SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended:
March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from
_____to______
Commission file number: 0-25203
OMNICOMM SYSTEMS, INC.
(Name of small business issuer in its charter)
Delaware 11-3349762
(State of incorporation) (IRS employer Ident. No.)
3250 Mary Street, #402, Miami, FL 33133
(Address of principal office) (Zip Code)
Registrant's telephone number: (305) 448-4700
Indicate by check mark whether the Registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes _X__ No___
The number of shares outstanding of each of the issuer's
classes of equity as of March 31, 2000: 4,544,066 common stock
$.001 par value. 4,263,500 5% Series A Convertible Preferred
Stock, $0.00 par.
OMNICOMM SYSTEMS, INC.
Part I - Financial Information
Page
Consolidated Balance Sheet -
March 31, 2000 and December 31, 1999
Consolidated Statements of Shareholders' Equity -
January 1, 1999 to March 31, 2000
Consolidated Statements of Operations -
Three months ended March 31, 2000 and 1999
Consolidated Statement of Cash Flows -
Three months ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To a Vote of
Security Holders
Item 5. Other Information
Item 6, Exhibits and Reports on Form 8-K
Signature Page
OMNICOMM SYSTEMS, INC.
FINANCIAL STATEMENTS
MARCH 31, 2000
INDEX
Page
Consolidated Balance Sheets
Consolidated Statements of Shareholders'
Equity (Deficit)
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Financial Statements
OMNICOMM SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,2000 December 31, 1999
(Unaudited)
CURRENT ASSETS
Cash $ 49,509 $ 1,127,263
Accounts receivable 8,034 8,458
Inventory 6,169 10,166
Due from placement agent -0- -0-
Prepaid expenses 57,260 -0-
Total current assets 120,972 1,145,887
Property and equipment, net 459,177 353,183
OTHER ASSETS
Equity investment in
Medical Networks EMN 335,00 -0-
Shareholder loans 3,406 3,406
Intangible assets, net 141,311 169,629
Goodwill, net 198,194 237,832
Other assets 26,960 26,960
TOTAL ASSETS $ 1,285,020 $ 1,936,897
LIABILITIES AND SHAREHOLDERS'EQUITY
CURRENT LIABILITIES
Accounts payable
and accrued expenses $ 313,672 $ 284,381
Notes payable-current 177,500 177,500
Sales tax payable 1,177 1,818
Due to factoring agent -0- -0-
Total current liabilities 492,349 463,799
Notes payable - long term -0- -0-
Convertible notes 862,500 862,500
TOTAL LIABILITIES 1,354,849 1,326,299
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock-10,000,000 shares authorized,
4,263,500 and 4,117,500 issued and
outstanding,
respectively at par 3,812,093 3,872,843
Common Stock -20,000,000 shares authorized,
4,544,066 and 3,344,066 issued and outstanding,
respectively,
at $.001 par value 4,544 3,344
Additional paid in capital 241,840 238,007
Retained earnings
(deficit) (4,127,353) (2,652,644)
Stock subscriptions
receivable (952) (850,952)
TOTAL SHAREHOLDERS'S
EQUITY(DEFICIT) (69,829) 610,598
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 1,285,019 $ 1,936,897
The accompanying notes are an integral part of these financial
statements.
OMNICOMM SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
March 31
2000 1999
Revenue-sales, net $ 24,978 $ 528,722
Cost of sales 35,120 225,291
Gross margin (loss) (10,142) 303,431
Other expenses
Salaries, benefits and related taxes 572,933 102,935
Rent 60,932 15,373
Consulting-medical advisory 42,000 -0-
Consulting-marketing/sales 48,000 50,547
Consulting-product development 28,435 -0-
Legal and professional fees 109,248 37,966
Travel 169,718 30,102
Telephone and internet 64,034 3,588
Factoring fees -0- 3,868
Selling, general and administrative 210,173 32,601
Interest expense, net 17,023 8,831
Depreciation and amortization 92,616 69,228
Total other expenses 1,415,113 355,039
(Loss) before taxes and preferred dividends (1,425,255) (51,608)
Income tax expense (benefit) -0- -0-
Preferred stock dividends (49,545) -0-
Net (loss) $ (1,474,709) $ (51,608)
Net (loss) per share $ (0.35) $ (0.04)
Weighted average number of
Shares outstanding 4,214,396 1,459,667
The accompanying notes are an integral part of these financial
statements.
OMNICOMM SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended
March 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (1,474,709) $ (51,608)
Adjustment to reconcile net loss to net cash
Provided by (used in) operating activities
Depreciation and amortization 92,616 69,228
Changes in operating assests and liabilities, net of
Effects of acquisition of Education
Navigator, Inc. (EdNav)
Accounts receivable 424 (58,924)
Inventory 3,997 (24,466)
Due from placement agent -0- (293,625)
Prepaid expenses (57,260) -0-
Other assets -0- 7,500
Accounts payable and accrued expenses 29,191 (103,725)
Sales tax payable (641) (33,822)
Due to factoring agent -0- 38,376
Net cash provided by (used in) operating activities (1,406,382) (451,066)
CASH FLOWS FROM INVESTING ACTIVITIES
Equity investment in European Medical Networks(335,000) -0-
Purchase of WebIPA 5,033 -0-
Purchase of property and equipment (130,654) -0-
Net cash provided by (used in) investing activities (460,621) -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from convertible notes -0- 666,750
Proceeds from the issuance of Preferred stock,
Net of issuance costs 789,250 -0-
Payments on notes payable -0- (130,000)
Net cash provided by financing activities 789,250 536,750
Net increase (decrease) in cash and cash equivalents(1,077,753) 85,684
Cash and cash equivalents at beginning of period 1,127,263 44,373
Cash and cash equivalents at end of period $ 49,509 $ 130,057
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 0 $ 0
Interest $ 44,728 $ 1,532
Non Cash Investing and Financing Transactions, March 31, 2000
Acquisition of all of the outstanding common
Stock of WebIPA, Inc. during the quarter
Ended March 31, 2000
Assets acquired, fair value $ 5,033
Cash acquired 5,033
Net cash paid for acquisition $ -0-
The accompanying notes are an integral part of these financial
statements.
<TABLE>
OMNICOMM SYSTEMS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD JANUARY 1, 1999 TO MARCH 31, 2000
<CAPTION>
5% Series A Convertible Total
Common Stock Additional Preferred Stock Retained Shareholders
Number $0.001 Paid in Number Earnings Subscription Equity
Of Shares Value Capital of Shares $0.00 Par (Deficit) Receivable (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as
January 1, 1999 1,343,000 $1,343$132,213 - $(311,407) $(952) $(178,803)
Issuance of
Common Stock 250,000 250 250
Issuance of Common
Stock for Services 84,400 86 56,050 56,145
Issuance of Common
Stock 300,000 300 2,700 3,000
Issuance of Common
Stock for Services 68,000 68 44,132 44,200
Issuance of
Common Stock 1,296,666 1,297 2,903 4,200
Issuance of
Preferred Stock, net
Of $134,590
Issuance Costs 4,117,500 3,872,843 (850,000) 3,022,843
Net Loss for the
Year Ended
December 31, 1999 (2,341,237) (2,341,237)
Balances at
December 31, 1999 3,344,066 3,344 238,007 4,117,500 3,872,843(2,652,644)(850,952) 610,598
Receipt of
Subscription
Receivable 850,000 850,000
Acquisition of
WebIPA, Inc. 1,200,000 1,200 3,833 5,033
Issuance of
Preferred Stock 146,000 146,000 146,000
Issuance costs (206,750) (206,750)
Net (Loss) for the
Quarter Ended
March 31, 2000 (1,474,709) (1,474,709)
Balance at
March 31, 2000 4,544,066 $ 4,544 $241,840 4,263,500 $3,812,093 $(4,127,353)$ (952) $(69,828)
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
OmniComm Systems, Inc. (the Company) was originally incorporated
in Florida in February 1997. The Company provides internet based
database applications that integrate significant components of the
clinical trial process, including the collection, compilation and
validation of data over the internet. The Company's primary
products include TrialMaster(tm) and WebIPA.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term investments
with maturities of 90 days or less. The carrying amount reported
in the accompanying balance sheets approximates fair value.
CONSOLIDATION
The Company's accounts include those of its two wholly owned
subsidiaries Omnicommerce and OmniTrial B.V. All significant
intercompany transactions have been eliminated in consolidation.
ACCOUNTS RECEIVABLE
Accounts receivable are judged as to collectibility by management
and an allowance for bad debts is established as necessary. As of
each balance sheet date, no reserve was considered necessary.
EARNINGS PER SHARE
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS 128 replaced the previously reported primary and
fully diluted earnings per share with basic and diluted earnings
per share. Unlike primary earnings per share, basic earnings per
share excludes any dilutive effects of options, warrants, and
convertible securities. The diluted earnings per shared
calculation is very similar to the previously fully diluted
earnings per share calculation method. SFAS 128 became effective
December 31, 1997.
Basic earnings per share were calculated using the weighted
average number of shares outstanding of 4,214,396 and 1,459,667 at
March 31, 2000 and 1999 respectively. There were no differences
between basic and diluted earnings per share. Options to purchase
3,825,072 shares of common stock at prices ranging from $.25 to
$3.50 per share were outstanding during both periods, but were not
included in the computation of diluted earnings per share because
the options have an anti-dilutive effect. The effect of the
convertible debt and convertible preferred stock is anti-dilutive.
5% SERIES A CONVERTIBLE PREFERRED STOCK
During the year ended December 31, 1999, the Company designated
5,000,000 shares of its 10,000,000 authorized preferred shares as
5% Series A Convertible Preferred Stock. Each shares is
convertible into common stock at $1.50 per shares. In the event
of liquidation, these shareholders will be entitled to receive in
preference to the holders of common stock an amount equal to their
original purchase price plus all accrued but unpaid dividends.
Dividends are payable at the rate of 5% per annum, payable semi-
annually.
ADVERTISING
Advertising costs are expensed as incurred. Advertising expense
for the quarters ended March 31, 2000 and 1999 was $82,733 and
$1,254, respectively.
RECLASSIFICATIONS
Certain items from prior periods within the financial statements
have been reclassified to conform to current period
classifications.
INTANGIBLE ASSETS AND GOODWILL
Included in Intangible Assets are the following assets:
March 31, 2000
Accumulated
Cost Amortization
Covenant not to compete $120,000 $ 105,000
Software development costs 87,500 51,042
Organization costs 539 405
Debt acquisition costs 119,625 29,906
$327,664 $ 186,353
December 31, 1999
Accumulated
Cost Amortization
Covenant not to compete $120,000 $ 90,000
Software development costs 87,500 43,750
Organization costs 539 360
Debt acquisition costs 119,625 23,925
$327,664 $ 158,035
The covenant not to compete and the software development
costs were acquired as a result of the acquisition of Education
Navigator, Inc. (EdNav) on June 26, 1998. The covenant is for a
two-year period and is being amortized ratably over that time.
The software development costs were capitalized and are being
amortized ratably over a three-year period, as that is the
expected life of the various products.
During the first nine months of 1999, the Company issued
Convertible Notes totaling $862,500. The fees of $119,625
associated with these notes are being amortized ratably over the
term of the notes, which is five years.
Included in Goodwill, as a result of the EdNav acquisition at
March 31, 2000 and December 1999 is the cost of $475,665 and
accumulated amortization of $277,471 and $237,833 respectively.
The goodwill is being amortized ratably over a period of three
years.
PROPERTY AND EQUIPMENT, AT COST
Property and equipment consists of the following:
March 31, 2000 December 31, 1999
Accumulated Accumulated
Cost Depreciation Cost Depreciation
Computer and
Office equipment $337,303 $78,335 $195,340 $30,146
Computer software 182,823 11,067 167,220 1,034
Office furniture 31,159 2,704 23,070 1,267
$551,284 $92,106 $385,630 $32,447
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
furniture and 3 years for software.
Depreciation expense for the three months ended March 31, 2000 and
1999 was $24,660 and $1,840 respectively.
REVENUE RECOGNITION POLICY
The Company recognized sales, for both financial statement and tax
purposes, when its 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.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." SFAS 109 has as its basic objective the recognition of
current and deferred income tax assets and liabilities based upon
all events that have been recognized in the financial statements
as measured by the provisions of the enacted tax laws.
Valuation allowances are established when necessary to reduce
deferred tax assets to the estimated amount to be realized.
Income tax expense represents the tax payable for the current
period and the change during the period in the deferred tax assets
and liabilities.
STOCK 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.
During the second and third quarters of 1999, the Company issued
86,377 and 68,000, respectively, common shares to employees and
advisors under its stock bonus arrangement. The Company adopted
SFAS 123 to account for its stock based compensation plans. SFAS
123 defines the "fair value based method" of accounting for stock
based compensation. Under the fair value based method,
compensation cost is measured at the grant date based on the value
of the award and is recognized over the service period. In
accordance with this method, the Company recognized expense of
$56,145 and $44,200, respectively, during the second and third
quarters of 1999.
NOTE 3: OPERATIONS AND LIQUIDITY
The Company has incurred substantial losses in 1999 and 2000.
Until such time that the Company's products and services can be
successfully marketed the Company will continue to need to fulfill
working capital requirements through the sale of stock and
issuance of debt. The inability of the company to continue its
operations, as a going concern would impact the recoverability and
classification of recorded asset amounts.
The ability of the Company to continue in existence is dependent
on its having sufficient financial resources to bring products and
services to market for marketplace acceptance. As a result of its
significant losses, negative cash flows from operations, and
accumulated deficits for the periods ending March 31, 2000, there
is doubt about the Company's ability to continue as a going
concern.
Management believes that its current available working capital,
anticipated contract revenues and subsequent sales of stock and or
placement of debt instruments will be sufficient to meet its
projected expenditures for a period of at least twelve months from
March 31, 2000.
NOTE 4: ACQUISITION
WebIPA, Inc. Acquisition
On February 9, 2000, the Company acquired WebIPA, Inc., a Florida
corporation pursuant to an Agreement and Plan of Acquisition dated
Januray 26, 2000. In consideration of receiving all of the issued
and outstanding shares of WebIPA Inc., OmniComm issued 1,200,000
restricted shares of common stock to the shareholders of WebIPA
Inc.
NOTE 5: EQUITY INVESTMENT
European Medical Network (EMN) Investment
On March 20, 2000 the Company purchased a 25% interest in Medical
Network AG EMN, a Swiss company. The purchase price for 25% of the
current stock equity of EMN is $838,500 to be paid as follows:
Cash: US$645,000 paid as follows: March 20, 2000 - US$335,000,
April 20, 2000 - US$310,000; Stock: 41,883 shares of restricted
common stock of the Company. Pursuant to the terms of the stock
purchase agreement the shareholders of EMN entered into a
shareholders agreement that provides for the Company having one
board seat and the right to veto any sale of equity in excess of
49% of the total issued and outstanding equity of EMN.
NOTE 6: NOTES PAYBLE
At March 31, 2000 the Company owed $177,500 to the selling
stockholders of Education Navigator. The notes are payable over
two years and bear interest at 5.51% annually. The amount
payable during fiscal 2000 is $177,500.
NOTE 7: CONVERTIBLE NOTES
During the first quarter of 1999, the Company issued Convertible
Notes Payable in the amount of $862,500 pursuant to a Confidential
Private Placement Memorandum. There were costs of $119,625
associated with this offering. The Company also granted the agent
the option to purchase 250,000 common shares at $.001. The agent
exercised the option. The net proceeds to the Company were
$742,875. The notes bear interest at ten percent annually,
payable semi-annually. The notes are convertible after maturity,
which is five years, into shares of common stock of the Company at
$1.25 per share, including registration rights.
NOTE 8: COMMIMENTS AND CONTINGENCIES
The Company currently leases office space requiring minimum annual
base rental payments for the fiscal periods shown as follows:
2000 $150,327
2001 142,735
2002 153,547
2003 111,465
2004 95,964
Total $654,038
In addition, to annual base rental payments, the company must pay
an annual escalation for operating expenses as determined in the
lease.
NOTE 9: RELATED PARTY TRANSACTIONS
The Company was owed $3,406 and $3,406 at March 31, 2000 and
December 31, 1999, respectively, from a shareholder. The amount
is payable on demand. The interest rate is 6% annually.
NOTE 10: 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 (post-retirement). Therefore, no provision is required
under SFAS's 106 or 112.
NOTE 11: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the Company for the period
from January 1, 2000 to March 31, 2000 and January 1, 1999 to
March 31, 1999 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.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Forward Looking Statements
In addition to historical information, this Quarterly Report
contains "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 Quarterly Report 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 Quarterly Report. 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, we or any other
person that these plans will be consummated or that estimates and
projections will be realized, and actual results may vary
materially should not regard the inclusion of projections and
other forward-looking statements as a representation. 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.
Results of Operation
Revenues:
Total revenues decreased to $24,978 from $528,722 in the first
quarter of fiscal year 2000 compared to the corresponding period
in fiscal year 1999. This substantial decrease in revenue is
attributed to the Company changing its focus away from computer
systems integration to the development and marketing of internet
based database products.
All of the Company's revenue for both periods presented is
attributed to its systems integration business. The Company has
earned no revenue from its TrialMaster(tm) or WebIPA internet
based systems.
Operating Expenses:
Total operating expenses decreased to $208,792 from $307,218 in
the first quarter of fiscal year 2000 compared to the
corresponding period in fiscal year 1999. The decrease in
operating expenses is attributed to the Company's decision to
redeploy its resources on the development and marketing of the
TrialMaster(tm) Internet and WebIPA systems. The Company
experienced a decrease in product and service revenues in
connection with the change in strategic focus and therefore a
corresponding decrease in cost of goods sold.
Salaries and Wages. Salaries and wages increased to $572,933 from
$102,935 in the first quarter of fiscal year 2000 compared to the
corresponding period in fiscal year 1999. The Company currently
has twenty-three employees compared to eight for the comparable
period in fiscal 1999. All of the Company's employees are
currently directly involved in the development, marketing, and
implementation of the TrialMaster(tm) and WebIPA systems.
Selling, General and Administrative. Selling, general and
administrative expenses increased to $550,071 from $104,257 in the
first quarter of fiscal year 2000 compared to the corresponding
period in fiscal year 1999. The substantial increase in selling,
general and administrative expenses is attributed to the increase
in resources expended related to the development and marketing of
the Company's TrialMaster(tm) and WebIPA systems. The Company
experienced increases in its legal and professional fees, travel
and general and administrative expenses in connection with its
decision to implement its Internet strategy.
Independent Consultants. Independent consulting expenses increased
to $118,435 from $50,547 in the first quarter of fiscal year 2000
compared to the corresponding period in fiscal year 1999. The
increase is attributed to the development and marketing of the
TrialMaster(tm) system. The Company has retained the services of
independent programmers to assist in finalizing certain software
issues related to the application. In addition, the Company has
retained the services of consultants to assist in developing
marketing strategies for the marketing and sales of the
TrialMaster(tm) system and WebIPA systems. The Company has
established a medical advisory board and the members are paid a
monthly retainer of $1,000 per month.
LIQUIDITY AND CAPITAL RESOURCES:
Cash and cash equivalents decreased to $49,510 from $1,127,263 in
the first three months of fiscal year 2000. The decrease can be
attributed to the losses incurred during the first fiscal quarter,
the Company's investment in European Medical networks of $335,000,
the purchase of property and equipment offset by the receipt of
equity financing received from the issuance of Series A
Convertible Preferred Convertible Stock.
The Company generated a loss of $1,474,709 from operations in the
first three months of fiscal year 2000 compared to a loss of
$51,608 for the corresponding period in 1999. The losses can be
primarily attributed to the increased expenses associated with the
development and marketing of the TrialMaster(tm) and WebIPA
systems. The Company has incurred increased expenses in salaries
and wages, consulting fees, travel and professional fees in
connection with developing and marketing the Company's internet
based products.
The Company's primary capital requirements are for daily
operations and for the continued development and marketing of
TrialMaster(tm) and WebIPA systems. Management believes that its
current available working capital, anticipated contract revenues
and subsequent sales of stock and or debt financing will be
sufficient to meet its projected expenditures for a period of at
least twelve months from March 31, 2000. The Company's capital
requirements, will need to be funded through debt and equity
financing, of which there can be no assurance that such financing
will be available or, if available, that it will be on terms
favorable to the Company.
PART II. OTHER INFORMATION
Item 5. Other Information
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 (subjectto 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.
The private placement was extended for an additional forty-five
(45) days.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On March 6, 2000 the company filed a current report on Form 8-K
dated March 6, 2000 reporting items 1,2,5,6 and 7 in connection
with its preliminary agreement to acquire 25% of the current stock
equity of Medical Network EMN Ltd. for cash and restricted common
stock of Omnicomm.
On February 9, 2000 the company filed a current report on Form 8-K
dated February 9, 2000 reporting items 1,2,5,6 and 7 in connection
with its acquisition WebIPA, Inc. pursuant to an Agreement and
Plan of Acquisition dated January 26, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
OMNICOMM SYSTEMS, INC.
Registrant
Date: May 19, 2000
_________________________
Peter S. Knezevich
Chief Executive Officer
________________________
Ronald T. Linares
Vice President and
Chief Accounting Officer
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