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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, 2003

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

       For the transition period from ______________ to ________________

                         Commission file number: 0-25203

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

           DELAWARE                                    11-3349762
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

               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
                                      ----

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

                     COMMON STOCK, PAR VALUE $.001 PER SHARE
                     ---------------------------------------
                                (Title of Class)

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 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: $884,929 for the 12
months ended December 31, 2003.

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, 2004
is approximately $4,094,382. The common stock is traded over-the counter. As of
March 18, 2004, 17,929,277 shares of the Registrant's Common Stock were
outstanding of which 1,551,749 shares were held by affiliates.



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                       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 OMNICOMM SYSTEMS,
INC., ITS BUSINESS AND OPERATIONS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996. THIS REPORT
AND THE INFORMATION INCORPORATED BY REFERENCE IN IT CONTAIN FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE
COMPANY INTENDS THE FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE HARBOR
PROVISIONS FOR FORWARD-LOOKING STATEMENTS IN THESE SECTIONS. 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

SUMMARY

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
("CRO's"), academic research institutions and other clinical trial sponsors.
TrialMaster(R), our Internet-based 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.

Medical Error Reporting System ("MERS-TH") was co-developed with Columbia
University during 2002. MERS-TH was developed to provide U.S. and European based
hospitals and medical centers, a standardized system for collecting data on
medical errors, adverse events and near misses. Based on a February 2000 report
made to the President, medical errors are estimated to lead to between 40,000
and 90,000 deaths annually, and cost the U.S. health care system over $33
billion annually.

BACKGROUND AND HISTORY

OmniComm Systems, Inc. was originally organized as Coral Development Corp. under
the laws of the State of Delaware on November 19, 1996 by Modern Technology
Corp. ("Modern"). Modern originally completed a "blind pool/blank check" offer
pursuant to Rule 419 by having Modern distribute Coral Development shares as a
dividend to Modern shareholders. On February 17, 1999, OmniComm Systems, Inc., a
company organized under the laws of the State of Florida as the Premisys Group,
Inc. on March 4, 1997, merged with Coral Development. Coral Development was the
surviving entity post-merger. The merged entity changed its name to OmniComm
Systems, Inc.

TRIALMASTER

TrialMaster is a Web-based software application that uses Internet technologies
for EDC 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:

         o  Accelerates initiation and completion of clinical trials by
            approximately 30%;

         o  Provides real-time access to clinical trial data;

         o  Eliminates double data entry and paper based reports;

         o  Decreases the cost of data collection in clinical trials by up to
            80%;

         o  Provides real time connection between all participants in the
            clinical trial process;

         o  Improves data entry accuracy by up to 80%; and

         o  Secures collection and storage of clinical trial data, through
            encryption and multilevel storage in two locations.

MARKET OPPORTUNITY

Clinical trials are the critical component in bringing a drug or medical device
to market. All prescription drug and medical device therapies must undergo
extensive testing as part of the regulatory approval process. Most 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 clinical trial sponsors that want to
improve clinical trial efficiencies, speed-up results and ensure regulatory
compliance.



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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 the FDA approves it.
This is in addition to five to nine years of studies required to provide the
data to support the NDA. The amount of money and time currently spent on
clinical trials is enormous. The following points are illustrative of the
dynamics:

         o  Drug companies lose as much as $11 million in potential revenue for
            each day a trial is delayed on a blockbuster drug such as
            Prilosec(TM).

         o  Of 5,000 screened chemical compounds only 250 enter preclinical
            testing, 5 enter clinical testing and only one is approved by the
            FDA to be marketed to consumers

         o  According to PhRMA, the average drug approved for sale by the FDA in
            2001 cost approximately $802,000,000 to bring to market.

Included in the above cost analysis of bringing a new medicine to market are
expenses of project failures and the impact that long development times have on
investment costs. The estimate also accounts for out-of-pocket discovery and
preclinical development costs, post-approval marketing studies and the cost of
capital. Lengthening development times caused by complex disease targets and a
more intensive regulatory process have more than tripled the cost of developing
a drug over the past 15 years. The estimates which were published as part of a
Tuft's University study cite that many factors are driving up development costs,
including a greater emphasis on developing treatments for chronic diseases, the
increasing size of trials and the rising cost of recruiting subjects

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

THE CLINICAL TRIAL INDUSTRY IS A LARGE AND GROWING INDUSTRY.

Worldwide pharmaceutical R & D spending totaled approximately $52 billion in
2001. A June 2003 Covance report projects 10% annual growth in R & D spending
powered by the development of new drugs and treatments, increases in the
complexity and number of clinical trials, increasing number of patients in the
average application, an aging population and strong demand for drugs to treat
this aging population.

CenterWatch estimates that in 2000 $4.8 billion was spent in the United States
by pharmaceutical, medical device and biotechnology companies on clinical
research data management and handling. We estimate that in 2003 approximately
25% 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 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 have forced pharmaceutical
companies to attempt 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

One of the bottlenecks in the clinical trials process is in the collection,
validation and management of data. Traditional paper-based clinical trials are
an inefficient process. Several market-leading CRO's are conducting trials using
Web-based trial solutions. Trial sponsors are beginning to use EDC in order to
remain competitive relative to their competitors in relation to the costs of
conducting trials and the time to complete those trials.



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EMERGING MARKET OF WEB-BASED EDC

Web-based EDC has been around for four years and an estimated 25% of all
clinical trials are currently conducted using Web-based EDC. CenterWatch
estimates that approximately $140 million was spent on EDC use in 2003. We
believe that the move toward emerging Web-based technologies is natural since it
involves the 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 will become widely accepted. For example, Forrester Research and Frost &
Sullivan each predict annual double-digit growth in the use of EDC technologies
between 2004 and 2006; Accenture predicts that by 2006, 60% of all clinical
trials will use some form of EDC.

UNIQUE COMPETITIVE ADVANTAGES

We believe we are well positioned to succeed within the emerging EDC industry
due to our competitive strengths which include:

FLEXIBLE DESIGN ARCHITECTURE. Our primary software product, TrialMaster, has
been designed with dynamic capabilities to allow for rapid change and
scalability. We have successfully deployed new products, including Trial
Archive, MERS-TH and a specialized Phase I product from the base TrialMaster
package.

RAPID PROJECT DEPLOYMENT. An added benefit of TrialMaster's flexible design is
the ability to incorporate client specific customizations more rapidly than our
competition. TrialMaster V3.0 has also integrated several automated build tools
that allow us to efficiently complete projects containing repetitive trial
specific tasks such as forms collecting data on patient visits over the course
of time.

ENTREPRENEURIAL ENVIRONMENT. The small size of our firm allows us to move
quickly. Our marketing, sales and technological focus are consistent for the
long-term but we have proven capable of moving rapidly tactically to capitalize
on short-term opportunities. Our senior management team utilizes a collaborative
approach to problem solving and is intent on building market share in a prudent
manner. The advantageous cost structure of our business allows us significant
leverage in seeking new clientele and new markets.

INDUSTRY BACKGROUND

Global research and development expenditures by the pharmaceutical industry
reached an estimated $52 billion in 2001, with approximately 80% of that amount
spent by North American-based pharmaceutical, biotechnology and medical device
companies. Approximately 8.5% of the total R & D costs are 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
("CRO's").

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 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 lower and control the prices of
drugs and devices.

GENERIC DRUG EFFECT. Competition from generic drugs following patent expiration
has resulted in increasing market pressure on profit margins.



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INCREASINGLY COMPLEX AND STRINGENT REGULATION. Increasingly complex and
stringent regulatory requirements have increased the volume and quality 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 increasing 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 new therapies.

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, 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 ("CRF's") that are submitted to and filled out by an investigator,
typically a doctor or research assistant who is administering the clinical
trial. CRF's 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, double data entry is used 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 CRF's are Internet enabled and the
validation criteria encoded, the CRF forms are accessed via the Internet from
our server to the sites where the clinical trials will take place.

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 5.5(R) or above. 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.

TrialMaster's features and benefits include:

         o  Internet-based network - no special client software required and you
            can manage your data from anywhere anytime on the web;

         o  Role-based security - data presented on basis of role in the trial
            (i.e., investigator, sponsor, trial manager);

         o  Audit trail of all transactions - all original data and changes are
            recorded;

         o  Primary data validation - data ranges and requirements are checked
            upon entry of data

         o  Customized reports based on client's specifications;

         o  Enhanced Messaging system - sends email notifications based upon
            client defined events both systemically and client generated;

         o  Data export - client can export database in a variety of formats for
            interim analysis including SAS, CDISC,XML, ASCII and Excel
            spreadsheet formats;


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         o  Real time data access/project management - clients can monitor trial
            progress and make go/no-go decisions;

         o  ASP model - uses our secure data infrastructure and can be installed
            utilizing client-supplied equipment as an option;

         o  Fully compliant with FDA 21 CFR Part 11 and subsequent April 1999
            Guidance to Industry;

         o  CDISC compliant exported data.

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 CRF's
that are provided by the trial sponsor 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 visits by patients over a period of time. Currently, the
cost to process data ranges from $7.00 to $25.00 per page per patient. Under the
TrialMaster system, the cost to process the data is 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 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 if 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. By using TrialMaster,
the number of edit queries are significantly reduced because the system
validates data as it is input, and the cost of the queries can 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 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 by the
monitor. 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.

TRIALMASTER ARCHIVE(TM)

TrialMaster Archive presents the data collected during the clinical trial in the
same browser format used during the live clinical trial, TrialMaster's tree
configuration. TrialMaster Archive is delivered via CD in read only format and
provides the ability to export data to study specified formats such as SAS and
CDISC. TrialMaster Archive does not require the installation of any other
software and will provide our clients the ability to review trial data by site,
patient, visit and form parameters. User formats available include read-only and
print-friendly and the data can be presented with and without audit trails. The
client can also choose an option to have the data presented in PDF form.

TRIALMASTER PHASE I(TM)

TrialMaster Phase I was designed during 2003 in order to address the unique data
capture requirements of Phase I clinical trials. The benefits of TrialMaster
Phase I include:

         o  Flexible design structure that allows implementation without
            modifying existing work flow processes.

         o  Allows simultaneous data entry (multiple CRF's per patient)

         o  Provides for direct data entry (bedside) through the use of portable
            data devices



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TRIALMASTER SALES AND MARKETING

EDC services are currently used in approximately 25% of clinical trials. Our
sales efforts encompass a broad range of clinical trial sponsors including
multi-national pharmaceutical companies, small and mid-size pharmaceutical
companies, medical device companies, academic research institutions and clinical
research organizations. We have begun allocating a substantial portion of our
sales effort towards large multi-national pharmaceutical companies. These firms
conduct numerous trials per year making TrialMaster a scalable and
cost-efficient solution. The scope of work available from these large sponsors
provides a strong market for sales growth for us. Our focus on small and
mid-size companies is predicated upon the fact that they 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.

TrialMaster can be used within any segment of the pharmaceutical, biotechnology
or medical device industries that undertake clinical trials. We have focused our
sales and marketing efforts on the pharmaceutical industry, a market dominated
by companies such as Johnson & Johnson and Pfizer. We believe the following are
the relevant factors for approaching this market:

         o  access to "validators" for the market,

         o  relatively standardized and advanced approach to clinical trial
            process,

         o  a very competitive market with relatively short product cycles
            providing for a need to get products to market quickly, and

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

Our marketing strategy includes establishing relationships with "opinion
leaders" and decision makers 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 industry
conventions.

MEDICAL ERROR REPORTING SYSTEM - MERS-TH

MERS-TH is a Web-based reporting system used to collect, classify and analyze
medical events from geographically dispersed sites. MERS-TH provides the
opportunity to study and monitor actual and near-miss errors to facilitate the
improvement of the care-giving process. We developed MERS-TH in conjunction with
Columbia University during 2002.

We believe MERS-TH will improve the process of collecting, cataloging and
studying medical errors. MERS-TH provides the following benefits:

         o  Standardized error classification system and reporting will allow
            larger hospital and health care providers to streamline the
            reporting process;

         o  Real-time access to data;

         o  Seamless integration into existing health care reporting systems
            utilizing data imports;

         o  Improves existing QA systems' effectiveness without creating
            additional layers of responsibility;

         o  Facilitates compliance with governmental mandated reporting
            requirements; and

         o  Secure collection and storage of data through encryption.

MEDICAL ERRORS DEFINED

Types of Medical Errors

         o  DIAGNOSTIC

            o  Error or delay in diagnosis;

            o  Failure to act on results of testing or monitoring;

            o  Using outdated tests.



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         o  TREATMENT

            o  Error in the performance of an operation, procedure or test;

            o  Error in administering the treatment;

            o  Error in the dose or method of using a drug.

         o  PREVENTIVE

            o  Failure to provide prophylactic treatment;

            o  Inadequate monitoring or follow-up treatment.

         o  OTHER

            o  Equipment failure;

            o  Other system failure.

A "near miss" is an event or situation that could have resulted in an accident,
injury, or illness, but did not, either by chance or through timely
intervention.

MARKET OPPORTUNITY

In November 1999, the Institute of Medicine ("IOM") issued a report titled "TO
ERR IS HUMAN: BUILDING A SAFER HEALTH SYSTEM," detailing its findings from
reviewing medical errors in the U.S. health care system. The report found that
between 44,000 and 98,000 people are killed annually from preventable medical
errors and that another one million people are injured by errors in treatment at
hospitals. Beyond their cost in human lives, preventable medical errors are
estimated to cost as much as $29 billion annually in U.S. hospitals. These costs
include; the expense of additional care necessitated by the errors, lost income
and household productivity, and disability. The report called on states to
create mandatory reporting systems, starting with hospitals. The consequences of
medical mistakes are often more severe than the consequences of mistakes in
other industries--leading to death or disability rather than inconvenience on
the part of consumers.

Most hospitals underestimate or are underreporting the number of errors and
injuries that occur due to a workplace culture that tends to punish those making
mistakes and because hospital personnel tend to regard health care provider
errors as evidence of personal carelessness. Dr. Lucien Leape of the Harvard
School of Public Health estimates that only 2 to 3% of major errors are reported
through hospital incident reporting systems. Worse yet, another study by Dr.
Leape found that 70% of adverse events found in a review of 1,133 medical
records were preventable.

A wide body of research, including studies by the Agency for Healthcare Research
and Quality ("AHRQ"), support the IOM conclusions. Studies conducted during the
1990's have shown that adverse events occur in approximately 3 to 4% of
patients. Another study conducted by Dr. Leape found that the average intensive
care unit ("ICU") patient experienced almost two errors per day, a proficiency
level of 99 percent. However, one out of five of these errors were potentially
serious or fatal. If performance levels of 99.9%-- substantially better than
those found in the ICU--applied to the airline industry, it would equate to two
dangerous landings per day at O'Hare International Airport in Chicago!

Other industries, e.g., aviation or manufacturing, have done a better job than
the health care industry in managing the risk level inherent in their operating
activities. Some industries, such as the aviation industry, have adopted quality
improvement, safety assurance and error reduction programs as a core mission. A
review of the experience in non-health-care industries offers some lessons that
may be applicable to reducing medical errors. Characteristics found in
industries that have effectively reduced errors include:

         o  Development of tracking mechanisms that expose errors;

         o  Thorough investigation of errors;

         o  Applying to error reduction a systems oriented approach that
            combines human intervention, technical tools and organizational
            remedies;

         o  Systems solutions that are focused on fixing the problem, not the
            blame;

         o  Changing organizational cultures so that an environment that
            embraces error reduction is nurtured; and

         o  Allocating the resources necessary to fix the problems.



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One of the problems in concluding that a chronic medical error problem exists is
that medical errors usually affect only one patient at a time; therefore, they
are treated as isolated incidents. Health-care errors are also underreported due
to liability and confidentiality concerns. Implementing a broad-based solution
that is available to the healthcare industry can help begin to remedy the first
problem. Only changing the culture intrinsic to the industry can combat the
second.

REGULATORY BACKGROUND

In December of 1999, President Clinton directed the Quality Interagency
Coordination Task Force ("QuIC") to evaluate recommendations from TO ERR IS
HUMAN and to respond with a strategy to identify prevalent threats to patient
safety and reduce medical errors. The QuIC is a multi-agency task force with
participants including the Department of Health and Human Services; Department
of Defense; and the Department of Veteran Affairs. The latter two are of
significance since they collectively manage over 1,800 health care sites serving
13 million patients annually.

In response to the IOM report, the President directed the QuIC to prepare a set
of recommendations for specific actions to improve health care outcomes and
prevent medical errors. Specifically, the President requested that the QuIC
report:

         o  Identify prevalent threats to patient safety and medical errors that
            can be prevented through the use of decision-support systems;

         o  Identify additional strategies to reduce medical errors and ensure
            patient safety in Federal health care programs;

         o  Evaluate the extent to which medical errors are caused by misuse of
            medications and medical devices, and consider steps to strengthen
            the FDA's reporting structure on these types of errors; and

         o  Identify opportunities for the Federal Government to take specific
            action to improve patient safety and health care quality through
            collaboration with the private sector.

The IOM's report resulted in a flurry of regulatory activity. As of January
2003, approximately 20 states have implemented laws making error reporting
systems mandatory. The goal of such legislation is to improve patient safety and
to hold health care organizations responsible for the quality of care they
provide.

The IOM and QuIC made several recommendations in their respective reports.
Amongst their recommendations are to:

         o  Create a national mandatory reporting system;

         o  Include patient safety in performance standards for health care
            organizations - require specific performance levels in order to
            retain the rights to provide goods and services;

         o  Ask independent accrediting organizations to demonstrate how they
            are coordinating and strengthening their patient safety standards;

         o  Identify a core set of errors reporting data;

         o  Identify and attempt to pool existing data sets (such as State
            mandatory errors reporting data) that can be brought together to
            enhance the knowledge and understanding of errors.

AHRQ and the CDC have expanded their research efforts in the area of informatics
to include initiatives aimed at developing and evaluating electronic systems to
identify, track, and address patient safety concerns. Additionally, Governmental
participation, especially in requiring the pooling of data, and in setting and
enforcing safety standards from its vendors is likely. On a more global basis,
establishing a national MERS-TH database will provide useful data to study
system failure points, enable benchmarking and provide data to study the efforts
that prevented near misses from becoming errors. The errors that are cataloged
will provide useful information on the causes of health care problems. Perhaps
more importantly, near misses occur more frequently than errors and reveal a
greater variety of systemic problems with processes and procedures.



                                       10
<PAGE>



MERS-TH DESCRIPTION

When designing MERS-TH the following design criteria were identified as crucial
for an ideal reporting system:

Error reporting should:

         o  Be confidential and non-punitive;

         o  Be relatively easy to integrate into an existing quality assurance
            system;

         o  Include near-misses and no harm events, in addition to errors;

         o  Classify events by what and where events happened, where and how
            they were discovered, and by the underlying root causes of the
            errors;

         o  Use a uniform method for recording data;

         o  Include a process for analyzing data and sharing solutions; and

         o  Feed into a non-regulatory central system where the aggregated data
            can be further analyzed.

Since quality assurance ("QA") programs are already required by regulation, it
is vital that the design of an error reporting system be complementary to
existing QA systems to avoid employee resistance. The system therefore could not
duplicate existing QA systems, but instead needs to meet the above criteria and
still be compatible with existing QA systems.

MERS-TH provides a software-based process to sort error reports based on the
potential for risk to a patient and provides health care organizations a
consistent method for classifying the causes of events. The system has been
designed to handle high volume environments without becoming cumbersome to use
at the local hospital level.

MERS-TH has been developed with the knowledge that errors can never be
eliminated; however they can be reduced by managing, identifying and addressing
the risks inherent in health care services. MERS-TH provides a standardized
means of organized data collection and analysis of medical errors, adverse
events and near misses. Its effectiveness depends on the willingness of
individuals to report such information.

HOW DOES MERS-TH WORK?

         o  DETECTION: Identify, report and record the event.

         o  SELECTION: Determine the extent of investigation needed.

         o  INVESTIGATION: Find out more about the context in which the event
            occurred, and conduct a root cause analysis, if necessary.

         o  DESCRIPTION AND CLASSIFICATION: Assign standardized codes to
            describe the event and root causes.

         o  COMPUTATION: Analyze the aggregate data to identify patterns and
            trends.

         o  INTERPRETATION: Use the results to guide organizational risk
            reduction efforts.

BARRIERS TO IMPLEMENTATION

INFORMATION SYSTEMS AND TECHNICAL PROBLEMS. To be practical, error prevention
will need to rely on sophisticated management and clinical information systems,
both as sources of data on adverse events and as a component of interventions to
reduce errors. However, information systems existent in health care
organizations today are neither sufficiently integrated nor flexible enough to
serve either of these purposes. We believe MERS-TH bridges this gap by combining
a user-friendly interface that will avoid initial user reluctance, with an
engine dynamically driven by its database that provides a flexible system that
is readily integrated into existing healthcare information structures.

COST AND STRUCTURAL PROBLEMS. Although considerable cost savings can be realized
by the effective reduction of medical errors, instituting such programs will
require a substantial initial investment. In addition, the relative autonomy of
departments within some health care institutions is a potential barrier to rapid
organization change and the adoption of new models and procedures to prevent
errors. We view the cultural changes needed to implement new error reduction
campaigns as the more relevant obstacle. MERS-TH is a reasonably priced
alternative for fulfilling an organization's MIS needs in combating medical
errors. Most health-care organizations have capital expenditure budgets that
dwarf the investment necessary to implement MERS-TH.



                                       11
<PAGE>



MERS-TH SALES AND MARKETING

MERS-TH is currently installed and is being evaluated as part of a pilot study
that began in January 2003 at the University of Columbia. The sales and
marketing of MERS-TH will be done separately from TrialMaster and is likely to
command specialized sales personnel with risk management backgrounds. As our
co-developer in the project, Columbia University provides an extensive network
of research associates as potential clientele. Our initial target will be the
domestic market with academic institutions and private and public hospitals and
medical centers targeted equally. The European market provides an equally
attractive sales market. Illustrative of the potential market for MERS-TH is the
number of hospitals in operation domestically and in the European market. As of
January 2003 approximately:

         o  Privately run U.S. hospitals - 5,801

         o  Government run U.S. hospitals - 1,802

         o  European academic and state-run hospitals - 14,000

The market for error reporting systems is in its initial stages, with few
competitors and no products currently exerting market dominance. Our internal
estimates are that error reporting systems may account for as much as a $500
million annual market. Given the likelihood that governmental regulation may
make error reporting systems mandatory; we believe that this market provides
enormous short and long-term prospects.

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 an IBM owned co-location
facility in Atlanta, GA.

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 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-swappable 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.

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



                                       12
<PAGE>



RESEARCH AND DEVELOPMENT

We acquired the technology, developed by Education Navigator, Inc., for our
TrialMaster product in June 1998. Since that date, our development of
TrialMaster and its subsequent improvements and refinements have been handled by
our in-house staff of developers. During fiscal 2003, we spent approximately
$504,000 on research and development activities, the majority of which
represented salaries to our developers. In fiscal 2002 we spent approximately
$465,000 on research and development activities. We intend to continue to
improve and broaden our product line 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 TrialMaster. The principal competitors include Phase Forward
Incorporated and eResearch Technology. We believe that 25 to 30 viable
competitors in varying degrees of development exist. Many 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 the
poor financial results experienced during the period covering fiscal 2000 to the
present.

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, nor do we need any approvals
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 the "Risk Factors" section of this document.

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 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 our intellectual property rights.

EMPLOYEES

We currently have 18 full time employees of which four are executives, two are
administrative, seven are programmers, two are technology and systems managers
and two 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

AN INVESTMENT IN OUR SECURITIES IS SPECULATIVE IN NATURE AND INVOLVES A HIGH
DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, THE FOLLOWING MATERIAL RISK FACTORS SHOULD BE CONSIDERED CAREFULLY
IN EVALUATING US AND OUR BUSINESS BEFORE PURCHASING OUR SECURITIES.


                                       13
<PAGE>



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

We incurred net losses attributable to common stockholders of $2,761,412 and
$5,266,264 in fiscal 2003 and 2002, respectively. At December 31, 2003, we had
an accumulated deficit of approximately $24,032,562 and a working capital
deficit of approximately $1,622,097. We expect net losses and negative cash flow
for the foreseeable future until such time as we can generate sufficient
revenues to achieve profitability. We expect our operating cash flows to improve
in fiscal 2004, but we have little control over the timing of contracted
projects. We expect our client and contract base to expand and diversify to the
point where it meets our on-going operating needs, but this may not happen in
the short-term or at all. 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
independent auditors on our consolidated financial statements for the year ended
December 31, 2003 contained an explanatory paragraph indicating there was
substantial doubt about our ability to continue as a going concern.

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

We were incorporated in 1997 and initiated our development of TrialMaster 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:

         o  develop our infrastructure;

         o  attract and maintain a base of end users;

         o  develop and introduce desirable services;

         o  provide customer support, personnel and facilities, to support our
            business;

         o  establish and maintain strategic relationships;

         o  establish and maintain relationships within the pharmaceutical,
            medical device, and biotechnology industries; and

         o  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.

OUR ABILITY TO CONDUCT OUR BUSINESS WOULD BE MATERIALLY AFFECTED IF WE WERE
UNABLE TO PAY OUR OUTSTANDING INDEBTEDNESS.

At December 31, 2003, we had outstanding borrowings of approximately $1,807,571
of which

         o  approximately $375,000, at 10% interest, is due June 2004, however
            we are in default in the payment of interest and, at the option of
            the holder, the full amount of the notes could be declared in
            default;

         o  approximately $497,000, at 9% interest, is due January 31, 2005;

         o  approximately $253,000, at 9% interest, is due October 31, 2005, and

         o  approximately 682,571, at 8% interest, is due April 1, 2006;


Since December 31, 2003 we have borrowed an additional $97,500 at 9% interest
which is due October 31, 2005.



                                       14
<PAGE>



No assurance can be given that the holders of the 10% notes will not declare the
notes in default and seek immediate collection of the amounts due and owing.
Further, no assurance can be given that faced with future principal repayment
and interest obligations, our cash flow from operations or external financing
will be available or sufficient to enable us to meet our financial obligations.
If we are unable to meet our financial obligations, the lenders could obtain a
judgment against us in the amount of the notes and foreclose on our assets. Such
foreclosure would materially and adversely affect our ability to conduct our
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:

         o  fund more rapid expansion;

         o  fund additional capital or marketing expenditures;

         o  develop new or enhanced features, services and products;

         o  enhance our operating infrastructure;

         o  respond to competitive pressures; or

         o  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 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.

WE MAY BE UNABLE TO PREVENT COMPETITORS FROM USING OUR INTELLECTUAL PROPERTY,
AND WE WOULD FACE POTENTIALLY EXPENSIVE LITIGATION TO ASSERT OUR RIGHTS AND TO
DEFEND OURSELVES AGAINST PATENT OR OTHER INTELLECTUAL PROPERTY INFRINGEMENT
CLAIMS ASSERTED BY OTHERS. 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. In addition, we presently have a patent
application pending for our Trial Master product. The effect and extent of
patent and other protection for our intellectual property is uncertain.
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. Although we intend to protect our 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.



                                       15
<PAGE>



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
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 affect on our financial
condition.

WE DO NOT BELIEVE WE ARE SUBJECT TO REGULATION BY THE FDA, BUT WE HAVE MADE NO
INDEPENDENT INQUIRIES.

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.

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 recently registered an aggregate of 39,879,850 shares of our common stock,
which are issuable upon the conversion or exercise of outstanding shares of our
Series B Preferred Stock, Series C Preferred Stock, warrants and Placement Agent
Unit Options. It is possible that the selling stockholders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time, the sale, or the possibility thereof, may
have a negative effect on the market price of our common stock.



                                       16
<PAGE>



THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS AND THE CONVERSION OF
OUTSTANDING SHARES OF PREFERRED STOCK AND CONVERTIBLE PROMISSORY NOTES WILL BE
DILUTIVE TO OUR EXISTING STOCKHOLDERS.

As of March 15, 2004, we had a total of 22,295,646 shares of our common stock
underlying options, warrants and other convertible securities and 22,596,149
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 TRADING MARKET FOR OUR COMMON STOCK.

There is a limited trading 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, investors may find
it difficult to dispose of shares of our common stock and may suffer a loss of
all or a substantial portion of their investment in 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:

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

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

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

         o  government regulation; and

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

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,
which could result in a decrease in the trading price of our common stock.

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.

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.

The Securities and Exchange Commission 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.



                                       17
<PAGE>



PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BY-LAWS MAY DELAY OR PREVENT A
TAKE-OVER WHICH MAY NOT BE IN THE BEST INTERESTS OF OUR COMMON STOCKHOLDERS.

Provisions of our articles of incorporation and by-laws may be deemed to have
anti-takeover effects, which include when and by whom special meetings of our
stockholders may be called, and may delay, defer or prevent a takeover attempt.
In addition, our articles of incorporation authorize the issuance of up to
10,000,000 shares of preferred stock with such rights and preferences as may be
determined from time to time by our board of directors, of which 4,709,874
shares are currently issued and outstanding. Our board of directors may, without
stockholder approval, issue additional series of preferred stock with dividends,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our common stock.

ITEM 2. DESCRIPTION OF PROPERTY

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
under the terms of a sublease expiring in September 2005. Our annual rental
payment under this sublease is $66,900 plus sales tax.

Our secondary data site, which serves as our disaster recovery location, is
located in Atlanta, Georgia and is leased from IBM. We lease this space under
the terms of a lease expiring in October 2004. Our annual lease payment is
approximately $53,460.

ITEM 3. LEGAL PROCEEDINGS

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

Other than the foregoing, we are not a party to any legal proceedings.

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 a limited basis on the 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. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions. The
quotation of our common stock on the OTC Bulletin Board does not assure that a
meaningful, consistent and liquid market for such securities currently exists.


                                       18
<PAGE>

                                           HIGH    LOW
                                           ----    ---
               FISCAL 2002
               1st Quarter                $0.25   $0.20
               2nd Quarter                $0.30   $0.20
               3rd Quarter                $0.31   $0.23
               4th Quarter                $0.29   $0.23

               FISCAL 2003
               1st Quarter                $1.56   $0.38
               2nd Quarter                $0.56   $0.25
               3rd Quarter                $0.95   $0.38
               4th Quarter                $0.55   $0.21

On March 18, 2004, the closing price of our common stock as reported on the OTC
Bulletin Board was $0.25. At March 18, 2004, we had approximately 402 record
shareholders; however, we believe that we have in excess of 1,000 beneficial
owners of our common stock.

DIVIDEND POLICY

Holders of our common stock are entitled to cash dividends when, and as may be
declared by the board of directors. 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 and we do not
anticipate that any cash dividends will be paid in the foreseeable future. Our
future payment of dividends will be subject to the discretion of our board of
directors and will depend on our earnings, capital requirements, expansion
plans, financial condition and other relevant factors. There can be no assurance
that cash dividends of any kind will ever be paid.

A SPECIAL NOTE ABOUT PENNY STOCK RULES

The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. Our common stock should be
considered to be a penny stock. A penny stock is subject to rules that impose
additional sales practice requirements on broker/dealers who sell these
securities to persons other than established customers and accredited investors.
For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of these securities. In addition, he
must receive the purchaser's written consent to the transaction prior to the
purchase. He must also provide certain written disclosures to the purchaser.
Consequently, the penny stock rules may restrict the ability of broker-dealers
to sell our securities, and may negatively affect the ability of holders of
shares of our common stock to sell them.

RECENT SALES OF UNREGISTERED SECURITIES

From April 2003 through May, 2003, we sold an aggregate of 1,400,000 shares of
our common stock and warrants to purchase 700,000 shares of our common stock to
accredited investors resulting in gross proceeds of $350,000. The warrants are
exercisable at an exercise price of $0.25 per share expiring May 2008. This
private placement was exempt from registration under the Securities Act in
reliance on Section 4(2) and Regulation S. Each of these transactions was an
"offshore" transaction to a non-U.S. person. No general solicitation or
advertising was used in connection with this transaction, and the certificates
evidencing the shares that were issued contained a legend restricting their
transferability absent registration under the Securities Act or the availability
of an applicable exemption therefrom. Each purchaser represented that he/she was
an accredited investor and was acquiring the shares for investment purposes
only, and not with a view towards distribution or resale except in compliance
with applicable securities laws. The investors had full access to, or were
otherwise provided with, all relevant information reasonably necessary to
evaluate us. None of these investors were our affiliates. Noesis Capital Corp.,
an NASD member firm, acted as placement agent in the offering and as
compensation therefore received a commission equal to 8% of the sales made by
it, or an aggregate of $28,000, a non-accountable expense allowance equal to 2%
of the sales made by it, or an aggregate of $7,000 and a warrant to purchase at
$0.25 per share, 10% of the shares sold, or 140,000 shares of our common stock.

From July 2003 through December 2003, we sold an aggregate of 2,484,000 shares
of our common stock resulting in gross proceeds of $621,000. This private
placement was exempt from registration under the Securities Act in reliance on
Section 4(2) and Regulation S. Each of these transactions was an "offshore"
transaction to a non-U. S. person. No general solicitation or advertising was
used in connection with this transaction, and the certificates evidencing the
shares that were issued contained a legend restricting their transferability
absent registration under the Securities Act or the availability of an
applicable exemption therefrom. Each purchaser represented that he/she was an
accredited investor and was acquiring the shares for investment purposes only,
and not with a view towards distribution or resale except in compliance with
applicable securities laws. The investors had full access to, or were otherwise
provided with, all relevant information reasonably necessary to evaluate us.
None of these investors were our affiliates. Noesis Capital Corp., an NASD
member firm, acted as placement agent in the offering and as compensation
therefore received a commission equal to 8% of the sales made by it, or an
aggregate of $48,400, a non-accountable expense allowance equal to 2% of the
sales made by it, or an aggregate of $12,100 and a warrant to purchase at $0.25
per share, 10% of the shares sold, or 248,400 shares of our common stock.



                                       19
<PAGE>



SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The following table sets forth securities authorized for issuance under
equity compensation plans, including individual compensation arrangements, by us
under our 1998 Incentive Stock Plan as of December 31, 2003.

<TABLE>
<CAPTION>

                                                                                        Number of securities
                                                                                      remaining available for
                                                                                       future issuance under
                                    Number of securities to      Weighted average       equity compensation
                                    be issued upon exercise     exercise price of         plans (excluding
                                    of outstanding options,    outstanding options,   securities reflected in
                                      warrants and rights      warrants and rights          column (a))
Plan Category                                 (a)                      (b)                      (c)
-------------                       -----------------------    -------------------    ------------------------
<S>                                        <C>                        <C>                    <C>
1998 Stock Incentive Plan                  3,593.500                  $0.48                  1,406,500
                                           ---------                  -----                  ---------
Total                                      3,593,500                  $0.48                  1,406,500
                                           =========                  =====                  =========

</TABLE>


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

GENERAL

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

FORWARD-LOOKING STATEMENTS

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

OVERVIEW

We are a 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 via our Internet-based software, TrialMaster. TrialMaster 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. Medical Error
Reporting System ("MERS-TH") was co-developed with Columbia University during
2002. MERS-TH has been designed to provide U.S. and European hospitals and
medical centers, a standardized system for collecting data on medical errors,
adverse events and near misses. Medical errors lead to between 40,000 and 90,000
deaths annually and cost the U.S. health care system over $33 billion annually.
We phased out the systems integration segment of our business during 2001. All
of our personnel are involved in the development and marketing of TrialMaster
and MERS-TH.



                                       20
<PAGE>



THE YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2002

RESULTS OF OPERATIONS

Revenues for the period ended December 31, 2003 were $884,929 compared to
$437,698 for the same period in 2002, an increase of 102.2%. The revenue
increase can be attributed to an increase in the number of projects initiated in
2003 (20) versus 2002 (11) and to the increase in pricing power we have
developed. Overall market acceptance of EDC services increased during 2003. We
have also found EDC users more receptive to our products. The combination of a
flexible design architecture, robust features and competitive pricing of
TrialMaster provide an attractive alternative to potential clients when compared
to the products offered by our competitors. This is consistent with the overall
market adoption of EDC services.

We built upon the momentum from fiscal 2002 through the acquisition of new
clients and via repeat engagements with existing clients. We placed additional
emphasis on broadening the market segments that we market our products to.
During the latter half of 2002 we secured engagements from our first Clinical
Research Organization (CRO) and academic research organization, Columbia
University. We believe the broadened marketing horizon provides us some
insulation from downturns in any specific segment for clinical trial services
and also affords us some ability to cross-market services between our different
clients. Working with CRO's brings our services to their built-in client base
and allows us to benefit from their sales efforts by bundling TrialMaster as
part of their service offerings. Conversely, we can provide the CRO potential
new clients for their non-data collection services. CRO's have become more
receptive to the EDC process during 2003 and we expect their adoption rate to
continue increasing. We believe that the adoption of EDC by CRO's is a
significant factor to the overall success of EDC as a data collection tool. We
expect the adoption rate to increase as clinical trial sponsors continue seeking
methods to reduce their R & D costs and more importantly as they continue
seeking a way to make the clinical trial process more efficient. Academic
research organizations provide us an attractive opportunity due to their
participation in cutting-edge projects, access to government sponsored projects
and the credibility afforded companies partnering with institutions such as
Columbia University.

The general weakness exhibited in the economy from 2001 to the present has not
diminished the level of activity in new drug therapy research since the drug and
medical device manufacturers are continuously forced to find replacements for
therapies coming under the pressures exerted by the loss of patent protection.
We do believe, however, that the broad perception that small, high-technology
firms are operating under severe financial constraints has caused slower
adoption of EDC. More specifically, we have found that potential clients are
apprehensive of doing business with us because of our going-concern issues. We
believe we have had some success in addressing this issue and that our recent
success in securing new clients in conjunction with our improved financial
results will lessen the effect this has on our sales efforts.

While industry growth estimates vary, most predictions indicate that EDC is
anticipated to become widely accepted. For example, CenterWatch predicts annual
double-digit growth in the use of EDC technologies between 2004 and 2006.
Web-based EDC has been around for approximately four years and approximately 25%
of all clinical trials are currently conducted using Web-based EDC. Incremental
growth within the industry should continue as competitive pressures mount in the
pharmaceutical industry to replace existing prescription drugs losing their
patent protection.

TrialMaster 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 case
report forms used to collect data and the number of sites utilizing TrialMaster.
The client will pay a trial setup fee based on the previously mentioned factors,
and then pay an on-going maintenance fee for the duration of the clinical trial
that provides software, network and site support during the trial. Generally,
these contracts will range in duration from four months to several years. Setup
fees are generally earned prior to the inception of a trial, however, the
revenues will be recognized in accordance with SEC Staff Accounting Bulletin No.
101 "Revenue Recognition in Financial Statements" which requires that the
revenues be recognized ratably over the life of the contract. The maintenance
fee revenues are earned and recognized monthly. Costs associated with contract
revenues are recognized as incurred.



                                       21
<PAGE>



We expect to begin marketing our new EDC product, MERS-TH, during 2004 in
concert with InCHOIR, Columbia University's academic research organization. The
Medical Event Reporting System (MERS-TH) is an event reporting system developed
for hospitals and medical centers to collect, classify, and analyze events that
could potentially compromise patient safety. MERS-TH provides the opportunity to
study and monitor both actual and near-miss events to facilitate process
improvement efforts. MERS-TH was developed in conjunction with Columbia
University and will be marketed by both of us to hospital and medical centers in
the U.S. and Europe initially.

Cost of goods sold decreased to $240,398 in 2003 compared to $288,790 in 2002.
Cost of goods sold were approximately 27.2% of sales in 2003 compared to 66.0%
in fiscal 2002. The decrease in expense can be attributed to the use of one less
programmer in our production function. This was partially offset by the use of a
third party vendor providing services to us on a European project. Cost of goods
sold now relates primarily to salaries and related benefits associated with the
programmers, developers and systems analysts producing clinical trials on behalf
of our clients.

We expect to increase development programming labor costs on an absolute basis
as our trial revenues increase. We expect labor costs to remain at approximately
25% of sales. TrialMaster V3.0, the latest release of our trial-building
software will improve our ability to reduce our trial production related costs
since it automates many of the trial building functions that were manually
performed in prior releases of our software. In addition, MERS-TH will provide a
sales platform with high gross margins since we expect few client specific
alterations to the basic software platform.

Salaries and related expenses are our biggest expense at 68.8% of total Other
Expenses for 2003. Salaries and related expenses totaled $1,709,614 in 2003
compared to $1,620,663 in 2002 an increase of 5.5%. Total salaries were
relatively flat versus 2002. A portion of total payroll is now accounted for in
cost of goods sold. We currently employ approximately 16 employees out of our
Davie, Florida corporate office and have two out-of-state employees. We expect
to increase headcount by about 25% within our production function in concert
with anticipated increases in TrialMaster clients during fiscal 2004. We will
look to selectively add experienced sales and marketing personnel in 2004 in an
effort to increase our market penetration and to continue broadening our client
base.

Rent expense increased by $7,741 in 2003. Our corporate office lease was
extended through September 2005 with our total occupancy costs increasing by
approximately 2%. In December 2001, we established a disaster recovery site at
an IBM owned Co-Location facility in Atlanta, Georgia and will continue
utilizing this facility for the foreseeable future since it is designed to
ensure 100% system up-time and to provide system redundancy.

Legal and professional fees totaled $178,214 in 2002 compared with $142,387
during fiscal 2003, a decrease of approximately $35,827. Legal and accounting
fees associated with our capital raising activities decreased in 2003 versus
2002. We expect on-going legal and professional fees to approximate what was
experienced during 2003.

Selling, general and administrative expenses ("SGA") were $137,181 during 2003
compared to $224,844 in 2002, a decrease of 41%. 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 do
expect to increase the overall dollar volume spent on SGA as we increase our
revenue base and step-up our overall activity marketing, selling, public
relations and advertising activities.

Interest expense was $138,757 during 2003 versus $938,639 in fiscal 2002. In
December 2002, we converted our 12% Convertible Notes into shares of our Series
C Convertible Preferred Stock. This conversion lowered the conversion price of
the investors from $0.50 per share to $0.25 per share resulting in a debt
conversion expense due to the more favorable conversion terms afforded the
investors. The debt conversion expense of $646,000 was recorded as additional
interest expense, this expense is non-cash and we recorded a corresponding
increase to our additional paid-in capital.



                                       22
<PAGE>



We sold additional Series C Convertible Preferred Stock during 2003 and we
issued an additional 590,000 warrants to investors of our Series C Convertible
Preferred Stock. The warrants were valued at $135,344 utilizing the
Black-Scholes model. The net proceeds received in the Series C Convertible
Preferred Stock Unit offering were allocated to the Series C Preferred Stock and
we recognized a deemed dividend on preferred stock of $135,344 resulting in a
charge to retained earnings and a credit to additional paid-in capital within
our stockholders' equity as of December 31, 2003.

During 2003 we issued 700,000 warrants to investors in a private placement of
our Common Stock. The warrants were valued at $160,577 utilizing the
Black-Scholes model. The net proceeds received in the Common Stock offering were
allocated to Common Stock and we recognized a deemed dividend on common stock
warrants of $160,577 resulting in a charge to retained earnings and a credit to
additional paid-in capital within our stockholders' equity as of December 31,
2003.

During 2002 we issued 6,153,000 warrants to investors in a private placement of
our Series C Convertible Preferred Stock, including 3,230,000 warrants issued in
the conversion of our 12% Convertible Notes into shares of the Series C
Convertible Preferred Note. The warrants were valued at $1,411,475 utilizing the
Black-Scholes model. The net proceeds received in the Series C Convertible
Preferred Stock Unit offering were allocated to the Series C Preferred Stock and
we recognized a deemed dividend on preferred stock of $1,411,475 resulting in a
charge to retained earnings and a credit to additional paid-in capital within
our stockholders' equity as of December 31, 2002.

There were arrearages of $205,364 in 5% Series A Preferred Stock dividends,
$154,674 in Series B Preferred Stock dividends and $265,925 in Series C
Preferred Stock dividends at December 31, 2003, compared with arrearages of
$86,010 in 5% Series A Preferred Stock dividends, $211,256 in Series B Preferred
Stock dividends and $56,805 in Series C Preferred Stock dividends at December
31, 2002. We deducted $625,963 and 472,991 from Net Income (Loss) Attributable
to Common Stockholders' for the years ended December 31, 2003 and December 31
2002, respectively, relating to undeclared Series A, B and C Convertible
Preferred Stock dividends.

LIQUIDITY AND CAPITAL RESOURCES

We have historically experienced negative cash flows and have relied primarily
on the proceeds from the sale of debt and equity securities to fund our
operations. In addition, we have utilized stock-based compensation as a means of
paying for consulting and salary related expenses.

Cash and cash equivalents decreased by $192,700 from $194,677 to $1,977 at
December 31, 2003. This was the result of cash provided by financing activities
of $1,414,765 offset by cash used in operating activities of approximately
$1,584,404. The significant components of the activity include a loss from
operations of approximately $1,839,530 offset by non-cash expenses of $201,589,
increases in cash of $53,537 from changes in working capital accounts and
approximately $1,414,765 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. We do not presently have any commitment for
capital expenditures.

We are currently in arrears on interest payments owed totaling $89,004 on our
10% Convertible Notes. The terms of the notes provide a payment grace period of
thirty days in which to make required semi-annual interest payments. We were in
default effective January 30, 2002.

The Company had a recorded liability of $111,159 at December 31, 2003 for
federal employment taxes. The Company had fully satisfied the liability as of
January 31, 2003.

We have been operating with a cash burn rate. In order to manage cash flows, we
have issued preferred stock and common stock to satisfy operating expenses and
obligations. Between March 28, 2002 and March 2003 we sold 165,650 shares of our
Series C Preferred Stock and warrants to purchase 3,513,000 shares of our common
stock. Gross cash proceeds from this offering totaled $1,656,500. We accrued
$333,092 in transaction related fees leaving net proceeds of approximately
$1,423,409 of which $100,000 originally had been received as a bridge loan which
was later converted at the shareholders request into shares of our Series C
Preferred Stock.



                                       23
<PAGE>



From April 2003 through May 31, 2003 we sold an aggregate of 1,400,000 shares of
our Common Stock and warrants to purchase 700,000 shares of our common stock for
gross proceeds of $350,000. We accrued $35,000 in transaction fees leaving net
proceeds to us of $315,000.

From July 2003 through December 31, 2003 we sold an aggregate of 2,484,000
shares of our common stock for gross proceeds of $621,000. We accrued $60,500 in
transaction fees leaving net proceeds to us of $560,500.

During the last twelve months we entered into contracts for EDC services worth
approximately $1.6 million in value. During this period we added nine new
clients, including two clinical research organizations (CRO) and an academic
research institution. These clients in particular are deemed vital to our
long-term growth since these two areas have become a point of emphasis for our
sales and marketing activities.

Our selling efforts now include marketing our products to several Fortune 500
pharmaceutical and medical device manufacturers and two of the largest CRO's. We
began providing services to some of these entities during the first half of
2003. These contracts should provide us the opportunity to limit our need for
funding our operations via debt and equity capital. Obtaining contracts with
clients of this size and reputation would also increase the credibility of the
company.

We feel that the momentum established from new client acquisitions; the
development of a new EDC product - MERS-TH; and our ability to retain clients
for repeat engagements provide a good operating base from which to build during
2004. We improved our sales staff during the latter half of fiscal 2002 and
expect to increase the level of resources utilized in the sales and marketing
areas. We embarked on a cost cutting program during fiscal 2000. That program
became part of our organization's identity and remains ingrained in our culture
today. We feel that a combination of our lean operating environment and
increased success in new client acquisition, coupled with our ability to retain
our existing clients will allow us to compete effectively within the EDC market.

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

We will continue to require substantial funds to continue our research and
development activities and to market, sell and commercialize our technology. We
will need to raise substantial additional capital to fund our future operations.
Our capital requirements will depend on many factors, including the problems,
delays, expenses and complications frequently encountered by companies
developing and commercializing new technologies; the progress of our research
and development activities; the rate of technological advances; determinations
as to the commercial potential of our technology under development; the status
of competitive technology; the establishment of collaborative relationships; the
success of our sales and marketing programs; the cost of filing, prosecuting and
defending and enforcing patents and intellectual property rights; and other
changes in economic, regulatory or competitive conditions in our planned
business. Estimates about the adequacy of funding for our activities are based
upon certain assumptions, including assumptions that the research and
development programs relating to our technology can be conducted at projected
costs and that progress towards broader commercialization of our technology will
be timely and successful. There can be no assurance that changes in our research
and development plans or other events will not result in accelerated or
unexpected expenditures.

To satisfy our capital requirements, including ongoing future operations, we
will seek to raise additional financing through debt financings. We are not
currently planning to raise capital via equity transactions, but cannot preclude
the use of equity should the need arise or if the conditions of such a
transaction were favorable to us and our shareholders. There can be no assurance
that any such fundings will be available to us on favorable terms or at all. If
adequate funds are not available when needed, we may be required to delay, scale
back or eliminate some or all of our research and product development programs,
and our business operations. If we are successful in obtaining additional
financings, the terms of such financings may have the effect of diluting or
adversely affecting the holdings or the rights of the holders of our common and
preferred stock. Further, there can be no assurance that even if such additional
capital is obtained or the planned cost reductions are implemented, that we will
achieve positive cash flow or profitability or be able to continue as a
business.



                                       24
<PAGE>



Our ability to continue in existence is dependent on our having sufficient
financial resources to bring products and services to market. As a result of our
significant losses, negative cash flows from operations, and accumulated
deficits for the periods ending December 31, 2003, there is doubt about our
ability to continue as a going concern. In addition, our auditors Greenberg and
Company, included language which qualified their report regarding our ability to
continue as a going concern.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make judgments, assumptions and estimates that affect the amounts
reported. Note 2 of Notes to the Consolidated Financial Statements describes the
significant accounting policies used in the preparation of the consolidated
financial statements. Certain of these significant accounting policies are
considered to be critical accounting policies, as defined below. A critical
accounting policy is defined as one that is both material to the presentation of
our financial statements and requires management to make difficult, subjective
or complex judgments that could have a material effect on our financial
condition and results of operations. Specifically, critical accounting estimates
have the following attributes: 1) we are required to make assumptions about
matters that are highly uncertain at the time of the estimate; and 2) different
estimates we could reasonably have used, or changes in the estimate that are
reasonably likely to occur, would have a material effect on our financial
condition or results of operations.

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

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

DEFERRED REVENUE

Deferred revenue represents cash advances received in excess of revenue earned
on on-going contracts. Payment terms vary with each contract but may include an
initial payment at the time the contract is executed, with future payments
dependent upon the completion of certain contract phases or targeted milestones.
In the event of contract cancellation, we are entitled to payment for all work
performed through the point of cancellation.

REVENUE RECOGNITION POLICY

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

The Company recognizes sales, for both financial statement and tax purposes in
accordance with SEC Staff Accounting Bulletin No. 101 "Revenue Recognition in
Financial Statements" (SAB 101). 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.



                                       25
<PAGE>



STOCK BASED COMPENSATION.

Options granted to employees under our Stock Option Plan are accounted for by
using the intrinsic value method under APB Opinion 25, Accounting for Stock
Issued to Employees (APB 25). In October 1995, the Financial Accounting
Standards Board issued Statement No.123, Accounting for Stock-Based Compensation
(SFAS 123), which defines a fair value based method of accounting for stock
options. All stock based compensation issued to individuals, other than
employees and directors such compensation which is accounted for in accordance
with APB 25, are accounted for in accordance with SFAS 123, as amended by SFAS
148.

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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. Statement of Financial Accounting Standards No.
145-"RESCISSION OF FASB STATEMENTS NO. 4, 44 AND 64, AMENDMENT OF FASB STATEMENT
NO. 13, AND TECHNICAL CORRECTIONS", was issued in April 2002. Also during 2002,
Statement of Financial Accounting Standards No. 146, "ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES" and Statement of Financial
Accounting Standards No. 148, "ACCOUNTING FOR STOCK-BASED
COMPENSATION--TRANSITION AND DISCLOSURE--AN AMENDMENT OF FAS 123" were issued in
June and December 2002, respectively.

SFAS 141 requires all business combinations initiated after September 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 September 30,
2001.

SFAS 142 addresses the financial accounting and reporting for acquired goodwill
and other intangible assets. Under the new rules, we are 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". We expect that SFAS 142 will not have a material impact
on our consolidated results of operations and financial position upon adoption.
We adopted SFAS 142 on January 1, 2002.

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

SFAS 144 establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS 144, supersedes
Statement of Financial Accounting Standards No. 121, "ACCOUNTING FOR IMPAIRMENT
OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF" ("SFAS 121"),
and APB Opinion No. 30, "REPORTING THE RESULTS OF OPERATIONS - REPORTING THE
EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND
INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS". The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted, and in general are to be applied prospectively. We adopted SFAS 144
effective January 1, 2002 and do not expect that the adoption will have a
material impact on our consolidated results of operations and financial
position.

In April 2002, the FASB issued SFAS No. 145, "RESCISSION OF FASB STATEMENTS NO.
4, 44 AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS."
SFAS No. 145 eliminates SFAS No. 4, "REPORTING GAINS AND LOSSES FROM
EXTINGUISHMENT OF DEBT," which required all gains and losses from extinguishment
of debt to be aggregated and, if material, classified as an extraordinary item.
Under SFAS No. 145, such gains and losses should be classified as extraordinary
only if they meet the criteria of APB Opinion No. 30. In addition, SFAS No. 145
amends SFAS No. 13, "ACCOUNTING FOR LEASES," to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. We do not expect the adoption of SFAS
No. 145, which will become effective after May 2002 to have a material effect on
our financial condition or results of operations.




                                       26
<PAGE>

In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES". The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Previous
accounting guidance was provided by EITF Issue No. 94-3, "LIABILITY RECOGNITION
FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY
(INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING)". SFAS No. 146 replaces
Issue 94-3. The provisions of SFAS No. 146 are to be applied prospectively to
exit or disposal activities initiated after December 31, 2002. We do not expect
the adoption of this pronouncement to have a material effect on our earnings or
financial position.

On December 31, 2002, the FASB issued SFAS No.148, "ACCOUNTING FOR STOCK-BASED
COMPENSATION--TRANSITION AND DISCLOSURE--AN AMENDMENT OF FAS 123". This
statement amends SFAS 123, "Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation and amends the
disclosure requirements of SFAS 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition and annual disclosure provisions of FAS 148 were adopted
for fiscal 2003.

In January 2003, the FASB issued Interpretation No. 46, "CONSOLIDATION OF
VARIABLE INTEREST ENTITIES" ("FIN 46"). The interpretation provides guidance for
determining when a primary beneficiary should consolidate a variable interest
entity or equivalent structure that functions to support the activities of the
primary beneficiary. The interpretation is effective as of the beginning of the
Company's third quarter of 2003 for variable interest entities created before
February 1, 2003. The Company holds no interest in any variable interest
entities. Accordingly, the adoption of this statement is not expected to have a
material impact on the consolidated financial statements.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 149
(SFAS 149), AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. SFAS 149 is intended to result in more consistent reporting of
contracts as either freestanding derivative instruments subject to Statement 133
in its entirety, or as hybrid instruments with debt host contracts and embedded
derivative features. SFAS 149 is effective for contracts entered into or
modified after June 30, 2003. The adoption of SFAS has not had nor do we expect
it to have a material effect on the Company's results of operations, liquidity,
or financial condition.

In April 2003, the FASB issued Statement of Financial Accounting Standards No.
150 (SFAS 150), ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH
CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. SFAS 150 requires certain
financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity to be classified as liabilities.
Many of these instruments previously were classified as equity or temporary
equity and as such, SFAS 150 represents a significant change in practice in the
accounting for a number of mandatorily redeemable equity instruments and certain
equity derivatives that frequently are used in connection with share repurchase
programs. SFAS 150 is effective for all financial instruments created or
modified after May 31, 2003, and to other instruments at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS 150 has
not had nor do we expect it to have a material effect on the Company's results
of operations, liquidity, or financial condition.

ITEM 7. FINANCIAL STATEMENTS

Our financial statements are set forth on Pages F-1 through F-XX attached
hereto.

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

None.



                                       27
<PAGE>



ITEM 8A. CONTROLS AND PROCEDURES

Based on their evaluation as of the end of the period covered by this Annual
Report on Form 10-KSB, being December 31, 2003, the Company's principal
executive officer and principal financial officer have concluded that the
Company's disclosure controls and procedures as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act) are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation and up to the filing date of this Annual Report on Form 10-KSB.
There were no significant deficiencies or material weaknesses, and therefore
there were no corrective actions taken.

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

                                    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 by-laws 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
   ------               ---                       --------
Cornelis F. Wit          57    Chief Executive Officer, President and Director
Randall G. Smith         46    Chairman and Chief Technology Officer
Ronald T. Linares        41    Chief Financial Officer
Charles Beardsley        58    Senior Vice President Marketing and Sales
Guus van Kesteren        63    Director
Matthew D. Veatch        34    Director

CORNELIS F. WIT. Mr. Wit has been a member of our board of directors since
November 1999, and CEO and President since June of 2002. Mr. Wit was interim CEO
from June to July 2000. Mr. Wit was the President of Corporate Finance at Noesis
Capital Corp, Boca Raton, Florida, an NASD member firm, from March 1995 until
September 2000. 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
International Operations for Duphar, a pharmaceutical company in Holland. Mr.
Wit graduated from Nijenrode, a business university in Holland.

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 us, from 1996 until 1999, Mr. Linares 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.



                                       28
<PAGE>



CHARLES BEARDSLEY. Mr. Beardsley has served as Senior Vice President, Marketing
and Sales since January 2003. Prior to joining us, from 1974 to 1995, Mr.
Beardsley spent most of his career at Rhone-Poulenc Rorer (RPR, now Aventis
Pharmaceuticals), where he served as Vice President of U.S. Marketing and Sales
and later as President and General Manager of RPR Canada. More recently, he has
served in senior level leadership roles with ASI Business Solutions, from 1997
to 1999, CB Technologies, from 2001 to 2002, and Quintiles Transnational, from
2000 to 2001, companies involved in information technology to include electronic
data capture, business intelligence, decision-support and sales force automation
and optimization. Mr. Beardsley received his B.S from San Jose State University
and his M.B.A. from Golden Gate University.

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 a consultant to
Noesis Capital Corp., a NASD member firm. 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 graduated from Nijenrode, a business
university in Holland.

MATTHEW D. VEATCH. Mr. Veatch has been a member of our Board of Directors since
February 2004. Since 1999 Mr. Veatch has been employed as a Director for
Quintiles Transnational, a global leader in contract product development and
commercialization services. From 1997 to 1999 Mr. Veatch was employed as a
Director for Affiliated Research Centers. During 1999 Mr. Veatch was employed as
a Director for CB Technologies, an EDC provider to pharmaceutical, medical
device and bio-technology companies. Mr. Veatch graduated from the University of
Colorado at Boulder and expects to receive his MBA from California State
University, Dominguez Hills.

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 and
MERS-TH applications. Currently there are no members on our Medical Advisory
Board; we are seeking to add members as we identify individuals who can advise
us in adding value to TrialMaster and MERS-TH.

COMMITTEES OF OUR BOARD OF DIRECTORS

Our board of directors established a Governance Committee, Compensation
Committee and an Audit Committee. The Governance Committee, established during
2002, assists the board of directors in fulfilling its responsibility relating
to compliance with all Securities and Exchange Commission rules and regulations.
Its primary tasks during 2003 were the implementation of the various
requirements of the Sarbanes-Oxley Act of 2002. Mr. van Kesteren chairs this
committee, but all of the directors in concert with our Chief Financial Officer
are involved in integrating the requirements of the various regulatory agencies
dictating public company rules and regulations into our operating structure. The
Compensation Committee administers our stock option plan and makes
recommendations to the board of directors concerning compensation, including
incentive arrangements, for our officers and key employees. The members of the
Compensation Committee are Mr. van Kesteren, who serves as Chairman of the
committee and Mr. Wit. The Audit Committee assists the board of directors in
fulfilling its oversight responsibility relating to our financial statements and
financial reporting process, the qualifications, independence, engagement and
performance of our independent auditors, and the performance of our internal
control functions. The audit committee also reviews all non-audit fees and
services to be rendered to us by the independent auditors. Mr. van Kesteren, as
our sole independent director is the only current member of the Audit Committee.
We have not yet retained a financial expert as a director.

RIGHT TO DESIGNATE MEMBERS TO OUR BOARD OF DIRECTORS

In connection with our private placement of Series A Preferred Stock in July
1999, in which Noesis Capital Corp. acted as placement agent, we granted Noesis
Capital Corp. the right to designate through July 2004 two directors to our
board of directors pursuant to which Mr. Wit and Mr. Van Kesteren were appointed
to our board of directors.

In connection with our private placement of Series B Preferred Stock in August
and September 2001, in which Commonwealth Associates, L.P. acted as placement
agent, we granted Commonwealth Associates and the Series B investors the right
to designate one director. Our officers, directors and certain of our principal
stockholders have delivered an irrevocable proxy to Commonwealth Associates
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'
designee as a member of our board of directors.



                                       29
<PAGE>



We also agreed that all committees of our board of directors would include a
proportionate number of directors designated by Commonwealth Associates.
Finally, Commonwealth Associates is also entitled to appoint an observer to
attend all meetings of our board of directors.

In connection with our private placement of our Series C Preferred Stock in
2002, in which Noesis Capital Corp. acted as placement agent, we granted Noesis
Capital Corp. the right to designate two directors to our board of directors. As
of the date of this prospectus, Noesis Capital Corp. had not yet exercised the
right to name either director.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
us under Rule 16a-3 (d) of the Exchange Act during the fiscal year ended
December 31, 2003, 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,
2003.

CODE OF ETHICS

Effective March 1, 2004, our board of directors adopted a Code of Business
Conduct and Ethics that applies to, all of our employees and member of our board
of directors. As adopted, our Code of Business Conduct and Ethics sets forth
written standards that are designed to deter wrongdoing and to promote:

         o  honest and ethical conduct, including the ethical handling of actual
            or apparent conflicts of interest between personal and professional
            relationships;

         o  full, fair, accurate, timely, and understandable disclosure in
            reports and documents that we file with, or submit to, the
            Securities and Exchange Commission and in other public
            communications made by us;

         o  compliance with applicable governmental laws, rules and regulations;

         o  the prompt internal reporting of violations of the Code of Business
            Conduct and Ethics to an appropriate person or persons identified in
            the Code of Business Conduct and Ethics; and

         o  accountability for adherence to the Code of Business Conduct and
            Ethics.

Our Code of Business Conduct and Ethics requires, among other things, that all
of our company's personnel shall be accorded full access to our President with
respect to any matter that may arise relating to the Code of Business Conduct
and Ethics. Further, all of our company's personnel are to be accorded full
access to our company's board of directors if any such matter involves an
alleged breach of the Code of Business Conduct and Ethics by our President.

In addition, our Code of Business Conduct and Ethics emphasizes that all
employees, and particularly managers and/or supervisors, have a responsibility
for maintaining financial integrity within our company, consistent with
generally accepted accounting principles, and federal, provincial and state
securities laws. Any employee who becomes aware of any incidents involving
financial or accounting manipulation or other irregularities, whether by
witnessing the incident or being told of it, must report it to his or her
immediate supervisor or to our company's President. If the incident involves an
alleged breach of the Code of Business Conduct and Ethics by the President, the
incident must be reported to any member of our board of directors. Any failure
to report such inappropriate or irregular conduct of others is to be treated as
a severe disciplinary matter. It is against our company policy to retaliate
against any individual who reports in good faith the violation or potential
violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics was filed as Exhibit D to our Proxy
Statement dated June 4, 2003 with the Securities and Exchange Commission. We
will provide a copy of the Code of Business Conduct and Ethics to any person
without charge, upon request. Requests can be sent to: OmniComm Systems, Inc.,
2555 Davie Road, Suite 110-B, Davie, Florida 33317.




                                       30
<PAGE>



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").

<TABLE>
<CAPTION>

                                                                              LONG TERM COMPENSATION
                                                                        ------------------------------------
                                          ANNUAL COMPENSATION                    AWARDS           PAYOUTS
---------------------- --------- -------------------------------------- ------------------------- ----------
         (a)             (b)           (c)           (d)        (e)         (f)          (g)         (h)          (i)
---------------------- --------- ---------------- ---------- ---------- ------------ ------------ ---------- --------------
                                                               OTHER                 SECURITIES
NAME                                                          ANNUAL    RESTRICTED     UNDER-                  ALL OTHER
AND                                                           COMPEN-      STOCK        LYING       LTIP        COMPEN-
PRINCIPAL                                                     SATION      AWARDS       OPTIONS     PAYOUT       SATION
POSITION                 YEAR      SALARY ($)     BONUS ($)     ($)         ($)       SARs (#)       ($)          ($)
---------------------- --------- ---------------- ---------- ---------- ------------ ------------ ---------- --------------
<S>                        <C>          <C>            <C>        <C>          <C>       <C>           <C>            <C>
Cornelis F. Wit,           2003         $176,538       $-0-       $-0-         $-0-      180,000       $-0-           $-0-
CEO/Director               2002       $67,385(1)       $-0-       $-0-         $-0-      190,000       $-0-           $-0-

David Ginsberg,            2002      $88,904 (2)    $20,833       $-0-         $-0-          -0-       $-0-           $-0-
CEO/Director               2001         $312,813    $12,500       $-0-         $-0-      750,000       $-0-           $-0-
                           2000     $134,255 (3)       $-0-       $-0-         $-0-      240,000       $-0-    $16,759 (4)

Peter Knezevich
CEO/Director               2000         $131,231       $-0-       $-0-         $-0-          -0-       $-0-     $5,300 (5)

Randall Smith              2003         $171,346       $-0-       $-0-         $-0-      155,000       $-0-           $-0-
President/Director         2002         $156,000       $-0-       $-0-         $-0-       65,000       $-0-           $-0-
                           2001         $138,506       $-0-       $-0-         $-0-      270,000       $-0-       $300 (5)

Ronald T. Linares          2003         $155,769       $-0-       $-0-         $-0-       45,000       $-0-           $-0-
CFO                        2002         $138,880       $-0-       $-0-         $-0-       45,000       $-0-           $-0-
                           2001         $119,044       $-0-       $-0-         $-0-      300,000       $-0-       $150 (5)

Charles Beardsley          2003      $150,000(7)       $-0-       $-0-      $25,000      155,000       $-0-            $-0
Vice President

Christiopher Droz          2003         $115,854       $-0-       $-0-         $-0-      101,000       $-0-            $-0
Vice President
</TABLE>

---------
(1)  Mr. Wit joined our company as CEO on June 1, 2002.

(2)  Dr. Ginsberg left our employ on June 1, 2002.

(3)  Dr. Ginsberg joined our company on August 1, 2000.

(4)  Consisted of reimbursements for moving expenses and temporary housing
     during calendar 2000.

(5)  Consisted of car allowance payments.

(6)  Mr. Linares joined our company on April 17, 2000.

(7)  Mr. Beardsley joined our company on January 7, 2003.



                                       31
<PAGE>




                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>

                                             INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------------------------
         (a)                    (b)                   (c)                   (d)                  (e)
----------------------- -------------------- ---------------------- -------------------- --------------------
                             NUMBER OF
                            SECURITIES            % OF TOTAL
                            UNDERLYING           OPTIONS/SARs
                             OPTIONS/             GRANTED TO
                               SARs              EMPLOYEES IN        EXERCISE OR BASE        EXPIRATION
         NAME               GRANTED (#)           FISCAL YEAR         PRICE ($/SHARE)           DATE
----------------------- -------------------- ---------------------- -------------------- --------------------
<S>                                 <C>                      <C>                  <C>               <C>   <C>
Cornelis F. Wit                     175,000                  12.0%                $0.25             12/31/10

Cornelis F. Wit                       5,000                   0.3%                $0.25               8/1/08

Randall Smith                       150,000                  10.3%                $0.25             12/31/10

Randall Smith                         5,000                   0.3%                $0.25               8/1/08

Ronald Linares                       75,000                   5.2%                $0.25             12/31/10

Ronald Linares                        5,000                   0.3%                $0.25               8/1/08

Charles Beardsley                   150,000                  10.3%                $0.25               1/6/08

Charles Beardsley                   150,000                  10.3%                $0.25             12/31/10

Charles Beardsley                     5,000                   0.3%                $0.25               8/1/08

Christopher Droz                     96,000                   6.6%                $0.25             12/31/10

Christopher Droz                      5,000                   0.3%                $0.25               8/1/08

</TABLE>


               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>

         (a)                 (b)            (c)                       (d)                                       (e)
----------------------- -------------- --------------- ------------------------------------ ----------------------------------------
                                                                    NUMBER OF
                                                                   SECURITIES                              VALUE OF
                                                                   UNDERLYING                             UNEXERCISED
                                                                   UNEXERCISED                           IN-THE-MONEY
                                                                 OPTIONS/SARs AT                        OPTIONS/SARs AT
                           SHARES                                  FY END (#)                             FY END ($)
                          ACQUIRED                     ------------------------------------ ----------------------------------------
                        ON EXERCISE        VALUE
         NAME                (#)        REALIZED ($)     EXERCISABLE       UNEXERCISABLE       EXERCISABLE        UNEXERCISABLE
----------------------- -------------- --------------- ----------------- ------------------ ------------------ ---------------------
<S>                           <C>           <C>            <C>                   <C>              <C>                  <C>
Cornelis Wit                 -0-            $-0-           580,000              -0-               $-0-                 $-0-

Randall Smith                -0-            $-0-           492,000              -0-               $-0-                 $-0-

Ronald Linares               -0-            $-0-           537,000              -0-               $-0-                 $-0-

Charles Beardsley            -0-            $-0-           205,000              -0-               $-0-                 $-0-

Christopher Droz             -0-            $-0-           197,000              -0-               $-0-                 $-0-

</TABLE>


COMPENSATION OF DIRECTORS

Non-management directors receive options under the 1998 Stock Option Plan. Under
the 1998 Plan, a grant of options to purchase 150,000 shares of common stock was
granted in December 2003 at an exercise price equal to the market value of one
share on the date of grant, or $.25 per share. Such options were immediately
exercisable upon grant and will expire five years after the date of grant. In
addition, non-management directors are reimbursed for ordinary expenses incurred
in connection with attendance at meetings.



                                       32
<PAGE>



EMPLOYMENT AGREEMENTS

In August 2003, we entered into an employment agreement with Cornelis F. Wit to
serve as our Chief Executive Officer and President through December 31, 2004.
Mr. Wit receives an annual salary of $186,987 payable in cash and/or stock plus
a bonus tied to our operating results. As part of the agreement incentive
options are awardable under the agreement based upon sales and cash flow
objectives. In the event that we consummate a transaction with a third party
resulting in the sale, merger, consolidation, reorganization or other business
combination involving all or a majority of our business, assets or stock,
whether effected in one transaction or a series of transactions due to the
initiative of Mr. Wit (whether or not during the term of the agreement) Mr. Wit
will receive a fee equal to 2% of the aggregate consideration. 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 Mr. Wit's employment upon 30 days notice of a material breach and Mr.
Wit may terminate the agreement under the same terms and conditions. The
employment agreement contains customary non-disclosure provisions, as well as a
one year non-compete clause if Mr. Wit 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, Mr. Smith receives an annual salary
of $181,500 as of January 1, 2003 to be paid in the form of cash and/or stock,
as agreed upon by the parties, 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 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, or $0.43 per share for five years from the date of vesting. 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-competition restriction 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 $161,000 as of January 1,
2003 to be paid in the form of cash and/or stock, as agreed upon by the parties,
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 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 or
$0.43 per share, for five years from the date of vesting. 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. 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-competition restriction following the termination of the
agreement.

In January 2003, we entered into a three-year employment agreement with Mr.
Charles Beardsley to serve as our Senior Vice President for Sales and Marketing.
Under the terms of this agreement, Mr. Beardsley receives an annual salary of
$165,000 to be paid in the form of cash and/or stock, as agreed upon by the
parties, and he is eligible to receive additional incentive compensation based
upon achieving financial milestones. Mr. Beardsley is eligible for a commission,
payable on a quarterly basis, equal to 2% of the Company's Net Operating Income
as defined in an exhibit to his employment contract. Mr. Beardsley was granted
an aggregate of 150,000 options under our 1998 Stock Incentive Plan. The
options, which vest 50,000 annually beginning with January 2, 2004, are
exercisable at a price of $0.25 per share, for five years from the date of
vesting. Mr. Beardsley received a grant of 100,000 shares of restricted common
stock upon execution of his employment agreement. 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. Beardsley upon 30 days notice of a material
breach and Mr. Beardsley may terminate the agreement under the same terms and
conditions. If Mr. Beardsley is terminated by us for any reason other than for
cause, we must pay him severance benefits equal to twelve months salary. The
employment agreement contains customary non-disclosure provisions.



                                       33
<PAGE>



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 under the 1998 Plan. This increase was approved by our
shareholders at the shareholder meeting held on November 16, 2001. As of
December 31, 2003 we have outstanding options under the 1998 Plan to purchase an
aggregate of 3,593,500 shares of our common stock at exercise prices ranging
from $0.15 to $2.75 per share.

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 5,000,000 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 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 procedures permitted by Regulation T of the Federal Reserve
Board.



                                       34
<PAGE>



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 as
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

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:

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

         o  Change the maximum option price;

         o  Extend the maximum option term;

         o  Extend the termination date of the 1998 Plan; or

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


                                       35
<PAGE>



CHANGE OF CONTROL AND REORGANIZATION

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

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

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

         o  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

         o  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.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

Our Articles of Incorporation, as amended and restated, provide to the fullest
extent permitted by Section 145 of the General Corporation Law of the State of
Delaware, that our directors or officers shall not be personally liable to us or
our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Articles of Incorporation,
as amended and restated, is to eliminate our rights and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
damages against a director or officer for breach of the fiduciary duty of care
as a director or officer (including breaches resulting from negligent or grossly
negligent behavior), except under certain situations defined by statute. We
believe that the indemnification provisions in our Articles of Incorporation, as
amended, are necessary to attract and retain qualified persons as directors and
officers.

Our By Laws also provide that the board of directors may also authorize us to
indemnify our employees or agents, and to advance the reasonable expenses of
such persons, to the same extent, following the same determinations and upon the
same conditions as are required for the indemnification of and advancement of
expenses to our directors and officers. As of the date of this prospectus, the
board of directors has not extended indemnification rights to persons other than
directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended ("Securities Act") may be permitted to directors, officers or
persons controlling us pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

At March 15, 2004 there were an aggregate of:

         o  17,929,277 shares of common stock,

         o  4,215,224 shares of 5% Series A Preferred Stock,

         o  157,500 shares of Series B Preferred Stock, and

         o  337,150 shares of Series C Preferred Stock



                                       36
<PAGE>



issued and outstanding. These securities comprise our "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
the 5% Series A Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock are also entitled to vote on matters submitted to our
stockholders, with one vote for each share of common stock into which these
series of our preferred stock are convertible. Based upon the current conversion
price for each of the 5% Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock on March 15, 2004, these holders would be
entitled to 22,596,149 votes at a meeting of our stockholders, and the common
stockholders would be entitled to 17,929,277 votes, for an aggregate of
40,525,426 votes for all currently outstanding Voting Securities.

The following table sets forth, as of March 15, 2004 information known to us
relating to the beneficial ownership of shares of our Voting Securities by:

         o  each person who is the beneficial owner of more than 5% of the
            outstanding shares of Voting Securities, aggregate all three classes
            together;

         o  each director;

         o  each executive officer; and

         o  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 15,
2004 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 15, 2004 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 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.

<TABLE>
<CAPTION>
                                                       NO OF SHARES
NAME OF BENEFICIAL OWNER                             BENEFICIALLY OWNED     PERCENTAGE OF VOTING SECURITIES
------------------------                             ------------------     -------------------------------

<S>                                                       <C>                            <C>
Cornelis Wit (1) (12)                                     1,113,603                      2.68%
Randall G. Smith (2) (12)                                 1,468,716                      3.55%
Ronald T. Linares (3) (13)                                 576,529                       1.39%
Charles R. Beardsley (4) (12)                              305,000                       0.74%
Guus van Kesteren (5) (12)                                1,693,901                      4.07%
Matthew D. Veatch (6) (12)                                 50,000                        0.12%
ComVest Venture Partners LP (7)                           5,704,000                     12.74%
Magnolia Private Foundation (8)                           2,268,000                      5.45%
Noesis Capital Corp. (9)                                  3,632,683                      8.34%
Noesis N.V. (10)                                          5,265,030                     12.28%
Wisa Options BV (11)                                      2,218,751                      5.34%
                                                          ---------                      -----
All Directors and Officers as a group (six
persons) (12)                                             5,207,749                     11.95%
                                                          =========                     ======

</TABLE>
----------

(1)   Includes vested options to purchase an aggregate of 580,000 shares of our
      common stock at prices ranging from $0.25 to $2.20 per share with
      expiration dates ranging from November 2005 to December 2010, 304,000
      shares of our common stock issuable upon conversion of our Series C Stock,
      and 152,000 shares of our common stock issuable upon conversion of
      warrants.

(2)   Includes vested options to purchase an aggregate of 492,000 shares of our
      common stock at prices ranging from $0.25 to $2.75 per share with
      expiration dates ranging from November 2005 to December 2010.

(3)   Includes vested options to purchase an aggregate of 537,000 shares of our
      common stock at prices ranging from $0.25 to $2.75 per share with
      expiration dates ranging from March 2006 to December 2010.



                                       37
<PAGE>



(4)   Includes vested options to purchase an aggregate of 205,000 shares of our
      common stock at $0.25 per share with expiration dates ranging from March
      2006 to December 2010.

(5)   Includes vested options to purchase an aggregate of 380,000 shares of our
      common stock at prices ranging from $0.25 to $2.20 per shares with
      expiration dates ranging from May 2005 to December 2010, 352,000 shares of
      our common stock issuable upon conversion of warrants, 100,000 shares of
      our common stock issuable upon conversion of our Series B Preferred Stock
      and 504,000 shares of our common stock issuable upon conversion of our
      Series C Preferred Stock.

(6)   Includes vested options to purchase an aggregate of 50,000 shares of our
      common stock at $0.25 per share expiring in December 2010.

(7)   Includes 1,800,000 shares of our common stock issuable upon the conversion
      of our Series B Preferred Stock and 3,000,000 shares of our common stock
      issuable upon the conversion of warrants at an exercise price of $.25 per
      share. Also includes 452,000 shares of our common stock issuable upon the
      conversion of our Series B Preferred Stock and 452,000 shares of our
      common stock issuable upon the conversion of warrants at an exercise price
      of $.25 per share pursuant to a Placement Agent Unit Option that ComVest
      Venture Partners LP received from Commonwealth Associates. ComVest Venture
      Partners, LP is an affiliate of the Commonwealth Associates, L.P., the
      placement agent for our private offering of our Series B Preferred Stock.
      The information presented for ComVest Venture Partners, LP, however, does
      not include any holdings of Commonwealth Associates, L.P., or its
      affiliates. ComVest Venture Partner's address is 830 Third Avenue, Fourth
      Floor, New York, NY 10022.

(8)   Includes 760,000 shares of our common stock issuable upon conversion of
      warrants and 1,220,000 shares of our common stock issuable upon conversion
      of our Series C Preferred Stock. Magnolia Private Foundation's address is
      Landhuis Joonchi, Kaya Richard J. Beaujon z/n, Curacao, Netherlands
      Antilles.

(9)   Includes 800,000 shares of our common stock issuable upon the conversion
      of our Series C Preferred Stock and 1,178,233 shares of our common stock
      issuable upon the conversion of warrants at an exercise price ranging from
      $.25 to $1.10 per share, including 389,833 warrants held by Noesis
      International Holding, the parent company of Noesis Capital Corp. Also
      includes 993,900 shares of our common stock issuable upon the conversion
      of shares of our Series C Preferred Stock and 496,950 shares of our common
      stock issuable upon the conversion of warrants at an exercise price of
      $.25 per share pursuant to a Placement Agent Unit Option. Noesis Capital
      Corp.'s address is 1801 Clint Moore Road, Suite 100, Boca Raton, FL 33487.

(10)  Includes 1,500,000 shares of our common stock issuable upon the conversion
      of shares of our Series B Preferred Stock, 1,972,532 shares of our common
      stock issuable upon the conversion of warrants and 560,000 shares of our
      common stock issuable upon conversion of our Series C Preferred Stock.
      Noesis, N.V.'s address is Landhuis Joonchi, Kaya Richard J. Beaujon z/n,
      Curacao, Netherlands Antilles.

(11)  Includes 700,000 shares of our common stock issuable upon conversion of
      warrants and 1,400,000 shares of our common stock issuable upon conversion
      of our Series C Preferred Stock. Wisa Options BV's address is Singel 83,
      1012 VE Amsterdam, Holland.

(12)  Includes footnotes (1) through (6) above.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Cornelis F. Wit, our President and Chief Executive Officer and a member of our
board of directors served as President of Corporate Finance of Noesis Capital
Corp. from March 1995 to September 2000. Noesis Capital Corp., a NASD member
firm, has served as placement agent for us in six private placements of
securities which occurred between September 1999 and December 2003 Guus van
Kesteren, a member of our board of directors, is a consultant to Noesis Capital
Corp.



                                       38
<PAGE>



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 TrialMaster. For the periods ended December
30, 2001 and 2002, no compensation was earned by either Mr. van Kesteren or Mr.
Wit under this agreement. This agreement was terminated upon mutual agreement of
the parties effective June 30, 2002.

On April 5, 2002, Cornelis F. Wit, our President and Chief Executive Officer and
a member of our board of directors, invested $10,000 in a private placement of
our Series C Preferred Stock and warrants. Mr. Wit purchased 1,000 shares of our
Series C Preferred Stock, which is convertible into shares of our common stock
at a conversion price of $0.25 per share and carries a stated dividend rate of
8% per annum, and 20,000 warrants for the purchase of our common stock at an
exercise price of $0.25 per share expiring March 29, 2009.

On April 5, 2002, Guus van Kesteren a member of our board of directors, invested
$10,000 in a private placement of our Series C Preferred Stock and warrants. Mr.
van Kesteren purchased 1,000 shares of our Series C Preferred Stock, which is
convertible into shares of our common stock at a conversion price of $0.25 per
share and carries a stated dividend rate of 8% per annum, and warrants to
purchase 20,000 shares of common stock at an exercise price of $0.25 per share
and expiring March 29, 2009.

On January 30 2002, Noesis N.V., one of our principal stockholders, invested
$90,000 in a private placement of our Series C Preferred Stock and warrants.
Noesis NV purchased 9,000 shares of our Series C Preferred Stock, which is
convertible into shares of our common stock at a conversion price of $0.25 per
share and carries a stated dividend rate of 8% per annum, and warrants to
purchase 180,000 shares of common stock at an exercise price of $0.25 per share
expiring March 29, 2009.

From time to time we have borrowed funds from Mr. van Kesteren, a member of our
board of directors, including:

         o  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 a 12% convertible note issued as
            part of a private placement of our 12% Convertible Notes in January
            2001. The note 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 was
            converted on December 31, 2002 into 11,000 shares of our Series C
            Preferred Stock, which are convertible into shares of our common
            stock at a conversion price of $0.25 per share, and warrants to
            purchase 220,000 shares of our common stock at an exercise price of
            $0.25 per share and expiring March 29, 2009.

         o  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 in the amount of $196,644 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. These notes were amended and restated on December
            31, 2002 extending the maturity date of the notes to October 31,
            2004. On December 31, 2003, this note was amended and restated to
            extend the maturity date of the note to April 1, 2006. This note
            remained outstanding as of the date of this prospectus.

         o  in September 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 in August 2001 into 2,500 shares of our Series B Preferred
            Stock, which are convertible into shares of our common stock at a
            conversion price of $0.25 per share, and warrants to purchase
            100,000 shares of our common stock at an exercise price of $0.25 per
            share expiring August 31, 2006.

In conjunction with these various loans, we 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. All of these warrants have expired.



                                       39
<PAGE>



In July 2001, Noesis Capital Corp., the placement agent for our 12% Convertible
Notes, assigned $60,000 of accrued fees that we owed to Noesis Capital Corp. to
Cornelis Wit, a member of our board of directors at the time. Mr. Wit converted
that accrued expense into our 12% Convertible Notes. The 12% Convertible Notes
were subsequently converted on December 31, 2002 into 6,000 shares of our Series
C Preferred Stock and warrants to purchase 120,000 shares of our common stock at
an exercise price of $0.25 expiring March 29, 2009.

We granted Randall G. Smith, our 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, a member of our board of
directors in July 2001, in the amount of $100,000. These warrants have expired.

On August 17, 2000, we borrowed $100,000 from Noesis N.V., one of our principal
stockholders. The promissory note bore interest 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 a 12% convertible note issued as part of a
private placement of our 12% Convertible Notes in January 2001. The note accrues
interest at 12% per annum, 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 was converted on December 31, 2002 into 10,000 shares of our Series C
Preferred Stock, which are convertible into shares of our common stock at a
conversion price of $0.25 per share, and warrants to purchase 200,000 shares of
our common stock at an exercise price of $0.25 per share expiring March 29,
2009.

During March 2002, we borrowed $2,341 from Randall G. Smith, our Chairman of the
board and Chief Technology Officer. This amount was repaid without interest on
April 12, 2002. In addition, we borrowed $6,000 without interest from Mr. Smith
on November 25, 2002. In March 2003 this note was amended and restated extending
the maturity date to January 31, 2005.

In April 2002, we borrowed $1,500 from Ronald Linares, our Chief Financial
Officer. This amount was repaid without interest on May 1, 2002.

In September and July of 2002, we borrowed an aggregate of $20,000 without
interest from Nico Letschert, an officer, director and principal shareholder of
Noesis Capital Corp., one of our principal stockholders. This amount is due and
payable January 31, 2005.

In December 2002, we borrowed $50,000 from Cornelis Wit, our President and Chief
Executive Officer and a member of our board of directors. This amount was
borrowed under a promissory note bearing interest at a rate of 9% per annum,
payable on March 31, 2003. This note was amended and restated on March 31, 2003
extending the maturity date of the note to October 31, 2005.

In December 2002, we borrowed $50,000 from Guus van Kesteren a member of our
board of directors. This amount was borrowed under a promissory note bearing
interest at a rate of 9% per annum, payable on March 31, 2003. This note was
amended and restated on March 31, 2003 extending the maturity date of the note
to October 31, 2005.

In March 2003, we borrowed $2,600 from Cornelis Wit, our Chief Executive Officer
and President and a member of our board of directors. This amount was repaid
without interest on April 3, 2003.

In June 2003, we borrowed $100,000 from Cornelis Wit, our President and Chief
Executive Officer and a member of our board of directors. This amount was
borrowed under a promissory note bearing interest at a rate of 9% per annum,
payable on October 31, 2005.

In July and August 2003, we borrowed $116,000 from Cornelis Wit, our President
and Chief Executive Officer and a member of our board of directors. This amount
was borrowed under two promissory notes bearing interest at a rate of 9% per
annum, payable on January 31, 2005.

During October 2003, the Company borrowed $16,000 from Cornelis Wit, the
Company's President and Chief Executive Officer and a Director. The Company
repaid $13,000 of this amount during November and December 2003 and issued a
promissory note in the amount of $3,000 bearing interest at a rate of 9% per
annum, payable on October 31, 2005.



                                       40
<PAGE>



During October and November 2003, the Company borrowed $30,000 from Cornelis
Wit, the Company's President and Chief Executive Officer and a Director. This
amount was borrowed under promissory notes bearing interest at a rate of 9% per
annum, payable on October 31, 2005.

During October 2003, the Company borrowed $16,000 from Guus van Kesteren, a
Company Director. This amount was borrowed under a promissory note bearing
interest at a rate of 9% per annum, payable on October 31, 2005. On December 31,
2003, Mr. van Kesteren elected to convert this note payable into common stock of
the Company at a conversion price of $0.25 per share. The Company issued 64,000
shares of restricted common stock in connection with this conversion.

On December 31, 2003, Guus van Kesteren, a Company Director, elected to convert
$41,000 in accrued but unpaid interest into 164,000 shares of restricted common
stock at a conversion price of $0.25 per share.



                                       41
<PAGE>



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)

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 - Series A Preferred Stock (6)

3.3                Certificate of Increase - Series A Preferred Stock (7)

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

3.5                Amendment to Certificate of Incorporation (9)

3.6                By-laws (10)

3.7                Certificate of Amendment - Certificate of Designation -
                   Series A Preferred Stock (11)

3.8                Certificate of Amendment - Certificate of Incorporation (12)

3.9                Certificate of Designation - Series C Preferred Stock (13)

4.1                Form of Warrant Agreement including the Form of Warrant
                   issued in connection with the Series B Preferred Stock
                   offering (24)

4.2                Form of Warrant Agreement including the Form of Warrant
                   issued in connection with the Series C Preferred Stock
                   offering (25)

4.3                Form of 10% Convertible Note (26)

4.4                Form of Placement Agent Unit Option issued to Commonwealth
                   Associates, LP in connection with the Series B Preferred
                   Stock offering (27)

4.5                Form of Placement Agent Unit Option issued to Noesis Capital
                   Corp. in connection with the Series C Preferred Stock
                   offering (28)

10.1               Employment Agreement and Stock Option Agreement between the
                   Company and Randall G. Smith (14)

10.2               Employment Agreement and Stock Option Agreement between the
                   Company and Ronald T. Linares (15)

10.3               1998 Stock Incentive Plan (16)

                                       42
<PAGE>
EXHIBIT NO.        DESCRIPTION
-----------        -----------
10.4               Medical Advisory Board Agreement (17)

10.5               Standard Agreement - Proprietary Protection (18)

10.6               Employment Agreement and Stock Option Agreement between the
                   Company and Cornelis F. Wit (19)

10.7               Employment Agreement and Stock Option Agreement between the
                   Company and Charles Beardsley (20)

10.8               Amendment to Employment Agreement between the Company and
                   Cornelis F. Wit (21)

14                 OmniComm Systems, Inc. Code of Ethics (22)

31.1               Certification of Chief Executive Officer Pursuant to Section
                   302 of the Sarbanes-Oxley Act of 2002, promulgated under the
                   Securities and Exchange Act of 1934, as amended.

31.2               Certification of Chief Financial Officer Pursuant to Section
                   302 of the Sarbanes-Oxley Act of 2002, promulgated under the
                   Securities and Exchange Act of 1934, as amended.

32.1               Certification of Chief Executive Officer Pursuant to 18
                   U.S.C. Section 1350, as adopted Pursuant to Section 906 of
                   the Sarbanes Oxley Act of 2002 .

32.2               Certification of Chief Financial Officer Pursuant to 18
                   U.S.C. Section 1350, as adopted Pursuant to Section 906 of
                   the Sarbanes Oxley Act of 2002

99.1               OmniComm Systems, Inc. Audit Committee Charter (23)

(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.

                                       43
<PAGE>

(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 3.7 filed with our Annual Report on
      Form 10-KSB for the fiscal year ended December 31, 2002.

(12)  Incorporated by reference to Exhibit 3.8 filed with our Annual Report on
      Form 10-KSB for the fiscal year ended December 31, 2002.

(13)  Incorporated by reference to Exhibit 3.9 filed with our Annual Report on
      Form 10-KSB for the fiscal year ended December 31, 2002.

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

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

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

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

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

(19)  Incorporated by reference to Exhibit 10.7 filed with our Form 10-QSB for
      the period ended June 30, 2002.

(20)  Incorporated by reference to Exhibit 10.8 filed with our Annual Report on
      Form 10-KSB for the fiscal year ended December 31, 2002.

(21)  Incorporated by reference to Exhibit 10.8 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003

(22)  Incorporated by reference to our Proxy Statement filed on June 9 2003.

(23)  Incorporated by reference to our Proxy Statement filed on June 9 2003.

(24)  Incorporated by reference to Exhibit 4.1 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003

(25)  Incorporated by reference to Exhibit 4.2 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003

(26)  Incorporated by reference to Exhibit 4.3 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003

(27)  Incorporated by reference to Exhibit 4.4 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003

(28)  Incorporated by reference to Exhibit 4.5 filed with our Registration
      Statement filed on Form SB-2 dated September 29, 2003


(a)      REPORTS ON FORM 8-K.

              NONE.



                                       44
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

The aggregate audit fees billed by Greenberg and Company, LLC for professional
services rendered for the audit of our annual financial statements included in
our annual report on Form 10-KSB during the fiscal year ended December 31, 2003
were $35,000 .The aggregate audit fees billed to us by Greenberg and Company,
LLC during the fiscal year ended December 31, 2002 were approximately $30,000.
The aggregate audit fees billed to us by Greenberg and Company, LLC for the
review of quarterly financial statements included in our quarterly reports on
Form 10-QSB for the quarters ending March 31, June 30 and September 30, 2003
were approximately $15,000.

AUDIT RELATED FEES

For the fiscal year ended December 31, 2003 the aggregate fees billed for
assurance and related services by Greenberg and Company, LLC relating to the
performance of the audit of our financial statements which are not reported
under the caption "Audit Fees" above was $5,000. For the fiscal year ended
December 31, 2002 the aggregate fees billed for assurance and related services
by Greenberg and Company, LLC relating to the performance of the audit of our
financial statements which are not reported under the caption "Audit Fees" above
was $0.

TAX FEES

For the fiscal year ended December 31, 2003 the aggregate fees bill for tax
compliance, tax advice or tax planning was $0. For the fiscal year ended
December 31, 2002 the aggregate fees billed for tax related services was $2,925.

ALL OTHER FEES

Other than fees relating to the services described above under "Audit Fees,"
"Audit-Related Fees" and "Tax Fees," there were no additional fees billed by our
principal accountant for services rendered to us for the fiscal years ended
December 31, 2003 or 2002.





                                       45
<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/ CORNELIS F. WIT
                                     ------------------------------------------
                                     Cornelis F Wit, 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.

<TABLE>
<CAPTION>

SIGNATURE                          TITLE                               DATE
---------                          -----                               ----
<S>                                <C>                                 <C>

/s/ CORNELIS F. WIT                Chief (Principal) Executive         March 31, 2004
-------------------                Officer, President and Director
Cornelis F. Wit


/s/ RANDALL G. SMITH               Chairman, Chief                     March 31, 2004
--------------------               Technology Officer
Randall G. Smith


/s/ RONALD T. LINARES              Chief (Principal Accounting         March 31, 2004
---------------------              and) Financial Officer
Ronald T. Linares


/s/ GUUS VAN KESTEREN              Director                            March 31, 2004
---------------------
Guus van Kesteren


/s/ MATTHEW D. VEATCH              Director                            March 31, 2004
---------------------
Matthew D. Veatch

</TABLE>

                                       46



<PAGE>
                              FINANCIAL STATEMENTS


                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets                                                F-2

Consolidated Income Statements                                             F-3

Consolidated Statements of Cash Flows                                      F-4

Notes to Consolidated Financial Statements                                 F-6


                                      F-1
<PAGE>



                             OMNICOMM SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                      DECEMBER 31,        DECEMBER 31,
                                                                                          2003               2002
                                                                                      ------------       ------------
<S>                                                                                   <C>                <C>

                                ASSETS

CURRENT ASSETS
     Cash                                                                             $      1,977       $    194,677
     Accounts receivable                                                                   112,026            274,540
     Prepaid expenses                                                                       20,799              8,959
                                                                                      ------------       ------------
     Total current assets                                                                  134,822            478,176
                                                                                      ------------       ------------

PROPERTY AND EQUIPMENT, net                                                                139,830            261,736

OTHER ASSETS
     Intangible assets, net                                                                    -0-                -0-
     Other assets                                                                           12,997             12,997
                                                                                      ------------       ------------

TOTAL ASSETS                                                                          $    287,629       $    752,909
                                                                                      ============       ============

             LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable and accrued expenses                                            $    854,150       $  1,007,325
     Accrued payroll taxes                                                                 111,159            439,125
     Notes payable - current                                                                   -0-            120,000
     Notes payable related party- current                                                      -0-            106,000
     10% Convertible notes                                                                 375,000                -0-
     Deferred revenue                                                                      416,592            322,520
                                                                                      ------------       ------------
     Total current liabilities                                                           1,756,901          1,994,970

10% Convertible Notes                                                                          -0-            450,000
Notes payable, net of current portion                                                      880,926            485,926
Notes payable, related party, net of current portion                                       551,644            196,644
                                                                                      ------------       ------------
TOTAL LIABILITIES                                                                        3,189,471          3,127,540
                                                                                      ------------       ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)

     Undesignated preferred stock - $.001 par value. 4,022,500 shares
     authorized, no shares issued and outstanding                                              -0-                -0-

     Series B convertible preferred stock, - $.001 par value. 230,000 shares
     authorized, 157,500 and 200,000 issued and outstanding, respectively;
     liquidation preference $1,575,000 and $2,000,000, respectively                            158                200

     Series C convertible preferred stock, - $.001 par value. 747,500 shares
     authorized, 337,150 and 307,650 issued and outstanding, respectively;
     liquidation preference $3,371,500 and $3,076,500, respectively                            337                308

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

     Common stock - 150,000,000 shares authorized, 17,929,277 and 12,018,719
     issued and outstanding, after deducting 673,878 and 669,777 shares of
     treasury stock, at $.001 par value, respectively                                       18,554             12,640
     Additional paid in capital - preferred                                              8,778,394          8,938,117
     Additional paid in capital - common                                                12,671,495         10,939,462
     Less: Treasury stock, cost method, 673,878 and 669,777 shares, respectively          (299,861)          (298,794)
     Accumulated deficit                                                               (24,032,562)       (21,897,111)
     Deferred compensation                                                                 (42,572)           (72,528)
     Subscriptions receivable                                                                  -0-             (1,140)
                                                                                      ------------       ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                    (2,901,842)        (2,374,631)
                                                                                      ------------       ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                  $    287,629       $    752,909
                                                                                      ============       ============

</TABLE>

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



                                      F-2
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002


<TABLE>
<CAPTION>

                                                                  2003               2002
                                                             ------------       ------------

<S>                                                               <C>                <C>
REVENUES                                                     $    884,929       $    437,698
COST OF SALES                                                     240,398            288,790
                                                             ------------       ------------

GROSS MARGIN                                                      644,531            148,908

OTHER EXPENSES
Salaries, benefits and related taxes                            1,709,614          1,620,663
Rent & occupancy expenses                                         161,085            153,344
Consulting - medical advisory                                     (53,385)           139,423
Consulting - marketing sales                                        2,239                582
Legal and professional fees                                       142,387            178,214
Travel                                                             47,903             34,548
Telephone and internet                                             53,313             82,421
Selling, general and administrative                               137,181            224,844
Interest expense, net                                             138,757            938,639
Depreciation and amortization                                     144,967            208,232
                                                             ------------       ------------
TOTAL OTHER EXPENSES                                            2,484,061          3,580,910
                                                             ------------       ------------

(LOSS) BEFORE TAXES AND PREFERRED DIVIDENDS                    (1,839,530)        (3,432,002)

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

NET INCOME (LOSS)                                              (1,839,530)        (3,432,002)

Preferred stock dividends Series A Preferred                          -0-           (119,972)
Preferred stock dividends in arrears Series A Preferred          (205,364)           (84,958)
Preferred stock dividends in arrears Series B Preferred          (154,674)          (211,256)
Preferred stock dividends in arrears Series C Preferred          (265,925)           (56,805)
Preferred stock dividends - deemed dividends                     (295,921)        (1,411,475)
                                                             ------------       ------------
Total preferred stock dividends                                  (921,884)        (1,834,262)
                                                             ------------       ------------

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS        $ (2,761,414)      $ (5,266,264)
                                                             ============       ============

NET (LOSS) PER SHARE                                         $      (0.20)      $      (0.63)
                                                             ============       ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                  13,688,721          8,333,820
                                                             ============       ============

</TABLE>


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



                                      F-3
<PAGE>



                             OMNICOMM SYSTEMS, INC.
                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002


<TABLE>
<CAPTION>

                                                                                           2003              2002
                                                                                       -----------       -----------
<S>                                                                                    <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                                 $(1,839,530)      $(3,432,002)
     Adjustment  to  reconcile  net  income  to net cash  provided  by (used  in)
     operating activities:
     Depreciation and amortization                                                         144,967           208,232
     Amortization of deferred compensation                                                  29,955            17,571
     Interest expense on detachable warrants                                                   -0-               165
     Interest expense from beneficial conversion feature on 12% convertible note               -0-           646,000
     Common stock issued for services                                                       26,667           917,882
     Preferred stock issued for services                                                       -0-           100,000
     Change in assets and liabilities:
     Accounts receivable                                                                   161,447          (213,718)
     Prepaid expenses                                                                      (11,840)           (6,864)
     Other assets                                                                              -0-            (7,500)
     Accounts payable and accrued expenses                                                (190,142)          298,507
     Deferred revenue                                                                       94,072           239,434
                                                                                       -----------       -----------
Net cash provided by (used in) operating activities                                     (1,584,404)       (1,232,293)
                                                                                       -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                                                    (23,061)              -0-
                                                                                       -----------       -----------
Net cash provided by (used in) investing activities                                        (23,061)              -0-
                                                                                       -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable                                                                341,500           230,888
Payments on notes payable                                                                  (51,500)           (4,888)
Proceeds from issuance of common stock, net of issuance costs                              859,500               -0-
Proceeds from issuance of Series C convertible  preferred  stock, net of issuance
costs                                                                                      265,265         1,058,144
                                                                                       -----------       -----------
Net cash provided by (used in) financing activities                                      1,414,765         1,284,144
                                                                                       -----------       -----------

Net increase (decrease) in cash and cash equivalents                                      (192,700)          (51,851)
Cash and cash equivalents at beginning of period                                           194,677           142,826
                                                                                       -----------       -----------
Cash and cash equivalents at end of period                                             $     1,977       $   194,677
                                                                                       ===========       ===========


</TABLE>

                                      F-4
<PAGE>



                             OMNICOMM SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
                                   (CONTINUED)


<TABLE>
<CAPTION>

                                                                               FOR THE YEARS ENDED
                                                                                  DECEMBER 31,
                                                                            -----------------------
                                                                             2003            2002
                                                                            -------      ----------

<S>                                                                            <C>             <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:

Income tax                                                                     $-0-            $-0-
                                                                            =======      ==========
Interest                                                                       $-0-      $   22,560
                                                                            =======      ==========

NON-CASH TRANSACTIONS
Treasury stock repurchase of stock for trade accounts receivable            $ 1,067      $    4,883
Conversion of Series B Preferred Stock into common stock                    425,000             -0-
Common stock issued in exchange for notes payable and accrued interest       57,000         361,576
Common stock issued for services and in lieu of pay                          25,000          22,401
Preferred stock issued in exchange for convertible notes payable                -0-       1,615,000
Common stock issued for accrued preferred stock dividends                       -0-         533,904
Conversion of convertible notes payable into shares of common stock          75,000             -0-


</TABLE>

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



                                      F-5
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


NOTE 1:  ORGANIZATION AND NATURE OF OPERATIONS

         OmniComm Systems, Inc. is a healthcare technology company that provides
         Internet-based electronic data capture ("EDC") solutions and related
         value-added services to pharmaceutical and biotech companies, clinical
         research organizations, and other clinical trial sponsors.
         TrialMaster(R) allows clinical trial sponsors and investigative sites
         to securely collect, validate, transmit, and analyze clinical trial
         data. The Medical Event Reporting System (MERS-TH) is an event
         reporting system developed for hospitals and medical centers to
         collect, classify, and analyze events that could potentially compromise
         patient safety. MERS-TH provides the opportunity to study and monitor
         both actual and near-miss events to facilitate process improvement
         efforts. MERS-TH was developed in conjunction with Columbia University
         and will be marketed by both of us to hospital and medical centers in
         the U.S. and Europe initially.

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 2002 financial
         statements to conform to the 2003 presentation. These reclassifications
         did not have any effect on net income (loss) or shareholders' equity.

         SEGMENT INFORMATION

         The Company operates in one reportable segment.

         CASH AND CASH EQUIVALENTS

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

         ACCOUNTS RECEIVABLE

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

         CONCENTRATION OF CREDIT RISK

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


                                      F-6
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)

         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 on a straight-line basis over periods
         ranging from one to five years. The Company continually reviews the
         recoverability of the carrying value of these assets using the
         methodology prescribed in SFAS 121. The Company also reviews long-lived
         assets and the related intangible assets for impairment whenever events
         or changes in circumstances indicate the carrying amounts of such
         assets may not be recoverable. If it is determined the carrying amount
         of the assets is permanently impaired then intangible assets are
         written down to fair value and the useful life of the asset may be
         changed prospectively. Fair value is determined based on discounted
         cash flows, appraised values or management's estimates, depending upon
         the nature of the assets. As of December 31, 2003, 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. As of December 31, 2003 the Company had $416,592
         in deferred revenues relating to contracts for services to be performed
         over periods ranging from 1 month to 5 years.

         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 a few months to several
         years. Most of the fees associated with our product including
         post-setup customer support in the form of maintenance charges are
         recognized ratably over the term of the clinical trial. Cost of sales
         is primarily comprised of programmer salaries and taxes and is expensed
         as incurred.

         The Company recognizes sales, for both financial statement and tax
         purposes in accordance with SEC Staff Accounting Bulletin No. 101
         "Revenue Recognition in Financial Statements (SAB 101)". 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. As
         of December 31, 2003 the Company had $416,592 in deferred revenue
         relating to contracts for services to be performed over periods ranging
         from 1 month to 5 years.



                                      F-7
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         ADVERTISING

         Advertising costs are expensed as incurred. Advertising costs were
         $3,636 and $13,008 for the years ended December 31, 2003 and 2002,
         respectively.

         RESEARCH AND DEVELOPMENT EXPENSES

         Software development costs are included in research and development and
         are expensed as incurred. Statement of Financial Accounting Standards
         No. 86 ("SFAS 86") requires the capitalization of certain development
         costs of software to be sold once technological feasibility is
         established, which the Company defines as completion to the point of
         marketability. The capitalized cost is then amortized on a
         straight-line basis over the estimated product life. To date, the
         period between achieving technological feasibility and the general
         availability of such software has been short and software development
         costs qualifying for capitalization have been immaterial. Accordingly,
         the Company has not capitalized any software development costs under
         SFAS 86. Research and development expense was approximately $504,021 in
         2003 and $465,422 in 2002 for the years ended December 31,
         respectively.

         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" and,
         accordingly, does not recognize compensation expense for its
         stock-based awards to employees in the Consolidated Statements of
         Income. 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. See Note 13 for pro forma
         information on the impact of the fair-value method of accounting for
         stock options.

         EARNINGS PER SHARE

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

         Basic earnings per share were calculated using the weighted average
         number of shares outstanding of 13,688,721 and 8,333,820 for the years
         ended December 31, 2003 and 2002, respectively. There were no
         differences between basic and diluted earnings per share. Options to
         purchase 3,593,500 shares of common stock at prices ranging from $.15
         to $5.50 per share were outstanding at December 31, 2003. Stock
         warrants to purchase 16,751,296 shares of common stock at prices
         ranging from $0.25 to $10.00 per share were outstanding at December 31
         2003. The Company granted a Unit Purchase Option ("Agent Option") to
         the Placement Agent of its Series B Convertible Preferred Stock that
         provides the Placement Agent the ability to purchase 27,000 Series B
         Preferred Shares with 1,080,000 detachable common stock warrants. The
         exercise of the Agent Option would result in the issuance of an
         aggregate of 2,160,000 shares of common stock at an exercise price of
         $0.25 per share. The options, warrants and Agent Options were not
         included in the computation of diluted earnings per share because they
         have an anti-dilutive effect on net loss per share. The Company's
         convertible debt and convertible preferred stock have an anti-dilutive
         effect on net loss per share.



                                      F-8
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         The Company granted a Unit Purchase Option ("Agent Option") to the
         Placement Agent of its Series C Convertible Preferred Stock that
         provides the Placement Agent the ability to purchase 24,848 Series C
         Preferred Shares with 496,950 detachable common stock warrants. The
         exercise of the Agent Option would result in the issuance of an
         aggregate of 1,490,850 shares of common stock at an exercise price of
         $0.25 per share. The 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.

         INCOME TAXES

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

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

         IMPACT OF NEW ACCOUNTING STANDARDS

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

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

         SFAS 144 establishes a single accounting model for the impairment or
         disposal of long-lived assets, including discontinued operations. SFAS
         144, supersedes Statement of Financial Accounting Standards No. 121,
         "ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
         ASSETS TO BE DISPOSED OF" ("SFAS 121"), and APB Opinion No. 30,
         "REPORTING THE RESULTS OF OPERATIONS - REPORTING THE EFFECTS OF
         DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND
         INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS". The provisions of SFAS
         144 are effective in fiscal years beginning after December 15, 2001,
         with early adoption permitted, and in general are to be applied
         prospectively. The Company adopted SFAS 144 effective January 1, 2002
         and does not expect that the adoption will have a material impact on
         its consolidated results of operations and financial position.



                                      F-9
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)



         In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
         Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
         Technical Corrections." SFAS No. 145 eliminates SFAS No. 4, "Reporting
         Gains and Losses from Extinguishment of Debt," which required all gains
         and losses from extinguishment of debt to be aggregated and, if
         material, classified as an extraordinary item. Under SFAS No. 145, such
         gains and losses should be classified as extraordinary only if they
         meet the criteria of APB Opinion No. 30. In addition, SFAS No. 145
         amends SFAS No. 13, "Accounting for Leases," to eliminate an
         inconsistency between the required accounting for sale-leaseback
         transactions and the required accounting for certain lease
         modifications that have economic effects that are similar to
         sale-leaseback transactions. The Company does not expect the adoption
         of SFAS No. 145, which became effective after May 2002 to have a
         material effect on its financial condition or results of operations.

         In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS
         ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES". The standard requires
         companies to recognize costs associated with exit or disposal
         activities when they are incurred rather than at the date of a
         commitment to an exit or disposal plan. Previous accounting guidance
         was provided by EITF Issue No. 94-3, "LIABILITY RECOGNITION FOR CERTAIN
         EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY
         (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING)". SFAS No. 146
         replaces Issue 94-3. The provisions of SFAS No. 146 are to be applied
         prospectively to exit or disposal activities initiated after December
         31, 2002. The Company does not expect the adoption of this
         pronouncement to have a material effect on the earnings or financial
         position of the Company.

         On December 31, 2002, the FASB issued SFAS No.148, "ACCOUNTING FOR
         STOCK-BASED COMPENSATION--TRANSITION AND DISCLOSURE--AN AMENDMENT OF
         FAS 123". This statement amends SFAS 123, "Accounting for Stock-Based
         Compensation", to provide alternative methods of transition for a
         voluntary change to the fair value based method of accounting for
         stock-based employee compensation and amends the disclosure
         requirements of SFAS 123 to require prominent disclosures in both
         annual and interim financial statements about the method of accounting
         for stock-based employee compensation and the effect of the method used
         on reported results. The transition and annual disclosure provisions of
         FAS 148 are effective for fiscal years ending after December 15, 2002.
         The Company does not expect the adoption to have a material effect on
         the earnings or financial position of the Company.

         In January 2003, the FASB issued Interpretation No. 46, "CONSOLIDATION
         OF VARIABLE INTEREST ENTITIES" ("FIN 46"). The interpretation provides
         guidance for determining when a primary beneficiary should consolidate
         a variable interest entity or equivalent structure, that functions to
         support the activities of the primary beneficiary. The interpretation
         is effective as of the beginning of the Company's third quarter of 2003
         for variable interest entities created before February 1, 2003. The
         Company holds no interest in any variable interest entities.
         Accordingly, the adoption of this statement is not expected to have a
         material impact on the consolidated financial statements.

         In May 2003, the FASB issued Statement of Financial Accounting
         Standards No. 149 (SFAS 149), AMENDMENT OF STATEMENT 133 ON DERIVATIVE
         INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 149 is intended to result in
         more consistent reporting of contracts as either freestanding
         derivative instruments subject to Statement 133 in its entirety, or as
         hybrid instruments with debt host contracts and embedded derivative
         features. SFAS 149 is effective for contracts entered into or modified
         after June 30, 2003. The adoption of SFAS has not had nor do we expect
         it to have a material effect on the Company's results of operations,
         liquidity, or financial condition.




                                      F-10
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         In April 2003, the FASB issued Statement of Financial Accounting
         Standards No. 150 (SFAS 150), ACCOUNTING FOR CERTAIN FINANCIAL
         INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. SFAS
         150 requires certain financial instruments that embody obligations of
         the issuer and have characteristics of both liabilities and equity to
         be classified as liabilities. Many of these instruments previously were
         classified as equity or temporary equity and as such, SFAS 150
         represents a significant change in practice in the accounting for a
         number of mandatorily redeemable equity instruments and certain equity
         derivatives that frequently are used in connection with share
         repurchase programs. SFAS 150 is effective for all financial
         instruments created or modified after May 31, 2003, and to other
         instruments at the beginning of the first interim period beginning
         after June 15, 2003. The adoption of SFAS 150 has not had nor do we
         expect it to have a material effect on the Company's results of
         operations, liquidity, or financial condition.

NOTE 3:  OPERATIONS AND LIQUIDITY

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

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

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

         The ability of the Company to continue in existence is dependent on its
         having sufficient financial resources to bring products and services to
         market for marketplace acceptance. As a result of its significant
         losses, negative cash flows from operations, and accumulated deficits
         for the periods ending December 31, 2003 there is doubt about the
         Company's ability to continue as a going concern.



                                      F-11
<PAGE>

                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 4:  INTANGIBLE ASSETS AND GOODWILL

         Included in Intangible Assets are the following assets:

<TABLE>
<CAPTION>

                                                                DECEMBER 31, 2003
                                                    --------------------------------------------
                                                                                     ACCUMULATED
                                                      COST                          AMORTIZATION
                                                    ---------                       ------------
<S>                                                  <C>                                <C>
                 Covenant not to compete             $120,000                           $120,000
                 Software development costs            87,500                             87,500
                 Organization costs                       539                                539
                 Debt acquisition costs               301,888                            301,888
                                                      -------                            -------
                                                     $509,927                           $509,927
                                                     ========                           ========

</TABLE>

<TABLE>
<CAPTION>

                                                                  DECEMBER 31, 2002
                                                    --------------------------------------------
                                                                                     ACCUMULATED
                                                         COST                       AMORTIZATION
                                                    ---------                       ------------
<S>                                                  <C>                                <C>
                 Covenant not to compete             $120,000                           $120,000
                 Software development costs            87,500                             87,500
                 Organization costs                       539                                539
                 Debt acquisition costs               301,888                            301,888
                                                      -------                            -------
                                                     $509,927                           $509,927
                                                     ========                           ========
</TABLE>

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

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

NOTE 5:  PROPERTY AND EQUIPMENT, AT COST

         Property and equipment consists of the following:

<TABLE>
<CAPTION>

                                               DECEMBER 31, 2003                 DECEMBER 31, 2002
                                           -------------------------       ----------------------------      ------------
                                                         ACCUMULATED                       ACCUMULATED        ESTIMATED
                                             COST       DEPRECIATION         COST          DEPRECIATION      USEFUL LIVES
                                           -------      ------------       ---------       ------------      ------------
<S>                                       <C>              <C>               <C>              <C>                 <C>
             Computer and
             office equipment             $423,177         $337,604          $420,298         $253,416            5 years

             Leasehold
             improvements                    3,299            2,052             3,299            1,392            5 years

             Computer software             269,869          235,196           260,287          183,989            3 years

             Office furniture               52,950           34,613            42,350           25,701            5 years
                                          --------         --------          --------         --------
                                          $749,295         $609,465          $726,234         $464,498
                                          ========         ========          ========         ========

</TABLE>

         Depreciation expense for the periods ended December 31, 2003 and 2002
         was $144,967 and $159,776 respectively.



                                      F-12
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 6:  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         Accounts payable and accrued expenses consist of the following at
         December 31, 2003 and December 31, 2002:

<TABLE>
<CAPTION>

                                                                              12/31/03       12/31/02
                                                                              --------       --------
<S>                                                                           <C>            <C>
                 Accounts payable                                             $255,890       $431,736
                 Accrued payroll and related costs                              15,479         34,259
                 Other accrued expenses                                        236,927        293,233
                 Accrued interest                                              218,335        120,578
                 Accrued expenses of OmniTrial BV                              127,519        127,519
                                                                              --------     ----------
                      Total accounts payable and accrued expenses             $854,150     $1,007,325
                                                                              ========     ==========
</TABLE>


         Other accrued expenses consist primarily of placement agent fees and
         expenses due on private placements of our debt and equity securities
         that occurred during 2000 to 2003 and accrued legal fees associated
         with the sale of Series C Convertible Preferred Stock.

NOTE 7:  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 46,891,795 have been
         omitted from the calculation of dilutive EPS for the year ended
         December 31, 2003. A reconciliation between numerators and denominators
         of the basic and diluted earnings per shares is as follows:

<TABLE>
<CAPTION>

                                  THE YEAR ENDED DECEMBER 31, 2003               THE YEAR ENDED DECEMBER 31, 2002
                           ---------------------------------------------    -------------------------------------------
                               INCOME          SHARES         PER-SHARE       INCOME           SHARES        PER-SHARE
                              NUMERATOR      DENOMINATOR       AMOUNT        NUMERATOR      DENOMINATOR        AMOUNT
                              ---------      -----------       ------        ---------      -----------       ---------
<S>                        <C>               <C>              <C>          <C>               <C>             <C>
         Basic EPS         $(2,761,412)      13,688,721       $(0.20)      $(5,266,264)      8,333,820       $(0.63)

         Effect of
         Dilutive
         Securities
         None                      -0-              -0-         -0-                -0-             -0-         -0-
                           -----------      -----------       -----        -----------     -----------       -----
         Diluted EPS       $(2,761,412)      13,688,721       $(0.20)      $(5,266,264)      8,333,820       $(0.63)


</TABLE>

                                      F-13
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 8:  NOTES PAYBLE

         At December 31 2003, the Company owed $1,432,570 in notes payable. The
         table below provides details as to the terms and conditions of the
         notes payable.

<TABLE>
<CAPTION>

                           ORIGINATION             DUE      INTEREST                             SHORT             LONG
       NOTE HOLDER            DATE                DATE        RATE                AMOUNT          TERM             TERM
       -----------        ------------         ---------    ----------            ------        ---------      ----------
<S>                         <C>                  <C>            <C>                <C>          <C>               <C>
Guus van Kesteren           8/30/2001            4/1/2006       8.0%             $ 196,644       $      0       $ 196,644
Magnolia Private Fnd.       8/30/2001            4/1/2006       8.0%               209,534              0         209,534
Magnolia Private Fnd.       8/30/2001            4/1/2006       8.0%               276,392              0         276,392
Nico Letschert              7/31/2002          10/31/2005       9.0%                10,000              0          10,000
Nico Letschert               9/3/2002          10/31/2005       9.0%                10,000              0          10,000
Randall Smith              11/25/2002           1/31/2005       9.0%                 6,000              0           6,000
Guus van Kesteren          12/26/2002          10/31/2005       9.0%                50,000              0          50,000
Cornelis Wit               12/30/2002          10/31/2005       9.0%                50,000              0          50,000
Guy Brissette              12/30/2002           1/31/2005       9.0%               100,000              0         100,000
Cornelis Wit                6/30/2003          10/31/2005       9.0%               100,000              0         100,000
Noesis Capital              6/30/2003           1/31/2005       9.0%               250,000              0         250,000
Cornelis Wit                7/18/2003           1/31/2005       9.0%                60,000              0          60,000
Cornelis Wit                8/18/2003           1/31/2005       9.0%                56,000              0          56,000
Cornelis Wit               11/21/2003          10/31/2005       9.0%                 3,000              0           3,000
Cornelis Wit               10/13/2003          10/31/2005       9.0%                30,000              0          30,000
Carel Letschert             11/7/2003           1/31/2005       9.0%                25,000              0          25,000
                                                                               -----------       ---------    -----------
                                                                               $ 1,432,570        $     0     $ 1,432,570
                                                                               ===========      ==========    ===========

</TABLE>

         Promissory notes totaling $682,570 were amended and restated on
         December 31, 2002, with new terms which included an extension of the
         maturity date to October 31, 2004 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.

         Promissory notes totaling $120,000 were amended and restated on March
         31, 2003, with new terms which included an extension of the maturity
         date to October 31, 2005.

         A promissory note in the amount of $250,000 was issued to Noesis
         Capital Corp. on June 30, 2003 in exchange for accounts payable and
         accrued expenses owed in connection with financial advisory services
         rendered and for placement agent fees earned in four private placements
         of the Company's debt and equity securities.

         Promissory notes totaling $100,000 were amended and restated on August
         15, 2003, with new terms which included an extension of the maturity
         date to January 31, 2005.


                                      F-14
<PAGE>


                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)



         RELATED PARTY NOTES PAYABLE

         Included in related party notes payables is a $196,644 promissory note
         that was amended and restated on December 31, 2002 with new terms which
         include an extension of the maturity date to December 31, 2004 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. These
         notes were amended again in December 2003 extending the maturity date
         to April 2006.

         During March 2002, the Company borrowed $2,341 from Randall Smith, the
         Company's Chairman and Chief Technology Officer. This amount was repaid
         without interest on April 12, 2002. In addition, the Company borrowed
         $6,000 from Mr. Smith on November 25, 2002 and this amount remained
         outstanding as of December 31, 2003.

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

         During December 2002, the Company borrowed $50,000 from Cornelis Wit,
         the Company's President and Chief Executive Officer and a Director.
         This amount was borrowed under a promissory note bearing interest at a
         rate of 9% per annum, payable on March 31, 2003. This note was amended
         and restated on March 31, 2003 extending the maturity date of the note
         to October 31, 2005.

         During December 2002, the Company borrowed $50,000 from Guus van
         Kesteren, a Director of the Company. This amount was borrowed under a
         promissory note bearing interest at a rate of 9% per annum, payable on
         March 31, 2003. This note was amended and restated on March 31, 2003
         extending the maturity date of the note to October 31, 2005.

         During March 2003, the Company borrowed $2,600 from Cornelis Wit, the
         Company's President and Chief Executive Officer and a Director. This
         amount was repaid without interest on April 3, 2003.

         During June 2003, the Company borrowed $100,000 from Cornelis Wit, the
         Company's President and Chief Executive Officer and a Director. This
         amount was borrowed under a promissory note bearing interest at a rate
         of 9% per annum, payable on October 31, 2005.

         During July and August 2003, the Company borrowed $116,000 from
         Cornelis Wit, the Company's President and Chief Executive Officer and a
         Director. This amount was borrowed under two promissory notes bearing
         interest at a rate of 9% per annum, payable on January 31, 2005.

         During October 2003, the Company borrowed $16,000 from Cornelis Wit,
         the Company's President and Chief Executive Officer and a Director. The
         Company repaid $13,000 of this amount during November and December 2003
         and issued a promissory note in the amount of $3,000 bearing interest
         at a rate of 9% per annum, payable on October 31, 2005.

         During October and November 2003, the Company borrowed $30,000 from
         Cornelis Wit, the Company's President and Chief Executive Officer and a
         Director. This amount was borrowed under promissory notes bearing
         interest at a rate of 9% per annum, payable on October 31, 2005.

         During October 2003, the Company borrowed $16,000 from Guus van
         Kesteren, a Company Director. This amount was borrowed under a
         promissory note bearing interest at a rate of 9% per annum, payable on
         October 31, 2005. On December 31, 2003, Mr. van Kesteren elected to
         convert this note payable into common stock of the Company at a
         conversion price of $0.25 per share. The Company issued 64,000 shares
         of restricted common stock. in connection with this conversion.



                                      F-15
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 9:  CONVERTIBLE NOTES

         During the first quarter of 1999, the Company issued 10% Convertible
         Notes Payable in the amount of $862,500 pursuant to a Confidential
         Private Placement Memorandum. There were costs of $119,625 associated
         with this offering. The 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, 2003
         approximately $487,500 of the Convertible Notes had been converted into
         390,000 shares of common stock of the Company leaving an outstanding
         principal balance of $375,000.

         The Company is currently in default on interest payments owed totaling
         $89,004 on its 10% Convertible Notes. The terms of the notes provide a
         payment grace period of thirty days in which to make required
         semi-annual interest payments. The company has been in default since
         January 30, 2002. At the option of the note holders the full amount of
         the convertible notes could be declared in default.

         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, 2002, and $60,000 of accrued expenses due to the placement
         agent converted as part of the private placement of the 12% Convertible
         Notes Payable. The notes bear interest at twelve percent annually,
         payable at maturity. The notes are convertible after maturity, which is
         January 31, 2002, into shares of common stock of the Company at $0.50
         per share. EITF 98-5, "ACCOUNTING FOR CONVERTIBLE SECURITIES WITH
         BENEFICIAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE CONVERSION
         RATIOS", requires Company's to record interest expense on convertible
         debt that is issued with an embedded beneficial conversion feature, or
         in the money at the date the investor is committed to purchase the
         convertible securities. The Company valued the 12% Convertible Notes
         Payable utilizing the intrinsic value method and recorded $508,835 in
         interest expense with a corresponding credit to additional paid-in
         capital.

         The Company completed a conversion of its 12% Convertible Notes on
         December 31, 2002. The Company converted the principal amount
         outstanding of $1,615,000 into Units of its Series C Convertible
         Preferred Stock resulting in the issuance of 161,500 shares of the
         Series C Preferred with 3,230,000 attached common stock warrants
         providing the shareholder the right to purchase additional shares at
         $0.25 per share. In addition, the outstanding accrued interest on the
         12% Convertible Notes, which totaled $361,576 on December 31, 2002,
         resulted in the issuance of 1,446,306 shares of common stock.

NOTE 10: COMMITMENTS AND CONTINGENCIES

         The Company currently leases office space under an operating lease. The
         minimum future lease payments required under the Company's operating
         leases at December 31, 2003 are as follows:

                          2004                     117,246
                          2005                      54,522
                          2006                           0
                          2007                           0
                          2008                           0
                                                  --------
                          Total                   $171,768
                                                  ========



                                      F-16
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         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 $161,085 and $153,344 for the years ended
         December 31, 2003 and 2002.

         CONTINGENT LIABILITIES

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

         In January 2001, a former employee, Eugene A. Gordon, filed a lawsuit
         in Dade County, Florida alleging breach of his employment contract with
         us. The plaintiff alleged we owed him more than $100,000 for back
         payment of salary according to the terms of his employment contract. We
         disputed Mr. Gordon's allegations and vigorously defended this lawsuit.
         As part of its defense, the Company filed a counterclaim against Mr.
         Gordon and a counter-suit against his wife. The parties entered into a
         settlement agreement on August 19, 2002. The parties subsequently filed
         and the court accepted a Joint Stipulation for Dismissal With Prejudice
         on September 6, 2002.

         EMPLOYMENT AGREEMENTS

         In August 2003, we entered into an employment agreement with Cornelis
         F. Wit to serve as our Chief Executive Officer and President through
         December 31, 2004. Mr. Wit receives an annual salary of $175,000
         payable in cash and/or stock plus a bonus tied to our operating
         results. As part of the agreement incentive options are awardable under
         the agreement based upon sales and cash flow objectives. In the event
         that the we consummate a transaction with a third party resulting in
         the sale, merger, consolidation, reorganization or other business
         combination involving all or a majority of our business, assets or
         stock, whether effected in one transaction or a series of transactions
         due to the initiative of Mr. Wit (whether or not during the term of the
         agreement) Mr. Wit will receive a fee equal to 2% of the aggregate
         consideration. 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 Mr.
         Wit's employment upon 30 days notice of a material breach and Mr. Wit
         may terminate the agreement under the same terms and conditions. The
         employment agreement contains customary non-disclosure provisions, as
         well as a one year non-compete clause if Mr. Wit 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, Mr. Smith
         receives an annual salary of $165,000 as of January 1, 2003 to be paid
         in the form of cash and/or stock, as agreed upon by the parties, 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 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, or $0.43 per share for five years from the date of
         vesting. The agreement also provides, among other things, for
         participation in employee


                                      F-17
<PAGE>

                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         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-competition restriction 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
         $150,000 as of January 1, 2003 to be paid in the form of cash and/or
         stock, as agreed upon by the parties, 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 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 or $0.43 per share, for five years from the date of
         vesting. 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. 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-competition
         restriction following the termination of the agreement.

         In January 2003, we entered into a three-year employment agreement with
         Mr. Charles Beardsley to serve as our Senior Vice President for Sales
         and Marketing. Under the terms of this agreement, Mr. Beardsley
         receives an annual salary of $150,000 to be paid in the form of cash
         and/or stock, as agreed upon by the parties, and he is eligible to
         receive additional incentive compensation based upon achieving
         financial milestones. Mr. Beardsley is eligible for a commission,
         payable on a quarterly basis, equal to 2% of the Company's Net
         Operating Income as defined in an exhibit to his employment contract.
         Mr. Beardsley was granted an aggregate of 150,000 options under our
         1998 Stock Incentive Plan. The options, which vest 50,000 annually
         beginning with January 2, 2004, are exercisable at a price of $0.25 per
         share, for five years from the date of vesting. Mr. Beardsley received
         a grant of 100,000 shares of restricted common stock upon execution of
         his employment agreement. 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. Beardsley upon 30
         days notice of a material breach and Mr. Beardsley may terminate the
         agreement under the same terms and conditions. If Mr. Beardsley is
         terminated by us for any reason other than for cause, we must pay him
         severance benefits equal to twelve months salary. The employment
         agreement contains customary non-disclosure provisions.

         FINANCIAL ADVISORY AGREEMENT

         During March 2002, the Company entered into a one-year financial
         advisory agreement with Noesis Capital to assist the Company in
         performing certain financial advisory services including the sale of
         securities, and the possible sale, merger or other business combination
         involving the Company. Pursuant to this agreement, the Company is
         obligated to pay $90,000 in professional fees during the one-year term
         of the agreement. The advisory agreement was extended for a twelve
         month term effective June 15, 2003.



                                      F-18
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 11: RELATED PARTY TRANSACTIONS

         Cornelis F. Wit, our President and Chief Executive Officer and a member
         of our board of directors served as President of Corporate Finance of
         Noesis Capital Corp. from March 1995 to September 2000. Noesis Capital
         Corp., a NASD member firm, has served as placement agent for us in six
         private placements of securities which occurred between September 1999
         and December 2003 Guus van Kesteren, a member of our board of
         directors, is a consultant to 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
         TrialMaster. For the periods ended December 30, 2001 and 2002, no
         compensation was earned by either Mr. van Kesteren or Mr. Wit under
         this agreement. This agreement was terminated upon mutual agreement of
         the parties effective June 30, 2002.

         On April 5, 2002, Cornelis F. Wit, our President and Chief Executive
         Officer and a member of our board of directors, invested $10,000 in a
         private placement of our Series C Preferred Stock and warrants. Mr. Wit
         purchased 1,000 shares of our Series C Preferred Stock, which is
         convertible into shares of our common stock at a conversion price of
         $0.25 per share and carries a stated dividend rate of 8% per annum, and
         20,000 warrants for the purchase of our common stock at an exercise
         price of $0.25 per share expiring March 29, 2009.

         On April 5, 2002, Guus van Kesteren a member of our board of directors,
         invested $10,000 in a private placement of our Series C Preferred Stock
         and warrants. Mr. van Kesteren purchased 1,000 shares of our Series C
         Preferred Stock, which is convertible into shares of our common stock
         at a conversion price of $0.25 per share and carries a stated dividend
         rate of 8% per annum, and warrants to purchase 20,000 shares of common
         stock at an exercise price of $0.25 per share and expiring March 29,
         2009.

         On January 30 2002, Noesis N.V., one of our principal stockholders,
         invested $90,000 in a private placement of our Series C Preferred Stock
         and warrants. Noesis NV purchased 9,000 shares of our Series C
         Preferred Stock, which is convertible into shares of our common stock
         at a conversion price of $0.25 per share and carries a stated dividend
         rate of 8% per annum, and warrants to purchase 180,000 shares of common
         stock at an exercise price of $0.25 per share expiring March 29, 2009.

         From time to time we have borrowed funds from Mr. van Kesteren, a
         member of our board of directors, including:

         o  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 a 12% convertible note issued as
            part of a private placement of our 12% Convertible Notes in January
            2001. The note 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 was
            converted on December 31, 2002 into 11,000 shares of our Series C
            Preferred Stock, which are convertible into shares of our common
            stock at a conversion price of $0.25 per share, and warrants to
            purchase 220,000 shares of our common stock at an exercise price of
            $0.25 per share and expiring March 29, 2009.



                                      F-19
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         o  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 in the amount of $196,644 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. These notes were amended and restated on December
            31, 2002 extending the maturity date of the notes to October 31,
            2004. This note remained outstanding as of the date of this
            prospectus.

         o  in September 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 in August 2001 into 2,500 shares of our Series B Preferred
            Stock, which are convertible into shares of our common stock at a
            conversion price of $0.25 per share, and warrants to purchase
            100,000 shares of our common stock at an exercise price of $0.25 per
            share expiring August 31, 2006.

         In conjunction with these various loans, we 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. All of these
         warrants have expired.

         In July 2001, Noesis Capital Corp., the placement agent for our 12%
         Convertible Notes, assigned $60,000 of accrued fees that we owed to
         Noesis Capital Corp. to Cornelis Wit, a member of our board of
         directors at the time. Mr. Wit converted that accrued expense into our
         12% Convertible Notes. The 12% Convertible Notes were subsequently
         converted on December 31, 2002 into 6,000 shares of our Series C
         Preferred Stock and warrants to purchase 120,000 shares of our common
         stock at an exercise price of $0.25 expiring March 29, 2009.

         We granted Randall G. Smith, our 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, a member of our board of directors in July 2001, in the
         amount of $100,000. These warrants have expired.

         On August 17, 2000, we borrowed $100,000 from Noesis N.V., one of our
         principal stockholders. The promissory note bore interest 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 a 12%
         convertible note issued as part of a private placement of our 12%
         Convertible Notes in January 2001. The note accrues interest at 12% per
         annum, 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 was converted on December 31, 2002 into 10,000 shares of our
         Series C Preferred Stock, which are convertible into shares of our
         common stock at a conversion price of $0.25 per share, and warrants to
         purchase 200,000 shares of our common stock at an exercise price of
         $0.25 per share expiring March 29, 2009.

         During March 2002, we borrowed $2,341 from Randall G. Smith, our
         Chairman of the board and Chief Technology Officer. This amount was
         repaid without interest on April 12, 2002. In addition, we borrowed
         $6,000 without interest from Mr. Smith on November 25, 2002. In March
         2003 this note was amended and restated extending the maturity date to
         January 31, 2005.

         In April 2002, we borrowed $1,500 from Ronald Linares, our Chief
         Financial Officer. This amount was repaid without interest on May 1,
         2002.



                                      F-20
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         In September and July of 2002, we borrowed an aggregate of $20,000
         without interest from Nico Letschert, an officer, director and
         principal shareholder of Noesis Capital Corp., one of our principal
         stockholders. This amount is due and payable January 31, 2005.

         In December 2002, we borrowed $50,000 from Cornelis Wit, our President
         and Chief Executive Officer and a member of our board of directors.
         This amount was borrowed under a promissory note bearing interest at a
         rate of 9% per annum, payable on March 31, 2003. This note was amended
         and restated on March 31, 2003 extending the maturity date of the note
         to October 31, 2005.

         In December 2002, we borrowed $50,000 from Guus van Kesteren a member
         of our board of directors. This amount was borrowed under a promissory
         note bearing interest at a rate of 9% per annum, payable on March 31,
         2003. This note was amended and restated on March 31, 2003 extending
         the maturity date of the note to October 31, 2005.

         In March 2003, we borrowed $2,600 from Cornelis Wit, our Chief
         Executive Officer and President and a member of our board of directors.
         This amount was repaid without interest on April 3, 2003.

         In June 2003, we borrowed $100,000 from Cornelis Wit, our President and
         Chief Executive Officer and a member of our board of directors. This
         amount was borrowed under a promissory note bearing interest at a rate
         of 9% per annum, payable on October 31, 2005.

         In July and August 2003, we borrowed $116,000 from Cornelis Wit, our
         President and Chief Executive Officer and a member of our board of
         directors. This amount was borrowed under two promissory notes bearing
         interest at a rate of 9% per annum, payable on January 31, 2005.

         During October 2003, the Company borrowed $16,000 from Cornelis Wit,
         the Company's President and Chief Executive Officer and a Director. The
         Company repaid $13,000 of this amount during November and December 2003
         and issued a promissory note in the amount of $3,000 bearing interest
         at a rate of 9% per annum, payable on October 31, 2005.

         During October and November 2003, the Company borrowed $30,000 from
         Cornelis Wit, the Company's President and Chief Executive Officer and a
         Director. This amount was borrowed under promissory notes bearing
         interest at a rate of 9% per annum, payable on October 31, 2005.

         During October 2003, the Company borrowed $16,000 from Guus van
         Kesteren, a Company Director. This amount was borrowed under a
         promissory note bearing interest at a rate of 9% per annum, payable on
         October 31, 2005. On December 31, 2003, Mr. van Kesteren elected to
         convert this note payable into common stock of the Company at a
         conversion price of $0.25 per share. The Company issued 64,000 shares
         of restricted common stock in connection with this conversion.

NOTE 12: 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.



                                      F-21
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


NOTE 13: STOCKHOLDERS' EQUITY (DEFICIT)

         Our authorized capital stock consists of 150,000,000 shares of common
         stock, $.001 par value per share, and 10,000,000 shares of preferred
         stock, par value $.001 per share, of which 5,000,000 shares have been
         designated as 5% Series A Preferred, 230,000 shares have been
         designated as Series B Preferred Stock and 747,500 shares have been
         designated as Series C Preferred Stock.

         As of December 31, 2003 we had the following outstanding securities:

               o  17,929,277 shares of common stock issued and outstanding;

               o  16,751,296 warrants issued and outstanding to purchase shares
                  of our common stock;

               o  4,215,224 shares of our Series A Preferred Stock issued and
                  outstanding,

               o  157,500 shares of our Series B Preferred Stock issued and
                  outstanding;

               o  337,150 shares of our Series C Preferred Stock issued and
                  outstanding;

               o  a Series B Placement Agent Unit Option;

               o  a Series C Placement Agent Unit Option; and

               o  10% Convertible Notes.

         COMMON STOCK

         Holders of common stock are entitled to one vote for each share on all
         matters submitted to a stockholder vote. Holders of our voting
         securities do not have cumulative voting rights. Holders of common
         stock are entitled to share in all dividends that the board of
         directors, in its discretion, declares from legally available funds. In
         the event of our liquidation, dissolution or winding up, subject to the
         preferences of the Series A Preferred Stockholders, Series B Preferred
         Stock holders and Series C Preferred Stockholders, each outstanding
         share of common stock entitles its holder to participate in all assets
         that remain after payment of liabilities and after providing for each
         class of stock, if any, having preference over the common stock.

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

         From April 2003 through May, 2003, we sold an aggregate of 1,400,000
         shares of our common stock and warrants to purchase 700,000 shares of
         our common stock to accredited investors resulting in gross proceeds of
         $350,000. The warrants are exercisable at an exercise price of $0.25
         per share expiring May 2008. None of these investors were our
         affiliates. Noesis Capital Corp., an NASD member firm, acted as
         placement agent in the offering and as compensation therefore received
         a commission equal to 8% of the sales made by it, or an aggregate of
         $28,000, a non-accountable expense allowance equal to 2% of the sales
         made by it, or an aggregate of $7,000 and a warrant to purchase at
         $0.25 per share, 10% of the shares sold, or 140,000 shares of our
         common stock. An estimated fair value of $32,115 of the warrants
         granted to Noesis Capital was calculated using the Black-Scholes
         pricing model. The warrants granted to Noesis Capital were valued
         utilizing the Black-Scholes option pricing model. An estimated fair
         value of $32,115 was calculated for the warrants granted to Noesis
         Capital.


                                      F-22
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         From July 2003 through December, 2003, we sold an aggregate of
         2,484,000 shares of our common stock resulting in gross proceeds of
         $621,000. None of these investors, other than Guus van Kesteren, a
         Director, were our affiliates. Noesis Capital Corp., an NASD member
         firm, acted as placement agent in the offering and as compensation
         therefore received a commission equal to 8% of the sales made by it, or
         an aggregate of $48,400, a non-accountable expense allowance equal to
         2% of the sales made by it, or an aggregate of $12,100 and a warrant to
         purchase at $0.25 per share, 10% of the shares sold, or 248,400 shares
         of our common stock. The warrants granted to Noesis Capital were valued
         utilizing the Black-Scholes option pricing model. An estimated fair
         value of $56,982 was calculated for the warrants granted to Noesis
         Capital.

         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. In addition, the board of directors may fix and determine all
         privileges and rights of the authorized preferred stock series
         including:

               o  dividend and liquidation preferences,

               o  voting rights,

               o  conversion privileges, and

               o  redemption terms.

         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.

         SERIES A PREFERRED STOCK

         In 1999, our board of directors designated 5,000,000 shares of our
         preferred stock as 5% Series A Convertible Preferred Stock ("Series A
         Preferred Stock"), of which 4,215,224 shares are issued and
         outstanding.

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

               o  the shares are not redeemable,

               o  each share of Series A 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, or if not so
                  converted after one year from issuance, at any time at our
                  option if the closing bid price of our common stock has
                  exceeded $3.00 for 20 consecutive trading days, our common
                  stock is listed on The Nasdaq Stock Market or other national
                  stock exchange, and the shares of common stock issuable upon
                  conversion of the Series A Preferred Stock are registered
                  under a registration statement,

               o  the conversion price has certain anti-dilution protections 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 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 Preferred Stock and Series C Preferred Stock,



                                      F-23
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)

               o  the shares of Series A Preferred Stock pay a cumulative
                  dividend at a rate of 5% per annum based on the stated value
                  of $1.00 per share, payable when and as declared by the board
                  of directors, or upon conversion or liquidation. Dividends on
                  the Series A Preferred Stock have priority to our common stock
                  and junior to Series B Preferred Stock and Series C Preferred
                  Stock. At our option, dividends can be paid in cash or shares
                  of common stock valued at the conversion price of the Series A
                  Preferred Stock,

               o  in the event of our liquidation or winding up, each share of
                  Series A Preferred Stock has a liquidation preference equal to
                  $1.00 per share,

               o  the holders of the Series A 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 A Preferred Stock.

         There were arrearages of $290,322 and $84,958 on the Series A Preferred
         Stock for undeclared dividends as of December 31, 2003 and December 31,
         2002.

         In addition, the holders of the Series A Preferred Stock were granted
         certain demand and piggy-back registration rights for the shares of our
         common stock issuable upon the conversion of the Series A Preferred
         Stock.

         SERIES B PREFERRED STOCK

         In August 2001, our board of directors designated 200,000 shares of our
         preferred stock as Series B Convertible Preferred Stock ("Series B
         Preferred Stock"). A Corrected Certificate of Designations was filed on
         February 7, 2002 with the Delaware Secretary of State increasing the
         number of shares authorized as Series B Preferred Stock to 230,000
         shares, of which 157,500 shares are issued and outstanding.

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

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

               o  the shares are not redeemable,

               o  each share of Series B 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, subject to limitations based on trading volume, 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
                  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 Preferred Stock has been declared effective,

              o  the conversion price has certain anti-dilution protections 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,

               o  the shares of Series B Preferred Stock pay a cumulative
                  dividend at a rate of 8% per annum based on the stated value
                  of $10.00 per share, 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,

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



                                      F-24
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


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

               o  the holders of the Series B 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 Preferred Stock,

         There were arrearages of $365,930 and $211,256 on the Series B
         Preferred Stock for undeclared dividends as of December 31, 2003 and
         December 31, 2002.

         In addition, the holders of the Series B Preferred Stock were granted
         certain mandatory and piggy-back registration rights for the shares of
         our common stock issuable upon the conversion of the Series B Preferred
         Stock and are entitled to vote one member to our board of directors.

         SERIES C PREFERRED STOCK

         In March 2002, our board of directors designated 747,500 shares of our
         preferred stock as Series C Convertible Preferred Stock. of which
         337,150 shares are issued and outstanding.

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

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

               o  the shares are not redeemable,

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

               o  the conversion price has certain anti-dilution protections 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,

               o  the shares of Series C Preferred Stock pay a cumulative
                  dividend at a rate of 8% per annum based on the stated value
                  of $10.00 per share, payable when and as declared by the board
                  of directors, or upon conversion or liquidation. At our
                  option, dividends can be paid in cash or shares of common
                  stock valued at the conversion price of the Series C Preferred
                  Stock.

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



                                      F-25
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)

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

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

         There were arrearages of $322,730 and $56,805 on the Series C Preferred
         Stock for undeclared dividends as of December 31, 2003 and December 31,
         2002.

         In addition, the holders of the Series C Preferred Stock were granted
         certain mandatory and piggy-back registration rights covering the
         shares of our common stock issuable upon the conversion of the Series C
         Preferred Stock.

         WARRANTS

         We have issued and outstanding warrants to purchase a total of
         16,751,296 shares of our common stock, including:

               o  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
                  Preferred Stock offering, which warrants contain a cashless
                  exercise provision. The holders of the warrants were granted
                  certain mandatory and piggy-back registration rights covering
                  the shares of our common stock issuable upon the exercise of
                  the warrants.

               o  warrants to purchase 919,896 shares of our common stock at
                  exercise prices ranging from $.50 to $10.00 per share expiring
                  periodically through July 2006.

               o  warrants to purchase 6,743,000 shares of our common stock at
                  an exercise price of $.25 per share expiring May 2007 which
                  were issued by us in connection with the Series C Preferred
                  Stock offering, which warrants contain a cashless exercise
                  provision. The holders of the warrants were granted certain
                  mandatory and piggy-back registration rights covering the
                  shares of our common stock issuable upon the exercise of the
                  warrants.

               o  warrants to purchase 700,000 shares of our common stock at an
                  exercise price of $.25 per share expiring May 2008 which were
                  issued by us in connection with a private placement of common
                  stock, which warrants contain a cashless exercise provision.

               o  warrants to purchase 388,400 shares of our common stock at an
                  exercise price of $.25 per share expiring December 2008 which
                  were issued by us to the placement agent of two offerings of
                  our common stock that were conducted during 2003.

         SERIES B PLACEMENT AGENT UNIT OPTION

         In connection with our September 2001 private placement of Series B
         Preferred Stock, we issued the placement agent an option to purchase
         2.7 units. Each unit is exercisable at $100,000 per unit and consists
         of 10,000 shares of Series B Preferred Stock and 5-year warrants to
         purchase 400,000 shares of common stock at an exercise price of $0.25
         per share. The Placement Agent Unit Option contains a cashless exercise
         provision. The holder of the Placement Agent Unit Option was granted
         certain mandatory and piggy-back registration rights covering the
         shares of our common stock issuable upon conversion of the Series B
         Preferred Stock and exercise of the warrants underlying the Placement
         Agent Unit Option. The Placement Agent Unit Option expires August 31,
         2006.



                                      F-26
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         SERIES C PLACEMENT AGENT UNIT OPTION

         In connection with our March 2002 to March 2003 private placement of
         Series C Preferred Stock, we issued the placement agent an option to
         purchase 2.48 units. Each unit is exercisable at $100,000 per unit and
         consists of 10,000 shares of Series C Preferred Stock and 5-year
         warrants to purchase 200,000 shares of common stock at an exercise
         price of $0.25 per share. The Placement Agent Unit Option contains a
         cashless exercise provision. The holder of the Placement Agent Unit
         Option was granted certain mandatory and piggy-back registration rights
         covering the shares of our common stock issuable upon conversion of the
         Series C Preferred Stock and exercise of the warrants underlying
         Placement Agent Unit Option. The Placement Agent Unit Option expires
         March 31, 2008.

         10% CONVERTIBLE NOTE

         From February 1999 to May 1999, we issued 10% convertible notes ("10%
         Convertible Notes") in the aggregate principal amount of $862,500. The
         10% Convertible Notes pay 10.00% interest and are due and payable on
         June 2004. The holders have the right to convert the principal and
         interest amount into shares of our common stock at a rate of $1.25 per
         share. We have the right to prepay the principal amount at any time
         with 60 days prior written notice. During 2000 and 2001, certain of the
         note holders converted an aggregate of $487,500 principal amount of the
         notes according to their terms into 390,000 shares of our common stock
         at a conversion price of $1.25 per share. In addition, the holders of
         the 10% Convertible Notes were granted certain demand and piggy-back
         registration rights for the shares of our common stock issuable upon
         the conversion of the 10% Convertible Notes.

         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 5,000,000 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,             YEAR ENDED DECEMBER 31,
                                                    2002                                2003
                                       -------------------------------- --------------------------------------
                                                            WEIGHTED                             WEIGHTED
                                                            AVERAGE                              AVERAGE
                                                            EXERCISE                             EXERCISE
                                            OPTIONS          PRICE            OPTIONS             PRICE
                                            -------          -----            -------             -----

<S>                                        <C>                <C>             <C>                  <C>
Outstanding at beginning of period         3,584,039          $1.33           2,785,039            $1.00
             Granted                         811,000          $0.25           1,471,000            $0.25
             Exercised                           -0-          $0.00              40,000            $0.25
             Cancelled                     1,610,000          $1.36             622,539            $0.27
                                           ---------                            -------            -----

Outstanding at end of period               2,785,039          $1.00           3,593,500            $0.83
                                           =========          =====           =========            =====
Exercisable at end of period               2,761,705          $0.82           3,099,500            $0.53
                                           =========          =====           =========            =====
</TABLE>

                                      F-27
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         The following table summarizes information about stock options
         outstanding at December 31, 2003:

<TABLE>
<CAPTION>

                                         OUTSTANDING                                   EXERCISABLE
                     ----------------------------------------------------- -------------------------------
                                              WEIGHTED
                                               AVERAGE
                                             REMAINING           WEIGHTED                        WEIGHTED
                                              YEARS OF            AVERAGE                         AVERAGE
RANGE OF                     NUMBER OF     CONTRACTUAL           EXERCISE         NUMBER OF      EXERCISE
EXERCISE PRICES              OPTIONS            LIFE              PRICE           OPTIONS          PRICE
---------------             ----------     -------------         --------      -------------    ----------
<S>                          <C>                  <C>               <C>         <C>                 <C>
$0.25 - $0.47                2,983,500            5.08              $0.30       2,489,500           $0.31
$0.50 - $0.80                  282,000            5.82              $0.55         282,000           $0.55
$1.00 - $2.75                  328,000            1.61              $2.09         328,000           $2.09

</TABLE>

         ACCOUNTING FOR STOCK BASED COMPENSATION

         At December 31, 2003, the Company has one stock-based compensation plan
         which is described more fully below. The Company accounts for its plan
         under the recognition and measurement principles of APB Opinion No 25,
         "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES", ("APB 25") and related
         interpretations. No stock-based employee compensation cost is reflected
         in net income, as all options granted under the plan had an exercise
         price equal to or above the market value of the underlying common stock
         on the date of grant. The following table illustrates the effect on net
         income and earnings per share if the company had applied the fair value
         recognition provisions of FASB Statement No. 123, "ACCOUNTING FOR
         STOCK-BASED COMPENSATION" to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                                        YEARS ENDED
                                                                         DECEMBER 31,
                                                                   ------------------------
         (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)                   2003            2002
                                                                   --------        --------
<S>                                                                <C>             <C>
         Net loss available to common stockholders
         As reported                                               $ (2,761)       $ (5,266)
         Deduct: Total stock-based employee compensation
         expense determined under fair value based method
         for all awards, net of related tax effects                  (9,623)         (9,103)
                                                                   --------        --------
         Pro forma net loss available to common stockholders       $(12,385)       $(14,369)
                                                                   ========        ========
         Weighted average number of common shares
         outstanding used to compute net income (loss) per
         common share-basic and diluted                              13,689           8,333
                                                                   ========        ========
         Basic and diluted net loss per share
             As reported                                           $  (0.20)       $  (0.63)
                                                                   ========        ========
             Pro forma                                             $  (0.90)       $  (1.72)
                                                                   ========        ========

</TABLE>

         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:

<TABLE>
<CAPTION>

                                                               YEARS ENDED
                                                               DECEMBER 31,
                                                         ---------------------
                                                           2003           2002
                                                         -------        -------
<S>                                                         <C>            <C>
         Risk-free interest rate                            2.90%          5.00%
         Expected years until exercise                   6 Years        6 Years
         Expected stock volatility                         125.0%         150.0%
         Dividend yield                                        0%             0%


</TABLE>

                                      F-28
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


         OTHER STOCK BASED COMPENSATION

         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 $29,955 and $17,571 during the
         years ended December 31, 2003 and December 31, 2002, respectively, in
         connection with the warrant grants.

         During 2002, the Company issued an aggregate of 113,100 shares of
         restricted common stock to employees including three of its officers.
         The stock issued had a fair market value of $22,288 and was issued for
         employment services rendered in lieu of cash payments.

         During 2003, the Company issued an aggregate of 100,000 shares of
         restricted common stock to employees. The stock issued had a fair
         market value of $25,000 and was issued under the terms of an employment
         contract.

NOTE 14: OMNITRIAL B.V. BANKRUPTCY

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

NOTE 15: INCOME TAXES

         The tax expense (benefit) for income taxes differs from the amount
         computed by applying the statutory federal income tax rate of 34% to
         income (loss) before provision (benefit) for income taxes as follows:

<TABLE>

<S>                                                              <C>              <C>
                                                            12/31/03         12/31/02
                                                           ----------       ----------
         Current tax expense (benefit):
                     Income tax at statutory rates               $-0-             $-0-
                                                           ==========       ==========
         Deferred tax expense (benefit):
                     Amortization of goodwill and
                     covenant                                     -0-              -0-
                     Operating loss carryforward             (692,215)      (1,291,463)
                                                           ----------       ----------
                                                             (692,215)      (1,291,463)
                                                           ----------       ----------
         Valuation allowance                                  692,215        1,291,463
                                                           ----------       ----------
         Total tax expense (benefit)                             $-0-             $-0-
                                                           ==========       ==========
</TABLE>

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. Significant components of our deferred tax assets and
         liabilities are as follows:



                                      F-29
<PAGE>
                             OMNICOMM SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003
                                   (CONTINUED)


<TABLE>
<CAPTION>

                                                                            12/31/03           12/31/02
                                                                           -----------        -----------
<S>                                                                        <C>                <C>
         Deferred tax assets:
         Amortization of intangibles                                       $   283,698        $   283,698
         Operating loss carryforwards                                        6,241,546          5,549,331
                                                                           -----------        -----------
                     Gross deferred tax assets                               6,525,244          5,833,029
                                                                           -----------        -----------
                     Valuation allowance                                    (6,525,244)        (5,833,029)
                                                                           -----------        -----------
                     Net deferred tax asset                                       $-0-               $-0-
                                                                           ===========        ===========
</TABLE>

         The Company has net operating loss carryforwards (NOL) for income tax
         purposes of approximately $16,574,500. This loss is allowed to be
         offset against future income until the year 2023 when the NOL's will
         expire. Other timing differences relate to depreciation and
         amortization for the stock acquisition of Education Navigator in 1998.
         The tax benefits relating to all timing differences have been fully
         reserved for in the valuation allowance account due to the lack of
         operating history and the substantial losses incurred through December
         31, 2003.

NOTE 16: SUBSEQUENT EVENTS

         The Company had a recorded liability of $111,159 at December 31, 2003
         for federal employment taxes. The Company had fully satisfied the
         liability as of January 31, 2003.

         The Company is currently in arrears on interest payments owed totaling
         $89,004 on 10% Convertible Notes. The terms of the notes provide a
         payment grace period of thirty days in which to make the required
         semi-annual interest payments. The Company has been in default since
         January 30, 2002 in the payment of accrued interest and at the option
         of the note holder the full amount of the convertible notes could be
         declared in default.



                                      F-30
<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, 2003 and 2002 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, 2003. 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, 2003 and 2002, and the consolidated
results of their operations and cash flows for each of the two years in the
period ended December 31, 2003, 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 3 to the
financial statements, the Corporation has incurred losses and negative cash
flows from operations in recent years through December 31, 2003 and these
conditions are expected to continue through 2004, raising substantial doubt
about the Corporation's ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 3. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


GREENBERG & COMPANY LLC

Springfield, New Jersey
February 6, 2004




                                      F-31