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                    U.S. Securities and Exchange Commission

                            Washington, D.C.  20549

                                  Form 10-KSB
(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, 2001

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

     For the transition period from __________ to

     Commission file number

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

                                   Delaware
                                   --------
             (State or other jurisdiction of incorporation or organization)

                                  11-3349762
                                  ----------
                     (I.R.S. Employer Identification No.)

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

                   Issuer's telephone number (954) 473-1254

             Securities registered under Section 12(b) of the Exchange Act:

                                     None
                                     ----
                             (Title of each class)

                   Name of each exchange on which registered

                                not applicable
                                --------------

             Securities registered under Section 12(g) of the Exchange Act:
             -------------------------------------------------------------

                                 Common Stock

Check whether the issuer (1) 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
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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 is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $170,522 for the 12
months ended December 31, 2001.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.  The aggregate market value of the voting stock held by non-affiliates
computed at the closing price of the registrant's common stock on March 18,
2002 is approximately $2,927,436.

State the number of shares outstanding of each of the issuer's class of common
equity, as of the latest practicable date. As of March 12, 2002, 8,323,697
shares of common stock are issued and outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) of
the Securities Act of 1933 ("Securities Act").  Not Applicable.

Transitional Small Business Disclosure Form (check one):

Yes __     No  X
              --

   CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

     The discussion in this Annual Report on Form 10-KSB regarding the OmniComm
Systems, Inc., its business and operations includes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1996.  Such statements consist of any statement other than a recitation of
historical fact and can be identified by the use of forward-looking terminology
such as "may," "expect," "anticipate," "estimate" or "continue" or the negative
thereof or other variations thereon or comparable terminology.  The reader is
cautioned that all forward-looking statements are necessarily speculative and
there are certain risks and uncertainties that could cause actual events or
results to differ materially from those referred to in such forward looking
statements.  We do not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by us over time means
that actual events are bearing out as estimated in such forward looking
statements.

     When used in this Annual Report, the terms " we," "our,"  "us," and
"OmniComm" refers to OmniComm Systems, Inc., a Delaware corporation and its
subsidiaries OmniCommerce Systems, INC. and OmniTrial, B.V.
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                                    PART I

ITEM 1.    DESCRIPTION OF BUSINESS

     We are an Internet-based healthcare technology company that provides
Web-based electronic data capture ("EDC") solutions and related value-added
services to pharmaceutical and biotechnology companies, clinical research
organizations, and other clinical trial sponsors.  Our Internet-based
TrialMaster(R) software allows clinical trial sponsors and investigative sites
to securely collect, validate, transmit, and analyze clinical study data
including patient histories, patient dosing, adverse events, and other clinical
trial information.  At every research site, clinical research data is entered
electronically.  All participants in the clinical trial process are connected
and have access to the data in real time.  Clinical trial sponsors can review,
monitor, and analyze the data remotely and in real time.

PRODUCT

     Our TrialMaster software is a Web-based application that uses Internet
technologies for electronic data capture to conduct and manage clinical trial
data from geographically dispersed sites.

     We believe TrialMaster offers the following advantages which increase the
efficiency and decrease the costs of the clinical trial process :

     **    Accelerates initiation and completion of clinical trials by
           approximately 30%;
     **    Real-time access to clinical trial data;
     **    Eliminates double data entry and paper based reports;
     **    Decreases the cost of data collection in clinical trials by up to
           80%;
     **    Real time connection between all participants in the clinical trial
           process;
     **    Improves data entry accuracy by up to 80%; and
     **    Secures collection and storage of clinical trial data, through
           encryption and multiserver storage in two locations.

MARKET OPPORTUNITY

     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 - a
clinical trial.

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Clinical trials are currently conducted in an antiquated manner and fail to
optimize the resources available for a successful clinical trial.  We believe
that our solution significantly reduces costs, improves data quality and
expedites results.  The data integrity, system reliability, management control
and auditable quality of TrialMaster will aid any pharmaceutical, medical
device or biotechnology company that wants to improve clinical trial
efficiencies, speed results and ensure regulatory compliance.

     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.  The regulatory
review process for new drugs and devices is time consuming and expensive.  A
new drug application ("NDA") can take up to two years before it is approved by
the FDA.  This is in addition to three to five years of studies required to
provide the data to support the NDA.  The amount of money and time currently
spent on clinical trials is very large. The following points are illustrative
of the dynamics:

     **    It can cost as much as $800,000,000 to bring a drug to market.
     **    Drug companies lose as much as $13 million in potential revenue for
           each day a trial is delayed on a blockbuster drug such as Lipitor.

     We believe TrialMaster provides us with strong market opportunities,
including:

THE CLINICAL TRIAL INDUSTRY IS A LARGE AND GROWING INDUSTRY.

     The clinical trial industry currently represents a $54 billion a year
marketplace. The expected 14% annual growth in the clinical trial industry is
powered by the development of new drugs and treatments, increasing complexity
and number of clinical trials, increasing number of patients in the average
application, aging population and strong demand for drugs to treat this aging
population.

     UBS Warburg estimates that in 2000 $3.7 billion was spent in the United
States on clinical research data management and handling. We believe that in
2000 at least 5%-10% of all clinical trials were conducted using Web-based
(EDC) solutions.

INDUSTRY TRENDS

     Industry and regulatory trends have led pharmaceutical, biotechnology, and
medical device companies to increase research and development for proprietary
new drugs and medical devices.  To keep pace in today's market, companies must
conduct both more and increasingly complex clinical trials, develop
multinational

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clinical trial capability, and, at the same time, control costs.  These trends
have created even greater competitive demands on the industry to bring products
to market efficiently and quickly.

COMPETITIVE PRESSURES

     Increased competition and pressure from generic brands and increased
volume of new drug candidates from the genomics industry has forced
pharmaceutical companies to shorten the clinical trial processes to bring new
drugs to market as soon as possible.  New drugs are also needed because
shortened life cycles of drugs have narrowed the window of opportunity for
companies to enjoy extraordinary returns from patented drugs.  According to
Accenture, pharmaceutical companies are striving to select winning drugs
earlier and to reduce the time it takes to bring the drug to market by
one-third.

EXPENSIVE AND INEFFICIENT PAPER-BASED CLINICAL TRIALS COMPARED TO EDC SOLUTION

     The bottleneck in the clinical trials process is in the collection,
validation and management of data.  Traditional paper-based clinical trials are
an inefficient process.  We believe that if several clinical trial sponsors
conduct trials using our Web-based trial solution, other sponsors will use it
in order to compete.

EMERGING MARKET OF WEB-BASED EDC

     Web-based EDC has been around for four years and between 5% and 10% of all
clinical trials are currently conducted using Web-based EDC.  We believe that
the move toward emerging Web-based technologies is natural since it involves
management of large quantities of trial data in different formats, which is by
definition one of the core skills and competencies of the IT industry.  While
industry growth estimates vary, all predictions indicate that EDC is
anticipated to become widely accepted.  For example, Forrester Research and
Frost & Sullivan each predict annual double-digit growth in the use of EDC
technologies between 2001 and 2006; Accenture predicts that by 2003, 60% of all
clinical trials will use some form of EDC; and CB Technologies predicts that
approximately 28% of pharmaceutical, biotechnology, and medical device
companies, contract research organizations and academic research institutions
plan to implement EDC within the next 18 months.

UNIQUE COMPETITIVE ADVANTAGES

     We believe we are well positioned to succeed within the emerging EDC

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industry due to our competitive strengths which are as follows:

     .     A FOCUS TOWARD CUSTOMER REQUIREMENTS.

           Unlike competitors that have "global" solutions with standard data
           fields, screens and forms, we provide a fully customized solution to
           meet very specific client needs. Our team of programmers ensures
           user acceptance and system performance and provides customer-focused
           support services to guarantee a smooth integration of technology
           into each sponsor's clinical trials.  We assist with the design,
           installation, and integration of TrialMaster with existing systems,
           host the clinical trial data in a secure and controlled
           state-of-the-art facility, provide customer support 24 hours a day,
           7 days a week, and train on-site personnel.

     .     A STRONG TEAM OF HIGHLY EXPERIENCED CLINICAL AND TECHNICAL PEOPLE.

           Dr. David Ginsberg, our Chief Executive Officer, has more than 15
           years of clinical trial industry experience and has conducted more
           than 300 industry-sponsored clinical trials.  Randall Smith, our
           Chief Technology Officer, has over 20 years of experience in several
           facets of the high-tech sector.

     .     QUALITY EDC SOLUTION OFFERED AT A 30% DISCOUNT TO THE MARKET PRICE.

           Our business strategy focuses on the continued development,
           marketing and sale of our TrialMaster product.  TrialMaster was
           first introduced less than a year ago.  As of today, we are involved
           in conducting or developing multi-center, clinical trials for nine
           clients.  We completed a multi-center, multi-national clinical trial
           with a European-based medical device company and a European-based
           clinical research organization.  This clinical trial encompassed 400
           patients in 42 sites throughout Canada, Western Europe, and
           Scandinavia.  We are in negotiations with several U.S.-based
           pharmaceutical and clinical research organizations to implement
           TrialMaster.  During the fourth quarter of 2001 we signed nine
           contracts, which is more than 60% of all contracts signed to date.

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INDUSTRY BACKGROUND

     Worldwide research and development expenditures by the pharmaceutical,
medical device and biotechnology industries reached an estimated $54 billion in
2000, with $21 billion being spent by North American-based pharmaceutical and
medical device companies.  It is estimated that pre-clinical and clinical trial
costs represent approximately one-third of the total spent on research and
development, with 20% of the total costs spent on data management.

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

     We believe that certain industry and regulatory trends summarized below
have led pharmaceutical, biotechnology and medical device companies to increase
research and development for proprietary new drugs 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.

     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, medical device and
biotechnology industries.

     Managed Care.  Managed care providers and insurance carriers have become
major participants in the delivery of pharmaceuticals along with pharmacy
benefits organizations.  These companies are seeking to depress the prices of
drugs and devices.

     Consolidation.  There have been several  mergers within the pharmaceutical
industry, and as a result, the pharmaceutical industry has experienced large
scale employee lay-offs and cutbacks.

     Generic Drug Effect.   Competition from generic drugs following patent
expiration, has resulted in increasing market pressure on profit margins.

     Increasingly Complex and Stringent Regulation.  Increasingly complex and

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stringent regulatory requirements have increased the volume of data required
for regulatory filings and escalated the demand for real time, high accuracy
data collection and analysis during the drug development process.

     Reducing Drug Development Time Requirements.  To reduce costs, maintain
market share and speed revenue production, pharmaceutical, medical device and
biotechnology companies face increased pressure to bring new drugs to market in
the shortest possible time.

     New Drug Development Pressures.  To respond to the demand for products for
an aging population and for the treatment of chronic disorders and
life-threatening conditions, research and development expenditures have
increased as a result of the constant pressure to develop and patent products.

     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.

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

CLINICAL TRIAL OVERVIEW

     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 case report forms ("CRFs") that
are submitted to and filled out by an investigator, typically a doctor or
research assistant who is participating in the clinical trial.  CRFs can be
five to several hundred pages long, and document a series of visits by patients
over a period of time.

     Once information is collected  by the investigator and the CRF is
completed, the investigator submits the CRF to the sponsor or the CRO.  The
data is then input manually into a database.  Typically, each CRF is entered
twice 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 our server to the sites where the clinical trials are to take place.

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THE TRIALMASTER SUITE OF PRODUCTS

     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 5.0(R).  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.  The cost for implementing the application is based on a data point per
page/per patient fee which increases or decreases depending on the size and
length of the trial.

     Certain features and benefits of TrialMaster include:

     .     Internet-based network - no special client software required
     .     Role-based security - data presented on basis of role in the trial
           (i.e., investigator, sponsor, trial manager)
     .     Audit trail of all transactions - all original data and changes are
           recorded
     .     Primary data validation - data ranges and requirements are checked
           upon entry of data
     .     Customized reports based on client's specifications
     .     Messaging system - sends email notifications based upon client
           defined events
     .     Data export - client can export database in a variety of formats for
           interim analysis
     .     Real time data access - clients can monitor trial progress and make
           go/no-go decisions
     .     ASP model - uses our secure data infrastructure and can be installed
           utilizing client-supplied equipment as an option
     .     Fully compliant with FDA 21 CFR Part 11 and subsequent April 1999
           Guidance to Industry

     TrialMaster is intended to enhance the clinical trial process in the
following three areas:

     Data Collection is Faster and Cheaper.  Clinical data is collected from
the CRFs that are provided by the CRO and submitted to and filled out by an
investigator - a doctor or a research assistant - who is participating in the
clinical trial.  The forms are five to several hundred pages per patient and
encompass a series of visit by patients over a period of time.  Currently, the
cost to process data is approximately $7.00 to $25.00 per page per patient.
Under the TrialMaster system,

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the cost to process the data is expected to be approximately two to five times
less per page per patient.  The time to process the data under the current
manual system can take anywhere from one to eight weeks, which is expected to
be significantly reduced utilizing TrialMaster because the data is entered in
real-time with validation occurring instantly.

     Data is Collected More Accurately.  Upon its submission, data is reviewed
to determine if the collected data is within the parameters of the clinical
trial.  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.  Under the current manual
system, the cost to process an edit query is approximately $80 to $115 per
query; for a large trial, it is not uncommon to generate 500 to 1,000 edit
queries a week.  The time to process the data for each patient under the
current manual system can take anywhere from three to eight weeks.  Using the
TrialMaster system, it is expected that the number of edit queries will be
significantly reduced because the system does the validation when the data is
inputted, and the cost of the queries will be reduced by up to 80% to 85%.

     Clinical Studies Can Be Monitored More Efficiently.  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 standards.  They 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 exceed one-quarter of the total costs
of a clinical trial.  Under the current system, the cost for a monitoring visit
can vary from $1,000 to $3,000 per visit, and a trial can require as many as
three to seven visits.  The number of visits can be reduced when using
TrialMaster because the status of sites can be monitored remotely and in
real-time.  Under the current system, the time for each visit is usually one to
two days; utilizing TrialMaster, we believe monitoring hours can be reduced by
50% and monitoring visits can be more efficiently scheduled due to the
availability of more accurate and complete information on the trials.

SALES AND MARKETING

     EDC services are currently used in approximately 5 to 10% of clinical
trials.  We are focusing our sales efforts primarily on small and mid-size
pharmaceutical, medical device and clinical research organizations.  We believe
small and mid-size companies are unlikely to have the technological resources
necessary to develop a product like TrialMaster which will offer these
companies operating efficiencies in the clinical trial process as well as
potential cost savings.

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     During fiscal 2001 CV Therapeutics accounted for approximately 44% of our
net sales and Optima Worldwide, Ltd. accounted for approximately 16% of our net
sales.

     TrialMaster can be used within any segment of the pharmaceutical,
biotechnology or medical device industries that undertake clinical trials.  To
date, we have taken a deliberative approach to marketing TrialMaster to the
pharmaceutical industry, a $54 billion market dominated by companies such as
Pfizer, Johnson & Johnson and Eli Lilly.  We believe the following are the
relevant factors for approaching this market:

     .     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, and

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

     Our marketing strategy also includes establishing relationships with
"opinion leaders" and decision makers in other specialties within the clinical
trial industry.  In this regard, we have created a Medical Advisory Board to
advise us 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.  We are also using
traditional methods to market TrialMaster, including advertising in trade
periodicals and attending a number of medical conventions including the those
of the American College of Cardiology, Drug Information Association and The
American Heart Association.

SYSTEMS

     We provide application hosting services for our web-based clinical trial
applications utilizing a secure, medical-grade network infrastructure.  We
maintain both a primary data center and a secondary disaster recovery site.
These sites utilize identical configurations with the primary site located at
our headquarters while the secondary site is located at a BellSouth co-location
facility in Atlanta, GA.

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     Internet communications to the data center is maintained via two
high-speed digital data communication lines; a primary and a "shadow" line.
The shadow monitors the primary line and automatically becomes active should an
interruption in communications occur to the primary line.  These lines are
connected to a Cisco high-speed dual line router.  Data is then passed from the
router to a Cisco PIX hardware firewall.  The hardware firewall is capable of
providing 120 Mbps of data throughput and up to 125,000 simultaneous sessions.
The two Cisco PIX firewalls located at the primary data center and at the
secondary disaster recovery site are linked via a secure, static, encrypted
virtual private network (VPN) connection.  The PIX provides firewall, VPN, and
intrusion detection functions to the network.

     Data from the PIX is passed to an HP high-speed data switch.  The switch
is capable of processing data at a rate of 36.6 Gbps.  The switch is used to
connect all of our servers to the PIX.

     Our software applications were developed utilizing Microsoft's Distributed
Network Architecture (DNA).  Thus, the network was designed to accommodate the
security and scalability of the DNA framework.  Using this approach, servers
are paired so that the production server is visible to the internet while the
database server is not.  Data from the database is made available to authorized
users via our proprietary software object module running on the production
server.  Communication between the servers is handled by the HP switch.

     HP Netserver computers running Microsoft Windows 2000 are used in all
production and database servers.  The servers are configured with dual Intel
Pentium class processors, dual power supplies, and hot-swapable RAID disk
storage for maximum availability and reliability.  Database servers are
configured with one gigabyte of RAM memory and 36 gigabytes of disk storage.
Production servers are configured with 512 megabytes of RAM memory and 27
gigabytes of disk storage.  All servers are capable of supporting up to one
gigabyte of RAM memory and one terabyte (1,099,511,627,776 bytes) of disk
storage.  Up-time of 100% has been experienced since the deployment of these
servers in 1998.

     The current production environment employs two production/database server
pairs at the primary data center which is mirrored at the collocation facility.
Database synchronization between the primary data center and the collocation
facility is accomplished utilizing transaction replication technology via the
VPN link established between the two locations.

RESEARCH AND DEVELOPMENT

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     We acquired the technology, developed by Education Navigator, Inc., for
our TrialMaster product in June 1998.  Since that date, our completion of our
TrialMaster product and its subsequent improvements and refinements have been
handled by our in-house staff of programmers.  During fiscal 2001, we spent
approximately $377,000 on research and development activities, the majority of
which represented salaries to our programmers.  In fiscal 2000 we spent
approximately $454,000 on research and development activities.  We intend to
continue to refine our products to increase our ability to compete in our
market segment.

COMPETITION

     We compete in the  EDC market.  This industry can be characterized as
rapidly evolving, highly competitive and fragmented.  There are other entities
that compete with our 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 we do.  In addition, other companies could enter the EDC
market due to the vast size of the market opportunity.  We believe that the
most significant competitive factors we face are a lack of operating history
and an attendant perception of a lack of experience in competing in such a
changing and competitive environment.
     We believe, however, that our technical expertise, the knowledge and
experience of our principals in the industry, quality of service,
responsiveness to client needs and speed in delivering solutions will allow us
to compete favorably within this market.  Further, we believe that none of the
aforementioned companies have developed an approach to the clinical trial
process that is as flexible and customizable as TrialMaster.

GOVERNMENT REGULATION

     We do not believe that we are currently regulated by the FDA or any
specific government or quasi-governmental agency.  There can be no assurance,
however, that we will not become subject to government regulation in the
future.  See "Risk Factors" below.

INTELLECTUAL PROPERTY RIGHTS

     Our success depends in part on our ability to protect our intellectual
property. To protect our proprietary rights, we rely generally on copyright,
trademark and trade secret laws, confidentiality agreements with employees and
third parties, and

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agreements with consultants, vendors and customers, although we have not signed
such agreements in every case.  Despite such protections, a third party could,
without authorization, copy or otherwise obtain and use our software.  We can
give no assurance that our agreements with employees, consultants and others
who participate in development activities will not be breached, or that we will
have adequate remedies for any breach, or that our trade secrets will not
otherwise become known or independently developed by competitors.

     We have a patent application pending with respect to our TrialMaster
product.  This application was filed in May 2000 and remains pending.  We are
also in the process of registering a number of trademarks including "OMNICOMM
SYSTEMS, INC.," and we have federally registered "TRIALMASTER" and "OMNICOMM
SYSTEMS," as well as copyrights on any computer software applications produced
by us. We intend to make such other state and federal registrations as we deem
necessary and appropriate to protect out intellectual property right.

EMPLOYEES

     We currently have 20 full time employees and two part time employees, of
which three are executives, three are administrative, 11 are programmers, two
are technology and systems managers and three are in sales and marketing.  We
believe that relations with our employees are good.  None of our employees is
represented by a union.

RISK FACTORS

WE HAVE A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT FOR YOU TO
EVALUATE OUR BUSINESS.

     We were incorporated in 1997 and initiated our eBusiness plan in August
1998.  We have a limited operating history on which you can base an evaluation
of our business and prospects.  Our revenue and income potential are unproven.
An investor must consider the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly companies with limited capital in new and rapidly evolving
markets, including the Internet B2B market.  These risks and difficulties
include our ability to:

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     **    develop our infrastructure;
     **    attract and maintain a base of end users;
     **    develop and introduce desirable services;
     **    provide customer support, personnel and facilities, to support our
           business;
     **    establish and maintain strategic relationships;
     **    establish and maintain relationships within the pharmaceutical,
           medical device, and biotechnology industries; and
     **    respond effectively to competitive and technological developments.

     We cannot assure you that our business strategy will be successful or that
we will successfully address any of these risks or difficulties.

WE ARE DEPENDENT ON A NEW BUSINESS MODEL WHOSE ACCEPTANCE IS UNCERTAIN.

     We intend to derive revenues by providing web-based electronic data
capture and management application for clinical research in the pharmaceutical,
medical device, and biotechnology industries.  While the market for clinical
trials data capture is well established, the market for our Web-based
electronic services is new and rapidly evolving, and there can be no assurance
that our products and services will be accepted by the marketplace.  Our
customers have limited experience with Web-based clinical trials and may
conclude that they are not a desirable, efficient or cost effective method of
administering clinical trials.  Failure to obtain significant customer
acceptance and satisfaction will adversely affect our revenue.

WE HAVE A HISTORY OF LOSSES, ANTICIPATED FUTURE LOSSES AND MAY NEVER ACHIEVE OR
MAINTAIN PROFITABILITY.

     We incurred net losses attributable to common stockholders of $7,549,596
and $6,781,626 in fiscal 2001 and 2000, respectively.  At December 31, 2001, we
had an accumulated deficit of approximately $16,932,609 and a working capital
deficit of approximately $1,241,000.  We expect net losses and negative cash
flow for the foreseeable future until such time as we can generate sufficient
revenues to achieve profitability.  While we expect to achieve additional
revenue through the growth of our business, we cannot assure you that we will
generate sufficient revenue to fund our expenses and achieve and maintain
profitability in any period.

OUR FINANCIAL STATEMENTS CONTAIN A GOING CONCERN QUALIFICATION.

     Because of our significant operating losses, accumulated deficit and the
uncertainty as to our ability to secure additional financing, the report of our

                                     13
<PAGE>

independent auditors on our consolidated financial statements for the year
ended December 31, 2001 contained an explanatory paragraph indicating there was
substantial doubt about our ability to continue as a going concern.

WE HAVE HAD LIMITED REVENUES TO DATE, AND WE MAY BE UNABLE TO FORECAST OUR
REVENUES ACCURATELY.

     We have had limited revenues to date and do not have historical financial
data for a sufficient number of periods to accurately forecast revenues and
results of operations. Therefore, our period-to-period comparisons contained in
our SEC filings cannot be relied on as indicators of future performance. Such
future revenues are difficult to forecast due to, among other things, the fact
that our business is a new, developing business.

WE WILL LIKELY NEED ADDITIONAL FINANCING, THE TERMS OF WHICH MAY BE
UNFAVORABLE TO OUR THEN EXISTING STOCKHOLDERS.

     Our plan of operations will require us to raise additional working capital
if our revenue projections are not realized, and even if our projections are
realized, we may need to raise additional financing to meet our ongoing
obligations. In addition, we may also need to raise additional funds to meet
known needs or to respond to future business contingencies, which may include
the need to:

     *      fund more rapid expansion;
     *      fund additional capital or marketing expenditures;
     *      develop new or enhanced features, services and products;
     *      enhance our operating infrastructure;
     *      respond to competitive pressures; or
     *      acquire complementary businesses or necessary technologies.

     If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of our stockholders will
be reduced, and these newly-issued securities may have rights, preferences or
privileges senior to those of existing stockholders or debt holders. We cannot
assure you that additional financing will be available on terms favorable to
us, or at all. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our operations and remain in business may
be significantly limited.

WE MUST ESTABLISH, MAINTAIN AND STRENGTHEN THE TRIALMASTER BRAND TO ATTRACT
USERS AND GENERATE REVENUE FROM EXISTING AND NEW BUSINESSES.

     To successfully implement our business plan, we must establish, maintain
and

                                     14
<PAGE>

continually strengthen the TrialMaster brand. For us to be successful in
establishing TrialMaster, pharmaceutical, medical device and biotechnology
industries must perceive it as a desirable, efficient and cost effective method
of real time data collection, compilation and validation which significantly
reduces costs, improves data quality and expedites results. If our marketing
efforts are not productive or if we cannot strengthen our brand, our efforts to
establish and maintain our brand will be unsuccessful, and we may lose
customers and be unable to attract new business.

OUR FAILURE TO MANAGE THE GROWTH OF OUR OPERATIONS AND INFRASTRUCTURE
COULD DISRUPT OUR OPERATIONS AND ADVERSELY AFFECT OUR REVENUES.

     We have been expanding, and intend to continue to expand our business.
This growth has placed, and any further growth is likely to continue to place,
a significant strain on our resources. Our ability to achieve and maintain
profitability will depend on our ability to manage growth effectively, to
implement, improve and expand operational and customer support systems, and to
hire additional personnel. We may not be able to augment or improve existing
systems and controls or implement new systems and controls to respond to any
future growth. In addition, future growth may result in increased
responsibilities for management personnel, which may limit their ability to
effectively manage our business.

WE FACE INTENSE COMPETITION AND WILL HAVE TO COMPETE FOR MARKET SHARE.

     There can be no assurance that our products will achieve or maintain a
competitive advantage. There are currently a number of companies who market
services and products for Web-based clinical trials. Barriers to entry on the
Internet are relatively low, and we expect competition to increase
significantly in the future. We face competitive pressures from numerous actual
and potential competitors, both online and offline, many of which have longer
operating histories, greater brand name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than we do.
We cannot assure you that the Web-based clinical trials maintained by our
existing and potential competitors will not be perceived by clinical trial
sponsors as being superior to ours.

IF WE CANNOT PROTECT OUR PROPRIETARY INFORMATION, WE MAY LOSE A
COMPETITIVE ADVANTAGE AND SUFFER DECREASED REVENUES AND CASH FLOW.

     We are dependent, in part, on proprietary data, analytical computer
programs and methods and related know-how for our day-to-day operations. We
rely on a combination of confidentiality agreements, contract provisions and
trade secret laws to protect our proprietary rights. Although we intend to
protect our

                                     15
<PAGE>

rights vigorously, there can be no assurance we will be successful in
protecting our proprietary rights. If we are unable to protect our proprietary
rights, or if our proprietary information and methods become widely available,
we may lose any ability to obtain or maintain a competitive advantage within
our market niche.

FAILURE TO ADAPT TO EVOLVING TECHNOLOGIES AND USER DEMANDS COULD RESULT
IN THE LOSS OF USERS.

     To be successful, we must adapt to rapidly changing technologies and user
demands by continually enhancing our products and services and introducing new
products and services. If we need to modify our products and services or
infrastructure to adapt to changes affecting clinical trials, we could incur
substantial development or acquisition costs. As described above, we will be
dependent upon the availability of additional financing to fund these
development and acquisition costs. If these funds are not available to us, and
if we cannot adapt to these changes, or do not sufficiently increase the
features and functionality of our products and services, our users may switch
to the product and service offerings of our competitors.

A SYSTEM FAILURE COULD RESULT IN SIGNIFICANTLY REDUCED REVENUES.

     Any system failure, including network, software or hardware failure that
causes an interruption in our service could affect the performance of our
TrialMaster software and result in reduced revenues. The servers that host our
software are backed-up by remote servers, but we cannot be certain that the
back-up servers will not fail or cause an interruption in our service. Clinical
trial data could also be affected by computer viruses, electronic break-ins or
other similar disruptions. Our users will depend on Internet service providers,
online service providers and other web site operators for access to our
products. Each of these providers may have experienced significant outages in
the past and could experience outages, delays and other difficulties due to
system failures unrelated to our systems. Further, our systems are vulnerable
to damage or interruption from fire, flood, power loss, telecommunications
failure, break-ins, earthquake and similar events. Our insurance policies have
low coverage limits and may not adequately compensate us for any such losses
that may occur due to interruptions in our service.

WE MAY BE UNABLE TO ADEQUATELY DEVELOP OUR SYSTEMS, PROCESSES AND SUPPORT
IN A MANNER THAT WILL ENABLE US TO MEET THE DEMAND FOR OUR SERVICES.

     Our future success will depend on our ability to develop effectively the

                                     16
<PAGE>

infrastructure, including additional hardware and software, and implement the
services, including customer support, necessary to meet the demand for our
services. In the event we are not successful in developing the necessary
systems and implementing the necessary services on a timely basis, our revenues
could be adversely affected, which would have a material adverse effect on our
financial condition.

WE ARE DEPENDENT ON THE CONTINUED CONTRIBUTIONS OF OUR KEY PERSONNEL.

     We are currently dependent on our senior management and board of
directors. The loss of their services, or the services of any other individual
upon which we currently rely, may significantly adversely affect our
performance and our ability to carry out the successful development and
implementation of our business plan. Failure to retain management, directors
and advisors or to attract and retain other key employees could have an adverse
effect upon our growth and our ability to achieve and maintain profitability.

WE MAY NOT BE ABLE TO HIRE AND RETAIN A SUFFICIENT NUMBER OF QUALIFIED
EMPLOYEES AND, AS A RESULT, WE MAY NOT BE ABLE TO GROW AS WE EXPECT OR
MAINTAIN THE QUALITY OF OUR SERVICES.

     Our success will depend on our ability to hire, train, and retain highly
skilled technical, marketing and sales and customer support personnel.
Competition for these people is intense, especially for engineers and
programmers, and we may be unable to successfully attract sufficiently
qualified personnel. The pool of qualified technical people in the greater Fort
Lauderdale, Florida area, is limited. We will need to increase the size of our
staff to support our anticipated growth, without compromising the quality of
our offerings or customer service. There can be no assurance we will be able to
hire, train and retain a sufficient number of qualified employees. If we were
unable to recruit and retain a sufficient number of employees, we would be
forced to limit our growth or possibly curtail our operations.

SINCE WE ARE A WEB-BASED COMPANY, OUR BUSINESS IS SUBJECT TO GOVERNMENT
REGULATION RELATING TO THE INTERNET, WHICH COULD IMPAIR OUR OPERATIONS.

     Because of the increasing use of the Internet as a communication and
commercial medium, the government has adopted and may adopt additional laws and
regulations with respect to the Internet covering such areas as user privacy,
pricing, content, taxation, copyright protection, distribution and
characteristics and quality of production and services.
WE DO NOT BELIEVE WE ARE SUBJECT TO REGULATION BY THE FDA, BUT WE HAVE

                                     17
<PAGE>

MADE NO INDEPENDENT INQUIRES.

     Based upon our internal review of the relevant statutes, rules and
regulations, we do not believe that our TrialMaster product is subject to FDA
review or approval. However, because we have neither made independent inquiry
of the FDA nor have we engaged special FDA counsel to provide us with an
opinion regarding the applicability of the subject statutes, rules and
regulations, our belief as to their inapplicability may be incorrect. In that
event, we could be subject to fines and/or other sanctions which will adversely
affect our results of operations. In addition, if at some time in the future
the FDA adopts rules to which we become subject, the cost of compliance
therewith may be significant to us which would likewise adversely affect our
results of operations and liquidity.

WE MAY BE UNABLE TO PREVENT COMPETITORS FROM USING OUR INTELLECTUAL
PROPERTY, AND WE FACE THE CONTINUING PROSPECT OF POTENTIALLY EXPENSIVE
PATENT LITIGATION TO ASSERT OUR RIGHTS AND TO DEFEND OURSELVES AGAINST
PATENT INFRINGEMENT CLAIMS ASSERTED BY OTHERS.

     The clinical research business is crowded and includes a number of new
entrants hoping to capitalize on advances in electronic data capture. Many of
these new entrants have secured patent protection. We presently have a patent
application pending for our TrialMaster product. The effect and extent of
patent and other protection for our intellectual property is uncertain. Legal
standards relating to the validity and scope of claims in the Internet fields
are evolving. We cannot guarantee that our patent application will be approved.
Even if it is approved, we cannot guarantee that our patent will be broad and
effective, nor can there be any assurance that we will not be involved in
litigation to protect our intellectual property and to defend ourselves against
infringement claims by our competitors.

FUTURE SALES OF SHARES BY EXISTING STOCKHOLDERS AS WELL AS THE ISSUANCE OF
ADDITIONAL SHARES OF OUR COMMON STOCK COULD RESULT IN A DECLINE IN THE
MARKET PRICE OF THE STOCK.

     We have agreed to register an aggregate of 29,406,682 shares of our
common stock which are issuable upon the conversion of outstanding shares of
our Series A Convertible Preferred Stock, our Series B Convertible Preferred
Stock, convertible notes and accrued interest and outstanding options and
warrants. At such time as these shares are eligible for resale in the public
market, such sales will have a dilutive effect on the market for our common
stock and will in all likelihood adversely affect its market price.

                                     18
<PAGE>

ITEM 2.     DESCRIPTION OF PROPERTY

THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS AND THE CONVERSION OF
OUTSTANDING NOTES WILL BE DILUTIVE TO OUR EXISTING STOCKHOLDERS.

     As of March 18, 2002, we had a total of 17,556,968 shares of our common
stock underlying options, warrants and other convertible securities and
10,810,149 shares of common stock underlying convertible preferred stock. The
exercise of these warrants and options and/or the conversion of these
convertible securities will have a dilutive effect on our existing stockholders.

THERE IS ONLY A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK.

     There is a limited public market for our common stock. We cannot predict
the extent to which investor interest in us will lead to the development of an
active trading market or how liquid that trading market might become. If a
liquid trading market does not develop or is not sustained, it may be difficult
for investors to sell shares of our common stock.

FLUCTUATIONS IN OUR OPERATING RESULTS MAY ADVERSELY AFFECT OUR STOCK PRICE.

     Historically, there has been volatility in the market price for our common
stock. Our quarterly operating results, changes in general conditions in the
economy, the financial markets or our industry segment, or other developments
affecting us or our competitors, could cause the market price of our common
stock to fluctuate substantially. We expect to experience significant
fluctuations in our future quarterly operating results due to a variety of
factors. Factors that may adversely affect our quarterly operating results
include:

     -    the announcement or introduction of new products by us and our
          competitors;

     -    our ability to retain existing clients and attract new clients at a
          steady rate, and maintain client satisfaction;

     -    the amount and timing of operating costs and capital expenditures
          relating to expansion of our business and operations;

     -    government regulation; and

     -    general economic conditions and economic conditions specific to the
          clinical trials industry.

                                     19
<PAGE>

     As a result of these factors, in one or more future quarters, our
operating results may fall below the expectations of securities analysts and
investors. In this event, the market price of our common stock would likely be
materially adversely affected.

BECAUSE OUR STOCK CURRENTLY TRADES BELOW $5.00 PER SHARE, AND IS QUOTED ON
THE OTC BULLETIN BOARD, OUR COMMON STOCK IS CONSIDERED A "PENNY STOCK"
WHICH CAN ADVERSELY EFFECT ITS LIQUIDITY. OUR COMMON STOCK DOES NOT
CURRENTLY QUALIFY FOR LISTING ON THE NASDAQ STOCK MARKET AND WE DO NOT
FORESEE THAT WE WILL QUALIFY FOR SUCH A LISTING IN THE FORESEEABLE FUTURE.

     If our common stock continues to be quoted on the OTC Bulletin Board, and
the trading price of our common stock remains less than $5.00 per share, our
common stock is considered a "penny stock," and trading in our common stock is
subject to the requirements of Rule 15g-9 under the Exchange Act. Under this
rule, broker/dealers who recommend low-priced securities to persons other than
established customers and accredited investors must satisfy special sales
practice requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the purchaser's written
consent prior to the transaction.

     SEC regulations also require additional disclosure in connection with any
trades involving a "penny stock," including the delivery, prior to any penny
stock transaction, of a disclosure schedule explaining the penny stock market
and its associated risks. These requirements severely limit the liquidity of
securities in the secondary market because few broker or dealers are likely to
undertake these compliance activities. In addition to the applicability of the
penny stock rules, other risks associated with trading in penny stocks could
also be price fluctuations and the lack of a liquid market.

     The Nasdaq Stock Market establishes listing qualifications for companies
wishing to have their securities quoted on the Nasdaq SmallCap Market. In
addition to minimum bid price and public float requirements, among other
listing requirements in order for a security to be quoted on the Nasdaq
SmallCap Market, the issuer must have minimum stockholders' equity of at least
$5,000,000. At December 31, 2001, we had total stockholder's deficit of
$3,171,484. Accordingly, it is unlikely that we will meet the initial listing
standards of the Nasdaq SmallCap Market in the foreseeable future.

                                      20
<PAGE>

     Our principal executive offices are located in commercial office space in
approximately 4,400 square feet at 2555 Davie Road, Suite 110B, Fort
Lauderdale, Florida, and our telephone number is (954) 473-1254. We lease these
offices from an affiliate of Mr. Harold Blue, a member of our board of
directors, under the terms of a sublease expiring in September 2003. Our annual
rental payments under this sublease are $66,000 plus sales tax. We believe that
the terms of this lease are as favorable as we might have negotiated on an
arms-length basis.

ITEM 3.     LEGAL PROCEEDINGS

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

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

      None.

                                    PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is traded on OTC Bulletin Board under the symbol OMCM.
The following table sets forth the high and low closing prices for our common
stock as reported by the OTC Bulletin Board for the periods indicated.

                                      High     Low
                                      ----     ---

Fiscal 2000

First Quarter                         $ 5.75   $ 3.50
Second Quarter                        $ 6.75   $ 2.06
Third Quarter                         $ 4.25   $ 1.50
Fourth Quarter                        $ 2.25   $ 0.63

Fiscal 2001

First Quarter                         $ 1.56   $ 0.38
Second Quarter                        $ 0.56   $ 0.25

                                     21
<PAGE>

Third Quarter                         $ 0.95   $ 0.38
Fourth Quarter                        $ 0.55   $ 0.21

     On March 18, 2002, the closing price of our common stock as reported on
the OTC Bulletin Board was $0.28. At March 8, 2002, we had approximately 402
record shareholders; however, we believe that we have in excess of 937
beneficial owners of our common stock.

DIVIDEND POLICY

     We have never declared or paid any cash dividends on our common stock.
We currently expect to retain future earnings, if any, to finance the growth
and development of our business.

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

GENERAL

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

     Management's discussion and analysis contains various forward-looking
statements within the meaning of the Securities and Exchange Act of 1934. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward looking terminology such as "may,"
"expect," "anticipate," "estimates" or "continue" or use of negative or other
variations of comparable terminology. We caution that these statements are
further qualified by important factors that could cause actual results to
differ materially from those contained in our forward looking statements, that
these forward looking statements are necessarily speculative, and there are
certain risks and uncertainties that could cause actual events or results to
differ materially from those referred to in our forward looking statements.

OVERVIEW

     We are an Internet-based healthcare technology company that provides
Web-based electronic data capture ("EDC") solutions and related value-added
services to pharmaceutical and biotechnology companies, clinical research
organizations, and other clinical trial sponsors. Our Internet-based
TrialMaster(R) software allows clinical trial sponsors and investigative sites
to securely collect,

                                     22
<PAGE>

validate, transmit, and analyze clinical study data including patient histories,
patient dosing, adverse events, and other clinical trial information. We phased
out the systems integration segment of our business during 2001. Virtually all
of our personnel are involved in the development and
marketing of TrialMaster.

THE YEAR ENDED DECEMBER 31, 2001 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2000

RESULTS OF OPERATIONS

REVENUES
--------

     Revenues for the year ended December 31, 2001 were $170,522 compared
to $70,976 for the same period in 2000. The increase can be attributed to
increased success we experienced in marketing TrialMaster. In particular, we
found the markets increasingly receptive to utilizing EDC services during the
second half of 2001. Our revenues during the second half of 2001 were $113,443
or approximately 66% of the annual total. This is consistent with our
expectation that the market will increasingly begin adopting EDC services more
rapidly as early adopters bring increasing credibility to the market. Revenues
associated with our Internet based clinical trial products were approximately
$147,325 and $17,825 for 2001 and 2000 respectively. Systems integration
revenues in 2000 were approximately $53,151 compared to $23,197 in 2001. We
expect systems integration revenues in 2002 to diminish from the results
achieved in 2001.

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

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

                                     23
<PAGE>

are earned and recognized monthly. Costs associated with contract revenues are
recognized as incurred.

COST OF GOODS SOLD
------------------

Cost of goods sold increased to $194,108 in 2001 compared to $52,492. The
expenses incurred in 2000 related to our systems integration business and these
expenses diminished in 2001 to $15,735 as we continued phasing out that line of
our business. Cost of goods sold now relates primarily to salaries and benefits
associated with the programmers, developers and systems analysts producing
clinical trials on behalf of our clients. Cost of goods sold will continue to
exceed recognized revenues for the short-term based on the fact that we expense
salaries as incurred and are compelled to record our revenues over the expected
length of the contracts that we are servicing. As we build the number of
clinical trials either in development or in production that trend will reverse.

We expect to increase development programming labor costs on an absolute basis
as our trial revenues increase. We expect labor costs to decrease on a relative
percentage basis as we increase our trial base and develop economies of scale
with regard to trial production.

OTHER EXPENSES
--------------

     SALARIES, BENEFITS AND RELATED TAXES

     Salaries and related expenses are our biggest expense at 47% of total
Other Expenses for 2001. Salaries and related expenses totaled $1,829,385 in
2001 compared to $2,895,108 in 2000. We increased personnel in 2000 in
anticipation of marketing both TrialMaster and WebIPA. The increase encompassed
additional computer programmers, and increased sales and marketing personnel.
We have reduced our sales and marketing personnel primarily through the closure
of our European office based on our decision to focus on building our clinical
trial clientele domestically in the US. In addition, we were able to reduce our
research and development personnel through the consolidation of our Tampa,
Florida and Miami, Florida offices. We currently employ approximately 20
employees out of our Davie, Florida corporate office. We expect to increase
headcount within our technology and sales and marketing based functions in
concert with anticipated increases in TrialMaster clients during fiscal 2002.

     RENT

     Rent expense was $185,040 for fiscal 2001 compared with $242,471 for fiscal

                                      24
<PAGE>

2000. The decrease is attributable to $36,989 paid as a lease settlement in
2000 and approximately $29,117 in rent expense for our office in Amsterdam
incurred in fiscal 2000 which did not recur in 2001 due to the closure of the
Amsterdam office in connection with the bankruptcy filing of our European
subsidiary, OmniTrial B.V, offset by approximately $4,279 paid in additional
rent in 2001 pursuant to standard lease cost of living adjustments and rent
expense of $4,396 recorded in association with stock warrants issued to our
former landlord in Miami in connection with the early termination of our lease.

     CONSULTING EXPENSES

     We recorded $20,860 in consulting expenses during 2001. That amount is
comprised of approximately $37,735 in marketing related fees and $21,125 in
product development costs offset by the reversal of $38,000 in medical advisory
fees that had been accrued at the beginning of the year that were subsequently
reversed. We do not generally utilize the services of consultants for product
development services and the expenses recorded during 2001 related to costs
incurred in connection with the 1998 acquisition of Education Navigator. We
eliminated cash payments to members of our Medical Advisory Board during 2000
and do not anticipate incurring expenses in the future relating to the Medical
Advisory Board other than in the nature of expense reimbursements. We incurred
marketing and sales related expenses during 2001 that are attributable to a
campaign aimed at increasing the breadth of companies with which we are actively
engaging in sales conversations. We believe our campaign was successful and
anticipate utilizing these services again during 2002.

     LEGAL AND PROFESSIONAL FEES

     Legal and professional fees totaled $215,001 in 2001 compared with
$963,279 during fiscal 2000. Key components of this amount include $90,000 paid
to our former placement agent for financial advisory services, $59,012 to our
accountants for audit and tax related services, $31,877 in legal expenses
related to various matters and $33,915 that relate to accounting and legal
services associated with our obligations as a public company. We expect
on-going legal and professional fees to fall in-line with what was experienced
during 2001.

     TRAVEL

     We incurred $66,205 in travel expenses during fiscal 2001 compared to
$374,558 during 2000. The marked decrease is a result of several factors
including the closing of our European operations during 2000 which eliminated
international

                                     25
<PAGE>

PREFERRED STOCK DIVIDENDS
--------------------------

travel, and during 2001 we diminished travel as a result of the on-going
working capital difficulties that we had been experiencing. We expect travel to
increase on an as needed basis as we experience more success in penetrating the
marketplace with our sales efforts. We expect this increase to be offset by the
increase in accompanying sales.

     TELEPHONE AND INTERNET

     Telephone and Internet related costs were reduced by $100,840 due to
decreased telephone and Internet access costs associated with the closing of
our offices in Amsterdam, the Netherlands and Tampa, Florida, and a decrease in
overall long-distance charges associated with the closed facilities. In
addition, there were credits due which were not recognized during the first
nine months of 2000 totaling approximately $37,200 for excess charges by our
long distance and network access provider. We do not anticipate to an increase
in access charges during fiscal 2002 based on our own existing communications
infrastructure and our projected 2002 clinical trial workload.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses ("SGA")were reduced to $98,206
during 2001. These expenses relate primarily to costs incurred in running our
office day-to-day and other costs not directly related to other captioned items
in our income statement, and include the cost of office equipment and supplies,
the costs of attending conferences and seminars and other expenses incurred in
the normal course of business. We made a concerted effort during the second
half of 2000 to eliminate or reduce SGA expenses not crucial to the effective
operation of our company. This effort continued during 2001 and is now
culturally ingrained. We do expect to increase the overall dollar volume spent
on SGA as we increase our revenue base and step-up our overall activity.

     NON-RECURRING CHARGES

     Non-recurring charges totaled $9,127 and $413,131 in 2001 and 2000
respectively, primarily associated with the following events:

          IMPAIRMENT OF EQUITY INVESTMENT

     On March 20, 2000 we entered into a stock purchase agreement under which we
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

                                     26
<PAGE>

purchase price for 25% of EMN's stock equity was $838,500 to be paid partly in
cash and stock. We made payments totaling $335,000 in cash during 2000 and
defaulted on the payments due subsequent to March 20, 2000. We have established
a valuation allowance of $335,000 against the investment in EMN to reflect the
uncertainty of the fair market value of the investment as of December 31, 2001
and 2000.

          LOSS ON SUBSIDIARY BANKRUPTCY

     On August 30, 2000, the board of directors of OmniTrial B.V. issued a
                                                             ===
written consent to apply for bankruptcy, which was instituted in The
Netherlands on or about September 4, 2000. In connection with the bankruptcy
filing we recorded charges totaling $78,131 to reflect the write-down of
OmniTrial's assets.

          ASSET IMPAIRMENT CHARGES

     During January 2001 we issued 90,000 shares of common stock to our Chairman
and Chief Technology Officer in reimbursement of shares that he had pledged as
collateral for a bridge loan entered into by us in 2000. We recorded the 90,000
                                             ==
shares at fair market value which totaled $75,000. In August 2001 we satisfied
the bridge loan through the issuance of an additional 53,768 shares to the note
holder. We recorded an asset impairment charge of $9,127 to reflect the
decrease in market value of the shares originally issued as collateral to the
note holder.

INTEREST EXPENSE
----------------

     Interest expense increased to $918,834 during 2001 versus $248,286 in
fiscal 2000. During 2001 we entered into a private placement of 12% Convertible
Notes that created $167,777 in interest expense in 2001. In addition, we
recorded interest expense of $508,835 in connection with a "beneficial
conversion feature" that was deemed to exist when the conversion price of some
of the 12% Notes was issued at a discount to the prevailing market price of our
stock. This expense is non-cash and we recorded a corresponding increase to our
additional paid-in capital.

     During 2001 we issued 220,700 detachable common stock warrants as
additional compensation in connection with short-term bridge loans that were
used for working capital purposes. We valued the warrants utilizing the Black-
Scholes model and recorded $124,826 as interest expense. We also recorded
$71,414 in interest expense payable to note-holders in connection with these
bridge loans.

                                      27
<PAGE>

     In September 2001 we issued 8,000,000 warrants to investors in a private
placement of our Series B Convertible Preferred Stock. The warrants were valued
at $3,383,168 utilizing the Black-Scholes model. The net proceeds received in
the Series B Convertible Preferred Stock offering were allocated to the Series
B Preferred Stock and we recognized a deemed dividend on preferred stock of
$3,383,168 resulting in a charge to retained earnings and a credit to
additional paid-in capital within our stockholders' equity as of December 31,
2001. Dividends on our Series A Preferred Stock totaled $204,742 in 2001
compared to $208,137 for the comparable period in 2000. There were arrearages
of $51,279 in Series B Preferred Stock dividends at December 31, 2001 and we
therefore deducted $51,279 from Net Income/(Loss) Attributable to Common Stock
Holders.

LIQUIDITY AND CAPITAL RESOURCES

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

     Cash and cash equivalents increased by $51,868 to $142,826 at December
31, 2001. This was the result of cash provided by financing activities of $2.96
million offset by cash used in operating activities of approximately $3.1
million and $82 thousand in investing activities. The significant components of
the activity include a loss from operations of approximately $3.9 million, the
purchase of property and equipment of approximately $82 thousand, offset by
non-cash expenses associated with the issuance of our securities of $521
thousand and approximately $2.96 million we raised through the sale of debt and
equity securities.

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

At December 31, 2000 we had outstanding notes payable totaling $612,500 to non-
related parties and $660,000 to related parties. Approximately $250,000 of the
non-

                                     28
<PAGE>

related party notes and $510,000 of the related party notes were converted into
a private placement of 12% convertible notes during the first quarter of 2001.
During the year we repaid $332,500 plus accrued interest of non-related party
notes using our common stock. We also repaid $30,000 in non-related party notes
in cash.

During the year we received proceeds of approximately $532,571 in the form of
short-term bridge loans. These loans and $150,000 in bridge loans made during
2000 were still outstanding in August 2001 when we entered into a private
placement of our 8% Series B Convertible Preferred Stock. These promissory
notes were amended and restated on August 30, 2001 with new terms which
included an interest rate of 8% per annum, and with one half of the principal
payable upon the closing of any financing by us resulting in gross proceeds in
excess of $2,000,000, and the balance of the principal together with accrued
interest payable no later than August 30, 2003. We have classified $341,285 of
these notes payable as current notes payable and an equal amount as long-term
notes payable

The Company is currently in default on interest payments owed totaling $22,560
on its 10% Convertible Notes. The terms of the notes provides a payment grace
period of thirty days in which to make required semi-annual interest payments.
The company was in default effective January 30, 2002.

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

     Because of the losses experienced in 1999, 2000 and 2001 we have needed to
continue utilizing the proceeds from the sale of debt and equity securities to
fund our working capital needs. The capital markets since mid-2000 have
provided a difficult climate for the raising of capital because of the decline
in value of publicly held technology stocks and the corresponding apprehension
on the part of investors to invest in technology oriented firms. In addition,
when available capital has been expensive relative to the valuations that were
afforded during the expansion of the Internet sector in 1999 and 2000. The
softness in the capital markets coupled with the losses experienced caused
working capital shortfalls. To compensate for our working capital needs we have
used a combination of equity financing and short-term bridge loans. Other than
our current capital, and capital we may raise from future debt or equity
offerings or short-term bridge loans, we do not have any additional sources of
working capital.

                                     29
<PAGE>

     During 2001 we completed two private placements of our securities. We
completed a private placement of 12% Convertible Notes during the first half of
2001 that raised $1,615,000 in gross proceeds. In September 2001 we completed a
private placement of our 8% Series B Preferred Stock that resulted in
$2,000,000 in gross proceeds.
     Our primary capital requirements are for daily operations and for the
continued development and marketing of the TrialMaster system. Our management
believes that our current available working capital, anticipated and subsequent
sales of stock and or debt financing will be sufficient to meet our projected
expenditures for a period of at least 12 months from December 31, 2001. Our
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 us.

ITEM 7.     FINANCIAL STATEMENTS

     Our financial statements are contained in pages F- 1  through F- 29 as
                                                       ===           ===
follows.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

                                    PART III

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

     The following individuals are our executive officers and the members of
our board of directors. Each director is elected at our annual meeting of
stockholders and holds office until the next annual meeting of stockholders, or
until his or her successor is elected and qualified. Our bylaws permit the
board of directors to fill any vacancy and such director may serve until the
next annual meeting of stockholders or until his or her successor is elected
and qualified. The board of directors elects officers annually and their terms
of office are at the discretion of the board.

     Person                  Age              Position
     ------                  ---              --------
     Dr. David Ginsberg      54          Chief Executive Officer, President
                                         and Director
     Randall G. Smith        44          Chairman and Chief Technology
                                         Officer
     Ronald T. Linares       39          Chief Financial Officer

                                     30
<PAGE>

     Mike Chirichella        48          Vice President of Sales
     Cornelis F. Wit         55          Director
     Guus van Kesteren       61          Director
     Harold Blue             40          Director

     Dr. David Ginsberg. Dr. Ginsberg has been our Chief Executive Officer,
President and a member of our board of directors since August 2000. Prior to
joining OmniComm, Dr. Ginsberg served as Vice President of Field Operations for
Wyeth-Ayerst from 1998 to 2000. Dr. Ginsberg served as Executive Director of
Investigator and Site Services of Covance, Inc. from 1997 to 1998, and he
served as President of Concorde Clinical Research from 1994 to 1997. Dr.
Ginsberg received a B.A. from Temple University and a Doctorate in Osteopathic
Medicine from the Philadelphia College of Osteopathic Medicine.

     Randall G. Smith. Mr. Smith has been an executive officer and member of
our board of directors since 1997, serving as President and Chief Technology
Officer from May 1997 until August 2000 and thereafter as our Chief Technology
Officer. From December 1995 to May 1997, Mr. Smith was Director of Operations
for Global Communications Group. Mr. Smith received a B.S. from Purdue
University.

     Ronald T. Linares. Mr. Linares has served as our Chief Financial Officer
since April 2000. Prior to joining OmniComm, from 1996 until 1999, he was Chief
Financial Officer of First Performance Corp., a financial consulting firm, and
from 1992 to 1996, Mr. Linares served in various senior financial positions
within the Kenny Rogers Roasters Company including Chief Financial Officer of
Foodquest, Inc. from 1994 to 1996. Mr. Linares received a B.S. from the
University of Florida and a Masters in Public Accountancy from Barry
University.

     Mike Chirichella. Mr. Chirichella has served as our Vice President of
Sales since 2000, and served as our Vice President of Operations from 1999 to
2000. From 1996 to 1999, Mr. Chirichella served as Manager of Information
Systems for Office Depot. Mr. Chirichella received a B.S. from St. John's
University.

     Cornelis F. Wit. Mr. Wit has been a member of our board of directors since
November 1999 and was interim CEO from June to July 2000 before Dr. Ginsberg
joined us. Mr. Wit was the President of Corporate Finance at Noesis Capital
Corp, Boca Raton, Florida from 1994 until September 2000 and currently provides
consulting services to Noesis. Prior to 1994, Mr Wit was the CEO for DMV, USA,
the American subsidiary for Campina Melkunie, a Dutch multi-billion dollar food
and pharmaceutical ingredient company, and he also served as Vice President

                                     31
<PAGE>

International Operations for Duphar, a pharmaceutical company in Holland. Mr.
Wit received a B.A. from Nijenrode, a business university in Holland.

     Guus van Kesteren. Mr. van Kesteren has been a member of our board of
directors since November 1999. Since 1996, Mr. van Kesteren has been an advisor
to Noesis Capital Corp. Prior thereto, he was employed from 1972 until 1996 by
Johnson & Johnson in various capacities, holding the position of Vice President
International from 1985 until 1996 with responsibility for the Australasian
subsidiaries. Mr. van Kesteren received a B.A. degree from Nijenrode, a
business university located in Holland.

     Harold Blue. Mr. Blue has been a member of our board of directors since
September 2001. Since February 2001, Mr. Blue has been employed by and is a
member of the Board of Directors of Commonwealth Associates, L.P., the
Placement Agent in our current private placement Since its founding in 1993,
Mr. Blue has been a member of the Board of Directors of Proxymed, Inc., a
healthcare information systems company, and has served in various capacities at
that company including Chairman, CEO and Vice-Chairman. Mr. Blue served as a
director of iMALL from 1997 to 1999 when it was acquired by Excite@home. Mr.
Blue is currently a member of the board of directors of MonsterDaata, Inc.,
Healthwatch, Inc., eB2B Inc. and Notify Technology Corporation.

COMMITTEES OF OUR BOARD OF DIRECTORS

     Our board of directors has established a Compensation Committee and an
Audit Committee. The Compensation Committee administers our stock option plan
and makes recommendations to the board of directors concerning compensation,
including incentive arrangements, of our officers and key employees. The
members of the Compensation Committee are Messrs. Wit, van Kesteren and Blue.
The Audit Committee reviews the engagement of the independent accountants and
reviews the independence of the accounting firm. The Audit Committee also
reviews the audit and non-audit fees of the independent accountants and the
adequacy of our internal accounting controls. The members of the Audit
Committee are Messrs. Wit, van Kesteren and Blue.

MEDICAL ADVISORY BOARD

     We have formed a Medical Advisory Board whose purpose is to advise and
consult with us on the development, implementation and marketing of the
TrialMaster application. Currently, there is one member on our Medical Advisory
Board; however, we are seeking to expand its membership as we identify

                                     32
<PAGE>

additional individuals who can advise us in complimentary areas.

     Dr. Gervasio Lamas Dr. Lamas brings to us 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, medical 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.

EXPANSION OF OUR BOARD OF DIRECTORS

     In connection with our private placement of Series B Convertible
Preferred Stock in August and September 2001, in which Commonwealth Associates,
L.P. acted as placement agent, we granted Commonwealth Associates, L.P. and the
investors the right to designate one director pursuant to which Mr. Blue was
appointed to our board of directors. Our officers, directors and certain of our
principal stockholders have delivered an irrevocable proxy to Commonwealth
Associates, L.P. agreeing that until the later of August 31, 2006 or such time
as less than 25% of certain currently issued and outstanding securities are
then issued and outstanding such individuals will continue to vote for
Commonwealth Associates, L.P.'s designee a member of our board of directors.

     We also agreed that all committees of our board of directors would include
a proportionate number of directors designated by Commonwealth Associates,
L.P.. Finally, Commonwealth Associates, L.P. is also entitled to appoint an
observer to attend all meetings of our board of directors, and we agreed to
maintain directors and officers liability insurance in the amount of at least
$3,000,000.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Based solely upon a review of Forms 3 and 4 and amendments thereto

                                     33
<PAGE>

furnished to us under Rule 16a-3(d) of the Exchange Act during the fiscal year
ended December 31, 2001, we are not aware of any person that failed to file on
a timely basis, as disclosed in the aforementioned Forms, reports required by
Section 16(a) of the Exchange Act during the fiscal year ended December 31,
2001, other than Mr. Harold Blue who inadvertently failed to timely file his
Form 3, which form has subsequently been filed.

ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth certain information relating to the
compensation of (i) our Chief Executive Officer; and (ii) each of our executive
officers who earned more than $100,000 during the three most recent fiscal
years (collectively, the "Named Executive Officers.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                      Long Term Compensation
                         Annual Compensation                          Awards        Payouts
                                                                                           Securities
Name                                                                Other                  Under-            All other
And                                                                 Annual     Restricted  Lying     LTIP    Compen-
Principal                                                           Compen-    Stock       Options   Payout  sation
Position                 Year                Salary        Bonus    sation($)  Awards($)   SARs (#)  ($)     ($)
                         ----                ------        -----    ---------  ---------   --------  ------  ---
<S>                      <C>                 <C>           <C>      <C>        <C>         <C>       <C>     <C>

David Ginsberg, D.O.,    2001                $312,813      $12,500  $ -0-      $ -0-       750,000   $ -0-   $-0-
President CEO/Director   2000                $134,255/(1)/ $  -0-   $ -0-      $ -0-       240,000   $ -0-   $16,759/(2)/

Randall Smith            2001                $138,506      $  -0-   $ -0-      $ -0-       270,000   $ -0-   $   300/(3)/
Chairman, Chief          2000                $119,831      $  -0-   $ -0-      $ -0-       336,539   $ -0-   $ 6,800/(3)/
Technology Officer       1999                $ 84,278      $  -0-   $6,205     $ -0-       732,107   $ -0-   $ 4,000/(3)/

Ronald T. Linares,
Chief Financial Officer  2001                $119,044/(4)/ $  -0-   $-0-       $ -0-       300,000   $ -0-   $   700/(3/)
</TABLE>

/(1)/  Dr. Ginsberg joined our company on August 1, 2000.
/(2)/  Consists of reimbursements for moving expenses and temporary housing
         during calendar 2000.
/(3)/  Consist of car allowance payments.
/(4)/  Mr. Linares joined our company on April 17, 2000.

STOCK OPTION INFORMATION

          The following table sets forth certain information with respect to
     stock options granted in fiscal 2001 to the Named Executive Officers.

                                     34
<PAGE>

                  Option Grants in Year Ended December 31, 2001

                                INDIVIDUAL GRANTS
                                -----------------

<TABLE>
<CAPTION>
                      No. Of Securities  % of Total Options
                      Underlying         Granted to Employees  Exercise    Expiration
Name                  Options Granted       In Fiscal Year        Price          Date
----                                     --------------------  ----------  ----------
<S>                        <C>               <C>               <C>           <C>
David Ginsberg, D.O.       500,000           23.9%             $0.43           9/1/08
                           100,000            4.8%             $0.50           3/9/08
                           100,000            4.8%             $0.75         12/31/08
                            40,000            1.9%             $0.83           1/1/06
                             5,000            0.2%             $0.33           5/1/06
                             5,000            0.2%             $0.50           3/1/06

Randall G. Smith           210,000           10.1%             $0.43           9/1/08
                            50,000            2.4%             $0.45          7/20/06
                             5,000            0.2%             $0.33           5/1/06
                             5,000            0.2%             $0.50           3/1/06

Ronald T. Linares          210,000           10.1%             $0.43           9/1/08
                            40,000            1.9%             $0.32          4/23/07
                            40,000            1.9%             $0.44          7/20/06
                             5,000            0.2%             $0.33           5/1/06
                             5,000            0.2%             $0.50           3/1/06
</TABLE>

           Aggregate Option Exercises in Year Ended December 31, 2001
                           and Year-End Option Values

<TABLE>
<CAPTION>
                                               NO. OF SECURITIES
                                            UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED
                       SHARES                     OPTIONS AT          IN-THE-MONEY OPTIONS AT
                      ACQUIRED                  December 31, 2001       DECEMBER 31, 2001/(1)/
                                                -----------------       ----------------------
                        ON       VALUE
NAME                  EXERCISE  REALIZED  EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
----                  --------  --------  -----------  -------------  -----------  --------------
<S>                     <C>      <C>      <C>          <C>            <C>                    <C>
David Ginsberg, D.O.    -0-      $-0-     656,667      333,333        $  1,556              $-0-
Randall G. Smith        -0-      $-0-     466,539      140,000        $  1,556              $-0-
Ronald T. Linares       -0-      $-0-     204,666      208,334        $13,628               $-0-
</TABLE>

EMPLOYMENT AGREEMENTS

                                     35
<PAGE>

     In September 2001, we entered into a three year employment agreement with
Dr. David Ginsberg to serve as our Chief Executive Officer and President. Dr.
Ginsberg receives an annual salary of $200,000 payable in cash and/or stock
plus a minimum guaranteed bonus of $12,500 quarterly. As part of the agreement,
Dr. Ginsberg received options to purchase an aggregate of 500,000 shares of
common stock, with 166,667 being exercisable every year for a period of three
years at $.43 per share. The agreement also provides, among other things, for
participation in employee benefits available to employees and executives. Under
the terms of the agreement, we may terminate Dr. Ginsberg's employment upon 30
days notice of a material breach and Dr. Ginsberg may terminate the agreement
under the same terms and conditions. If Dr. Ginsberg is terminated by us for
any reason other than for cause, we must pay him severance benefits equal to
six months salary. The employment agreement contains customary non-disclosure
provisions, as well as a one year non-compete clause if Dr. Ginsberg leaves the
company voluntarily or a six month non-compete clause following his termination
by us.

     In September 2001, we entered into a three year employment agreement with
Mr. Randall Smith to serve as our Chief Technology Officer. Under the terms of
the agreement, as compensation for his services, we pay him an annual base
salary of $150,000 to be paid in the form of cash and/or stock and he is
eligible to receive a bonus based upon achieving technology related milestones.
Mr. Smith was granted an aggregate of 210,000 options under our 1998 Stock
Incentive Plan. The three year options, which vest 70,000 on the date of the
employment agreement, 70,000 on September 30, 2002, and 70,000 on September 30,
2003, are exercisable at the market price plus 10% per share. The agreement
also provides, among other things, for participation in employee benefit plans
or programs applicable to employees and executives. Under the terms of the
agreement, we may terminate the employment of Mr. Smith upon 30 days notice of
a material breach and Mr. Smith may terminate the agreement under the same
terms and conditions. If Mr. Smith is terminated by us for any reason other
than for cause, we must pay him severance benefits equal to six months salary.
The employment agreement contains customary non-disclosure provisions, as well
as a one year non-compete clause following the termination of the agreement.

     In September 2001, we entered into a three year employment agreement with
Mr. Ronald Linares to serve as our Chief Financial Officer. Under the terms of
this agreement, Mr. Linares receives an annual salary of $125,000 to be paid in
the form of cash and/or stock and he is eligible to receive additional
incentive compensation based upon achieving financial milestones. Mr. Linares
was granted an aggregate of 210,000 options under our 1998 Stock Incentive
Plan. The three year options, which vest 70,000 on the date of the employment
agreement, 70,000 on September 30, 2002, and 70,000 on September 30, 2003, are
exercisable at the market price plus 10% per share. The agreement also
provides, among other things, for participation in employee benefit plans or
programs applicable to employees and executives. Under the terms of the
agreement, we may terminate

                                     36
<PAGE>

the employment of Mr. Linares upon 30 days notice of a material breach and Mr.
Linares may terminate the agreement under the same terms and conditions. If Mr.
Linares is terminated by us for any reason other than for cause, we must pay
him severance benefits equal to six months salary.  The employment agreement
contains customary non-disclosure provisions, as well as a one year non-compete
clause following the termination of the agreement.

STOCK OPTION PLAN

     Our 1998 Stock Incentive Plan (the "1998 Plan") was adopted in January
1998, and was amended in July 2001 by our board of directors to increase the
number of shares available amended the 1998 Plan.  At March 8, 2002 we have
outstanding options to purchase an aggregate of 3,801,540 shares of our common
stock at exercise prices ranging from $0.25 to $5.50 outstanding under the 1998
Plan.

     The purpose of the 1998 Plan is to provide a means through which we can
attract able persons to enter and remain in our employ, and to provide a means
whereby those key persons upon whom the responsibilities of our successful
administration and management rest, and whose present and potential
contributions to our welfare are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to our welfare and promoting
an identity of interest between stockholders and these key persons.

     A further purpose of the 1998 Plan is to provide such key persons with
additional incentive and reward opportunities designed to enhance our
profitable growth. So that the appropriate incentive can be provided, the 1998
Plan provides for granting incentive stock options, non-qualified stock
options, stock appreciation rights, restricted stock awards, phantom stock unit
awards and performance share units, or any combination of the foregoing.

     We believe that the 1998 Plan encourages the participants to contribute
materially to our growth and will align the economic interests of the
participants with those of our stockholders.

General

     We have reserved 3,000,000 shares of our common stock for issuance upon
the exercise of options granted under the 1998 Plan. These shares may be
authorized but unissued shares of our common stock or may be shares that we

                                     37
<PAGE>

have reacquired, including shares we may purchase on the open market. If any
options or stock appreciation rights granted under the 1998 Plan expire or are
terminated for any reason without being exercised, or restricted shares or
performance shares are forfeited, the shares of common stock underlying that
award will again be available for grant under the 1998 Plan.

Administration of the 1998 Plan

     The Compensation Committee of our board of directors administers and
interprets the 1998 Plan. The Compensation Committee has the sole authority to
designate participants, grant awards and determine the terms of all grants,
subject to the terms of the 1998 Plan. The Compensation Committee has the full
authority to interpret the 1998 Plan and to make rules, regulations, agreements
and instruments for implementing the 1998 Plan.

Eligibility

     Grants may be made to any of our employees and to any non-employee member
of the board of directors. Key advisors who perform services for us or any of
our subsidiaries are eligible if they render bona fide services, not as part of
the offer or sale of securities in a capital-raising transaction.

Options

     Incentive stock options may be granted to employees, directors and key
advisors. Non-qualified stock options may be granted to employees, key advisors
and non-employee directors. The exercise price of common stock underlying an
option is determined by the Compensation Committee at the time the option is
granted, and may be equal to, greater than, or less than the fair market value
of such stock on the date the option is granted; provided, that the exercise
price of an incentive stock option must be equal to or greater than the fair
market value of a share of common stock on the date the incentive stock option
is granted, and the exercise price of an incentive stock option granted to an
employee who owns more than 10% of our common stock, or who is an officer or
director, cannot be less than 110% of the fair market value. Unless the
applicable option agreement provides otherwise, a participant can exercise an
option award after the option has fully vested, by paying the applicable
exercise price in cash, or, with the approval of the Compensation Committee, by
delivering shares of common stock owned by the grantee and having a fair market
value on the date of exercise equal to the exercise price of the grants, or by
such other method as the Compensation Committee approves, including payment
through a broker in accordance with

                                     38
<PAGE>

procedures permitted by Regulation T of the Federal Reserve Board.

     Options vest according to the terms and conditions determined by the
Compensation Committee and specified in the grant instrument. The Compensation
Committee determines the term of each option up to a maximum of 10 years from
the date of grant except that the term of an incentive stock option granted to
an employee who owns more than 10% of our common stock, or who is an officer or
director, may not exceed five years from the date of grant. The Compensation
Committee may accelerate the exercisability of any or all outstanding options
at any time for any reason.

Restricted Stock

     The Compensation Committee determines the number of restricted shares
granted to a participant, subject to the maximum plan limit described above.
Grants of restricted shares will be conditioned on such performance
requirements, vesting provisions, transfer restrictions or other restrictions
and conditions as the Compensation Committee may determine in its sole
discretion. The restrictions will remain in force during a restriction period
set by the Compensation Committee. If the grantee is no longer employed by us
during the restriction period or if any other conditions are not met, the
restricted shares grant will terminate as to all shares covered by the grant
for which the restrictions are still applicable, and those shares must be
immediately returned to us.

Stock Appreciation Rights

     The Compensation Committee can grant stock appreciation rights (SARs) to
any participant, subject to the maximum plan limit described above. At any
time, the Compensation Committee may grant an SAR award, either separately or
in connection with any option; provided, that if an SAR is granted in
connection with an incentive stock option, it must be granted at the same time
that the underlying option is granted. The Compensation Committee will
determine the base amount of the SAR at the time that it is granted and will
establish any applicable vesting provisions, transfer restrictions or other
restrictions as it may determine is appropriate in its sole discretion. When a
participant exercises an SAR, he or she will receive the amount by which the
value of the stock has appreciated since the SAR was granted, which may be
payable to the participant in cash, shares, or a combination of cash and shares,
as determined by the Compensation Committee.

Performance Share Awards

                                     39
<PAGE>

     The Compensation Committee can grant performance share awards to any
employee or key advisor. A performance share award represents the right to
receive an amount based on the value of our common stock, but may be payable
only if certain performance goals that are established by the Compensation
Committee are met. If the Compensation Committee determines that the applicable
performance goals have been met, a performance share award will be payable to
the participant in cash, shares or a combination of cash and shares, as
determined by the Compensation Committee.

Amendment and Termination of the 1998 Plan

     Our board of directors can at any time terminate the 1998 Plan. With the
express written consent of an individual participant, the board may cancel or
reduce or otherwise alter the outstanding awards thereunder if, in its
judgment, the tax, accounting, or other effects of the 1998 Plan or potential
payouts thereunder would not be in our best interest. The board may, at any
time, or from time to time, amend or suspend and, if suspended, reinstate, the
1998 Plan in whole or in part, provided, however, that without further
stockholder approval the board shall not:

     -    Increase the maximum number of shares of our common stock which may
           be issued on exercise of awards under the 1998 Plan;

     -    Change the maximum option price;

     -    Extend the maximum option term;

     -    Extend the termination date of the 1998 Plan; or

     -    Change the class of persons eligible to receive awards under the Plan.

Adjustment Provisions

     In the event that certain reorganizations of our company or similar
transactions or events occur, the maximum number of shares of stock available
for grant, the maximum number of shares that any participant in the 1998 Plan
may be granted, the number of shares covered by outstanding grants, the kind of
shares issued under the 1998 Plan and the price per share or the applicable
market value of such grants shall be adjusted by the committee to reflect
changes to our common stock as a result of such occurrence to prevent the

                                     40
<PAGE>

dilution or enlargement of rights of any individual under the 1998 Plan.

Change of Control and Reorganization

     Upon a change of control, as defined in the 1998 Plan, the Compensation
Committee may:

     .    determine that the outstanding grants, whether in the form of options
          and stock appreciation rights, shall immediately vest and become
          exercisable;

     .    determine that the restrictions and conditions on all outstanding
          restricted stock or performance share awards shall immediately lapse;

     .    require that grantees surrender their outstanding options and stock
          appreciation rights in exchange for payment by us, in cash or common
          stock, in an amount equal to the amount by which the then fair market
          value of the shares of our common stock subject to the grantee's
          unexercised options or stock appreciation rights exceeds the exercise
          price of those options; and/or

     .    after giving grantees an opportunity to exercise their outstanding
          options and stock appreciation rights, terminate any or all
          unexercised options and stock appreciation rights.

     Upon a reorganization, as defined in the 1998 Plan, where we are not the
surviving entity or where we survive only as a subsidiary of another entity,
unless the Compensation Committee determines otherwise, all outstanding option
or SAR grants shall be assumed by or replaced with comparable options or rights
by the surviving corporation. In addition, the Compensation Committee may
require that grantees surrender their outstanding options in exchange for
payment by us, in cash or common stock, at an amount equal to the amount by
which the then fair market value of the shares of common stock subject to the
grantee's unexercised options exceeds the exercise price of those options
and/or after accelerating all vesting and giving grantees an opportunity to
exercise their outstanding options or SARs, terminate any or all unexercised
options and SARs.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                                     41
<PAGE>

     At March 12, 2002, there were an aggregate of:

          .    8,323,697 shares of our common stock,

          .    4,215,224 shares of our Series A Convertible Preferred Stock,
               and

          .    200,000 shares of our Series B Convertible Preferred Stock

issued and outstanding. These securities comprise our outstanding voting
securities ("Voting Securities"). The holders of our shares of common stock are
entitled to one vote for each outstanding share on all matters submitted to our
stockholders. The holders of both our Series A Convertible Preferred Stock and
our Series B Convertible Preferred Stock are also entitled to vote on matters
submitted to our stockholders, with one vote for each share of our common stock
into which these series of our preferred stock are convertible. Based upon the
current conversion price for each of our Series A Convertible Preferred Stock
and our Series B Convertible Preferred Stock on March 18, 2002, these holders
would be entitled to 10,810,149 votes at a meeting of our stockholders, and our
common stockholders would be entitled to 8,323,697 votes, for an aggregate of
19,133,846 votes for all our currently outstanding Voting Securities.

     The following table sets forth, as of March 12, 2002 information known to
us relating to the beneficial ownership of shares of our Voting Securities by:

     .    each person who is the beneficial owner of more than 5% of the
          outstanding shares of our Voting Securities, aggregate all three
          classes together;
     .    each director;
     .    each executive officer; and
     .    all executive officers and directors as a group.

     Under securities laws, a person is considered to be the beneficial owner
of securities he owns and that can be acquired by him within 60 days from March
12, 2002 upon the exercise of options, warrants, convertible securities or
other understandings. We determine a beneficial owner's percentage ownership by
assuming that options, warrants or convertible securities that are held by him,
but not those held by any other person and which are exercisable within 60 days
of March 12, 2002 have been exercised or converted.

     The following table, however, gives no effect to the exercise of any
outstanding options or warrants unless specifically set forth therein. We
believe that all persons named in the table have sole voting and investment
power with

                                     42
<PAGE>

respect to all shares of Voting Securities beneficially owned by
them. Unless otherwise noted, the address for each person is 2555 Davie Road,
Suite 110-B, Davie, Florida 33317.

Name of                           No. of Shares              Percentage of
Beneficial Owner                  Beneficially Owned  Voting Securities
----------------                  ------------------  ------------------

Dr. David Ginsberg /(1)//(12)/          1,592,423            7.89%
Randall G. Smith /(2)//(12)/            1,435,085            7.31%
Ronald T. Linares /(3)//(12)/             258,690            1.33%
Cornelis F. Wit /(4)//(12)/               349,899            1.80%
Guus van Kesteren /(5)//(12)/             525,001            2.67%
Harold Blue /(6)//(12)/                   125,600                *
ComVest Venture
 Partners LLP /(7)//(12)/               6,000,000           27.11%
Noesis N.V. /(8)//(12)/                 5,949,028           26.31%
Shea Venture, LLC /(9)//(12)/           2,000,000            9.93%
Robert Priddy /(10)//(12)/              2,000,000            9.93%
All officers and directors
as a group (six persons)/(11)//(12)/    4,286,698           19.59%

*     represents less than 1%

/(1)/  Includes 656,667 shares of our common stock issuable upon the exercise of
       currently exercisable stock options, 400,000 shares of our common stock
       issuable upon conversion of the our Series B Convertible Stock, and
       400,000 shares of our common stock issuable upon conversion of warrants.

/(2)/  Includes 466,539 shares of our common stock issuable upon the exercise of
       currently exercisable stock options, and 20,000 shares of our common
       stock issuable upon conversion of stock warrants.

/(3)/  Includes 245,333 shares of our common stock issuable upon the exercise of
       currently exercisable stock options.

/(4)/  Includes 210,000 shares of our common stock issuable upon the exercise of
       currently exercisable stock options and 120,000 shares of our common
       stock issuable upon conversion of outstanding promissory notes.

/(5)/  Includes 210,000 shares of our common stock issuable upon the exercise of
       currently exercisable stock options, 70,700 shares of our common stock
       issuable upon the exercise of currently exercisable stock warrants and
       220,000 shares of our common stock issuable upon conversion of the
       outstanding promissory notes.

/(6)/  Includes 62,800 shares of our common stock issuable upon conversion of
       our Series B

                                     43
<PAGE>

      Convertible Preferred Stock and 62,800 shares of our common stock issuable
      upon conversion of stock warrants underlying the portion of the Agent's
      Option transferred to Mr. Blue following the private placement of the
      Series B Convertible Preferred Stock.

/(7)/ Includes 3,000,000 shares of our common stock issuable upon the conversion
      of shares of our Series B Convertible Preferred Stock and 3,000,000
      shares of our common stock issuable upon the conversion of outstanding
      warrants. ComVest Venture Partners, LLP is an affiliate of Commonwealth
      Associates, L.P., which acted as placement agent for us in a private
      offering. The information presented for ComVest Venture Partners, LLP,
      however, does not include any holdings of Commonwealth Associates, L.P. or
      its affiliates. ComVest Venture Partners, LLP's address is 830 Third
      Avenue, Fourth Floor, New York, NY 10022.

/(8)/ Includes 1,600,000 shares of our common stock issuable upon the conversion
      of shares of our Series B Convertible Preferred Stock, 3,479,197 shares of
      our common stock issuable upon the conversion of outstanding warrants and
      333,333 shares of our common stock issuable upon conversion of outstanding
      promissory notes. Noesis, N.V.'s address is Landhuis Joonchi, Kava Richard
      J. Beauion z/n, Curacao, Netherland Antilles.

/(9)/ Includes 1,000,000 shares of our common stock issuable upon the conversion
      of shares of our Series B Convertible Preferred Stock and 1,000,000 shares
      of our common stock issuable upon the exercise of outstanding warrants.
      Shea Venture, LLC's address is 655 Brea Canyon Road, Walnut, CA 91789.

/(10)/Includes 1,000,000 shares of our common stock issuable upon the
      conversion of shares of our Series B Convertible Preferred Stock and
      1,000,000 shares of our common stock issuable upon the conversion of
      outstanding warrants.  Mr. Priddy's address is 3435 Kingsboro Road,
      Apartment 1601, Atlanta, GA 30326.

/(11)/Includes footnotes (1) through (6) above.

/(12)/These stockholders have agreed not to convert or exercise such securities
      until such time as we have amended our charter documents to authorize at
      least 150 million shares of common stock.

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                     44
<PAGE>

of directors, is a consultant for Noesis Capital Corp.

     In December 1999, we entered into a consulting agreement with Messrs. van
Kesteren and Wit, each of whom is a member of our board of directors, providing
that we will compensate each of these individuals for sales leads or contacts
developed by them in connection with our TrialMaster system.  For the fiscal
years ended December 31, 1999, 2000 and 2001, no compensation has been earned
by either Mr. van Kesteren or Mr. Wit under this agreement.

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

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

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

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

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

     On August 17, 2000, we borrowed $100,000 from Noesis N.V., our
stockholder.

                                     45
<PAGE>

One of our directors, Mr. Wit, at that time, was President of Corporate Finance
of Noesis Capital Corp., an affiliate of Noesis N.V., and remains a consultant
to the firm.  The promissory note bore interest rate at a of 8% per annum and
had a maturity date of January 1, 2001.  At our request, Noesis N.V. agreed to
convert this promissory note into debt issued as part of a private placement of
our debt in January 2001.  The private placement debt accrues interest at 12%
per annum and is convertible into shares of our common stock at the holder's
option at a rate of $0.50 per share commencing on January 31, 2002.  This note
is now due and payable.

     In January 2001, we entered into a three-year agreement with Noesis
Capital Corp.  providing for a finder's fee in the event that, as a result of
introductions by Noesis Capital Corp., we merge with another company or
purchase more than 25% of the securities or assets of another company or sell
more than 25% of our securities or assets to another company.  The fee equals
3% of the total consideration paid in any such transaction if such
consideration is paid in cash, or 5% of the total consideration paid in any
such transaction if such consideration is other than cash.

     In January 2002, Noesis, N.V. lent us $90,000 under a promissory note
bearing interest at 5% per annum.

     We granted Randall G. Smith, Chairman of the Board and Chief Technology
Officer, warrants to purchase 20,000 shares of our common stock at an exercise
price of $0.41 per share in connection with a pledge of real property he made
in securing a loan made to us by Mr. van Kesteren in July 2001, in the amount
of $100,000.  In January 2001 we issued Mr. Smith 90,000 shares of our common
stock in reimbursement of shares that he had pledged as collateral for a loan
to us.  The shares originally pledged were used as partial payment by us for
the loan..

                                  PART IV

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

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

(a)  Exhibits
     --------

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

     2.1       Agreement and Plan of Reorganization dated July 22, 1998 /(1)/

                                     46
<PAGE>

     2.2       Amendment to Agreement and Plan of Reorganization /(2)/

     2.3       Plan of Merger /(3)/

     2.4       Agreement and Plan of Acquisition of WebIPA dated January 26,
               2000 /(4)/

     3.1       Certificate of Incorporation /(5)/

     3.2       Certificate of Designation - 5% Series A Convertible Preferred
               Stock /(6)/

     3.3       Certificate of Increase - 5% Series A Convertible Preferred
               Stock /(7)/

     3.4       Certificate of Designation - 8% Series B Convertible Preferred
               Stock /(8)/

     3.5       Amendment to Certificate of Incorporation /(9)/

     3.6       Bylaws /(10)/

     10.1      Employment Agreement and Stock Option Agreement between
               OmniComm and Randall G. Smith /(11)/

     10.2      Employment Agreement and Stock Option Agreement between
               OmniComm and David Ginsberg, D.O. /(12)/

     10.3      Employment Agreement and Stock Option Agreement between OmniComm
               and Ronald T. Linares /(13)/

     10.4      1998 Stock Incentive Plan /(14)/

     10.5      Medical Advisory Board Agreement /(15)/
     10.6      Standard Agreement - Proprietary Protection /(16)/

     23.1      Consent of Greenberg & Company, LLC, Registrants Independent
               Auditors /(17)/

------------------------

                                     47
<PAGE>

   /(1)/  Incorporated by reference to Exhibit 2 filed with our Report on Form
          8-K dated March 3, 1999.

   /(2)/  Incorporated by reference to Exhibit 2(c) filed with our Registration
          Statement on Form 10-SB dated December 22, 1998.

   /(3)/  Incorporated by reference to Exhibit 2(c) filed with our amended
          Registration Statement on Form 10-SB dated July 27, 1999.

   /(4)/  Incorporated by reference to Exhibit 2 filed with our Report on Form
          8-K dated February 9, 2000.

   /(5)/  Incorporated by reference to Exhibit 3(a) filed with our Registration
          Statement on Form SB-2 dated February 6, 1997.

   /(6)/  Incorporated by reference to Exhibit 4(b) filed with our amended
          Registration Statement on Form 10-SB dated August 25, 1999.

   /(7)/  Incorporated by reference to Exhibit 4(c) filed with our Annual
          Report on Form 10-KSB for the fiscal year ended December 31, 1999.

   /(8)/  Incorporated by reference to Exhibit 4(D) filed with our amended
          Registration Statement on Form SB-2 dated September 17, 2001.

   /(9)/  Incorporated by reference to Exhibit 4(E) filed with our Registration
          Statement on Form SB-2 dated December 27, 2001.

   /(10)/ Incorporated by reference to Exhibit 3(b) filed with our Registration
          Statement on Form SB-2 dated February 6, 1997.

   /(11)/ Incorporated by reference to Exhibit 10(a)(i) filed with our amended
          Registration Statement on Form SB-2 dated September 17, 2001.

   /(12)/ Incorporated by reference to Exhibit 10(a)(ii) filed with our amended
          Registration Statement on Form SB-2 dated September 17, 2001.

   /(13)/ Incorporated by reference to Exhibit 10(a)(iii) filed with our
          amended Registration Statement on Form SB-2 dated September 17, 2001.

   /(14)/ Incorporated by reference to Exhibit 10(c) filed with our amended
          Registration Statement on Form 10-SB dated July 27, 1999.

                                     48
<PAGE>

   /(15)/ Incorporated by reference to Exhibit 10(e) filed with our amended
          Registration Statement on Form 10-SB dated July 27, 1999.
   /(16)/ Incorporated by reference to Exhibit 10(f) filed with our amended
          Registration Statement on Form 10-SB dated August 25, 1999.

   /(17)/ Incorporated by reference to Exhibit 23 filed with our  Registration
          Statement on Form SB-2 dated December 27, 2001.

     (b)  Reports on Form 8-K
          -------------------

          None.

                                     49
<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.

                                By:  /s/David Ginsberg, D.O.
                                   ---------------------------
                                     David Ginsberg, Chief Executive Officer

                                By:  /s/Ronald T. Linares
                                     ------------------
                                     Ronald T. Linares, Chief Financial Officer

     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.

Signature                 Title                   Date
---------                 -----                   ----

/s/ David Ginsberg        Chief Executive Officer,          March 21, 2002
------------------        President and Director
David Ginsberg

/s/ Randall G. Smith      Chairman, Chief                   March 21, 2002
--------------------      Technology Officer
Randall G. Smith

/s/ Ronald T. Linares     Chief Financial Officer           March 21, 2002
---------------------
Ronald T. Linares

/s/ Cornelis F. Wit       Director                          March 21, 2002
-------------------
Cornelis F. Wit

/s/ Guus van Kesteren     Director                          March 21, 2002
---------------------
Guus van Kesteren

/s/ Harold Blue           Director                          March 21, 2002
---------------
Harold Blue

                                     50
<PAGE>

                             OMNICOMM SYSTEMS, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
                                     ASSETS
CURRENT ASSETS
   Cash                                                      $    142,826    $     90,958
   Accounts receivable                                             65,705           9,927
   Prepaid expenses                                                 2,095             -0-
                                                             ------------    ------------
   Total current assets                                           210,626         100,885

PROPERTY AND EQUIPMENT, net                                       421,512         486,481

OTHER ASSETS
   Intangible assets, net                                          48,452          53,071
   Goodwill, net                                                      -0-          79,277
   Other assets                                                     5,500          25,160
                                                             ------------    ------------

TOTAL ASSETS                                                 $    686,090    $    744,874
                                                             ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable and accrued expenses                     $  1,026,919    $  1,079,506
   Notes payable - current                                        242,963         612,500
   Notes payable related party- current                            98,322         660,000
   Deferred revenue                                                83,085          26,861
                                                             ------------    ------------
   Total current liabilities                                    1,451,289       2,378,867

CONVERTIBLE DEBT                                                2,065,000         462,500
NOTES PAYABLE, net of current portion                             242,963             -0-
NOTES PAYABLE RELATED PARTY, net of current portion                98,322             -0-
                                                             ------------    ------------
TOTAL LIABILITIES                                               3,857,574       2,841,367
                                                             ------------    ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
   Undesignated preferred stock - $.001 par value                     -0-             -0-
   4,800,000 shares authorized, no shares issued
   and outstanding

   8% Series B convertible preferred stock, - $.001                   200             -0-
   par value. 200,000 shares authorized, 200,000 and
   0 issued and outstanding, respectively; liquidation
   preference $2,000,000 and $-0-, respectively

   5% Series A convertible preferred stock - $0.001                 4,215           4,260
   par value, 5,000,000 shares authorized; 4,215,224
   and 4,260,224 issued and outstanding, respectively;
   liquidation preference $4,215,224 and $4,260,224,
   respectively

   Common stock - 20,000,000 shares authorized,                     8,944           7,975
   8,323,697 and 7,353,697 issued and outstanding,
   after deducting 620,951 shares of treasury stock,
   respectively, at $.001 par value
   Additional paid in capital - preferred                       5,519,282       3,852,919
   Additional paid in capital -  common                         8,613,635       3,767,675
   Less cost of treasury stock, cost method,                     (293,912)       (293,912)
   620,951 and 620,951 - shares, respectively
   Accumulated deficit                                        (16,932,609)     (9,434,270)
   Deferred compensation                                          (90,099)            -0-
   Subscriptions receivable                                        (1,140)         (1,140)
                                                             ------------    ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                           (3,171,484)     (2,096,493)
                                                             ------------    ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)         $    686,090    $    744,874
                                                             ============    ============
</TABLE>

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

                                      F-1
<PAGE>

                              OMNICOMM SYSTEMS, INC.
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE PERIOD JANUARY 1, 2000 TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                           Preferred Stock
                                                                                           ---------------
                                                                   5% Series A Convertible             8% Series B Convertible
                                                                   -----------------------             -----------------------
                                    Common Stock       Additional         Additional                          Additional
                                    ------------       ----------         ----------                          ----------
                                      Number   $   0.001  Paid In    Number   $   0.001  Paid In    Number   $   0.001  Paid In
                                      ------   ---------  -------    ------   ---------  -------    ------   ---------  -------
                                    of Shares  Par Value  Capital  of Shares  Par Value  Capital  of Shares  Par Value  Capital
                                    ---------  ---------  -------  ---------  ---------  -------  ---------  ---------  -------
<S>                                 <C>          <C>     <C>       <C>       <C>         <C>            <C>  <C>       <C>

<CAPTION>
                                                                                                        Total
                                                                                                        -----
                                                                                                    Shareholders'
                                                                                                    -------------
                        Accumulated          Deferred        Subscription       Treasury                Equity
                        -----------          --------        ------------       --------                ------
                          Deficit          Compensation       Receivable         Stock                (Deficit)
                          -------          ------------       ----------         -----                ---------
<S>                    <C>                  <C>              <C>                <C>                   <C>
</TABLE>

                                    F-2
<PAGE>

                              OMNICOMM SYSTEMS, INC.
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE PERIOD JANUARY 1, 2000 TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                           Preferred Stock
                                                                                           ---------------
                                                                   5% Series A Convertible             8% Series B Convertible
                                                                   -----------------------             -----------------------
                                    Common Stock       Additional         Additional                          Additional
                                    ------------       ----------         ----------                          ----------
                                      Number   $   0.001  Paid In    Number   $   0.001  Paid In    Number   $   0.001  Paid In
                                      ------   ---------  -------    ------   ---------  -------    ------   ---------  -------
                                    of Shares  Par Value  Capital  of Shares  Par Value  Capital  of Shares  Par Value  Capital
                                    ---------  ---------  -------  ---------  ---------  -------  ---------  ---------  -------
<S>                                 <C>          <C>     <C>       <C>       <C>         <C>            <C>  <C>       <C>
Balances at
December 31, 1999                   3,344,066    $3,344  $238,007  4,117,500 $    4,118  $ 3,868,726    -0-   $   -0-  $    -0-

Issuance of common
stock for services                     40,000        40    89,960

Issuance of common
stock                                 284,166       284

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

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

Payment of
subscription
receivable

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

Common stock
reacquired in the
acquisition of WebIPA                (600,000)

Issuance of
preferred stock                                                      146,000        146      145,854

Issuance costs                                                                              (206,750)

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

Exercise of stock
options                                20,000        20    15,980

Exercise of stock
warrants                              481,834       482   963,186

Exercise of stock
warrants                              187,954       188         -

Conversion of
preferred stock to
common stock                           66,667        67    99,933   (100,000)      (100)     (99,900)

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

<CAPTION>
                                                                                                        Total
                                                                                                        -----
                                                                                                    Shareholders'
                                                                                                    -------------
                        Accumulated          Deferred        Subscription       Treasury                Equity
                        -----------          --------        ------------       --------                ------
                          Deficit          Compensation       Receivable         Stock                (Deficit)
                          -------          ------------       ----------         -----                ---------
<S>                    <C>                  <C>              <C>                <C>                   <C>
Balances at
December 31, 1999      $(2,652,644)         $       -0-      $  (850,952)       $    -0-              $   610,598

Issuance of common
stock for services                                                                                         90,000

Issuance of common
stock                                                                                                         284

Exercise of stock
options                                                                                                   298,050

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

Payment of
subscription
receivable                                                       850,000                                  850,000

Acquisition of
WebIPA, Inc.                                                                                                5,633

Common stock
reacquired in the
acquisition of WebIPA                                                               (600)                    (600)

Issuance of
preferred stock                                                                                            146,000

Issuance costs                                                                                            (206,750)

Conversion of conv.
notes payable, net of
issuance costs of $33,28                                                                                   366,713

Exercise of stock
options                                                                                                     16,000

Exercise of stock
warrants                                                                                                   963,668

Exercise of stock
warrants                                                            (188)                                       -0-

Conversion of
preferred stock to
common stock                                                                                                    -0-

Conversion of notes                                                                                             -0-
payable to common
stock                                                                                                      206,118
</TABLE>

                                    F-3
<PAGE>

                              OMNICOMM SYSTEMS, INC.
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE PERIOD JANUARY 1, 2000 TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                           Preferred Stock
                                                                                           ---------------
                                                                   5% Series A Convertible             8% Series B Convertible
                                                                   -----------------------             -----------------------
                                    Common Stock       Additional         Additional                          Additional
                                    ------------       ----------         ----------                          ----------
                                      Number   $   0.001  Paid In    Number   $   0.001  Paid In    Number   $   0.001  Paid In
                                      ------   ---------  -------    ------   ---------  -------    ------   ---------  -------
                                    of Shares  Par Value  Capital  of Shares  Par Value  Capital  of Shares  Par Value  Capital
                                    ---------  ---------  -------  ---------  ---------  -------  ---------  ---------  -------
<S>                                <C>           <C>     <C>       <C>       <C>         <C>            <C>  <C>       <C>
Issuance of common
stock for services                  70,990          71   188,784

Issuance of common
stock, net of issuance
costs of $66,833                   668,334         668   600,833

Issuance of preferred
stock for services                                                   126,781     127      190,045

Conversion of notes
payable to preferred                                                  66,667      67       99,933
stock

Conversion of
preferred stock to
common stock                        96,724          97   144,989     (96,724)    (97)    (144,989)

Issuance of common
stock for services                  76,340          76    45,552

Interest expense on
detachable stock
warrants                                                 157,093

Financial advisory
compensation on
stock warrants issued                                    349,482

Net (loss) for the
year ended
December 31, 2000

Dividends on Series A
preferred stock

Balances at
December 31, 2000                7,353,627       7,975  3,767,675  4,260,224    4,260    3,852,919          -          -      -
                              ------------   --------- ----------  ---------  -------  -----------  ---------  ---------  -----

Issuance of shares                  90,000          90     74,910

Conversion of preferred
stock to common stock               30,000          30     44,970    (45,000)     (45)     (44,955)

Conversion of convertible
notes payable to
common stock, net of
issuance costs of $2,890            10,000          10      9,600

Exercise of stock options           20,000          20     15,980

Stock issued in lieu of pay
and for trade payables             170,451         170    118,051

Conversion of notes
payable to common stock            636,494         636    313,157

<CAPTION>
                                                                                                        Total
                                                                                                        -----
                                                                                                    Shareholders'
                                                                                                    -------------
                        Accumulated          Deferred        Subscription       Treasury                Equity
                        -----------          --------        ------------       --------                ------
                          Deficit          Compensation       Receivable         Stock                (Deficit)
                          -------          ------------       ----------         -----                ---------
<S>                    <C>                  <C>              <C>                <C>                   <C>
Issuance of common
stock for services                                                                                    188,855

Issuance of common
stock, net of issuance
costs of $66,833                                                                                      601,501

Issuance of preferred
stock for services                                                                                    190,172

Conversion of notes
payable to preferred
stock                                                                                                 100,000

Conversion of
preferred stock to
common stock                                                                                               -0-

Issuance of common
stock for services                                                                                     45,628

Interest expense on
detachable stock
warrants                                                                                              157,093

Financial advisory
compensation on
stock warrants issued                                                                                 349,482

Net (loss) for the
year ended
December 31, 2000        (6,573,489)                                                               (6,573,489)

Dividends on Series A
preferred stock            (208,137)                                                                 (208,137)

Balances at
December 31, 2000-       (9,434,270)           -             (1,140)            (293,912)          (2,096,493)
                      -------------   ----------    ---------------    -----------------  -------------------

Issuance of shares                                                                                     75,000

Conversion of preferred
stock to common stock                                                                                      -0-

Conversion of convertible
notes payable to
common stock, net of
issuance costs of $2,890                                                                                9,610

Exercise of stock options                                                                              16,000

Stock issued in lieu of pay
and for trade payables                                                                                118,221

Conversion of notes
payable to common stock                                                                               313,793
</TABLE>

                                    F-4
<PAGE>

                              OMNICOMM SYSTEMS, INC.
            CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
               FOR THE PERIOD JANUARY 1, 2000 TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                           Preferred Stock
                                                                                           ---------------
                                                                   5% Series A Convertible             8% Series B Convertible
                                                                   -----------------------             -----------------------
                                    Common Stock       Additional         Additional                          Additional
                                    ------------       ----------         ----------                          ----------
                                      Number   $   0.001  Paid In    Number   $   0.001  Paid In    Number   $   0.001  Paid In
                                      ------   ---------  -------    ------   ---------  -------    ------   ---------  -------
                                    of Shares  Par Value  Capital  of Shares  Par Value  Capital  of Shares  Par Value  Capital
                                    ---------  ---------  -------  ---------  ---------  -------  ---------  ---------  -------
<S>                               <C>        <C>     <C>          <C>        <C>         <C>           <C>       <C>      <C>
Issuance of common stock            13,125       13        4,187

Issuance of Series B
preferred stock, net of
issuance costs of $288,482                                                                             200,000      200   1,711,318

Deferred compensation
on stock warrant issued                                   95,689

Amortization of
deferred compensation

Interest expense on
detachable stock
warrants                                                 124,827

Interest expense
from beneficial
conversion feature
on 12% Conv. Notes                                       508,835

Rent expense on
stock warrants issued
lieu of payment                                            4,396

Debt acquistion costs
on stock warrants                                              -
issued to placement
agent for 12%
convertible notes                                        148,190

Net loss for the year
ended
December 31, 2001

Dividends on preferred
stock including
$3,383,168 in
deemed dividends                          -        -   3,383,168          -        -               -         -         -          -
                             --------------  ------- -----------  ---------  -------  --------------  --------  -------- ----------
Balances at
December 31, 2001                 8,323,697  $ 8,944 $ 8,613,635  4,215,224  $ 4,215     $ 3,807,964   200,000   $   200 $1,711,318
                             ==============  ======= ===========  =========  =======  ==============  ========  ======== ==========

<CAPTION>
                                                                                                        Total
                                                                                                        -----
                                                                                                    Shareholders'
                                                                                                    -------------
                        Accumulated          Deferred        Subscription       Treasury                Equity
                        -----------          --------        ------------       --------                ------
                          Deficit          Compensation       Receivable         Stock                (Deficit)
                          -------          ------------       ----------         -----                ---------

<S>                        <C>              <C>              <C>                <C>                   <C>
Issuance of common stock                                                                                      4,200

Issuance of Series B
preferred stock, net of
issuance costs of $288,482                                                                                1,711,518

Deferred compensation
on stock warrant issued                        (95,689)

Amortization of
deferred compensation                            5,590                                                        5,590

Interest expense on
detachable stock
warrants                                                                                                    124,827

Interest expense
from beneficial
conversion feature
on 12% Conv. Notes                                                                                          508,835

Rent expense on
stock warrants issued
lieu of payment                                                                                               4,396

Debt acquistion costs
on stock warrants
issued to placement
agent for 12%
convertible notes                                                                                           148,190

Net loss for the year
ended
December 31, 2001             (3,909,587)                                                                (3,909,587)

Dividends on preferred
stock including
$3,383,168 in
deemed dividends              (3,588,752)            -               -                    -                (205,584)
                           -------------  ------------     -----------      ---------------     -------------------
Balances at
December 31, 2001          $ (16,932,609)   $  (90,099)      $  (1,140)         $  (293,912)          $  (3,171,484)
                           =============  ============     ===========      ===============     ===================
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                    F-5
<PAGE>

                             OMNICOMM SYSTEMS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       For the years ended
                                                           December 31,
                                                         2001         2000
                                                      -----------  -----------
REVENUES -- SALES, Net                                $   170,522  $    70,976

COST OF SALES                                             194,108       52,492
                                                      -----------  -----------
GROSS MARGIN                                              (23,586)      18,484

OTHER EXPENSES
   Salaries, employee benefits and related expenses     1,829,385    2,895,108
   Rent                                                   185,040      242,471
   Consulting - marketing and sales                       (38,000)     107,600
   Consulting - medical advisory                           37,734       93,033
   Consulting - product development                        21,125       69,365
   Legal and professional fees                            215,001      963,279
   Travel                                                  66,205      374,558
   Telephone and internet                                  97,018      197,858
   Selling, general and administrative                     98,206      617,006
   Asset impairment                                         9,127          -0-
   Impairment of equity investment                            -0-      335,000
   Loss on subsidiary bankruptcy                              -0-       78,131
   Interest expense, net                                  918,834      248,286
   Depreciation and amortization                          446,326      370,278
                                                      -----------  -----------

TOTAL OTHER EXPENSE                                     3,886,001    6,591,973
                                                      -----------  -----------

INCOME (LOSS) BEFORE TAXES                             (3,909,587)  (6,573,489)

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

NET INCOME (LOSS)                                      (3,909,587)  (6,573,489)

PREFERRED STOCK DIVIDENDS, including deemed            (3,640,009)    (208,137)
dividends of $3,383,168 during 2001                            --           --

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON              $(7,549,596) $(6,781,626)
STOCKHOLDERS                                          ============ ============

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE         $     (0.95) $     (1.16)
                                                      ===========  ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING -- BASIC AND DILUTED                        7,960,069    5,859,593
                                                      ===========  ===========

See accompanying summary of accounting policies and notes to financial
statements

                                    F-6
<PAGE>

                             OMNICOMM SYSTEMS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         For the years ended
                                                              December 31,
                                                           2001         2000
                                                       -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                   $(3,909,587) $(6,573,489)
   Adjustment to reconcile net income to net cash
   provided by (used in)
   operating activities:
   Impairment of equity investment                             -0-      335,000
   Loss on subsidiary bankruptcy                               -0-       78,131
   Asset impairment                                          9,127          -0-
   Depreciation and amortization                           446,326      370,278
   Common stock issued for services                        118,221      324,482
   Preferred stock issued for services                         -0-      190,172
   Accrued placement agent fee                                 -0-      (66,833)
   Interest expense from beneficial conversion             508,835          -0-
   feature on 12% convertible note
   Warrants issued in early lease termination                4,396          -0-
   Amortization of deferred compensation                     5,590          -0-
   Professional fee expense from detachable warrants           -0-      349,482
   Interest expense on detachable warrants                 124,827      157,093
   Change in assets and liabilities:
   Accounts receivable                                     (55,778)      (1,468)
   Inventory                                                   -0-       10,166
   Prepaid expenses                                         (2,095)         -0-
   Intangible assets                                       (49,080)         -0-
   Shareholder loans                                           -0-        3,406
   Other assets                                              5,500        1,800
   Accounts payable and accrued expenses                   (85,145)     586,889
   Sales tax payable                                           -0-       (1,818)
   Deferred revenue                                         56,224       26,861
                                                       -----------  -----------
Net cash provided by (used in) operating activities     (2,822,639)  (4,209,848)

CASH FLOWS FROM INVESTING ACTIVITIES
   Equity investment in EMN                                    -0-     (335,000)
   Purchase of WebIPA                                          -0-        5,033
   Purchase of property and equipment                      (81,911)    (333,765)
                                                       -----------  -----------
Net cash provided by (used in) operating activities        (81,911)    (663,732)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from convertible notes, net of issuance       794,900          -0-
costs
Payments on notes payable                                  (60,000)     (45,000)
Proceeds from notes payable                                490,000    1,440,000
Issuance of 5% Series A convertible preferred stock,           -0-      789,250
net of issuance
costs
Issuance of 8% Series B convertible preferred stock,     1,711,318          -0-
net of issuance
costs
Issuance of common stock, net of issuance costs              4,200      668,618
Proceeds from stock warrant exercise                           -0-      963,668
Proceeds from stock option exercise                         16,000       20,739
                                                       -----------  -----------
Net cash provided by (used in) financing activities      2,956,418    3,837,275
                                                       -----------  -----------

Net increase (decrease) in cash and cash equivalents        51,868   (1,036,305)
Cash and cash equivalents at beginning of period            90,958    1,127,263
                                                       -----------  -----------
Cash and cash equivalents at end of period                $142,826      $90,958
                                                       ===========  ===========

                                    F-7
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     For the years ended
                                                                        December 31,
                                                                      2001         2000
                                                                      ----         ----
<S>                                                                <C>           <C>
  Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for:

  Income tax paid                                                    $    -0-     $    -0-
                                                                     ========     ========
  Interest paid                                                      $ 50,363     $ 65,827
                                                                     ========     ========

  Non-cash Transactions
  Conversion of convertible notes payable into shares                $ 12,500     $400,000
  of common stock
  Common stock issued in exchange for notes payable                  $349,666     $206,118
  and accrued interest
  Preferred stock issued in exchange for notes payable and accrued   $    -0-     $206,118
  interest
  Common stock issued for services and in lieu of pay                $148,221     $100,000
  Convertible notes payable issued in exchange for accrued expenses  $ 60,000     $    -0-
  Conversion of notes payable into 12% convertible notes             $760,000     $    -0-
  Shares issued as collateral for a note payable                     $ 75,000     $    -0-
  Conversion of Series A preferred stock into shares of common stock $ 45,000     $245,086
</TABLE>

Additional Non-Cash Investing and Financing Transactions;

Acquisition of all of the outstanding common stock of WebIPA, Inc. on February
6, 2000.
         Assets acquired, fair value      $ 5,033
         Cash acquired                      5,033
                                          -------
         Net cash paid for acquisition    $   -0-
                                          =======

The Company amended and restated $640,000 in promissory notes on August 31,
2001 in connection with a private placement of the Company's 8% Series B
Preferred Stock.  In addition, the Company included $42,571 in accrued interest
due on the promissory notes in the principal amount of the amended and restated
notes payable.  The aggregate amounts due on the amended and restated notes
payable is $682,571.

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 $293,912 to account for the stock appreciation rights.

    See accompanying summary of accounting policies and notes to financial
    statements

                                    F-8
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

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

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

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

            BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
            -----------------------------------------------------

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

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

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

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

            Certain reclassifications have been made in the 2000 financial
            statements to conform to the 2001 presentation.

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

            The Company operates in one reportable segment.

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

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

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

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

            MAJOR CUSTOMERS
            ---------------

            During the year ended December 31, 2001 CV Therapeutics accounted
            for approximately 44% and Optima Worldwide, Ltd. ("Optima")
            accounted for approximately 16% of the Company's revenues. During
            the year ended December 31, 2000 Optima accounted for approximately
            33% of the Company's revenues.

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

                                    F-9
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

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

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

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

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

            Intangible assets are amortized over periods ranging from one to
            five years. The Company continually reviews the recoverability of
            the carrying value of these assets using the methodology prescribed
            in SFAS 121. The Company also reviews long-lived assets and the
            related intangible assets for impairment whenever events or changes
            in circumstances indicated the carrying amounts of such assets may
            not be recoverable. If it is determined the carrying amount of the
            assets is permanently impaired then intangible assets are written
            down to fair value and the useful life of the asset may be changed
            prospectively. Fair value is determined based on discounted cash
            flows, appraised values or management's estimates, depending upon
            the nature of the assets. As of December 31, 2001, management
            believes no revision to the remaining useful lives or write-down of
            intangible assets is required.

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

            Deferred revenue represents cash advances received in excess of
            revenue earned on on-going contracts. Payment terms vary with each
            contract but may include an initial payment at the time the contract
            is executed, with future payments dependent upon the completion of
            certain contract phases or targeted milestones. In the event of
            contract cancellation, the Company is entitled to payment for all
            work performed through the point of cancellation. The Company had
            $83,085 in deferred revenue relating to contracts for services to be
            performed over the next six to nine months.

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

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

            The Company recognizes sales, for both financial statement and tax
            purposes in accordance with SEC Staff Accounting Bulletin No. 101
            "Revenue Recognition in Financial Statements (SAB 101)". SAB 101
            requires that revenues be recognized ratably over the life of a
            contract. In accordance with SAB 101 the Company will periodically
            record deferred revenues relating to advance payments in contracts.
            The Company had $83,085 in deferred revenue relating to contracts
            for services to be performed over the next six to nine months.

                                    F-10
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

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

            Advertising costs are expenses as incurred. Advertising costs were
            $10,293 and $127,175 for the years ended December 31, 2001 and 2000,
            respectively.

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

            Software development costs incurred prior to achieving technological
            feasibility are charged to research and development expense when
            incurred. Research and development expense was approximately
            $377,829 in 2001 and $454,311 in 2000.

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

            The Company uses the intrinsic-value method of accounting for
            stock-based awards granted to employees and, accordingly, does not
            recognize compensation expense for its stock-based awards to
            employees in the Consolidated Statements of Income. See Note 16 for
            pro forma information on the impact of the fair-value method of
            accounting for stock options.

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

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

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

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

            Basic earnings per share were calculated using the
            weighted average number of shares outstanding of 7,960,069 and
            5,859,593 for the years ended December 31, 2001 and 2000;
            respectively. There were no differences between basic and diluted
            earnings per share. Options to purchase 3,584,039 shares of common
            stock at prices ranging from $.25 to $5.50 per share were
            outstanding at December 31, 2001. Stock warrants to purchase
            11,595,428 shares of common stock at prices ranging from $0.25 to
            $10.00 per share were outstanding at December 31, 2001. The Company
            granted a Unit Purchase Option ("Agent Option") to the Placement
            Agent of its 8% Series B Convertible Preferred Stock that provide
            the Placement Agent the ability to purchase 27,000 Series B
            Preferred Shares with 1,080,000 detachable common stock warrants.
            The exercise of the Agent Option would result in the issuance of an
            aggregate of 2,160,000 shares of common stock at an exercise price
            of $0.25 per share. The options, warrants and Agent Options were
            not included in the computation of diluted earnings per share
            because they have an anti-dilutive effect on net loss per share.
            The Company's convertible debt and convertible preferred stock have
            an anti-dilutive effect on net loss per share.

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

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

                                    F-11
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

            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.

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

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

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

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

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

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

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

            Management determined that warrants issued during 2000 by the
            Company should have been valued in accordance with Statement of
            Financial Accounting Standards No. 123 "Accounting for Stock
            Compensation" ("SFAS 123"). SFAS 123 requires businesses to value
            stock based compensation utilizing a fair value approach. Upon
            review, management determined that the

                                    F-12
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

            Black-Scholes option pricing model should have been used to estimate
            the respective fair value of warrants that had been issued in
            connection with certain bridge loans the Company entered into in
            2000 and as additional compensation with advisors.

            As a result, the financial statements of OmniComm Systems as of
            December 31, 2000 and for the year then ended have been restated to
            reflect the utilization of the Black-Scholes pricing model where
            applicable. The effect of the restatement was to increase additional
            paid in capital by $506,575 and increase accumulated deficit by
            $506,575 resulting in no change to the total stockholders' equity as
            of December 31, 2000; and to increase the net loss attributable to
            common stockholders by $506,575, a non-cash charge, for the year
            ended December 31, 2000.

            A summary of the effects of the restatement is as follows;

            -------------------------------------------------------------------
            At December 31, 2000        As Previously Reported      As
            ====================        ======================      ==
                                                                    Restated
                                                                    ========
            -------------------------------------------------------------------
            Series A preferred stock                     4,260            4,260
            -------------------------------------------------------------------
            Common stock                                 7,975            7,975
            -------------------------------------------------------------------
            Additional paid in capital               7,114,019        7,620,594
            -------------------------------------------------------------------
            Accumulated deficit                     (8,927,695)      (9,434,270)
            -------------------------------------------------------------------
            Treasury stock                            (293,912)        (293,912)
            -------------------------------------------------------------------
            Subscriptions receivable                    (1,140)          (1,140)
                                                       =======          =======
            -------------------------------------------------------------------

-------------------------------------------------------------------------------
Stockholders' equity                               $(2,096,493)     $(2,096,493)
                                                  ============     ============
-------------------------------------------------------------------------------


-------------------------------------------------------------------------------
For the year ended December 31, 2000    As Previously Reported   As Restated
====================================    ======================   ===========
Legal and professional fees                            613,797         963,279
-------------------------------------------------------------------------------
Interest expense                                        91,193         248,286
-------------------------------------------------------------------------------
Net loss                                           (6,066,914)     (6,573,489)
-------------------------------------------------------------------------------
Net loss attributable to common stockholders       (6,275,051)     (6,781,626)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
Basic and diluted net loss per common share            $(1.07)         $(1.16)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

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

            The Company has incurred substantial losses in 1999, 2000 and 2001.
            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, 2001, 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, 2001. 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

                                    F-13
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)
            acceptable to us, if at all.

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

            Included in Intangible Assets are the following assets:

                                       December 31, 2001
                                                           Accumulated
                               Cost                        Amortization
                               ----                        ------------
Covenant not to compete           $120,000                             $120,000
Software development                87,500                               87,500
costs
Organization costs                     539                                  539
Debt acquisition costs             301,888                              253,436
                                  --------                             --------
                                  $509,927                             $461,475
                                  ========                             ========

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

            The covenant not to compete and the software development costs were
            acquired as a result of the acquisition of Education Navigator, Inc.
            (EdNav) on June 26, 1998. The covenant was for a two-year period and
            was being amortized ratably over that time. The software development
            costs were capitalized and were amortized ratably over a three-year
            period, as that was the expected life of the various products.
            Amortization expense was $14,583 for software development costs for
            the year ended December 31, 2001.

            During the year ended December 31, 2001, the Company issued
            Convertible Notes with gross proceeds totaling $1,615,000. The
            Company recorded total debt acquisition fees of $218,440 of which
            $70,250 were to be paid in cash and $148,190 were deemed additional
            compensation derived from 323,000 stock warrants issued to the
            placement agent as additional compensation. The debt acquisition
            costs are being amortized ratably over the term of the notes.
            Amortization expense of the debt acquisition costs totaled $181,659
            for the year ended December 31, 2001, and approximately $2,890 of
            the debt acquisition costs were reclassified as stock issuance
            costs in connection with the conversion of $12,500 (original cost)
            of the convertible notes into common stock of the Company.

            Included in Goodwill, as a result of the EdNav acquisition at
            December 31, 2001 and December 31, 2000 is the cost of $475,665 and
            accumulated amortization of $475,665 and $396,388 respectively. The
            goodwill was amortized ratably over a period of three years.
            Goodwill amortization totaled $79,277 for the year ended December
            31, 2001.

                                    F-14
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)
NOTE 6:     PROPERTY AND EQUIPMENT, AT COST
            -------------------------------

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                        December 31, 2001                 December 31, 2000
                                  Accumulated                       Accumulated        Estimated
                      Cost        Depreciation         Cost         Depreciation         Useful
                      ----        ------------         ----         ------------         ------
                                                                                          Lives
                                                                                          -----
<S>                <C>              <C>              <C>             <C>                 <C>
Computer and       $420,298         $169,408         $387,862        $ 88,812
office
equipment                                                                                5 years
Leasehold             3,299              732            1,699             201
improvements                                                                             5 years
Computer            260,287          117,349          212,412          60,067
software                                                                                 3 years
Office furniture     42,350           17,231           42,350           8,762            5 years
                  ---------        ---------        ---------       ---------
                   $726,234         $304,720         $644,323        $157,842
                  =========        =========        =========       =========
</TABLE>

            Depreciation expense for the years ended December 31, 2001 and 2000
            was $146,879 and $128,454 respectively. Included in depreciation
            expense for 2000 is approximately $3,059 related to assets from the
            Company's European subsidiary. As described in Note 17, 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, 2001 and 2000 since the
            recoverability of any of those assets is considered unlikely.

NOTE 7:     ACCOUNTS PAYABLE AND ACCRUED EXPENSES
            -------------------------------------
            Accounts payable and accrued expenses consists of the following at
            December 31, 2001 and 2000:
                                           2001                        2000
                                           ----                        -----
Accounts payable                         $  155,531                  $  412,571
Accrued payroll and related costs            41,818                      52,218
Other accrued expenses                       77,083                     211,631
Accrued interest                            212,089                      67,430
Accrued dividends                           412,879                     208,137
Accrued expenses of OmniTrial BV            127,519                     127,519
                                         ----------                  ----------
   Total accounts payable and accrued
     expenses                            $1,026,919                  $1,079,506
                                         ==========                  ==========

            Other accrued expenses consist primarily of placement agent fees due
            on private placements of our debt and equity securities that
            occurred during 2000 and 2001.

                                    F-15
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

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

            Basic earnings per shares ("EPS") is computed by dividing income
            available to common shareholders (which for the Company equals its
            net loss) by the weighted average number of common shares
            outstanding, and dilutive EPS adds the dilutive effect of stock
            options and other common stock equivalents. Antidilutive shares
            aggregating 28,149,616 have been omitted from the calculation of
            dilutive EPS for the fiscal year ended December 31, 2001. A
            reconciliation between numerators and denominators of the basic and
            diluted earnings per shares is as follows:

<TABLE>
<CAPTION>
                       Year Ended December 31, 2001                Year Ended December 31, 2000
                       ----------------------------                -----------------------------
                    Income        Shares       Per-Share       Income        Shares        Per-
                                                                                          Share
                   Numerator     Denominat      Amount        Numerator    Denominator    Amount
                   ---------     ---------      ------        ---------    -----------    ------
                                    or
                                    --
<S>              <C>             <C>            <C>         <C>               <C>          <C>
Basic EPS        $(7,549,596)    7,960,069      $(0.95)     $(6,781,626)      5,859,593    $(1.16)
Effect of
Dilutive
Securities
None.                -0-            -0-         -0-              -0-            -0-           -0-
                 -----------     ---------      ------      -----------       ---------    ------
Diluted EPS      $(7,549,596)    7,960,069      $(0.95)     $(6,781,626)      5,859,593    $(1.16)

</TABLE>

NOTE 9:     ACQUISITIONS
            ------------

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

            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 using 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.

                                    F-16
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)
NOTE 10:    EQUITY INVESTMENTS
            ------------------

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

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

            On March 20, 2000, the Company paid EMN $335,000, received 10% of
            EMN's equity and a seat on EMN's board. On April 20, 2000, the
            Company did not make the second payment of $310,000 or the stock
            payment of 41,883 shares to EMN and the stock purchase agreement
            did not close.  On July 11, 2000, the Company and EMN agreed to
            renegotiate the terms of their agreement subject to the Company's
            success in finding adequate financing. As part of the renegotiation
            the Company resigned its seat on EMN's board and offered to sell
            its 10% interest back to EMN. The Company accounts for its
            investment in EMN under the cost method of accounting. The Company
            has established a valuation allowance of $335,000 against its
            investment in EMN to reflect the uncertainty of the fair market
            value of the investment as of December 31, 2001 and 2000.

NOTE 11:    NOTES PAYBLE
            ------------

            EDUCATION NAVIGATOR
            -------------------

            The Company satisfied the note payable to the selling shareholders
            of Education Navigator on August 24, 2001 for 356,688 shares of
            common stock which included remuneration for accrued interest and
            amounts payable under non-compete agreements. The principal amount
            due on August 24, 2001 was $127,500.

            SHORT-TERM BORROWINGS
            ---------------------

            At December 31, 2001 the Company owed $0 under short-term notes
            payable. The Company made payments totaling $10,000 during the
            quarter ended December 31, 2001 in satisfaction of a note payable
            with an original principal amount of $30,000.

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

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

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

            At December 31, 2001, the Company owed $196,644 in related party
            notes payable. The promissory notes were amended and restated on
            August 31, 2001 with new terms which include an interest rate of 8%
            per annum, and with one half of the principal payable upon the
            closing of

                                    F-17
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)
            any financing by the Company resulting in gross proceeds in excess
            of $2,000,000, and the balance of the principal together with
            accrued interest payable no later than August 31, 2003.

NOTE 12:    CONVERTIBLE NOTES
            ------------------

            During the first quarter of 1999, the Company issued 10%
            Convertible Notes Payable in the amount of $862,500 pursuant to a
            Confidential Private Placement Memorandum. There were costs of
            $119,625 associated with this offering. The Company also granted
            the agent the option to purchase 250,000 common shares at $.001 per
            share. The agent exercised the option. The net proceeds to the
            Company were $742,875. The notes bear interest at ten percent
            annually, payable semi-annually. The notes are convertible after
            maturity, which is five years, into shares of common stock of the
            Company at $1.25 per share. As of December 31, 2001 approximately
            $412,500 of the Convertible Notes had been converted into 330,000
            shares of common stock of the Company.

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

NOTE 13:    COMMITMENTS AND CONTINGENCIES
            -----------------------------

            The Company currently leases office space under operating leases.
            The minimum future lease payments required under the Company's
            operating leases at December 31, 2001 are as follows:

              2002                  $66,900
              2003                   44,600
              2004                        0
              2005                        0
              2006                        0
                                  ---------
              Total                $111,500
                                  =========

            In addition, to annual base rental payments, the Company pays for
            the operating expenses associated with its leased office space and
            is responsible for any escalation in operating expenses as
            determined in the lease. Rental expense was $185,040 and $242,471
            for the years ended December 31, 2001 and 2000. The Company incurred
            rental expense of $36,000 in 2001 in connection with an office in
            Tampa that was closed during 2001. The Company recognized $4,396 in
            rent expense in connection with warrants issued to the landlord of
            its former corporate office in connection with the early termination
            of its lease. The warrants were valued and the expense was
            determined utilizing the Black-Scholes method.

            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

                                    F-18
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

            appointed a liquidating trustee. The Company claimed that certain
            assets in the possession of OmniTrial were paid for by the Company
            and therefore should not be part of the liquidating assets of
            OmniTrial. The bankruptcy trustee rejected that claim and told the
            Company that as part of the OmniTrial bankruptcy estate the assets
            would be sold to diminish any deficiency of the estate. On July 5,
            2001 the Company signed a settlement agreement providing for the
            return of the assets to the Company in exchange for a payment of
            $10,000 that was made on or about July 5, 2001.

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

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

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

            In December 2000, the Company received a demand letter from a
            former employee for fees owed relating to an advisers agreement
            between 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.

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

            During 2001, the Company entered into three-year employment
            agreements with its President/Chief Executive Officer,
            Chairman/Chief Technology Officer and Chief Financial Officer with
            compensation for up to six months if terminated under certain
            conditions. Under separate stock option agreements entered into
            concurrently with their employment agreements, the President/Chief
            Executive Officer was granted incentive stock options to purchase
            500,000 shares of common stock at $0.43 per share and the
            Chairman/Chief Technology Officer and Chief Financial Officer were
            granted incentive stock options to purchase 210,000 shares of
            common stock at $0.43 per share respectively.

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

            During 2001, the Company entered into a one-year financial advisory
            agreement with Noesis Capital to assist the Company in performing
            certain financial advisory services including the sale of
            securities, and the possible sale, merger or other business
            combination involving the Company.Pursuant to this agreement, the
            Company is obligated to pay $90,000 in professional fees.

                                    F-19
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

NOTE 14:    RELATED PARTY TRANSACTIONS
            --------------------------

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

            In December 1999, we entered into a consulting agreement with
            Messrs. van Kesteren and Wit, each of whom is a member of our Board
            of Directors, providing that we will compensate each of these
            individuals for sales leads or contacts developed by them in
            connection with our TrialMaster system. For the fiscal years ended
            December 31, 2000 and 2001, no compensation was earned by either
            Mr. van Kesteren or Mr. Wit under this agreement.

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

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

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

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

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

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

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

                                    F-20
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

NOTE 15:    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 16:    STOCKHOLDERS' EQUITY (DEFICIT)
            ------------------------------

            The authorized capital stock of the Company consists of 20,000,000
            shares of common stock, $.001 par value per share, and 10,000,000
            shares of preferred stock, par value $.001 per share, of which
            5,000,000 shares have been designated as Series A Convertible
            Preferred Stock and 200,000 shares have been designated as Series B
            Convertible Preferred Stock.

            As of December 31, 2001 the Company had the following outstanding
            securities:

            .   8,323,697 shares of common stock issued and outstanding;
            .   11,595,428 warrants issued and outstanding to purchase shares
                of our common stock;
            .   4,215,224 shares of our 5% Series A Convertible Preferred Stock
                issued and outstanding, and
            .   200,000 shares of our 8% Series B Convertible Preferred Stock
                issued and outstanding

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

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

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

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

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

                                    F-21
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

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

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

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

                .   the shares are not redeemable,

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

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

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

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

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

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

            There were $412,879 and $208,137 of accrued and unpaid dividends on
            the Series A Convertible Preferred Stock at December 31, 2001 and
            2000, respectively.

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

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

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

                .   the stated value of each share is $10.00 per share,

                                    F-22
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

                .   the shares are not redeemable,

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

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

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

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

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

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

                .   the holders of the Series B Convertible Preferred Stock
                    were granted certain registration rights covering the
                    shares of our common stock issuable upon the conversion of
                    the Series B Convertible Preferred Stock,

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

            There were arrearages of $51,270 and $-0- on the Series B
            Convertible Preferred Stock for undeclared dividends as of December
            31, 2001 and 2000. The per share arrearage as of December 31, 2001
            was $0.25.

            WARRANTS
            --------

            We have issued and outstanding warrants to purchase a total of
            11,595,428 shares of our common stock, including:

                .   warrants to purchase 623,167 shares of our Series A
                    Preferred Stock at an exercise

                                    F-23
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

                    price of $2.00 per share expiring December 2002 which were
                    issued by us in connection with the offering of the Series
                    A Preferred Stock offering.

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

                .   warrants to purchase 1,736,665 shares of our Series A
                    Preferred Stock at an exercise price of $2.00 per share
                    expiring December 2002 which were issued by us to Noesis,
                    N.V. as additional consideration paid for its services in a
                    private placement of our securities from June 1999 to
                    January 2001 in which Noesis, N.V. acted as placement
                    agent.

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

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

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

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

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

            (in thousands, except for per share data)         2001         2000
                                                              ----         ----
            Net loss available to common stockholders
                As reported                               $(7,550)     $(6,782)
                Pro forma                                 $(8,499)    $(12,619)
            Basic and diluted net loss per share
                As reported                                $(0.95)      $(1.16)
                Pro forma                                  $(1.07)      $(2.15)

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

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

                                    F-24
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

                                                          2001          2000
                                                          ----          ----
            Risk-free interest rate                      5.00%         5.00%
            Expected years until exercise              6 Years       6 Years
            Expected stock volatility                  170.0 %        150.0%
            Dividend yield                                  0%            0%

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

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

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

<TABLE>
<CAPTION>
Year ended December 31,                          2001                      2000
                                   ----------------------------------------------------
                                                    Weighted                  Weighted
                                                     Average                   Average
                                                    Exercise                  Exercise
                                     Options         Price         Options      Price
                                     -------         -----         -------      -----
<S>                                  <C>                 <C>       <C>              <C>
Outstanding at beginning
of period                            3,316,006           $2.28     3,562,916        $1.00
          Granted                    2,089,500           $0.48     1,851,994        $3.46
          Exercised                     20,000           $0.80     1,045,894        $0.30
          Cancelled                  1,801,467           $2.09     1,053,010        $1.97
                                     ---------           -----     ---------        -----

Outstanding at end of period         3,584,039           $1.33     3,316,006        $2.28
                                     =========           =====     =========        =====
Exercisable at end of period         2,636,372           $1.47     1,512,848        $2.19
                                     =========           =====     =========        =====
</TABLE>

             The following table summarizes information about stock options
             outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                         Outstanding                              Exercisable
----------------------------------------------------------------------------------------------

                                        Weighted
                                         Average
                                        Remaining    Weighted                      Weighted
                                         Years of     Average                       Average
Range of           Number of          Contractual    Exercise      Number of       Exercise
Exercise             Options                 Life       Price        Options          Price
-------              -------                 ----       -----        -------          -----
Prices
------
<S>                <C>                       <C>        <C>          <C>              <C>
$0.25 - $0.47      1,606,501                 5.50       $0.41        834,333          $0.40
$0.50 - $0.83        940,333                 7.34       $0.58        764,333          $0.58
$1.00 - $2.50        791,205                 4.07       $1.73        791,206          $1.73
$2.61 - $5.50        246,000                 5.65       $4.96        246,000          $4.96
</TABLE>

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

                                    F-25
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (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.

            During 2000, Company issued 245,064 common stock warrants to
            financial advisors in connection with the early termination of an
            advisory agreement.  The Company valued the warrants using the
            Black-Scholes Option Pricing Model ("Black-Scholes Model") and
            recorded $349,482 in legal and professional fees.

            During 2000, the Company issued 135,000 detachable common stock
            warrants as additional compensation in connection with short-term
            bridge loans that were used for working capital.  The Company
            valued the warrants utilizing the Black-Scholes Model and recorded
            $157,093 as interest expense.

            During 2001, the Company issued an aggregate of 170,451 shares of
            common stock to employees and advisors with a fair market value of
            $118,221 for services rendered under employment and consulting
            agreements.

            During 2001, the Company issued 50,000 warrants to advisors as
            compensation for services to be rendered over periods ranging from
            3 to 5 years.  The Company valued the warrants in accordance with
            SFAS 123 utilizing the Black-Scholes Model.  The Company recorded
            $95,689 in deferred compensation and is amortizing the amounts over
            the expected life of the consulting services to be rendered. The
            Company recognized non-cash compensation expense totaling $5,590 in
            connection with the warrant grants.

            During 2001, the Company issued 10,000 warrants in connection with
            the early termination of the lease on its former corporate offices.
            The Company valued the warrants in accordance with SFAS 123
            utilizing the Black-Scholes Model. The Company recorded $4,396 in
            rent expense.

            In July 2001, the Company issued 323,000 warrants to Noesis Capital
            as additional compensation for acting as placement agent in the
            Company's private placement of its 12% Convertible Notes. The
            Company valued the warrants utilizing the Black-Scholes Model and
            recorded $148,190 in debt acquisition costs that are being amortized
            ratably over the life of Convertible Notes.

            In September 2001 the Company issued 8,000,000 warrants to
            investors in the Company's private placement of its Series B
            Convertible Preferred Stock. The warrants were valued at $3,383,168
            utilizing the Black-Scholes Model.  The net proceeds received in
            the Series B Convertible Preferred Stock offering were allocated to
            the Series B Preferred Stock and the Company recognized a deemed
            dividend on preferred stock, of $3,383,168 resulting in a charge to
            retained earnings and a credit to additional paid-in capital within
            the stockholders' equity of the Company as of December 31, 2001.

            During 2001 the Company issued 220,700 detachable common stock
            warrants as additional compensation in connection with short-term
            bridge loans that were used for working capital purposes.  The
            Company valued the warrants utilizing the Black-Scholes method and
            recorded $124,826 as interest expense.

NOTE 17:    OMNITRIAL, B.V. BANKRUPTCY
            --------------------------

            On or about September 6, 2000, the Company's wholly owned
            subsidiary, OmniTrial B.V. ("OmniTrial") submitted a petition for
            bankruptcy protection from the bankruptcy court of the Netherlands.
            The court appointed a liquidating trustee.  The Company claimed
            that certain assets in the possession of OmniTrial were paid for by
            the Company and therefore should not

                                    F-26
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)
            be part of the liquidating assets of OmniTrial.  The bankruptcy
            trustee rejected that claim and told the Company that as part of
            the OmniTrial bankruptcy estate the assets would be sold to
            diminish any deficiency of the estate.  On July 5, 2001 the Company
            signed a settlement agreement providing for the return of the
            assets to the Company in exchange for a payment of $10,000.

NOTE 18:    INCOME TAXES
            ------------
            Income taxes are accrued at statutory US and state income tax
            rates.  Income tax expense is as follows:

                                                 12/31/01            12/31/00
                                                 ========            ========
            Current tax expense (benefit):
               Income tax at statutory rates           $-0-               $-0-
            Deferred tax expense (benefit):
               Amortization of goodwill and        (59,396)           (70,640)
               covenant
               Operating loss carryforward      (1,121,779)        (2,212,340)
                                                -----------        -----------
                                                (1,181,175)        (2,282,980)
            Valuation allowance                   1,181,175          2,282,980
                                                -----------        -----------
            Total tax expense (benefit)                $-0-               $-0-
                                                      =====              =====

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

                                                   12/31/01           12/31/00
                                                   ========           ========
            Deferred tax assets:
            Amortization of intangibles            $283,698           $224,302
            Operating loss carryforwards          4,257,868          3,136,089
                                                 ----------         ----------
               Gross deferred tax assets          4,541,566          3,360,391
               Valuation allowance              (4,541,566)        (3,360,391)
                                                 ----------         ----------
               Net deferred tax asset                  $-0-               $-0-
                                                 ==========         ==========

            The Company has net operating loss carryforwards (NOL) for income
            tax purposes of approximately $11,303,000.  This loss is allowed to
            be offset against future income until the year 2021 when the NOL's
            will expire.  Other timing differences relate to depreciation and
            amortization for the stock acquisition of Education Navigator in
            1998.  The tax benefits relating to all timing differences have
            been fully reserved for in the valuation allowance account due to
            the lack of operating history and the substantial losses incurred
            in 2001.

NOTE 19:    SUBSEQUENT EVENTS
            -----------------

            The Company is currently in default on interest payments owed
            totaling $22,560 on its 10% Convertible Notes.  The terms of the
            notes provides a payment grace period of thirty days in which to
            make required semi-annual interest payments.  The company was in
            default effective January 30, 2002.

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

            Commonwealth Associates, L.P. acted as our placement agent in
            connection with the September 2001 private placement of units which
            included our 8% Series B Convertible Preferred Stock. We issued
            Commonwealth Associates a seven year option
            ("Placement Agent Option") to purchase 2.7 units, each unit
            consisting of 10,000 shares of Series B Convertible

                                    F-27
<PAGE>

                              OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (continued)

            Preferred Stock and warrants to purchase 400,000 shares of common
            stock, exercisable at $100,000 per unit, as additional compensation.
            At the time we issued the Placement Agent Option the company only
            had 200,000 shares of Series B Preferred Stock authorized. On
            February 7, 2002, the company filed a corrected Certificate of
            Designations, Powers, Preferences and Rights with the Delaware
            Secretary of State increasing the number of shares authorized for
            issuance as Series B Preferred Stock to 230,000.

                                    F-28
<PAGE>

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

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

We have audited the accompanying consolidated balance sheets of OMNICOMM
SYSTEMS, INC. as of December 31, 2001 and 2000 and the related consolidated
statements of operations, changes in shareholders' equity (deficiency) and cash
flows for each of the two years in the period ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. 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, such consolidated financial statements presented above present
fairly, in all material respects, the consolidated financial position of
OMNICOMM SYSTEMS, INC. at December 31, 2001 and 2000, and the consolidated
results of their operations and cash flows for each of the two years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Corporation will continue as a going concern. As discussed in Note 4 to the
financial statements, the Corporation has incurred losses and negative cash
flows from operations in recent years through December 31, 2001 and these
conditions are expected to continue through 2002, 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 4. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

As described in Note 3, the financial statements have been restated to correct
the valuation of certain common stock warrants.

                                        GREENBERG & COMPANY LLC

Springfield, New Jersey
February 8, 2002

                                     F-29