U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
Amendment No. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES ACT OF 1934
OmniComm Systems, Inc.
Delaware 11-3349762___
(State or Other Jurisdiction of (I.R.S. Employer
incorporation of oragnization) Identification No.)
3250 Mary Street, Ste. 307, Miami, FL.33133
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 305-448-4700
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered each class is to be
registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
PART I
Item 1. BUSINESS
Forward-Looking Statements
Statements contained in this Form 10-SB 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 profitability
levels of such businesses, and other matters contained in this Form
10-SB 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-SB.
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.
Y2K COMPLIANCE
Year 2000 Program
Introduction
The "Year 2000 Problem" arose because many existing computer
programs use only the last two digits to refer to a year.
Therefore, these computer programs do not properly recognize a year
that begins with "20" instead of the familiar "19." If not
corrected, many computer applications could fail or create
erroneous results. The problems created by using abbreviated dates
appear in hardware (such as microchips), operating systems and
other software programs. The Company's Year 2000 ("Y2K") compliance
project is intended to determine the readiness of the Company's
business for the Year 2000. The Company defines Y2K "compliance" to
mean that the computer code will process all defined future dates
properly and give accurate results.
Description of Areas of Impact and Risk
The Company has identified four areas where the Y2K problem
creates risk to the Company. These areas are: a) internal
Information Technology ("IT") systems; b) non-IT systems with
embedded chip technology; c) system capabilities of third party
businesses with relationships with the Company, including product
suppliers, customers, service providers (such as telephone, power,
logistics, financial services) and other businesses whose failure
to be Y2K compliant could have a material adverse effect on the
Company's business, financial condition or results of operations;
and d) product liability claims arising out of the non-performance
of computer products distributed by the Company.
Plan to Address Year 2000 Compliance
The Company has formed a Year 2000 Compliance Project Team and
began developing an overall plan to address Y2K readiness issues.
This plan includes five phases as follows: Phase I is to create an
inventory of the Company's IT systems, non-IT systems and service
providers (each of these being referred to as "business
components") that need to be analyzed for Y2K compliance. During
Phase I a priority is established so that the Company will first
address the most important business components to determine Y2K
readiness. Phase II analyzes the identified business components to
determine which of the business components in the inventory require
additional effort to be Y2K compliant. Phase III is the repair,
modification or replacement of business components which the
analysis determines are not Y2K compliant ("remediation"). Phase IV
consists of various types of testing to confirm that the
remediation process has resulted in the business components being
Y2K compliant. Phase V is the development of contingency plans to
address potential risks that the Y2K compliance project may not
fully address.
State of Readiness
IT Systems - The initial Phase I inventory and prioritization
process for the Company's U.S. based IT systems has been completed.
The Company's current focus in this area is on testing and
remediation, inventory refinement, and test plan refinement.
Approximately 92% of all identified IT system business components
have been deemed to be Y2K compliant as of March 31, 1999 with
analysis of the remaining 8% continuing. Testing will continue
through July 1999 when all compliance testing is anticipated to be
completed. Even though the original design of the Company's network
and accounting software system (the Company's system performing the
primary business functions of sales order entry, billing,
purchasing, distribution and inventory control) considered the Y2K
problem and is currently deemed compliant, the test plan includes
detailed testing of this business critical system. Desktop hardware
and software systems testing and remediation is anticipated to be
completed in June 1999.
Non-IT systems - Non-IT systems consist of any device which is
able to store and report date-related information, such as access
control systems, elevators, security systems and other items
containing a microprocessor or internal clock. The phased plan
approach utilized by the Company for analysis of the IT systems is
also being used for non-IT systems. Phase I inventory and
prioritization has been completed for non-IT systems. Phase II
analysis will be performed on systems material to the Company's
operations with the assistance of the Company's vendors. The
Company currently plans to complete the Y2K compliance program for
all material non-IT systems by the end of June 1999.
Material Third Parties - The Company has created an inventory
of what it believes to be all material third parties with whom the
Company has a business relationship in the U.S. Requests for
binding Y2K compliance letters were sent to these third parties
beginning in March 1999. The Company is currently reviewing the
responses to these requests to determine the Y2K readiness of these
third parties. For those critical third party suppliers, service
providers and customers that fail to respond to the Company's
survey, the Company intends to pursue alternative means of
obtaining Y2K readiness information, such as review of publicly
available information published by such third parties. The Company
plans to continue to review its third party relationships
throughout the Y2K compliance program to ensure all material third
party relationships are addressed.
Product Liability - The Company does not make any
representations or warranties that the products it distributes are
or will be Y2K ready or compliant. In certain countries where the
Company or its subsidiaries distribute products, the Company may
have an obligation to accept returns of products which fail because
the product is not Y2K ready. In most cases, these returns may be
passed on to the manufacturer. In those countries where product
return obligations may exist, the Company plans to carefully review
manufacturer representations regarding products that are sold in
material volumes by the Company or its subsidiaries.
Contingency Planning and Risks
Upon completion of Phase I (inventory of components) and Phase
II (analysis of Y2K readiness) the Y2K compliance project team will
commence development of a contingency plan to address risks arising
from Y2K. While the Company believes that its approach to Y2K
readiness is sound, it is possible that some business components
are not identified in the inventory, or that the scanning or
testing process does not result in analysis and remediation of all
source code. The Company will assume a third party is not Y2K ready
if no response or an inadequate response is received. The Company's
contingency plan will address alternative providers and processes
to deal with business interruptions that may be caused by internal
system or third party providers failure to be Y2K ready to the
extent it is possible.
The failure to correct a material Y2K problem could result in
an interruption in, or a failure of, certain normal business
activities or operations. Such failure could materially and
adversely affect the Company's results of operations, liquidity and
financial condition. In addition, the Company's operating results
could be materially adversely affected if it were to be held
responsible for the failure of any products sold by the Company to
be Y2K ready despite the Company's disclaimer of product warranties
and the limitation of liability contained in its sales terms and
conditions.
The expenditures related to the Year 2000 compliance program
are approximately $7,500.
Business Development
Coral Development Corp. ("Coral") was incorporated under the
laws of the State of Delaware on November 16, 1996 as a wholly
owned subsidiary of Modern Technology Corp. ("MTC") a Delaware
corporation who received 403,000 shares of common stock of Coral in
exchange for $30,000.
In June of 1997, Coral registered 403,000 shares of common
stock to be distributed to the shareholders of MTC as a shared
dividend. The registration and issuance of the shares was subject
to the provisions of Rule 419 ("Rule 419") of Regulation C of the
Rules and Regulations of the Securities Act of 1933, as amended.
Rule 419 sets forth the requirements that apply to every
registration statement filed under the Act relating to an offering
by a "blank check company". A "blank check company" is a company
that is a development stage company that has no specific plan or
purpose or has indicated that its business plan is to engage in a
merger or acquisition with an unidentified company or companies, or
other entity or person. At the time of filing the registration
statement, Coral was a "blank check company". The main requirements
of Rule 419 are: escrowing the securities that are subject to the
registration statement prior to issuance of the securities and
consummating a transaction within 18 months of filing the
registration statement.
Coral and OmniComm Systems, Inc. (the "Company") entered into
an Agreement and Plan of Merger on July 22, 1998. The terms of the
agreement provided that all of the issued and outstanding shares of
OmniComm Systems, Inc. would be exchanged for 940,000 shares of
common stock of Coral. The officers and directors of Coral would
resign and the name of Coral would be changed to OmniComm Systems,
Inc. Further, as part of the plan of merger, the five OmniComm
shareholders will receive options representing an additional
2,687,000 shares of common stock of the Company. The options will
vest in the event the Company generates $4,000,000 in gross revenue
on a cumulative basis. The issuance of the shares subject to the
options will cause substantial dilution to the existing
shareholders.
Coral had until December 5, 1998 (18 months from the filing
date of the Form SB-2 ; June 5, 1997) to finalize a transaction.
Prior to entering into the Agreement and Plan of Merger, the
Company acquired Education Navigator, Inc. on June 26, 1998. The
closeness in time of these two transactions presented a logistical
problem in completing due diligence and providing audited financial
statements for OmniComm Systems, Inc. and especially Education
Navigator, Inc. which did not have audited financial statements. To
further complicate the matter, the financial statements when
completed needed to be presented in such a way so as to show pro-
forma information as if the mergers had occurred a year earlier.
Coral received a comment letter from the Securities Exchange
Commission concerning the Post-Effective amendment to the SB-2. It
was clear from the comments that Coral and the Company would not
make the deadline on December 5, 1998 so the SB-2 was withdrawn.
Coral and the Company understood that if the SB-2 did not go
effective by December 5, 1998, they would have to re-file the
registration statement since it was very unlikely that an extension
would be given. The shares that had been held in escrow pursuant to
Rule 419 were returned to MTC.
Since the parties were specifically identified for purposes of
an acquisition it was felt that the proscriptions of Rule 419 would
not apply and the safeguards for issuance of the shares such as the
escrow requirements would not have to be adhered to which would
shorten the time period for completing the transactions. In
addition, the Division of Corporate Finance had issued Staff Legal
Bulletin No. 4, which gave specific guidance to the parties for the
type of transaction that was contemplated.
The Company and Coral continued with their plans to finalize
the merger and to become a reporting company. The parties executed
an Amended Agreement and Plan of Merger to include MTC, the parent
of Coral, as a party for the sole purpose of issuing the shares in
accordance with the Agreement and Plan of Merger. A Form 10-SB was
filed on December 22, 1998 to register the common shares of Coral,
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
The Company and Coral finalized the merger on February 17,
1999. None of the shares have been distributed to the MTC
shareholders.
BUSINESS OF ISSUER
OmniComm Systems, Inc. is developing and marketing
TrialMasterTM a data base application to collect, validate and
compile clinical trial data over the Internet. TrialMasterTM is an
integrated solution for participants in the clinical trial process
such as pharmaceutical and medical device companies, and clinical
research organizations (CRO) to implement a system that utilizes
the principal strengths of the Internet to conduct clinical trials:
Less Expensive
Faster
More Efficient
Real-Time Access
TrialMasterTM automates the entire process of data collection
and validation; effectively reducing development and testing time
for medical drug and device research projects. See TrialMasterTM
Overview.
In addition to the development and marketing of its
TrialMasterTM application, OmniComm is a systems integrator: a
provider of services and products designed to build, manage and
enhance computer network infrastructures, local and wide area, for
businesses.
The Company made a strategic decision during the beginning of
January 1999 to focus substantially all of its resources, both
financial and personnel, on the development and marketing of its
TrialMasterTM system. The Company had begun the development of the
application during the fourth calendar quarter of 1998.
The Company, however, will continue with its systems
integration business and its current projects with its current
client base including Office Depot, Republic Industries, and
Commercial Services International and other private companies.
TRIALMASTER(TM)
Overview
In order for a drug or device to be marketed in the United
States, Europe or Japan, the drug or medical device must undergo
extensive testing and regulatory review in order to determine that
the drug or device is safe and effective.
To support an application for regulatory approval, clinical
data must be collected. Clinical data is collected from the
Clinical Report Forms (CRF) that are submitted to and filled out by
an investigator, typically a doctor or research assistant who is
participating in the clinical trial. These CRFs can be 5 to 100
pages and document a series of visits by patients over a period of
time. See Clinical Trial Overview.
Once information is collected from the patient/study subject
by the investigators and the relevant portion of the CRF is filled
out, it is then submitted to either the sponsor of the study, such
as a pharmaceutical company, or the clinical research organization
(CRO), an entity that has contracted with the sponsor to conduct
the clinical trial. The data is then inputted manually into a data
base. Typically, double data entry is used in order to resolve
errors.
TrialMasterTM allows participants in the clinical trial process
such as a sponsor or CRO to perform the foregoing data collection
and handling via a direct, secure Internet connection.
Description
OmniComm provides a fully integrated solution for the
collection of clinical data utilizing its TrialMasterTM application.
OmniComm works closely with a sponsor such as a drug company, CRO
to develop a CRF that is Internet enabled. During this process, the
protocol of the trial in the form of validation parameters are
incorporated into the CRF. The development of the Internet based
CRF and the incorporation of the validation criteria are done
internally and, when necessary, outside software programming
assistance is utilized.
After the CRFs are Internet enabled and the validation
criteria encoded, the CRFs are distributed via the Internet from
the Company's server to the sites where the clinical trials are to
take place. In addition to installing the application, OmniComm can
provide the necessary infrastructure components including network
consulting and implementation, hardware procurement, hosting, and
maintenance.
TrialMaster(TM) is an open system that is fully integratable with
existing legacy data systems such as Oracle(TM) and Microsoft SQL(TM).
The application utilizes standard browsers such as Internet
Explorer 4.0(TM) and Netscape(TM).
The cost for implementing the application is based on a per
page/per patient fee which will increase or decrease depending on
the size of the trial in terms of patients/subjects and the length
of time to conduct the trial. As an example, a 400 patient trial
using a 5 page CRF would approximately $100,000. The cost per page,
in this case, would be $50.00 per page. The cost per page would
decrease as the number of patients or pages increase.
TrialMaster(TM) allows clinical data to be entered directly from
a source document such as a patient record or doctor's notes via a
computer. The clinical data is transmitted via the Internet to a
secure server where the data is validated and stored. The following
flow chart shows how the system works.
TrialMaster(TM) significantly impacts the clinical trial process
in the following three areas: Data Collection, Validation and Edit
Queries, and Monitoring.
Data Collection Comparison
Clinical data is collected from the Clinical Report Forms
(CRF) that are submitted to and filled out by an
investigator ; doctor/research assistant ; who is
participating in the clinical trial. These forms can be 5 to
100 pages per patient and encompass a series of visits by
patients over a period of time. For example, the cost for
data handling and collection in an ongoing 12,000 patient
European clinical trial with a 70-page clinical report form
(CRF) is $1,000 per patient.
Current System
The cost to process data is
approximately $15.00 to
$25.00 per page per
patient.
The time to process the data
can take anywhere from 1 -
4 weeks
TrialMaster(TM) System
The cost to process the data
is approximately 5-10
times less per page per
patient.
The time to process the data
is approximately 1 minute
Validation and Edit Query Comparison
Upon submission, data is reviewed to see whether the
collected data is within certain parameters of the clinical
trial, primary validation. If data is outside of the
clinical trial parameters or there are typographical errors
or similar data problems the data collection process will
generate an edit query. This edit query must be submitted to
the investigator for resolution and resubmitted for data
processing.Current System
The cost to process an edit
query is approximately $80-
$100 per query. For a large
trial it would not be
uncommon to generate 500-
1000 edit queries a week.
The time to process the data
can take anywhere from 3 -
5 weeks
TrialMaster(TM) System
The number of edit queries is
significantly reduced or
even eliminated because the
system does the validation
when the data is inputted.
The time to process the data
is approximately 1 minute
Monitoring
Monitors are an integral and necessary part of the clinical
trial process. These individuals travel to the clinical
sites to ensure that the investigators are complying with
good clinical practice (GCP) standards. Essentially, their
role is to make sure clinical data is being collected and
submitted in a safe, timely and accurate manner. Monitoring
and its associated costs such as travel can make up one
quarter of the total costs of a clinical trial.
Current System
The cost for a monitoring
visit can vary between
$1,000 to $3,000 per visit
per site. A trial can have
as many as 3-7 visits.
The time for each visit is
usually 1 to 2 days.
TrialMaster(TM) System
The number of visits can be
reduced because the status
of sites can be monitored
remotely and in real time.
The time for a visit can be
reduced 25% to 30%.
CLINICAL TRIAL INDUSTRY OVERVIEW
Worldwide research and development expenditures by the
pharmaceutical and biotechnology industries reached an estimated
$40 billion in 1997, approximately $12 billion of which was spent
on preclinical and clinical trials. Approximately $4 billion or
more is estimated to have been outsourced to contract research
organizations (CROs), and the pharmaceutical outsourcing industry
is projected to be growing 20-25% annually. Further, research and
development expenditures in 1997 for the top 50 pharmaceutical
companies in the world increased approximately 11% from the
previous year.
The Company believes that certain industry and regulatory
trends have led pharmaceutical, biotechnology, cosmetic and device
companies to increase research and development for proprietary new
drugs, cosmetic and medical devices. These trends have required
companies to conduct increasingly complex clinical trials, and
develop multinational clinical trial capability, while seeking to
control internal fixed costs. The trends driving the industry's
growth can be summarized as follows:
Drug Development Pressures.
Globalization of Clinical Development and Regulatory Strategy.
Increasingly Complex and Stringent Regulation; Need for
Technological Capabilities.
Competitive Pressures.
Growth of Biotechnology and Genomics Industries.
These trends have created even greater competitive demands on
the industry to bring products to market efficiently and quickly.
It has been estimated that for each day a given product remains in
clinical trials a company loses approximately $1,000,000 in revenue
per day.
CLINICAL TRIAL OVERVIEW
The regulatory review process is time consuming and expensive.
A new drug application (NDA) can take up to 2 years before it is
approved. This is in addition to 3 to 5 years of studies required
to provide the data to support the NDA. The following is an
overview of the process that is generally undertaken to bring a
drug or device to market:
Preclinical Research (1 to 3.5 years). In vitro ("test tube") and
animal studies to establish the relative toxicity of the drug
over a wide range of doses and to detect any potential to cause
birth defects or cancer. If results warrant continuing
development of the drug, the manufacturer will file an IND
(Investigational New Drug Application), upon which the FDA may
grant permission to begin human trials.
Clinical Trials (3.5 to 6 years)
Phase I (6 months to 1 year). Basic safety and pharmacology
testing in 20 to 80 human subjects, usually healthy volunteers,
includes studies to determine how the drug works, how it is
affected by other drugs, where it goes in the body, how long it
remains active, and how it is broken down and eliminated from
the body.
Phase II (1 to 2 years). Basic efficacy (effectiveness) and dose-
range testing in 100 to 200 afflicted volunteers to help
determine the best effective dose, confirm that the drug works
as expected, and provide additional safety data.
Phase III (2 to 3 years). Efficacy and safety studies in hundreds
or thousands of patients at many investigational sites
(hospitals and clinics) can be placebo-controlled trials, in
which the new drug is compared with a "sugar pill," or studies
comparing the new drug with one or more drugs with established
safety and efficacy profiles in the same therapeutic category.
Treatment Investigational New Drug ("TIND") (may span late Phase
II, Phase III, and FDA review). When results from Phase II or
Phase III show special promise in the treatment of a serious
condition for which existing therapeutic options are limited or
of minimal value, the FDA may allow the manufacturer to make the
new drug available to a larger number of patients through the
regulated mechanism of a TIND. Although less scientifically
rigorous than a controlled clinical trial, a TIND may enroll and
collect a substantial amount of data from tens of thousands of
patients.
New Drug Application ("NDA") Preparation and Submission. Upon
completion of Phase III trials, the manufacturer assembles the
statistically analyzed data from all phases of development into
a single large document, the NDA, which today comprises, on
average, roughly 100,000 pages.
FDA Review & Approval (1 to 1.5 years). Careful scrutiny of data
from all phases of development (including a TIND) to confirm
that the manufacturer has complied with regulations and that the
drug is safe and effective for the specific use (or
"indication") under study.
Post-Marketing Surveillance and Phase IV Studies. Federal
regulation requires the manufacturer to collect and periodically
report to FDA additional safety and efficacy data on the drug
for as long as the manufacturer markets the drug (post-marketing
surveillance
To alleviate the enormous amount of paperwork that is
generated and submitted for purposes of receiving approval, the
United States Food and Drug Administration ("FDA") promulgated
regulations on March 20, 1997 concerning the electronic submission
of data to the FDA: 21 CFR Part 11 ;Electronic Records; Electronic
Signatures; Final Rule. Essentially, this regulation provided for
the voluntary submission of parts or all of regulatory records in
electronic format without an accompanying paper copy. More
recently, the FDA promulgated "Providing Regulatory Submissions in
Electronic Format-General Considerations".
EMPLOYEES
The Company and its wholly owned subsidiary, OmniCommerce
Systems, Inc., currently have nine (9) full time employees.
SALES AND MARKETING
The Company has made a strategic decision to focus all of its
resources both financial and personnel on developing, marketing and
selling its TrialMaster(TM) application. The Company is focusing its
marketing efforts on three (3) core groups: clinical and academic
research organizations; pharmaceutical companies; and, device
manufactures.
The Company has retained the services of Mr. Lawrence Kronick
as its consulting applications manager to assist the Company in
defining and formulating a strategic marketing plan. Mr. Kronick
has 15 years experience in the sales and marketing of products and
services within the medical community throughout the United States,
Europe, and Asia. Mr. Kronick is paid a monthly retainer of $3,500
per month, has an option to purchase 60,000 shares of common stock
vesting over 3 years, and receives a 10% commission based on sales
of the application.
OmniComm is taking a very focused approach to marketing
TrialMaster(TM). To date the Company has focused primarily its
marketing on the interventional cardiology market. This is a
significant market dominated by companies such as Guidant, Johnson
& Johnson, Medtronic, Eli Lily, and others. Since becoming involved
in this market, however, there are a few factors that lend
themselves to the use of TrialMaster(TM):
A very competitive market with relatively short product cycles
providing for a need to get products to market quickly.
A number of products within a specific segment such as stents that
have an incremental difference which need clinical trials to
show clinical and functional superiority.
A tight group of opinion leaders within the market segment.
The clinical trial industry requires an approach grounded on
establishing relationships with opinion leaders and decision-
makers. The Company is in the early stages of establishing these
relationships. OmniComm is planning on attending various meetings
including the European Society of Cardiology meeting in Barcelona
in August 1999, and the American Heart Association in October 1999.
To date, the Company has not received any revenues from the
sale of the TrialMaster(TM) application.
COMPETITION
TrialMaster(TM) - Data Collection
There are other entities that compete with the Company's
Internet based data collection system, TrialMaster(TM). Principally,
the competitors include Phase Forward Incorporated
(www.phaseforward.com), CB Technologies (www.MetaTrial.com), and a
British based company, RDE Ltd. Most of these competitors have
significantly greater financial, technical and marketing resources,
or name recognition than that of the Company.
Systems Integration
The market for the type of system integration services the
Company provides includes a large number of competitors and is
subject to rapid change. Primary competitors include participants
from a variety of market segments, including systems consulting and
implementation firms, application software firms, service groups of
computer equipment companies, systems integration companies, and
general management consulting firms and programming companies.
Most of the competitors have significantly greater financial,
technical and marketing resources and name recognition that the
Company. In addition, the Company competes with its clients'
internal resources, particularly where these resources represent a
fixed cost to the client. Such competition will impose additional
financial and pricing pressures on the Company.
The Company believes that the most significant competitive
factors it faces is a lack of operating history and an attendant
perception of a lack of experience in competing in such a changing
and competitive environment. The Company believes, however, that
its technical expertise, the knowledge and experience of its
principals of the industry, quality of service and responsiveness
to client needs and speed in delivering solutions will allow it to
compete favorably within this environment.
MEDICAL ADVISORY BOARD
Given the Company's basic approach in developing and marketing
the TrialMaster(TM) application as if it were a medical device, the
Company decided to form a Medical Advisory Board. The purpose of
the Board is to advise and consult the Company on the development,
implementation, and marketing of the TrialMaster(TM) application. The
Board is to be composed of 3-5 individuals who have the background
and expertise to provide meaningful insight into the process of
developing, implementing, and marketing TrialMaster(TM) to the medical
drug and device industry. The Board members are paid a retainer of
$1,000 per month and given an option to purchase 50,000 shares of
common stock of the Company at $1.00 per share over a 3-year
period. Currently, there are two members on the Board:
Warren Scott Grundfest, M.D., F.A.C.S. Dr. Grundfest is currently
the holder of the Dorothy and E. Phillip Lyon Chair in Laser
Research, Director of the laser research and technology
development program of Cedars-Sinai Medical Center, Los Angeles,
CA.
Bruce Edward Murphy, M.D., Ph.D., F.A.C.C. Dr. Murphy is the
Director of Medicine of the Arkansas Heart Hospital; and,
Chairman of the Board of the Arkansas Heart Institute.
INTELLECTUAL PROPERTY RIGHTS
The Company acquired Education Navigator, Inc., in part, for
its e-commerce applications that it had created and implemented.
The Company believes that some of these applications such as
TrialMaster(TM) may be subject to patent and/or copyright protection.
The Company is currently investigating the viability of securing
such protection. Given the uncertainties of the patenting process
especially within the field of computer software and business
processes, no assurance can be given that such patent protection
will be secured.
The Company relies upon a combination of nondisclosure and
other contractual arrangements and trade secret, copyright and
trademark laws to protect its proprietary rights and the
proprietary rights of third parties from whom the Company licenses
intellectual property. The Company enters into confidentiality
agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps
taken by the Company in this regard will be adequate to deter
misappropriation of proprietary information or that the Company
will be able to detect unauthorized use and take appropriate steps
to enforce its intellectual property rights.
On May 18, 1999, the Company filed a provisional application
for a patent on a "Distributed System and Method for Collecting and
Evaluating Clinical Data". Serial No. 60/134,671.
The Company is in the process of registering the trademarks
"OMNICOMM SYSTEMS, INC.", AND "TRIALMASTER" with the U.S. Patent
and Trademark Office. The Company intends to make such other state
and federal filings as the Company deems necessary and appropriate
to protect its intellectual property rights.
Item 2. Management's Discussion and Analysis or Plan of Operation
The Company
The proposed business of Coral (n/k/a OmniComm Systems, Inc.)
was to provide a mechanism to take advantage of business
opportunities. Through inception, November 19, 1996, to February
17, 1999, the Company conducted no business other than
organizational activities.
On June 5, 1997, a registration statement relating to a
dividend distribution of 403,000 shares of the Company's Common
Stock was declared effective. The offering was made pursuant to
Rule 419. The Company realized no net proceeds. The Rule 419
offering did not proceed due to time limitations.
On July 22, 1998, Coral signed an Agreement and Plan of
Reorganization with the Company and its shareholders and an
Amendment thereto dated November 3, 1998("Agreement"). The
essential terms of the Agreement are described above, "Other
Matters", "Acquisition of Education Navigator". The Agreement was
finalized on February 17, 1999. The Company has filed a copy of the
Agreement with the Securities and Exchange Commission on Form 8-
K. The OmniComm shares now owned by MTC will be distributed to
MTC shareholders on the basis of one Coral share for each fifty
(50) MTC shares.
OMNICOMM SYSTEMS, INC.
Results of Operations
The foregoing takes into account the accounts of the Company's
wholly owned subsidiary OmniCommerce. OmniCommerce was formed in
July 1998 for the purpose of acquiring Education Navigator, Inc.
From the date of inception (February 28, 1997) to December 31,
1997.
From the date of inception (February 28, 1997) through
December 31, 1997, the Company was a subchapter S Corporation.
During this period, the Company had a gross profit of $45,423 on
revenues of $210,373 and a net loss of $16,040. A significant
portion, approximately seventy-five percent (75%), of the revenue
generated during this period was from a single client, Commercial
Services International, Inc. (CSI). The source of the revenue was
primarily from hardware procurement.
For the twelve month period ending December 31, 1998.
For the twelve-month period ending December 31, 1998 the
Company had a gross profit of $466,776 on revenues of $1,689,794
and a net loss of $295,367. The net loss is primarily attributed
to the acquisition of Education Navigator, Inc.
Comparison between the twelve period ending December 31, 1997 and
December 31, 1998.
For the twelve period ending December 31, 1997 the Company had
a gross profit of $45,423 on revenues of $210,373 and a net loss of
$16,040. For a similar period ending December 31, 1998 the Company
had an increase in revenues of $1,479,421. The increase in revenue
for the period ending December 31, 1998 is due to a significant
increase in projects initiated by the Company's clients, primarily
CSI, which represents 78% of the total. During this same period,
there was an attendant increase in selling, general and
administrative expenses, and salaries to $425,854 from $25,889
representing an increase of $399,965. The major expense items
concerning selling, general and administrative expenses were as
follows: wages - $180,275; rent - $42,902; health insurance -
$14,312; professional fees (accnts./legal) - $27,293; travel -
$20,890; telephone - $13,531; fedex - $5,157; office
expense/supplies - $10,494; internet access/web - $7,588 In
addition to the costs associated with the acquisition of Education
Navigator, Inc., the Company hired four additional full time
employees, relocated its operations to 3250 Mary Street, Suite 307,
Miami, Florida 33133, and rented an additional 1750 square feet for
the operations of OmniCommerce Systems, Inc. located at 9400 S.
Dadeland Blvd., Suite 112, Miami, Florida 33156.
Plan of Operation
The Company currently has sufficient cash flow from its
systems integration projects to fund its day to day operations. The
Company has recently initiated a private placement, see below, of
5 year, 10% convertible notes to accredited investors. The proceeds
from this offering should be sufficient to assist in the marketing
of the TrialMaster application for the next 6 months and to make
the necessary debt payments to the Education Navigator
shareholders. See Recent Sales of Unregistered Securities - Private
Placement.
The Company intends to raise additional funds to develop,
market and implement the TrialMaster(TM) application. The Company
would expect to raise these funds through additional private
placements of debt or equity securities.
Private Placement
On June 4, 1999, the Company entered into a private placement
agreement with Noesis Capital Corp. ("Noesis") whereby Noesis has
undertaken to raise on a "best efforts" "all or nothing" basis,
with a $500,000 minimum on or before June 30, 1999, $3,000,000 from
the sale of 2,000,000 shares of 5% Series "A" Convertible Preferred
capital stock at $1.50 per share. The offer and sale of the
securities is made pursuant to Regulation S of the Securities Act
of 1933.
LIQUIDITY
The sole source of revenue for the Company is from its systems
integration business and its current projects. The Company has not
derived any revenue from its TrialMaster(TM) application.
The Company is generating adequate amounts of cash to meet its
current operational needs. With the acquisition of Education
Navigator, Inc. the Company, through its wholly owned subsidiary
OmniCommerce Systems, Inc., has acquired certain Internet
applications including, more specifically, the TrialMaster
application. To fully take advantage of the TrialMaster(TM)
application the Company anticipates having to raise additional
funds to market and develop the infrastructure to support the
applications. It is possible that the Company could support such
marketing and infrastructure development from current cash flow.
However, the Company feels that such an approach would diminish the
ultimate value of the applications by not bringing them to market
as quickly as possible.
OTHER MATTERS
Acquisition of Education Navigator, Inc.
The Company decided during the beginning of 1998 to diversify
its range of services to include applications and services related
to the Internet. It is the Company's belief that the Internet has
become the network of choice for business entities. The Company
decided to search for a company to acquire that was involved in the
Internet as opposed to internally developing the capability. It was
felt this approach would be more expedient and efficient given the
rapidly changing technology base concerning the Internet.
The Company searched for an entity that had the technological
base to develop applications or render services, primarily e-
commerce, related to the Internet. The Company was not primarily
concerned with the financial structure or resources of the entity;
rather the Company wanted to acquire a core technology base.
On April 6, 1998 the Company entered into a letter of intent
to acquire all of the issued and outstanding shares of Education
Navigator, Inc. During the next 45 days the parties negotiated the
terms and conditions of the proposed merger and conducted due
diligence. On June 26, 1998 the parties entered into a Merger
Agreement the principal terms of which are set forth below.
Education Navigator, Inc. and its shareholders, Clifton Middleton
and Hugh McCallum, were represented by counsel in the transaction.
There were no related parties involved in the transaction and all
negotiations were conducted on an "arms length" basis.
The payment to the shareholders of EdNav of $600,000 was
structured as follows: (a) seventy five thousand dollars ($75,000)
was paid on the closing (less a credit for the $5,000 deposit
previously paid by Company to the EdNav shareholders); (b) five
hundred twenty-five thousand dollars ($525,000) was paid at closing
by the delivery of a promissory note issued by the Company which
providing for payments of principal as follows: $75,000 within
sixty (60) days of closing; $95,000 on or before December 31, 1998;
$177,500 on the first anniversary date of the closing; $177,500 on
the second anniversary date of the closing. In addition, the
shareholders of EdNav were issued 441,180 shares of common stock of
the Company.
As part of the acquisition transaction, the two shareholders
of Education Navigator, Inc. entered into convenants not to
compete. The covenants prohibit the shareholders from engaging in
activities that compete with OmniComm Systems, Inc. The Company
employs one of the shareholders and the convenant has been
incorporated into his employment contract. The covenants shall
terminate on June 26, 2001. The Company has agreed to pay the
shareholders $60,000 for entering into the convenants. The payment
of $60,000 is to be paid as follows: (a) $10,000 upon execution of
this Agreement, (b)$10,000 on or before December 31, 1998, (c)
$10,000 on or before March 31, 1999, (e) $15,000 on or before July
1, 1999, and (e) $15,000 on or before July 1, 2000.
Factoring
In order to flatten its cash flow requirements the Company
entered into a factoring agreement with Bankest Capital Corporation
on March 3, 1998. The fees and charges for the factoring
arrangement are customary and reasonable. The Company does not
factor all invoices, but selectively factors invoices as the need
arises.
Item 3. Description of Property
OmniComm's principal executive offices currently are located
at 3250 Mary Street, Suite 307, Miami, Florida 33133. The Company
currently is on a month to month lease at this location. The
Company has also entered into a five year lease for space at 9400
South Dadeland Boulevard, Suite 112, Miami, Florida 33131. The
rent for this space ranges from $25,000 to $29,000. The operations
of OmniCommerce will be conducted from this location. OmniComm does
not expect that any additional space will be required for the
foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth as of April 5, 1999 the
number and percentage of shares beneficially owned after giving
effect to the consummation of the merger and distribution of the
shares of common stock of the Company, owned of record and
beneficially, by each officer and director of the Company and by
any other person owning more than 5% of the Company's outstanding
Common Stock, and by all Officers and Directors as a group.
Shares of Percentage
Common After
Stock After Merger Percentage
Merger and and Prior To
Name Distribution Distribution (3) Merger(4)
Randall Smith(2) 421,461 26% 0%
Peter Knezevich(2) 281,640 18% 0%
Fred Sager 153,500 10% 0%
Clifton Middleton(2) 102,461 6% 0%
Hugh McCallum 102,461 6% 0%
Arthur Seidenfeld(1)(5) 193,096 12% 48%
Anne Seidenfeld(1) (5) 48,530 3% 12%
All directors and
officers as a group
(2) 805,562 50.5%
(1) May be deemed to be a parent and promoter as such terms are
defined under the Securities Act.
(2) Directors and/or Officers of the Company since February 17,
1999
(3) At the time of filing the amended Form 10-SB none of the
shares have been distributed to the individuals set forth
above. However, after filing and distribution there will be
1,593,000 shares outstanding which reflects the 940,000
shares to be issued to the OmniComm shareholders.
(4) All of the shares were owned by MTC prior to the
acquisition.
(5) As an affiliate of MTC may be construed to own that
percentage of shares held by MTC.
Item 5. Directors, Executive Officers, Promoters and Control
Persons
The officers and directors (giving effect to the
OmniComm acquisition) are as follows:
Name Age Position
Peter S. Knezevich 42 Chief Executive Officer &
Director
Randall G. Smith 41 President, Chief Technology
Officer and Director
Clifton R. Middleton 51 Vice President
Peter S. Knezevich, 42, Director, Chief Executive Officer.
Mr. Knezevich has been a Director of OmniComm Systems, Inc., since
October of 1997 and shall serve as a Director until the next annual
meeting. On March 31, 1999, Mr. Knezevich was appointed as Chief
Executive Officer of the Company. Since inception (June 30, 1998)
Mr. Knezevich has been Director and Chief Operating and Financial
Officer of OmniCommerce Systems, Inc., the wholly owned subsidiary
of OmniComm Systems, Inc.
From April 1995 to September 1997, Mr. Knezevich was Vice
President and General Counsel of Imaging Diagnostic systems, Inc.,
a development stage, reporting and publicly traded company.
From May 1994 to March 1995, Mr. Knezevich was in the private
practice of law.
From June 1991 to April 1994, Mr. Knezevich was an associate
with the Miami, Florida law firm of Ferrell and Fertel, P.A.
Randall G. Smith, 41, Director, President and Chief Technical
Officer. Mr. Smith has been a Director of OmniComm Systems, Inc.
since inception and shall serve as a Director until the next annual
meeting. Since inception (June 30, 1998) Mr. Smith has been
Director and Chief Technical Officer of OmniCommerce Systems, Inc.,
the wholly owned subsidiary of OmniComm Systems, Inc.
From December 1995 to May 1997, Mr. Smith was Director of
Operations for Global Communications Group, a Miami, Florida, based
systems integrator.
From November 1993 to December 1994, Mr. Smith was General
Manager and Chief Operating Officer of Genesis International, a
Charlotte, North Carolina, based regional systems integrator.
From January 1989 to November 1993, Mr. Smith was Executive
Vice President and Chief Operating Officer of CableNet, Inc., a
Charlotte, North Carolina based engineering company that developed,
manufactured and marketed world-wide computer interface products.
Mr. Smith developed the Company's first product; the universal
network adapter utilizing a proprietary dual ram-linked RISC
processor architecture.
Clifton R. Middleton, 51, Vice President and Director of
Internet Development and Applications. Since inception (June 30,
1998) Mr. Middleton has been Director and President of OmniCommerce
Systems, Inc., the wholly owned subsidiary of OmniComm Systems,
Inc. Prior to June 1998, for the past five years, he was President
of Education Navigator, Inc., acquired by OmniComm.
Item 6. Executive Compensation
The following sets forth the compensation paid to the officers
and directors during the past fiscal year ended December 31, 1998.
Officers and directors of Coral received no remuneration.
Long Term
Name and Annual Compensation Compensation
Principal Securities Underlying
Position Year Salary Bonus Options/SARs
Randall Smith 1997 0
President/Dir. 1998 $29,000
Peter Knezevich 1997 0
CEO/Dir. 1998 $29,000
Clifton
Middleton 1998 $85,000 85,000
Vice President
Item 7. Certain Relationships and Related Transactions
As the parent of Coral Development, MTC beneficially owns all
of the issued and outstanding shares of Coral Development totaling
403,000 shares of common stock for which it paid $30,000. The loans
to Coral were written off and charged to merger related expenses.
Arthur and Anne Seidenfeld are shareholders of MTC and will be
shareholders of OmniComm Coral once the shares are distributed as
a result of the spin-off: Arthur Seidenfeld will beneficially own
193,096 shares of common stock and Anne Seidenfeld, his mother,
will beneficially own 48,530 shares of common stock. As a
consequence of finalizing the merger, Arthur and Anne Seidenfeld
are no longer officers or directors of OmniComm (f/k/a/ Coral
Development Corp.).
The Company's wholly owned subsidiary, OmniCommerce Systems,
Inc., was incorporated on June 30, 1998. The Company beneficially
owns 100 shares of common stock of OmniCommerce Systems, Inc. The
Company has pledged these shares as security for the obligations
owed to the shareholders Education Navigator, Inc. as a result of
the acquisition. OmniComm Systems, Inc. employs Clifton Middleton,
one of the shareholders of Education Navigator, as its vice-
president responsible for Internet applications and development.
Mr. Middleton is paid $85,000 per annum and was granted an
incentive stock option on June 26, 1998 to purchase 85,000 shares
of common stock at $.60 per share. The option shall vest over a 3-
year period as follows: 14,166, 28,334, and, 42,500.
In addition, the Company paid rent of $22,500 during fiscal
year 1997 to Mr. Lawton Jackson, vice president and general counsel
of the Company. Also, as of September 30, 1998, Mr. Jackson owed
the Company $3,406.
Item 8. Description of Securities
The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, $.001 par value per share.
Holders of the Common Stock are entitled to receive dividends
when and as declared by the Company's Board of Directors out of
funds available therefore. Any such dividends may be paid in cash,
property or shares of the Common Stock. The Company has not paid
any dividends since its inception and presently anticipates that
all earnings, if any, will be retained for development and
expansion of the Company's business, and that no dividends on the
Common Stock will be declared in the foreseeable future. Any
future dividends will be subject to the discretion of the Company's
Board of Directors and would depend upon, among other things,
future earnings, the operating and financial condition of the
Company, its capital requirements, and general business conditions.
Each holder of Common Stock is entitled to one vote per share
on all matters, including the election of directors, submitted to
a vote of such class. Holders of Common Stock do not have
cumulative voting rights. The absence of cumulative voting means
that the holders of more than 50% of the shares voting for the
election of directors can elect all directors if they choose to do
so. In such event, the holders of the remaining shares of the
Common Stock will not be entitled to elect any director. The Board
of Directors shall be elected each year to a one year term. A
majority of the shares entitled to vote, represented in person or
by proxy, constitutes a quorum at a meeting of shareholders.
The Company has initiated a private placement of Units
pursuant to Section 4(2) and Regulation D, Rule 506 of the
Securities Act of 1933. See above, Item 13. Plan of Operation -
Private Placement. Each Unit consists of a five (5) year
convertible note, bearing 10% annual interest, payable semi-
annually with the principal convertible into shares of common
stock, $.001 par value, of the Company at $1.25 per Share, subject
to customary anti-dilution provisions. The Convertible Notes may be
called in whole or in part at a premium of 102% of par into shares
at the conversion price, as may be adjusted, in the event the
Company's Common Stock publicly trades on a recognized exchange,
NASDAQ or OTC Bulletin Board, for a period of 20 consecutive
trading days at a bid price per share of $3.50 or greater, and
provided the Shares underlying the Convertible Note have been
registered and may be sold without restriction by the holders
thereof.
Miscellaneous Rights and Provisions
Shares of the Common Stock have no preemptive or conversion
rights, no redemption or sinking funds provisions and are not
liable to further call or assessment. The outstanding shares of
the Common Stock are, and any shares sold pursuant to this offering
will be, fully paid and non-assessable. Each share of the Common
Stock is entitled to share ratably in any assets available for
distribution to holders of its equity securities upon liquidation
of the Company.
PART II
Item 1. Market Price of and Dividends on Registrant's Common
Equity and Other Shareholder Matters
The Common Stock has not traded. Until this distribution
Modern Technology Corp owned all shares. There is no
representation made that any trading market will develop, or if
developed that it will be sustained. There is no indication of any
potential trading prices. As of April 6, 1999, assuming the
distribution, the Company will have approximately 370 shareholders
of record. The Company has not paid any dividends since inception
and does not anticipate paying any dividends.
The following indicate the amounts of common equity:
(i) that are subject to outstanding options or warrants to
purchase, or securities convertible into common equity of the
registrant: 865,000.
(ii) that could be sold pursuant to Rule 144 under the Securities
Act or that the registrant has agreed to register under the
Securities Act for sale by security holders: None.
Item 2. Legal Proceedings
None
Item 3. Changes in and Disagreements with Accountants
Not Applicable
Item 4. Recent Sales of Unregistered Securities
Section 4(2) Transactions
On or about December 1996, Coral Development issued 403,000
shares of common stock to MTC, the parent corporation of Coral
Development, in exchange for $30,000. The shares were issued
pursuant to an exemption from registration contained in Section
4(2) of the Securities Act of 1933.
On June 26, 1998, prior to executing the merger agreement with
Coral Development, the Company acquired Education Navigator, Inc.
In exchange for all the issued and outstanding shares of Education
Navigator, the Company issued 441,180 shares of common stock of the
Company to the two shareholders of Education Navigator and issued
promissory notes in the amount of $525,000. The shares and
promissory notes were issued pursuant to an exemption from
registration contained in Section 4(2) of the Securities Act of
1933. Subsequent to the acquisition of Education Navigator, the
Company executed an employment agreement with Cliff Middleton, a
shareholder of Education Navigator. In addition, pursuant to
Section 422 of the Internal Revenue Code, the Company granted an
incentive stock option to Cliff Middleton for 85,000 common shares
at $.60 per share, vesting over 3 years beginning June 26, 1999.
On February 17, 1999, OmniComm Systems, Inc. and Coral
Development finalized the merger pursuant to the terms and
conditions set forth in the Agreement and Plan of Reorganization.
It is intended that all of the issued and outstanding shares of
OmniComm Systems, Inc. will be exchanged for 940,000 shares of
common stock of Coral Development; or, 3.129 shares of OmniComm
Systems for 1 share of Coral Development. The exchange and issuance
of shares were issued pursuant to an exemption from registration
contained in Section 4(2) of the Securities Act of 1933.
Both of the foregoing issuances concerning the merger
transactions dated June 26, 1998 (acquisition of Education
Navigator), and February 17, 1999 (merger with Coral Development
Corp.), relied on the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 (the "Act"). The basis
of the exemption is a transaction by an issuer that does not
involve a public offering.
Critical to the application of the exemption is the
availability of information to the offeree and her sophistication.
The availability of information can be provided in two ways: access
to information or disclosure.
In both transactions, the offerees were sophisticated; they
have the financial and business experience to evaluate the offer.
In the Education Navigator transaction the offerees were familiar
with and professionals within the computer and Internet market and
had experience with the risks associated with ventures involving
start-up companies in the market. In the Coral/OmniComm transaction
the offerees have a level of sophistication sufficient to
appreciate the relative risks and benefits of being affiliated with
a reporting company including the statutory obligations, both
federal and state.
In both transactions the offerees were provided with full
disclosure pursuant to agreements including audited financial
information and written legal opinions. Also, in both cases,
counsel who had sufficient experience with transactions of the type
consummated represented the offerees.
The transaction involving Coral Development Corp. and MTC was
a transaction involving a parent and a subsidiary where the parent
had access to corporate information concerning the subsidiary.
Private Placement
On January 18, 1999, Northeast Securities, Inc., as placement
agent, began the distribution of a Confidential Private Placement
Memorandum to accredited investors on behalf of the Company. The
terms of the offering are as follows:
Amount: $400,000 Minimum/$750,000 Maximum, All or none, Best
Efforts.
Offering: 16 Units Minimum/30 Units Maximum. Each Unit
consists of a five (5) year convertible note in the principal
amount of $25,000, bearing 10% annual interest, payable semi-
annually with the principal convertible into shares of common
stock, $.001 par value, of the Company ("Common Stock" or "Shares")
at $1.25 per Share, subject to customary anti-dilution provisions.
The Convertible Notes may be called in whole or in part at a
premium of 102% of par into shares at the conversion price, as may
be adjusted, in the event the Company's Common Stock publicly
trades on a recognized exchange, NASDAQ or OTC Bulletin Board, for
a period of 20 consecutive trading days at a bid price per share of
$3.50 or greater, and provided the Shares underlying the
Convertible Note have been registered and may be sold without
restriction by the holders thereof.
Interest Adjustment: In the event holders demand registration
of the Shares underlying the Convertible Notes and such
registration statement is not effective within 90 days after the
date of notice of demand by said holders, the interest rate on the
Convertible Notes beginning on the next quarter following the
expiration of the 90 day period, shall increase to 15%, and shall
remain at 15% until said registration statement is effective, at
which time the interest rate shall revert back to 10%.
Price: $25,000 per Unit. The Company will accept subscriptions
for partial Units.
Registration Rights: Demand (so long as 50% of the aggregate
amount of the total offering files notices) and Piggy-Back
registration rights (subject
to underwriter's cut-back).
Use of Proceeds: Operating and Marketing Expenses
Conditions:
(1) Regulation D of the Securities Act of 1933, as
amended.
(2) Suitability Standards; Accredited Investors
Only.
(3) Board of Directors: Northeast Securities,
placement agent, shall have the right to designate one
observer with the same notice and reimbursement of
expenses as other directors.
(4) Termination Date: March 31, 1999
(5) Placement Fee: 250,000 Common Shares at a
purchase price of $.001 per share at the closing of the
Minimum.
(6) The Company agrees not to issue equity
securities except ISO stock options and other options or
stock bonuses to employ consultants and advisors.
(7) Northeast shall have a right of first refusal to
match any bonafide equity based offering proposal.
(8) The Company shall have no more than 4,000,000
Shares outstanding on a fully diluted basis prior to the
placement of the Convertible Notes.
Placement Agent Fees: 10% Commission (cash); 3%
NonAccountable expense allowance (cash); $7,500 advance against
non-accountable due diligence expense.
As of May 31, 1999, the Company had received net proceeds of
$775,000 as a result of the private placement.
The offer and sale of the notes were made in reliance upon
Rule 506, Regulation D of the Securities Act of 1933. The offerees
and purchasers were accredited investors who were provided with a
private placement memorandum that met the requirements of
Regulation D.
Other Issuances
On February 1, 1998, the Board of Directors of OmniComm
Systems, Inc. authorized the issuance of 625,000 shares of common
stock to Peter S. Knezevich. The shares were issued pursuant to
Section 4(2) of the Securities Act of 1933 in exchange for services
rendered and to be rendered as evidenced by a written employment
agreement. The offeree, who is currently the CEO and Director of
the Company, was sophisticated and was provided with full
disclosure.
Item 5. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of Delaware
provides for broad indemnification of officers and directors and
Section 326 of the General Corporation Law of Delaware states as
follows: When an officer, director or stockholder shall pay any
debt of a corporation for which he is made liable by the provisions
of this chapter, he may recover the amount so paid in an action
against the corporation for money paid for its use, and in such
action only the property of the corporation shall be liable to be
taken and not the property of any stockholder.
Part III
Financial Statements
OmniComm Systems, Inc.: December 31, 1998 and 1997
Coral Development Corp.: December 31, 1998, June 30, 1998 and 1997
Education Navigator, Inc: December 31, 1997 and 1996
Exhibits
2 (a) Agreement and Plan of Reorganization dated July
22, 1998:Incorporated herein by reference to Form 8-K,
dated March 3, 1999. File No. 000-25203
(b) Amendment to Agreement and Plan of
Reorganization: Incorporated herein by reference to
Form 10-SB dated December 20, 1998
(c) Plan of Merger
3 (i) Certificate of Incorporation: Incorporated
herein by reference to Form SB-2 #333-6410
(ii) By-Laws: Incorporated herein by reference to
Form SB-2 #333-6410
10 (a) Employment Contract.
(i) Clifton Middleton - Employment Agreement
(b) Factor Agreement
(c) 1998 Stock Incentive Plan
(d) Consulting Contract - Larry Kronick
(e) Medical Advisory Board Agreement
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the Registrant caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
OmniComm Systems, Inc.
_______________________
Peter S. Knezevich,
Chief Executive Officer
Dated: June __, 1999
OMNICOMM SYSTEMS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS 2
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF CASH FLOWS 5-6
NOTES TO THE FINANCIAL STATEMENTS 7-14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
OMNICOMM SYSTEMS, INC.
Miami, Florida
We have audited the accompanying balance sheet of OMNICOMM
SYSTEMS, INC. as of December 31, 1998 and 1997 and the related
statements of operations, statements of shareholders' equity
(deficit) and cash flows for the periods ended December 31, 1998
and 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based upon our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of OMNICOMM SYSTEMS, INC. as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for the periods
ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
January 15, 1999
(with the exception of note 9, which date
is March 24, 1999)
Page 1 of 14
OMNICOMM SYSTEMS, INC.
BALANCE SHEETS
A S S E T S
December 31,
1998 1997
CURRENT ASSETS
Cash $ 44,373 $ 16,077
Accounts Receivable 77,188 26,086
Inventory 4,240 -0-
Total Current Assets 125,801 42,163
PROPERTY AND EQUIPMENT - Net 33,352 6,800
OTHER ASSETS
Stockholder Loans 3,406 10,906
Intangible Assets, net 163,276 467
Goodwill, net 396,387 -0-
Other Assets 9,300 -0-
TOTAL ASSETS $ 731,522 $ 60,336
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 286,478 $ 26,189
Notes Payable - Current 262,500 50,000
Sales Tax Payable 39,835 -0-
Due to Factoring Agent 139,012 -0-
Total Current Liabilities 727,825 76,189
Notes Payable - Long Term 182,500 -0-
Total Liabilities 910,325 76,189
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Stock - 2,000,000 shares
authorized, none issued and outstanding
Common Stock - 10,000,000 shares
authorized, 2,941,180 and 1,875,000
issued and outstanding, respectively,
at no par value 132,604 187
Retained Earnings (Deficit) (311,407) (16,040)
(178,803) (15,853)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 731,522 $ 60,336
The accompanying notes are an integral part of these financial
statements.
Page 2 of 14
OMNICOMM SYSTEMS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For The Period February 28, 1997 (inception) to December 31, 1998
Total
Share-
Common Stock Retained holders'
Number No Par Earnings Equity
of Shares Value (Deficit) (Deficit)
Issuance of
Common Stock 1,875,000 $ 187 $ -0- $ 187
Net Income (Loss)
for the period
Feb. 28, 1997
(inception) through
December 31, 1997 (16,040) (16,040)
BALANCES AT
DECEMBER 31, 1997 1,875,000 187 (16,040) (15,853)
Issuance of
Common Stock 625,000 63 63
Acquisition of
Education Navigator,
Inc. 441,180 132,354 132,354
Net Income (Loss)
for the Year Ended
December 31, 1998 (295,367) (295,367)
BALANCES AT
DECEMBER 31, 1998 2,941,180 $132,604 $(311,407) $(178,803)
The accompanying notes are an integral part of these financial statements.
Page 3 of 14
OMNICOMM SYSTEMS, INC.
STATEMENTS OF OPERATIONS
February 28, 1997
For the year ended (inception) to
December 31, 1998 December 31, 1997
REVENUES - SALES, Net $1,689,794 $210,373
COST OF SALES 1,223,018 164,950
GROSS MARGIN (LOSS) 466,776 45,423
OTHER EXPENSES
Depreciation and Amortization 128,196 717
Interest 15,428 5,620
Salaries and Wages 224,796 3,750
Factoring Fees 68,597 -0-
Rent 47,199 24,737
Independent Consultants 76,869 4,500
Selling, General and
Administrative 201,058 22,139
Income (Loss) Before Taxes (295,367) (16,040)
Income Taxes Expense (Benefit) -0- -0-
NET INCOME (LOSS) $ (295,367) $(16,040)
Net Income (Loss) Per Share $(.11) $(.01)
Weighted Average Number of
Shares Outstanding 2,675,375 1,875,000
The accompanying notes are an integral part of these financial statements.
Page 4 of 14
OMNICOMM SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
February 28, 1997
For the year ended (inception) to
December 31, 1998 December 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(295,367) $(16,040)
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 128,196 717
Change in Assets and Liabilities,
net of effects of acquisition of
Education Navigator Inc (EdNav):
(Increase) Decrease in Accounts
Receivable (37,157) (26,086)
(Increase) Decrease in Inventory (4,240) -0-
Increase (Decrease) in Other
Assests (9,300) (539)
Increase (Decrease) in Accounts
Payable and Accrued Expenses 260,289 26,189
Increase (Decrease) in Sales
Tax Payable 39,835 -0-
Increase (Decrease) in Due to
Factoring Agent 139,012 -0-
Net Cash Provided By (Used In)
Operating Activities 221,268 (15,759)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (3,035) (7,445)
Purchase of EdNav, Net of Cash
Acquired (67,500) -0-
Net Cash Provided By (Used In)
Investing Activities (70,535) (7,445)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Proceeds from Note Payable -0- 50,000
(Payments of) Notes Payable (130,000) -0-
(Loans to) Payments From Stockholder 7,500 (10,906)
Proceeds from Common Stock Issuance 63 187
Net Cash Provided By (Used In)
Financing Activities (122,437) 39,281
The accompanying notes are an integral part of these financial statements.
Page 5 of 14
OMNICOMM SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(CONTINUED)
February 28, 1997
For the year ended (inception) to
December 31, 1998 December 31, 1997
Net Increase (Decrease) in Cash and
Cash Equivalents 28,296 16,077
Cash and Cash Equivalents at
Beginning of Period 16,077 -0-
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 44,373 $ 16,077
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Income Tax Paid $ -0- $ -0-
Interest Paid $ 1,636 $ 5,020
Non Cash Investing and Financing
Transactions:
Acquisition of all of the Outstanding
Common Stock of Education Navigator
Inc. during the year ended
December 31, 1998
Assets Acquired, Fair Value $ 732,354
Notes to Sellers Issued (525,000)
Common Stock Issued (132,354)
Cash Acquired (7,500)
Net Cash Paid for Acquisition $ 67,500
The accompanying notes are an integral part of these financial statements.
Page 6 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
OmniComm Systems, Inc. (the Company) formerly The Premisys
Group, Inc. was incorporated in Florida in February 1997.
The Company is a computer systems integrator providing
services and hardware sales for the installation of local and
wide area networks. The Company's customers are located
throughout North America.
In addition, the Company is developing a web based database
application for the collection, compilation, and validation
of clinical data over the internet. The application is
called TrialMaster.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less. The carrying
amount reported in the accompanying balance sheets
approximates fair value.
CONSOLIDATION
During the period from July 1, 1998 through December 31, 1998
the accounts of the Company's wholly owned subsidiary,
Omnicommerce Systems Inc. (Omnicommerce) were included in the
consolidated financial position and results of operations and
cash flows. Omnicommerce was formed in July 1998 for the
purpose of acquiring Education Navigator, Inc. (See Note 3,
Acquisition.) All significant intercompany transactions have
been eliminated in consolidation.
ACCOUNTS RECEIVABLE
Accounts receivable are judged as to collectibility by
management and an allowance for bad debts is established as
necessary. As of each balance sheet date, no reserve was
considered necessary.
ADVERTISING
Advertising costs are expensed as incurred.
Page 7 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
INTANGIBLE ASSETS AND GOODWILL
Included in Intangible Assets are the following assets:
December 31, 1998
Cost Accum Amortization Asset
$120,000 $30,000 Covenant not to compete
87,500 14,583 Software development costs
539 180 Organization costs
$208,039 $44,763
December 31, 1997
Cost Accum Amortization Asset
$ 539 $ 72 Organization costs
The covenant not to compete and the software development
costs were acquired as a result of the acquisition of EdNav
(see Note 3). The covenant is for a two year period and is
being amortized ratably over that time. The software
development costs were capitalized and are being amortized
ratably over a three year period as that is the expected life
of the various products.
Included in Goodwill, as a result of the EdNav acquisition
(see Note 3), at December 31, 1998 is the cost of $475,665
and accumulated amortization of $79,278. The goodwill is
amortized ratably over a three year period.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentration of credit risk are accounts receivable. Major
customers are as follows:
December 31, 1998 December 31, 1997
% of % of
Customer Sales $ Total Sales Sales $ TotalSales
Commercial
Services Inc $1,289,594 76% $155,648 74%
Metropolitan
Mortgage -0- -0- 25,934 12%
Office Depot
Inc 176,965 10% -0- -0-
Page 8 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
The Company performs ongoing credit evaluations of its
customers but generally does not require collateral to
support customer receivables. The loss of any one of these
customers could have a material adverse effect on the
financial condition of the company.
PROPERTY AND EQUIPMENT, At Cost
Property and equipment consists of the following:
December 31, 1998 December 31, 1997
Accumulated Accumulated
Cost Depreciation Cost Depreciation
Computer and
office
equipment $33,274 $4,636 $7,445 $645
Office
furniture 4,950 236 -0- -0-
$38,224 $4,872 $7,445 $645
Renewals and betterments are capitalized; maintenance and
repairs are expensed as incurred.
Depreciation is calculated using the straight line method
over the asset's estimated useful life, which is 5 years for
equipment and 7 years for office furniture.
Depreciation expense for 1998 and 1997 was $4,573 and $645
respectively.
REVENUE RECOGNITION POLICY
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped
and when services are provided.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Page 9 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes." SFAS 109 has as its
basic objective the recognition of current and deferred
income tax assets and liabilities based upon all events that
have been recognized in the financial statements as measured
by the provisions of the enacted tax laws.
Valuation allowances are established when necessary to
reduce deferred tax assets to the estimated amount to be
realized. Income tax expense represents the tax payable for
the current period and the change during the period in the
deferred tax assets and liabilities.
STOCK OPTION PLAN
In 1998 the Company initiated a stock option plan. The Plan
provides for granting Incentive Stock Options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Phantom Stock Unit Awards and Performance Share
Units. In 1998 the Company granted an option to an employee
(see Note 3., Acquisition) to purchase 85,000 shares of
common stock. The option is exercisable after one year. No
compensation expense has been recognized during the periods
presented.
NOTE 3: ACQUISITION
On June 26, 1998 the Company acquired all of the outstanding
common stock of Education Navigator, Inc. (EdNav). The
purchase has been accounted for under the purchase method in
accordance with APB Opinion 16. The Company paid the
selling stockholders of EdNav $600,000 ($75,000 downpayment
and $525,000 in a promissory note) and issued 441,180 shares
of common stock of the Company to the selling stockholders
of EdNav. The Company valued these shares at $.30 each
based principally on the earnings potential of the combined
operations. Therefore, the total purchase price was
$732,354. The Company also granted a stock option to one
selling stockholder to purchase 85,000 shares of the Company
for $.60 per share. The option is pursuant to a stock
option plan (which has 3,000,000 shares reserved under the
plan) and is exercisable over the next three years at 14,166
shares, 28,334 shares and 42,500 shares, respectively.
Page 10 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
EdNav is an Internet company that has developed and is
developing dynamic web applications for business. The
acquisition of EdNav is accounted for as under the purchase
method. All results of EdNav's operations are included in
the financial statements from June 26, 1998 forward. The
acquisition resulted in $475,665 recorded as goodwill, which
will be amortized ratably over 3 years.
The fair value of the assets acquired were as follows:
Cash $ 7,500
Accounts receivable 13,945
Computer and office equipment 27,744
Covenant not to compete 120,000
Software developed 87,500
Goodwill 475,665
$732,354
The following table shows the results of operations on a pro
forma basis for the periods presented as though the
companies had combined at the beginning of the period. This
information is presented for informational purposes only and
does not purport to be indicative of the results of
operations that actually would have resulted if the
acquisition had been consummated on February 28, 1997 nor
which may result from future operations.
1/1/98-12/31/98 2/28/97-12/31/97
Revenues $1,775,835 $ 343,933
Income (Loss) before
extraordinary items (421,599) (325,358)
Net Income (Loss) (421,599) (325,358)
Earnings (Loss)
Per Share $(.14) $(.14)
Weighted Average
Shares Outstanding 2,942,106 2,317,106
Proforma adjustments to the results of operations are as
follows:
1/1/98-12/31/98 2/28/97-12/31/97
Depreciation -
Equipment $ 2,774 $ 5,548
Amortization:
Software developed 14,583 29,167
Covenant not to
Compete 30,000 60,000
Goodwill 79,278 158,555
(126,635) (253,270)
Page 11 of 14
OMNICOMM SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
EdNav net income
(Loss):
1/1/98-6/30/98 403
1/1/97-12/31/97 (56,048)
Proforma Adjustment $(126,232) $(309,318)
NOTE 4: NOTES PAYABLE
At December 31, 1997 the Company owed $50,000 to a third
party. The note was payable on demand and bore interest at
two percent per month. The note was secured by all accounts
receivable of the Company. This note was repaid in 1998.
At December 31, 1998 the Company owed $445,000 to the
selling stockholders of Ed Nav (see Note 3). The notes are
payable over the next two years and bear interest at 5.51%
annually. The amount payable in the fiscal year 1999 is
$262,500 and the amount due in the fiscal year 2000 is
$182,500.
NOTE 5: COMMITMENTS AND CONTINGENCIES
The company is currently in a lease for office space
requiring minimum annual base rental payments for the fiscal
periods shown as follows:
1999 $ 25,747
2000 26,552
2001 27,357
2002 28,161
2003 28,966
Total $136,783
In addition to annual base rental payments, the company must
pay an annual escalation for operating expenses as
determined in the lease. Rent expense for 1998 and 1997 was
$47,199 and $24,737, respectively.
NOTE 6: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state
income tax rates.
During the period ended December 31, 1997 the Company elected
to be taxed as an 'S' corporation for federal and state
income tax purposes. Therefore, the corporate income is
taxed directly to the shareholders. This election was
terminated as of January 1, 1998.
Page 12 of 14
OMNICOMM STSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
Income tax expense is as follows:
December 31, 1998
Current tax expense (benefit):
Income tax at statutory rates $ -0-
Deferred tax expense (benefit):
Amortization of Goodwill and
Covenant (48,419)
Operating Loss Carryforward (58,943)
107,362
Valuation allowance (107,362)
Total Tax Expense (Benefit) $ -0-
The tax effect of significant temporary differences, which
comprise the deferred tax assets are as follows:
December 31, 1998
(Unaudited)
Deferred tax assets:
Amortization of Intangibles $ 48,419
Operating loss carryforwards 58,943
Gross deferred tax assets 107,362
Valuation allowance (107,362)
Net deferred tax assets $ -0-
During 1998 the Company incurred a net operating loss (NOL)
for income tax purposes of approximately $170,000. This loss
is allowed to be offset against future income until the year
2018 when the NOL will expire. Other timing differences
relate to depreciation and amortization for the stock
acquisition of EdNav (Note 3).
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 substantial losses.
NOTE 7: RELATED PARTY TRANSACTIONS
The Company paid rent of $22,500 to a shareholder for the use
of office space during 1997.
The Company was owed $10,906 and $3,406 at December 31, 1997
and December 31, 1998, respectively, from shareholder. The
amounts are payable on demand. The interest rate is 6%
annually.
Page 13 of 14
OMNICOMM STSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
NOTE 8: POSTRETIREMENT 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 (postretirement). Therefore, no provision is
required under SFAS's 106 or 112.
NOTE 9: SUBSEQUENT EVENTS
On February 17, 1999 Omnicomm merged with Coral Development
Corp. (Coral) in a reverse merger. In consideration of
receiving all of the issued and outstanding shares of
Omnicomm, Coral will issue 940,000 restricted shares of
common stock to the shareholders of Omnicomm. Coral had
403,000 shares issued and outstanding prior to the merger.
On January 18, 1999 the Company prepared a Confidential
Private Placement Memorandum. The offering consisted of
units consisting of a five (5) year term note in the
principal amount of $25,000, bearing 10% annual interest,
with principal and interest, convertible into shares of
common stock of the Company at $1.25 per share, including
registration rights. Pursuant to this offering the Company
has raised a total of $380,625 as of March 24, 1999.
Page 14 of 14
CORAL DEVELOPMENT CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 1998
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS 2
STATEMENT OF STOCKHOLDER'S EQUITY 3
STATEMENTS OF OPERATIONS 4-5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-8
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
CORAL DEVELOPMENT CORP.
Brooklyn, New York
We have reviewed the balance sheets of CORAL DEVELOPMENT CORP. (A
Development Stage Enterprise) as of December 31, 1998 and the
related statements of operations, stockholder's equity and cash
flows for the six month periods ended December 31, 1998 and 1997,
in accordance with standards established by the American
Institute of Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an examination in accordance
with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements for
them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of June 30, 1998, and
the related statements of operations, shareholder's equity and
cash flows for the year then ended, and in our report dated
August 6, 1998, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of June 30, 1998 is fairly
stated in all material respects in relation to the balance sheet
from which it has been derived.
GREENBERG & COMPANY LLC
Springfield, New Jersey
January 21, 1999
Page 1 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
Dec 31, 1998 June 30,
(Unaudited) 1998
ASSETS
ASSETS
Current assets - cash $ 431 $ 1,299
Deferred registration costs 48,930 26,007
Organization expense 300 300
TOTAL ASSETS $49,661 $27,606
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accrued expense $ 8,465 $ -0-
Due to parent company 27,660 6,701
TOTAL CURRENT LIABILITIES 36,125 6,701
STOCKHOLDER'S EQUITY
Common stock par value $.001
Authorized: 20,000,000 shares
Shares Issued and Outstanding:
403,000 Shares 403 403
Additional paid in capital 29,897 29,897
(Deficit) accumulated during the
development stage (16,764) (9,395)
Total Stockholder's Equity 13,536 20,905
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $49,661 $27,606
Subject to the comments contained in the Accountants' Review Report.
Page 2 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD NOVEMBER 19, 1996 (INCEPTION) TO DECEMBER 31, 1998
(Deficit)
Common Accumulated Total
Stock Additional During the Stock-
# of $.001 par Paid in Development holder's
Shares Value Capital Stage Equity
Initial investment
in capital stock 403,000 $403 $29,897 $ -0- $30,300
BALANCE AT
DECEMBER 16, 1996 403,000 403 29,897 -0- 30,300
Net (Loss) for the
period (578)
(578)
BALANCE AT
JUNE 30, 1997
(Audited) 403,000 403 29,897 (578) 29,722
Net (Loss) for
the year ended
June 30, 1998 (8,817) (8,817)
BALANCE AT
JUNE 30, 1998
(Audited) 403,000 403 29,897 (9,395) 20,905
Net (Loss) for the
six months ended
December 31, 1998 (7,369) (7,369)
BALANCE AT
DECEMBER 31, 1998
(Unaudited) 403,000 $403 $29,897 $(16,764) $13,536
Subject to the comments contained in the Accountants' Review Report.
Page 3 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
FOR THE PERIOD NOVEMBER 19, 1996 (INCEPTION) TO DECEMBER 31, 1998
(Unaudited)
Period from
For the Three For the Three Nov. 19, 1996
Months Ended Months Ended (inception) to
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998
General and administrative
expenses $( 834) $(6,319) $(16,764)
Net (Loss) for the period $( 834) $(6,319) $(16,764)
Net (Loss) per share $ (0.00) $ (0.02) $ (0.04)
Weighted average common
shares outstanding 403,000 403,000 403,000
Subject to the comments contained in the Accountants' Review Report.
Page 4 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
FOR THE PERIOD NOVEMBER 19, 1996 (INCEPTION) TO DECEMBER 31, 1998
(Unaudited)
For the Six For the Six
Months Ended Months Ended
Dec. 31, 1998 Dec. 31, 1997
General and administrative
expenses $(7,369) $(7,439)
Net (Loss) for the period $(7,369) $(7,439)
Net (Loss) per share $ (0.02) $ (0.02)
Weighted average common
shares outstanding 403,000 403,000
Subject to the comments contained in the Accountants' Review Report.
Page 5 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
For the Six For the Six Amounts
Months Ended Months Ended From
Dec 31, 1998 Dec 31, 1997 Inception
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $(7,369) $(7,439) $(16,764)
Changes In Assets
(Increase) in Organization Expense -0- -0- (300)
Increase (Decrease) in Accrued
Expenses 8,465 1,500 8,465
Net Cash Provided By (Used In)
Operating Activities 1,096 (5,939) (8,599)
CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from Parent Company 20,959 4,451 27,660
Common Stock Issuance -0- -0- 30,300
(Increase) in Deferred Registration
Costs (22,923) (100) (48,930)
Net Cash Provided By (Used In)
Financing Activities (1,964) 4,351 9,030
Net Increase (Decrease) in Cash (868) (1,588) 431
Cash, Beginning of Period 1,299 3,515 -0-
CASH, END OF PERIOD $ 431 $ 1,927 $ 431
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Taxes $ -0- $ -0- $ -0-
Interest $ -0- $ -0- $ -0-
Subject to the comments contained in the Accountants' Review Report.
Page 6 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Coral Development Corp. (CDC) is a Delaware corporation.
CDC is in the development stage and has not begun any formal
operations. CDC's office is located in New York. The
principal purpose of CDC is to find and merge with an
operating company. The Company's fiscal year end is June
30.
On December 10, 1996 Modern Technology Corp. (Modern), the
parent company of Coral Development Corp., purchased 403,000
shares of the company for $30,300. The shares of the
Company were registered on June 6, 1997 with the Securities
and Exchange Commission. The intention of Modern is to
distribute those shares to Modern's stockholders in the form
of a dividend.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING POLICIES
Coral Development Corp.'s accounting policies conform to
generally accepted accounting principles. Significant
policies followed are described below.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 3: INCOME TAXES
The Company follows Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes."
FAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been
recognized in the Company's financial statements or tax
returns. The Company has net operating loss carry forwards
Page 7 of 8
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
of approximately $16,000 available to reduce any future
income taxes. The tax benefit of these losses,
approximately $5,600, has been offset by a valuation
allowance due to the uncertainty of its realization.
NOTE 4: DEFERRED REGISTRATION COSTS
As of December 31, 1998, the Company has incurred deferred
registration costs of $48,930 relating to expenses incurred
in connection with the Proposed Distribution (see Note 1).
Upon consummation of this Proposed Distribution, the
deferred registration costs will be charged to equity.
Should the Proposed Distribution prove to be unsuccessful,
these deferred costs, as well as additional expenses to be
incurred, will be charged to operations.
NOTE 5: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the Company for the
period July 1, 1998 to December 31, 1998 have been prepared
by management from the books and records of the Company, and
reflect, in the opinion of management, all adjustments
necessary for a fair presentation of the financial position
and operations of the Company as of the period indicated
herein, and are of a normal recurring nature.
Page 8 of 8
CORAL DEVELOPMENT CORP.
FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS 2
STATEMENT OF STOCKHOLDER'S EQUITY 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO THE FINANCIAL STATEMENTS 6-7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
CORAL DEVELOPMENT CORP.
Brooklyn, New York
We have audited the accompanying balance sheets of CORAL
DEVELOPMENT CORP. (A Development Stage Enterprise) as of June 30,
1998 and 1997 and the related statements of stockholder's equity,
operations and cash flows for the period ended June 30, 1998 and
1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based upon our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 statement presentation. We believe that
our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
presents fairly, in all material respects, the financial position
of CORAL DEVELOPMENT CORP. (A Development Stage Enterprise) as of
June 30, 1998 and 1997, and the statement of its operations and
cash flows for the periods then ended, in conformity with
generally accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 6, 1998
Page 1 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
June 30,
1998 1997
ASSETS
ASSETS
Current assets - cash $ 1,299 $ 3,515
Deferred registration costs 26,007 25,907
Organization Expense 300 300
TOTAL ASSETS $27,606 $29,722
LIABILITIES AND STOCKHOLDER'S EQUITY
Due to parent company $ 6,701 $ -0-
TOTAL LIABILITIES 6,701 $ -0-
STOCKHOLDER'S EQUITY
Common stock par value $.001
20,000,000 shares authorized
403,000 shares issued and outstanding 403 403
Additional paid in capital 29,897 29,897
(Deficit) accumulated during the
development stage (9,395) (578)
TOTAL STOCKHOLDER'S EQUITY 20,905 29,722
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $27,606 $29,722
The accompanying notes are an integral part of this financial
statement.
Page 2 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD NOVEMBER 19, 1996 (INCEPTION) TO JUNE 30, 1998
(Deficit)
Common Accumulated Total
Stock Additional During the Stock-
# of $.001 par Paid in Development holder's
Shares Value Capital Stage Equity
Initial investment
in capital stock 403,000 $403 $29,897 $ -0- $30,300
Balance -
December 16, 1996 403,000 403 29,897 -0- 30,300
Net (Loss) for the
period (578)
(578)
Balance -
June 30, 1997 403,000 403 29,897 (578) 29,722
Net (Loss) for the
year ended
June 30, 1998 (8,817) (8,817)
BALANCE -
JUNE 30, 1998 403,000 $403 $29,897 $(9,395) $20,905
The accompanying notes are an integral part of this financial statement.
Page 3 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
Period from
For the Year Ended December 17, 1996
June 30, 1998 to June 30, 1997
General and administrative
expenses $(8,817) $ (578)
Net (Loss) for the period $(8,817) $ (578)
Net (Loss) per share $ (0.02) $ (0.00)
Weighted average common shares
outstanding 403,000 403,000
Cumulative amounts from inception:
General and administrative
expenses $ 9,395
Net (Loss) $(9,395)
Net (Loss) per share $ (0.02)
The accompanying notes are an integral part of this financial
statement.
Page 4 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
Cumulative
For The Period From Amounts
Year Ended 12/17/96 From
6/30/98 to 6/30/97 Inception
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $(8,817) $ (578) $ (9,395)
Changes In Assets
(Increase) in Organization Expense -0- -0- (300)
Net Cash (Used In) Operating
Activities (8,817) (578) (9,695)
CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from Parent Company 6,701 -0- 6,701
Common Stock Issuance -0- -0- 30,300
(Increase) in Deferred Registration
Costs (100) (25,907) (26,007)
Net Cash Provided By (Used In)
Financing Activities 6,601 (25,907) 10,994
Net Increase (Decrease) in Cash (2,216) (26,485) 1,299
Cash, Beginning of Period 3,515 30,000 -0-
CASH, END OF PERIOD $ 1,299 $ 3,515 $ 1,299
Supplemental Disclosures of
Cash Flow Information
Cash Paid During Period for:
Income Taxes $ -0- $ -0- $ -0-
Interest $ -0- $ -0- $ -0-
The accompanying notes are an integral part of this financial statement.
Page 5 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Coral Development Corp. (CDC) is a Delaware corporation.
CDC is in the development stage and has not begun any formal
operations. CDC's office is located in New York. The
principal purpose of CDC is to find and merge with an
operating company. The Company's fiscal year end is June
30.
On December 10, 1996 Modern Technology Corp., the parent
company of Coral Development Corp., purchased 403,000 shares
of the company for $30,300. The shares of the Company were
registered on June 6, 1997 with the Securities and Exchange
Commission. The intention of Modern Technology Corp. is to
distribute those shares to Modern Technology Corp.'s
stockholders in the form of a dividend.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING POLICIES
Coral Development Corp.'s accounting policies conform to
generally accepted accounting principles. Significant
policies followed are described below.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 3: INCOME TAXES
The Company follows Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes."
FAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been
recognized in the Company's financial statements or tax
returns. The Company has net operating loss carry forwards
of approximately $10,000 available to reduce any future
Page 6 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
income taxes. The tax benefit of these losses,
approximately $3,500, has been offset by a valuation
allowance due to the uncertainty of its realization.
NOTE 4: DEFERRED REGISTRATION COSTS
As of June 30, 1998, the Company has incurred deferred
registration costs of $26,007 relating to expenses incurred
in connection with the Proposed Distribution (see Note 1).
Upon consummation of this Proposed Distribution, the
deferred registration costs will be charged to equity.
Should the Proposed Distribution prove to be unsuccessful,
these deferred costs, as well as additional expenses to be
incurred, will be charged to operations.
NOTE 5: SUBSEQUENT EVENT
On July 22, 1998, the Company signed an Agreement and Plan
of Reorganization with Omnicomm Systems, Inc. (Omnicomm).
The agreement calls for Omnicomm to be merged into the
Company. Omnicomm is a privately held company engaged in
the computer software industry. The transaction is
contingent upon receiving shareholder approval from both
companies and also subject to the conditions of Rule 419 of
the Securities Act of 1933 and approval by the Securities
and Exchange Commission of a post-effective amendment to the
registration statement.
Page 7 of 7
EDUCATION NAVIGATOR, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS 2
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO THE FINANCIAL STATEMENTS 6-9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
EDUCATION NAVIGATOR, INC.
Miami, Florida
We have audited the accompanying balance sheet of EDUCATION
NAVIGATOR, INC. as of December 31, 1997 and 1996 and the related
statements of operations, statements of shareholders' equity
(deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based upon our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of EDUCATION NAVIGATOR, INC. as of December 31, 1997 and 1996,
and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted
accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
November 5, 1998
Page 1 of 9
EDUCATION NAVIGATOR, INC.
BALANCE SHEETS
ASSETS
December 31,
1997 1996
CURRENT ASSETS
Cash $ 3,521 $ 4,328
Accounts Receivable 1,550 -0-
Total Current Assets 5,071 4,328
PROPERTY AND EQUIPMENT - Net 22,351 10,241
OTHER ASSETS
Deposit 2,807 2,807
Organization Costs, net 581 733
TOTAL ASSETS $ 30,810 $ 18,109
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 41,633 $ 8,604
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Common Stock - 100,000 shares
authorized, 1,000 issued and
outstanding at $.001 par value 1 1
Additional Paid In Capital 82,083 46,413
Retained Earnings (Deficit) (92,907) (36,859)
Less: Stock Subscription Receivable -0- (50)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (10,823) 9,505
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 30,810 $ 18,109
The accompanying notes are an integral part of these financial
statements.
Page 2 of 9
EDUCATION NAVIGATOR, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For The Period February 28, 1997 (inception) to December 31, 1997
Total
Stock Share-
Number $.001 Additional Retained Subscrip- holders'
of Par Paid-In Earnings tion Equity
Shares Value Capital (Deficit) Receivable (Deficit)
Issuance of
Common Stock 1,000 $1 $46,413 $ -0- $ 46,414
Stock Subscription
Receivable $(50) (50)
Net Income (Loss)
for the period
Sept. 24, 1996
(inception) through
December 31, 1996 (36,859) (36,859)
BALANCES AT
DECEMBER 31, 1996 1,000 1 46,413 (36,859) (50) 9,505
Capital
Contribution 35,670 35,670
Stock Subscription
Payment 50 50
Net Income (Loss) for
the Year Ended
December 31, 1997 (56,048) (56,048)
BALANCES AT
DECEMBER 31, 1997 1,000 $1 $82,083 $(92,907) $-0- $(10,823)
The accompanying notes are an integral part of these financial statements.
Page 3 of 9
EDUCATION NAVIGATOR, INC.
STATEMENTS OF OPERATIONS
September 24,1996
For The Year Ended (inception) to
December 31, 1997 December 31, 1996
SALES, Net $133,560 $ -0-
COST OF SALES 90,689 -0-
GROSS PROFIT 42,871 -0-
OTHER EXPENSES
Depreciation and
Amortization Expense 3,893 562
Interest Expense -0- 363
Bad Debts 25,200 -0-
Selling, General and
Administrative 69,826 35,934
Income (Loss) Before Taxes (56,048) (36,859)
Income Taxes -0- -0-
NET INCOME (LOSS) $(56,048) $(36,859)
Earnings (Loss) Per Share $(56.05) $(36.86)
Number of Weighted Average
Shares Outstanding 1,000 1,000
The accompanying notes are an integral part of these financial statements.
Page 4 of 9
EDUCATION NAVIGATOR, INC.
STATEMENTS OF CASH FLOWS
September 24,1996
For the Year Ended (inception) to
December 31, 1997 December 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(56,048) $(36,859)
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization 3,893 562
Change in Assets and Liabilities:
(Increase) Decrease in Accounts
Receivable (1,550) -0-
(Increase) Decrease in Deposit -0- (2,807)
(Decrease) Increase in Accounts
Payable and Accrued Expenses 33,029 8,604
Net Cash Provided By (Used In)
Operating Activities (20,676) (30,500)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (15,851) (10,778)
Organization Costs -0- (758)
Net Cash Provided By (Used In)
Investing Activities (15,851) (11,536)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Common Stock Issuance -0- 46,364
Additional Paid In Capital 35,720 -0-
Net Cash Provided By (Used In)
Financing Activities 35,720 46,364
Net Increase (Decrease) in Cash (807) 4,328
Cash At Beginning of Period 4,328 -0-
CASH AT END OF PERIOD $ 3,521 $ 4,328
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Income Tax Paid $ -0- $ -0-
Interest Paid $ 363 $ -0-
The accompanying notes are an integral part of these financial statements.
Page 5 of 9
EDUCATION NAVIGATOR, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Education Navigator, Inc. (the Company) was incorporated in
Florida in September 1996. The Company develops and
maintains dynamic internet web site applications for
business. The Company's customers are located throughout
North America.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less. The carrying
amount reported in the accompanying balance sheets
approximates fair value.
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.
ADVERTISING
Advertising costs are expensed as incurred.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentration of credit risk are accounts receivable.
The Company performs ongoing credit evaluations of its
customers but generally does not require collateral to
support customer receivables.
Page 6 of 9
EDUCATION NAVIGATOR, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
PROPERTY AND EQUIPMENT
The components of property and equipment at cost are as
follows:
12/31/97 12/31/96
Computer equipment $23,147 $ 7,296
Office Furniture 2,783 2,783
Office Equipment 699 699
26,629 10,778
Accumulated Depreciation (4,278) (537)
Property & Equipment, Net $22,351 $10,241
Renewals and betterments are capitalized; maintenance and
repairs are expensed as incurred.
Depreciation is calculated using the straight line method
over the asset's estimated useful life, which is 5 years for
equipment and 7 years for office furniture.
Depreciation expense for 1997 and 1996 was $3,741 and $537,
respectively.
REVENUE RECOGNITION POLICY
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped
and when services are provided.
ORGANIZATION COSTS
Organization costs of $758 were capitalized upon
incorporation. Amortization is recognized ratably over five
years. Amortization expense for 1996 and 1997 was $25 and
$152, respectively.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Page 7 of 9
EDUCATION NAVIGATOR, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") 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.
NOTE 3: SUBSEQUENT EVENT - ACQUISITION
On June 26, 1998 the Company was acquired by Omnicomm
Systems, Inc. (Omni) for $600,000 and 441,200 shares of Omni
stock.
NOTE 4: COMMITMENTS AND CONTINGENCIES
The company is currently in a lease for office and factory
space requiring minimum annual base rental payments for the
fiscal periods shown as follows:
1999 $ 25,747
2000 26,552
2001 27,357
2002 28,161
2003 28,966
Total $136,783
In addition to annual base rental payments, the company must
pay an annual escalation for operating expenses as
determined under the lease. Rent expense for 1996 and 1997
was $2,132 and $21,482, respectively.
Page 8 of 9
EDUCATION NAVIGATOR, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Continued)
NOTE 5: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state
income tax rates.
During the periods ended December 31, 1996 and 1997 the
Company elected to be taxed as an 'S' corporation for federal
and state income tax purposes. Therefore, the corporate
income is taxed directly to the shareholders. This election
was terminated as of June 26, 1998, when Omnicomm acquired
all of the outstanding stock of the Company.
NOTE 6: POSTRETIREMENT 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 (postretirement). Therefore, no provision is
required under SFAS's 106 or 112.
Page 9 of 9
Exhibit 2(c)
Plan of Merger
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Plan" or "Plan of Merger")
dated June ___, 1998 (the "Closing Date") by and among OmniComm
Systems, Inc., a Florida corporation (the "Parent Corp."),
OmniCommerce Systems, Inc., a Florida corporation and subsidiary of
OmniComm Systems, Inc. (the "Subsidiary Corp.") and (collectively
the "Surviving Corp."), and Education Navigator, Inc., (the "Target
Corp."). (All of the foregoing entities shall be referred to
collectively as the "Constituent Corporations"). This Plan of
Merger is being effected pursuant and in accordance with s.
607.1101 et seq. of the Florida Business Corporation Act (the
"Act").
1. Articles of Incorporation. The Articles of Incorporation of
Subsidiary, as in effect immediately before the Effective Date,
shall be the Articles of Incorporation of the Subsidiary until
further amended as provided by law.
2. Distribution and Payment to Shareholders of Target Corporation.
Upon the Effective Date, each share of Target Corp. voting common
stock as enumerated in Exhibit 1.1 that shall be issued and
outstanding at that time shall, without more, be converted into and
exchanged for Four Hundred Forty-One and 2/100 (441.2) shares of
voting common stock of the Parent Corp., and Parent Corp. shall pay
additional monetary consideration of Six Hundred Dollars ($600) per
share for each share of Target Corp. voting common stock totaling
Six Hundred Thousand Dollars ($600,000) in the aggregate for all of
the issued and outstanding shares of Target Corp. Each share of
Subsidiary stock that is issued and outstanding on the Effective
Date shall continue as outstanding shares of Subsidiary's stock.
3. Monetary Consideration. The monetary price for all of the issued
and outstanding shares of Target shall be $600,000 (the "Purchase
Price"), and shall be paid to Target shareholders as follows:
a. Seventy Five Thousand Dollars ($75,000) shall be paid
at Closing (less a credit for the $5,000 deposit previously paid by
Parent Corp. to Target shareholders) by payment of a cashier's
check from a Florida Bank;
b. Six hundred forty-five Thousand Dollars ($645,000)
shall be paid at Closing by the delivery of a promissory note
issued by Parent Corp. in the form attached hereto as Exhibit 3(b)
which provides for payments of principal as follows:
within sixty (60) days of closing: $75,000;
On or before December 31, 1998:$95,000;
On the first anniversary date of the closing:
$237,500;
On the second anniversary date of the closing:
$237,500.
4. Effect of Merger. On the Effective Date, the separate existence
of Target Corp. shall cease, and Subsidiary Corp. shall be fully
vested in Target Corp.'s rights, privileges, immunities, powers,
and franchises, subject to its restrictions, liabilities,
disabilities, and duties, all as more particularly set forth in s.
607.1106 of the Florida Business Corporation Act (the "Act").
5. Filing with the Florida Secretary of State and Effective Date.
Upon the Closing, as provided herein, Target and Subsidiary shall
immediately cause their respective President (or Vice President) to
execute Articles of Merger in the form attached to this Agreement
as Exhibit 6, and upon such execution, the Plan of Merger shall be
deemed incorporated by reference into the Articles of Merger as if
fully set forth in such Articles and shall become an exhibit to
such Articles of Merger. Thereafter, such Articles of Merger shall
be delivered for filing by Subsidiary to the Florida Secretary of
State. In accordance with s. 607.1105 of the Act, the Articles of
Merger shall specify the "Effective Date," which shall be the date
of filing with the Florida Secretary of State.
6. Assignment. If at any time Parent Corp. shall consider or be
advised that any further assignment or assurances in law are
necessary or desirable to vest, perfect, or confirm or record in
Subsidiary the title to any property or rights of Target, or to
otherwise carry out the provisions of this Agreement, the proper
officers and directors of Target as of the Effective Date shall
execute and deliver any and all proper deeds, assignments, and
assurances in law, and do all things necessary or proper to vest,
perfect, or confirm title to such property or rights in Subsidiary.
7. Satisfaction of Rights of Disappearing Corp. Shareholders. All
shares of Parent Corp.'s stock into which shares of Target Corp.'s
stock shall have been converted and become exchangeable for under
this Plan shall be deemed to have been paid in full satisfaction of
such converted shares.
8. Fractional Shares. Fractional shares of Parent Corp.'s stock
will not be issued.
9. Effect of Merger. On the Effective Date, the separate existence
of Target Corp. shall cease, and Subsidiary Corp. shall be fully
vested in Target Corp.'s rights, privileges, immunities, powers,
and franchises, subject to its restrictions, liabilities,
disabilities, and duties, all as more particularly set forth in s.
607.1106 of the Act.
10. Supplemental Action. If at any time after the Effective Date
Surviving Corp. shall determine that any further conveyances,
agreements, documents, instruments, and assurances or any further
action is necessary or desirable to carry out the provisions of
this Plan, the appropriate officers of Surviving Corp. or Target
Corp., as the case may be, whether past or remaining in office,
shall execute and deliver, on the request of Surviving Corp., any
and all proper conveyances, agreements, documents, instruments, and
assurances and perform all necessary or proper acts, to vest,
perfect, confirm, or record such title thereto in Surviving Corp.,
or to otherwise carry out the provisions of this Plan.
11. Filing with the Florida Secretary of State and Effective Date.
Upon the Closing, as provided in the Agreement of Merger of which
this Plan is a part, Target Corp. and Surviving Corp. shall cause
their respective President, Vice President, or other duly
authorized officer to execute Articles of Merger in the form
attached to this Plan and upon such execution this Plan shall be
deemed incorporated by reference into the Articles of Merger as if
fully set forth in such Articles and shall become an exhibit to
such Articles of Merger. Thereafter, Surviving Corp. shall deliver
such Articles of Merger for filing to the Florida Secretary of
State. In accordance with s. 607.1105 of the Act, the Articles of
Merger shall specify the "Effective Date," which shall be the
filing date of the Articles of Merger.
12. Amendment and Waiver. Any of the terms or conditions of this
Plan may be waived at any time by any one of the Constituent
Corporations which is, or the shareholders of which are, entitled
to the benefit thereof by action taken by the Board of Directors of
such party, or may be amended or modified in whole or in part at
any time before the vote of the shareholders of the constituent
corporations by an agreement in writing executed in the same manner
(but not necessarily by the same persons), or at any time
thereafter as long as such change is in accordance with s. 607.1103
of the Act.
13. Termination. At any time before the Effective Date (whether
before or after filing of Articles of Merger), this Plan may be
terminated and the Merger abandoned by mutual consent of the Boards
of Directors of the Constituent Corporations, notwithstanding
favorable action by the shareholders of the respective Constituent
Corporations.
Exhibit 10(a)
Employment Contract
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of
______ __, 1999, between OmniComm Systems, Inc., a Delaware
corporation, having it principal place of business located at 3250
Mary Street, Ste. 307, Coconut Grove, Florida (the "Company"), and
___________(the "Employee").
WITNESSETH:
WHEREAS, the Company desires to employ the Employee as an
administrative assistant and the Employee desires to accept such
employment.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions
hereinafter set forth.
2. Term. This Agreement shall be at will. Either party in
their sole and absolute discretion may terminate the Agreement.
3. Salary. For all services rendered under this Agreement the
Company shall pay the Employee a base salary of $______ per annum
in equal semi-monthly installments.
4. Duties. The Employee shall be employed as an ____________
and, subject to the direction of the Board of Directors and the
Company's officers designated by the Board of Directors, shall
perform and discharge well and faithfully the duties which may be
assigned to her from time to time by the Company in connection with
the conduct of its business.
5. Extent of Services. The Employee shall devote her entire
time, attention and energies to the business of the Company and
shall not during the term of the Agreement be engaged during normal
business hours, in any other business or professional activity,
whether or not such activity is pursued for gain, profit, or other
pecuniary advantage.
6. Disclosure of Information. (a) The Employee recognizes and
acknowledges that the Company's trade secrets and proprietary
information and processes, as they may exist from time to time, are
valuable, special and unique assets of the Company's business,
access to and knowledge of which are essential to the performance
of the Employee's duties hereunder. The Employee will not, during
or after the term of her employment by the Company, in whole or in
part, disclose such secrets, information or processes to any
person, firm, corporation, association or other entity for any
reason or purpose whatsoever, nor shall the Employee make use of
any such property for her own purposes or for the benefit of any
person, firm, corporation or other entity except the Company under
any circumstances during or after the term of her employment,
provided that after the term of her employment these restrictions
shall not apply to such secrets, information and processes which
are then in the public domain provided that the Employee was not
responsible, directly or indirectly, for such secrets, information
or processes entering the public domain without the Company's
consent. The Employee agrees to hold as the Company's property,
all memoranda, books, papers, letters, formulas and other data, and
all copies thereof and therefrom, in any way relating to the
Company's business and affairs, whether made by him or otherwise
coming into her possession, and on termination of her employment,
or on demand of the Company, at any time, to deliver the same to
the Company.
7. Inventions. The Employee hereby sells, transfers and
assigns to the Company or to any person, or entity designated by
the Company, all of the entire right, title and interest of the
Employee in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Employee, solely or jointly, or
in whole or in part, during the term hereof which (i) relate to
methods, apparatus, designs, products, processes or devices sold,
leased, used or under construction or development by the Company or
any subsidiary, or (ii) otherwise relate to or pertain to the
business, functions or operations of the Company or any subsidiary,
or (iii) arise wholly or partly from the efforts of the Employee
during the term hereof. The Employee shall communicate promptly
and disclose to the Company, in such form as the Company requests,
all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and, whether
during the term hereof or thereafter, the Employee shall execute
and deliver to the Company such formal transfers and assignments
and such other papers and documents as maybe required of the
Employee at the Company's expense to permit the Company or any
person or entity designated by the Company to file and prosecute
the patent applications and, as to copyrightable material, to
obtain copyright thereon. Any invention by the Employee within one
(1) year following the termination of this Agreement shall be
deemed to fall within the provisions of this paragraph unless
proved by the Employee to have been first conceived and made
following such termination.
8. Covenant Not to Compete. (a) During the term hereof and
for a period of one (1) year thereafter, the Employee shall not
compete, directly or indirectly, with the Company, interfere with,
disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company and any customer, client, supplier,
consultant, or employee of the Company and any customer, client,
supplier, consultant or employee of the Company, including, without
limitation, employing or being an investor (representing more than
5% equity interest) in, or officer, director, or consultant to, any
person or entity which employs any former key or technical employee
whose employment with the Company was terminated after the date
which is one year prior to the date of termination of the
Employee's employment therewith. An activity competitive with an
activity engaged in by the Company shall mean performing services
whether as an employee, officer, consultant, director, partner, or
sole proprietor for any person or entity engaged in the business
then engaged in by the Company, which services involve systems
integration (b) It is the desire and intent of the parties that the
provisions of this Section 8 shall be enforced to the fullest
extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if
any particular portion of this Section 8 shall be adjudicated to be
invalid or unenforceable, this Section 8 shall be deemed amended to
delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the
operation of this Section in the particular jurisdiction in which
such adjudication is made. (c) Nothing in this Section 8 shall
reduce or abrogate the Employee's obligations during the term of
this Agreement under Sections 4 and 5 hereof.
9. Remedies. If there is a breach or threatened breach of the
provisions of Section 5, 6(b), 7 or 8 of this Agreement, the
Company shall be entitled to an injunction restraining the Employee
from such breach. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies for such breach or
threatened breach.
10. Assignment. This Agreement may not be assigned by any
party hereto; provided that the Company may assign this Agreement:
(a) to an affiliate so long as such affiliate assumes the Company's
obligations hereunder; provided that no such assignment shall
discharge the Company of its obligations herein, or (b)in
connection with a merger or consolidation involving the Company or
a sale of substantially all its assets to the surviving corporation
or purchaser as the case may be, so long as such assignee assumes
the Company's obligations thereunder.
11. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and sent by
registered mail to the Employee at her residence at________________
and to the Company at its address set forth above, Attention:
12. Waiver or Breach. A waiver by the Company or the Employee
of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent
breach by the other party.
13. Entire Agreement. This instrument contains the entire
agreement of the parties. It may be changed only by an agreement in
writing signed by a party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida. All questions
with respect to the construction hereof and the rights and
liabilities of the parties hereto shall be governed by the laws of
the State of Florida. Any action or proceeding arising out of or
relating hereto shall be brought in Dade County, State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first hereinabove written.
OmniComm Systems, Inc.
By:____________________________
Employee
_______________________________
<PAGE>
Exhibit 10(a)(i)
Employment Agreement-Clifton Middleton
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed this _____
day of June, 1998, to become effective immediately, by and between
OMNICOMM SYSTEMS, INC., a Florida corporation, (hereinafter
individually referred to as "Parent"), and OMNICOMMERCE SYSTEMS,
INC., a Florida corporation, (hereinafter individually referred to
as "Subsidiary") (both Parent and Subsidiary are hereinafter
jointly referred to as the "Company"), and CLIFTON MIDDLETON
(hereinafter referred to as "Executive").
WITNESSETH:
WHEREAS, Parent is a Florida corporation engaged in the
business of computer networking;
WHEREAS, Subsidiary is a Florida corporation engaged in the
business of developing and marketing software that facilitates
internet commerce;
WHEREAS, both Parent and Subsidiary desire to concurrently
employ Employee and Employee desires to be concurrently employed by
Parent and Subsidiary, in the capacity set forth below; and,
WHEREAS, Employer and Executive desire to set forth in writing
the terms and conditions of their agreements and understandings.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending legally to be bound, agree as
follows:
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive
and the Executive hereby accepts employment upon the terms and
conditions hereinafter set forth.
2. Term. This Agreement shall commence on the date hereof
and shall terminate on the earlier of:
(a) 3 years from the date hereof;
(b) Whenever Company and Executive shall mutually agree
to terminate the Agreement in writing;
(c) The death or disability of the Executive.
"Disability" shall mean the Executive's inability,
due to sickness or injury, to perform effectively
his duties hereunder for a period of time exceeding
one-hundred and eighty (180) consecutive business
days;
(d) Thirty (30) days after the Company gives notice to
the Executive that an intentional wrongful act
committed by the Executive causing substantial
economic damage to the Company has occurred; or
(e) Thirty (30) days after the Executive gives notice
to the Company that an intentional wrongful act
committed by the Company causing substantial
economic damage to the Executive has occurred.
(f) In the event a court of competent jurisdiction
makes a determination that the Executive was
terminated without justification, the Executive's
stock options then existing shall vest immediately
and be exercisable subject to the option agreement.
The exercise of the Company's or the Executive's right to
terminate this Agreement pursuant to clause (d) or (e) hereof, as
the case may be, shall not abrogate the rights and remedies of the
terminating party in respect of the breach giving rise to such
termination.
3. Salary. For all services rendered under this Agreement:
(a) The Company shall pay the Executive a base salary
of $85,000 per annum in equal semi-monthly
installments.
(b) The Executive shall receive a bonus of one percent
(1%) of the "profits" of Subsidiary and any
"profits" of Parent generated by Subsidiary.
Profits and bonus for this Section 3(b) shall be
calculated as set forth on Exhibit 3(b) of this
Agreement. The Bonus shall be payable within sixty
(60) days of the audited financial statements of
the Company being completed by the Company's
accountants.
(c) The Executive shall also receive such other bonuses
as the Company may determine, but in no event shall
other executives of the Company receive a bonus
without the executive receiving a bonus of at least
75% of the average of all bonuses paid during a
fiscal year. If a bonus is paid pursuant to section
3(b), above, that is at least 75% of the average of
all bonuses paid during a fiscal year, then the
executive shall not be entitled to a bonus pursuant
to this Section 3(c).
(d) The Executive shall be granted an initial incentive
stock option pursuant to the Company's 1998
Incentive Stock Option Plan. The essential terms of
the initial incentive stock option are set forth on
Exhibit 3(c). The Executive shall also receive such
other incentive stock options as the Company may
grant, but in no event shall other executives of
the Company receive an option without the
Executive's receiving an option on similar terms
and conditions as the other executives.
(e) During the term of his employment, the Executive
shall be entitled to participate in employee
benefit plans or programs of the Company, if any,
to the extent the Executive is eligible to
participate thereunder. Such additional benefits
shall include: (a) major medical health insurance
and (b) 4 weeks paid vacation annually.
(f) Although Employee is employed concurrently by
Parent and Subsidiary, Parent is hereby designated
as the common paymaster for the purpose of
disbursing all compensation to Executive and for
the reporting and payment of FICA and FUTA taxes,
or any other employment taxes or charges imposed by
any state, Federal or local governmental
authorities.
4. Duties. The Executive shall be appointed as a Director
of the Subsidiary. Further, the Executive shall be employed as the
Chief Technology Officer of the Subsidiary and as a Vice President
and Director of Internet Applications and Development for the
Parent and, subject to the direction of the Board of Directors and
the Company's officers designated by the Board of Directors, shall
perform and discharge well and faithfully the duties which may be
assigned to him from time to time by the Company in connection with
the conduct of its business. If the Executive is elected or
appointed a director or officer of the Company or any subsidiary
thereof during the term of this Agreement, the Executive will serve
in such capacity without further compensation.
5. Extent of Services. The Executive shall devote his
entire time, attention and energies to the business of the Company
and shall not during the term of this Agreement be engaged, whether
or not during normal business hours, in any other business or
professional activity, whether or not such activity is pursued for
gain, profit, or other pecuniary advantage.
6. Disclosure of Information. (a) The Executive represents
and warrants to the Company that Exhibit 6(a) hereto sets forth (i)
all rights, in respect of the Executive's engaging in any business
activity of former employers, clients, principals, partners or
others with whom or for whom the Executive has performed services
since 1995, and (ii) all of the business activities of the
Executive applicable to periods after the time such services were
performed; (b) The Executive recognizes and acknowledges that the
Company's trade secrets and proprietary information and processes,
as they may exist from time to time, are valuable, special and
unique assets of the Company's business, access to and knowledge of
which are essential to the performance of the Executive's duties
hereunder. The Executive will not, during or after the term of his
employment by the Company, in whole or in part, disclose such
secrets, information or processes to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever,
nor shall the Executive make use of any such property for his own
purposes or for the benefit of any person, firm, corporation or
other entity except the Company under any circumstances during or
after the term of his employment, provided that after the term of
his employment these restrictions shall not apply to such secrets,
information and processes which are then in the public domain
provided that the Executive was not responsible, directly or
indirectly, for such secrets, information or processes entering the
public domain without the Company's consent. The Executive agrees
to hold as the Company's property, all memoranda, books, papers,
letters, formulas and other data, and all copies thereof and
therefrom, in any way relating to the Company's business and
affairs, whether made by him or otherwise coming into his
possession, and on termination of his employment, or on demand of
the Company, at any time, to deliver the same to the Company.
7. Inventions. The Executive hereby sells, transfers and
assigns to the Company or to any person, or entity designated by
the Company, all of the entire right, title and interest of the
Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Executive, solely or jointly, or
in whole or in part, during the term hereof which (i) relate to
methods, apparatus, designs, products, processes or devices sold,
leased, used or under construction or development by the Company,
or (ii) otherwise relate to or pertain to the business, functions
or operations of the Company, or (iii) arise wholly or partly from
the efforts of the Executive during the term hereof. The Executive
shall communicate promptly and disclose to the Company, in such
form as the Company requests, all information, details and data
pertaining to the aforementioned inventions, ideas, disclosures and
improvements; and, whether during the term hereof or thereafter,
the Executive shall execute and deliver to the Company such formal
transfers and assignments and such other papers and documents as
maybe required of the Executive at the Company's expense to permit
the Company or any person or entity designated by the Company to
file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereon. Any invention by the
Executive within one (1) year following the termination of this
Agreement shall be deemed to fall within the provisions of this
Section unless proved by the Executive to have been first conceived
and made following such termination.
8. Covenant Not to Compete. (a) During the term hereof and,
unless this Agreement is terminated pursuant to Section 2(e)
hereof, for a period of one (1) year thereafter, and encompassing
the world, the Executive shall not compete, directly or indirectly,
with the Company, interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Company and any
customer, client, supplier, consultant, or employee of the Company
and any customer, client, supplier, consultant or employee of the
Company, including, without limitation, employing or being an
investor (representing more than 5% equity interest) in, or
officer, director, or consultant to, any person or entity which
employs any former key or technical employee whose employment with
the Company was terminated after the date which is one year prior
to the date of termination of the Executive's employment therewith.
An activity competitive with an activity engaged in by the Company
shall mean performing services whether as an employee, officer,
consultant, director, partner, or sole proprietor for any person or
entity engaged in the business then engaged in by the Company,
which services involve developing software applications for the
internet, (b) It is the desire and intent of the parties that the
provisions of this Section 8 shall be enforced to the fullest
extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if
any particular portion of this Section 8 shall be adjudicated to be
invalid or unenforceable, this Section 8 shall be deemed amended to
delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the
operation of this Section in the particular jurisdiction in which
such adjudication is made, and (c) Nothing in this Section 8 shall
reduce or abrogate the Executive's obligations during the term of
this Agreement under Sections 4 and 5 hereof. The Executive has
been advised by the Company to seek the advice of counsel and has
had the opportunity to do so prior to executing this Agreement.
Further the Shareholder has been made aware of Florida Statute
542.33, 542.331, and 542.335, concerning contracts in restraint of
trade.
9. Remedies. If there is a breach or threatened breach of
the provisions of Section 5, 6(b), 7 or 8 of this Agreement, the
Company shall be entitled to an injunction restraining the
Executive from such breach. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
10. Assignment. This Agreement may not be assigned by any
party hereto; provided that the Company may assign this Agreement:
(a) to an affiliate or subsidiary so long as such affiliate or
subsidiary assumes the Company's obligations hereunder; provided
that no such assignment shall discharge the Company of its
obligations herein, or (b) in connection with a merger or
consolidation involving the Company or a sale of substantially all
its assets to the surviving corporation or purchaser as the case
may be, so long as such assignee assumes the Company's obligations
thereunder.
11. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and sent by
registered mail to the Executive at his residence at 2100 Salzedo
Street, Suite 207, Coral Gables, Fl 33134 and to the Company at its
address set forth above, Attention: Peter S. Knezevich.
12. Waiver of Breach. A waiver by the Company or the
Executive of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any
subsequent breach by the other party.
13. Entire Agreement. This instrument contains the entire
agreement of the parties. It may be changed only by an agreement in
writing signed by a party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida. All questions
with respect to the construction hereof and the rights and
liabilities of the parties hereto shall be governed by the laws of
the State of Florida. Any action or proceeding arising out of or
relating hereto shall be brought in Dade County, State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first hereinabove written.
OMNICOMM SYSTEMS, INC.
By:_________________________________
Name:______________________________
Title:_______________________________
EXECUTIVE
Clifton Middleton
EXHIBIT 3(B)
BONUS COMPUTATION
Revenues = A
Operating Expenses:
Cost of Revenues = Bi
Research and Development = Bii
Sales and Marketing = Biii
General and Administrative = Biv
Profit = A - (Bi+Bii+Biii+Biv)
Bonus = Profit x .01
EXHIBIT 3(C)
INCENTIVE STOCK OPTION
Number of shares optioned: 85,000
Option exercise price per share: $.60
Expiration Date: 10 years from date of grant, i.e. date of
employment
Timing of Purchases
The Option is not exercisable in any part until one (1) year
after the date of grant. Upon the expiration of one (1) year after
the date of grant and subject to the provisions for termination and
acceleration pursuant to the Stock Option Plan, this Option shall
become exercisable as follows:
One (1) year anniversary date: 14,166
Two (2) year anniversary date: 28,334
Three (3) year anniversary date: 42,500
EXHIBIT 6(A)
DISCLOSURE OF INFORMATION
Business Activities Capacity
Education Navigator President
Smartkid Magazine Dir. Marketing & Sales
Advantage Direct V.P. Marketing
Rights in Activities
Database driven web hosting and development
Retail web-shopping site
Configurators
Electronic Marketing Automation
Super Email
Electronic Purchase Orders
Database Optimization
Intranet Legacy Systems
Client Acquisition and Management
K:\USR\JCC\EDUCNAV\OMNI\DOCSFIN\EMPAG2.WPD
<PAGE>
Exhibit 10(b)
Factor Agreement
BANKEST CAPITAL CORP.
STANDARD FACTORING AGREEMENT
Omnicomm Systems, Inc.
3250 Mary Street, Ste. 307
Coconut Grove, FL 33133
Gentlemen:
The following shall constitute the terms upon which Bankest
Capital Corp. ("Bankest" and "we" and/or "us") shall act as
sole factor of Omnicomm Systems, Inc.("company" and "you"
and/or "your") (see section 11 for the definition of
certain capitalized terms):
SECTION 1 Sales and Approval of Receivables
1.1 You hereby sell, assign and transfer to us and we
hereby purchase from you all of your now outstanding and
hereafter created or acquired Receivables with full power
to collect and otherwise deal therewith as the sole
exclusive owner thereof. You further sell and assign to us
all of your interest in the goods represented by the
Receivables and in all goods that may be returned by
customers, all rights as an unpaid vendor or lienor, all
rights of stoppage in transit, replevin and reclamation
relating thereto, all rights in and to all security
therefor and guarantees thereof, and all rights against
third parties with respect thereto. Any goods so recovered
or returned shall be set aside, marked with our name and
held for our account as owner. You shall notify us
promptly of all such returned or recovered goods.
1.2 (a) You will submit for our written approval the
amount, terms of payment and delivery, and all other
conditions of each prospective sale and each approved sale
shall be made only in accordance with such approval, which
may be withdrawn at any time before actual delivery of the
merchandise or rendition of the services to the customer.
We may, in our sole judgment, and from time to time,
establish credit lines for sales to some or all of your
customers and, provided sales to such customers are on your
normal selling terms which we have approved, all sales to
such customers within the established credit lines will be
Approved Receivables provided that delivery or performance
is completed while the credit line remains in effect. All
of our credit approvals will be in writing.
(b) We reserve the right to amend or withdraw a
credit approval or credit line at any time by advice to
you, which advice will be promptly confirmed in writing.
A credit line will be automatically suspended (i.e.
withdrawn) during any period that the customer is 60 or
more days past due. We will reinstate any suspended credit
line in accordance with, and subject to, our credit line
approval guidelines.
(c) Without limiting the foregoing, our approval
shall automatically be withdrawn if any terms are changed
or if delivery is made more than thirty days after the
approved delivery date, or more than thirty days after the
date of approval if no delivery date is specified. If the
amount of any sale is increased without our prior written
consent, our approval shall apply only to the original
amount approved.
(d) We shall have no liability to you or to any
customer for our refusal to credit approve a Receivable or
establish a credit line or for our withdrawal of a credit
approval or a credit line.
1.3 We shall assume the Credit Risk on all Approved
Receivables. We shall have full recourse to you for all
other reasons (other than Credit Risk), which cause us not
to collect Receivables sold by you to us. We shall have
full recourse to you on all Non-Approved Receivables.
1.4 In the event that monies shall, at any time, be owing
from one of your customers for both Approved Receivables
and Non-Approved Receivables, we may, and you so authorize
and approve us to , apply all payments received first in
reduction of the outstanding Approved Receivables.
SECTION 2 Purchase Price, Commissions, Advances, and
Reserve
2.1 We will purchase each Receivable at the Net Amount of
thereof, less our commission thereon (hereinafter, the
"Purchase Price"). "Net Amount" shall mean the face amount
less all returns, discounts (which may, at our option, be
calculated on the longest or shortest terms), credits or
allowances of any nature at any time issued, owing, claimed
by customers, granted or outstanding, and out-of-pocket
expenses as set forth in the Reimbursable Out-of-Pocket
Costs Schedule Attachment as Schedule A.
2.2 Upon the Payment Date (as defined in Section 11.8
hereof) with respect to any Receivable, the Purchase Price,
less any debits or reserves, shall be credited to your
account. The credit balance of the account shall be
available for distribution to you, at your request. We may
retain from sums payable to you a reserve, which reserve
may be revised from time to time at our discretion, in
order to provide for Customer Disputes, possible credit
losses on Non-Approved Receivables, sums owing to us for
goods/services purchased by you from any other firm or
company factored or otherwise financed by us, and the
Obligations. Amounts in your account shall also be subject
to reduction for payment of any charges or credits which
may be charged to you pursuant to this Agreement, and shall
be given as security for all of your Obligations hereunder
or arising from any other agreement between you and us.
2.3 From time to time during the term of this Agreement
and prior to the Payment Date, upon you request and in our
sole discretion, we may advance funds ("Advance") to you up
to seventy percent (70.0%) of the Purchase Price of a
Receivable. Any Advance in excess of the percentages set
forth above shall be deemed to be an Overadvance, which
Overadvance shall be made in our sole discretion and also
subject to this Agreement.
2.4 All Advances, Overadvances and other credits, charges
or payments specified herein, except for charges which
reduce the Purchase Price pursuant to Section 2.2, shall be
charged to your account. You shall be charged interest in
the amount as and at such times as herein provided on the
outstanding balance of the account. The account shall be
reduced by all payments received with respect to a
Receivable.
2.5 You will pay us a factoring commission, which
commission shall be due and payable at the time of our
acceptance of the purchase or assignment of each
Receivable, in the form of a Discount in the amount of the
Applicable Factoring Commission Percentage of each
Receivable purchased by us (the "Applicable Factoring
Commission Percentage"). The Applicable Factoring
Commission Percentage is predicated upon the number of days
the Receivables remain outstanding and shall be the
percentage set forth on the Factoring Commission Schedule
attached hereto as Schedule B. The minimum factoring
commission on each invoice shall be Five Dollars ($5.00).
2.6 During each contract year (the 12 months immediately
following the date hereof or any anniversary thereof you
agree to pay to us Factoring Commissions aggregating at
least eighteen thousand Dollars ($18,000.00), ("Minimum
Annual Commission"). If during any month the aggregate
factoring commissions paid by you is less than one thousand
five hundred Dollar ($1,500.00) ("Minimum Monthly
Commission"), then you shall pay to us, or we may charge
your account with an amount equal to the difference between
the Minimum Monthly Commission and the factoring commission
actually paid during that month (the "Deficiency Charge").
At such time as you exceed the Minimum Annual Commission,
the Minimum Monthly Commission shall be waived for the
remainder of the contract year and the Deficiency Charges
paid during said contract year shall be applied against
subsequent factoring commission charges incurred during
said contract year.
2.7 We will charge you account our standard wire transfer
fee on all wire transfers, and you will reimburse us for
exchanges on checks, charges for returned items and all
other back charges and other charges and costs as
stipulated in the Reimbursable Out-of-Pocket Costs Schedule
attached hereto. We may also, at our option, charge your
account for all amounts owing by you to us under this
Agreement and all other Obligations.
2.8 In the case of sales to customers located outside the
continental United States, you shall pay to us and we may
conclusively charge to your account (i) the amount of all
fees, costs and commissions charged to us by our
correspondent foreign factors to which we re-assign or
through which we re-factor such sales, (ii) all premiums on
any credit insurance obtained by us in connection
therewith, (iii) all currency rate differentials, currency
conversion charges, transmittal charges and other costs and
expenses relating thereto, and (iv) any and all sums which
we may be required to pay or assume under our arrangements
with any foreign factors. All charge-backs of foreign
sales by such foreign factors shall be binding on you and
shall relieve us of the Credit Risk with respect thereto.
You acknowledge that we have informed us of the terms of
our arrangements with any and all such foreign factors,
including, without limitation, the Code of International
Factoring Customs (IFC76) and Master Agreement relating
thereto; you consent thereto and agree to fulfill and to
assist in fulfilling those customs as far as your part of
the transactions in concerned; your failure to comply with
any thereof shall immediately relieve us of the Credit Risk
with respect to all affected Receivables. You shall affix
to all invoices to foreign customers such legend regarding
payment thereof to the foreign factor as we may from time
to time require.
2.9 You shall pay us on demand any debit balance at any
time existing in your account.
SECTION 3 Interest
3.1 You will pay interest on the daily balance of all
monies remitted, paid or otherwise advanced to you or for
your account net of all payments received from you or on
your behalf including the Purchase Price of Receivables
purchased by us hereunder which is credited to your account
on the Collection Date. Interest will be calculated daily
at a rate the greater of three percent (3.0%) per annum or
three hundred (300) basis points plus the Base Rate (the
"Interest Rate") and will be charged to your account
monthly, in arrears. All other indebtedness due by you to
us) under this Agreement and on all other Obligations,
except those specifying a different rate, from the date
incurred through the date paid will be charged interest
calculated daily at the greater at that rate which is the
maximum rate applicable by law, or rate of six hundred
basis points (6.0%) plus the Base Rate and, at our option,
may be charged to your account. Any publicly announced
decrease or increase in the Base Rate shall result in an
adjustment to the Interest Rate on the next business day.
Interest shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. In no event shall
the Interest Rate exceed the maximum rate permitted by
applicable law and in the event excess interest is paid,
it shall be considered a repayment of the principal.
3.2 If a Receivable or any payment is charged back to you
after the Collection Date, you will pay us interest at the
Interest Rate on such Net Receivable or such payment from
the Collection Date to the chargeback date.
SECTION 4 Representations, Warranties and Covenants
4.1 You represent, warrant and covenant as to each
Receivable sold and assigned hereunder that, at the time of
its creation, the Receivable is a valid, bona fide account,
representing an undisputed indebtedness incurred by the
named account debtor for goods actually sold and delivered
or for services completely rendered; there are no setoffs,
offsets or counterclaims, genuine or otherwise, against the
Receivable; the Receivable does not represent a sale to a
parent, subsidiary or a consignment, sale or return or a
bill and hold transaction; no agreement exists permitting
any deduction or discount (other than the discount stated
on the invoice); you are the lawful owner of the Receivable
and have the right to sell and assign the same to us; the
Receivable is free of all security interests, liens and
encumbrances other than those in our favor, and the
Receivable is due and payable in accordance with its terms.
4.2 You shall not grant or suffer to exist any lien upon
or security interest in your inventory in favor of any
party other than us without our written consent, or prior
knowledge.
4.3 You are a solvent corporation; duly incorporated and
in good standing under the laws of the State of Florida and
qualified in all States where such qualification is
required; the execution, delivery and performance of this
Agreement have been duly authorized and are not in
contravention of any applicable law, your corporate charter
or by-laws or any agreement or order by which you are
bound.
4.4 You shall not change your corporate name or the
location of your office or open any new offices without
giving us at least thirty (30) days prior written notice.
At the present time, you carry on business only at the
above address and the addresses set forth below:
_______________________________________
4.5 All books and records pertaining to the Receivables or
to any inventory owned by you shall be maintained solely
and exclusively at the above addresses or the addresses
listed in Section 4.4 and no such books and records shall
be moved or transferred without giving us thirty (30) days
prior written notice.
4.6 You shall not sell, lease, transfer or otherwise
dispose of all or substantially all of your property or
assets, or consolidate with or merge
into or with any corporation or entity without our prior
written consent, which consent will not be unreasonable
withheld.
4.7 After our request, you shall hold all returned,
replevied or reclaimed goods coming into your possession in
trust for us and all such goods shall be segregated and
identified as held in trust for our benefit and you shall,
at our request, and at your expense, deliver such goods to
such place or places as we may designate.
4.8 Receivables sold to us hereunder and represented by
invoices bearing the tradenames or styles set forth below
are wholly owned by you and the undertakings,
representations and warranties made in connection therewith
shall be identical to and of the same force and effects as
those made with respect to invoices bearing your corporate
name. The tradenames or styles set forth below are the
only tradenames or styles under which you transact
business.
Omnicomm Systems, Inc.
4.9 No discounts, credits or allowances will be issued,
granted or allowed by you to customers and no returns will
be accepted without our prior written consent; provided,
however, that until we notify you to the contrary, you may
presume our consent. Discounts, credits or allowances once
issued may be claimed only by the customer; no third party
beneficiary rights are created hereby.
SECTION 5 Disputes, Chargebacks and Reserves
5.1 With respect to any Receivable, upon the occurrence of
a breach of any of the representations or warranties
contained in Section 4.1, or the assertion by a customer of
a Dispute or other defense to payment, other than financial
inability, an Approved Receivable shall automatically
become a Non-Approved Receivable and we may charge back
such Receivable to you.
5.2 You will notify us promptly of and settle all Disputes
at your cost and expense, including attorneys' fees, and
will pay us promptly the amount of the Receivables affected
thereby. However, if any Dispute is not settled by you
within thirty days after the maturity date of the invoice
or within such shorter period as we may determine, we may
settle, compromise or litigate such Dispute in our or your
name upon such terms as we in our sole discretion deem
advisable and for your account and risk. We may also in
our discretion and without notice to you take possession of
and sell any returned goods at such prices and upon such
terms as we deem advisable. We may charge any deficiency,
and all costs and expenses, including attorney's fees, to
your account, In addition to all other rights to which we
are entitled under this Agreement, if there is any Dispute
as to any Receivable, or if any Receivable on which you
have the Credit Risk or evidenced by an invoice for less
than Fifty Dollars ($50.00) is unpaid at its maturity, we
may at any time charge the amount of such Receivable back
to your account. Immediately upon the occurrence of any
Dispute and regardless of the date on which we charge back
the affected Receivable, the Credit Risk on such
Receivable, to the extent theretofore borne by us, shall
automatically revert to you. We may also charge back the
amount of any Receivable which is not paid to us at
maturity due to acts of God, war, civil strife, currency
restrictions, foreign political impediments or the like.
5.3 We may, at our option, charge back to you all amounts
owing on Non-Approved Receivables which are not paid when
due. We shall also have the right to charge back to you
any payment which we receive with respect to a Non-Approved
Receivable if such payment is subsequently disgorged by us
or disgorged by our assigns, whether as a result of any
proceeding in bankruptcy or otherwise.
5.4 A chargeback shall not constitute a resale to you of
said Receivables; however, upon payment by you to us of all
monies due with respect to such charge back Receivable,
title thereto shall revert to you, subject, however, to our
continuing security interest therein. You agree to
indemnify and save us harmless from and against any and all
loss, costs and expenses, caused by or arising out of
disputed Receivables, including, but not limited to,
collection expenses and attorney's fees incurred with
respect thereto. We may charge our normal and standard
late payment and/or delinquency charges to your customers.
SECTION 6 Administration
6.1 You shall, from time to time, execute and deliver to
us confirmatory schedules of Receivables sold to us,
together with one copy of each invoice and acceptable
evidence of shipment and such other documentation and
proofs of delivery as we may require. Each invoice shall
bear a notice, in form satisfactory to us, that it has
been sold and assigned to and is payable United States
dollars only to us. However, the issuance of invoices to
customers shall itself constitute the assignment to us of
the Receivables represented thereby. You will keep all
shipping and delivery receipts and copies of all invoices
at your office available for our inspection, and will
deliver them to us promptly at our request. The sale of
your Receivables to us and our ownership thereof will be
properly reflected on your books. You agree to prepare and
mail all invoices or, at our option, you shall send all of
the invoices to us ready for mailing to the customers, in
which event the postage and clerical charges incurred by us
in mailing the same will be paid by you.
6.2 You agree to execute and deliver to us such further
instruments of assignments, financing statements and
instruments of further assurance as we may reasonably
require. You authorize us to execute on your behalf and
file such UCC financing statements as we may deem necessary
in order to perfect and maintain the security interests
granted by you in accordance with this and any other
agreement between you and us, and you further agree that we
may file this Agreement or a copy thereof as such UCC
financing statement. You agree to bear the cost of all
filing fees, filing taxes, search reports, legal fees and
other charges incurred by us in the perfection, protection
and preservation of the rights and collateral security
herein granted to us.
6.3 If any remittances are made directly to you, your
employees or agents, you shall act as trustee of an express
trust for our benefit, hold the same as our property and
deliver the same to us forthwith in kind. We and/or such
designee as we may from time to time appoint, are hereby
appointed your attorney-in-fact to endorse your name on may
remittances received by us where such endorsement is
required to effect collection; this power, being coupled
with an interest is irrevocable.
6.4 We may, at all times, have access to, inspect and make
extracts from all your records, files and books of
accounts. We may, at any time after default by you
hereunder, remove from your premises all such records,
files and books relating to the Receivables. You agree to
promptly furnish us within forty-five (45) days after the
close of each quarter financial statements unaudited and in
such form and detail as we may reasonably require. You
also agree to prepare and furnish to us, within ninety (90)
days after the close of your fiscal year, financial
statements which have been audited and certified by an
independent certified public accountant which is acceptable
to us. You authorize us to communicate directly with your
independent certified public accountants and authorize
such accountants to discuss your financial condition and
statements directly with us.
6.5 If we determine that the credit standing of a
customer has deteriorated after we have assumed the Credit
Risk on a Receivable, you shall, at our request, exercise
such rights as you may have to reclaim or stop the goods in
transit, and you hereby grant us the right to take such
steps in your name or ours.
6.6 You authorize us to disclose such information as we
deem appropriate to persons making credit inquiries about
you.
6.7 We will send you a monthly statement of your account
which shall constitute an account stated and be binding
upon you with respect to the matters reflected therein and
any matters previously reported to you which are
incorporated therein, except to the extent that written
exceptions thereto are served upon us within thirty (30)
days after such statement is rendered.
6.8 You hereby agree to indemnify us for all costs and
expenses incurred by us in connection with Receivables for
which credit approval has not been given and in connection
with Receivables which are unpaid at maturity for reasons
other than financial inability. Further, you hereby agree
to indemnify us for any liability for duties, forwarder's
fees, storage, shipping charges and other expense connected
with the Receivables and any losses occasioned by claims of
Customers under Receivables.
SECTION 7 Collateral Security
7.1 As collateral security for all Obligations, you hereby
assign and grant to us a continuing security interest in:
(i) all of your presently existing and hereafter created
Receivables and general intangibles and the proceeds
thereof; (ii) all monies, securities and other property now
or hereafter held or received by, or in transit to us from
or for you, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of your
deposits and credit balances in our possession; (iii) all
returned, reclaimed or repossessed goods and the documents
evidencing or relating to such goods; (iv) all books,
records and other property at any time evidencing or
relating to the Receivables; and (v) the proceeds of any
insurance policies covering any of the foregoing. Recourse
to the collateral security herein provided shall not be
required, and you shall at all times remain liable for the
payment and performance of all of your Obligations upon
demand by us.
7.2 By your execution of this Agreement, you also hereby
grant to us the right and authority to set-off and debit
payments and charges you owe us, which we are otherwise
entitled to set-off and debit against the account as
specified in this Agreement directly against your account,
without prior notice or consent from you. We shall in good
faith endeavor to provide you written notice of such set-
off or debit within ten (10) days after same; provided
however, that we shall have no liability to you in respect
of our failure to give such notice; and further provided
that our failure to give such notice shall have no effect
on our rights to set-off or debit as provided above.
SECTION 8 Events of Default
8.1 The occurrence of any of the following acts or events
shall constitute an Event of Default: (a) if you fail to
make payment of any of your Obligations when due, (b) if
you fail to make any remittance required by this Agreement,
(c) if you commit any breach of any of the terms,
representations, warranties, covenants, conditions or
provisions of this Agreement, or of any present or future
supplement or amendment hereto or of any other agreement
between us, (d) if you become insolvent or unable to meet
your debts as they mature, (e) if you deliver to us a false
financial statement, (f) if you call, or have called by a
third party, a meeting of creditors, (g) if you have
commenced by or against you any bankruptcy proceeding,
insolvency, arrangement or similar proceeding, (h) if you
suspend or discontinue doing business for any reason, (i)
if a receiver or a trustee of any kind is appointed for you
or any of your property, (j) if any guarantor of your
Obligations shall become insolvent or have commenced by or
against such guarantor any bankruptcy proceeding,
insolvency, arrangement or similar proceeding, (k) if any
guaranty of your Obligations is terminated, or (l) if any
change of ownership occurs with respect to more than twenty
(20%) percent of your capital stock.
8.2 Upon the occurrence of an Event of Default, we shall
have the right to terminate this Agreement and all other
arrangements existing between us forthwith and without
notice, and all of your Obligations to us shall mature and
become immediately due and payable and we shall have the
right to withhold any further payment to you until all
Obligations have been paid in full. In addition, we shall
have all the rights of a secured party under the Uniform
Commercial Code, including, without limitation, the right
to take possession of any collateral in which we have a
security interest and to dispose of same at public or
private sale and you will be liable for any deficiency. We
shall not be required to proceed against any Collateral but
may proceed against you directly. In the event we
institute suit against you, you agree to pay our costs and
reasonable attorney's fees.
SECTION 9 Terms and Termination
This Agreement shall continue in full force and effect for
one (1) year or until terminated by either party hereto
giving the other party not less than 90 days prior written
notice thereof. Notice of termination shall be registered
or certified mail; provided however, that you shall not
terminate this Agreement so long as you are indebted or
obligated to us in connection with any other financing
arrangements. Notwithstanding such notice of termination,
our respective rights and obligations arising out of
transactions having their inception prior to the specified
date of termination shall not be affected by such
termination and all terms, provisions and conditions
hereof, including but not limited to, the security
interests herein above granted to us, shall continue in
full force and effect until all Obligations have been paid
in full. All of the representations, warranties and
covenants made herein shall survive the termination of this
Agreement.
SECTION 10 Modifications
This Agreement cannot be changed or terminated orally; it
constitutes the entire agreement between us and shall be
binding upon respective successors and assigns, but may not
be assigned by you without our prior written consent. No
delay or failure on our part in exercising any right,
privilege, or option hereunder shall operate as a waiver
thereof or of any other right, privilege or option. No
waiver whatsoever shall be valid unless in writing, signed
by us, and then only to the extent therein set forth. If
any term or provision of this Agreement is held invalid
under any statute, rule or regulation of any jurisdiction
competent to make such a decision, the remaining terms and
provisions shall not be affected, but shall remain in full
force and effect. You further acknowledge that during the
course of the term of this Agreement, we shall make credit
determinations with respect to your Receivables and shall
refactor and otherwise assign such Receivables to a Third
Party, notwithstanding any such assignment of refactoring
you shall in no way rely on any credit determination
relayed to us, or any action or inaction taken by such
Third Party with respect to the Receivables, and that you
shall look only to us as the party responsible for credit
determinations and administration of your Receivables and
this Agreement generally.
SECTION 11 Definitions
11.1 "Approved Receivable" - Any Receivable with respect to
which we have issued a credit approval which has not
subsequently been withdrawn.
11.2 "Base Rate" - The rate of interest publicly announced
from time to time by Citibank N. A., New York, New York as
its prime or base rate (or equivalent).
11.3 "Credit Risk" - The risk that a customer will be
financially unable to pay a Receivable at maturity,
provided the customer has received and accepted the goods
and/or services which gave rise to such Receivable, without
any Dispute.
11.4 "Dispute" - Any dispute, deduction, claim, offset,
defense or counterclaim of any kind, including, without
limitation, any dispute relating to goods or services
already paid for or relating to Receivables other than the
Receivable on which payment is being withheld.
11.5 "Net Receivable" - The gross face amount of a
Receivable less the discount offered by you and taken by
us.
11.6 "Non-Approved Receivable" - Any Receivable with
respect to which we have either not issued a credit
approval or have subsequently withdrawn a credit approval
as a result of a Dispute or otherwise.
11.7 "Obligations" - All loans, advances, debts,
liabilities, obligations, covenants and duties owing by you
to us, direct or indirect, absolute or contingent, due or
to become due, now existing, or hereafter arising,
including, without limitation, invoices for goods or
services purchased by you from any company whose accounts
are factored or financed by us and indebtedness arising
under any guaranty made by you or issued by us on your
behalf and the debit balance of your account.
11.8 "Payment Date" - The earlier of the Wednesday of the
week following the week in which we receive payment of a
Receivable or 120 days after the due date of a Receivable,
provided that such Receivable remains unpaid solely because
of the Customer's financial inability to pay.
11.9 "Receivables" - All presently existing and hereafter
created accounts, contract rights and general intangibles
relating thereto, and other forms of obligation for the
payment of money arising out of the sale of goods or
rendition of services together will all proceeds thereof,
all guaranties and security therefor, and all goods and
rights represented thereby or arising therefrom including,
but not limited to, the right of stoppage in transit,
replevin and reclamation.
SECTION 12 Entire Agreement, Governing Law, and Waiver
of Jury
This Agreement embodies our entire agreement as to the
subject matter and supersedes all prior agreements as to
the subject matter. This shall be governed by and
interpreted in accordance with the laws of the State of
Florida. EACH OF US HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY SUIT OR PROCEEDING ARISING UNDER OR RELATING TO
TRANSACTIONS UNDER THIS AGREEMENT.
SECTION 13 Acceptance
This proposal is submitted to you unsigned and shall
constitute an agreement between us only when signed by us.
Very truly yours,
BANKEST CAPITAL CORP.
By:______________________
Title:
The foregoing Factoring Agreement is accepted and agreed
this day of , 199 .
By:
By:
Title: President
Title: Secretary
Attachments: [omitted]
<PAGE>
Exhibit 10(c)
1998 Stock Incentive Plan
1998 STOCK INCENTIVE PLAN OF
OMNICOMM SYSTEMS, INC.
1. PURPOSE
The purpose of the 1998 Stock Incentive Plan ("Plan")
of OmniComm Systems, Inc. ("Company") is to provide a means
through which the Company and its Subsidiaries and
Affiliates may attract able persons to enter and remain in
the employ of the Company and its subsidiaries and
Affiliates, and to provide a means whereby those key
persons upon whom the responsibilities of the successful
administration and management of the Company rest, and
whose present and potential contributions to the welfare of
the Company are of importance, can acquire and maintain
stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting an identity of
interest between stockholders and these key persons.
A further purpose of the Plan is to provide such key
persons with
additional incentive and reward opportunities designed to
enhance the
profitable growth of the Company. So that the appropriate
incentive can be provided, the Plan provides for granting
Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Phantom Stock
Unit Awards and Performance Share Units, or any combination
of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable
throughout the Plan.
"Affiliate" means any affiliate of the Company within
the meaning of 17 CFR Section 230.405.
"Appreciation Date" means the date designated by a
Holder of Stock
Appreciation Rights for measurement of the appreciation in
the value of rights awarded to him, which date shall be the
date notice of such designation is received by the
Committee, or its designee.
"Award" means, individually or collectively, any
Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock Award, Phantom Stock
Unit Award or Performance Share Unit Award.
"Award Period" means a period of time within which
performance is measured for the purpose of determining
whether an Award of Performance Share Units has been
earned.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or an
Affiliate having cause to terminate a Participant's
employment under any existing employment agreement between
the Participant and the Company, a Subsidiary or an
Affiliate or, in the absence of such an employment
agreement, upon (i) the determination by the Committee that
the Participant has ceased to perform his duties to the
Company, or a Subsidiary or an Affiliate (other than as a
result of his incapacity due to physical or mental illness
or injury), which failure amounts to an intentional and
extended neglect of his duties to such party, (ii) the
Committee's determination that the Participant has engaged
or is about to engage in conduct materially injurious to
the Company, or a Subsidiary or an Affiliate, or (iii) the
Participant having been convicted of a felony.
"Change in Control" shall, unless the Board otherwise
directs by
resolution adopted prior thereto, be deemed to occur if (i)
any "person" (as that term is used in Sections 13 and
14(d)(2) of the Securities and Exchange Act of 1934
("Exchange Act")) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act),
directly or indirectly, of 25% or more of the voting Stock
or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director
was approved by a vote of at least three-quarters of the
directors then still in office who were directors at the
beginning of the period. Any merger, consolidation or
corporate reorganization in which the owners of the
Company's capital stock entitled to vote in the election of
directors ("Voting Stock") prior to said combination, own
50% or more of the resulting entity's Voting Stock shall
not, by itself, be considered a Change in Control.
"Code" means the Internal Revenue Code of 1986, as
amended. Reference in the Plan to any section of the Code
shall be deemed to include any amendments or successor
provisions to such section and any regulations under such
section.
"Committee" means the Compensation Committee of the
Board or such other committee as the Board may appoint to
administer the Plan.
"Common Stock" means the common stock, no par value of
the Company.
"Company" means OmniComm Systems, Inc.
"Date of Grant" means the date on which the granting
of an Award is authorized or such other date as may be
specified in such authorization.
"Disability" means the complete and permanent
inability by reason of illness or accident to perform the
duties of the occupation at which a Participant was
employed when such disability commenced or, if the
Participant was retired when such disability commenced, the
inability to engage in any substantial gainful activity, as
determined by the
Committee based upon medical evidence acceptable to it.
"Disinterested Person" means a person who is a
"disinterested person" within the meaning of Rule 16b-3 of
the Exchange Act, or any successor rule or regulation.
"Eligible Employee" means any person regularly
employed by the Company or a Subsidiary or Affiliate on a
full-time salaried basis, and any independent contractor of
the Company or a Subsidiary or Affiliate, who satisfies all
of the requirements of Section 6.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value" on a given date means (i) the last
reported sale price for the Stock on that date (or, if
there were no such sales on that date, on the next most
recent date on which there were such sales) as reported on
the Composite Tape if the Stock is listed on the New York
Stock Exchange ("NYSE") or on the National Association of
Securities Dealers National Market System ("NMS"), (ii) if
the Stock is not then issued on the NYSE or the NMS but
sales of the Stock are reported by the National Association
of Securities Dealers Automatic Quotation System or any
successor thereto ("AQS"), the average between the closing
bid and asked price quotations for the Stock on that date
(or if none on that date, on the next most recent date) as
reported on the AQS, or (iii) if the Stock is not then
issued on the NYSE or the NMS, and sales of the Stock are
not reported by the AQS, the amount determined by the Board
to be the fair market value based upon a good faith attempt
to value the Stock accurately and computed in accordance
with applicable regulations of the Internal Revenue
Service.
"Holder" means a Participant who has been granted an
Option, a Stock Application Right, a Restricted Stock
Award, Phantom Stock Unit Award or a Performance Share Unit
Award.
"Incentive Stock Option" means an Option granted by
the Committee to a Participant under the Plan which is
designated by the Committee as an Incentive Stock Option
pursuant to Section 422 of the Code.
"Nonqualified Stock Option" means an Option granted by
the Committee to a Participant under the Plan which is not
designated by the Committee as an Incentive Stock Option.
"Normal Termination" means termination:
(i) With respect to the Company or a Subsidiary,
at retirement (excluding early
retirement) pursuant to the Company
retirement plan then in effect;
(ii) With respect to an Affiliate, at retirement
(excluding early retirement) pursuant to the
retirement plan of such Affiliate then in
effect or, if the Affiliate has no such
plan, at retirement upon or after the attainment of
age 65;
(iii) On account of Disability;
(iv) With the written approval of the
Committee; or
(v) By the Company, a Subsidiary or Affiliate
without
Cause.
"Option" means an Award granted under Section 7 of the
Plan.
"Option Period" means the period described in Section
7(c).
"Participant" means an Eligible Employee who has been
selected to participate in the Plan and to receive an Award
pursuant to Section 6.
"Performance Goals" means the performance objectives of
the
Company during an Award Period or Restricted Period
established for the purpose of determining whether, and to
what extent, Awards will be earned for an Award Period or
Restricted Period.
"Performance Share Unit" means a hypothetical
investment equivalent equal to one share of Stock granted
in connection with an Award made under Section 9 of the
Plan.
"Phantom Stock Unit" means a hypothetical investment
equivalent equal to one share of Stock granted in
connection with an Award made under Section 10 of the Plan,
or credited with respect to Awards of Performance Share
Units which have been deferred under Section 9.
"Plan" means the 1998 Stock Incentive Plan of OmniComm
Systems, Inc.
"Reporting Company" means the Company upon or after
the first registration of the Company's equity securities
under the Exchange Act.
"Restricted Period" means, with respect to any share
of Restricted Stock, the period of time determined by the
Committee during which such share of Restricted Stock is
subject to the restrictions set forth in Section 10.
"Restricted Stock" means shares of Common Stock issued
or transferred to a Participant subject to the restrictions
set forth in Section 10 and any new, additional or
different securities a Participant may become entitled to
receive as a result of adjustments made pursuant to Section
12.
"Restricted Stock Award" means an Award granted under
Section 10 of the Plan.
"Securities Act" means the Securities Act of 1933, as
amended.
"Stock" means the Common Stock or such other
authorized shares of stock the Company as the Committee may
from time to time authorize for use under the Plan.
"Stock Appreciation Right" or "SAR" means an Award
granted under Section 8 of the Plan.
"Subsidiary" means any subsidiary of the Company as
defined in Section 424(f) of the Code.
"Valuation Date" means the last day of an Award Period
or the date of death of a Participant, as applicable.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
Subject to the approval of this Plan by the
shareholders of the Company at a duly convened meeting of
shareholders, or by a written consent of shareholders
effective under applicable state law, the Plan shall become
effective on January 1, 1998, and no further Awards may be
made after the expiration of 10 years therefrom.
The Plan shall continue in effect until all matters
relating to the payment of Awards and administration of
the Plan have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. Each member
of the Committee shall, at the time he takes any action
with respect to an Award under the Plan, be a Disinterested
Person; provided, however, that such requirement shall not
apply prior to the Company becoming a Reporting Company and
publicly traded on a NASDAQ regulated market. Two members
of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a
quorum is present or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.
No member of the Committee, while serving as such,
shall be eligible to receive an Award under the Plan;
provided, however, that such requirement shall not apply
prior to the Company becoming a Reporting Company and
publicly traded on a NASDAQ regulated market. Subject to
the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Eligible Employees to
participate in the Plan;
(b) Determine the nature and extent of the Awards to
be made to
each Participant;
(c) Determine the time or times when Awards
will be made;
(d) Determine the duration of each Award
Period;
(e) Determine the conditions to which the payment of
Awards may
be subject;
(f) Establish the Performance Goals for each
Award Period;
(g) Prescribe the form or forms evidencing
Awards; and
(h) Cause records to be established in which there
shall be
entered, from time to time as Awards are made to
Participants, the date of each Award, the number of
Incentive Stock Options, Nonqualified Stock Options, SARs,
Phantom Stock Units, Performance Share Units and shares of
Restricted Stock awarded by the Committee to each
Participant, the expiration date, the Award Period and the
duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such
rules and regulations and to make all such determinations
relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's
interpretation of the Plan or any Awards granted pursuant
thereto and all decisions and determinations by the
Committee with respect to the Plan shall be final, binding,
and conclusive on all parties unless otherwise determined
by the Board. Notwithstanding the foregoing, in lieu of a
Committee as described above, the Board of Directors of the
Company may administer the Plan until such time as it is
practicable and feasible to appoint a Committee.
5. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AWARDS,PHANTOM STOCK AWARDS AND
PERFORMANCE SHARE UNITS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of
Options, Stock Appreciation Rights, Restricted Stock,
Phantom Stock Units and/or Performance Share Units to one
or more Participants; provided, however, that:
Subject to Section 12, the aggregate number of shares
of
Stock made subject to Awards may not exceed 3,000,000;
Such shares shall be deemed to have been used in
payment of
awards whether they are actually delivered or the Fair
Market Value equivalent of such shares is paid in cash. In
the event any Option, SAR not attached to an Option,
Restricted Stock, Phantom Stock Unit or Performance Share
Unit, shall be surrendered, terminate, expire, or be
forfeited, the number of shares of Stock no longer subject
thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan to the fullest
extent permitted by Rule 16b-3 under the Exchange Act (if
applicable at the time);
Stock delivered by the Company in settlement of Awards
under
the Plan may be authorized and unissued Stock or Stock held
in the treasury of the Company or may be purchased on the
open market or by private purchase at prices no higher than
the Fair Market Value at the time of purchase; and
No individual may receive Options or SARs representing
More than 500,000 shares of Stock in any one year.
6. ELIGIBILITY
Participants shall be limited to officers, key
employees and independent contractors of the Company and
its Subsidiaries and Affiliates who have received written
notification from the Committee or from a person designated
by the Committee, that they have been selected to
participate in the Plan.
7. STOCK OPTIONS
One or more Incentive Stock Options or Nonqualified
Stock Options can be granted to any Participant; provided,
however, that Incentive Stock Options may be granted only
to employees of the Company or a Subsidiary. Each Option
so granted shall be subject to the following conditions.
(a) OPTION PRICE. The Option price ("Option Price")
per share of Stock shall be set by the Committee at the
time of grant but shall not be less than (i) in the case of
an Incentive Stock Option, the Fair Market Value of a share
of Stock at the Date of Grant, and (ii) in the case of a
Non-Qualified Stock Option, the par value per share of
Stock.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options
which have become exercisable may be exercised by delivery
of written notice of exercise to the Committee accompanied
by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair
Market Value at the time the Option is exercised, or, in
the discretion of the Committee, either (i) in other
property having a fair market value on the date of exercise
equal to the Option Price, or (ii) by delivering to the
Committee a copy of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the Option Price.
(c) OTHER TERMS AND CONDITIONS. If the Holder has not
died or terminated, the Option shall become exercisable in
such manner and within such period or periods ("Option
Period"), not to exceed 10 years from its Date of Grant, as
set forth in the Stock Option Agreement to be entered into
in connection therewith.
(i) Each Option shall lapse in the following
situations:
-Ten years after it is granted;
-Three months after Normal Termination,
except
as otherwise provided by the Committee,
or
-Any earlier time set forth in the Stock
Option Agreement.
(ii) If the Holder terminates otherwise than
by Normal Termination or death, the Option
shall lapse at the time of termination.
(iii) If the Holder dies within the Option Period
or within 3 months after Normal Termination (or
such other period as may have been established by
the Committee), the Option shall lapse unless it
is exercised within the Option Period and in no
event later than 12 months after the date of
Holder's death by the Holder's legal
representative or representatives or by the
person or persons entitled to do so under the
Holder's last will and testament or, if the
Holder shall fail to make testamentary
disposition of such Option or shall die
intestate, by the person entitled to receive said
Option under the applicable laws of descent and
distribution.
(d) STOCK OPTION AGREEMENT. Each Option granted under
the Plan shall be evidenced by a "Stock Option Agreement"
between the Company and the Holder of the Option containing
such provisions as may be determined by the Committee, but
shall be subject to the following terms and conditions:
(i) Each Option or portion thereof that is
exercisable shall be exercisable for the full
amount or for any part thereof, except as
otherwise determined by the terms of the Stock
Option Agreement.
(ii) Each share of Stock purchased through the
exercise of an Option shall be paid for in full
at the time of the exercise. Each Option shall
cease to be exercisable, as to any share of
Stock, when the Holder purchases the share or
exercises a related SAR or when the Option
lapses.
(iii) Options shall not be transferable by the
Holder except by will or the laws of descent and
distribution and shall be exercisable during the
Holder's lifetime only by him.
(iv) Each Option shall become exercisable by the
Holder in accordance with the vesting schedule
established by the Committee for the Award.
(v) Each Stock Option Agreement may contain an
agreement that, upon demand by the Committee for
such a representation, the Holder shall deliver
to the Committee at the time of any exercise of
an Option a written representation that the
shares to be acquired upon such exercise are to
be acquired for investment and not for resale or
with a view to the distribution thereof. Upon
such demand, delivery of such representation
prior to the delivery of any shares issued upon
exercise of an Option shall be a condition
precedent to the right of the Holder or such
other person to purchase any shares. In the
event certificates for Stock are delivered under
the Plan with respect to which such investment
representation has been obtained, the Committee
may cause a legend or legends to be placed on
such certificates to make appropriate reference
to such representation and to restrict transfer
in the absence of compliance with applicable
federal or state securities laws.
(e) GRANTS TO 10% HOLDERS OF COMPANY VOTING STOCK.
Notwithstanding Section 7(a), if an Incentive Stock Option
is granted to a Holder who owns stock representing more
than ten percent of the voting power of all classes of
stock of the Company or of the Company and its
Subsidiaries, the period specified in the Stock Option
Agreement for which the Option thereunder is granted and at
the end of which such Option shall expire shall not exceed
five years from the Date of Grant of such Option and the
Option Price shall be at least 110 percent of the Fair
Market Value (on the Date of Grant) of the Stock
subject to the Option.
(f) LIMITATION. To the extent the aggregate Fair
Market Value (as determined as of the Date of Grant) of
Stock for which Incentive Stock Options are exercisable for
the first time by any Participant during any calendar
year(under all plans of the Company and its Subsidiaries)
exceeds $100,000, such excess Incentive Stock Options shall
be treated as Nonqualified Stock Options.
(g) VOLUNTARY SURRENDER. The Committee may permit the
voluntary surrender of all or any portion of any
Nonqualified Stock Option and its corresponding SAR, if
any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a
different number of shares as the Option surrendered or
require such voluntary surrender as a condition precedent
to a grant of a new Option to such Participant. Such new
Option shall be exercisable at the Option Price, during the
exercise period, and in accordance with any other terms or
conditions specified by the Committee at the time the
new Option is granted, all determined in accordance with
the provisions of the Plan without regard to the Option
Price, exercise period, or any other terms and conditions
of the Nonqualified Stock Option surrendered.
(h) ORDER OF EXERCISE. Options granted under the Plan
may be exercised in any order, regardless of the Date of
Grant or the existence of any other outstanding Option.
(i) NOTICE OF DISPOSITION. Participants shall give
prompt notice to the Company of any disposition of Stock
acquired upon exercise of an Incentive Stock Option if such
disposition occurs within either two years after the Date
of Grant of such Option and/or one year after the receipt
of such Stock by the Holder.
8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include an SAR,
either at the time of grant or by amendment except that in
the case of an Incentive Stock Option, such SAR shall be
granted only at the time of grant of the related Option.
The Committee may also award to Participants SARs
independent of any Option. An SAR shall be subject to such
terms and conditions not inconsistent with the Plan as the
Committee shall impose, including, but not limited to, the
following:
(a)VESTING. An SAR granted in connection with an
Option
shall become exercisable, be transferable and shall lapse
according to the same vesting schedule, transferability and
lapse rules that are established for the Option. An SAR
granted independent of an Option shall become exercisable,
be transferable and shall lapse in accordance with a
vesting schedule, transferability and lapse rules
established by the Committee. Notwithstanding the above, an
SAR shall not be exercisable by a person subject to Section
16(b) of the Exchange Act for at least six months
following the date of grant.
(b) FAILURE TO EXERCISE. If on the last day of the
Option
Period (or in the case of an SAR independent of an Option,
the SAR period established by the Committee), the Fair
Market Value of the Stock exceeds the Option Price, the
Holder has not exercised the Option or SAR, and neither the
Option nor the SAR has lapsed, such SAR shall be deemed to
have been exercised by the Holder on such last day and the
Company shall make the appropriate payment therefor.
(c) PAYMENT. The amount of additional compensation
which
may be received pursuant to the award of one SAR is the
excess, if any, of the Fair Market Value of one share of
Stock on the Appreciation Date over the Option Price, in
the case of an SAR granted in connection with an Option, or
the Fair Market Value of one share of Stock on the Date of
Grant, in the case of an SAR granted independent of an
Option. With respect to SARs exercised before the Company
has been subject to the reporting requirements of Section
13(a) of the Exchange Act for one year, the Company shall
issue or transfer to the Participant shares of Stock with
a Fair Market Value at such time equal to 100 percent of
any such excess. With respect to SARs exercised after the
Company has been subject to such reporting requirements for
at least one year, the Company shall pay such excess in
cash, in shares of Stock valued at Fair Market Value, or
any combination thereof, as determined by the Committee.
Fractional shares shall be settled in cash.
(d) DESIGNATION OF APPRECIATION DATE. A Participant
may designate an Appreciation Date at such time or times as
may be determined by the Committee at the time of grant by
filing an irrevocable written notice with the Committee or
its designee, specifying the number of SARs to which the
Appreciation Date relates, and the date on which such SARs
were awarded. Such time or times determined by the
Committee may take into account any applicable "window
periods" required by Rule 16b-3 under the Exchange Act.
EXPIRATION. Except as otherwise provided in the case
of SARs granted in connection with Options, the SARs shall
expire on a date designated by the Committee which is not
later than ten years after the date on which the SAR was
awarded.
9. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to
establish Performance Share programs to be effective over
designated Award Periods of not less than three years nor
more than five years. At the beginning of each Award
Period, the Committee will establish in writing Performance
Goals based upon financial objectives for the Company for
such Award Period and a schedule relating the
accomplishment of the Performance Goals to the Awards to be
earned by Participants. Performance Goals may include
absolute or relative growth in earnings per share or rate
of return on stockholders' equity or other measurement of
corporate performance and may be determined on an
individual basis or by categories of Participants. The
Committee may adjust Performance Goals or performance
measurement standards as it deems equitable in recognition
of extraordinary or non-recurring events experienced during
an Award Period by the Company or by any other corporation
whose performance is relevant to the determination of
whether Performance Goals have been attained. The
Committee shall determine the number of Peformance Share
Units to be awarded, if any, to each Participant who is
selected to receive an Award. The Committee may add new
Participants to a Performance Share program after its
commencement by making pro rata grants.
(b) DETERMINATION OF AWARD. At the completion of a
Performance Share program, or at other times as specified
by the Committee, the Committee shall calculate the amount
earned with respect to each Participant's award by
multiplying the Fair Market Value on the Valuation Date by
the number of Performance Share Units granted to the
Participant and multiplying the amount so determined by a
performance factor representing the degree of attainment of
the Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a
full Award Period, whether by reason of commencement or
termination of employment or otherwise, shall receive such
portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) PAYMENT OF NON-DEFERRED AWARDS. The amount earned
with respect to an Award shall be payable 100% in shares of
Stock based on the Fair Market Value on the Valuation Date;
provided, however, that, at its discretion, the Committee
may vary such form of payment as to any Participant upon
the specific request of such Participant. The amount of
any payment made in cash shall be based upon the Fair
Market Value on the seventh business day prior to payment.
Except as provided in subparagraph 9(e), payments of Awards
shall be made as soon as practicable after the completion
of an Award Period.
(e) DEFERRAL OF PAYMENT. A Participant may file a
written election with the Committee to defer the payment of
any amount otherwise payable pursuant to subparagraph 9(d)
on account of an Award to a period commencing at such
future date as specified in the election. Such election
must be filed with the Committee no later than the last day
of the month which is two-thirds of the way through the
Award Period during which the Award is earned, unless the
Committee specifies an earlier filing date.
(f) SEPARATE ACCOUNTS. At the conclusion of each
Award Period, the Committee shall cause a separate account
to be maintained in the name of each Participant with
respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All
amounts credited to such account shall be fully vested at
all times.
(g) ELECTION OF FORM OF INVESTMENT. Within 60 days
from the end of each Award Period, and at such time or
times, if any, as the Committee may permit, a Participant
may file a written election with the Committee of the
percentage of the deferred portion of any Award of
Performance Share Units which is to be expressed in the
form of dollars and credited with interest, the percentage
of such Award which is to be expressed in the form of
Phantom Stock Units and the percentage of such Award which
is to be deemed invested in any other hypothetical
investment equivalent from time to time made available
under the Plan by the Committee. In the event a
Participant fails to file an election
within the time prescribed, one hundred percent (100%) of
the deferred portion of such Participant's Award shall be
expressed in the form of Phantom Stock Units.
(h) INTEREST PORTION. The amount of interest credited
with
respect to the portion of an Award credited to the
Participant's account which is deferred and credited with
interest (the "Interest Portion") shall be equal to the
amount such portion would have earned had it been credited
with interest from the last day of the Award Period with
respect to which the Award was made until the seventh
business day preceding the date as of which payment is
made, compounded
annually, at the Company's rate of return on stockholders'
equity for each fiscal year that payment is deferred, or at
such other rate as the Committee may from time to time
determine. The Committee may, in its sole discretion,
credit interest on amounts payable prior to the date on
which the Company's rate of return on stockholders' equity
becomes ascertainable at the rate applicable to deferred
amounts during the year immediately preceding the year of
payment.
(i) PHANTOM STOCK UNIT PORTION. With respect to the
portion of an Award credited to the Participant's account
which is deferred and expressed in the form of Phantom
Stock Units (the "Phantom Stock Unit Portion"), the number
of Phantom Stock Units so credited shall be equal to the
result of dividing (i) the Phantom Stock Unit Portion by
(ii) the Fair Market Value on the date the Award Period
ended.
(j) DIVIDEND EQUIVALENTS. Within thirty (30) days
from the payment of a dividend by the Company on its Stock,
the Phantom Stock Unit Portion of each Participant's
account shall be credited with additional Phantom Stock
Units the number of which shall be determined by (i)
multiplying the dividend per share paid on the Company's
Stock by the number of Phantom Stock Units credited to his
account at the time such dividend was declared, then (ii)
dividing such amount by the Fair Market Value on the
payment date for such dividend.
(k) PAYMENT OF DEFERRED AWARDS. Payment with respect
to amounts credited to the account of a Participant shall
be made in a series of annual installments over a period of
ten (10) years, or such other period as the Committee may
direct, or as the Committee may allow the Participant to
elect, in either case at the time of the original deferral
election. Except as otherwise provided by the Committee,
each installment shall be withdrawn proportionately from
the Interest Portion and from the Phantom Stock Unit
Portion of a Participant's account based on the percentage
of the Participant's account which he originally elected to
be credited with interest and with Phantom Stock Units, or,
if a later election has been permitted by the Committee and
is then in effect, based on the percentage specified in
such later election. Payments shall commence on the date
specified by the Participant in his deferral election,
unless the Committee in its sole discretion determines that
payment shall be made over a shorter period or in more
frequent installments, or commence on an earlier date, or
any or all of the above. If a Participant dies prior to
the date on which payment with respect to all amounts
credited to his account shall have been completed, payment
with respect to such amounts shall be made to the
Participant's beneficiary in a series of annual
installments over a period of five (5) years, unless the
Committee in its sole discretion determines that payment
shall be made over a shorter period or in more frequent
installments, or both. To the extent practicable, each
installment payable hereunder shall approximate that part
of the amount then credited to the Participant's or
beneficiary's account which, if multiplied by the number of
installments remaining to be paid would be equal to the
entire amount then credited to the Participant's account.
(l) COMPOSITION OF PAYMENT. The Committee shall cause
all payments with respect to deferred Awards to be made in
a manner such that not more than one-half of the value of
each installment shall consist of Stock. To that end,
payment with respect to the Interest Portion and the
Phantom Stock Unit Portion of a Participant's account shall
be paid in cash and Stock as the Committee shall determine
in its sole discretion. The determination of any amount to
be paid in cash for Phantom Stock Units shall be made by
multiplying (i) the Fair
Market Value of one share of Stock on the seventh business
day prior to the date as of which payment is made, by (ii)
the number of Phantom Stock Units for which payment is
being made. The determination of the number of shares of
Stock, if any, to be distributed with respect to the
Interest Portion of a Participant's account shall be made
by dividing (i) one-half of the value of such portion on
the seventh business day prior to the date as of which
payment is made, by (ii) the Fair Market Value of one share
of Stock on such date. Fractional shares shall be paid in
cash.
(m) ALTERNATIVE INVESTMENT EQUIVALENTS. If the
Committee shall have permitted Participants to elect to
have deferred Awards of Performance Share Units invested in
one or more hypothetical investment equivalents other than
interest or Phantom Stock Units, such deferred Awards shall
be credited with hypothetical investment earnings at such
rate, manner and time as the Committee shall determine. At
the end of the deferral period, payment shall be made in
respect of such hypothetical investment equivalents in such
manner and at such time as the Committee shall determine.
(n) ADJUSTMENT OF PERFORMANCE GOALS. The Committee
may, during the Award Period, make such adjustments to
Performance Goals as it may deem appropriate, to compensate
for, or reflect, any significant changes that may have
occurred during such Award Period in (i) applicable
accounting rules or principles or changes in the Company's
method of accounting or in that of any other corporation
whose performance is relevant to the determination of
whether an
Award has been earned or (ii) tax laws or other laws or
regulations that alter or affect the computation of the
measures of Performance Goals used for the calculation of
Awards.
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
The Committee shall have the authority (1)
to
grant Restricted Stock and Phantom Stock Unit Awards,
(2) to issue or transfer Restricted Stock to
Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock
and Phantom Stock Units, including the Restricted
Period, which may differ with respect to each grantee,
the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the
number of shares or units to be covered by each grant.
The Holder of a Restricted Stock Award
shall
execute and deliver to the Secretary of the Company an
agreement with respect to Restricted Stock and escrow
agreement satisfactory to the Committee and the
appropriate blank stock powers with respect to the
Restricted Stock covered by such agreements. If a
Participant shall fail to execute the agreement,
escrow agreement and stock powers within such period,
the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder
shall generally have the rights and privileges of a
stockholder as to such Restricted Stock, including the
right to vote such Restricted Stock. At the
discretion of the Committee, cash and stock dividends
with respect to the Restricted Stock may be either
currently paid or withheld by the Company for the
Holder's account, and interest may be paid on the
amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee.
Cash or stock dividends so withheld by the Committee
shall not be subject to forfeiture.
In the case of a Restricted Stock Award,
the
Committee shall then cause stock certificates
registered in the name of the Holder to be issued and
deposited together with the stock powers with an
escrow agent to be designated by the Committee. The
Committee shall cause the escrow agent to issue to the
Holder a receipt evidencing any stock certificate held
by it registered in the name of the Holder.
In the case of a Phantom Stock Units Award,
no
shares of Common Stock shall be issued at the time the
Award is made, and the Company will not be required to
set aside a fund for the payment of any such Award.
The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently
pay to, each Holder of an Award of Phantom Stock Units
an amount equal to the cash dividends paid by the
Company upon one share of Stock for each Phantom Stock
Unit then credited to such Holder's account ("Dividend
Equivalents"). Dividend Equivalents credited to
Holder's account shall be subject to forfeiture and
may bear interest at a rate and subject to such terms
as determined by the Committee.
(b) RESTRICTIONS.
Restricted Stock awarded to a Participant
shall
be subject to the following restrictions until the
expiration of the Restricted Period: (1) the Holder
shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the
restrictions on transferability set forth in the
grant; (3) the shares shall be subject to forfeiture
to the extent provided in subparagraph (d) and, to the
extent such shares are forfeited, the stock
certificates shall be returned to the Company, and all
rights of the Holder to such shares and as a
shareholder shall terminate without further obligation
on the part of the Company.
Phantom Stock Units awarded to any
Participant
shall be subject to the following restrictions until
the expiration of the Restricted Period: (1) the units
shall be subject to forfeiture to the extend provided
in subparagraph (d), and to the extent such units are
forfeited, all rights of the Holder to such units
shall terminate without further obligation on the part
of the Company and (2) any other restrictions which
the Committee may determine in advance are necessary
or appropriate.
The Committee shall have the authority to
remove any or all of the restrictions on the
Restricted Stock and Phantom Stock Units whenever it
may determine that, by reason of changes in applicable
laws or other changes in circumstances arising after
the date of the Restricted Stock Award or Phantom
Stock Award, such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of
Restricted Stock and Phantom Stock Units shall commence on
the Date of Grant and shall expire from time to time as to
that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee in the
Incentive Plan Agreement.
(d) FORFEITURE PROVISIONS. In the event a Holder
terminates employment during a Restricted Period, that
portion of the Award with respect to which restrictions
have not expired ("Non-Vested Portion") shall be treated as
follows.
(i) Resignation or discharge:
-- The Non-Vested Portion of the
Award shall
be completely forfeited.
(ii) Normal Termination:
-- The Non-Vested Portion of the
Award shall
be prorated for service during the
Restricted Period and shall be
received as soon as practicable
following termination.
(iii) Death:
-- The Non-Vested Portion of the
Award shall be
prorated for service during the
Restricted Period and paid to the
Participant's beneficiary as soon as
practicable following death.
(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF
PHANTOM STOCK UNITS. Upon the expiration of the Restricted
Period with respect to any shares of Stock covered by a
Restricted Stock Award, a stock certificate evidencing the
shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period
has expired (to the nearest full share) shall be delivered
without charge to the Holder, or his beneficiary, free of
all restrictions under the Plan. Upon the expiration of the
Restricted Period with respect to any Phantom Stock Units
covered by a Phantom Stock Unit Award, the Company shall
deliver to the Holder or his beneficiary without any charge
one share of Stock for each Phantom Stock Unit which has
not then been forfeited and with respect to which the
Restricted Period has expired ("vested unit") and cash
equal to any Dividend Equivalents credited with respect to
each such vested unit and the interest thereon, if any;
provided, however, that the Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock
in lieu of delivering only Stock for vested units. If cash
payment is made in lieu of
delivering Stock, the amount of such payment shall be equal
to the Fair Market Value for the date on which the
Restricted Period lapsed with respect to such vested unit.
(f) SEC RESTRICTIONS. Each certificate representing
Restricted Stock awarded under the Plan shall bear the
following legend:
"Transfer of this certificate and the shares
represented hereby is restricted pursuant to the terms of
a Restricted Stock Agreement, dated as of ,
between OmniComm Systems, Inc. and
__________________________. A copy of such Agreement is on
file at the offices of the Company in Miami, Florida."
Stop transfer orders shall be entered with the Company's
transfer agent and registrar against the transfer of legend
securities except in compliance with the Securities Act.
11. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. The award of
any benefit under the Plan may also be subject to such
other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee
determines appropriate including, without limitation,
provisions to assist the Participant in financing the
purchase of Common Stock through the exercise of Options,
provisions for the forfeiture of or restrictions on resale
or other disposition of shares acquired under any form of
benefit, provisions giving the Company the
right to repurchase shares acquired under any form of
benefit in the event the Participant elects to dispose of
such shares, and provisions to comply with Federal and
state securities laws and Federal and state income tax
withholding requirements.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise
specifically provided in the Plan, no person shall be
entitled to the privileges of stock ownership in respect of
shares of Stock which are subject to Options or Restricted
Stock Awards, Performance Share Unit Awards or Phantom
Stock Unit Awards hereunder until such shares have been
issued to that person upon exercise of an Option according
to its terms or upon sale or grant of those shares in
accordance with a Restricted Stock Award, Performance Share
Unit Award or Phantom Stock Unit Award.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation
of the Company to make payment of Awards in Stock or
otherwise shall be subject to all applicable laws, rules,
and regulations, and to such approvals by governmental
agencies as may be required. The Company shall be under no
obligation to register under the Securities Act any of the
shares of Stock paid under the Plan. If the shares paid
under the Plan may in certain circumstances be exempt from
registration under the Securities Act, the Company may
restrict the transfer of such shares in such manner as it
deems advisable to ensure the availability of any such
exemption.
(d) TAX WITHHOLDING. Notwithstanding any other
provision of the Plan, the Company or a Subsidiary or
Affiliate, as appropriate, shall have the right to deduct
from all Awards, to the extent paid in cash, all federal,
state or local taxes as required by law to be withheld with
respect to such Awards and, in the case of Awards paid in
Stock, the Holder or other person receiving such Stock may
be required to pay to the Company or a Subsidiary or
Affiliate, as appropriate prior to delivery of such Stock,
the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to
such
Stock. Subject in particular cases to the disapproval of
the Committee, the Company may accept shares of Stock of
equivalent Fair Market Value in payment of such withholding
tax obligations if the Holder of the Award elects to make
payment in such manner at least six months prior to the
date such tax obligation is determined.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No
employee or other person shall have any claim or right to
be granted an Award under the Plan nor, having been
selected for the grant of an Award, to be selected for a
grant of any other Award. Neither this Plan nor any action
taken hereunder shall be construed as giving any
Participant any right to be retained in the employ of the
Company or a Subsidiary or Affiliate.
(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each
Participant shall file with the Committee a written
designation of one or more persons as the beneficiary who
shall be entitled to receive the amounts payable with
respect to an Award of Performance Share Units, Phantom
Share Units or Restricted Stock, if any, due under the Plan
upon his death. A Participant may, from time to time,
revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new
designation with the Committee. The last such designation
received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation
thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt.
(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If
the Committee shall find that any person to whom any amount
is payable under the Plan is unable to care for his affairs
because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless
a prior claim therefor has been made by a duly appointed
legal representative), may, if the Committee so directs the
Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person,
or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to
payment. Any such payment shall be a complete discharge of
the liability of the Committee and the Company therefor.
(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of
the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on
his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of
the Committee and each other employee, officer or director
of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense
(including counsel fees) or liability (including any sum
paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising
out of such person's own fraud or bad faith; provided,
however, that approval of the Board shall be required for
the payment of any amount in settlement of a claim against
any such person. The foregoing right of indemnification
shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under
the
Company's Articles of Incorporation or By-Laws, as a matter
of law, or
otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
(i) GOVERNING LAW. The Plan shall be governed by and
construed in
accordance with the internal laws of the State of Florida
without reference to the principles of conflicts of law
thereof.
(j) FUNDING. Except as provided under Section 10, no
provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to
segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of
the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no
rights under the Plan other than as unsecured general
creditors of the Company, except that insofar as they may
have become entitled to payment of additional compensation
by performance of services, they shall have the same rights
as other employees under general law.
(k) NONTRANSFERABILITY. A person's rights and
interest under the Plan, including amounts payable, may not
be sold, assigned, donated, or transferred or otherwise
disposed of, mortgaged, pledged or encumbered except, in
the event of a Holder's death, to a designated beneficiary
to the extent permitted by the Plan, or in the absence of
such designation, by will or the laws of descent and
distribution.
(l) RELIANCE ON REPORTS. Each member of the Committee
and each member of the Board shall be fully justified in
relying, acting or failing to act, and shall not be liable
for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant
of the Company and its Subsidiaries or Affiliates and upon
any other information furnished in connection with the Plan
by any person or persons other than himself.
(m) RELATIONSHIP TO OTHER BENEFITS. No payment under
the Plan shall be taken into account in determining any
benefits under any pension, retirement, profit sharing,
group insurance or other benefit plan of the Company or any
Subsidiary or Affiliate except as otherwise specifically
provided.
(n) EXPENSES. The expenses of administering the Plan
shall be borne by the Company and its Subsidiaries and
Affiliates.
(o) PRONOUNS. Masculine pronouns and other words of
masculine gender shall refer to both men and women.
(p) TITLES AND HEADINGS. The titles and headings of
the sections in the Plan are for convenience of reference
only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings shall control.
12. CHANGES IN CAPITAL STRUCTURE
Options, SARs, Restricted Stock Awards, Phantom Stock
Unit Awards, Performance Share Unit Awards, and any
agreements evidencing such Awards, and Performance Goals,
shall be subject to adjustment or substitution, as
determined by the Committee in its sole discretion, as to
the number, price or kind of a share of Stock or other
consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the
event of changes in the outstanding Stock or in the capital
structure of the Company, or of any other corporation whose
performance is relevant to the attainment of Performance
Goals hereunder, by reason of stock dividends, stock
splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant
changes in capitalization occurring after the Date of Grant
of any such Award or (ii) in the event of any change in
applicable laws or any change in circumstances which
results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for,
Participants in the Plan, or which otherwise warrants
equitable adjustment because it interferes with the
intended operation of the Plan. In addition, in the event
of any such adjustments or substitution, the aggregate
number of shares of Stock available under the Plan shall be
appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in
Incentive Stock Options under this Section 12 shall be made
only to the extent not constituting a "modification" within
the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manner
which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. The Company
shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be
conclusive and binding for all purposes.
13. EFFECT OF CHANGE IN CONTROL
(a) In the event of a Change in Control,
notwithstanding any vesting schedule provided for hereunder
or by the Committee with respect to an Award of Options,
SARs, Phantom Stock Units or Restricted Stock, such Option
or SAR shall become immediately exercisable with respect to
100 percent of the shares subject to such Option or SAR,
and the Restricted Period shall expire immediately with
respect to 100 percent of the Phantom Stock Units or shares
of Restricted Stock subject to Restrictions; provided,
however, that to the extent that so accelerating the time
an Incentive Stock Option may first be exercised would
cause the limitation provided in Section 7(f) to be
exceeded, such Options shall instead first become
exercisable in so many of the next following years as is
necessary to comply with such limitation.
(b) In the event of a Change in Control, all
incomplete Award Periods in effect on the date the Change
in Control occurs shall end on the date of such change, and
the Committee shall, (i) determine the extent to which
Performance Goals with respect to each such Award Period
have been met based upon such audited or unaudited
financial information then available as it deems relevant,
(ii) cause to be paid to each Participant partial or full
Awards with respect to Performance Goals for each such
Award Period based upon the Committee's determination of
the degree of attainment of Performance Goals, and (iii)
cause all previously deferred Awards to be settled in full
as soon as possible.
(c) The obligations of the Company under the Plan
shall be binding upon any successor corporation or
organization resulting from the merger, consolidation or
other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all
of the assets and business of the Company. The Company
agrees that it will make appropriate provisions for the
preservation of Participant's rights under the Plan in any
agreement or plan which it may enter into or adopt to
effect any such merger, consolidation, reorganization or
transfer of assets.
14. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company
for approval shall be construed as creating any limitations
on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than
under this Plan, and such arrangements may be either
applicable generally or only in specific cases.
15. AMENDMENTS AND TERMINATION
The Board may at any time terminate the 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 Plan or potential
payouts thereunder would not be in the best interest of the
Company. The Board may, at any time, or from time to time,
amend or suspend and, if suspended, reinstate, the Plan in
whole or in part, provided, however, that without further
stockholder approval the Board shall not:
(a) Increase the maximum number of
shares of Stock which may be issued on exercise of Options,
SARs, or pursuant to Restricted Stock Awards, Phantom Stock
Unit Awards, or Performance Share Unit Awards, except as
provided in Section 12;
(b) Change the maximum Option Price;
(c) Extend the maximum Option term;
(d) Extend the termination date of the
Plan; or
(e) Change the class of persons eligible
to receive Awards under the Plan.
16. EFFECT OF SECTION 162(M) OF THE CODE
The Plan, and all Awards issued thereunder, are
intended to be exempt from the application of Section
162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for
compensation paid by a public company to named executives
in excess of $1 million per year. This exemption is based
on Proposed Treasury Regulation Section 1.162-27(f), as in
effect at the time of the adoption of the Plan, with the
understanding that such regulation generally exempts from
the application of Section 162(m) of the Code compensation
paid pursuant to a plan that existed before a company
becomes publicly held. The Committee may, without
shareholder approval, amend the Plan retroactively and/or
prospectively to the extent it determines necessary in
order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the
Company's Federal income tax deduction for compensation
paid pursuant to the Plan.
As adopted by the Board of Directors of
OmniComm Systems, Inc.
as of January 5, 1998.
<PAGE>
Exhibit 10(d)
Consulting Contract - Larry Kronick
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made this
1st day of March , 1999 (the "Effective Date"), by and
between Omnicomm Systems, Inc. a Delaware corporation
having a place of business at, 3250 Mary Street, Suite
307, Coconut Grove, FL 33233-0906, Telefacsimile Number
305/670 0541, and Business Asia Consultants, Inc.
("BAC"), a Florida corporation having a place of business
at 484 Tamarind Drive, Golden Isles, Hallandale, Florida,
33009, Telefacsimile Number 954/457-8038.
WITNESSETH:
WHEREAS, OmniComm Systems, Inc. manufactures, markets,
sells and distributes products for networking and web-
development (the "Products and Services").
WHEREAS, BAC desires to provide consultation and advice
to OmniComm Systems, Inc. regarding the marketing, sale
and distribution of the Products and Services.
WHEREAS, OmniComm Systems, Inc. desires to contract
with BAC for such purpose in accordance with the terms of
this Agreement;
NOW THEREFORE, in consideration of the mutual covenants
contained herein, and for ten dollars ($10.00), and other
good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
Article 1. Services.
BAC shall provide Omnicomm Systems, Inc. with the
following services ("Services"):
Assist and consult with Omnicomm Systems, Inc. on
marketing and sales of Omnicomm Systems, Inc.'s Products
and Services.
Article 2. Term.
This Agreement shall continue for twelve (12) months
beginning on the Effective Date unless terminated under
Article 3.
Article 3. Termination.
a. Either party may terminate this Agreement at any
time, without cause, effective on sixty (60)
days notice to the other party.
b. In the event Lawrence Kronick becomes an
employee of Omnicomm Systems, Inc. or
its subsidiaries the agreement will terminate on the
effective date of the new employment agreement.
c. Termination of this Agreement for any reason
shall immediately terminate BAC's obligation to provide
Services to Omnicomm Systems, Inc. and terminate
Omnicomm Systems, Inc.'s obligations to compensate BAC
for Services, except as provided in Article 4. The
parties' rights, obligations, warranties and
representations in Articles 4, 5, 6 and 7 shall survive
termination of this Agreement.
Article 4. Remuneration.
As BAC's compensation for Services provided under
1.(a) Omnicomm Systems, Inc. shall
pay BAC a retainer fee of Three Thousand Five Hundred
Dollars (US$3,500) per month for the term of the
Agreement commencing on the Effective Date. In
addition, Omnicomm Systems, Inc. shall grant to Lawrence
Kronick, an option to purchase 60,000 shares of common
stock at $.60 per share which shall vest over 3 years in
equal quarterly installments.
b Omnicomm Systems, Inc. shall provide to
Lawrence Kronick a laptop computer of his choice
which shall be not more than US$3,750 within sixty (60)
days of the effective date of this agreement
A ten percent (10%) commission (the "Commission")
on the Net Invoice Dollar Value of all
Products and Services sold with the assistance of or
consultation by BAC will be paid within fifteen (15) days
of receipt of actual funds by Omnicomm Systems, Inc.
Payment of the Commission is conditioned upon BAC
communicating in writing, including electronic mail, the
name of the customer and relevant contact information to
Omnicomm Systems, Inc.
A Commission on the Net Invoice Dollar Value of all
Products and Services sold by Omnicomm
Systems, Inc. where BAC is requested in writing to
participate in the marketing and sales process by
Omnicomm Systems, Inc.
e. A Commission is due only for sales pursuant to
orders transmitted to Omnicomm Systems, Inc.,
during the period commencing on the Effective Date.
f. Should Omnicomm Systems, Inc. choose to
terminate, or not renew the agreement, the
Commission under Article 4.b and c will be in effect for
six months from the date of termination notice or
expiration of the agreement.
g. Notwithstanding the foregoing, Omnicomm
Systems, Inc. shall reimburse BAC for all necessary
and reasonable expenses ("Expenses"), incurred by BAC in
performing the Services, if the Expenses: (i) are fully
and adequately documented and invoiced, and (ii) if in
excess of US $100 per expense, are authorized in advance
in writing by Omnicomm Systems, Inc. . BAC shall
submit invoices for the Expenses on a monthly basis, and
Omnicomm Systems, Inc. shall pay such invoices within
fifteen (15) days of receipt of BAC's invoice.
Article 5. Compliance with Law.
Each party shall at all times during the term of this
Agreement perform and accept the Services and otherwise
act in compliance with any applicable laws, rules and
regulations.
Article 6. Other Agreements.
Each party warrants that it is not a party to any other
agreement that would prevent it from entering into this
Agreement, or which would adversely effect its
performance under this Agreement.
Article 7. Miscellaneous.
7.1 Relationship.
This Agreement does not make either party the employee,
agent or legal representative of the other for any
purpose whatsoever. Neither party is granted any right
or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in
the name of the other party. In fulfilling its
obligations pursuant to this Agreement, each party shall
be acting as an independent contractor. Omnicomm
Systems, Inc. shall not have the right to, and shall
not, control the manner or prescribe the method by which
the services are performed by BAC hereunder.
7.2 Assignment.
Neither party shall have the right to assign or otherwise
transfer its rights and obligations under this Agreement
except with the prior written consent of the other party.
Notwithstanding the Forgoing, Omnicomm Systems, Inc.
may assign or transfer its rights under this Agreement to
a successor corporation or to an affiliate. Any
prohibited assignment shall be invalid.
7.3 Notices.
Notices permitted or required to be given hereunder shall
be deemed sufficient only if in writing and:
a. Given by registered or certified mail, postage
prepaid, addressed to the respective addresses of the
parties as first written or at such other addresses as
the respective parties may designate by like notice from
time to time. Notices so given shall be effective upon
(a) receipt by the party to which notice is given, or (b)
on the fifth (5th) business day following the date such
notice was posted, whichever occurs first; or
b. Given by Telefacsimile to the respective
parties at the Telefacsimile Number first written, or at
such other number as the respective parties may designate
by like notice from time to time. Notices so given shall
be effective upon receipt by the party to which notice is
given and a facsimile transmission receipt evidencing
successful transmission of the Telefacsimile according to
this Article shall be sufficient documentation to
establish receipt by the receiving party.
7.4 Entire Agreement.
This Agreement, including all the Schedules now or
hereafter attached hereto and incorporated as an integral
part of this Agreement, constitutes the entire agreement
of the parties with respect to the subject matter hereof
and supersedes all previous proposals, oral or written,
and all negotiations, conversations or discussions
heretofore had between the parties related to the subject
matter of this Agreement. There are no other
understandings or covenants, expressed or implied, not
expressly set forth in this Agreement.
7.5 Amendment.
This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in
whole or in part, except by written amendment signed by
the parties hereto.
7.6 Severability.
In the event that any of the terms of this Agreement are
in conflict with, or invalid or unenforceable under, any
rule of law or statutory provision or otherwise
unenforceable under the laws or regulations of any
government or subdivision thereof, such terms shall be
modified and limited, but only to the extent necessary to
make such affected provision valid or enforceable. Such
invalidity or unenforceability shall not invalidate any
of the other terms of this Agreement and this Agreement
shall continue in full force and effect.
7.7 Waiver.
No failure by either party to take any action or assert
any right hereunder shall be deemed to be a waiver of
such right in the event of the continuation or repetition
of the circumstances giving rise to such right. No waiver
of any one provision hereunder shall be considered a
waiver of any other provision hereunder.
7.8 Governing Law.
This Agreement shall be governed by, and interpreted and
construed according to, the internal laws, and not the
law of conflicts, of the State of Florida, USA
7.9 Arbitration
The parties agree that any disputes or questions arising
hereunder, including the construction or application of
this Agreement, shall be settled by arbitration in
accordance with the rules of the American Arbitration
Association (AAA) then in force. The arbitrators shall
look solely to the Agreement to settle the dispute or
questions unless the matter is not covered in the
Agreement. Arbitration can be initiated at the written
request of either Omnicomm Systems, Inc. or BAC. Any
part of this Agreement that is not in dispute shall
continue to be performed during arbitration. The cost of
the Arbitration shall be shared equally by the parties,
unless the Arbitrator (s) determine that the expenses
shall be otherwise shared. Arbitration shall take place
in Broward County, Florida, USA.
7.10 Costs and Expenses.
If there is any claim, litigation or controversy arising
out of this Agreement or its interpretation or
enforcement, the prevailing party shall recover from the
other all reasonable legal expenses of its attorneys.
7.11 Written Agreement.
The parties intend to be bound only upon executing a
written agreement. Neither employment nor any other
conduct shall imply a continuing agreement upon the
expiration of this Agreement.
7.12 Counterparts.
This Agreement may be signed in one or more counterparts
with the same effect as if the signatures to each
counterpart were upon a single instrument. All
counterparts shall be considered an original of this
Agreement. All counterparts shall be construed together
and shall constitute one Agreement.
7.13 Binding Agreement.
Each party binds itself, its partners, successors,
permitted assigns and legal representatives to the other
party to this Agreement and to the partners, successors,
permitted assigns and legal representatives of such other
party with respect to all provisions of this Agreement.
7.14 Headings.
The headings contained herein are for convenience of
reference only and are not intend to define or limit the
scope of any provisions of this Agreement.
7.15 Necessary Acts.
Each party, shall do and perform such acts and execute
and deliver any instruments as may be required by law or
reasonably requested by notice hereunder by the other
party to establish, maintain and protect the respective
rights and remedies of the other party, and to carry out
the intent and purpose of this Agreement.
7.16 Time.
Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed on the date first written.
Omnicomm Systems, Inc.
By: ___________________________
Date: April 7, 1999
Business Asia Consultants, Inc.
By: ___________________________
Date: April 7, 1999
Exhibit 10(e)
Medical Advisory Board Agreement
This letter will serve to confirm the terms and
conditions of your appointment to the Medical Advisory
Board which has been established for the purpose of
advising and consulting on the development, implementation
and marketing of the TrialMaster(TM) application.
The following are the terms and conditions that relate
to the appointment:
Purpose: To advise and consult OmniCommerce, Inc. on the
development, implementation, and marketing of the
TrialMaster(TM) application.
Composition: The medical advisory board will be composed of
3-5 individuals.
Qualifications: A board member shall have the background
and expertise to provide meaningful insight into the
process of developing, implementing, and marketing a
service to the medical drug and device industry.
Term: Two years.
Compensation and Fees:
1) Monthly Retainer: $1000.00 per month paid directly
to Ms. Sheila Spiro.
2) Per Diem: In the event a board member is asked to
appear on behalf of the Company at a meeting or event, the
Company shall pay the member $3,000 per day and provide for
1st class air travel and accommodations. The Company shall
commit to a minimum of six (6) days per year beginning with
calendar year 1999.
3) Stock Bonus: Upon acceptance of the appointment,
the Company shall provide the board member with 5,000
shares of common stock of the Company.
4) Stock Option: Upon acceptance of the appointment,
the member shall be granted an option by the Company to
purchase 50,000 shares of common stock over the term of the
appointment at $1.00 per share. The option shall vest as
follows: i) After 6 months of appointment: 10,000 shares;
ii) After 12 months of appointment: 20,000 shares; and,
iii) After 18 months of appointment: 20,000 shares.
Board Representations and Contacts:
1) The Company shall not make any representations
whether written or oral on behalf of the Board or its
members unless the Board or the board member has approved
the representation in writing.
2) The Company may make available to prospective
clients or investors the names of the board members and
their qualifications.
3) The Company shall not make arrangements for or
allow a board member to be contacted unless the board
member gives prior written approval of the time, date, and
is notified of the purpose of the contact including name of
individual.
Status Reports: The Company shall forward to each board
member on a monthly basis a report setting forth the
status of the development of the TrialMaster(TM)
application.
If the foregoing accurately reflects your
understanding of the relationship between yourself and
Medical Advisory Board, please sign, date and return an
original of this letter at the address listed above.
Sincerely,
Mr. Peter S. Knezevich
Chief Executive Officer
Understood and Agreed To:
_________________________
