-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UsyduZVjyiE2Id/0X8D1+1D417CUqeKunkk8cEhPd1dJ9WJJ9BCmNhazKJ8kapLR 2OU98ojiCq30D9jOsZEsCQ== 0001034592-00-000015.txt : 20000522 0001034592-00-000015.hdr.sgml : 20000522 ACCESSION NUMBER: 0001034592-00-000015 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICOMM SYSTEMS INC CENTRAL INDEX KEY: 0001034592 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 113349762 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25203 FILM NUMBER: 640284 BUSINESS ADDRESS: STREET 1: 3250 MARY STREET STREET 2: SUITE 402 CITY: MIAMI STATE: FL ZIP: 33133 BUSINESS PHONE: 7184693132 MAIL ADDRESS: STREET 1: 3250 MARY STREET STREET 2: SUITE 307 CITY: MIAMI STATE: FL ZIP: 33133 FORMER COMPANY: FORMER CONFORMED NAME: CORAL DEVELOPMENT CORP DATE OF NAME CHANGE: 19970225 10QSB 1 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. OMNICOMM SYSTEMS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD JANUARY 1, 1999 TO MARCH 31, 2000
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) 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)
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 EX-27 2
5 3-MOS DEC-31-2000 MAR-31-2000 49510 0 8034 0 6169 120972 551284 92106 1285020 492349 0 0 3812093 4544 (3886465) 1285020 24978 24978 35120 35120 1398090 0 17023 (1425113) 0 (1425113) 0 0 0 (1474709) (.35) (.35)
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