<PAGE>

                                FORM 10-KSB/A-1
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

[Mark One]
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 For the fiscal year ended: December 31, 2000

                                      or

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

           For the transition period from __________to_____________

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

                            OmniComm Systems, Inc.
                            ----------------------
                (Name of small business issuer in its charter)

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

            3250 Mary Street, Suite 402, Miami, FL            33133
            --------------------------------------            -----
                (Address of principal office)               (Zip Code)

                   Issuer's telephone number: (305) 448-4700

        Securities registered under Section 12(b) of the Exchange Act:
                                     None
                                     ----

        Securities registered under Section 12(g) of the Exchange Act:
                              Common Stock, $.001
                              -------------------
                               (Title of class)

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X  No___
            ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or
amendment to this Form 10-KSB.[_]

State issuer's revenues for its most recent fiscal year. $70,976

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. $2,170,919 (Based upon the closing price
of $0.41 per common share on April 5, 2001.

The number of shares outstanding of each of the issuer's classes of common
equity, as of December 31, 2000: 7,353,627. The number of shares outstanding of
the issuer's class of preferred equity (5% Series A Convertible Preferred), as
of December 31, 2000: 4,260,224.

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

Statements contained in this Form 10-KSB that are not historical fact are
"forward looking statements". These statements can often be identified by the
use of forward-looking terminology such as "estimate", "project", "believe",
"expect", "may", "will", "should", "intends", or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties. We wish to caution the reader
that these forward-looking statements, such as statements relating to timing,
costs and of the acquisition of, or investments in, existing business, the
revenue or profitability levels of such businesses, and other matters contained
in this Form 10-KSB 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-KSB.  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.

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                                    PART I
                                    ------

ITEM 1. DESCRIPTION OF BUSINESS.

BUSINESS DEVELOPMENT

Coral Development Corp. ("Coral") was incorporated under the laws of the State
of Delaware on November 16, 1996 as a wholly owned subsidiary of Modern
Technology Corp. ("MTC") a Delaware corporation who received 403,000 shares of
common stock of Coral in exchange for $30,000.

In June of 1997, Coral registered 403,000 shares of common stock to be
distributed to the shareholders of MTC as a shared dividend. The registration
and issuance of the shares was subject to the provisions of Rule 419 ("Rule
419") of Regulation C of the Rules and Regulations of the Securities Act of
1933, as amended.

Rule 419 sets forth the requirements that apply to every registration statement
filed under the Act relating to an offering by a "blank check company". A "blank
check company" is a company that is a development stage company that has no
specific plan or purpose or has indicated that its business plan is to engage in
a merger or acquisition with an unidentified company or companies, or other
entity or person. At the time of filing the registration statement, Coral was a
"blank check company". The main requirements of Rule 419 are: escrowing the
securities that are subject to the registration statement prior to issuance of
the securities and consummating a transaction within 18 months of filing the
registration statement.

Coral and OmniComm Systems, Inc. (the "Company" or "OmniComm") entered into an
Agreement and Plan of Merger on July 22, 1998. The terms of the agreement
provided that all of the issued and outstanding shares of OmniComm Systems, Inc.
would be exchanged for 940,000 shares of common stock of Coral. The officers and
directors of Coral would resign and the name of Coral would be changed to
OmniComm Systems, Inc. Further, as part of the plan of merger, the five OmniComm
shareholders would receive options representing an additional 2,687,000 shares
of common stock of the Company. The options would vest in the event the Company
generates $4,000,000 in gross revenue on a cumulative basis. The issuance of the
shares subject to the options would cause substantial dilution to the existing
shareholders.

Coral had until December 5, 1998 (18 months from the filing date of the Form SB-
2 - June 5, 1997) to finalize a transaction. Prior to entering into the
Agreement and Plan of Merger, the Company acquired Education Navigator, Inc. on
June 26, 1998. The closeness in time of these two transactions presented a
logistical problem in completing due diligence and providing audited financial
statements for OmniComm Systems, Inc. and especially Education Navigator, Inc.
which did not have audited financial statements. To further complicate the
matter, the financial statements when completed needed to be presented in such a
way so as to show pro-forma information as if the mergers had occurred a year
earlier.  Coral received a comment letter from the Securities Exchange
Commission concerning the Post-Effective amendment to the SB-2. It was clear
from the comments that Coral and the Company would not make the deadline on
December 5, 1998 so the SB-2 was withdrawn.  Coral and the Company understood
that if the SB-2 did not go effective by December 5, 1998, they would have to
re-file the registration statement since it was very unlikely that an extension
would be given. The shares that had been held in escrow pursuant to Rule 419
were returned to MTC.

                                                                               3
<PAGE>

Since the parties were specifically identified for purposes of an acquisition it
was felt that the proscriptions of Rule 419 would not apply and the safeguards
for issuance of the shares such as the escrow requirements would not have to be
adhered to which would shorten the time period for completing the transactions.
In addition, the Division of Corporate Finance had issued Staff Legal Bulletin
No. 4, which gave specific guidance to the parties for the type of transaction
that was contemplated.

The Company and Coral continued with their plans to finalize the merger and to
become a reporting company. The parties executed an Amended Agreement and Plan
of Merger to include MTC, the parent of Coral, as a party for the sole purpose
of issuing the shares in accordance with the Agreement and Plan of Merger. A
Form 10-SB was filed on December 22, 1998 to register the common shares of
Coral, pursuant to Section 12(g) of the Securities Exchange Act of 1934.  The
Company and Coral finalized the merger on February 17, 1999.

OMNITRIAL B.V. BANKRUPTCY

OmniTrial B.V., a wholly owned subsidiary of the Company, was incorporated on
October 15, 1999, in The Netherlands.  On August 28, 2000, the Board of
Directors of the Company voted to authorize David Ginsberg, D.O., it's President
and Chief Executive Officer, to vote on any resolution pertaining to OmniTrial,
including approval of a bankruptcy filing.  On August 30, 2000, the Board of
Directors of OmniTrial issued a written consent to apply for bankruptcy, which
was instituted in The Netherlands on or about September 6, 2000.  A liquidating
trustee was appointed and the case is still pending as of this date.

The Company requested that the bankruptcy trustee return to the Company several
computer servers, which the Company claimed it owned separately from OmniTrial.
The bankruptcy trustee refused to return the servers and alleged that the
Company caused the bankruptcy due to its mismanagement of OmniTrial.  The
Company is currently attempting to negotiate a settlement with the trustee.  If
the Company is unable to settle the matter with the trustee, it intends to
contest the outstanding matters in the bankruptcy court in The Netherlands.

BUSINESS OF ISSUER

THE CLINICAL TRIALS OPPORTUNITY

With increasing pressure to be first to market, sponsors of clinical studies
have been undertaking a comprehensive re-examination of every phase of drug and
medical device development. The process includes exploring new approaches to
discovery, continues by identifying therapeutic targets that optimize core
competencies, and finishes by moving compounds more quickly into and through
better designed global clinical trials.  Achieving this ambitious goal requires
modifying many traditional approaches to drug and medical device development.

Large pharmaceutical companies are using a combination of approaches at every
step. To access new technologies that can lead to pipelines full with promising
new therapies, sponsors are increasing the headcount in the Research and
Development phase while continuing to make strategic alliances and licensing
agreements with biotechnology firms.  The need to conduct faster trials creates
significant outsourcing opportunities for various types of contract services.

                                                                               4
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Even dollar-conscious sponsors see outside contractors as partners in shortening
the clinical trials process. Outside contractors offer an attractive global
infrastructure, allow sponsors to shift fixed costs, and provide a way for
sponsors to manage peaks and valleys in the research pipeline. If the promise of
technology results in the development of new chemical entities, sponsors need
structured processes to send the successful ones through well-designed and
efficient clinical trials to yield clean data.

Although the pharmaceutical industry is very healthy, it is currently in flux.
The requirements of sponsors are changing as technology evolves and competition
increases. Since all dollars flow from the sponsors, contract service providers
continue to reinvent themselves to suit the markets changing needs. Part of this
process requires that stumbling blocks be acknowledged and addressed. Despite
recent passage of the FDA Modernization Act that shortens FDA review time,
studies are actually getting longer, more complex and more costly. Case report
forms, remote data entry and remote data capture lack industry standards.
Investigators and doctors who view conducting clinical trials as a way to make
easy money typically underestimate the requisite effort and cost of studies.

As an application software provider, ("ASP"), OmniComm's portal technology,
TrialMaster(TM), places the Company in a unique position to leverage the rapid
transformation taking place in the market and become a market leader in the
ownership and operation of proprietary software applications urgently needed to
streamline and modernize the clinical trials industry.

OmniComm Systems, Inc. is marketing and implementing TrialMaster and WebIPA(R).
TrialMaster and WebIPA are Internet based approaches that integrate the
significant components of the clinical trial process - trial management and
doctor/patient recruitment - into a seamless connection between industry,
doctors, and patients.

The critical component in bringing a drug or medical device to market is the
process by which approval is sought to market the drug or device. The amount of
money and time spent on the process are enormous. The following points are
illustrative of the business process:

     .  It can cost as much as $600 million to bring a drug to market
     .  50% of clinical trials are delayed due to a lack of patients
     .  For every day Viagra(R) was in clinical trials Pfizer lost approximately
        $5,000,000 a day
     .  In the United States less than 4% of the doctors and less than 2% of the
        eligible patients are involved in clinical trial

A fundamental way that the Internet is transforming business is the way in which
it changes institutional business processes such as clinical trials. The
Internet enables information to be easily and widely distributed and allows the
users of the information to use tools - web-based applications - to benefit from
and use the information.

The Company's current business strategy focuses on the continued development,
marketing and sale of its TrialMaster product.  The Company believes the
domestic clinical trial industry with its inherent inefficiencies, vast size and
considerable growth afford the greatest opportunity for revenue growth.  The
Company expects to devote the majority of its human and capital resources to
TrialMaster over the next 12 to 18 months.

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CLINICAL TRIAL INDUSTRY OVERVIEW

Worldwide research and development expenditures by the pharmaceutical and
biotechnology industries reached an estimated $50 billion in 1999 with $24
billion being spent by US based pharmaceutical and medical device companies.
Further, research and development expenditures in 1999 for the top 50
pharmaceutical companies increased approximately 14% from the previous year. It
is estimated that pre-clinical and clinical trial costs represent approximately
one-third of the total spent on research and development.

Preclinical and clinical trials historically were performed almost exclusively
by in-house personnel at the major pharmaceutical companies. Over the last two
decades pharmaceutical companies have transitioned to a model that includes the
outsourcing of clinical trial management to clinical research organization's
("CRO"), which has resulted in significant growth in the outsource contract
segment of the clinical trials industry.

The Company believes that certain industry and regulatory trends have led
pharmaceutical, biotechnology, cosmetic and medical device companies to increase
research and development for proprietary new drugs, cosmetics and medical
devices. These trends have required companies to conduct increasingly complex
clinical trials, and develop multinational clinical trial capability, while
seeking to control internal fixed costs. The trends driving the industry's
growth can be summarized as follows:

Increasing Cost Containment Pressures.  The increasing pressure to control
rising health care costs, and the penetration of managed health care and health
care reform, have caused changes in the pharmaceutical industry.  A number of
pharmaceutical companies have publicly committed to hold net effective price
increases in line with inflation. In the area of clinical development, many
pharmaceutical and biotechnology companies are seeking to reduce the high fixed
costs associated with peak-load staffing by reducing internal clinical staff and
relying on a combination of internal resources and external resources thereby
shifting fixed costs to variable costs.

Managed Care.  Managed care providers and insurance carriers have become major
participants in the delivery of pharmaceuticals along with pharmacy benefits
organizations.  These companies limit the selection of drugs from which
affiliated physicians may prescribe, thus increasing the competition to develop
more effective products in a shorter time frame.

Consolidation.  As pharmaceutical companies seek to create economies of scale,
there have been several large mergers within the industry, and as a result of
these mergers, the pharmaceutical industry has experienced large scale employee
lay-offs and cutbacks.

Competitive And Regulatory Factors.  Factors such as competition from generic
drugs following patent expiration, more stringent regulatory requirements and
the increasing complexity of clinical trials have resulted in increasing market
pressure on profit margins.

Globalization of Clinical Research and Development.  Due to the increasing cost
of new drug development, many projects that are not expected to achieve
sufficient annual worldwide revenue are abandoned. Pharmaceutical companies are
increasingly attempting to maximize returns from their drugs by pursuing
regulatory approvals in multiple countries simultaneously rather than
sequentially. A pharmaceutical company seeking approval in a country in which it
lacks experience or internal resources will frequently turn to an outsource
vendor for assistance in interacting with regulators or in organizing and
conducting clinical trials.

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Complex and Stringent Regulation; Need for Technology Capabilities.
Increasingly complex and stringent regulatory requirements have increased the
volume of data required for regulatory filings and escalated the demand for data
collection and analysis during the drug development process. In recent years,
the FDA and the corresponding regulatory agencies of Canada, Japan and Europe
have commenced discussions to develop common standards for preclinical and
clinical studies and the format and content of applications for new drug
approvals. Further, the FDA encourages the use of computer-assisted filings in
an effort to expedite the approval process. As regulatory requirements have
become more complex, the pharmaceutical and biotechnology industries are
increasingly outsourcing to leverage data management expertise, technological
capabilities and global presence.

Escalating Research and Development Expenditures.  R&D expenditures in 1998 for
the major pharmaceutical companies in the world increased approximately 14% from
the previous year. Such expenditures have resulted from an increased emphasis on
developing effective products for the treatment of chronic disorders and life
threatening acute conditions such as infectious diseases. One of the reasons the
cost of developing therapies for chronic disorders, such as arthritis,
Alzheimer's disease and osteoporosis is higher is because the treatments must be
studied for a longer period to demonstrate their effectiveness in curbing the
chronic disorder and to determine any possible long-term side effects.

Reducing Drug Development Time Requirements.  Pharmaceutical and biotechnology
companies face increased pressure to bring new drugs to market in the shortest
time, thereby reducing costs, maintaining market share and speeding revenue
production.  Currently, total development of a new drug takes approximately 8 to
12 years, a significant portion of a drug's 20 year period for protection under
U.S. patent laws. Pharmaceutical and biotechnology companies are attempting to
increase the speed of new product development and maximize the period of
marketing exclusivity and economic returns for their products, by outsourcing
development activities.  Some pharmaceutical companies are beginning to contract
with organizations to conduct preclinical and all phases of clinical trials for
new product programs rather than contracting phases of drug development to
several different companies.

New Drug Development Pressures.  R&D expenditures have increased as a result of
the constant pressure to develop and patent products, and to respond to the
demand for products for an aging population and for the treatment of chronic
disorders and life-threatening conditions.  In response to this pressure, trial
sponsors are outsourcing preclinical/clinical trials in order to use internal
resources to develop additional drugs.

Growth of Biotechnology Industry.  The biotechnology industry and the number of
drugs produced by it which require FDA approval have grown substantially over
the past decade. Many biotechnology companies have chosen not to expend
resources to develop sufficient staff or expertise to conduct clinical trials
in-house, but rather have utilized outside providers to perform these services.

These trends have created even greater competitive demands on the industry to
bring products to market efficiently and quickly.

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RECENT TRENDS IN THE PHARMACEUTICAL INDUSTRY
--------------------------------------------

The pharmaceutical and CRO industry is experiencing 11-20% annual growth. At
this point, the industry seems to grow from its own momentum, fueled by the
demographics of an aging population and the changing demands of pharmaceutical,
biotech and medical device sponsors.

Discovering and developing new chemical entities is the life-force of the
pharmaceutical and biotechnology industries. Without them, Research and
Development has no purpose. Currently, it is estimated that there are about
4,700 pharmaceutical compounds and 1,000 biotech compounds in pre-clinical
studies, and 2,900 pharmaceutical and 1,000 biotech candidates in some phase of
clinical development or regulatory review.

Suddenly, technology has created the possibility that sponsors can dramatically
increase the number of new chemical entities they discover and slate for
development.  This capability could not have come at a better time.  Sponsors
need many new chemical entities ("NCEs") in their pipelines so that a stream of
innovative products can be generated to feed investors' demands for sustained
double-digit earnings growth.  The current thinking is that drug companies will
have to become about three times as productive to grow 10% annually. PhRMA's
March 1997 survey says that big pharmaceutical companies require three target
NCEs annually, medium-sized companies require two, and small companies require
at least one just to maintain revenue growth in a highly competitive
environment.

Some sponsors have set annual targets for the number of products to come to
market. Bristol-Myers Squibb plans to double the number of drugs it has in early
development, and then double that number again by 2003.  Also, the company hopes
to introduce two products a year through 2000, and three annually by 2003.
Currently, Bristol-Myers Squibb launches approximately one new drug annually.
Glaxo Wellcome Inc.'s goal is to introduce three new drugs per year.  In
December 1999, the company issued a statement that it expected eighteen NCEs to
have entered exploratory development, compared to only six in 1994.

The fact that Research and Development budgets are at all time highs suggests
that companies are seriously exploring innovative high tech methods for the
discovery process. According to a September 1997 article, "Their Growth Has Just
Begun," pharmaceutical and biotechnology companies anticipated spending an $33
billion on R&D in 1997.  Of that, $16.32 billion was spent on clinical
development.

The reality is that despite tremendous R&D expenditures, the industry has been
slow to invest in new technologies. Industry observers estimate that the
industry spends only about $600 million, or 3% of the $16.32 billion clinical
development dollars on clinical information systems management. This is in sharp
contrast to the aerospace and auto motive industries, in which technology
purchases are estimated to be 5% of industry revenues.

At present, the industry shows historic 10% annual growth in clinical spending,
which has obvious implications for all phases of pre-clinical and clinical trial
testing. According to UBS Securities LLC, about $3.14 billion was outsourced to
CROs in 1997, an estimated $3.69 billion in 1998, $4.33 billion by 1999 and
$5.09 billion by 2000, representing 17.4% annual growth in this four year
period. A variety of outside contractors besides CROs stand to benefit from this
positive trend, most notably site management organizations, technology vendors,
individual sites and physician practice management organizations.

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CLINICAL TRIAL OVERVIEW

The Industry

In order for a drug or medical device to be marketed in the United States,
Europe or Japan, the drug or device must undergo extensive testing and
regulatory review to determine that it is safe and effective.

To support an application for regulatory approval, clinical data must be
collected, reviewed and compiled. Clinical data is collected from clinical
report forms ("CRF") that are submitted to and filled out by an investigator,
typically a doctor or research assistant who is participating in the clinical
trial. These CRFs can be five to one hundred pages long and document a series of
visits by patients over a period of time.

Once information is collected about the patient by the investigator and the
relevant portion of the CRF is filled out, it is then submitted to either the
sponsor of the study or the CRO.  The data is then inputted manually into a
database. Typically, double data entry is used in order to resolve errors.

TrialMaster allows participants in the clinical trial process such as a sponsor
or CRO to perform data collection, handling and transmission via a direct,
secure Internet connection.  After the CRFs are Internet enabled and the
validation criteria encoded, the CRF forms are distributed via the Internet from
the Company's server to the sites where the clinical trials are to take place.
In addition to installing the application, OmniComm provides the necessary
infrastructure components including network consulting and implementation,
hardware procurement, hosting and maintenance.

The regulatory review process is time consuming and expensive. A new drug
application (NDA) can take up to 2 years before it is approved. This is in
addition to 3 to 5 years of studies required to provide the data to support the
NDA. The following is an overview of the process that is generally undertaken to
bring a drug or device to market:

(1) Preclinical Research (1 to 3.5 years).  In vitro ("test tube") and animal
studies are used to establish the relative toxicity of the drug over a wide
range of doses and to detect any potential to cause birth defects or cancer.  If
results warrant continuing development of the drug, the manufacturer will file
an IND (Investigational New Drug Application), upon which the FDA may grant
permission to begin human trials.

(2) Clinical Trials  (3.5 to 6 years)

a.   Phase I (6 months to 1 year). Basic safety and pharmacology testing is
     conducted in 20 to 100 human subjects, usually healthy volunteer testing
     includes studies to determine how the drug works, how it is affected by
     other drugs, where it goes in the body, how long it remains active, and how
     it is broken down and eliminated from the body.

b.   Phase II (1 to 2 years). Basic efficacy (effectiveness) and dose-range
     testing is conducted in 100 to 1,000 afflicted volunteers to help determine
     the best effective dose, confirm that the drug works as expected, and
     provide additional safety data.

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c.   Phase III (2 to 5 years). Efficacy and safety studies are conducted in
     1,000 to 10,000 patients at multiple investigational sites (hospitals and
     clinics) which can be placebo-controlled trials, in which the new drug is
     compared with a placebo or studies comparing the new drug with one or more
     drugs with established safety and efficacy profiles in the same therapeutic
     category.

d.   Treatment Investigational New Drug ("TIND") (may span late Phase II, Phase
     III, and FDA review). When results from Phase II or Phase III show special
     promise in the treatment of a serious condition for which existing
     therapeutic options are limited or of minimal value, the FDA may allow the
     manufacturer to make the new drug available to a larger number of patients
     through the regulated mechanism of a TIND. Although less scientifically
     rigorous than a controlled clinical trial, a TIND may enroll and collect a
     substantial amount of data from tens of thousands of patients.

e.   New Drug Application ("NDA") Preparation and Submission. Upon completion of
     Phase III trials, the manufacturer assembles the statistically analyzed
     data from all phases of development into a single large document, the NDA,
     which comprises, on average, 100,000 pages.

f.   FDA Review and Approval (1 to 1.5 years). Careful scrutiny of data from all
     phases of development (including a TIND) is used to confirm that the
     manufacturer has complied with regulations and that the drug is safe and
     effective for the specific use (or "indication") under study.

g.   Post-Marketing Surveillance and Phase IV Studies. Federal regulation
     requires the manufacturer to collect and periodically report to the FDA
     additional safety and efficacy data on the drug for as long as the
     manufacturer markets the drug (post-marketing surveillance).

An integral part of the clinical trial process is the monitoring of the clinical
sites by monitors. These monitors visit sites throughout the clinical trial to
confirm that the sites are acting in accordance with good clinical practices and
filing out the documentation appropriately.

GOVERNMENT REGULATION
---------------------

To alleviate the enormous amount of paperwork that is generated and submitted
for purposes of receiving approval, the United States Food and Drug
Administration ("FDA") promulgated regulations on March 20, 1997 concerning the
electronic submission of data to the FDA: 21 CFR Part 11 "Electronic Records;
Electronic Signatures; Final Rule". Essentially, this regulation provided for
the voluntary submission of parts or all of regulatory records in electronic
format without an accompanying paper copy. Also, the FDA promulgated "Providing
Regulatory Submissions in Electronic Format- General Considerations".  More
recently, the FDA promulgated a guidance document "Computerized Systems Used In
Clinical Trials" which provides guidance to industry when utilizing a computer
system in a clinical trial. The FDA, however, does not regulate the TrialMaster
system.

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THE OMNICOMM SOLUTION

TRIALMASTER

OmniComm has developed and is marketing TrialMaster as an Application Service
Provider.  TrialMaster is a web-based B2B enterprise management system for
conducting and managing clinical trials. The Company utilizes a trial-
independent database to quickly generate the necessary trial data infrastructure
to proceed with the clinical trial process.

TrialMaster enables participants in the clinical trial process to utilize the
inherent benefits of the Internet - pervasiveness, scalability, efficiency and
security - to conduct and manage clinical trials in a real-time paperless
electronic environment.

In addition to its core activities, TrialMaster incorporates communications,
time and financial management and outcomes tracking.

TrialMaster is an open system that is fully integratable with existing legacy
data systems such as Oracle(R) and Microsoft SQL(R). The application utilizes a
standard browser such as Internet Explorer 4.0(R).

The cost for implementing the application is based on a data point per page/per
patient fee that will increase or decrease depending on the size of the trial in
terms of patients/subjects and the length of time to conduct the trial.
TrialMaster allows clinical data to be entered directly from a source document
such as a patient record or doctor's notes via computer. The clinical data is
transmitted via the Internet to a secure server where the data is validated and
stored.

TrialMaster significantly impacts the clinical trial process in the following
three areas: Data Collection, Validation/Edit Queries, and Monitoring.

--------------------------------------------------------------------------------
A.   Data Collection Comparison

Clinical data is collected from the Clinical Report Forms ("CRF") that are
submitted to and filled out by an investigator - a doctor or research
assistant - who is participating in the clinical trial. These forms can be five
to one hundred pages per patient and encompass a series of visits by patients
over a period of time.
--------------------------------------------------------------------------------
Current System                                     TrialMaster System

The cost to process data is approximately $7.00    The cost to process the data
to $25.00 per page per patient.                    is approximately five to ten
                                                   times less per page per
                                                   patient.
The time to process the data can take anywhere     The time to process the data
from one to eight weeks.                           is approximately one minute.
--------------------------------------------------------------------------------

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--------------------------------------------------------------------------------
B.  Validation and Edit Query Comparison

Upon submission, data is reviewed to see whether the collected data is within
certain parameters of the clinical trial, primary validation. If data is outside
of the clinical trial parameters or there are typographical errors or similar
data problems the data collection process will generate an edit query. This edit
query must be submitted to the investigator for resolution and resubmitted for
data processing.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Current System                                       TrialMaster System
<S>                                                  <C>
The cost to process an edit query is approximately   The number of edit queries is significantly reduced
$80-$115 per query. For a large trial it is not      or even eliminated because the system does the
be uncommon to generate 500-1,000 edit queries a     validation when the data is inputted.
week.
                                                     The time to process the data is approximately one
The time to process the data for each patient can    minute.
take anywhere from three to eight weeks.
-----------------------------------------------------------------------------------------------------------
</TABLE>

C.  Monitoring

--------------------------------------------------------------------------------
Study monitors are an integral and necessary part of the clinical trial process.
These individuals travel to clinical sites to ensure that the investigators are
complying with good clinical practice ("GCP") standards. Essentially, their role
is to make sure clinical data is being collected and submitted in a safe, timely
and accurate manner. Monitoring and its associated costs such as travel can make
up one quarter of the total costs of a clinical trial.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Current System                                       TrialMaster System
<S>                                                  <C>
The cost for a monitoring visit can vary between     The number of visits can be reduced because the
$1,000 to $3,000 per visit per site. A trial can     status of sites can be monitored remotely and in real
have as many as three to seven visits.               time.

The time for each visit is usually one to two days.  Monitoring hours can be reduced by 50%.  In addition,
                                                     monitoring visits can be more efficiently scheduled
                                                     due to the availability of more accurate and complete
                                                     information on the trials.
-----------------------------------------------------------------------------------------------------------
</TABLE>

TRIALMASTER ENTERPRISE MANAGER
------------------------------

Description

With the use of the TrialMaster technology, OmniComm Enterprise Manager
("Enterprise Manager") incorporates management tools into the Internet-based
system that allow the home office, field managers and project managers to track
the activity of hundreds clinical trials, including  principal investigator and
sub-investigator financial data, patient accruals, budgeted patient accruals,
payments and projected payments.

                                                                              12
<PAGE>

TrialMaster's Enterprise Manager significantly enhances the management of
clinical trials through faster and more accurate communication, cleaner
information and real-time reporting on hundreds of studies going on throughout
the country and around the world.

TrialMaster's robust standard features give the manager the capability to
successfully manage hundreds of clinical trials from start to finish.

Product Features

As part of the TrialMaster design, our clients are provided with the tools for
clinical trial creation and tracking technology as well as a robust milestone
tracking and alert system.  TrialMaster automatically monitors targets and
exceptions, trial progression and verifications based on the clients
requirements. Some of the Enterprise Manager features include:

  .  Milestones / Payment Schedule
  .  Document Transmittal
  .  Study Maintenance
  .  Drug Request Approval
  .  Letter Templates:
  .  Budget Maintenance
  .  Archive Processing
  .  Grant and Addenda Approval
  .  Audit Sub-system
  .  Alerts - Trial Duration, Email, Check Requests, Inactivity, Budgetary,
     Investigator, Grant Approval,  Investigator/Institution  and Payment
  .  Data Export - Real time and on-demand

SALES AND MARKETING

OmniComm has adopted a "push/pull" marketing strategy. The essential components
of the clinical trial industry are pharmaceutical/biotech/medical device,
doctors/patients, and opinion leaders. OmniComm is marketing to all three
components.  The Company is focusing a large portion of its sales efforts at
small and mid-size pharmaceutical, medical device and clinical research
organizations.  These types of clients are considered a prototypical client
since TrialMaster is capable of providing both an operating efficiency to the
clinical trial process as well as potential cost savings.  Small and mid-size
company's are unlikely to have the technological resources necessary to develop
a product like TrialMaster.

TrialMaster

TrialMaster can be used within any segment of the pharmaceutical, biotech, and
medical device industry, to date, OmniComm has taken a deliberative approach to
marketing TrialMaster to the pharmaceutical and medical device industries. This
is a $50 billion market, dominated by companies such as Pfizer, Johnson &
Johnson, Medtronic, and Eli Lily. The following are the relevant factors for
approaching these markets:

  .  Access to "validators" for the market.
  .  Relatively standardized and advanced approach to clinical trial process.
  .  A very competitive market with relatively short product cycles providing
     for a need to get products to market quickly.
  .  A number of products within the interventional market segment -

                                                                              13
<PAGE>

  .  A tight group of opinion leaders within the market segment with which we
     have direct relationships.

The Company is also establishing relationships with "opinion leaders" and
decision-makers in other specialties within the clinical trial industry. In this
regard, the Company has created a Medical Advisory Board to advise the Company
on the development and marketing of the TrialMaster system. The Medical Advisory
Board will also provide a platform to contact these opinion leaders and to
provide information about the application. OmniComm is also using traditional
methods to market TrialMaster, including advertising in trade periodicals and
attending a number of medical conventions including the, the American College of
Cardiology, Drug Information Association and The American Heart Association.

Current Implementation

The Company is involved in conducting or developing multi-center, clinical
trials for four clients.  In addition, the Company completed in 2000 a multi-
center, multi-nation clinical trial with a European based medical device company
and a European based clinical research organization. The clinical trial
encompassed 400 patients in 42 sites throughout Canada, Spain, Europe, and
Scandinavia.

The Company is in negotiations with several US based pharmaceutical and clinical
research organization's to implement TrialMaster.  The Company executed a
Strategic Alliance Agreement with ClinARC in October 2000 providing for a joint
effort at promoting ClinARC's CRO services and OmniComm's TrialMaster product.
The agreement has a one year duration.

COMPETITION

The Company competes in the electronic data capture (EDC) market.  This industry
can be characterized as rapidly evolving, highly competitive and fragmented.

There are other entities that compete with the Company's Internet based data
collection system, TrialMaster. The principal competitors include Phase Forward
Incorporated, CB Technologies, PHT Clinical Networks and eResearch Technology.
Most of these competitors have significantly greater financial, technical and
marketing resources, or name recognition than that of the Company.  In addition,
other companies could enter the EDC market due to the vast size of the market
opportunity.   The Company believes that the most significant competitive
factors it faces are a lack of operating history and an attendant perception of
a lack of experience in competing in such a changing and competitive
environment.

The Company believes, however, that its technical expertise, the knowledge and
experience of its principals of the industry, quality of service and
responsiveness to client needs and speed in delivering solutions will allow it
to compete favorably within this environment. Further, the Company believes that
none of the aforementioned companies have developed an approach to the clinical
trial process that is as malleable and customizable as TrialMaster.

                                                                              14
<PAGE>

MEDICAL ADVISORY BOARD

Given the Company's basic approach in developing and marketing the TrialMaster
application as if it were a medical device, the Company has formed a Medical
Advisory Board. The purpose of the Board is to advise and consult the Company on
the development, implementation, and marketing of the TrialMaster application.
Currently, there is one member on the Board:

Dr. Gervasio Lamas: brings to OmniComm a wealth of practical and academic
experience in the design and execution of clinical trials, and many years of
experience and contacts in the pharmaceutical industry, device industry, and
federal government. Dr. Lamas is a graduate of Harvard University (1974), and
the NYU School of Medicine (1978). Dr. Lamas completed his medical and
cardiology training at Harvard Medical School and Brigham and Women's Hospital
in Boston, Massachusetts, where he was on the faculty until 1993. He has
authored or co- authored over 100 publications and reports in numerous research
areas in the cardiovascular field, with a particular focus on the treatment of
patients with coronary disease and disorders of heart rhythm. His research has
led to first author publications in medical journals such as the "New England
Journal of Medicine" and "Circulation." At present, Dr. Lamas serves as
Principal Investigator, Study Chairman, Co-Chairman, or National Leader in many
ongoing national and international multi-center trials in the fields of coronary
disease, congestive heart failure, cardiac pacing, and preventive cardiology. In
these roles, he coordinates the activities of a network of over 200 clinical
centers worldwide.

INTELLECTUAL PROPERTY RIGHTS

The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect its
proprietary rights and the proprietary rights of third parties from whom the
Company licenses intellectual property.  The Company enters into confidentiality
agreements with its employees and limits distribution of proprietary
information.  There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use and take
appropriate steps to enforce its intellectual property rights.

On May 18, 1999, the Company filed a provisional application and on May 17, 2000
the Company filed its follow up formal application for the patent on the
TrialMaster product.  (Described in the applications as the "Distributed System
and Method for Collecting and Evaluating Clinical Data" Serial No. 60/134,671
for the provisional application, Serial No. 09/573,101 for the formal
application.)  The Company is in the process of registering a number of
trademarks including "OMNICOMM SYSTEMS, INC.," and has registered "TRIALMASTER,"
as well as copyrights on a computer software applications produced by the
Company.  The Company intends to make such other state and federal registrations
as the Company deems necessary and appropriate to protect its intellectual
property rights.

EMPLOYEES

The Company currently has 14 full time employees and 1 part time employee.  The
Company believes that relations with its employees are good.  None of its
employees are represented by a union.  The Company has employment agreements
with its Chief Executive Officer and Chief Technical Officer.  The loss of the
services of any of its executive officers could have a materially adverse effect
on the business or operations of the Company.  The Company stresses the
importance of attracting, retaining and motivating employees capable of
advancing the Company's business goals.

                                                                              15
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

The Company's facilities are located at 3250 Mary Street, Suite 402, Miami,
Florida 33133 ("Miami Office"), and 5680 West Cypress Street, Suite I, Tampa,
Florida 33607 ("Tampa Office"). The Miami Office is the Company's headquarters,
and costs $9,352 per month and comprises approximately 5,048 square feet. The
Tampa Office is where the Company's software development activities were located
through February 2001. The Tampa Office is rented for $2,449 per month and
comprises approximately 1,540 square feet. The Company believes that these
facilities are adequate for its current and reasonably foreseeable future needs.

ITEM 3. LEGAL PROCEEDINGS

On or about September 6, 2000, the Company's wholly owned subsidiary, OmniTrial
B.V. ("OmniTrial") submitted a petition for bankruptcy protection from the
bankruptcy court of the Netherlands.  The court appointed a liquidating trustee
and the case is still pending.  The Company is claiming that certain assets of
OmniTrial have been paid for by the Company and therefore should not be part of
the liquidating assets of OmniTrial.  The bankruptcy trustee has rejected that
claim and has told the Company that the assets as part of the OmniTrial
bankruptcy estate would be sold to diminish any deficiency of the estate.  The
Company would like to resolve its disputes with the trustee, but if unable to do
so, intends to contest the outstanding matters in the bankruptcy court of the
Netherlands.

On January 26, 2001, a former employee of the Company, Eugene A. Gordon filed a
lawsuit in the Circuit Court of the 11/th/ Judicial Circuit in and for Dade
County, Florida alleging breach of his employment contract with the Company.
The plaintiff alleges the Company owes him more than $100,000 for back payment
of salary per the terms of his employment contract.  The Company disputes Mr.
Gordon's allegations and is vigorously defending this lawsuit.

On February 2, 2001, an advertising firm, Wray Ward Laseter filed a lawsuit in
the Superior Court of North Carolina.  The plaintiff alleges claims totaling
approximately $84,160 against the Company for fees associated with advertising,
marketing and public relations services provided between March and September
2000.  The Company intends to vigorously defend this lawsuit.

On February 16, 2001, a staffing agency, Temp Art, Inc. filed a lawsuit in the
County Court in and for Miami-Dade County, Florida.  The plaintiff alleges the
Company breached its contract and owes approximately $13,126 for back payment of
services rendered plus interest and costs.  The Company disputes Temp Art's
allegations and is vigorously defending this lawsuit.

Other than the foregoing, neither the Company nor any of its subsidiaries is a
party to, nor is any of their respective property subject to, any pending or, to
its knowledge, threatened governmental, administrative or judicial proceedings
that would have a materially adverse effect upon the Company's financial
condition or such property.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

                                                                              16
<PAGE>

                                    PART II
                                    -------

ITEM 5. MARKET FOR COMMEN EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock, $.001 par value, is traded on the over-the counter
bulletin board market.  The Company's preferred stock is not publicly traded.
The ticker symbol for the Company's common stock is OMCM.

Quarter Ending/Fiscal Year Ending            High Bid           Low Bid
---------------------------------            --------           -------
December/1999                                 $ 6.00             $3.50
March/2000                                    $14.00             $2.00
June/2000                                     $ 6.38             $2.00
September/2000                                $ 4.25             $1.50
December/2000                                 $ 2.25             $0.63

The bid price which states over-the -counter market quotations reflect inter-
dealer prices without real mark-up, markdown or commissions and may not
necessarily represent real actual transactions.

The company has 408 shareholders of record of its common stock as of December
31, 2000.

The Company has never declared or paid cash dividends on its common stock.  Any
determination to pay cash dividends in the future will be at the discretion of
the Board of Directors after taking into account various factors, including the
Company's financial condition, its results of operations, and anticipated cash
needs for operations and expansion.

RECENT SALES OF UNREGISTERED SECURITIES

Section 4(2) Transactions

On or about February 1997 OmniComm Systems, Inc. formerly known as The Premisys
Group, Inc. was incorporated. Contemporaneous with the incorporation of OmniComm
Systems, Inc. common stock was issued to Randy Smith and Lawton Jackson totaling
1,875,000. On February 1, 1998, the Board of Directors of OmniComm Systems, Inc.
authorized the issuance of 625,000 shares of common stock to Peter S. Knezevich.
These shares were issued pursuant to Section 4(2) of the Securities Act of 1933
in exchange for services rendered and to be rendered as evidenced by a written
employment agreement.

On or about December 1996, Coral Development issued 403,000 shares of common
stock to MTC, the Parent corporation of Coral Development, in exchange for
$30,000. The shares were issued pursuant to an exemption from registration
contained in Section 4(2) of the Securities Act of 1933.

On June 26, 1998, prior to executing the merger agreement with Coral
Development, the Company acquired Education Navigator, Inc. In exchange for all
the issued and outstanding shares of Education Navigator, the Company issued
441,180 shares of common stock of the Company to the two shareholders of
Education Navigator and issued promissory notes in the amount of $525,000. The
shares and promissory notes were issued pursuant to an exemption from
registration contained in Section 4(2) of the Securities Act of 1933. Subsequent
to the acquisition of Education Navigator, the Company executed an employment
agreement with Cliff Middleton, a shareholder of Education Navigator. In
addition, pursuant to Section 422 of the Internal Revenue Code, the Company
granted an incentive stock option to Cliff Middleton for 85,000 common shares at
$.65 per share, vesting over 3 years beginning June 26, 1999.

                                                                              17
<PAGE>

On February 17, 1999, OmniComm Systems, Inc. and Coral Development finalized the
merger pursuant to the terms and conditions set forth in the Agreement and Plan
of Reorganization. All of the issued and outstanding shares of OmniComm Systems,
Inc. were exchanged for 940,000 shares of common stock of Coral Development; or,
3.129 shares of OmniComm Systems for 1 share of Coral Development. The exchange
and issuance of shares were issued pursuant to an exemption from registration
contained in Section 4(2) of the Securities Act of 1933.

Both of the foregoing issuances concerning the merger transactions dated June
26, 1998 (acquisition of Education Navigator), and February 17, 1999 (merger
with Coral Development Corp.), relied on the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933 (the "Act"). The basis of
the exemption is a transaction by an issuer that does not involve a public
offering.

Critical to the application of the exemption is the availability of information
to the offeree and her sophistication. The availability of information can be
provided in two ways: access to information or disclosure.

In both transactions, the offerees were sophisticated; they have the financial
and business experience to evaluate the offer. In the Education Navigator
transaction the offerees were familiar with and professionals within the
computer and Internet market and had experience with the risks associated with
ventures involving start-up companies in the market. In the Coral/OmniComm
transaction the offerees have a level of sophistication sufficient to appreciate
the relative risks and benefits of being affiliated with a reporting company
including the statutory obligations, both federal and state.

In both transactions the offerees were provided with full disclosure pursuant to
agreements including audited financial information and written legal opinions.
Also, in both cases, counsel who had sufficient experience with transactions of
the type consummated represented the offerees.

The transaction involving Coral Development Corp. and MTC was a transaction
involving a parent and a subsidiary where the parent had access to corporate
information concerning the subsidiary.

Rule 506 Transaction - 10% Convertible Note

On January 18, 1999, Northeast Securities, Inc., as placement agent, began the
distribution of a Confidential Private Placement Memorandum to accredited
investors on behalf of the Company. Northeast received the following placement
agent fees: 10% Commission (cash); 3% nonaccountable expense allowance (cash);
$7,500 advance against non-accountable due diligence expense. The offering was
closed on June 15, 1999 and as of August 1, 1999, the Company had received gross
proceeds of $862,500 as a result of the private placement.

The offer and sale of the notes were made in reliance upon Rule 506, Regulation
D of the Securities Act of 1933. The offerees and purchasers were accredited
investors who were provided with a private placement memorandum that met the
requirements of Regulation D and who executed investor questionnaires.

During 2000 notes totaling face value $400,000 were converted into 320,000
shares of the Company's common stock per the terms of the Private Placement.

                                                                              18
<PAGE>

Rule 701 Transactions

Rule 701 of the Securities Act of 1933, as amended (the "Act") is an exemption
from registration for offers and sales of securities pursuant to certain
compensatory benefit plans and contracts relating to compensation provided
bonafide services are rendered not related to capital raising or pursuant to a
written contract relating to compensation.

The Company granted an incentive stock option in accordance with Internal
Revenue Code (IRC) Code Section 422 to Clifton Middleton to purchase 85,000
shares of common stock at $.65 a share over a three (3) year period. The options
were granted pursuant to Rule 701 of the Act. The options were granted pursuant
the Company's 1998 Incentive Stock Option Plan and pursuant to a contract
relating to compensation and in accordance with Rule 701 of the Act.

The Company appointed Dr. Warren S. Grundfest to the Company's Medical Advisory
Board. Dr. Grundfest was granted stock options and a stock bonus. The options
and bonus stock were granted pursuant to the Company's 1998 Incentive Stock
Option Plan and in accordance with Rule 701 of the Act.

The Company retained Mr. Lawrence Kronick to act as a consultant for the Company
to assist in marketing the Company's TrialMaster system. Mr. Kronick was granted
options pursuant to a written contract of compensation and pursuant to the
Company's 1998 Incentive Stock Option Plan and in accordance with Rule 701 of
the Act.

The Company appointed Dr. Richard Murphy to the Company's Medical Advisory
Board. Dr. Murphy was granted stock options and a stock bonus. The options and
bonus stock were granted pursuant to the Company's 1998 Incentive Stock Option
Plan and in accordance with Rule 701 of the Act.

The Company appointed Dr. Sameer Mehta as its consulting Medical Director. Dr.
Mehta was granted stock options and a stock bonus. The options and bonus stock
were granted pursuant to the Company's 1998 Incentive Stock Option Plan and in
accordance with Rule 701 of the Act.

The Company granted stock option and bonuses to employees of the Company. The
stock bonuses totaled 51,377 shares of common stock. The options and bonus stock
were granted pursuant to the Company's 1998 Incentive Stock Option Plan and in
accordance with Rule 701 of the Act.


Regulation S and Section 4(2) - 5% Series A Convertible Preferred

On June 4, 1999, the Company entered into a private placement agreement
("Agreement") with Noesis Capital Corp. ("Noesis") wherein Noesis would act as
the placement agent for the offer and sale of the Company's 5% Series A
Convertible Preferred stock pursuant to and in accordance with Regulation S of
the Securities Act of 1933, as amended. Noesis received as a commission 10% of
the gross proceeds received by the Company and a warrant to purchase at par
value, $.001, 10% of the shares placed.  The Company sold the preferred stock to
foreign investors and to a small group of US based investors of which all were
accredited investors. The offering was concluded on December 31, 1999. The
Company received gross proceeds of $4,313,500 and incurred investment banking
fees of $440,657.

                                                                              19
<PAGE>

Regulation D - Common Stock

On July 24, 2000, the Company entered into a private placement agreement
("Agreement") with Noesis Capital Corp. ("Noesis") wherein Noesis would act as
the placement agent for the offer and sale of the Company's common stock
pursuant to and in accordance with Regulation D of the Securities Act of 1933,
as amended. Noesis was entitled to receive as a commission 8% of the gross
proceeds received by the Company and a warrant to purchase at $1.10 per share,
10% of the shares placed.  In addition, Noesis was granted a 2% non-accountable
expense allowance.  The Company sold the common stock to foreign investors and
to a small group of US based investors of which all were accredited investors.
The offering was concluded on October 15, 2000. The Company had received gross
proceeds of $635,000 and incurred investment banking fees of $66,833.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following information should be read in conjunction with the Consolidated
Financial Statements and Notes thereto and other information set forth as
Exhibit 99 of this report.

General

The Company changed the focus of its core business during 1999.  The company is
a provider of Internet based database products that integrate significant
components of the clinical trial process, including the collection, compilation
and validation of clinical trial data.  Prior to 1999 the Company was a computer
systems integrator providing services and hardware sales for the installation of
local and wide area networks.

The Company expects to continue phasing out the systems integration segment of
its business throughout 2001.  Virtually all of the Company's personnel are
involved in the development and marketing of the Company's TrialMaster product.

Year Ended December 31, 2000 Compared With the Year Ended December 31, 1999

Results of Operations

Revenues

Revenues for the year ended December 31, 2000 were $70,976 compared to
$1,259,214 for the same period in 1999.  The substantial decrease is
attributable to the Company significantly curtailing its systems integration
business segment.  Revenues associated with the Company's Internet based
clinical trial products were approximately $17,825 and $0 for 2000 and 1999
respectively.  Systems integration revenues in 2000 were approximately $53,151.
The Company expects systems integration revenues in 2001 to parallel the results
achieved in 2000.

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

TrialMaster contracts provide for pricing that is based on both the size and
duration of the clinical trial.  Size parameters include the number of patients
participating in the trial and the number of data points being collected per
patient.  The client will pay a trial setup fee based on the previously
mentioned factors, and then pay an on-going maintenance fee for the duration of
the clinical trial

                                                                              20
<PAGE>

that provides software and network support during the trial. Generally, these
contracts will range in duration from 12 months to several years. The
maintenance fee revenues are earned and recognized monthly. Costs associated
with contract revenues are recognized as incurred.

Cost of Sales

Cost of sales was $52,492 or 74.0% for the year ended December 31, 2000 versus
$1,005,338 or 79.8% for the year ended December 31, 1999.  The absolute decrease
in cost of sales is attributable to the Company's curtailment of its systems
integration business segment.  The decrease in cost of sales on a percentage
business is primarily the result of the Company providing more high margin
installation services in 2000 than hardware sales.

The Company does not anticipate that systems integration costs will be a
significant source of expense in 2001.  The Company's anticipates that the
commercialization of its database product TrialMaster and its related components
will be the source of most of its cost of sales.

Other Expenses

Salaries, Employee Benefits and Related Expenses

Salaries and related expenses is the Company's biggest expense at 47.6% of total
Other Expenses for 2000.  Salaries and related expenses totaled $2,895,108 in
2000 compared to $784,635 in 1999.  The marked increase is attributable to an
increase in headcount from approximately 8 employees during 1999 to an average
of 23 employees in 2000.  In addition, two employees were accounted for as
consultants in 1999 and subsequently converted to full-time employees in 2000.
The Company increased its personnel in 2000 in anticipation of marketing both
TrialMaster and WebIPA.  The increase encompassed additional computer
programmers, and increased sales and marketing personnel.  The Company has
reduced its sales and marketing personnel primarily through the closure of its
European office based on its decision to focus on building its clinical trial
clientele domestically in the US.  In addition, the Company was able to reduce
its research and development personnel through the consolidation of its Tampa,
Florida and Miami, Florida offices.

Rent

Rent expense was $242,471 for the year ended December 31, 2000 compared with
$108,371 for the comparable period in 1999.  The increase can be attributed to
approximately $32,728 in rent expense for the Company's office in Amsterdam and
an increase of approximately $20,990 in rent expense for the Company's Tampa
office.  In addition, the Company relocated its corporate office in November
1999 to a larger facility within the same office building.  The move created
approximately $80,000 in additional rent expense in 2000.

                                                                              21
<PAGE>

Consulting Expenses

Consulting expenses, which are comprised of medical advisory, product
development and marketing and sales consultants were $269,998 for the year ended
December 31, 2000 compared to $557,751 in fiscal 1999. The decrease of $287,753
was caused by several factors. There was a decrease in marketing and sales
consulting expense of $130,030 caused by the conversion of two sales consultants
into marketing executives of the Company. There was a decrease of $117,470 in
medical advisory consulting expenses that is directly correlated to a
curtailment of the Company's medical advisory board. In addition, there was
medical advisory consulting expense recognized in connection the payment of
stock bonuses to several members of the medical advisory board in 1999. Product
development fees were reduced by $40,253 through the reduced use of temporary
employees within the Company's research and development function.

Legal and Professional Fees

Legal and professional fees increased to $613,797 in the year ended December 31,
2000 compared to $98,895 in the same period in 1999.  The increase can be
attributed to investment banking and financial advisory fees totaling $496,889
in 2000.  Legal and accounting fees were $116,908 in 2000 compared to $98,895
for the same period in fiscal 1999.

Telephone and Internet

Telephone and Internet related costs increased by $130,749 due to the increased
telephone and Internet access costs associated with the Company's additional
offices in Amsterdam, the Netherlands and Tampa, Florida.  The Company
anticipates a reduction in access charges due to the closure of its European
offices and the recent closing of its Tampa office.

Selling, General and Administrative

Selling, general and administrative expenses ("SG&A") includes all office
oriented expenses, advertising, public relations and marketing costs and all
other expenses not directly chargeable to either cost of sales or specifically
detailed income statement categories.  These expenses were approximately
$617,006 in fiscal 2000 compared to $208,226 in fiscal 1999.  A portion of the
increase is a result of increased expenditures for advertising ($160,000),
marketing ($87,000) and public relations ($30,000) in comparison with fiscal
1999. In addition, the Company had SG & A expenses of approximately $79,000 in
its European operation.

Impairment of Equity Investment

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

                                                                              22
<PAGE>

On March 20, 2000, the Company paid EMN $335,000, received 10% of EMN's equity
and a seat on EMN's board.  On April 20, 2000, the Company did not make the
second payment of $310,000 or the stock payment of 41,883 shares to EMN and the
stock purchase agreement did not close.  On July 11, 2000, the Company and EMN
agreed to renegotiate the terms of their agreement subject to the Company's
success in finding adequate financing.  As part of the renegotiation the Company
has resigned its seat on EMN's board and offered to sell its 10% interest back
to EMN.  The Company accounts for its investment in EMN under the cost method of
accounting.  The Company has established a valuation allowance of $335,000
against its investment in EMN to reflect the uncertainty of the fair market
value of the investment as of December 31, 2000.

Loss on Subsidiary Bankruptcy

As discussed in Item One of this filing the Company filed for bankruptcy
protection on or about September 6, 2000 for its wholly owned subsidiary
OmniTrial.  In connection with the bankruptcy filing the Company has recognized
a loss of approximately $78,131 which represents the value of the assets of
OmniTrial immediately prior to the bankruptcy filing.  The Company believes it
is unlikely that any of the assets of OmniTrial will be recovered through the
bankruptcy proceeding.

The Company is currently attempting to negotiate a settlement with the trustee
which would provide (i) settlement of all matters relating to the case, (ii)
release the Company from further claims, and (iii) return the servers to the
Company in exchange for an amount to be paid to the trustee.

Depreciation and Amortization

Depreciation and amortization expense was $370,278 for fiscal 2000 compared with
$299,402 for fiscal 1999.  The increase is a result of an increase in
depreciation expense in 2000 of approximately $108,147 that is associated with
additional computer and office equipment offset by a $30,000 decrease in the
amortization of the non-compete covenant associated with the Education Navigator
acquisition in 1998.

Preferred Stock Dividends

Preferred stock dividends increased to $208,137 in fiscal 2000 compared with
$34,021 for the comparable period in 1999.  The expense in fiscal 2000
represents a full year's worth of dividends payable to preferred shareholders
versus an average period outstanding of approximately 50 days in 1999.

Liquidity and Capital Resources

The Company changed its primary focus to providing Internet based database
applications to the clinical trial industry in mid 1998.  At that time it began
phasing out its systems integration business segment.  Since the Company made
TrialMaster and its related components its primary business the Company has
relied primarily on the proceeds from the sale of debt and equity securities to
fund its operations.

                                                                              23
<PAGE>

Cash and cash equivalents decreased by $1,036,305 to $90,958 at December 31,
2000.  This was the result of cash provided by financing activities of $3.8
million offset by cash used in operating activities of approximately $4.2
million and $664 thousand in investing activities.  The significant components
of the activity include a loss from operations of approximately $6.3 million,
cash used in an equity investment in EMN of $335,000, the purchase of property
and equipment of approximately $333,765, offset by an increase in accounts
payable and accrued expenses of approximately $795,000 and approximately $3.9
million the company raised through the sale of debt and equity securities.

Because of the losses experienced in 1999 and 2000 the Company has needed to
continue utilizing the proceeds from the sale of debt and equity securities to
fund its working capital needs.  The capital markets during the latter half of
fiscal 2000 provided a difficult climate for the raising of capital because of
the decline in value of publicly held technology stocks and the corresponding
apprehension on the part of investors to invest in technology oriented firms.
The softness in the capital markets coupled with the losses experienced caused
working capital shortfalls.  To compensate for its working capital needs the
Company has used a combination of equity financing and short-term bridge loans.

The Company's primary capital requirements are for daily operations and for the
continued development and marketing of the TrialMaster system.  The Company's
Management believes that its current available working capital, anticipated and
subsequent sales of stock and or debt financing will be sufficient to meet its
projected expenditures for a period of at least twelve months from December 31,
2000.  The Company's capital requirements, will need to be funded through debt
and equity financing, of which there can be no assurance that such financing
will be available or, if available, that it will be on terms favorable to the
Company.

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998.

RESULTS OF OPERATION

Revenues:

Total revenues decreased to $1,259,214 for year 1999 from $1,689,794 for year
1998. This decrease in revenue is attributed to a decision made by management to
cease its systems integration business during the 3rd quarter of 1999. All of
the Company's revenue is attributed to its systems integration business. The
Company has earned no revenue from its TrialMaster system.

Operating Expenses:

Total operating expenses increased to $2,561,092 for the year 1999 from $762,143
for the year 1998. This substantial increase in operating expenses is attributed
to a number of factors including the aggressive development and marketing of
TrialMaster and the continuing financial obligations associated with the
acquisition of Education Navigator in June of 1998 and the decision to focus the
Company's resources on the development of the TrialMaster Internet system.

Salaries and Wages

Salaries and wages increased to $784,635 for the year 1999 from $239,108 for the
year 1998. The increase in salaries and wages is attributed to an increase in
the number of employees. The Company currently has 20 employees and 1 part time
employee.

                                                                              24
<PAGE>

Independent Consultants.

Fees to independent consultants increased to $557,751 for the year 1999 from
$76,869 for the year 1998. The Company decided to outsource a number of areas
during the initial phase of developing, marketing and implementing the
TrialMaster system. These areas concern product development, marketing and
sales, and medical/strategic consulting.

ITEM 7. FINANCIAL STATEMENTS
Attached as Exhibit 99.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.

                                   PART III
                                   --------

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

David Ginsberg, D.O, 53, Chief Executive Officer, President and Director. Dr.
Ginsberg has served as a Director of the Company since October 2000 and shall
serve until the next annual meeting.  From 1998 to 2000 Dr. Ginsberg served as
Vice President Operations of Wyeth-Ayerst Research.  From 1997 to 1998 Dr.
Ginsberg served as Executive Director of Covance, Inc.  From 1994 to 1997 Dr.
Ginsberg served as President of Concorde Clinical Research.

Randall G. Smith, 43, Chief Technical Officer, Chairman of the Board and
Director. Mr. Smith has been a Director of the Company since 1997 and shall
serve until the next annual meeting. From 1997 until August 1, 2000 Mr. Smith
was President of the Company.  He is still an officer and director of OmniComm
Systems, Inc. From December 1995 to May 1997 Mr. Smith was Director of
Operations for Global Communications Group.

Cornelis F. Wit, 54, Director. Mr. Wit has been a Director of the Company since
1999 and shall serve until the next annual meeting. Mr. Wit became interim Chief
Executive Officer of the Company on May 29, 2000 and served in that capacity
until August 2, 2000.  Mr. Wit is President of Corporate Finance of Noesis
Capital Corp.  Mr. Wit was formerly President and CEO of DMV Inc., the North
American subsidiary of Campina Melkunie.

Guus van Kesteren, 59, Director. Mr. van Kesteren has been a Director of the
Company since 1999 and shall serve until the next annual meeting. Mr. van
Kesteren is a consultant to Noesis Capital Corp.  Mr. van Kesteren was formerly
Vice President of Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson,
responsible for the pharmaceutical business in South East Asia, Australia, and
New Zealand.

Jan Vandamme, 40, Director. Mr. Vandamme has been a Director of the Company
since 2000 and shall serve until the next annual meeting. Mr. Vandamme is CEO of
Profrigo SA, an 110-year old investment company which invests primarily in
Internet and communication technology companies in both Europe and the US. Prior
to his involvement in Profrigo SA, Mr. Vandamme was the founder of United
Callers, one of Europe's first Internet Access and Service Provider companies.

Ronald T. Linares, 38, Vice President of Finance, Chief Financial Officer and
Chief Accounting Officer.  Mr. Linares has served as an officer of the Company
since April 2000.  From 1996 to

                                                                              25
<PAGE>

1999 was the Chief Financial Officer or First Performance Corp. a consulting and
outsource provider to the banking industry. From 1994 to 1996 Mr. Linares was
the Chief Financial Officer of FOODQUEST, Inc. a restaurant operator and
franchisor.

Paige A. Harper, 36, General Counsel.  Ms. Harper has served as an officer of
the Company since April 2000.  From 1997 to 2000 Ms. Harper served as Senior
Counsel for the United States Securities and Exchange Commission.  From 1989 to
1997 Ms. Harper was an associate with Greenberg Traurig, P.A.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange Act")
requires our officers and directors, and persons who own more than 10% of the
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file.

Based on our review of the copies of such forms received by us, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, we believe that, during our fiscal year ended December 31, 2000,
all filing requirements applicable to our officers and directors and greater
than 10% beneficial owners were complied with.

ITEM 10.  EXECUTIVE COMPENSATION

Information concerning executive compensation appears in the Company's Proxy
Statement, under "Executive Compensation and Related Information." This portion
of the Proxy Statement is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information concerning security ownership appears in the Company's Proxy
Statement, under "Security Ownership of Principal Holders and Management".  This
portion of the Proxy Statement is incorporated herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 18, 2000 the Company borrowed $50,000 from Guus van Kesteren a Director
of the Company.  The promissory note carries an interest rate of 12% per annum
and has a maturity date of September 30, 2000.  In addition, the Company granted
Mr. van Kesteren an option to purchase 20,000 shares of the Company's common
stock at a price of $2.25.  The promissory note is currently in default and
continues to accrue interest at the rate of 12% per annum.

On December 22, 2000 the Company borrowed $60,000 from Guus van Kesteren a
Director of the Company.  The promissory note carries an interest rate of 5% per
annum and has a maturity date of January 1, 2001.  At the Company's request Mr.
van Kesteren elected to convert the promissory note as part of a private
placement of debt of the Company.  The private placement debt will accrue
interest at 12% per annum and is convertible into common stock of the Company at
a rate of $0.50 per share on January 31, 2002.

                                                                              26
<PAGE>

On November 22, 2000 the Company borrowed $150,000 from Profrigo, N.V.  The
promissory note carries an interest rate of 18% per annum and has a maturity
date of January 15, 2001.  In addition, the Company granted Profrigo an option
to purchase 150,000 shares of the Company's common stock at a price of $0.75.
The promissory note is currently in default and continues to accrue interest at
the rate of 18% per annum.

On October 26, 2000 the Company borrowed $250,000 from Profrigo N.V. a
shareholder of the Company.  The promissory note carries an interest rate of 5%
per annum and has a maturity date of January 1, 2001.  At the Company's request
Profrigo elected to convert the promissory note as part of a private placement
of debt of the Company.  The private placement debt will accrue interest at 12%
per annum and is convertible into common stock of the Company at a rate of $0.50
per share on January 31, 2002.

On December 22, 2000 the Company borrowed $50,000 from Profrigo N.V. a
shareholder of the Company.  The promissory note carries an interest rate of 5%
per annum and has a maturity date of January 1, 2001.  At the Company's request
Profrigo elected to convert the promissory note as part of a private placement
of debt of the Company.  The private placement debt will accrue interest at 12%
per annum and is convertible into common stock of the Company at a rate of $0.50
per share on January 31, 2002.

On August 17, 2000 the Company borrowed $100,000 from Noesis N.V. a shareholder
of the Company.  The promissory note carries an interest rate of 8% per annum
and has a maturity date of January 1, 2001.  At the Company's request Noesis
elected to convert the promissory note as part of a private placement of debt of
the Company.  The private placement debt will accrue interest at 12% per annum
and is convertible into common stock of the Company at a rate of $0.50 per share
on January 31, 2002.

                                                                              27
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

    2(a)  Agreement and Plan of Reorganization dated July 22, 1998: Incorporated
          herein by reference to Form 8-K, dated March 3, 1999. File No. 0-25203
     (b)  Amendment to Agreement and Plan of Reorganization: Incorporated herein
          by reference to Form 10-SB dated December 20, 1998.
     (c)  Plan of Merger: Incorporated herein by reference to Form 10-SB/A dated
          August 17, 1999.
     (d)  Agreement and Plan of Acquisition dated January 26, 2000 of WebIPA:
          Incorporated herein by reference to Form 8K dated February 9, 2000.
    3(i)  Certificate of Incorporation: Incorporated herein by reference to Form
          SB-2 #333-6410
    (ii)  By-Laws:  Incorporated herein by reference to Form SB-2 #333-6410
    4(a)  Amendment to Article of Inc. - Authorization to issue preferred
          shares. Incorporated herein by reference to Form 10-SB/A dated August
          17, 1999.
     (b)  Certificate of Designation - 5% Series A Convertible Preferred.
          Incorporated herein by reference to Form 10- SB/A dated August 17,
          1999.
     (c)  Certificate of Increase - 5% Series A Convertible Preferred dated
          December 17, 1999. Incorporated herein by reference to Form SB-2/A
          dated November 14, 2000.
   10(a)  Employment Contracts.
     (i)  Clifton Middleton - Employment Agreement. Incorporated herein by
          reference to Form 10-SB/A dated August 17, 1999.
    (ii)  Peter S. Knezevich - Employment Agreement and Stock Option Agreement.
          Incorporated herein by reference to Form 10-KSB dated March 29, 2000.
   (iii)  Randy Smith - Employment Agreement and Stock Option Agreement.
          Incorporated herein by reference to Form 10-KSB dated March 29, 2000.
    (iv)  David Ginsberg, D.O.  - Employment Agreement.  Incorporated herein by
          reference to Form SB-2/A dated November 14, 2000.

     (b)  Factor Agreement. Incorporated herein by reference to Form 10-SB/A
          dated August 17, 1999.
     (c)  1998 Stock Incentive Plan. Incorporated herein by reference to Form
          10-SB/A dated August 17, 1999.
     (d)  Consulting Contract - Larry Kronick. Incorporated herein by reference
          to Form 10-SB/A dated August 17, 1999.
     (e)  Medical Advisory Board Agreement.  Incorporated herein by reference to
          Form 10-SB/A dated August 17, 1999.
     (f)  Standard Agreement - Proprietary Protection.  Incorporated herein by
          reference to Form 10-SB/A dated August 17, 1999.
     99   Audited Financials Statements for the Year and Periods ended December
          31, 2000 and 1999.

(b)       Reports on Form 8-K
          None.

                                                                              28
<PAGE>

                                  SIGNATURES
                                  ----------

       In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

OmniComm Systems, Inc.
---------------------
Registrant
----------

By:    David Ginsberg, D.O., Director, Chief Executive Officer and  President
       ----------------------------------------------------------------------
Date:  September 12,2001
       -----------------

       In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

By:    David Ginsberg, D.O., Director, Chief Executive Officer and President
       ---------------------------------------------------------------------
Date:  September 12,2001
       -----------------

By:    Randall G. Smith, Director and Chief Technology Officer
       -------------------------------------------------------
Date:  September 12,2001
       -----------------

By:    Cornelis F. Wit, Director
       -------------------------
Date:  September 12, 2001
       ------------------

By:    Guus van Kesteren, Director
       ---------------------------
Date:  September 12,2001
       -----------------

By:    Jan Vandamme, Director
       ----------------------
Date:  September 12, 2001
       ------------------

By:    Ronald T. Linares, Vice President of Finance, Chief Financial and
       -----------------------------------------------------------------
       Accounting Officer
       ------------------
Date:  September 12,2001
       -----------------

By:    Paige A. Harper, General Counsel
       --------------------------------
Date:  September 12, 2001
       ------------------

                                                                              29
<PAGE>

                       Exhibit 99 - Financial Statements
                       ---------------------------------

                                   I N D E X
                                   ---------



                                                                        Page
                                                                        ----


REPORT OF CERTIFIED PUBLIC ACCOUNTANTS                                   32

CONSOLIDATED BALANCE SHEETS                                              33

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)             34-37

CONSOLIDATED STATEMENTS OF OPERATIONS                                    38

CONSOLIDATED STATEMENTS OF CASH FLOWS                                 39-40

NOTES TO THE FINANCIAL STATEMENTS                                     41-50

                                                                              30
<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
              --------------------------------------------------


To the Shareholders and Board of Directors
OMNICOMM SYSTEMS, INC.
Miami, Florida

We have audited the accompanying consolidated balance sheets of OMNICOMM
SYSTEMS, INC. as of December 31, 2000 and 1999 and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for each of the two years in the period ended December 31, 2000. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based upon
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements'
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
OMNICOMM SYSTEMS, INC. at December 31, 2000 and 1999, and the consolidated
results of their operations and cash flows for each of the two years in the
period ended December 31, 2000, in conformity with generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
that the Corporation will continue as a going concern. As discussed in Note 3 to
the consolidated financial statements, the Corporation has incurred losses and
negative cash flows from operations in recent years through December 31, 2000
and these conditions are expected to continue through 2001, raising substantial
doubt about the Corporation's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 3.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.


                                                    GREENBERG & COMPANY LLC

Springfield, New Jersey
February 2, 2001

                                                                              31
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                      2000                     1999
                                                                                      ----                     ----
                                    ASSETS
<S>                                                                                <C>                         <C>
CURRENT ASSETS
           Cash                                                                     $    90,958              $ 1,127,263
           Accounts receivable                                                            9,927                    8,458
           Inventory                                                                        -0-                   10,166
                                                                                    -----------              -----------
           Total current assets                                                         100,885                1,145,887

PROPERTY AND EQUIPMENT, Net                                                             486,481                  353,183

OTHER ASSETS
           Shareholder loans                                                                -0-                    3,406
           Intangible assets, net                                                        53,071                  169,629
           Goodwill, net                                                                 79,277                  237,832
           Other assets                                                                  25,160                   26,960
                                                                                    -----------              -----------

TOTAL ASSETS                                                                        $   744,874              $ 1,936,897
                                                                                    ===========              ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
           Accounts payable and accrued expenses                                      1,079,506              $   284,481
           Notes payable - current                                                      612,500                  177,500
           Notes payable related parties - current                                      660,000                      -0-
           Sales tax payable                                                                -0-                    1,818
           Deferred revenue                                                              26,861                      -0-
                                                                                    -----------              -----------
           Total current liabilities                                                  2,378,867                  463,799

CONVERTIBLE DEBT                                                                        462,500                  862,500
                                                                                    -----------              -----------
TOTAL LIABILITIES                                                                     2,841,367                1,326,299
                                                                                    -----------              -----------

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
           5% Series A convertible preferred stock, 5,000,000 shares authorized,      3,857,179                3,872,843
           4,260,224 and 4,117,500 issued and outstanding, respectively, at par
           Common stock - 20,000,000 shares authorized, 7,974,578 and 3,344,066           7,975                    3,344
           issued, respectively, at $.001 par value
           Additional paid in capital                                                 3,261,100                  238,007
           Less cost of treasury stock: Common - 620,951 and -0- shares                (293,912)                     -0-
           respectively
           Retained deficit                                                          (8,927,695)              (2,652,644)
           Subscriptions receivable                                                      (1,140)                (850,952)
                                                                                    -----------              -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                 (2,096,493)                 610,598
                                                                                    -----------              -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                $   744,874              $ 1,936,897
                                                                                    ===========              ===========
</TABLE>

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

                                                                              32
<PAGE>

                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
              FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31, 2000
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                 5% Series A Convertible
                                       Common Stock             Additional          Preferred Stock            Retained
                                 Number of        $.001         Paid In        Number of                        Earnings
                                  Shares        Par Value       Capital         Shares        $0.00 Par        (Deficit)
                                  ------        ---------       ------          ------        ---------        ----------
<S>                               <C>           <C>             <C>             <C>           <C>              <C>
Balance  at January 1, 1999       1,343,000       $1,343         $132,213           -0-            $-0-         $(311,407)

Issuance of common stock            250,000          250

Issuance of common stock for         86,400           86           56,059
services

Issuance of common stock            300,000          300            2,700

Issuance of common stock for         68,000           68           44,132
services

Issuance of common stock          1,296,666        1,297            2,903

Issuance of preferred stock,                                                     4,117,500    3,872,843
net of $134,590 issuance
costs

Net loss for the year                                                                                          (2,341,237)
ended Dec 31, 1999

Balance at January 1, 2000        3,344,066        3,344          238,007          4,117,500  3,872,843        (2,652,644)

<CAPTION>

                                                                          Total
                                Subscription        Treasury           Shareholders'
                                Receivable           Stock               Equity
                                ---------            ------              ------
<S>                             <C>                  <C>                 <C>
Balance  at January 1, 1999        $(952)                $-0-               $(178,803)

Issuance of common stock                                                          250

Issuance of common stock for                                                   56,145
services

Issuance of common stock                                                        3,000

Issuance of common stock for                                                   44,200
services

Issuance of common stock                                                        4,200

Issuance of preferred stock,    (850,000)                                   3,022,843
net of $134,590 issuance
costs

Net loss for the year                                                      (2,341,237)
ended Dec 31, 1999

Balance at January 1, 2000     (850,952)                  -0-                 610,598
</TABLE>

                                       33
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
             FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31, 2000
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                     5% Series A Convertible
                                         Common Stock            Additional              Preferred Stock           Retained
                                  Number of        $.001          Paid In           Number of                       Earnings
                                   Shares        Par Value        Capital            Shares        $0.00 Par        (Deficit)
                                   ------        ---------        ------             ------        ---------        ---------
<S>                              <C>            <C>              <C>                 <C>           <C>              <C>
Issuance of common stock for         40,000             40           89,960
services

Issuance of common stock            284,166            284

Exercise of stock options         1,025,895          1,026          297,024

Purchase of treasury stock          (20,951)
in connection with stock
appreciation rights

Payment on subscription
receivable

Acquisition of WebIPA, Inc.       1,200,000          1,200            4,433

Common stock re-acquired in        (600,000)
the acquisition of WebIPA

Issuance of preferred stock                                                           146,000       146,000

<CAPTION>


                                                                                 Total
                                     Subscription          Treasury           Shareholders'
                                      Receivable            Stock               Equity
                                      ----------            ------              ------
<S>                                  <C>                 <C>                 <C>
Issuance of common stock for                                                      90,000
services

Issuance of common stock                                                             284

Exercise of stock options                                                        298,050

Purchase of treasury stock                                  (293,312)           (293,312)
in connection with stock
appreciation rights

Payment on subscription                850,000                                   850,000
receivable

Acquisition of WebIPA, Inc.                                                        5,633

Common stock re-acquired in                                     (600)               (600)
the acquisition of WebIPA

Issuance of preferred stock                                                      146,000
</TABLE>

                                       34
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
              FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31,2000

<TABLE>
<CAPTION>
                                                             5% Series A Convertible
                                 Common Stock    Additional      Preferred Stock       Retained                            Total
                             Number of   $.001    Paid In    Number of                 Earnings  Subscription Treasury Shareholders'
                              Shares   Par Value  Capital     Shares       $0.00 Par   (Deficit)  Receivable   Stock      Equity
                              -------  ---------  -------     ------       ---------   ---------  ----------   -----      ------
<S>                          <C>       <C>        <C>        <C>           <C>         <C>       <C>          <C>       <C>
Issuance costs on preferred                                                (206,750)                                    (206,750)
stock

Conversion of conv. notes     320,000    320      366,393                                                                366,713
payable, net of issuance
costs of $33,287

Exercise of stock options      20,000     20       15,980                                                                 16,000

Exercise of stock warrants    481,834    482      963,186                                                                963,668

Exercise of stock warrants    187,954    188                                                          (188)                  -0-

Conversion of preferred        66,667     67       99,933    (100,000)     (100,000)                                         -0-
stock to common stock

Conversion of notes payable    91,608     92      206,026                                                                206,118
to common stock

Issuance of common stock for   70,990     71      188,784                                                                188,855
services
</TABLE>

                                                                              35
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
              FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31,2000

<TABLE>
<CAPTION>
                                       5% Series A Convertible
                                   Common Stock   Additional   Preferred Stock    Retained                             Total
                                Number of  $.001   Paid In  Number of             Earnings   Subscription Treasury  Shareholders'
                                 Shares  Par Value  Capital  Shares    $0.00 Par  (Deficit)   Receivable   Stock      Equity
                                 ------  ---------  -------  ------    ---------  ---------   ----------   -----      ------
<S>                             <C>      <C>        <C>      <C>       <C>        <C>         <C>         <C>        <C>
Issuance of common stock, net   668,334    668      600,833                                                           601,501
of issuance costs of $66,833

Issuance of preferred stock                                  126,781   190,172                                       190,172
for services

Conversion of notes payable                                   66,667   100,000                                       100,000
into preferred stock

Conversion of preferred stock    96,724     97      144,989  (96,724) (145,086)                                          -0-
to common stock

Issuance of common stock for     76,340     76       45,552                                                           45,628
services
</TABLE>

                                                                              36
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
              FOR THE PERIOD JANUARY 1, 1999 TO DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                       5% Series A Convertible
                        Common Stock      Additional        Preferred Stock        Retained                                Total
                    Number of    $.001     Paid In     Number of                   Earnings   Subscription  Treasury   Shareholders'
                     Shares    Par Value   Capital      Shares     $0.00 Par      (Deficit)    Receivable    Stock        Equity
                     ------    ---------   -------      ------     --------       ---------    ----------    -----        ------
<S>                 <C>        <C>        <C>          <C>         <C>           <C>          <C>           <C>        <C>
Net (loss) for
the year ended                                                                   (6,275,051)                            (6,275,051)
December 31, 2000

Balances  at
December 31, 2000   7,353,627   $7,975    $3,261,100   4,260,224   $3,857,179    $(8,927,695)   $(1,140)   $(293,912)   $(2,096,493)
                    =========   ======    ==========   =========   ==========    ============   ========   ==========   ============
</TABLE>

    See accompanying summary of accounting policies and notes to financial
                                  statements

                                                                              37
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                       For the years ended
                                                                            December 31,
                                                                        2000          1999
                                                                        ----          ----
<S>                                                                 <C>            <C>
REVENUES - SALES, Net                                               $    70,976    $ 1,259,214

COST OF SALES                                                            52,492      1,005,338
                                                                    -----------    -----------

GROSS MARGIN                                                             18,484        253,876

OTHER EXPENSES
          Salaries, employee benefits and related expenses            2,895,108        784,635
          Rent                                                          242,471        108,371
          Consulting - marketing and sales                              107,600        237,630
          Consulting - medical advisory                                  93,033        210,503
          Consulting - product development                               69,365        109,618
          Legal and professional fees                                   613,797         98,895
          Travel                                                        374,558        334,753
          Telephone and internet                                        197,858         67,109
          Factoring fees                                                    -0-          4,571
          Selling, general and administrative                           617,006        208,226
          Impairment of equity investment                               335,000            -0-
          Loss on subsidiary bankruptcy                                  78,131            -0-
          Interest expense, net                                          91,193         97,379
          Depreciation and amortization                                 370,278        299,402
                                                                    -----------    -----------

TOTAL OTHER EXPENSE                                                   6,085,398      2,561,092
                                                                    -----------    -----------

INCOME (LOSS) BEFORE TAXES AND PREFERRED DIVIDENDS                   (6,066,914)    (2,307,216)

INCOME TAX EXPENSE (BENEFIT)                                                -0-            -0-

PREFERRED STOCK DIVIDENDS                                              (208,137)       (34,021)
                                                                    -----------    -----------

NET INCOME (LOSS)                                                    (6,275,051)   $(2,341,237)
                                                                    ===========    ===========

BASIS AND DILUTED NET INCOME (LOSS) PER SHARE                       $     (1.07)   $     (1.27)
                                                                    ===========    ===========

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED     5,859,593      1,840,550
                                                                    ===========    ===========
</TABLE>

    See accompanying summary of accounting policies and notes to financial
                                  statements

                                       38
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                  For the years ended
                                                                                      December 31,
                                                                                2000                1999
                                                                                ----                ----
<S>                                                                          <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                       $(6,275,051)        $(2,341,237)
     Adjustment to reconcile net income to net cash provided by
     (used in) operating activities:
     Impairment of equity investment                                             335,000                 -0-
     Loss subsidiary bankruptcy                                                   78,131                 -0-
     Depreciation and amortization                                               370,278             299,402
     Common stock issued for services                                            324,482             104,545
     Preferred stock issued for services                                         190,172                 -0-
     Accrued placement agent fee                                                 (66,833)                -0-
     Change in assets and liabilities:
     Accounts receivable                                                          (1,468)             68,730
     Inventory                                                                    10,166              (5,926)
     Shareholder loans                                                             3,406
     Other assets                                                                  1,800             (17,660)
     Accounts payable and accrued expenses                                       795,026              (1,997)
     Sales tax payable                                                            (1,818)            (38,018)
     Due to factoring agent                                                          -0-            (139,012)
     Deferred revenue                                                             26,861                 -0-
                                                                             -----------         -----------
Net cash provided by (used in) operating activities                           (4,209,848)         (2,071,173)

CASH FLOWS FROM INVESTING ACTIVITIES
     Equity investment in EMN                                                   (335,000)                -0-
     Purchase of WebIPA                                                            5,033                 -0-
     Purchase of property and equipment                                         (333,765)           (347,405)
                                                                             -----------         -----------
Net cash provided by (used in) operating activities                             (663,732)           (347,405)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from convertible notes, net of issuance costs                           -0-             742,875
Payments on notes payable                                                        (45,000)           (267,500)
Proceeds from notes payable                                                    1,440,000                 -0-
Issuance of 5% Series A convertible preferred stock, net of issuance costs       789,250           3,022,843
Issuance of common stock                                                         668,618               3,250
Proceeds from stock warrant exercise                                             963,668                 -0-
Proceeds from stock option exercise                                               20,739                 -0-
                                                                             -----------         -----------
Net cash provided by (used in) financing activities                            3,837,275           3,501,468
                                                                             -----------         -----------

Net increase (decrease) in cash and cash equivalents                          (1,036,305)          1,082,890
Cash and cash equivalents at beginning of period                               1,127,263              44,373
                                                                             -----------         -----------
Cash and cash equivalents at end of period                                   $    90,958         $ 1,127,263
                                                                             ===========         ===========
</TABLE>

                                       39
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Continued)

                                                             For the years ended
                                                                 December 31,
                                                             2000         1999
                                                             ----         ----

          Supplemental Disclosure of Cash Flow Information:
          Cash paid during the period for:
          Income tax paid                                    $   -0-    $   -0-
                                                             =======    =======
          Interest paid                                      $65,827    $67,297
                                                             =======    =======

Non-Cash Investing and Financing Transactions;
     Acquisition of all of the outstanding common stock of WebIPA, Inc. during
     the quarter ended March 31, 2000.

          Assets acquired, fair value       $  5,033
          Cash acquired                        5,033
                                            --------
          Net cash paid for acquisition     $    -0-
                                            ========

In addition, the Company re-acquired 600,000 shares of its common stock that had
been provided to WebIPA in October 1999 as a deposit towards the consummation of
a transaction in which the Company would acquire all of the common stock of
WebIPA.  The re-acquired shares have been accounted for as treasury stock.

During the year ended December 31, 2000, $400,000 of convertible notes payable
were converted into 320,000 shares of common stock.

During the year ended December 31, 2000, 1,018,604 incentive stock options were
exercised utilizing stock appreciation rights.  The net proceeds to the company
would have been $293,312.  The company recorded a treasury stock transaction in
the amount of $293,312 to account for the stock appreciation rights.

During the year ended December 31, 2000, a promissory note with a face value of
$100,000 was converted into 66,667 shares of the Company's preferred stock at a
rate of $1.50 per share.

During the year ended December 31, 2000, promissory notes totaling $206,118 of
principal and interest were converted into 91,608 shares of the Company's
preferred stock at a rate of $2.25 per share.

During the year ended December 31, 2000, $245,086 of the Company's convertible
Series A Preferred Stock totaling 196,724 shares were converted into 163,391
shares of common stock.

     See accompanying summary of accounting policies and notes to financial
                                   statements

                                       40
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

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

          OmniComm Systems, Inc. (the "Company") was originally incorporated in
          Florida in February 1997.  The Company provides Internet based
          database applications that integrate significant components of the
          clinical trial process, including the collection, compilation and
          validation of data over the Internet.  The Company's primary products
          include TrialMaster(TM) and WebIPA(R).

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

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

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

          CONSOLIDATION
          -------------

          The Company's accounts include those of its two wholly owned
          subsidiaries, OmniCommerce and OmniTrial B.V.  All significant
          intercompany transactions have been eliminated in consolidation.

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

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

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

          The Financial Accounting Standards Board issued Statement of Financial
          Accounting Standards ("SFAS") No. 128, "Earnings per Share."  SFAS 128
          replaced the previously reported primary and fully diluted earnings
          per share with basic and diluted earnings per share.  Unlike primary
          earnings per share, basic earnings per share excludes any dilutive
          effects of options, warrants, and convertible securities. The diluted
          earnings per share calculation is very similar to the previously fully
          diluted earnings per share calculation method.  SFAS 128 became
          effective December 31, 1997.

          Basic earnings per share were calculated using the weighted average
          number of shares outstanding of 5,859,593 and 1,840,550 for the years
          ended December 31, 2000 and 1999; respectively.  There were no
          differences between basic and diluted earnings per share.  Options to
          purchase 4,301,900 shares of common stock at prices ranging from $.60
          to $6.50 per share were outstanding at December 31, 2000, but they
          were not included in the computation of diluted earnings per share
          because the options have an anti-dilutive effect.  The effect of the
          convertible debt and convertible preferred stock are anti-dilutive.

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

          During the year ended December 31, 1999, the Company designated
          5,000,000 shares of its 10,000,000 authorized preferred shares as 5%
          Series A Convertible Preferred Stock.  Each share is convertible into
          common stock at $1.50 per share.  In the event of liquidation, these
          shareholders will be entitled to receive in preference to the holders
          of common stock an amount equal to their original purchase price plus
          all accrued but unpaid dividends.  Dividends are payable at the rate
          of 5% per annum, payable semi-annually.

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

          Advertising costs are expensed as incurred.  Advertising costs were
          $127,175 and $7,599 for the years ended December 31, 2000 and 1999
          respectively.

                                       41
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

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

          Certain items from prior periods within the financial statements have
          been reclassified to conform to current period classifications.

          INTANGIBLE ASSETS AND GOODWILL
          ------------------------------

          Included in Intangible Assets are the following assets:

                                                          December 31, 2000
                                                             Accumulated
                                            Cost             Amortization
                                            ----             ------------
          Covenant not to compete              $120,000             $120,000
          Software development costs             87,500               72,917
          Organization costs                        539                  539
          Debt acquisition costs                119,625               81,137
                                               --------             --------
                                               $327,664             $274,593
                                               ========             ========

                                                          December 31,1999
                                                            Accumulated
                                            Cost            Amortization
                                            ----            ------------
          Covenant not to compete              $120,000             $ 90,000
          Software development costs             87,500               43,750
          Organization costs                        539                  360
          Debt acquisition costs                119,625               23,925
                                               --------             --------
                                               $327,664             $158,035
                                               ========             ========

          The covenant not to compete and the software development costs were
          acquired as a result of the acquisition of Education Navigator, Inc.
          (EdNav) on June 26, 1998.  The covenant is for a two-year period and
          is being amortized ratably over that time.  The software development
          costs were capitalized and are being amortized ratably over a three-
          year period, as that is the expected life of the various products.
          Amortization expense was $30,000 on the covenant not to compete, and
          $29,167 for software development costs for the year ended December 31,
          2000.

          During the first nine months of 1999, the Company issued Convertible
          Notes totaling $862,500.  The fees of $119,625 associated with these
          notes are being amortized ratably over the term of the notes, which is
          five years.  Amortization expense of the debt acquisition costs
          totaled $23,925 for the year ended December 31, 2000, and
          approximately $33,287 of the debt acquisition costs were reclassified
          as stock issuance costs in connection with the conversion of $400,000
          (original cost) worth of the convertible notes into common stock of
          the Company.

          Included in Goodwill, as a result of the EdNav acquisition at December
          31, 2000 and December 31, 1999 is the cost of $475,665 and accumulated
          amortization of $396,388 and $237,833 respectively.  The goodwill is
          being amortized ratably over a period of three years.  Goodwill
          amortization totaled $158,555 for the year ended December 31, 2000.

                                       42
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

          PROPERTY AND EQUIPMENT, AT COST
          -------------------------------

          Property and equipment consists of the following:


<TABLE>
<CAPTION>
                                                            December 31, 2000                            December 31, 1999
                                                               Accumulated                                  Accumulated
                                                  Cost         Depreciation                     Cost        Depreciation
                                                  ----         ------------                     -----       ------------
          <S>                                      <C>               <C>                     <C>                    <C>
          Computer and office equipment            $387,862             $ 88,812               $195,340               $30,146
          Leasehold improvements                      1,699                  201                      0                     0
          Computer software                         212,412               60,067                167,220                 1,034
          Office furniture                           42,350                8,762                 23,070                 1,267
                                                   --------             --------               --------               -------
                                                   $644,323             $157,842               $385,630               $32,447
                                                   ========             ========               ========               =======
</TABLE>


          Renewals and betterments are capitalized; maintenance and repairs are
          expensed as incurred.

          Depreciation is calculated using the straight-line method over the
          asset's estimated useful life, which is 5 years for leasehold
          improvements, equipment and furniture and 3 years for software.

          Depreciation expense for the years ended December 31, 2000 and 1999
          was $128,454 and $20,307 respectively.  Included in depreciation
          expense for 2000 is approximately $3,059 related to assets from the
          Company's European subsidiary.  As described in Note 12 that
          subsidiary has filed for bankruptcy protection under the laws of the
          Netherlands and accordingly those assets have been excluded from the
          Company's balance sheet as of December 31, 2000 since the
          recoverability of any of those assets is considered unlikely.

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

          Deferred revenue represents cash advances received in excess of
          revenue earned on on-going contracts.  Payment terms vary with each
          contract but may include an initial payment at the time the contract
          is executed, with future payments dependent upon the completion of
          certain contract phases or targeted milestones.  In the event of
          contract cancellation, the Company is entitled to payment for all work
          performed through the point of cancellation.  The Company had $26,861
          in deferred revenue relating to one contract for services to be
          performed over the next six months.

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

          The Company recognizes sales, for both financial statement and tax
          purposes, when its products are shipped and when services are
          provided. The Company had $26,861 in deferred revenue relating to one
          contract for services to be rendered over the next six months.

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

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities at the date of the financial statements and the reported
          amounts of revenues and expenses during the reporting period.  Actual
          results could differ from those estimates.

                                       43
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

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

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

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

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

          The Company adopted SFAS 123 to account for its stock based
          compensation plans.  SFAS 123 defines the "fair value based method" of
          accounting for stock based compensation.  Under the fair value based
          method, compensation cost is measured at the grant date based on the
          value of the award and is recognized over the service period.

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

          Basic earnings per shares ("EPS") is computed by dividing income
          available to common shareholders (which for the Company equals its net
          loss) by the weighted average number of common shares outstanding, and
          dilutive EPS adds the dilutive effect of stock options and other
          common stock equivalents.  Antidilutive shares aggregating 4,658,515
          have been omitted from the calculation of dilutive EPS for the fiscal
          year ended December 31, 2000.  A reconciliation between numerators and
          denominators of the basic and dilutive earnings per shares is as
          follows:

<TABLE>
<CAPTION>
                               Year Ended December 31, 2000                      Year Ended December 31, 1999
                               ----------------------------                      ----------------------------
                        Net Income         Shares        Per-Share        Net Income          Shares          Per-Share
                          (Loss)                                            (Loss)
                        Numerator         Denominator      Amount           Numerator        Denominator        Amount
                        ---------         -----------      ------          ----------       ------------       --------
<S>                     <C>               <C>              <C>             <C>              <C>                <C>
Basic EPS               $(6,275,051)        5,859,593      $(1.07)        $(2,341,237)          1,840,550        $(1.27)
Effect of Dilutive
Securities
None.                            -0-               -0-         -0-                 -0-                 -0-           -0-
                        -----------         ---------    --------         -----------          ----------      --------
Diluted EPS             $(6,275,051)        5,859,593      $(1.07)        $(2,341,237)          1,840,550        $(1.27)
                        ===========         =========    ========         ===========          ==========      ========
</TABLE>

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

          In June 1998, the Financial Accounting Standards Board issued
          Statement of Financial Accounting Standards No. 133 "Accounting for
          Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which
          is effective for all fiscal quarter of all fiscals years beginning
          after June 15, 2000, as amended by SFAS No. 137.  In June 2000, SFAS
          No. 138 was issued which amended certain provisions of SFAS No. 133.
          SFAS No. 133 establishes accounting and reporting standards for
          derivative instruments, including certain derivative instruments
          imbedded in other contracts, and for hedging activities.  In
          accordance with SFAS No. 133, an entity is required to recognize all
          derivatives as either assets or liabilities in the statement of
          financial position and measure those instruments at fair value.  SFAS
          No. 133 requires that changes in the derivative's fair value be
          recognized currently in earnings unless specific hedge accounting
          criteria are met.  Special accounting for qualifying hedges allows a
          derivative's gains and losses to offset related results on the hedged
          item in the income statement and requires that a company formally
          document, designate and assess the effectiveness of transactions that
          receive hedge accounting. The Company has not yet completed its
          evaluation of the impact of SFAS No. 133 on its consolidated financial
          statements.  However, the Company does not believe that the
          implementation of SFAS No. 133 will have a significant effect on its
          results of operations.

                                       44
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

          FASB Interpretation No. 44 "Accounting for Certain Transactions
          Involving Stock Compensation" ("FIN No. 44"), provides guidance for
          applying APB Opinion No. 25, "Accounting for Stock Issued to
          Employees".  With certain exceptions, FIN No. 44 applies prospectively
          to new awards, exchanges of awards in a business combination,
          modifications to outstanding awards and changes in grantee status on
          or after July 1, 2000.  The Company does not believe that the
          implementation of FIN No. 44 will have a significant effect on its
          results of operations.

          In December 1999, The SEC issued Staff Accounting Bulletin No. 101,
          "Revenue Recognition Financial Statements" ("SAB No. 101"), which
          summarizes certain of the SEC staff's views in applying generally
          accounted principles to revenue recognition in financial statements.
          The Company will be required to adopt SAB No. 101 during fiscal year
          2001.  The Company does not believe that the implementation of SAB No.
          101 will have a significant effect on its results of operations.


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

          The Company has incurred substantial losses in 1999 and 2000.  Until
          such time that the Company's products and services can be successfully
          marketed the Company will continue to need to fulfill working capital
          requirements through the sale of stock and the issuance of debt.  The
          inability of the company to continue its operations, as a going
          concern would impact the recoverability and classification of recorded
          asset amounts.

          The ability of the Company to continue in existence is dependent on
          its having sufficient financial resources to bring products and
          services to market for marketplace acceptance.  As a result of its
          significant losses, negative cash flows from operations, and
          accumulated deficits for the periods ending December 31, 2000, there
          is doubt about the Company's ability to continue as a going concern.

          Management believes that its current available working capital,
          anticipated contract revenues and subsequent sales of stock and or
          placement of debt instruments will be sufficient to meet its projected
          expenditures for a period of at least twelve months from December 31,
          2000.  However, any projections of future cash needs and cash flows
          are subject to substantial uncertainty.  There can be no assurance
          that financing will be available in amounts or on terms acceptable to
          us, if at all.

NOTE 4:   ACQUISITION
          -----------

          WebIPA, Inc. Acquisition
          ------------------------

          On February 9, 2000, the Company acquired WebIPA, Inc., a Florida
          corporation pursuant to an Agreement and Plan of Acquisition dated
          January 26, 2000. In consideration of receiving all of the issued and
          outstanding shares of WebIPA Inc., OmniComm issued 1,200,000
          restricted shares of common stock to the shareholders of WebIPA Inc.

          The Company accounted for its acquisition of WebIPA under the purchase
          method of accounting.  At the time of the transaction WebIPA was a
          development stage company with approximately $5,033 in assets and no
          recorded liabilities.

                                       45
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

NOTE 5:   EQUITY INVESTMENT
          -----------------

          European Medical Network (EMN) Investment, at cost

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

          On March 20, 2000, the Company paid EMN $335,000, received 10% of
          EMN's equity and a seat on EMN's board.  On April 20, 2000, the
          Company did not make the second payment of $310,000 or the stock
          payment of 41,883 shares to EMN and the stock purchase agreement did
          not close.  On July 11, 2000, the Company and EMN agreed to
          renegotiate the terms of their agreement subject to the Company's
          success in finding adequate financing.  As part of the renegotiation
          the Company has resigned its seat on EMN's board and offered to sell
          its 10% interest back to EMN.  The Company accounts for its investment
          in EMN under the cost method of accounting.  The Company has
          established a valuation allowance of $335,000 against its investment
          in EMN to reflect the uncertainty of the fair market value of the
          investment as of December 31, 2000.


NOTE 6:   NOTES PAYBLE
          ------------

          Education Navigator
          -------------------

          As of December 31, 2000, the Company owed $157,500 to the selling
          stockholders of Education Navigator.  The notes are payable over two
          years and bear interest at 5.51% annually.  The amount payable during
          fiscal 2000 is $177,500.  At March 31, 2001 the Company was in default
          under the terms of the promissory notes governing the debt.

          Short-term Borrowings
          ---------------------

          At December 31, 2000 the Company owed $1,115,000 under short-term
          notes payable.  The notes bear interest at rates ranging from 8% to
          18%.  The average original term of the promissory notes is 64 days.
          One of the notes is collateralized by common stock owned by an Officer
          of the Company, the other notes are not collateralized.  The note
          holders were granted stock warrants in the Company at prices ranging
          from $.50 to $2.25 per share.  As of December 31, 2000 the Company was
          in default on five of the notes with face value amounts of $380,000
          and principal owed of approximately $355,000.

          Holders of notes totaling approximately $610,000 have agreed to
          participate in a private placement of the Company's debt.
          Accordingly, the notes representing that indebtedness will be
          converted into one-year 12% convertible notes.  The notes are
          convertible into common stock of the Company at a rate of $0.50 per
          share.

                                       46
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

NOTE 7:  CONVERTIBLE NOTES
         -----------------

          During the first quarter of 1999, the Company issued Convertible Notes
          Payable in the amount of $862,500 pursuant to a Confidential Private
          Placement Memorandum.  There were costs of $119,625 associated with
          this offering.  The Company also granted the agent the option to
          purchase 250,000 common shares at $.001.  The agent exercised the
          option.  The net proceeds to the Company were $742,875.  The notes
          bear interest at ten percent annually, payable semi-annually.  The
          notes are convertible after maturity, which is five years, into shares
          of common stock of the Company at $1.25 per share, including
          registration rights. As of December 31, 2000 approximately $400,000 of
          the Convertible Notes had been converted into 320,000 shares of common
          stock of the Company.

NOTE 8:  COMMITMENTS AND CONTINGENCIES
         -----------------------------

          The Company currently leases office space requiring minimum annual
          base rental payments for the fiscal periods shown as follows:

              2001        $123,114
              2002         103,576
              2003               0
              2004               0
              2005               0
                          --------
              Total       $226,690
                          ========

          In addition, to annual base rental payments, the company must pay an
          annual escalation for operating expenses as determined in the lease.

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

          On or about September 6, 2000, the Company's wholly owned subsidiary,
          OmniTrial B.V. ("OmniTrial") submitted a petition for bankruptcy
          protection from the bankruptcy court of the Netherlands.  The court
          appointed a liquidating trustee and the case is still pending.  The
          Company is claiming that certain assets of OmniTrial have been paid
          for by the Company and therefore should not be part of the liquidating
          assets of OmniTrial.  The bankruptcy trustee has rejected that claim
          and has told the Company that the assets as part of the OmniTrial
          bankruptcy estate would be sold to diminish any deficiency of the
          estate.  The Company would like to resolve its disputes with the
          trustee, but if unable to do so, intends to contest the outstanding
          matters in the bankruptcy court of the Netherlands.

          On January 26, 2001, a former employee of the Company, Eugene A.
          Gordon filed a lawsuit in the Circuit Court of the 11/th/ Judicial
          Circuit in and for Dade County, Florida alleging breach of his
          employment contract with the Company.  The plaintiff alleges the
          Company owes him more than $100,000 for back payment of salary per the
          terms of his employment contract.  The Company disputes Mr. Gordon's
          allegations and is vigorously defending this lawsuit.

          On February 2, 2001, an advertising firm, Wray Ward Laseter filed a
          lawsuit in the Superior Court of North Carolina.  The plaintiff
          alleges claims totaling approximately $84,160 against the Company for
          fees associated with advertising, marketing and public relations
          services provided between March and September 2000.  The Company
          intends to vigorously defend this lawsuit.

          On February 16, 2001, a staffing agency, Temp Art, Inc. filed a
          lawsuit in the County Court in and for Miami-Dade County, Florida.
          The plaintiff alleges the Company breached its contract and owes
          approximately $13,126 for back payment of services rendered plus
          interest and costs.  The Company disputes Temp Art's allegations and
          is vigorously defending this lawsuit.

                                       47
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

          In December 2000, the Company received a demand letter from a former
          employee for fees owed relating to an advisers agreement between the
          him and the Company.  The demand letter sought $37,500 in the form of
          past due fees.  The former employee later increased his demand to
          $50,000.  After its initial settlement offer was rejected, the Company
          advised the former employee that it intended to vigorously defend
          itself against any claims and assert its own claims against him.  The
          Company disputes his allegations and intends to vigorously defend
          itself should a lawsuit be filed.

NOTE 9:   RELATED PARTY TRANSACTIONS
          --------------------------

          The Company was owed $0 and $3,406 at December 30, 2000 and December
          31, 1999, respectively, from a shareholder.  The interest rate was 6%
          annually.

          On July 18, 2000 the Company borrowed $50,000 from Guus van Kesteren a
          Director of the Company.  The promissory note carries an interest rate
          of 12% per annum and has a maturity date of September 30, 2000.  In
          addition, the Company granted Mr. van Kesteren an option to purchase
          20,000 shares of the Company's common stock at a price of $2.25.  The
          promissory note is currently in default and continues to accrue
          interest at the rate of 12% per annum.

          On December 22, 2000 the Company borrowed $60,000 from Guus van
          Kesteren a Director of the Company.  The promissory note carries an
          interest rate of 5% per annum and has a maturity date of January 1,
          2001.  At the Company's request Mr. van Kesteren elected to convert
          the promissory note as part of a private placement of debt of the
          Company.  The private placement debt will accrue interest at 12% per
          annum and is convertible into common stock of the Company at a rate of
          $0.50 per share on January 31, 2002.

          On November 22, 2000 the Company borrowed $150,000 from Profrigo, N.V.
          The promissory note carries an interest rate of 18% per annum and has
          a maturity date of January 15, 2001.  In addition, the Company granted
          Profrigo an option to purchase 150,000 shares of the Company's common
          stock at a price of $0.75.  The promissory note is currently in
          default and continues to accrue interest at the rate of 18% per annum.

          On October 26, 2000 the Company borrowed $250,000 from Profrigo N.V. a
          shareholder of the Company.  The promissory note carries an interest
          rate of 5% per annum and has a maturity date of January 1, 2001.  At
          the Company's request Profrigo elected to convert the promissory note
          as part of a private placement of debt of the Company.  The private
          placement debt will accrue interest at 12% per annum and is
          convertible into common stock of the Company at a rate of $0.50 per
          share on January 31, 2002.

          On December 22, 2000 the Company borrowed $50,000 from Profrigo N.V. a
          shareholder of the Company.  The promissory note carries an interest
          rate of 5% per annum and has a maturity date of January 1, 2001.  At
          the Company's request Profrigo elected to convert the promissory note
          as part of a private placement of debt of the Company.  The private
          placement debt will accrue interest at 12% per annum and is
          convertible into common stock of the Company at a rate of $0.50 per
          share on January 31, 2002.

          On August  17, 2000 the Company borrowed $100,000 from Noesis N.V. a
          shareholder of the Company.  The promissory note carries an interest
          rate of 8% per annum and has a maturity date of January 1, 2001.  At
          the Company's request Noesis elected to convert the promissory note as
          part of a private placement of debt of the Company.  The private
          placement debt will accrue interest at 12% per annum and is
          convertible into common stock of the Company at a rate of $0.50 per
          share on January 31, 2002.

                                       48
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

NOTE 10:  POST-RETIREMENT EMPLOYEE BENEFITS
          ---------------------------------

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

NOTE 11:  STOCK BASED COMPENSATION
          ------------------------

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

          Statement of Financial Accounting Standards No. 123, "Accounting for
          Stock-Based Compensation", ("SFAS No. 123") requires that stock awards
          granted subsequent to January 1, 1995, be recognized as compensation
          expense based on their fair value at the date of grant.
          Alternatively, a company may use Accounting Principles Board Opinion
          No. 25, "Accounting for Stock Issued to Employees", ("APB 25") and
          disclose pro forma income amounts which would have resulted from
          recognizing such awards at their fair value.  The Company has selected
          to account for stock-based compensation expense under SFAS No. 123.


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

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

          The Company's share option activity and related information is
          summarized below:

<TABLE>
<CAPTION>
                                                      Year ended December 31,
                                                          1999                                 2000
                                                                Weighted                               Weighted
                                                                Average                                Average
                                                                Exercise                               Exercise
                                                  Options        Price                Options            Price
          <S>                                     <C>            <C>                  <C>              <C>
          Outstanding at beginning of period          50,000          $     1.00         3,502,916            $1.00
                Granted                            3,512,916          $     0.99         1,851,994            $3.46
                Exercised                                 -0-         $     0.00         1,045,894            $0.30
                Cancelled                             60,000          $     0.60         1,053,010            $1.97
                                                   ---------          ----------         ---------            -----

          Outstanding at end of period             3,502,916          $     1.00         3,316,006            $2.28
                                                   =========          ==========         ==========           =====
          Exercisable at end of period             1,248,953          $     0.40         1,512,848            $2.19
                                                   =========          ==========         ==========           =====
</TABLE>


          During the second and third quarters of 1999, the Company issued
          86,377 and 68,000, respectively, common shares to employees and
          advisors under its stock bonus arrangement.  The Company adopted SFAS
          123 to account for its stock based compensation plans.  SFAS 123
          defines the "fair value based method" of accounting for stock based
          compensation.  Under the fair value based method, compensation cost is
          measured at the grant date based on the value of the award and is
          recognized over the service period.  In accordance with this method,
          the Company recognized expense of  $56,145 and $44,200, respectively,
          during the second and third quarters of 1999, and $41,980 during the
          third quarter of 2000.

                                       49
<PAGE>

                            OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                  (Continued)

          During 2000 the Company issued an aggregate of 187,330 shares of
          common stock to employees and advisors with a fair market value as
          measured on the date of grant of $324,482 for services rendered under
          employment and consulting agreement.  In addition, the Company issued
          126,781 shares of preferred stock with a fair market value as measured
          on the date of grant of $190,172 to a financial advisor in accordance
          with a consulting agreement.

NOTE 12:  OMNITRIAL, B.V. BANKRUPTCY
          --------------------------

          OmniTrial B.V., a wholly owned subsidiary of the Company, was
          incorporated on October 15, 1999, in The Netherlands.  On August 28,
          2000, the Board of Directors of the Company voted to authorize David
          Ginsberg, D.O., it's President and Chief Executive Officer, to vote on
          any resolution pertaining to OmniTrial, including approval of a
          bankruptcy filing.  On August 30, 2000, the Board of Directors of
          OmniTrial issued a written consent to apply for bankruptcy, which was
          instituted in The Netherlands on or about September 6, 2000.  A
          liquidating trustee was appointed and the case is still pending as of
          this date.

          The Company requested that the bankruptcy trustee return to the
          Company several computer servers, which the Company claimed it owned
          separately from OmniTrial.  The bankruptcy trustee refused to return
          the servers and alleged that the Company caused the bankruptcy due to
          its mismanagement of OmniTrial.  The Company is currently attempting
          to negotiate a settlement with the trustee.  If the Company is unable
          to settle the matter with the trustee, it intends to contest the
          outstanding matters in the bankruptcy court in The Netherlands.



NOTE 13:  INCOME TAXES
          ------------
          Income taxes are accrued at statutory US and state income tax rates.
          Income tax expense is as follows:

<TABLE>
<CAPTION>
                                                                               12/31/00                    12/31/99
                                                                               ========                    ========
         <S>                                                               <C>                            <C>

          Current tax expense (benefit):
                   Income tax at statutory rates                                 $        -0-                   $      -0-
          Deferred tax expense (benefit):
                  Amortization of goodwill and covenant                              (70,640)                    (105,243)
                  Operating loss carryforward                                     (2,212,340)                    (864,806)
                                                                                 -----------                    ---------
                                                                                  (2,282,980)                    (970,049)
          Valuation allowance                                                      2,282,980                      970,049
                                                                                 -----------                    ---------
          Total tax expense (benefit)                                            $        -0-                   $      -0-
                                                                                 ===========                    =========
</TABLE>

          The tax effects of significant temporary differences, which comprise
          the deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                         12/31/00                       12/31/99
                                                         ========                      =========
          <S>                                         <C>                            <C>
          Deferred tax assets:
          Amortization of intangibles                 $   224,302                    $   153,662
          Operating loss carryforwards                  3,136,089                        923,749
                       Gross deferred tax assets        3,360,391                      1,077,411
                       Valuation allowance             (3,360,391)                    (1,077,411)
                                                      -----------                    -----------
                       Net deferred tax asset         $       -0-                           -0-$
                                                      ===========                    ===========
</TABLE>

          The Company has net operating loss carryforwards (NOL) for income tax
          purposes of approximately $8,322,000.  This loss is allowed to be
          offset against future income until the year 2020 when the NOL's will
          expire.  Other timing differences relate to depreciation and
          amortization for the stock acquisition of Education Navigator in 1998.
          The tax benefits relating to all timing differences have been fully
          reserved for in the valuation allowance account due to the lack of
          operating history and the substantial losses incurred in 2000.

                                       50