10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2014

[   ]         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.
(Exact name of registrant as specified in its Charter)
Delaware	11-3349762
(State or other jurisdiction of Incorporation or organization)	(IRS Employer Identification Number)
2101 W. Commercial Blvd. Suite 3500, Fort Lauderdale, FL	33309
Address of principal executive offices	Zip Code
954.473.1254
(Registrant’s Telephone Number including area code)

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] No [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer (Do not check if smaller reporting company)	[ ]	Smaller reporting company	[√]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares outstanding of each of the issuer’s classes of common equity as of November 10, 2014: 91,504,659 common stock $.001 par value.

1

Table of Contents to the Quarterly Report on Form 10-Q for the NINE MONTH pERIOD Ended SEPTEMBER 30, 2014

PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	57
ITEM 4.  CONTROLS AND PROCEDURES	57
PART II.  OTHER INFORMATION	58
ITEM 1.  LEGAL PROCEEDINGS	58
ITEM 1A.  RISK FACTORS	58
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	59
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES	59
ITEM 4. MINE SAFETY DISCLOSURES	59
ITEM 5. OTHER INFORMATION	59
ITEM 6.  EXHIBITS	59
SIGNATURES	61
EXHIBIT 31.1*	83
EXHIBIT 31.2*	84
EXHIBIT 32.1**	85
Exhibit 101.SCH      XBRL Taxonomy Extension Schema Document*
Exhibit 101.CAL      XBRL Taxonomy Extension Calculation Document*
Exhibit 101.DEF       XBRL Taxonomy Extension Definition Document*
Exhibit 101.LAB      XBRL Taxonomy Extension Label Document*
Exhibit 101.PRE       XBRL Taxonomy Extension Presentation Document*

* Filed herewith

** Furnished herewith

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2014			December 31, 2013
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	1,093,682		$	1,160,720
Accounts receivable, net of allowance for doubtful accounts of $142,051 and $65,341, respectively		2,887,083			1,599,568
Prepaid expenses		216,165			146,907
Prepaid stock compensation, current portion		153,500			-0-
Other current assets		16,138			-0-
Total current assets		4,366,568			2,907,195
Property and equipment, net		491,836			607,433
Other assets
Intangible assets, net		220,332			270,242
Goodwill		618,541			675,710
Prepaid stock compensation		185,028			169,375
Other assets		50,342			82,501
TOTAL ASSETS	$	5,932,647		$	4,712,456
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,256,504		$	2,540,956
Notes payable, current portion		328,562			37,500
Deferred revenue, current portion		5,702,672			2,866,356
Line of credit		3,700,000			3,500,000
Convertible notes payable, current portion, net of discount of $-0- and $-0-, respectively		75,000			75,000
Patent settlement liability, current portion		962,500			962,500
Conversion feature liability, related parties		1,416,296			2,979,392
Conversion feature liability		117,066			146,814
Warrant liability, related parties		3,646,003			5,799,946
Warrant liability		108,663			144,031
Total current liabilities		18,313,266			19,052,495
LONG TERM LIABILITIES
Notes payable, related parties, long term, net of current portion, net of discount of $670,535 and $447,666, respectively		5,325,344			4,568,213
Notes payable, long term, net of current portion		302,500			614,486
Deferred revenue, long term, net of current portion		2,530,126			1,385,017
Convertible notes payable, related parties, long term, net of current portion		8,815,000			9,125,000
Convertible notes payable, long term, net of current portion		775,000			465,000
Patent settlement liability, long term, net of current portion		746,432			963,124
TOTAL LIABILITIES		36,807,668			36,173,335
COMMITMENTS AND CONTINGENCIES (See Note 11)
SHAREHOLDERS' (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 3,772,500 shares undesignated		-0-			-0-
Series B convertible preferred stock, 230,000 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-0-			-0-
Series C convertible preferred stock, 747,500 shares authorized, -0- and -0- issued and outstanding, respectively at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-0-			-0-
Series A convertible preferred stock, 5,000,000 shares authorized, 4,125,224 and 4,125,224 issued and outstanding, respectively at $0.001 par value; liquidation preference $4,125,224 and $4,125,224, respectively		4,125			4,125
Series D preferred stock, 250,000 shares authorized, 250,000 and 250,000 issued and outstanding, respectively at $0.001 par value		250			250
Common stock, 250,000,000 shares authorized, 91,504,659 and 90,104,659 issued and outstanding, respectively, at $0.001 par value		91,505			90,105
Additional paid in capital - preferred		4,717,804			4,717,804
Additional paid in capital - common		37,624,741			37,334,358
Accumulated other comprehensive (loss)		(198,443	)		(87,604	)
Accumulated deficit		(73,115,003	)		(73,519,917	)
TOTAL SHAREHOLDERS' (DEFICIT)		(30,875,021	)		(31,460,879	)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$	5,932,647		$	4,712,456

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

3

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the nine months ended						For the three months ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues	$	11,554,553		$	10,543,197		$	4,943,015		$	3,449,661
Reimbursable revenues		361,160			412,947			181,674			27,960
Total revenues		11,915,713			10,956,144			5,124,689			3,477,621
Cost of goods sold		2,341,107			1,942,126			773,948			648,369
Reimbursable expenses-cost of goods sold		629,344			297,328			365,453			64,110
Total cost of sales		2,970,451			2,239,454			1,139,401			712,479
Gross margin		8,945,262			8,716,690			3,985,288			2,765,142
Operating expenses
Salaries, benefits and related taxes		7,954,833			6,496,528			2,726,522			2,130,385
Rent and occupancy expenses		663,961			665,932			219,974			199,492
Consulting services		60,669			117,410			10,111			14,496
Legal and professional fees		277,262			205,767			77,365			53,312
Travel		595,571			326,578			178,211			100,860
Telephone and internet		142,554			131,476			52,063			38,618
Selling, general and administrative		892,912			634,481			299,940			197,765
Bad debt expense		76,634			(4,830	)		632			8,191
Depreciation expense		181,520			174,436			59,087			54,894
Amortization expense		34,549			-0-			11,322			-0-
Total operating expenses		10,880,465			8,747,778			3,635,227			2,798,013
Operating income/(loss)		(1,935,203	)		(31,088	)		350,061			(32,871	)
Other income/(expense)
Interest expense, related parties		(1,818,911	)		(1,750,327	)		(578,735	)		(588,425	)
Interest expense		(160,968	)		(107,952	)		(54,236	)		(37,760	)
Interest income		77			9			12			3
Change in derivative liabilities		4,410,241			(2,524,671	)		1,607,670			2,418,612
Transaction gain/(loss)		(54,915	)		(4,497	)		(41,596	)		3,780
Income/(loss) before income taxes		440,321			(4,418,526	)		1,283,176			1,763,339
Income taxes		(35,407	)		(48,599	)		(1,446	)		(30,869	)
Net income/(loss)		404,914			(4,467,125	)		1,281,730			1,732,470
Preferred stock dividends
Preferred stock dividends in arrears
Series A preferred		(154,272	)		(154,272	)		(51,989	)		(51,989	)
Total preferred stock dividends		(154,272	)		(154,272	)		(51,989	)		(51,989	)
Net income/(loss) attributable to common stockholders	$	250,642		$	(4,621,397	)	$	1,229,741		$	1,680,481
Net income/(loss) per share
Basic and diluted	$	0.00		$	(0.05	)	$	0.01		$	0.02
Weighted average number of shares outstanding
Basic and diluted		90,417,480			87,515,641			91,032,920			87,867,268

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

4

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(unaudited)

	For the nine months ended September 30,						For the three months ended September 30,
	2014			2013			2014			2013
Net income/(loss) attributable to common stockholders	$	250,642		$	(4,621,397	)	$	1,229,741		$	1,680,481
Other comprehensive (loss)
Change in foreign currency translation adjustment		(110,839	)		(30,485	)		(86,887	)		(3,006	)
Other comprehensive (loss)		(110,839	)		(30,485	)		(86,887	)		(3,006	)
Comprehensive income/(loss)	$	139,803		$	(4,651,882	)	$	1,142,854		$	1,677,475

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

5

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(unaudited) 

	Preferred Stock																		Common Stock
	5% Series A Convertible				8% Series B Convertible				8% Series C Convertible				Series D Preferred				Additional						Additional						Accumulated
	Number		$0.001		Number		$0.001		Number		$0.001		Number		$0.001		paid in				$0.001		paid in						other			Total
	of		Par		of		Par		of		Par		of		Par		capital		Number		Par		capital			Accumulated			comprehensive			shareholders'
	shares		value		shares		value		shares		value		shares		value		preferred		of shares		value		common			deficit			income			(deficit)
Balances at December 31, 2012		4,125,224	$	4,125		-0-	$	-0-		-0-	$	-0-		250,000	$	250	$	4,717,804		86,598,659	$	86,599	$	36,645,589		$	(70,358,575	)	$	(69,092	)	$	(28,973,300	)
Employee stock option expense																								83,875									83,875
Foreign currency translation adjustment																														(18,512	)		(18,512	)
Restricted stock issuance																				1,225,000		1,225		221,275									222,500
Employee stock option exercise																				11,000		11		(11	)								-0-
Shares issued for purchase of Promasys																				2,270,000		2,270		383,630									385,900
Net loss for period ended December 31, 2013		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-			(3,161,342	)		-0-			(3,161,342	)
Balances at December 31, 2013		4,125,224		4,125		-0-		-0-		-0-		-0-		250,000		250		4,717,804		90,104,659		90,105		37,334,358			(73,519,917	)		(87,604	)		(31,460,879	)
Employee stock option expense																								53,783									53,783
Foreign currency translation adjustment																														(110,839	)		(110,839	)
Restricted stock issuance																				1,400,000		1,400		236,600									238,000
Net income for period ended September 30, 2014		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-			404,914			-0-			404,914
Balances at September 30, 2014		4,125,224	$	4,125		-0-	$	-0-		-0-	$	-0-		250,000	$	250	$	4,717,804		91,504,659	$	91,505	$	37,624,741		$	(73,115,003	)	$	(198,443	)	$	(30,875,021	)

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

6

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the nine months ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	404,914		$	(4,467,125	)
Adjustment to reconcile net income/(loss) to net cash (used in) operating activities
Change in derivative liabilities		(4,410,241	)		2,524,671
Interest expense from derivative instruments		405,216			456,750
Employee stock compensation		122,630			94,637
Provision for doubtful accounts		76,634			(4,830	)
Depreciation and amortization		216,069			174,436
Changes in operating assets and liabilities
Accounts receivable		(1,364,149	)		(46,819	)
Prepaid expenses		(69,257	)		(6,032	)
Other current assets		(16,138	)		-0-
Other assets		32,159			(409	)
Accounts payable and accrued expenses		695,548			410,815
Patent settlement liability		(216,692	)		(192,527	)
Deferred revenue		3,981,425			(83,604	)
Net cash (used in) operating activities		(141,882	)		(1,140,037	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(67,674	)		(107,844	)
Net cash (used in) investing activities		(67,674	)		(107,844	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable		(20,925	)		-0-
Proceeds from revolving line of credit		200,000			800,000
Net cash provided by financing activities		179,075			800,000
Effect of exchange rate changes		(36,557	)		(30,485	)
Net (decrease) in cash and cash equivalents		(67,038	)		(478,366	)
Cash and cash equivalents at beginning of period		1,160,720			873,315
Cash and cash equivalents at end of period	$	1,093,682		$	394,949
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	35,264		$	48,599
Interest	$	1,114,666		$	725,546
Non-cash transactions:
Notes payable issued in exchange for existing notes payable	$	1,902,500		$	2,866,879
Promissory notes issued for accrued interest	$	980,000		$	529,000
Restricted stock issuance	$	238,000		$	222,500

See accompanying summary of accounting policies and notes to unaudited condensed consolidated financial statements

7

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

OmniComm Systems, Inc. (“OmniComm” or the “Company”) is a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”), and other clinical trial sponsors principally located in the United States and Europe. Our proprietary EDC software applications; TrialMaster^®, TrialOne^®, eClinical Suite, and Promasys^® allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

Our ability to compete within the EDC industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC software and services. Our research and development (“R&D”) efforts are focused on developing new and complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. During the nine month periods ended September 30, 2014 and September 30, 2013 we spent approximately $2,092,125 and $1,718,079, respectively, on R&D activities, which are primarily comprised of salaries to our developers and other R&D personnel and related costs associated with the development of our software products.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The Company’s accounts include those of all its wholly-owned subsidiaries, which are more fully described in the Company’s 2013 Annual Report filed on Form 10-K, as amended, with the Securities and Exchange Commission, and have been prepared in conformity with (i) accounting principles generally accepted in the United States of America; and (ii) the rules and regulations of the United States Securities and Exchange Commission. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

UNAUDITED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The results for the periods indicated are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

The operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year-ended December 31, 2014. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, as amended, for the year-ended December 31, 2013.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities, the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results may differ from those estimates.

8

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

Reclassifications

Certain reclassifications have been made in the 2013 financial statements to conform to the 2014 presentation. These reclassifications did not have any effect on our net income/(loss) or shareholders’ deficit.

foreign currency translation

The financial statements of the Company’s foreign subsidiaries are translated in accordance with Accounting Standards Codification (“ASC”) 830-30, Foreign Currency Matters—Translation of Financial Statements. The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s subsidiaries, OmniComm Europe GmbH in Germany, OmniComm Spain S.L. in Spain and OmniComm Promasys B.V. in the Netherlands is the Euro. The functional currency of the Company’s subsidiary OmniComm Ltd., in the United Kingdom, is the British Pound Sterling. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded translation losses of $110,839 and $30,485 for the nine month periods ended September 30, 2014 and September 30, 2013 respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products offered by the Company: TrialMaster, TrialOne, eClinical Suite and Promasys (the “EDC Software”). Service revenues are derived principally from the Company's delivery of the hosted solutions of its TrialMaster and eClinical Suite software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the collection of fees is probable; and (4) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in one reportable segment which is the delivery of EDC Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through four main activities, including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its TrialMaster and eClinical Suite software products as hosted application solutions delivered through a standard web-browser, with customer support and training services. The Company's TrialOne and Promasys solutions are presently available on a licensed basis. To date, hosted applications revenues have been primarily related to TrialMaster and eClinical Suite.

Revenues resulting from TrialMaster and eClinical Suite application hosting services consist of three components of services for each clinical trial. The first component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The second component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The third component involves services required to close out, or lock, the database for the clinical trial.

9

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

Fees charged and costs incurred for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work performed outside the original scope of work is contracted for separately as an additional fee and is generally recognized ratably over the remaining term of the hosting period. Fees for the first and third stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the second stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the eClinical Suite products consist of installation and server configuration, application hosting and related support services. Services for this offering are generally charged as a fixed fee payable on a quarterly or annual basis. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf software. From time-to-time a client might require significant modification or customization subsequent to delivery to the customer. The Company generally enters into software term licenses for its EDC Software products with its customers for three to five year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net 30 days.

In the past the Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and may, in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company may also enter into arrangements to provide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional services can be deemed to be as essential to the functionality of the software at inception and typically are for initial trial configuration, implementation planning, loading of software, building simple interfaces, running test data and documentation of procedures. Subsequent additions or extensions to license terms do not generally include additional professional services.

Pass-through Revenue and Expense

The Company accounts for pass-through revenue and expense in accordance with ASC 605-45, Principal Agent Considerations (“ASC 605-45”). In accordance with ASC 605-45 these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with third-party services provided to our customers by our service and product partners. These third-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

Maintenance Revenues

Maintenance includes telephone-based help desk support and software maintenance. The Company generally bundles customer support with the software license for the entire term of the arrangement. As a result, the Company generally recognizes revenues for both maintenance and software licenses ratably over the term of the software license and support arrangement. The Company allocates the revenues recognized for these arrangements to the different elements based on management's estimate of the relative fair value of each element. The Company generally invoices each of the elements based on separately quoted amounts and thus has a fairly accurate estimate of the relative fair values of each of the invoiced revenue elements.

10

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The fees associated with each business activity for the periods ended September 30, 2014 and September 30, 2013, respectively are:

	For the nine months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	3,363,576	$	2,584,285
Change orders		337,903		344,400
Maintenance		3,187,173		3,495,908
Software licenses		2,730,770		2,333,016
Professional services		1,700,498		1,625,600
Hosting		595,793		572,935
Total	$	11,915,713	$	10,956,144

	For the three months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	1,419,722	$	988,990
Change orders		140,949		119,870
Maintenance		1,175,527		1,186,023
Software licenses		1,444,623		430,323
Professional services		747,693		552,719
Hosting		196,175		199,696
Total	$	5,124,689	$	3,477,621

COST OF REVENUES

Cost of revenues primarily consists of costs related to hosting, maintaining and supporting the Company’s application suite and delivering professional services and support. These costs include salaries, benefits, and bonuses for the Company’s professional services staff. Cost of revenues also includes outside service provider costs. Cost of revenues is expensed as incurred.

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 consolidated balance sheets approximates fair value.

ACCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary. The allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. The Company had recorded an allowance for uncollectible accounts receivable of $142,051 as of September 30, 2014 and $65,341 as of December 31, 2013, respectively.

11

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The following table summarizes activity in the Company's allowance for doubtful accounts for the periods presented.

	September 30, 2014		December 31, 2013
Beginning of period	$	65,341	$	84,210
Bad debt expense		76,634		11,131
Write-offs		-0-		(30,000	)
Exchange rate impact		76		-0-
End of period	$	142,051	$	65,341

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any one financial institution may be in excess of FDIC-insured limits. As of September 30, 2014, $767,672 was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

Except as follows, the Company has no significant off-balance-sheet risk or credit risk concentrations. Financial instruments that subject the Company to potential credit risks are principally cash equivalents and accounts receivable. Concentrated credit risk with respect to accounts receivable is limited to creditworthy customers. The Company's customers are principally located in the United States and Europe. The Company is directly affected by the overall financial condition of the pharmaceutical, biotechnology and medical device industries and management believes that credit risk exists and that any credit risk the Company faces has been adequately reserved for as of September 30, 2014. The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses, when incurred, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of September 30, 2014, the Company believes no additional credit risk exists beyond the amounts provided for in our allowance for uncollectible accounts. The Company evaluates its allowance for uncollectable accounts on a monthly basis based on a specific review of receivable aging and the period that any receivables are beyond the standard payment terms. The Company does not require collateral from its customers in order to mitigate credit risk.

One customer accounted for 13% of our revenues during the nine month period ended September 30, 2014 or approximately $1,585,000. One customer accounted for 11% of our revenues during the nine month period ended September 30, 2013 or approximately $1,221,000. The following table summarizes the number of customers who individually comprise greater than 10% of total revenue and/or total accounts receivable and their aggregate percentage of the Company's total revenue and gross accounts receivable for the periods presented.

	Revenues				Accounts receivable
							Percentage of
	Number of		Percentage of		Number of		accounts
For the period ended	customers		total revenues		customers		receivable
September 30, 2014		1		13%		0		0%
December 31, 2013		1		11%		2		23%
September 30, 2013		1		11%		2		29%

The table below provides revenues from European customers for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

European revenues
For the nine months ended
September 30, 2014				September 30, 2013
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,750,331		14.7%	$	1,214,121		11.1%

12

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The Company serves all of its hosting customers from third-party web hosting facilities located in the United States. The Company does not control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the third-party web hosting facilities become unavailable, although in such circumstances, the Company's service may be interrupted during the transition.

PROPERTY AND EQUIPMENT

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

ASSET IMPAIRMENT

Acquisitions and Intangible Assets 

We account for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

OmniComm’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820, Fair Value Measurements and Disclosures.

DEFERRED REVENUE

Deferred revenue represents cash advances and amounts in accounts receivable as of the balance sheet date received in excess of revenue earned on on-going contracts. Payment terms vary with each contract but may include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation. As of September 30, 2014, the Company had $8,232,798 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 6.5 years. The Company had $5,702,672 in deferred revenues that are expected to be recognized in the next twelve fiscal months.

13

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $338,486 and $175,095 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

RESEARCH AND DEVELOPMENT EXPENSES

Software development costs are included in R&D and are expensed as incurred. ASC 985-20, Software Industry Costs of Software to Be Sold, Leased or Marketed (“ASC 985-20”), requires the capitalization of certain development costs of software to be sold once technological feasibility is established, which the Company defines as completion to the point of marketability. The capitalized cost is then amortized on a straight-line basis over the estimated product life. To date, the period between achieving technological feasibility and the general availability of such software has been short and software development costs qualifying for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs under ASC 985-20. During the nine month periods ended September 30, 2014 and September 30, 2013 we spent approximately $2,092,125 and $1,718,079 respectively, on R&D activities, which include costs associated with the development of our software products and services for our clients’ projects and which are primarily comprised of salaries and related expenses for our software developers and consulting fees paid to third-party consultants. R&D costs are primarily included under Salaries, benefits and related taxes in our Statement of Operations.

EMPLOYEE EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) was approved at our Annual Meeting of Shareholders on July 10, 2009. The 2009 Plan provides for the issuance of up to 7,500,000 shares to employees, directors and key consultants. The predecessor plan, the OmniComm Systems, Inc., 1998 Stock Incentive Plan (the “1998 Plan”) expired on December 31, 2008. The 1998 Plan provided for the issuance of up to 12,500,000 shares in accordance with the terms of the 1998 Plan document. Each plan is more fully described in “Note 14, Employee Equity Incentive Plans”. The Company accounts for its employee equity incentive plans under ASC 718, Compensation – Stock Compensation ("ASC 718") which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions.

ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company currently uses the Black Scholes option pricing model to determine grant date fair value.

EARNINGS PER SHARE

The Company accounts for Earnings per Share using ASC 260, Earnings per Share. Unlike diluted earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities.

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 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.

14

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

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

IMPACT OF NEW ACCOUNTING STANDARDS

During the first nine months of 2014, we adopted the following new accounting pronouncements:

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”, (“ASU No. 2013-11”). This ASU amends ASC 740, Income Taxes, to require that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward; to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward does not exist at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. Our adoption of this standard on January 1, 2014 did not have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Management is currently evaluating which transition approach to use and the impact of the adoption of this ASU on the Company's consolidated financial statements.

In August 2014, FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We believe the adoption of this guidance will not have a material effect on our consolidated financial statements.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.

NOTE 3: GOING CONCERN

We have experienced net losses and negative cash flows from operations and have utilized debt and equity financings to help provide for our working capital, capital expenditure and R&D needs. We will continue to require substantial funds to continue our R&D activities and to market, sell and commercialize our technology. We may need to raise substantial additional capital to fund our future operations. Our capital requirements will depend on many factors, including the following: problems, delays, expenses and complications frequently encountered by companies developing and commercializing new technologies; the progress of our R&D activities; the rate of technological advances; determinations as to the commercial potential of our technology under development; the status of competitive technology; the establishment of collaborative relationships; the success of our sales and marketing programs; and other changes in economic, regulatory or competitive conditions in our planned business.

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

15

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

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

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 our historical operating losses, negative cash flows and accumulated deficits for the period ending September 30, 2014 there is substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4: EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share were calculated using the weighted average number of shares outstanding of 90,417,480 and 87,515,641 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

Antidilutive shares of 81,482,435 and 79,502,620 have been omitted from the calculation of dilutive earnings/(loss) per share for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per shares. There were no differences between basic and diluted earnings per share for the nine month periods ended September 30, 2014 and September 30, 2013. The table below provides a reconciliation of anti-dilutive securities outstanding as of September 30, 2014 and September 30, 2013, respectively.

Anti-Dilutive Security	September 30, 2014		September 30, 2013
Preferred stock		2,750,149		2,750,149
Employee stock options		4,681,500		6,175,000
Warrants		48,463,517		44,728,873
Convertible notes		24,620,000		24,620,000
Shares issuable for accrued interest		967,269		1,228,598
Total		81,482,435		79,502,620

The employee stock options are exercisable at prices ranging from $0.045 to $0.64 per share. The exercise prices on the warrants range from $0.25 to $0.60 per share. Shares issuable upon conversion of Convertible Debentures have conversion prices ranging from $0.25 to $0.50 per share.

The Company’s convertible debt and convertible preferred stock have an anti-dilutive effect on net income/(loss) per share and were not included in the computation of diluted earnings per share.

16

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

For the nine months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)
Effect of dilutive securities - none		-0-		-0-		-0-		-0-			-0-		-0-
Diluted EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)

For the three months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)		Shares		Per-share
	numerator		denominator		amount		numerator		denominator		amount
Basic EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02
Effect of dilutive securities - none		-0-		-0-		-0-		-0-		-0-		-0-
Diluted EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02

NOTE 5: PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
	Cost		depreciation		value		Cost		depreciation		value		(years)
Computer & office equipment	$	1,852,102	$	1,447,075	$	405,027	$	1,822,098	$	1,326,256	$	495,842		5
Leasehold improvements		93,137		81,170		11,967		93,812		75,735		18,077		5
Computer software		1,585,252		1,520,180		65,072		1,556,497		1,477,801		78,696		3
Office furniture		113,980		104,210		9,770		114,373		99,555		14,818		5
Total	$	3,644,471	$	3,152,635	$	491,836	$	3,586,780	$	2,979,347	$	607,433

Depreciation expense for the nine month periods ended September 30, 2014 and September 30, 2013 was $181,520 and $174,436, respectively.

17

NOTE 6: INTANGIBLE ASSETS, AT COST

Intangible assets consist of the following:

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
Asset	Cost		amortization		value		Cost		amortization		value		(years)
eClinical customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		124,725		7,622		117,103		136,253		1,514		134,739		15
Promasys B.V. software code		72,837		13,353		59,484		72,943		2,431		70,512		5
Promasys B.V. URLs/Website		62,993		19,248		43,745		68,814		3,823		64,991		3
Total	$	1,653,256	$	1,432,924	$	220,332	$	1,670,711	$	1,400,469	$	270,242

Amortization expense was $34,549 and $-0- for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

Remaining amortization expense for the Company’s intangible assets is as follows:

2014	$	10,970
2015		43,880
2016		40,380
2017		22,883
2018		20,454
Thereafter		81,765
Total	$	220,332

NOTE 7: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	September 30, 2014		December 31, 2013
Accounts payable	$	570,092	$	724,421
Accrued payroll and related costs		620,026		260,072
Other accrued expenses		118,218		88,292
Accrued interest		948,168		1,468,171
Total accounts payable and accrued expenses	$	2,256,504	$	2,540,956

NOTE 8: LINES OF CREDIT AND NOTES PAYABLE

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit (“Line of Credit”) with The Northern Trust Company guaranteed by our Chief Executive Officer and Director, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. The Line of Credit matures on December 17, 2014 and carries a variable interest rate based on the prime rate. At September 30, 2014, $3,700,000 was outstanding on the Line of Credit at an interest rate of 2.25%.

At September 30, 2014, the Company owed $6,626,941 in notes payable all of which are unsecured. The table below provides details as to the terms and conditions of the notes payable.

18

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		September 30,				Long				Long
date	date	rate		2014		Current		term		Current		term
12/17/2012	12/16/2014		12%	$	20,000	$	20,000	$	-0-	$	-0-	$	-0-
1/1/2013	1/1/2015		10%		308,562		308,562		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
4/4/2014	4/1/2017		12%		45,000		-0-		45,000		-0-		-0-
4/4/2014	4/1/2017		12%		137,500		-0-		137,500		-0-		-0-
4/4/2014	4/1/2017		10%		120,000		-0-		120,000		-0-		-0-
4/4/2014	4/1/2017		12%		1,600,000		-0-		-0-		-0-		1,600,000
1/1/2014	4/1/2017		12%		980,000		-0-		-0-		-0-		980,000
Discount on note payable							-0-		-0-		-0-		(670,535	)
Total				$	6,626,941	$	328,562	$	302,500	$	-0-	$	5,325,344

At December 31, 2013, the Company owed $5,667,865 in notes payable all of which were unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		December 31,				Long				Long
date	date	rate		2013		Current		term		Current		term
12/31/2011	1/1/2015		12%	$	1,600,000	$	-0-	$	-0-	$	-0-	$	1,600,000
4/1/2012	1/1/2014		12%		17,500		17,500		-0-		-0-		-0-
12/17/2012	12/16/2014		12%		20,000		20,000		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
1/1/2013	1/1/2015		10%		308,562		-0-		308,562		-0-		-0-
1/1/2013	1/1/2015		10%		123,424		-0-		123,424		-0-		-0-
1/1/2013	1/1/2015		12%		45,000		-0-		45,000		-0-		-0-
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
3/5/2013	1/1/2015		12%		137,500		-0-		137,500		-0-		-0-
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
Discount on note payable							-0-		-0-		-0-		(447,666	)
Total				$	5,667,865	$	37,500	$	614,486	$	-0-	$	4,568,213

On January 1, 2013, the Company issued a promissory note in the principal amount of $529,000 and warrants to purchase 2,116,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of January 31, 2016 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for accrued interest in the amount of $529,000. The note carries an interest rate of 12% per annum and is due on January 1, 2016.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $400,141 was calculated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $128,859. The warrant liability (discount) will be amortized over the 36 month duration of the note payable. The Company will continue to perform a fair value calculation periodically on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

19

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

On January 1, 2013, the Company issued a promissory note in the amount of $308,562 in exchange for an existing promissory note in the same amount. The note carries an interest rate of 10% per annum and matures on January 1, 2015.

On January 1, 2013, the Company issued a promissory note in the amount of $123,424 in exchange for an existing promissory note in the same amount. The note carries an interest rate of 10% per annum and matures on January 1, 2015.

On January 1, 2013 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On February 1, 2013 the Company issued a promissory note in the amount of $20,000 to our Chairman and Chief Technology Officer, Randall G. Smith, in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2016.

On March 5, 2013 the Company issued a promissory note in the amount of $137,500 in exchange for a promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On April 1, 2013 the Company issued a promissory note in the amount of $2,866,879 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of March 31, 2016. The expiration date of the warrants associated with the promissory note was also extended to March 31, 2016.

On January 1, 2014, the Company issued a promissory note in the principal amount of $980,000 and warrants to purchase 3,920,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2017 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for accrued interest in the amount of $980,000. The note carries an interest rate of 12% per annum and is due on April 1, 2017.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $628,086 was calculated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $351,914. The warrant liability (discount) will be amortized over the 39 month duration of the note payable. The Company will continue to perform a fair value calculation periodically on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

On April 4, 2014 the Company issued a promissory note payable to our Chief Executive Officer and Director, Cornelis F. Wit, in the amount of $1,600,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $120,000 and paid $3,424 in principal in exchange for an existing promissory note in the amount of $123,424. The promissory note carries an interest rate of 10% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $137,500 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

20

NOTE 9: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of September 30, 2014.

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		September 30, 2014		Allocated discount		discount amortized		September 30, 2014		September 30, 2014		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	4/1/2016		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		-0-		150,000
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		-0-		160,000
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2016		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	8,815,000	$	775,000

The following table summarizes the convertible debt outstanding as of December 31, 2013.

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		December 31, 2013		Allocated discount		discount amortized		December 31, 2013		December 31, 2013		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	1/1/2015		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		150,000		-0-
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2015		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		160,000		-0-
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	9,125,000	$	465,000

10% Convertible Notes

During 1999, the Company issued 10% Convertible Notes payable in the amount of $862,500 pursuant to a private offering. There were costs of $119,625 associated with this offering. The net proceeds to the Company were $742,875. The notes bear interest at ten percent annually, payable semi-annually. The notes were convertible after maturity, which was September 30, 2004, into shares of common stock of the Company at $1.25 per share. As of September 30, 2014, $787,500 of the Convertible Notes had been repaid in cash or converted into 1,495,179 shares of common stock of the Company leaving an outstanding principal balance of $75,000 that is in default. There was $115,358 of accrued interest at September 30, 2014.

Secured Convertible Debentures

On September 30, 2009, the Company sold an aggregate of $1,400,000 principal amount 12% Secured Convertible Debentures (the “Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The Debentures, which bear interest at 12% per annum, matured on March 30, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. On March 30, 2011, the Company repaid $200,000 of the outstanding principal amounts owed and extended $1,200,000 of the convertible debentures until April 1, 2013, including $1,100,000 in convertible debentures held by our Chief Executive Officer and Director, Cornelis F. Wit. The Company also extended the expiration date of the warrants associated with the offering until September 30, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,200,000 of the convertible debentures including $1,100,000 due to our Chief Executive Officer and Director, Cornelis F. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

21

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

Convertible Debentures

On August 29, 2008, the Company sold $2,270,000 of convertible debentures and warrants to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit, and Guus van Kesteren, a Director of the Company. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, Mr. Wit and Mr. van Kesteren extended $1,920,000 of the convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On February 22, 2013 the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures due to Mr. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On April 21, 2014 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party.

On December 16, 2008, we sold $5,075,000 of convertible debentures and warrants to purchase an aggregate of 10,150,000 shares of our common stock to eleven accredited investors including our Chief Executive Officer and Director, Chief Operating Officer, Chairman and Chief Technology Officer, Chief Financial Officer and three of our Directors. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009 the officers, directors and an affiliate of the Company extended $4,980,000 of Convertible Notes until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $4,505,000 of the convertible debentures including $4,475,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, $25,000 due to our Chief Operating Officer and President, Stephen E. Johnson, and $5,000 due to our Chairman and Chief Technology Officer, Randall G. Smith, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On February 27, 2013 the Company and Matthew Veatch, a former director of the Company, extended the maturity date of $15,000 of convertible debentures issued to Mr. Veatch to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On March 6, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2014. The expiration date of the warrants associated with the debentures was also extended to January 1, 2014. On March 12, 2013, the Company and the lenders agreed to extend the maturity date of $100,000 of convertible debentures to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On December 5, 2013 the Company and Guus van Kesteren, a Director of the Company, extended the maturity date of $160,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On December 9, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On April 28, 2014, the Company and the lender agreed to extend the maturity date of $100,000 of convertible debentures to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016.  On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party.

On December 31, 2009, the Company sold an aggregate of $1,490,000 principal amount 12% convertible debentures and warrants to purchase an aggregate of 5,960,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to three accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The debentures, which bear interest at 12% per annum, matured on June 30, 2011. The debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. On June 30, 2011, the Company and the lenders agreed to extend all $1,490,000 of the convertible debentures until October 1, 2013, including $1,440,000 of the Debentures held by Mr. Wit. The Company also extended the expiration date of the warrants associated with the December 2009 offering until December 31, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,490,000 of the convertible debentures, including $1,440,000 due to Mr. Wit, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

22

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The payments required at maturity under the Company’s outstanding convertible debt at September 30, 2014 are as follows:

2014	$	75,000
2015		-0-
2016		9,590,000
Total	$	9,665,000

NOTE 10: FAIR VALUE MEASUREMENT

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

● Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

● Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.

 The valuation techniques that may be used to measure fair value are as follows:

A. Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method

C. Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

The Company also adopted the provisions of ASC 825, Financial Instruments (“ASC 825”). ASC 825 allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to re-measure any of its existing financial assets or liabilities under the provisions of this Statement. The Company elected the fair value option for the issuance of warrants associated with the new promissory notes issued in the nine month periods ended September 30, 2014 and September 30, 2013.

The Company’s financial assets or liabilities subject to ASC 820 as of September 30, 2014 include the conversion feature and warrant liability associated with convertible debentures issued during fiscal 2008 and 2009 and the warrants issued during 2011, 2013 and 2014 that are associated with notes payable that were issued to our Chief Executive Officer and Director, Cornelis F. Wit. The conversion feature and warrants were deemed to be derivatives (the “Derivative Instruments”) since a fixed conversion price cannot be determined for either of the Derivative Instruments due to anti-dilution provisions embedded in the offering documents for the convertible debentures. The derivative instruments were not issued for risk management purposes and as such are not designated as hedging instruments under the provisions of ASC 815, Disclosures about Derivative Instruments and Hedging Activities. See Note 9 – Convertible Notes Payable.

23

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

Following is a description of the valuation methodologies used to determine the fair value of the Company’s financial assets including the general classification of such instruments pursuant to the valuation hierarchy.

A summary as of September 30, 2014 of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2014		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,533,362	$	-0-	$	-0-	$	1,533,362
Warrant liability		3,754,666		-0-		-0-		3,754,666
Total of derivative liabilities	$	5,288,028	$	-0-	$	-0-	$	5,288,028

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the nine months ended September 30, 2014

(2) The fair value at the measurement date is equal to their carrying value on the balance sheet

Significant valuation assumptions of derivative instruments at September 30, 2014
Risk free interest rate	0.11%
Dividend yield	0.00%
Expected volatility	124.6% to 178.8%
Expected life (range in years)
Conversion feature liability	1.25 to 1.50
Warrant liability	1.25 to 2.50

24

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited) 

A summary as of December 31, 2013 of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at December 31,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	3,126,206	$	-0-	$	-0-	$	3,126,206
Warrant liability		5,943,977		-0-		-0-		5,943,977
Total of derivative liabilities	$	9,070,183	$	-0-	$	-0-	$	9,070,183

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the year ended December 31, 2013

(2) The fair value at the measurement date is equal to their carrying value on the balance sheet

Significant valuation assumptions of derivative instruments at December 31, 2013
Risk free interest rate	0.12% to 0.13%
Dividend yield	0.00%
Expected volatility	166.7% to 217.1%
Expected life (range in years)
Conversion feature liability	1.00 to 2.00
Warrant liability	1.00 to 2.25

A summary as of September 30, 2014 of the fair value of liabilities measured at fair value on a non-recurring basis follows:

	Carrying amount December 31,		Carrying amount September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		2014		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer lists (4)	$	134,739	$	117,103	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		70,512		59,484		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		64,991		43,745		-0-		-0-		68,814
Total	$	270,242	$	220,332	$	-0-	$	-0-	$	278,010

(3) The fair value of the acquired assets was estimated using the Income Approach with a discounted cash flow valuation methodology applied.

(4) The acquired Promasys B.V. software code, customer list and URLs/website are not measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

Other identifiable intangible assets, which are subject to amortization, are being amortized using the straight-line method over their estimated useful lives ranging from 3 to 15 years. The Impairment or Disposal of Long-Lived Asset subsection of ASC 360, Property, Plant and Equipment requires us to test the recoverability of long-lived assets, including identifiable intangible assets with definite lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In testing for potential impairment, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of impairment, if any.

The Company’s goodwill and other identifiable intangible assets with indefinite lives are measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3).

25

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The table below presents the fair value of the Goodwill as of September 30, 2014 and December 31, 2013.

Fair Value Measurements
	September 30, 2014		December 31, 2013
(Level 3)
Goodwill	$	618,541	$	675,710

Goodwill and other identifiable intangible assets with indefinite lives are reviewed for impairment annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets and identifiable intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that amounts may not be recoverable. If the testing performed indicates that impairment has occurred, the Company will record a noncash impairment charge for the difference between the carrying amount of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets in the period the determination is made. The $57,169 change in the value of Goodwill during the 9 month period ended September 30, 2014 is the result of exchange rate variance.

The table below presents the unrealized gains/losses for the nine month periods ended September 30, 2014 and September 30, 2013.

	Other income
	for the nine months ended
	September 30, 2014		September 30, 2013
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized gain/(loss) from changes in derivative liabilities at the reporting date	$	4,410,241	$	(2,524,671	)
Total unrealized gains/(losses) included in earnings	$	4,410,241	$	(2,524,671	)

The tables below set forth a summary of changes in fair value of the Company’s Level 3 financial liabilities at fair value for the periods ended September 30, 2014 and December 31, 2013. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of September 30, 2014 and December 31, 2013.

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		period
Period ended September 30, 2014
Derivatives:
Conversion feature liability	$	3,126,206	$	-0-	$	(1,592,844	)	$	-0-	$	-0-	$	1,533,362
Warrant liability		5,943,977		-0-		(2,817,397	)		628,086		-0-		3,754,666
Total of derivative liabilities	$	9,070,183	$	-0-	$	(4,410,241	)	$	628,086	$	-0-	$	5,288,028

26

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		year
Year ended December 31, 2013
Derivatives:
Conversion feature liability	$	2,287,323	$	-0-	$	838,883		$	-0-	$	-0-	$	3,126,206
Warrant liability		6,287,598		-0-		(743,762	)		400,141		-0-		5,943,977
Total of derivative liabilities	$	8,574,921	$	-0-	$	95,121		$	400,141	$	-0-	$	9,070,183

NOTE 11: COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating leases for its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at September 30, 2014 are as follows:

2014	$	169,095
2015		657,752
2016		369,825
2017		52,234
2018		5,354
Total	$	1,254,260

In addition to annual base rental payments, the Company pays for the operating expenses associated with its leased office space and is responsible for any escalation in operating expenses as determined in the leases. Rent expense was $663,961 and $665,932 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

The Company’s Fort Lauderdale, Florida corporate office lease expires in September 2016. The Company’s lease on its New Jersey field office expires in February 2016. The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in September 2017. The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in July 2015. The Company currently operates its wholly-owned subsidiary, OmniComm Promasys B.V, in the Netherlands under the terms of a lease that expires in October 2018.

LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2014, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

PATENT LITIGATION SETTLEMENT

On April 9, 2009, we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the license, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from January 1, 2009 until the expiration of the Licensed Patent equal to two percent (2%) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater. The remaining minimum royalty payments per year are as follows:

27

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

2014	$	625,000
2015		450,000
2016		450,000
2017		450,000
Total	$	1,975,000

During the nine month periods ended September 30, 2014 and September 30, 2013 the Company recorded a charge to earnings of $120,809 and $144,972 respectively, which amounts represent (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci License Agreement during the nine month periods ended September 30, 2014 and September 30, 2013 and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

We have employment agreements in place with the following members of our executive management team:

Cornelis F. Wit, Chief Executive Officer

Randall G. Smith, Chief Technology Officer

Stephen E. Johnson, President and Chief Operating Officer

The employment agreements provide, among other things, for participation in employee benefits available to employees and executives. Each of the agreements will renew for successive one-year terms unless the agreement is expressly cancelled by either the employee or the Company ninety days prior to the end of the term. Under the terms of the agreement, we may terminate the employee’s employment upon 30 days notice of a material breach and the employee may terminate the agreement under the same terms and conditions. The employment agreements contain non-disclosure and severance provisions, as well as non-compete clauses.

NOTE 12: RELATED PARTY TRANSACTIONS

On February 1, 2013, our Chairman and Chief Technology Officer, Randall G. Smith extended the maturity date of his $20,000 promissory note until January 1, 2016. The promissory note bears interest at 12% per annum. On December 31, 2011, Mr. Smith extended the maturity date of his promissory note until April 1, 2013. The note was originally issued on December 16, 2010 with a maturity date of December 31, 2011.     

On February 22, 2013, our Director, Guus van Kesteren, extended the maturity date of his $150,000 of convertible debentures to January 1, 2015. The debentures bear interest at 10% per annum. The convertible debentures were originally issued in August 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.     

On February 22, 2013, our Chief Operating Officer and President, Stephen E. Johnson extended the maturity date of his $25,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013, our Chairman and Chief Technology Officer, Randall G. Smith extended the maturity date of his $5,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

28

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

On December 5, 2013, our Director, Guus van Kesteren, extended the maturity date of his $160,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party.

On April 21, 2014, our Director, Guus van Kesteren, extended the maturity date of his $150,000 of convertible debentures to April 1, 2016. The debentures bear an interest rate of 10% per annum. The convertible debentures were originally issued in August 2008. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party.

As of September 30, 2014, we have an aggregate of $14,760,879 principal amount of convertible debentures and promissory notes outstanding to Cornelis F. Wit, our Chief Executive Officer and Director, and have issued certain warrants to Mr. Wit, as follows:

● In June 2008, Mr. Wit invested $510,000 in convertible notes. On August 29, 2008, Mr. Wit converted the $510,000 and invested an additional $1,260,000 in a private placement of convertible debentures and warrants to purchase 3,540,000 shares of our common stock. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $1,770,000 of convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● In February 2008, Mr. Wit invested $150,000 in promissory notes and from September 2008 to December 2008, Mr. Wit invested $4,200,000 in convertible notes. On December 16, 2008, Mr. Wit converted the $4,350,000 into a private placement of convertible debentures and warrants to purchase 8,700,000 shares of our common stock. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $4,350,000 of convertible debentures until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. In a private transaction on October 16, 2012, Mr. Wit purchased $125,000 of the December 2008 convertible debentures and the related 250,000 warrants from Mr. Ronald Linares, the Company’s former Chief Financial Officer. On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● From July 2009 to September 2009, Mr. Wit invested $1,100,000 which amount was aggregated under the terms of one convertible note dated September 30, 2009.  On September 30, 2009, Mr. Wit agreed to convert this convertible note into a private placement of secured convertible debentures bearing interest at a rate of 12% per annum with a maturity date of March 30, 2011. The convertible debentures were convertible into 4,400,000 shares of common stock and Mr. Wit received 4,400,000 warrants to purchase common stock of the Company at a price of $0.25. On March 30, 2011, the Company and Mr. Wit extended the maturity date of his convertible note until April 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 4,400,000 warrants issued with convertible note by two years to September 30, 2015. On February 22, 2013, the Company and Mr. Wit extended the maturity date of his convertible debentures to January 1, 2016 in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● From October 2009 to December 2009, Mr. Wit invested $1,440,000, which amount was aggregated under the terms of one convertible note dated December 31, 2009. On December 31, 2009, Mr. Wit agreed to convert this Convertible Note into a private placement of unsecured convertible debentures bearing interest at a rate of 12% per annum, which Convertible Debentures were due on June 30, 2011. The Company and Mr. Wit extended the maturity date of his convertible note until October 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 5,760,000 warrants issued with convertible note by two years to December 31, 2015. On February 22, 2013, the Company and Mr. Wit extended the maturity date of his convertible debentures to January 1, 2016 in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

29

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

● On March 31, 2011, the Company issued a note payable in the principal amount of $2,866,879 and warrants to purchase 11,467,517 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of March 31, 2016 to Mr. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of April 1, 2014. On April 1, 2013, the Company and Mr. Wit extended the maturity date of the promissory note to March 31, 2016.

The Promissory Note consolidates the amounts owed as detailed below:

i.	Promissory Note issued on April 13, 2010 for $450,000 with a maturity date of December 31, 2011;
ii.	Promissory Note issued on June 29, 2010 for $115,000 with a maturity date of December 31, 2011;
iii.	Promissory Note issued on September 30, 2010 for $695,000 with a maturity date of December 31, 2011;
iv.	Promissory Note issued on December 31, 2010 for $1,197,500 with a maturity date of December 31, 2011; and
v.	Promissory Note issued on December 31, 2010 for $409,379 with a maturity date of April 01, 2012.

● On December 31, 2011, the Company issued a promissory note in the principal amount of $1,600,000 and warrants to purchase 6,400,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of December 31, 2015 to Mr. Wit. The note carried an interest rate of 12% per annum and had a maturity date of January 1, 2015.

The promissory note consolidates the amounts owed as detailed below: 

i.	Promissory Note issued on May 13, 2011 for $96,000 with a maturity date of January 01, 2013;
ii.	Promissory Note issued on September 30, 2011 for $342,000 with a maturity date of April 01, 2014;
iii.	Promissory Note issued on October 05, 2011 for $130,000 with a maturity date of April 01, 2014;
iv.	Promissory Note issued on October 28, 2011 for $123,000 with a maturity date of April 01, 2014;
v.	Promissory Note issued on October 31, 2011 for $82,000 with a maturity date of April 01, 2014;
vi.	Promissory Note issued on November 23, 2011 for $60,000 with a maturity date of January 1, 2013; and
vii.	Accrued and unpaid interest in the amount of $767,000.

On April 4, 2014 the Company issued a promissory note payable to Mr. Wit, in the amount of $1,600,000 in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

● On January 1, 2013, the Company issued a promissory note in the principal amount of $529,000 and warrants to purchase 2,116,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of January 31, 2016 to Mr. Wit. The note carries an interest rate of 12% per annum and is due on January 1, 2016.

● On January 1, 2014, the Company issued a promissory note in the principal amount of $980,000 and warrants to purchase 3,920,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2017 to Mr. Wit in exchange for accrued interest in the amount of $980,000. The note carries an interest rate of 12% per annum and is due on April 1, 2017.

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit with The Northern Trust Company guaranteed by our Chief Executive Officer and Director, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. The Line of Credit matures on December 17, 2014 and carries a variable interest rate based on the prime rate. At September 30, 2014, $3,700,000 was outstanding on the Line of Credit at an interest rate of 2.25%.

For the nine months ended September 30, 2014 and September 30, 2013 we incurred $1,818,911 and $1,750,327, respectively, in interest expense payable to related parties. 

30

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

NOTE 13: STOCKHOLDERS’ (DEFICIT)

Our authorized capital stock consists of 250,000,000 shares of common stock, $.001 par value per share, and 10,000,000 shares of preferred stock, par value $.001 per share, of which 5,000,000 shares have been designated as 5% Series A Preferred Stock, 230,000 shares have been designated as Series B Preferred Stock, 747,500 shares have been designated as Series C Preferred Stock and 250,000 shares have been designated as Series D Preferred Stock.

As of September 30, 2014 we had the following outstanding securities:

o 91,504,659 shares of common stock issued and outstanding;

o 48,463,517 warrants issued and outstanding to purchase shares of our common stock;

o 4,125,224 shares of our Series A Preferred Stock issued and outstanding;

o -0- shares of our Series B Preferred Stock issued and outstanding;

o -0- shares of our Series C Preferred Stock issued and outstanding; 

o 250,000 share of our Series D Preferred Stock issued and outstanding; and

o $9,665,000 principal amount Convertible Debentures convertible into 24,620,000 shares of common stock.

Common Stock

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

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

On July31, 2014, we issued 1,400,000 restricted shares of our common stock to our senior management team and our Board of Directors under the 2009 Equity Incentive Plan of OmniComm Systems, Inc. (the “2009 Plan”). The restrictions on the shares lapse ratably over a 3 year period. The 2009 Plan is more fully described in “Note 14, Employee Equity Incentive Plans”.

Preferred Stock

Our Board of Directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. In addition, the Board of Directors may fix and determine all privileges and rights of the authorized preferred stock series including:

o  dividend and liquidation preferences;

o voting rights;

o conversion privileges; and 

o redemption terms. 

Our Board of Directors may authorize the issuance of preferred stock which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations and restrictions, if any, upon the payment of dividends on our common stock to be effective while any shares of preferred stock are outstanding.

31

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The following table presents the cumulative arrearage of undeclared dividends by class of preferred stock as of September 30, 2014 and September 30, 2013, respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share
	September 30,				as of September 30,
Series of preferred stock	2014		2013		2014		2013
Series A	$	2,534,711	$	2,328,450	$	0.61	$	0.56
Series B		609,887		609,887	$	3.05	$	3.05
Series C		1,472,093		1,472,093	$	4.37	$	4.37
Total preferred stock arrearage	$	4,616,691	$	4,410,430

The following table presents preferred dividends accreted for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, and the per share effect of the preferred dividends if their effect was not anti-dilutive.

	Dividends accreted				Dividends per share
	nine months ended September 30,				nine months ended September 30,
	2014		2013		2014		2013
Preferred stock dividends in arrears Series A	$	154,272	$	154,272	$	0.037	$	0.037
Preferred stock dividends in arrears Series B	$	-0-	$	-0-	$	-0-	$	-0-
Preferred stock dividends in arrears Series C	$	-0-	$	-0-	$	-0-	$	-0-

Warrants Issued for Services and in Capital Transactions

The following tables summarize all outstanding warrants for the periods ended September 30, 2014 and December 31, 2013, and the related changes during these periods.

September 30, 2014 warrants outstanding

September 30, 2014 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

September 30, 2014

remaining contractual life

exercise price

September 30, 2014

exercise price

$0.25

–

$0.60

48,463,517

1.41

$

0.35

48,463,517

$

0.35

December 31, 2013 warrants outstanding

December 31, 2013 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

December 31, 2013

remaining contractual life

exercise price

December 31, 2013

exercise price

$0.25

–

$0.60

44,728,873

2.05

$

0.36

44,728,873

$

0.36

Warrants
Balance at December 31, 2013		44,728,873
Issued		3,920,000
Exercised		-0-
Expired/forfeited		(185,356	)
Balance at September 30, 2014		48,463,517
Warrants exercisable at September 30, 2014		48,463,517
Weighted average fair value of warrants granted during 2014	$	0.15

Other Comprehensive (Loss)

Due to the availability of net operating losses and related deferred tax valuations, there is no tax effect associated with any component of other comprehensive (loss). The following table lists the beginning balance, quarterly activity and ending balance of the components of accumulated other comprehensive (loss).

32

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

	Foreign currency			Accumulated other
	translation			comprehensive (loss)
Balance at December 31, 2012	$	(69,092	)	$	(69,092	)
2013 Activity		(18,512	)		(18,512	)
Balance at December 31, 2013		(87,604	)		(87,604	)
2014 Activity		(110,839	)		(110,839	)
Balance at September 30, 2014	$	(198,443	)	$	(198,443	)

NOTE 14: EMPLOYEE EQUITY INCENTIVE PLANS

Stock Option Plan

Description of 2009 Equity Incentive Plan

In 2009, the Company’s Board of Directors and shareholders approved the 2009 Equity Incentive Plan of OmniComm Systems, Inc. (the “2009 Plan”). The 2009 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. Pursuant to the 2009 Plan, 7,500,000 shares of the Company’s common stock are authorized for issuance.

The maximum term for any option grant under the 2009 Plan is ten years from the date of the grant; however, options granted under the 2009 Plan will generally expire five years from the date of grant for most employees, officers and directors of the Company. Options granted to employees generally vest either upon grant or in two installments. The first vesting, which is equal to 50% of the granted stock options, occurs upon completion of one full year of employment from the date of grant and the second vesting occurs on the second anniversary of the date of grant. The vesting period typically begins on the date of hire for new employees and on the date of grant for existing employees. The restrictions on restricted shares granted to employees generally lapse in three equal annual installments on the anniversary of the date of grant.  Any unvested stock options or restricted shares with restrictions that have not lapsed that are granted under the 2009 Plan are forfeited and expire upon termination of employment.

As of September 30, 2014, there were 3,902,500 outstanding options and 2,625,000 restricted stock shares that have been granted under the 2009 Plan. At September 30, 2014, there were 972,500 shares available for grant as options or other forms of share-based compensation under the 2009 Plan.

Description of 1998 Stock Incentive Plan

In 1998, the Company’s Board of Directors and shareholders approved the 1998 Stock Incentive Plan of OmniComm Systems, Inc. (the “1998 Plan”). The 1998 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. Pursuant to the 1998 Plan, 12,500,000 shares of the Company’s common stock were authorized for issuance. The 1998 Plan expired as of December 31, 2008. As of September 30, 2014, there were 779,000 outstanding options that have been granted under the 1998 Plan.

33

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The following table summarizes the stock option activity for the Company’s equity incentive plans:

						Weighted
				Weighted		average
				average		remaining
	Number of			exercise price		contractual term		Aggregate
	shares			(per share)		(in years)		intrinsic value
Outstanding at December 31, 2012		10,452,500		$	0.36		1.68	$	149,598
Granted		350,000			0.17
Exercised		(100,000	)		0.18
Forfeited/cancelled/expired		(4,957,500	)		0.42
Outstanding at December 31, 2013		5,745,000			0.29		1.70	$	93,945
Granted		150,000			0.16
Exercised		-0-			-0-
Forfeited/cancelled/expired		(1,213,500	)		0.54
Outstanding at September 30, 2014		4,681,500		$	0.23		1.35	$	115,650
Vested and exercisable at September 30, 2014		4,281,500		$	0.23		1.10	$	108,475

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price at quarter-end and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2014.

The total number of shares vesting and the fair value of shares vesting for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, was:

	Number of options		Fair value of
	vested		options vested
Fair value of options vesting during the nine months ended September 30, 2014		570,834	$	66,389
Fair value of options vesting during the nine months ended September 30, 2013		593,833	$	62,204

Cash received from stock option exercises for the nine month periods ended September 30, 2014 and September 30, 2013 was $-0- and $-0-, respectively. Due to the Company’s net loss position, no income tax benefit has been realized during the nine month periods ended September 30, 2014 and September 30, 2013.

The following table summarizes information concerning options outstanding at September 30, 2014:

Awards breakdown by price range at September 30, 2014
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,302,500		1.55	$	0.15		2,952,500		1.25	$	0.15
0.21	to	0.29		600,000		1.18		0.24		550,000		0.95		0.25
0.30	to	0.49		80,000		0.23		0.38		80,000		0.23		0.38
0.50	to	0.70		699,000		0.68		0.55		699,000		0.68		0.55
0.00	to	0.70		4,681,500		1.35	$	0.23		4,281,500		1.10	$	0.23

34

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

The following table summarizes information concerning options outstanding at December 31, 2013:

Awards breakdown by price range at December 31, 2013
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,251,000		2.16	$	0.15		2,530,166		1.86	$	0.16
0.21	to	0.29		750,000		1.64		0.25		650,000		1.20		0.25
0.30	to	0.49		110,000		0.98		0.38		110,000		0.98		0.38
0.50	to	0.70		1,634,000		0.87		0.59		1,634,000		0.87		0.59
0.00	to	0.70		5,745,000		1.70	$	0.29		4,924,166		1.42	$	0.32

The weighted average fair value (per share) of options granted during the nine month period ended September 30, 2014 was $0.16 and $0.17 during the nine month period ended September 30, 2013. The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based Payments

Based on analysis of its historical volatility, the Company expects that the future volatility of its share price is likely to be similar to the historical volatility the Company experienced since the Company’s commercialization activities were initiated during the second half of 2000. The Company used a volatility calculation utilizing the Company’s own historical volatility to estimate its future volatility for purposes of valuing the share-based payments that have been granted. Actual volatility, and future changes in estimated volatility, may differ substantially from the Company’s current estimates.

The Company utilizes the historical data available regarding employee and director exercise activity to calculate an expected life of the options. The table below presents the weighted average expected life in years of options granted under the Plan as described above. The risk-free rate of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds with the expected term of the option granted.

Below are the assumptions for the fair value of share-based payments for the nine month periods ended September 30, 2014 and September 30, 2013.

	Stock option assumptions for the nine months ended
Stock option assumptions	September 30, 2014		September 30, 2013
Risk-free interest rate		0.93%		0.70%
Expected dividend yield		0.0%		0.0%
Expected volatility		199.0%		203.4%
Expected life of options (in years)		5		5

The following table summarizes weighted average grant date fair value activity for the Company’s incentive stock plans:

	Weighted average grant date fair value
	2014		2013
Stock options granted during the nine month period ended September 30,	$	0.16	$	0.17
Stock options vested during the nine month period ended September 30,	$	0.12	$	0.10
Stock options forfeited during the nine month period ended September 30,	$	0.43	$	0.28

35

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

A summary of the status of the Company’s non-vested shares underlying stock options as of September 30, 2014, and changes during the nine month period ended September 30, 2014 is as follows:

	Shares underlying stock		Weighted average grant
	options		date fair value
Nonvested shares at January 1, 2014		820,834	$	0.13
Nonvested shares at September 30, 2014		400,000	$	0.16

As of September 30, 2014, approximately $39,697 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.2 years.

NOTE 15: INCOME TAXES

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows:

	September 30, 2014			September 30, 2013
Federal statutory rate applied to income/(loss) before income taxes	$	165,693		$	(1,662,692	)
Increase/(decrease) in income taxes results from:
Current tax expense		35,407			48,599
Non deductible expenses		(1,482,741	)		1,144,767
Change in deferred assets		49,571			37,086
Change in valuation allowance		1,267,477			480,839
Income tax expense	$	35,407		$	48,599

The components of income tax expense/(benefit) for the nine month periods ended:

	September 30, 2014			September 30, 2013
Current tax expense	$	35,407		$	48,599
Deferred tax expense/(benefit):
Bad debt allowance		(28,837	)		13,106
Operating loss carryforward		(1,288,211	)		(531,031	)
Amortization of intangibles		4,111			-0-
Patent litigation settlement		45,460			37,086
		(1,267,477	)		(480,839	)
Valuation allowance		1,267,477			480,839
Total tax expense	$	35,407		$	48,599

36

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND SEPTEMBER 30, 2013

(unaudited)

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

	September 30, 2014			September 30, 2013
Amortization of intangibles	$	279,587		$	283,698
Bad debt allowance		52,452			17,608
Patent litigation liability accrual		269,948			349,596
Operating loss carryforwards		19,508,693			17,887,001
Gross deferred tax assets		20,110,680			18,537,903
Valuation allowance		(20,110,680	)		(18,537,903	)
Net deferred tax liability/(asset)	$	-0-		$	-0-

The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $54,089,558. This loss is allowed to be offset against future income until the year 2034 when the NOLs will expire. Other timing differences relate to depreciation and amortization for the stock acquisition of Education Navigator in 1998. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through September 30, 2014. The change in the valuation allowance for the nine month period ended September 30, 2014 was an increase of $1,267,477.

NOTE 16: SUBSEQUENT EVENTS

On October 7, 2014 the Company paid down $200,000 in principal on the Line of Credit.  As of October 7, 2014 the outstanding balance on the Line of Credit was $3,500,000.

37

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General 

The following information should be read in conjunction with the information contained in our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere herein and other information set forth in this report.

Forward-Looking Statements

Statements contained in this Form 10-Q 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, contained in this Form 10-Q 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-Q. Therefore, our actual experience and results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward-looking statements should not be regarded as a representation by us or any other person that these plans will be consummated or that estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. The Company does not undertake any obligation to update or revise any forward-looking statement made by it or on its behalf, whether as a result of new information, future events or otherwise.

Overview

We are a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”), and other clinical trial sponsors worldwide. Our proprietary EDC software applications: TrialMaster^®; TrialOne^®; eClinical Suite and Promasys^® (the “eClinical Software Products”), allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

In 2014, the primary focus of our strategy includes:

● Increasing our penetration of the Phase I trial market with our dedicated Phase I solution, TrialOne;

● Stimulating demand by providing clinical trial sponsors with high value eClinical applications and services;

● Expanding our penetration of the large pharmaceutical sponsor market;

● Broadening our suite of services and software applications on an organic R&D basis and on a selective basis via the acquisition or licensing of complementary solutions;

● Expanding our business development efforts in Europe to capitalize on our operational and clinical capabilities vis-à-vis our competition in that geographic market;

● Providing our services to small and midsize pharmaceutical, biotechnology, medical device companies and CROs; and

● Emphasizing our low operating costs.

Our operating focus is first, to increase our sales and marketing capabilities and penetration rate and secondly, to continue developing and improving our software solutions and services to ensure our services and products remain an attractive, high-value EDC choice.  During 2013 and the first nine months of 2014, we increased our marketing and sales efforts and expanded the scope of our CRO Preferred Program in order to increase our penetration of the domestic CRO market.  CROs are organizations that provide support and services to pharmaceutical, biotech, medical devices and other clinical trial sponsors. CROs can range from small specialty niche service providers to very large global service providers. According to a Tufts Center for the Study of Drug Development study published in late 2012, the overall US market for the 15 highest CRO-concentration geographic areas is estimated at between $32.5 and $39.5 billion. A single CRO could be managing clinical trials for one or more trial sponsors. Our CRO Preferred Program is designed to help the CRO service their existing clients and win new business. By building our relationship with the CRO, we gain access to trial sponsors that we might not be able to reach through other sales channels. The CRO Preferred Program offers our suite of EDC solutions to the CROs with a number of advantages including fixed pricing with no upfront fees, product demonstration support to trial sponsors, sales support, and integrated eLearning. We will seek to expand the scope of our sales and marketing efforts both domestically and in Europe during the remainder of 2014.

38

Our ability to compete within the EDC and eClinical industries is predicated on our ability to continue enhancing and broadening the scope of solutions we offer. Our R&D efforts are focused on developing new, complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. We spent approximately $2,092,125 and $1,718,079 on R&D activities during the nine months ended September 30, 2014 and September 30, 2013, respectively.  The majority of these expenses represent salaries and related benefits to our developers which include the costs associated with the continued development of our EDC software applications to meet current customer requirements and with our efforts at enhancing our suite of products by incorporating new features and services we believe will improve the products and consequently improve our market position. As our industry matures a critical success factor will be the ability of eClinical service providers to offer robust, end-to-end solutions than can either provide a comprehensive eClinical solution for our clients or that will allow us the ability to seamlessly integrate with complementary partnered products and services.  Our R&D team is comprised of software programmers, engineers and related support personnel. 

Our selling efforts include marketing our products to several Fortune 1000 pharmaceutical and medical device manufacturers and several of the largest CROs. We have experienced success in broadening our client roster over the past several quarters, via both organic growth and through acquisitions. Continued success in broadening our existing client relationships and forging new relationships should provide us the opportunity to limit our need for funding our operations via debt and equity capital. Continuing to obtain contracts with clients of this size and reputation will also increase the credibility of the Company to the clinical trial market.  We believe that strengthening our reputation and broadening the scope of our brand recognition will serve to improve the effectiveness of our sales and marketing efforts.

Our business development focus continues to include increasing our penetration of all phases of the clinical trial market with a particular emphasis on becoming the market leader in Phase I EDC services. We believe this market is an operating and strategic strength of the Company due to the inherent flexibility of our solutions including the solutions provided by our TrialOne products and services. We believe we have the ability to produce trials more quickly and economically than our competitors for this specialized and large market. During 2013 and the first nine months of 2014 we experienced positive strides towards achieving this goal.  We successfully increased the number of clients utilizing our software on a licensed basis as well as increasing the scope of licenses existing clients had deployed in our eClinical and TrialMaster product lines.  In the first nine months of 2014 we added fifteen new clients to our base of installed licenses and fourteen existing clients expanded their licenses.  We expect to experience continued success in penetrating the market for larger pharmaceutical, biotechnology and medical device clinical trial sponsors as we continue expanding our marketing and sales efforts during the remainder of 2014 and into 2015.

Our clients are able to partially or completely license our EDC solutions. The licensing business model provides our clients with a more cost effective means of deploying our EDC solutions on a large-scale basis. Our licensed products, falling under the auspices of either a Tech Transition (partial transfer with some services performed by OmniComm) or Tech Transfer, allows us to broaden our potential client base, provides us with a high-margin revenue source and affords us the ability to improve our competitive position within the EDC industry.  Additionally, we continue to focus on adding CROs as strategic and marketing partners. These relationships provide marketing leverage in the form of joint marketing and sales efforts and provide an installed base of trained users for our EDC and eClinical software applications. This installed base of users increases our ability to provide rapidly developed, cost effective solutions for our clients.  Additionally, we believe we have established an effective presence in the European clinical trial market and will seek to expand the scope of our sales and marketing operations there.  In 2013 we expanded our presence in Europe with the acquisition of Promasys B.V. Our acquisition of Promasys B.V., which is located in the Netherlands, afforded us the opportunity to expand our product line. Promasys’ EDC solution is focused on academic and investigator initiated trials. It provides these unique users with a robust, feature rich solution that is quickly deployed and easy to operate. The European market accounted for approximately 15% of total revenues for the nine months ended September 30, 2014.

We feel that the momentum established from new client acquisitions and our ability to retain clients for repeat engagements provide a good operating base from which to build during the remainder of 2014.  We increased the marketing and business development budget for our TrialOne product during 2013 and the first nine months of 2014 as we place increased emphasis on increasing our penetration of the Phase I market both in the U.S. and in Europe. We believe that segment of the EDC market is the least penetrated and allows for the greatest potential increases in market share and in sales volumes.  We expect to continue increasing the level of resources deployed in our sales and marketing efforts through the addition of sales personnel and by increasing the number of industry tradeshows and conferences that we attend. We feel that a combination of our existing infrastructure, broadened array of eClinical products and services and increased success in new client acquisition, coupled with our ability to retain our existing clients will allow us to compete effectively within the EDC market. 

39

The nine months ended September 30, 2014 compared with the nine months ended September 30, 2013

Results of Operations

A summarized version of our results of operations for the nine months ended September 30, 2014 and September 30, 2013 is included in the table below.

Summarized Statement of Operations

For the nine months ended

September 30, 

				% of						% of			$			%
	2014			Revenues			2013			Revenues			Change			Change
Total revenues	$	11,915,713					$	10,956,144					$	959,569			8.8	%
Cost of sales		2,970,451			24.9	%		2,239,454			20.4	%		730,997			32.6	%
Gross margin		8,945,262			75.1	%		8,716,690			79.6	%		228,572			2.6	%
Salaries, benefits and related taxes		7,954,833			66.8	%		6,496,528			59.3	%		1,458,305			22.4	%
Rent		663,961			5.6	%		665,932			6.1	%		(1,971	)		-0.3	%
Consulting		60,669			0.5	%		117,410			1.1	%		(56,741	)		-48.3	%
Legal and professional fees		277,262			2.3	%		205,767			1.9	%		71,495			34.7	%
Other expenses		1,030,828			8.7	%		627,660			5.7	%		403,168			64.2	%
Selling, general and administrative		892,912			7.5	%		634,481			5.8	%		258,431			40.7	%
Total operating expenses		10,880,465			91.4	%		8,747,778			79.8	%		2,132,687			24.4	%
Operating (loss)		(1,935,203	)		-16.2	%		(31,088	)		-0.3	%		(1,904,115	)	n/m
Interest expense		(1,979,879	)		-16.6	%		(1,858,279	)		-17.0	%		(121,600	)		6.5	%
Interest income		77			0.0	%		9			0.0	%		68		n/m
Change in derivatives		4,410,241			37.0	%		(2,524,671	)		-23.0	%		6,934,912		n/m
Transaction (loss)		(54,915	)		-0.5	%		(4,497	)		0.0	%		(50,418	)	n/m
Income/(loss) before income taxes and dividends		440,321			3.7	%		(4,418,526	)		-40.3	%		4,858,847		n/m
Income tax (expense)		(35,407	)		-0.3	%		(48,599	)		-0.4	%		13,192			-27.1	%
Net income/(loss)		404,914			3.4	%		(4,467,125	)		-40.8	%		4,872,039		n/m
Total preferred stock dividends		(154,272	)		-1.3	%		(154,272	)		-1.4	%		-0-			0.0	%
Net income/(loss) attributable to common stockholders	$	250,642			2.1	%	$	(4,621,397	)		-42.2	%	$	4,872,039		n/m
Net income/(loss) per share	$	0.00					$	(0.05	)
Weighted average number of shares outstanding		90,417,480						87,515,641

The table below provides a comparison of our recognized revenues for the nine months ended September 30, 2014 and September 30, 2013.

	For the nine months ended
Revenue activity	September 30, 2014				September 30, 2013				$ Change			% Change
Set-up fees	$	3,363,576	28.2	%	$	2,584,285	23.6	%	$	779,291			30.2	%
Change orders		337,903	2.9	%		344,400	3.1	%		(6,497	)		-1.9	%
Maintenance		3,187,173	26.7	%		3,495,908	32.0	%		(308,735	)		-8.8	%
Software licenses		2,730,770	22.9	%		2,333,016	21.3	%		397,754			17.0	%
Professional services		1,700,498	14.3	%		1,625,600	14.8	%		74,898			4.6	%
Hosting		595,793	5.0	%		572,935	5.2	%		22,858			4.0	%
Total	$	11,915,713	100.0	%	$	10,956,144	100.0	%	$	959,569			8.8	%

Overall Revenue increased by $959,569 or 8.8%. This increase is primarily the result of increases in set-up fees and software licenses offset by a decrease in maintenance.

40

We recorded revenue of $8,509,671 including $3,363,576 from set-up fees and $1,770,228 from maintenance associated with our TrialMaster suite during the nine months ended September 30, 2014 compared with revenue of $7,269,312 that included $2,584,285 in set-up fees and $2,045,492 in maintenance revenues during the nine months ended September 30, 2013.  

We recorded $1,618,564 in revenues associated with clients using the eClinical software application suite (“eClinical”) during the nine months ended September 30, 2014 compared with $2,598,287 for the nine months ended September 30, 2013.  eClinical revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.  

We recorded $214,602 in revenues from hosting activities and $124,920 in professional services associated with the eClinical suite during the nine months ended September 30, 2014 compared with $326,692 from hosting activities and $384,606 from professional services for the nine months ended September 30, 2013.  Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing that application. In addition we recorded $1,033,184 in revenues from maintenance relating to eClinical for the nine months ended September 30, 2014 as compared to $1,450,665 for the nine months ended September 30, 2013.

We recorded revenue of $990,253 including $366,743 from licensing and $493,235 from professional services associated with clients utilizing our TrialOne EDC software for the nine months ended September 30, 2014 compared with revenue of $1,088,544 including $678,019 from licensing and $382,800 from professional services for the nine months ended September 30, 2013.   We are continuing our efforts at enhancing our sales and marketing campaign for the TrialOne application.  We expect to increase our participation in industry trade shows and conferences and are in the process of expanding our dedicated sales force for the TrialOne software.  TrialOne revenues are comprised of license subscriptions and maintenance services since the software is currently only sold on a technology transfer basis.

We recorded revenue of $797,225 for the nine months ended September 30, 2014 including $401,412 from licensing and $321,010 from maintenance associated with clients utilizing the Promasys EDC solution that we acquired in the 4^th quarter of 2013.

Our TrialMaster EDC application has historically been sold on an application service provider (“ASP”) basis that provides EDC and other services such as an enterprise management suite which assists our clients in the pharmaceutical, biotechnology and medical device industries in accelerating the completion of clinical trials. During 2009 we completed the acquisition of the eResearch EDC Assets and TrialOne and in 2013 we acquired Promasys (collectively the “Acquired Software”).  These software applications have historically been sold on a licensed or technology transfer basis.  As we continue developing our software applications and our client relationships mature, we expect some of our clients to deploy TrialMaster on a licensed, rather than ASP hosted basis. We expect the Acquired Software applications to continue to be sold primarily on a licensed basis.

TrialMaster contracts for ASP services provide for pricing that is based on both the size and duration of the clinical trial. Size parameters include the number of case report forms used to collect data and the number of sites utilizing TrialMaster. The client will pay a trial setup fee at the beginning of a project based on the previously mentioned factors and then pay an on-going maintenance fee for the duration of the clinical trial that provides software, network and site support during the trial.

Generally, ASP contracts will range in duration from one month to several years. ASP set-up fees are generally recognized in accordance with ASC 605,“Revenue Recognition”, which requires that the revenues be recognized ratably over the life of the contract. ASP maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

License contracts are typically sold on a subscription basis that takes into account system usage both on a data volume and system user basis.  Pricing includes additional charges for consulting services associated with the installation, validation, training and deployment of our eClinical software and solutions.  Licensed contracts of the eClinical suite have historically been sold both on a term and on a perpetual license basis with hosting and maintenance charges being paid quarterly.  The Company expects any licenses it sells of its software products to be sold under three to five year term licenses.

Our top five customers accounted for approximately 29.5% of our revenues during the nine months ended September 30, 2014 and approximately 38.7% of our revenues during the nine months ended September 30, 2013.  One customer accounted for approximately 13.3% of our revenues during the nine months ended September 30, 2014.   One customer accounted for approximately 11.1% of our revenues during the nine months ended September 30, 2013. The loss of any of these contracts or these customers in the future could adversely affect our results of operations. 

41

Cost of goods sold increased approximately 32.6% or $730,997 for the nine months ended September 30, 2014 as compared to the nine months ended September 30, 2013.  Cost of goods sold were approximately 24.9% of revenues for the nine months ended September 30, 2014 compared to approximately 20.4% for the nine months ended September 30, 2013. Cost of goods sold relates primarily to (i) salaries and related benefits associated with the programmers, developers and systems analysts producing clinical trials on behalf of our clients and (ii) the costs associated with pass-through revenues. Cost of goods sold increased during the nine months ended September 30, 2014 due to increases in both of these categories. We added additional headcount in order to properly service both new clients and additional work from existing clients.  The costs associated with the headcount are recognized as incurred, but the revenue from the trials is recognized over the life of the trial. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin

Overall, total operating expenses increased approximately 24.4% for the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013.  The increase in operating expenses is primarily the result of an increase in headcount to support trials from new clients and additional work from existing clients.

Salaries and related expenses were our biggest operating expense at 73.1% of total operating expenses for the nine months ended September 30, 2014 compared to 74.3% of total operating expenses for the nine months ended September 30, 2013.  Salaries and related expenses increased by 22.4% for the nine months ended September 30, 2014 when compared to the same period ended September 30, 2013.  The table below provides a summary of the significant components of salary and related expenses by primary cost category.

For the nine months ended
	September 30, 2014		September 30, 2013		$ Change			% Change
OmniComm corporate operations	$	5,483,810	$	4,958,637	$	525,173			10.6	%
New Jersey operations office		477,032		258,756		218,276			84.4	%
OmniComm Europe, GmbH		601,072		630,622		(29,550	)		-4.7	%
OmniComm Ltd.		726,033		442,776		283,257			64.0	%
OmniComm Spain		116,578		111,100		5,478			4.9	%
OmniComm Promasys B.V.		427,678		-0-		427,678		n/a
Employee stock compensation		122,630		94,637		27,993			29.6	%
Total salaries and related expenses	$	7,954,833	$	6,496,528	$	1,458,305			22.4	%

We currently employ approximately 61 employees out of our Ft. Lauderdale, Florida Corporate Office (“Corporate Office”), 12 employees out of our New Jersey regional operating office, 14 out-of-state employees, 11 employees out of a wholly-owned subsidiary in the United Kingdom, 20 employees out of a wholly-owned subsidiary in Bonn, Germany, 4 employees out of a wholly-owned subsidiary in Leiden, the Netherlands and 1 employee out of a wholly-owned subsidiary in Spain.  We expect to continue to selectively add experienced sales and marketing personnel in an effort to increase our market penetration, particularly as it relates to the largest pharmaceutical, biotechnology and CRO customers and to continue broadening our client base domestically as well as in Europe.  

During the nine months ended September 30, 2014 and the nine months ended September 30, 2013 we incurred $122,630 and $94,637, respectively, in salary expense in connection with ASC 718, Compensation – Stock Compensation, which establishes standards for transactions in which an entity exchanges its equity instruments services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

Rent and related expenses decreased by approximately 0.3% during the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013.  The table below details the significant portions of our rent expense.  In particular, the decrease in 2014 is primarily associated with decreases in our Corporate Office, Co-location and disaster recovery facilities and straight line rent expenses offset by increases in our other facilities’ rent expenses.  Our primary data site is located at a Cincinnati Bell owned Co-location facility in Cincinnati, Ohio and we will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We lease Co-location and disaster recovery space in the Ft. Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. This lease expires in April 2016.  We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH under a lease that expires in July 2015.  We currently lease office space for a regional operating office in New Jersey under a lease that expires in February 2016.  Our OmniComm Ltd. subsidiary leases office space in Southampton, UK under a lease that expires in September 2017.  Our OmniComm Promasys B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018.  Our Corporate Office lease expires in September 2016.  The table below provides the significant components of our rent related expenses by location or subsidiary.  Included in rent during the nine months ending September 30, 2014 was a decrease in expense of $8,898 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to a decrease in expense of $5,691 for the nine month period ending September 30, 2013.

42

For the nine months ended
	September 30, 2014			September 30, 2013			$ Change			% Change
Corporate office	$	250,438		$	266,414		$	(15,976	)		-6.0	%
Co-location and disaster recovery facilities		246,449			249,697			(3,248	)		-1.3	%
New Jersey operations office		40,684			38,208			2,476			6.5	%
OmniComm Europe, GmbH		70,884			64,823			6,061			9.4	%
OmniComm Ltd.		51,912			46,552			5,360			11.5	%
OmniComm Spain		6,082			5,929			153			2.6	%
OmniComm Promasys B.V.		6,410			-0-			6,410		n/a
Straight-line rent expense		(8,898	)		(5,691	)		(3,207	)		-56.4	%
Total	$	663,961		$	665,932		$	(1,971	)		-0.3	%

Consulting services expense decreased to $60,669 for the nine months ended September 30, 2014 compared with $117,410 for the nine months ended September 30, 2013. Consulting services were comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. The table provided below provides the significant components of the expenses incurred related to consulting services. Consulting fees for both product development and sales and marketing were higher during the nine months of 2013 as we utilized the services of additional third-party sources for portions of this work.

For the nine months ended
Expense Category	September 30, 2014		September 30, 2013		$ Change			% Change
Sales and marketing	$	-0-	$	21,412	$	(21,412	)		-100.0	%
Product development		60,669		95,998		(35,329	)		-36.8	%
Total	$	60,669	$	117,410	$	(56,741	)		-48.3	%

Legal and professional fees increased approximately 34.7% for the nine months ended September 30, 2014 compared with the nine months ended September 30, 2013. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the nine months ended September 30, 2014 and September 30, 2013, respectively.

For the nine months ended
Expense Category	September 30, 2014		September 30, 2013		$ Change			% Change
Financial advisory	$	6,250	$	-0-	$	6,250		n/a
Audit and related		48,850		57,178		(8,328	)		-14.6	%
Accounting services		136,359		105,164		31,195			29.7	%
Legal-employment related		30,291		16,199		14,092			87.0	%
Legal-financial related		15,801		13,167		2,634			20.0	%
General legal		39,711		14,059		25,652			182.5	%
Total	$	277,262	$	205,767	$	71,495			34.7	%

Selling, general and administrative expenses (“SG&A”) increased by $258,431 or approximately 40.7% for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. The increase is primarily due to increases in marketing and insurance expenses offset by a reduction in miscellaneous expenses. SG&A expenses relate primarily to costs incurred in running our offices in Fort Lauderdale, Florida, Monmouth Junction, New Jersey, Southampton, England, Barcelona, Spain, Bonn, Germany and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2013 we spent approximately $226,000 on marketing, sales and advertising. We expect that the 2014 marketing, sales and advertising expenses will be approximately $650,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

43

During the nine month period ended September 30, 2014 we recognized $76,634 for bad debt expense as compared to a credit of $4,830 for the nine month period ended September 30, 2013.  This increase was primarily the result of an increase in aged receivable balances that required us to increase our reserve in the period. During the remainder of 2014 we will continue to carefully and actively manage our potential exposure to bad debt by closely monitoring our accounts receivable and proactively taking the action necessary to limit our exposure.  We have been very successful in managing and collecting our outstanding accounts receivable.  We believe that our current allowance for uncollectible accounts accurately reflects any accounts which may prove uncollectible during the remainder of fiscal 2014.

Interest expense was $1,979,879 during the nine months ended September 30, 2014 compared to $1,858,279 for the nine months ended September 30, 2013, an increase of $121,600.  Interest incurred to related parties was $1,818,911 during the nine months ended September 30, 2014 and $1,750,327 for the nine months ended September 30, 2013.  Included in interest expense is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of the financings we undertook in fiscal 2008 and 2009 and relating to warrants issued during 2011, 2013 and 2014.  The table below provides detail on the significant components of interest expense for the nine months ended September 30, 2014 and September 30, 2013.

Interest Expense
	For the nine months ended
Debt Description	September 30, 2014		September 30, 2013		$ Change
Accretion of discount from derivatives	$	405,216	$	456,750	$	(51,534	)
August 2008 convertible notes		143,605		143,605		-0-
December 2008 convertible notes		446,972		446,972		-0-
September 2009 secured convertible debentures		107,704		107,704		-0-
December 2009 convertible debentures		133,733		133,733		-0-
General interest		119,233		66,966		52,267
Related party notes payable		623,416		502,549		120,867
Total	$	1,979,879	$	1,858,279	$	121,600

We evaluate the cost of capital available to us in combination with our overall capital structure and the prevailing market conditions in deciding what financing best fulfills our short and long-term capital needs. Given the overall economic climate and in particular the difficulties nano-cap companies have experienced in obtaining financing, we believe the structure and terms of the transactions we entered into during 2013 and 2014 were obtained at the best terms available to the Company.

We record unrealized gains/losses related to changes in our derivative liabilities associated with the issuance of convertible debt that occurred during fiscal 2008 and 2009 and warrants associated with promissory notes issued in 2011, 2013 and 2014.  We recorded a net unrealized gain of $4,410,241 during the nine months ended September 30, 2014 compared with a net unrealized loss of $2,524,671 during the nine months ended September 30, 2013.  The unrealized gains/losses can be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities recorded by us at the time the convertible debt and promissory notes were issued.  Accordingly the warrant and conversion feature liabilities are increased or decreased based on the fair value calculations made at each balance sheet date.  These non-cash gains and losses have materially impacted our results of operations during the nine months ended September 30, 2014 and September 30, 2013 and can be reasonably anticipated to materially affect our net loss or net income in future periods. The fair value calculations are heavily reliant on the value of our common stock and on the calculated volatility of the price of our common stock on the OTC Bulletin Board. Accordingly, significant changes in our stock price will create large unrealized gains and losses on our financial statements. We are, however, unable to estimate the amount of such income/expense in future periods as the income/expense is partly based on the market price of our common stock at the end of a future measurement date. In addition, in the future if we issue securities which are classified as derivatives we will incur expense and income items in future periods. Investors are cautioned to consider the impact of this non-cash accounting treatment on our financial statements.

The Company recorded arrearages of $154,272 and $154,272 in its 5% Series A Preferred Stock dividends for the nine month periods ended September 30, 2014, and September 30, 2013, respectively. The below table contains the cumulative arrearage for each series of preferred stock.

44

Series of Preferred Stock	Cumulative Arrearage
Series A	$	2,534,711
Series B		609,887
Series C		1,472,093
Total preferred stock arrearages	$	4,616,691

The three months ended September 30, 2014 compared with the three months ended September 30, 2013

Results of Operations

A summarized version of our results of operations for the three months ended September 30, 2014 and September 30, 2013 is included in the table below.

Summarized Statement of Operations

For the three months ended

September 30,

				% of						% of						%
	2014			Revenues			2013			Revenues			Change			Change
Total revenues	$	5,124,689					$	3,477,621					$	1,647,068			47.4	%
Cost of sales		1,139,401			22.2	%		712,479			20.5	%		426,922			59.9	%
Gross margin		3,985,288			77.8	%		2,765,142			79.5	%		1,220,146			44.1	%
Salaries, benefits and related taxes		2,726,522			53.2	%		2,130,385			61.3	%		596,137			28.0	%
Rent		219,974			4.3	%		199,492			5.7	%		20,482			10.3	%
Consulting		10,111			0.2	%		14,496			0.4	%		(4,385	)		-30.2	%
Legal and professional fees		77,365			1.5	%		53,312			1.5	%		24,053			45.1	%
Other expenses		301,315			5.9	%		202,563			5.8	%		98,752			48.8	%
Selling, general and administrative		299,940			5.9	%		197,765			5.7	%		102,175			51.7	%
Total operating expenses		3,635,227			71.0	%		2,798,013			80.5	%		837,214			29.9	%
Operating income/(loss)		350,061			6.8	%		(32,871	)		-0.9	%		382,932		n/m
Interest expense		(632,971	)		-12.4	%		(626,185	)		-18.0	%		(6,786	)		1.1	%
Interest income		12			0.0	%		3			0.0	%		9			300.0	%
Change in derivatives		1,607,670			31.4	%		2,418,612			69.5	%		(810,942	)		-33.5	%
Transaction gain/(loss)		(41,596	)		-0.8	%		3,780			0.1	%		(45,376	)	n/m
Income before income taxes and dividends		1,283,176			25.0	%		1,763,339			50.7	%		(480,163	)		-27.2	%
Income tax (expense)		(1,446	)		0.0	%		(30,869	)		-0.9	%		29,423			-95.3	%
Net income		1,281,730			25.0	%		1,732,470			49.8	%		(450,740	)		-26.0	%
Total preferred stock dividends		(51,989	)		-1.0	%		(51,989	)		-1.5	%		-0-			0.0	%
Net income attributable to common stockholders	$	1,229,741			24.0	%	$	1,680,481			48.3	%	$	(450,740	)		-26.8	%
Net income per share	$	0.01					$	0.02
Weighted average number of shares outstanding		91,032,920						87,867,268

45

The table below provides a comparison of our recognized revenues for the three months ended September 30, 2014 and September 30, 2013.

	For the three months ended
Revenue Activity	September 30, 2014				September 30, 2013				$ Change			% Change
Set-up fees	$	1,419,722	27.7	%	$	988,990	28.4	%	$	430,732			43.6	%
Change orders		140,949	2.8	%		119,870	3.5	%		21,079			17.6	%
Maintenance		1,175,527	22.9	%		1,186,023	34.1	%		(10,496	)		-0.9	%
Software licenses		1,444,623	28.2	%		430,323	12.4	%		1,014,300			235.7	%
Professional services		747,693	14.6	%		552,719	15.9	%		194,974			35.3	%
Hosting		196,175	3.8	%		199,696	5.7	%		(3,521	)		-1.8	%
Total	$	5,124,689	100.0	%	$	3,477,621	100.0	%	$	1,647,068			47.4	%

Overall Revenue increased by $1,647,068 or 47.4%. This increase is primarily the result of increases in software licenses, set-up fees and professional services offset by minor decreases in maintenance and hosting.

We recorded revenue of $3,774,206 including $1,419,722 from set-up fees and $981,447 from software license revenues associated with our TrialMaster suite during the three months ended September 30, 2014 compared with revenue of $2,467,960 that included $988,990 in set-up fees and $285,527 in software license revenues during the three months ended September 30, 2013.  

We recorded $474,841 in revenues associated with clients using the eClinical software application suite (“eClinical”) during the three months ended September 30, 2014 compared with $906,747 for the three months ended September 30, 2013.  eClinical revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.  

We recorded $60,551 in revenues from hosting activities and $27,970 in professional services associated with the eClinical suite during the three months ended September 30, 2014 compared with $101,650 from hosting activities and $162,270 from professional services activities for the three months ended September 30, 2013.  Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing that application. In addition we recorded $316,113 in revenues from maintenance relating to eClinical in the three months ending September 30, 2014 as compared to $514,322 for the three months ending September 30, 2013.

We recorded revenue of $612,643 including $287,576 from software licensing and $262,755 from professional services associated with clients utilizing our TrialOne EDC software for the three months ended September 30, 2014 compared with revenue of $102,914 including $16,291 from software licensing and $61,230 from professional services for the three months ended September 30, 2013.   We are enhancing our efforts at developing our sales and marketing campaign for the TrialOne application.  We expect to increase our participation in industry trade shows and conferences and are in the process of expanding our dedicated sales force for the TrialOne software.  TrialOne revenues are comprised of license subscriptions and maintenance services since the software is currently only sold on a technology transfer basis.

We recorded revenue of $262,999 for the three months ended September 30, 2014 including $105,393 from software licensing and $109,948 from maintenance associated with clients utilizing the Promasys EDC solution that we acquired in the 4^th quarter of 2013.

Our TrialMaster EDC application has historically been sold on an application service provider (“ASP”) basis that provides EDC and other services such as an enterprise management suite which assists our clients in the pharmaceutical, biotechnology and medical device industries in accelerating the completion of clinical trials. During 2009 we completed the acquisition of the eResearch EDC Assets and TrialOne and in 2013 we acquired Promasys (collectively the “Acquired Software”).  These software applications have historically been sold on a licensed or technology transfer basis.  As we continue developing our software applications and our client relationships mature, we expect some of our clients to deploy TrialMaster on a licensed, rather than ASP hosted basis. We expect the Acquired Software applications to continue to be sold primarily on a licensed basis.

TrialMaster contracts for ASP services provide for pricing that is based on both the size and duration of the clinical trial. Size parameters include the number of case report forms used to collect data and the number of sites utilizing TrialMaster. The client will pay a trial setup fee at the beginning of a project based on the previously mentioned factors and then pay an on-going maintenance fee for the duration of the clinical trial that provides software, network and site support during the trial.

46

Generally, ASP contracts will range in duration from one month to several years. ASP Setup fees are generally recognized in accordance with ASC 605, “Revenue Recognition”, which requires that the revenues be recognized ratably over the life of the contract. ASP maintenance fee revenues are earned and recognized monthly. Costs associated with contract revenues are recognized as incurred.

License contracts are typically sold on a subscription basis that takes into account system usage both on a data volume and system user basis.  Pricing includes additional charges for consulting services associated with the installation, validation, training and deployment of our eClinical software and solutions.  Licensed contracts of the eClinical suite have historically been sold both on a term and on a perpetual license basis with hosting and maintenance charges being paid quarterly.  The Company expects any licenses it sells of its software products to be sold under three to five year term licenses.

Our top five customers accounted for approximately 37.4% of our revenues during the three months ended September 30, 2014 and approximately 39.0% of our revenues during the three months ended September 30, 2013.  One customer accounted for approximately 14.2% of our revenues and another accounted for approximately 10.9% during the three months ended September 30, 2014.   One customer accounted for approximately 12.8% of our revenues the three months ended September 30, 2013. The loss of any of these contracts or these customers in the future could adversely affect our results of operations. 

Cost of goods sold increased approximately 59.9% or $426,922 for the three months ended September 30, 2014 as compared to the three months ended September 30, 2013.  Cost of goods sold were approximately 22.2% of revenues for the three months ended September 30, 2014 compared to approximately 20.5% for the three months ended September 30, 2013. Cost of goods sold relates primarily to (i) salaries and related benefits associated with the programmers, developers and systems analysts producing clinical trials on behalf of our clients and (ii) the costs associated with pass-through revenues. Cost of goods sold increased during the three months ended September 30, 2014 primarily due to increases in both of these categories. We added additional headcount in order to properly service both new clients and additional work from existing clients.  The costs associated with the headcount are recognized as incurred, but the revenue from the trials is recognized over the life of the trial. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin.

Overall, total operating expenses increased approximately 29.9% for the three months ended September 30, 2014 when compared to the three months ended September 30, 2013.  The increase in operating expenses is primarily the result of an increase in headcount to support trials from new clients and additional work from existing clients.

Salaries and related expenses were our biggest operating expense at 75.0% of total operating expenses for the three months ended September 30, 2014 compared to 76.1% of total operating expenses for the three months ended September 30, 2013.  Salaries and related expenses increased by 28.0% for the three months ended September 30, 2014 when compared to the same period ended September 30, 2013.  The table below provides a summary of the significant components of salary and related expenses by primary cost category.

For the three months ended
	September 30, 2014		September 30, 2013		$ Change			% Change
OmniComm corporate operations	$	1,862,838	$	1,590,414	$	272,424			17.1	%
New Jersey operations office		187,182		91,952		95,230			103.6	%
OmniComm Europe, GmbH		196,732		205,237		(8,505	)		-4.1	%
OmniComm Ltd.		247,525		168,470		79,055			46.9	%
OmniComm Spain		41,814		38,826		2,988			7.7	%
OmniComm Promasys B.V.		145,341		-0-		145,341		n/a
Employee stock compensation		45,090		35,486		9,604			27.1	%
Total salaries and related expenses	$	2,726,522	$	2,130,385	$	596,137			28.0	%

We currently employ approximately 61 employees out of our Ft. Lauderdale, Florida Corporate Office (“Corporate Office”), 12 employees out of our New Jersey regional operating office, 14 out-of-state employees, 11 employees out of a wholly-owned subsidiary in the United Kingdom, 20 employees out of a wholly-owned subsidiary in Bonn, Germany, 4 employees out of a wholly-owned subsidiary in Leiden, the Netherlands and 1 employee out of a wholly-owned subsidiary in Spain.  We expect to continue to selectively add experienced sales and marketing personnel in an effort to increase our market penetration, particularly as it relates to the largest pharmaceutical, biotechnology and CRO customers and to continue broadening our client base domestically as well as in Europe.  

47

During the three months ended September 30, 2014 and the three months ended September 30, 2013 we incurred $45,090 and $35,486, respectively, in salary expense in connection with ASC 718, Compensation – Stock Compensation, which establishes standards for transactions in which an entity exchanges its equity instruments services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

Rent and related expenses increased by approximately 10.3% during the three months ended September 30, 2014 when compared to the three months ended September 30, 2013.  The table below details the significant portions of our rent expense.  In particular, the increase in 2014 is primarily associated with an increase in our Co-location and disaster recovery facilities rent expense.  Our primary data site is located at a Cincinnati Bell owned Co-location facility in Cincinnati, Ohio and we will continue utilizing this facility for the foreseeable future since it is designed to ensure 100% production system up-time and to provide system redundancy. We lease Co-location and disaster recovery space in the Ft. Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. This lease expires in April 2016.  We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH under a lease that expires in July 2015.  We currently lease office space for a regional operating office in New Jersey under a lease that expires in February 2016.  Our OmniComm Ltd. subsidiary leases office space in Southampton, UK under a lease that expires in September 2017.  Our OmniComm Promasys B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018.  Our Corporate Office lease expires in September 2016.  The table below provides the significant components of our rent related expenses by location or subsidiary.  Included in rent during the three months ending September 30, 2014 was a decrease in expense of $3,455 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to a decrease in expense of $1,500 for the three month period ending September 30, 2013.

For the three months ended
	September 30, 2014			September 30, 2013			$ Change			% Change
Corporate office	$	84,311		$	83,143		$	1,168			1.4	%
Co-location and disaster recovery facilities		82,080			64,879			17,201			26.5	%
New Jersey operations office		13,447			13,293			154			1.2	%
OmniComm Europe, GmbH		22,315			21,984			331			1.5	%
OmniComm Ltd.		17,251			15,702			1,549			9.9	%
OmniComm Spain		1,973			1,991			(18	)		-0.9	%
OmniComm Promasys B.V.		2,052			-0-			2,052		n/a
Straight-line rent expense		(3,455	)		(1,500	)		(1,955	)		-130.3	%
Total	$	219,974		$	199,492		$	20,482			10.3	%

Consulting services expense decreased to $10,111 for the three months ended September 30, 2014 compared with $14,496 for the three months ended September 30, 2013. Consulting services were comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. The table provided below provides the significant components of the expenses incurred related to consulting services. Consulting fees for both sales and marketing and product development were higher during the three months of 2013 as we utilized the services of additional third-party sources for portions of our product development and sales and marketing work.

For the three months ended
Expense Category	September 30, 2014		September 30, 2013		$ Change			% Change
Sales and marketing	$	-0-	$	2,652	$	(2,652	)		-100.0	%
Product development		10,111		11,844		(1,733	)		-14.6	%
Total	$	10,111	$	14,496	$	(4,385	)		-30.2	%

Legal and professional fees increased approximately 45.1% for the three months ended September 30, 2014 compared with the three months ended September 30, 2013. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the three months ended September 30, 2014 and September 30, 2013, respectively.

48

For the three months ended
Expense Category	September 30, 2014		September 30, 2013		$ Change		% Change
Financial advisory	$	6,250	$	-0-	$	6,250	n/a
Audit and related		8,780		5,180		3,600		69.5	%
Accounting services		43,912		34,479		9,433		27.4	%
Legal-employment related		10,897		8,758		2,139		24.4	%
Legal-financial related		3,866		3,500		366		10.5	%
General legal		3,660		1,395		2,265		162.4	%
Total	$	77,365	$	53,312	$	24,053		45.1	%

Selling, general and administrative expenses (“SG&A”) increased by $102,175 or approximately 51.7% for the three months ended September 30, 2014 compared to the three months ended September 30, 2013. The increase is primarily due to an increase in marketing and insurance expenses. SG&A expenses relate primarily to costs incurred in running our offices in Fort Lauderdale, Florida, Monmouth Junction, New Jersey, Southampton, England, Barcelona, Spain, Bonn, Germany and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2013 we spent approximately $226,000 on marketing, sales and advertising. We expect that the 2014 marketing, sales and advertising expenses will be approximately $650,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

During the three month period ended September 30, 2014 we recognized $632 for bad debt expense as compared to $8,191 for the three month period ended September 30, 2013.  This decrease was primarily the result of a decrease in aged receivable balances that enabled us to decrease our reserve. During the remainder of 2014 we will continue to carefully and actively manage our potential exposure to bad debt by closely monitoring our accounts receivable and proactively taking the action necessary to limit our exposure.  We have been very successful in managing and collecting our outstanding accounts receivable.  We believe that our current allowance for uncollectible accounts accurately reflects any accounts which may prove uncollectible during the remainder of fiscal 2014.

Interest expense was $632,971 during the three months ended September 30, 2014 compared to $626,185 for the three months ended September 30, 2013, an increase of $6,786.  Interest incurred to related parties was $578,735 during the three months ended September 30, 2014 and $588,425 for the three months ended September 30, 2013.  Included in interest expense is the accretion of discounts recorded related to financial instrument derivatives that were deemed a part of the financings we undertook in fiscal 2008 and 2009 and relating to warrants issued during 2011, 2013 and 2014.  The table below provides detail on the significant components of interest expense for the three months ended September 30, 2014 and September 30, 2013.

Interest Expense
	For the three months ended
Debt Description	September 30, 2014		September 30, 2013		$ Change
Accretion of discount from derivatives	$	102,326	$	152,250	$	(49,924	)
August 2008 convertible notes		48,394		48,394		-0-
December 2008 convertible notes		150,628		150,628		-0-
September 2009 secured convertible debentures		36,296		36,296		-0-
December 2009 convertible debentures		45,068		45,068		-0-
General interest		40,171		24,000		16,171
Related party notes payable		210,088		169,549		40,539
Total	$	632,971	$	626,185	$	6,786

We evaluate the cost of capital available to us in combination with our overall capital structure and the prevailing market conditions in deciding what financing best fulfills our short and long-term capital needs. Given the overall economic climate and in particular the difficulties nano-cap companies have experienced in obtaining financing, we believe the structure and terms of the transactions we entered into during 2013 and 2014 were obtained at the best terms available to the Company.

49

We record unrealized gains/losses related to changes in our derivative liabilities associated with the issuance of convertible debt that occurred during fiscal 2008 and 2009 and warrants associated with promissory notes issued in 2011, 2013 and 2014.  We recorded a net unrealized gain of $1,607,670 during the three months ended September 30, 2014 compared with a net unrealized gain of $2,418,612 during the three months ended September 30, 2013.  The unrealized gains/losses can be attributed to fair value calculations undertaken periodically on the warrant and conversion feature liabilities recorded by us at the time the convertible debt and promissory notes were issued.  Accordingly the warrant and conversion feature liabilities are increased or decreased based on the fair value calculations made at each balance sheet date.  These non-cash gains and losses have materially impacted our results of operations during the three months ended September 30, 2014 and September 30, 2013 and can be reasonably anticipated to materially affect our net loss or net income in future periods. The fair value calculations are heavily reliant on the value of our common stock and on the calculated volatility of the price of our common stock on the OTC Bulletin Board. Accordingly, significant changes in our stock price will create large unrealized gains and losses on our financial statements. We are, however, unable to estimate the amount of such income/expense in future periods as the income/expense is partly based on the market price of our common stock at the end of a future measurement date. In addition, in the future if we issue securities which are classified as derivatives we will incur expense and income items in future periods. Investors are cautioned to consider the impact of this non-cash accounting treatment on our financial statements.

The Company recorded arrearages of $51,989 and $51,989 in its 5% Series A Preferred Stock dividends for the three month periods ended September 30, 2014, and September 30, 2013, respectively.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its operating, investing and financing needs for cash.   We have historically experienced negative cash flows and have relied on the proceeds from the sale of debt and equity securities to fund our operations. In addition, we have utilized stock-based compensation as a means of paying for consulting and salary related expenses. At September 30, 2014, we had working capital deficit of approximately $13,946,698.

50

The table provided below summarizes key measures of our liquidity and capital resources:

Liquidity and Capital Resources
Summarized Balance Sheet Disclosure
	September 30, 2014			December 31, 2013			$ Change
Cash	$	1,093,682		$	1,160,720		$	(67,038	)
Accounts receivable, net of allowance for doubtful accounts		2,887,083			1,599,568			1,287,515
Prepaid expenses		216,165			146,907			69,258
Prepaid stock compensation, current portion		153,500			-0-			153,500
Other current assets		16,138			-0-			16,138
Current assets		4,366,568			2,907,195			1,459,373
Accounts payable and accrued expenses		2,256,504			2,540,956			(284,452	)
Notes payable, current portion		328,562			37,500			291,062
Patent litigation settlement liability, current portion		962,500			962,500			-0-
Deferred revenue, current portion		5,702,672			2,866,356			2,836,316
Line of credit		3,700,000			3,500,000			200,000
Convertible notes payable, current portion, net of discount		75,000			75,000			-0-
Conversion feature liability, related parties		1,416,296			2,979,392			(1,563,096	)
Conversion feature liability		117,066			146,814			(29,748	)
Warrant liability, related parties		3,646,003			5,799,946			(2,153,943	)
Warrant liability		108,663			144,031			(35,368	)
Current liabilities		18,313,266			19,052,495			(739,229	)
Working capital (deficit)	$	(13,946,698	)	$	(16,145,300	)	$	2,198,602

Statement of Cash Flows Disclosure
	For the nine months ended
	September 30, 2014			September 30, 2013
Net cash (used in) operating activities	$	(141,882	)	$	(1,140,037	)
Net cash (used in) investing activities		(67,674	)		(107,844	)
Net cash provided by financing activities		179,075			800,000
Net (decrease) in cash and cash equivalents		(67,038	)		(478,366	)
Changes in operating accounts		3,042,896			81,424
Effect of non-cash transactions on cash and cash equivalents	$	(3,589,692	)	$	3,245,664

Cash and Cash Equivalents

Cash and cash equivalents decreased by $67,038 to $1,093,682 at September 30, 2014. The decrease is primarily comprised of a net income of $404,914, changes in working capital accounts of $3,042,896 and a decrease from non-cash transactions of $3,589,692. During the nine months ended September 30, 2014 we had investing activities comprised of net purchases of property and equipment of $67,674. For financing activities, we borrowed $200,000 against our revolving line of credit and paid off $20,925 of promissory notes.

Capital Expenditures

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

51

Presently, we have approximately $100,000 planned for capital expenditures to further develop our infrastructure to allow for growth in our operations during the remainder of 2014.  We expect to fund these capital expenditure needs through a combination of vendor-provided financing, the use of operating or capital equipment leases and cash provided from operations.

Contractual Obligations

The following table sets forth our contractual obligations during the next five years as of September 30, 2014:

Contractual obligation			Payments due by period
	Total		Less than 1 year			1-2 Years			2-3 Years			3-5 Years
Promissory notes (1)	$	6,626,941	$	328,562	(2)	$	3,415,879	(3)	$	2,882,500	(4)	$	-0-
Convertible notes		9,665,000		75,000	(5)		9,590,000	(6)		-0-			-0-
Lines of credit (7)		3,700,000		3,700,000			-0-			-0-			-0-
Operating lease obligations (8)		1,254,260		668,288			511,508			67,504			6,960
Patent licensing fees (9)		1,975,000		962,500			450,000			450,000			112,500
Total	$	23,221,201	$	5,734,350		$	13,967,387		$	3,400,004		$	119,460

1. Amounts do not include interest to be paid.

2. Includes $20,000 of 12% notes payable that mature in December 2014 and $308,562 of 10% notes payable that mature in January 2015.

3. Includes $549,000 of 12% notes payable that mature in January 2016 and $2,866,879 of 12% notes payable that mature in March 2016.

4. Includes $120,000 of 10% notes payable that mature in April 2017 and $2,762,500 of 12% notes payable that mature in April 2017.

5. Includes $75,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of of the holder at a conversion rate of $1.25 per share.

6. Includes $1,770,000 in 10% convertible notes that mature in January 2016, $7,570,000 in 12% convertible notes that mature in January 2016, $150,000 in 10% convertible notes that mature in April 2016 and $100,000 in 12% convertible notes that mature in April 2016.

7. Includes $3,700,000 due on the revolving Line of Credit with The Northern Trust Company.

8. Includes office lease obligations for our Corporate Office in Florida, our regional operating office in New Jersey, our Co-location and disaster recovery locations in Ohio and Florida, our R&D office in England, our office in Leiden, the Netherlands and our European headquarters in Bonn, Germany.

9. Relates to guaranteed minimum payments owed in connection with our settlement of a patent infringement lawsuit brought against the Company by DataSci, LLC.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Debt Obligations

We are currently in arrears on principal and interest payments owed totaling $190,358 on our 10% Convertible Notes that were issued in 1999. We were in default effective January 30, 2002.

On December 31, 2011, the Company issued a promissory note in the amount of $1,600,000 and 6,400,000 warrants to purchase shares of our common stock at $0.25 per share to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for existing promissory notes in the amount of $833,000 and accrued interest in the amount of $767,000. The note carries an interest rate of 12% per annum and matures on January 1, 2015. The warrants have an expiration date of December 31, 2015.

On December 17, 2012, the Company issued a promissory note in the amount of $20,000 in exchange for an existing promissory note in the same amount. The note carries an interest rate of 12% per annum and matures on December 16, 2014.

On January 1, 2013, the Company issued a promissory note in the amount of $529,000 and 2,116,000 warrants to purchase shares of our common stock at $0.25 per share to our Chief Executive Officer and Director, Cornelis F. Wit in exchange for accrued interest in the amount of $529,000. The note carries an interest rate of 12% per annum and matures on January 1, 2016. The warrants have an expiration date of January 31, 2016.

On January 1, 2013 the Company issued promissory notes in the amount of $431,986 in exchange for existing promissory notes in the same amount.  The promissory notes carry an interest rate of 10% and have a maturity date of January 1, 2015.

52

On January 1, 2013 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On February 1, 2013 the Company issued a promissory note in the amount of $20,000 to our Chairman and Chief Technology Officer, Randall G. Smith, in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2016.

On February 22, 2013 the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to our Director, Guus van Kesteren, originally issued in August 2008.  The debentures carry an interest rate of 10% and have a maturity date of January 1, 2015.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.

On February 22, 2013 the Company and Mr. Wit extended the maturity date of $1,770,000 of convertible debentures to our Chief Executive Officer and Director, Cornelis F. Wit, originally issued in August 2008.  The debentures carry an interest rate of 10% and have a maturity date of January 1, 2016.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013 the Company and the lenders extended the maturity date of $4,505,000 of convertible debentures, including $4,475,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, $25,000 due to our Chief Operating Officer and President, Stephen E. Johnson, and $5,000 due to our Chairman and Chief Technology Officer, Randall G. Smith, originally issued in December 2008.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013 the Company and the lenders extended the maturity date of $1,200,000 of convertible debentures, including $1,100,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, originally issued in September 2009.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013 the Company and the lenders extended the maturity date of $1,490,000 of convertible debentures including $1,440,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, originally issued in December 2009.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 27, 2013 the Company and Mr. Veatch extended the maturity date of $15,000 of convertible debentures originally issued to our former Director, Matthew Veatch in December 2008.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On March 5, 2013 the Company issued a promissory note in the amount of $137,500 in exchange for a promissory note in the same amount.  The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On March 6, 2013, the Company and the lender extended the maturity date of $200,000 of convertible debentures originally issued in December 2008.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2014.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2014. On December 9, 2013, the Company extended the maturity date of $200,000 of convertible debentures originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On March 12, 2013, the Company and the lenders extended the maturity date of $100,000 of convertible debentures originally issued in December 2008.  The debentures carry an interest rate of 12% and have a maturity date of January 1, 2015.  The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit (“Line of Credit”) with The Northern Trust Company guaranteed by our Chief Executive Officer and Director, Cornelis F. Wit. Mr. Wit receives 2.0% interest ($9,500 per month) on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. The Line of Credit matures on December 17, 2014 and carries a variable interest rate based on the prime rate. At September 30, 2014, $3,700,000 was outstanding on the Line of Credit at an interest rate of 2.25%.

On April 1, 2013 the Company and Mr. Wit extended the maturity date of $2,866,879 of promissory notes due to our Chief Executive Officer and Director, Cornelis F. Wit originally issued in March 2011.  The notes carry an interest rate of 12% and have a maturity date of March 31, 2016.

53

On December 5, 2013 the Company and Mr. van Kesteren extended the maturity date of $160,000 of convertible debentures to our Director, Guus van Kesteren, originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On January 1, 2014, the Company issued a promissory note in the amount of $980,000 and 3,920,000 warrants to purchase shares of our common stock at $0.25 per share to our Chief Executive Officer and Director, Cornelis F. Wit in exchange for accrued interest in the amount of $980,000. The note carries an interest rate of 12% per annum and matures on April 1, 2017. The warrants have an expiration date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note payable to our Chief Executive Officer and Director, Cornelis F. Wit, in the amount of $1,600,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $120,000 and paid $3,425 in principal in exchange for an existing promissory note in the amount of $123,425. The promissory note carries an interest rate of 10% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $137,500 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 21, 2014, the Company extended the maturity date of $150,000 of convertible debentures to our Director, Guus van Kesteren originally issued in August 2008. The debentures carry an interest rate of 10% and have a maturity date of April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016.

On April 28, 2014, the Company and the lender agreed to extend the maturity date of $100,000 of convertible debentures. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016.

During the next twelve months we expect debt in the aggregate amount of $4,103,562 to mature as follows:  

● $75,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the debenture holder at a conversion rate of $1.25 per share;

● $20,000 of 12% promissory notes that mature in December 2014;

● $308,562 of 10% promissory notes that mature in January 2015; and

● $3,700,000 due on our line of credit that matures in December 2014.

Sources of Liquidity and Capital Resources

Because of the losses we have experienced from operations we have needed to continue utilizing the proceeds from the issuance of debt and the sale of equity securities to fund our working capital needs. We have used a combination of equity financing, short-term bridge loans and long-term loans to fund our working capital needs. Other than our revenues, current capital and capital we may raise from future debt or equity offerings or short-term bridge loans, we do not have any additional sources of working capital.

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

While we have not sought capital from venture capital or private equity sources we believe that those sources of capital remain available although possibly under terms and conditions that might be disadvantageous to existing investors.

54

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

While several of our directors have historically, either personally or through funds with which they are affiliated, provided substantial capital either in the form of debt or equity financing there can be no assurance that they will continue to provide any such funding to us on favorable terms or at all.

Our ability to continue in existence is dependent on our having sufficient financial resources to bring products and services to market. As a result of our historical operating losses, negative cash flows and accumulated deficits for the periods ending September 30, 2014, there is substantial doubt about our ability to continue as a going concern. In addition, our auditors Liggett, Vogt & Webb P.A., included language which qualified their opinion regarding our ability to continue as a going concern in their report dated March 31, 2014 regarding our audited financial statements for the year ended December 31, 2013.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 2 of Notes to the Condensed Consolidated Financial Statements describes the significant accounting policies used in the preparation of the condensed consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

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

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

ASSET IMPAIRMENT

Asset Acquisitions and Intangible Assets

We account for asset acquisitions in accordance with ASC 350, Intangibles-Goodwill and Other. The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of an asset acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

55

Long Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

OmniComm’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815, Derivatives and Hedging. ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820, Fair Value Measurements and Disclosures.

DEFERRED REVENUE

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

REVENUE RECOGNITION POLICY

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

The Company recognizes revenues, for both financial statement and tax purposes in accordance with SEC Staff Accounting Bulletin No. 104 “Revenue Recognition in Financial Statements (SAB 104)” (Codified within Accounting Standards Codification (ASC) Revenue Recognition ASC 605) and AICPA Statement of Position 97-2 (SOP 97-2) “Software Revenue Recognition” as amended by SOP 98-9 (Codified within ASC 605.985, Software Industry Revenue Recognition). SAB 104 requires that revenues be recognized ratably over the life of a contract.  The Company will periodically record deferred revenues relating to advance payments in contracts.  Under its licensing arrangements, the Company recognizes revenue pursuant to SOP 97-2.  Under these arrangements, the Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer and/or delivery has occurred; (3) the collection of fees is probable; and (4) the fee is fixed or determinable.  SOP 97-2, as amended, requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair values of the elements.  We have analyzed each element in our multiple element arrangements and determined that we have sufficient vendor-specific objective evidence (“VSOE”) to allocate revenues to license updates and product support.  License revenues are recognized on delivery if the other conditions of SOP 97-2 are satisfied.  License updates and product support revenue is recognized ratably over the term of the arrangement. In arrangements where term licenses are bundled with license updates and product support and such revenue is recognized ratably over the term of the arrangement, we allocate the revenue to license revenue and to license updates and product support revenue based on the VSOE of fair value for license updates and product support revenue on perpetual licenses of similar products.

STOCK BASED COMPENSATION

The Company accounts for its employee equity incentive plans under ASC 718, Compensation–Stock Compensation ("ASC 718") which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions.

ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Income. The Company currently uses the Black-Scholes option pricing model to determine grant date fair value.

56

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

During the first nine months of 2014, we adopted the following new accounting pronouncements:

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”, (“ASU No. 2013-11”). This ASU amends ASC 740, Income Taxes, to require that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward; to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward does not exist at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. Our adoption of this standard on January 1, 2014 did not have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Management is currently evaluating which transition approach to use and the impact of the adoption of this ASU on the Company's consolidated financial statements.

In August 2014, FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We believe the adoption of this guidance will not have a material effect on our consolidated financial statements.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements that have been issued since the filing of our Form 10-K, as amended, for the year ended December 31, 2013 to determine their impact, if any, on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, being September 30, 2014, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures, as such term is defined in  Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) are effective such that the information relating to OmniComm, including our consolidating subsidiaries, required to be disclosed by the Company in reports that it files or submits under the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

However, subsequent to the closing date of our acquisition of Promasys B.V. (“Promasys”), and continuing thereafter, we determined that we incorrectly applied the provisions of Item 9 of Form 8-K and Article 8 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as a result of which, (a) we concluded, incorrectly, that our acquisition of Promasys was not a “significant acquisition” within the meaning of Regulation S-X, and (b) we did not timely file a periodic report containing the audited financial statements, unaudited interim financial statements or pro-forma financial information required under Rules 8-04 and 8-05 of Regulation S-X to be filed in connection with our acquisition of Promasys. The Securities and Exchange Commission (“SEC”) has indicated that a company’s failure to file a report required to be filed under the Exchange Act may be evidence of a weakness in disclosure controls. Moreover, our incorrect application of Item 9 of Form 8-K and Article 8 of Regulation S-X could be indicative of a deficiency in our internal control over financial reporting.

57

We believe that our incorrect application of Item 9 of Form 8-K and Article 8 of Regulation S-X, and the resulting failure to timely file a required report under the Exchange Act, was caused by a lack of full familiarization on the part of our financial officers with the SEC’s accounting rules relating to acquisition transactions. However, the assets, liabilities and results of operations of Promasys have been consolidated in our financial statements since the effective date of acquisition, and our late filing of the required audited financial statements, interim financial statements and pro-forma financial statements are not expected to have any impact on our financial statements or results of operations. In order to reduce the likelihood that a similar event will occur in the future, we have taken remedial action including (a) establishing a policy that all proposed acquisitions be discussed with both our SEC counsel and our independent auditors prior to their consummation and (b) devoting resources to bolstering our financial officers’ knowledge of SEC accounting requirements, particularly those associated with acquisition transactions.

While we believe the remedial steps we have taken will reduce the likelihood of a similar occurrence in the future, there is no assurance that a significant deficiency or material weakness will not be identified in the future as a result of this or other circumstances.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the third quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2014, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations

ITEM 1A. RISK FACTORS

The following risk factors should be read in conjunction with the other risk factors identified in our annual report on Form 10-K, as amended, for the year ended December 31, 2013 and the other filings we make, from time to time, with the Securities and Exchange Commission.

We have not filed certain information required to be filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and until we do so, we will not be in compliance with our reporting obligations under the Exchange Act.

Subsequent to the closing date of our acquisition of Promasys B.V., a privately held Netherlands company (“Promasys”) and continuing until recently, we determined that we incorrectly applied the provisions of Item 9 of Form 8-K and Article 8 of Regulation S-X under the Exchange Act, as a result of which, (a) we concluded, incorrectly, that our acquisition of Promasys was not a “significant acquisition” within the meaning of Regulation S-X, and (b) we did not timely file a periodic report containing the audited financial statements, unaudited interim financial statements or pro-forma financial information required under Rules 8-04 and 8-05 of Regulation S-X to be filed in connection with our acquisition of Promasys.  We have filed the audited financial statements, not containing the required reconciliation to accounting principles generally accepted in the United States of America (“U.S. GAAP”), as an exhibit to our Current Report on Form 8-K filed August 14, 2014 (“Current Report”) and the unaudited interim financial statements and pro-forma financial information, containing the reconciliation to U.S. GAAP prepared by the Company, as exhibits to our amended Current Report filed October 23, 2014; however, after diligent attempts we have not been able to receive the required reconciliation from the auditors of our Dutch subsidiary necessary to enable us to file the audited financial statements containing the required reconciliation. We have submitted a request to the Securities and Exchange Commission, Division of Corporate Finance, Office of Chief Accountant to waive the financial reporting requirement to include the reconciliation to U.S. GAAP in the audited financial statements.

The assets, liabilities and results of operations of Promasys have been consolidated in our financial statements since the effective date of acquisition, and our late filing of the required audited financial statements, interim financial statements and pro-forma financial statements are not expected to have any impact on our financial statements or results of operations. However, until such time as we file the audited financial statements containing the reconciliation to U.S. GAAP, (a) we will not be considered in compliance with our reporting obligations under the Exchange Act and (b) Form S-8 will not be available to us for the registration or resale of shares issued under our equity compensation plan. Our continued non-compliance with our Exchange Act reporting requirements could subject us to regulatory scrutiny and the imposition of sanctions including the revocation of our registration under Section 12(g) of the Exchange Act.

58

Our failure to properly apply certain financial tests and the resulting failure to file certain information with the SEC may be indicative of weaknesses in our internal control over financial reporting and our disclosure controls and procedures.

The Securities and Exchange Commission (“SEC”) has indicated that the failure to file a report required to be filed under the Exchange Act may be evidence of a weakness in disclosure controls. Moreover, our incorrect application of Item 9 of Form 8-K and Article 8 of Regulation S-X in connection with our acquisition of Promasys could be indicative of a deficiency in our internal control over financial reporting. In order to reduce the likelihood that a similar event will occur in the future, we have taken remedial action. While we believe the remedial steps we have taken will reduce the likelihood of a similar occurrence in the future, there is no assurance that a significant deficiency or material weakness will not be identified in the future as a result of this or other circumstances.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

EXHIBIT NO.	DESCRIPTION
31.1*	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Document
101.DEF*	XBRL Taxonomy Extension Definition Document

59

101.LAB*	XBRL Taxonomy Extension Label Document
101.PRE*	XBRL Taxonomy Extension Presentation Document

*	Filed herewith
**	Furnished herewith

60

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 12, 2014

OMNICOMM SYSTEMS, INC.
By:	/s/ Cornelis F. Wit
Cornelis F. Wit, Chief Executive Officer
(Principal Executive Officer)
By:	/s/ Thomas E. Vickers
Thomas E. Vickers, Chief Financial Officer
(Principal Financial Officer)

61

EX-31

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, CORNELIS F. WIT, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2014 of OmniComm Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 12, 2014

By: /s/ Cornelis F. Wit

Cornelis F. Wit

Chief Executive Officer

[A signed original of this written statement required by Section 906 has been provided to OmniComm Systems, Inc. and will be retained by OmniComm Systems, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.]

EX-31

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, THOMAS E. VICKERS, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2014 of OmniComm Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 12, 2014

By: /s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

[A signed original of this written statement required by Section 906 has been provided to OmniComm Systems, Inc. and will be retained by OmniComm Systems, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.]

EX-32

EXHIBIT 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of OmniComm Systems, Inc. (the “Company”) for the period ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, being, Cornelis F. Wit, Chief Executive Officer of the Company, and Thomas E. Vickers, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 12, 2014

/s/ Cornelis F. Wit

Cornelis F. Wit

Chief Executive Officer

November 12, 2014

/s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

The foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, regardless of any general incorporation language in such filing.

XML

Note 2 - Summary of Significant Accounting Policies (Details) - Revenue by Business Activity (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	$ 5,124,689	$ 3,477,621	$ 11,915,713	$ 10,956,144
Set-up Fees [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	1,419,722	988,990	3,363,576	2,584,285
Change Orders [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	140,949	119,870	337,903	344,400
Maintenance [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	1,175,527	1,186,023	3,187,173	3,495,908
Software Licenses [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	1,444,623	430,323	2,730,770	2,333,016
Professional Services [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	747,693	552,719	1,700,498	1,625,600
Hosting [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Revenue	$ 196,175	$ 199,696	$ 595,793	$ 572,935

XML

Note 9 - Convertible Notes Payable (Details) (USD $)								0 Months Ended	1 Months Ended																								9 Months Ended	12 Months Ended				1 Months Ended
	Sep. 30, 2014	Jan. 02, 2013	Feb. 22, 2013 Chief Executive Officer [Member] Extended Maturity [Member] Convertible Debentures 4 [Member]	Jun. 30, 2011 Chief Executive Officer [Member] Extended Maturity [Member] Convertible Debentures 4 [Member]	Feb. 22, 2013 Chief Executive Officer [Member] Convertible Debentures [Member]	Sep. 30, 2009 Chief Executive Officer [Member] Convertible Debentures [Member]	Feb. 22, 2013 Chief Executive Officer [Member] Convertible Debentures 2 [Member]	Dec. 16, 2008 Chief Executive Officer [Member]	Aug. 29, 2008 Chief Executive Officer [Member]	Jan. 02, 2014 Chief Executive Officer [Member]	Feb. 22, 2013 Chief Executive Officer [Member]	Jan. 02, 2013 Chief Executive Officer [Member]	Dec. 31, 2011 Chief Executive Officer [Member]	Mar. 31, 2011 Chief Executive Officer [Member]	Sep. 30, 2009 Chief Executive Officer [Member]	Sep. 30, 2008 Chief Executive Officer [Member]	Jun. 30, 2008 Chief Executive Officer [Member]	Feb. 22, 2013 Chief Financial Officer [Member] Convertible Debentures 2 [Member]	Feb. 22, 2013 Chief Technology Officer1 [Member] Convertible Debentures 2 [Member]	Feb. 22, 2013 Chief Executive Officer 2 [Member] Convertible Debentures [Member]	Feb. 27, 2013 Former Director Mathew Veatech [Member] Extended Maturity [Member] Convertible Debentures 2 [Member]	Feb. 22, 2013 Extended Maturity [Member] Secured Convertible Debenture [Member]	Mar. 30, 2011 Extended Maturity [Member] Secured Convertible Debenture [Member]	Feb. 22, 2013 Extended Maturity [Member] Convertible Debentures [Member]	Sep. 30, 2009 Extended Maturity [Member] Convertible Debentures [Member]	Mar. 12, 2013 Extended Maturity [Member] Convertible Debentures 2 [Member]	Mar. 06, 2013 Extended Maturity [Member] Convertible Debentures 2 [Member]	Feb. 22, 2013 Extended Maturity [Member] Convertible Debentures 2 [Member]	Sep. 30, 2009 Extended Maturity [Member] Convertible Debentures 2 [Member]	Dec. 05, 2013 Extended Maturity [Member] Convertible Debentures 3 [Member]	Feb. 22, 2013 Extended Maturity [Member] Convertible Debentures 4 [Member]	Jun. 30, 2011 Extended Maturity [Member] Convertible Debentures 4 [Member]	Sep. 30, 2014 Convertible Notes 10% [Member]	Dec. 31, 1999 Convertible Notes 10% [Member]	Jun. 30, 2004 Convertible Notes 10% [Member]	Feb. 22, 2013 Secured Convertible Debenture [Member] Director [Member]	Mar. 30, 2011 Secured Convertible Debenture [Member] Director [Member]	Mar. 30, 2011 Secured Convertible Debenture [Member]	Sep. 30, 2009 Secured Convertible Debenture [Member]	Jul. 31, 2014 Convertible Debentures [Member] Non-Related Party [Member]	Dec. 16, 2008 Convertible Debentures [Member]	Aug. 29, 2008 Convertible Debentures [Member]	Jul. 31, 2014 Convertible Debentures 2 [Member] Non-Related Party [Member]	Dec. 31, 2009 Convertible Debentures 4 [Member]
Note 9 - Convertible Notes Payable (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		2.00%							10.00%	12.00%		12.00%	12.00%	12.00%																				10.00%					12.00%		12.00%	10.00%		12.00%
Convertible Notes Payable	$ 9,665,000		$ 1,440,000	$ 1,440,000	$ 4,475,000	$ 4,350,000	$ 4,475,000		$ 1,260,000		$ 1,770,000				$ 1,770,000	$ 4,200,000	$ 510,000	$ 25,000	$ 5,000	$ 1,770,000	$ 15,000	$ 1,200,000	$ 1,200,000	$ 150,000	$ 1,920,000	$ 100,000	$ 200,000	$ 4,505,000	$ 4,980,000	$ 160,000	$ 1,490,000	$ 1,490,000		$ 862,500		$ 1,100,000	$ 1,100,000		$ 1,400,000	$ 150,000	$ 5,075,000	$ 2,270,000	$ 160,000	$ 1,490,000
Debt Issuance Cost																																		119,625
Proceeds from Issuance of Debt																																		742,875
Debt Instrument, Convertible, Conversion Price (in Dollars per share)								$ 0.50	$ 0.50																										$ 1.25				$ 0.25		$ 0.50	$ 0.50		$ 0.25
Debt Conversion, Converted Instrument, Amount								4,350,000	510,000																								787,500
Debt Conversion, Converted Instrument, Shares Issued (in Shares)																																	1,495,179
Long-term Debt, Gross																																	75,000
Interest Payable																																	115,358
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)								8,700,000	3,540,000	3,920,000		2,116,000	6,400,000	11,467,517																									5,600,000		10,150,000	4,540,000		5,960,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)										$ 0.25		$ 0.25	$ 0.25	$ 0.25																									$ 0.25					$ 0.25
Repayments of Notes Payable																																						$ 200,000

XML

Note 6 - Intangible Assets, At Cost (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Disclosure Text Block [Abstract]
Amortization of Intangible Assets	$ 11,322	$ 0	$ 34,549	$ 0

XML

Note 13 - Stockholders' (Deficit) (Details) - Dividends Payable (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends accreted	$ 154,272	$ 154,272
Divideds accreted per share	$ 0.037	$ 0.037
Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends accreted	0	0
Divideds accreted per share	$ 0	$ 0
Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends accreted	$ 0	$ 0
Divideds accreted per share	$ 0	$ 0

XML

Note 9 - Convertible Notes Payable (Details) - Convertible Debt (USD $)						9 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended					9 Months Ended	12 Months Ended			12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Jan. 02, 2013	Sep. 30, 2014 Convertible Notes Payable 10% $862,500 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $862,500 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $862,500 [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $150,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $150,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $150,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $150,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $150,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $150,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $2,120,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $2,120,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $2,120,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $2,120,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 10% $2,120,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 10% $2,120,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $160,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $160,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $160,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $160,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $160,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $160,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $200,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $200,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $200,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $200,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $200,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $200,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $100,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $100,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $100,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $100,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $100,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $100,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $4,615,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $4,615,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $4,615,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $4,615,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $4,615,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $4,615,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,400,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,400,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,400,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,400,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,400,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,400,000 [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,490,000 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,490,000 [Member] Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,490,000 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,490,000 [Member] Non-Related Party [Member]	Sep. 30, 2014 Convertible Notes Payable 12% $1,490,000 [Member]	Dec. 31, 2013 Convertible Notes Payable 12% $1,490,000 [Member]	Sep. 30, 2014 Total [Member] Related Party [Member]	Dec. 31, 2013 Total [Member] Related Party [Member]	Sep. 30, 2014 Total [Member] Non-Related Party [Member]	Dec. 31, 2013 Total [Member] Non-Related Party [Member]	Sep. 30, 2014 Total [Member]	Dec. 31, 2013 Total [Member]	Dec. 31, 2013 Convertible Note Payable 10% $862,500 [Member] Related Party [Member]	Dec. 31, 2013 Convertible Note Payable 10% $862,500 [Member] Non-Related Party [Member]	Dec. 31, 2013 Convertible Note Payable 10% $862,500 [Member]
Debt Instrument [Line Items]
Maturity Date						Jun. 30, 2004					Apr. 01, 2016	Jan. 01, 2015					Jan. 01, 2016	Jan. 01, 2016					Jan. 01, 2016	Jan. 01, 2016					Jan. 01, 2016	Jan. 01, 2016					Apr. 01, 2016	Jan. 01, 2015					Jan. 01, 2016	Jan. 01, 2016					Jan. 01, 2016	Jan. 01, 2016					Jan. 01, 2016	Jan. 01, 2016									Jun. 30, 2004
Interest Rate			2.00%			10.00%					10.00%	10.00%					10.00%	10.00%					12.00%	12.00%					12.00%	12.00%					12.00%	12.00%					12.00%	12.00%					12.00%	12.00%					12.00%	12.00%									10.00%
Original Principal						$ 862,500					$ 150,000	$ 150,000					$ 2,120,000	$ 2,120,000					$ 160,000	$ 160,000					$ 200,000	$ 200,000					$ 100,000	$ 100,000					$ 4,615,000	$ 4,615,000					$ 1,400,000	$ 1,400,000					$ 1,490,000	$ 1,490,000					$ 11,097,500	$ 11,097,500			$ 862,500
Principal at Period End	9,665,000					75,000					150,000	150,000					1,770,000	1,770,000					160,000	160,000					200,000	200,000					100,000	100,000					4,520,000	4,520,000					1,200,000	1,200,000					1,490,000	1,490,000					9,665,000	9,665,000			75,000
Allocated Discount						0					135,600	135,600					1,916,480	1,916,480					44,024	44,024					55,030	55,030					27,515	27,515					1,243,681	1,243,681					526,400	526,400					935,720	935,720					4,884,450	4,884,450			0
Amortized Discount						0					135,600	135,600					1,916,480	1,916,480					44,024	44,024					55,030	55,030					27,515	27,515					1,243,681	1,243,681					526,400	526,400					935,720	935,720					4,884,450	4,884,450			0
Discount at Period End						0					0	0					0	0					0	0					0	0					0	0					0	0					0	0					0	0					0	0			0
Carrying Amount at Period End	9,665,000					75,000					150,000	150,000					1,770,000	1,770,000					160,000	160,000					200,000	200,000					100,000	100,000					4,520,000	4,520,000					1,200,000	1,200,000					1,490,000	1,490,000					9,665,000	9,665,000			75,000
Short Term Related	75,000	75,000		0	75,000		0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	75,000	75,000			0	75,000
Short Term Non Related	75,000	75,000		0	75,000		0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0			0	0	75,000	75,000			0	75,000
Long Term Related	775,000	465,000		0	0		0	150,000	150,000	0			1,770,000	1,770,000	0	0			0	160,000	160,000	0			0	0	200,000	200,000			0	0	100,000	100,000			4,505,000	4,505,000	15,000	15,000			1,100,000	1,100,000	100,000	100,000			1,440,000	1,440,000	50,000	50,000			8,815,000	9,125,000	775,000	465,000			0	0
Long Term Non Related	$ 775,000	$ 465,000		$ 0	$ 0		$ 0	$ 150,000	$ 150,000	$ 0			$ 1,770,000	$ 1,770,000	$ 0	$ 0			$ 0	$ 160,000	$ 160,000	$ 0			$ 0	$ 0	$ 200,000	$ 200,000			$ 0	$ 0	$ 100,000	$ 100,000			$ 4,505,000	$ 4,505,000	$ 15,000	$ 15,000			$ 1,100,000	$ 1,100,000	$ 100,000	$ 100,000			$ 1,440,000	$ 1,440,000	$ 50,000	$ 50,000			$ 8,815,000	$ 9,125,000	$ 775,000	$ 465,000			$ 0	$ 0

XML

Note 14 - Employee Equity Incentive Plans (Details) - Fair Value Assumptions of Share-Based Payments	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Fair Value Assumptions of Share-Based Payments [Abstract]
Risk-free interest rate	0.93%	0.70%
Expected dividend yield	0.00%	0.00%
Expected volatility	199.00%	203.40%
Expected life of options (in years)	5 years	5 years

XML

Note 5 - Property and Equipment, Net (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Property, Plant and Equipment [Abstract]
Depreciation	$ 181,520	$ 174,436

XML

Note 11 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

2014	$	169,095
2015		657,752
2016		369,825
2017		52,234
2018		5,354
Total	$	1,254,260

Schedule of Minimum Royalty Payments [Table Text Block]

2014	$	625,000
2015		450,000
2016		450,000
2017		450,000
Total	$	1,975,000

XML

Note 14 - Employee Equity Incentive Plans (Details) - Weighted Average Grant Date Fair Value Activity (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Weighted Average Grant Date Fair Value Activity [Abstract]
Stock options granted during the nine month period ended September 30,	$ 0.16	$ 0.17
Stock options vested during the nine month period ended September 30,	$ 0.12	$ 0.10
Stock options forfeited during the nine month period ended September 30,	$ 0.43	$ 0.28

XML

Note 13 - Stockholders' (Deficit) (Details) - Accumulated Other Comprehensive Gain (Loss) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Accumulated Other Comprehensive Gain (Loss) [Abstract]
Foreign Currency Translation			$ (87,604)	$ (69,092)	$ (69,092)
Accumulated other comprehensive income (loss)			(87,604)	(69,092)	(69,092)
Foreign Currency Translation	(86,887)	(3,006)	(110,839)	(30,485)	(18,512)
Accumulated other comprehensive income (loss)	(86,887)	(3,006)	(110,839)	(30,485)	(18,512)
Foreign Currency Translation	(198,443)		(198,443)		(87,604)
Accumulated other comprehensive income (loss)	$ (198,443)		$ (198,443)		$ (87,604)

XML

Note 10 - Fair Value Measurement (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Note 10 - Fair Value Measurement (Details) [Line Items]
Goodwill, Other Changes (in Dollars)	$ 57,169
Minimum [Member]
Note 10 - Fair Value Measurement (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	3 years
Maximum [Member]
Note 10 - Fair Value Measurement (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	15 years

XML

Note 14 - Employee Equity Incentive Plans (Details) - Vested Shares (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Vested Shares [Abstract]
Number of options vested	570,834	593,833
Fair value of options vested	$ 66,389	$ 62,204

XML

Note 15 - Income Taxes (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Operating Loss Carryforwards	$ 54,089,558
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ 1,267,477

XML

Note 14 - Employee Equity Incentive Plans (Details) - Stock Options Oustanding (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.045
Strike Price Range Upper Limit	$ 0.64
Strike Price Range 0.00 to 0.20 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.00	$ 0.00
Strike Price Range Upper Limit	$ 0.20	$ 0.20
Outstanding Stock Options (in Shares)	3,302,500	3,251,000
Weighted Average Remaining Contractual Life	1 year 200 days	2 years 58 days
Weighted Average Outstanding Strike Price	$ 0.15	$ 0.15
Vested Stock Options (in Shares)	2,952,500	2,530,166
Weighted Average Remianing Vested Life	1 year 3 months	1 year 313 days
Weighted Average Vested Strike Price	$ 0.15	$ 0.16
Strike Price Range 0.21 to 0.29 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.21	$ 0.21
Strike Price Range Upper Limit	$ 0.29	$ 0.29
Outstanding Stock Options (in Shares)	600,000	750,000
Weighted Average Remaining Contractual Life	1 year 65 days	1 year 233 days
Weighted Average Outstanding Strike Price	$ 0.24	$ 0.25
Vested Stock Options (in Shares)	550,000	650,000
Weighted Average Remianing Vested Life	346 days	1 year 73 days
Weighted Average Vested Strike Price	$ 0.25	$ 0.25
Strike Price Range 0.30 to 0.49 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.30	$ 0.30
Strike Price Range Upper Limit	$ 0.49	$ 0.49
Outstanding Stock Options (in Shares)	80,000	110,000
Weighted Average Remaining Contractual Life	83 days	357 days
Weighted Average Outstanding Strike Price	$ 0.38	$ 0.38
Vested Stock Options (in Shares)	80,000	110,000
Weighted Average Remianing Vested Life	83 days	357 days
Weighted Average Vested Strike Price	$ 0.38	$ 0.38
Strike Price Range 0.50 to 0.70 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.50	$ 0.50
Strike Price Range Upper Limit	$ 0.70	$ 0.70
Outstanding Stock Options (in Shares)	699,000	1,634,000
Weighted Average Remaining Contractual Life	248 days	317 days
Weighted Average Outstanding Strike Price	$ 0.55	$ 0.59
Vested Stock Options (in Shares)	699,000	1,634,000
Weighted Average Remianing Vested Life	248 days	317 days
Weighted Average Vested Strike Price	$ 0.55	$ 0.59
Strike Price Range 0.00 to 0.70 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Strike Price Range Lower Limit	$ 0.00	$ 0.00
Strike Price Range Upper Limit	$ 0.70	$ 0.70
Outstanding Stock Options (in Shares)	4,681,500	5,745,000
Weighted Average Remaining Contractual Life	1 year 127 days	1 year 255 days
Weighted Average Outstanding Strike Price	$ 0.23	$ 0.29
Vested Stock Options (in Shares)	4,281,500	4,924,166
Weighted Average Remianing Vested Life	1 year 36 days	1 year 153 days
Weighted Average Vested Strike Price	$ 0.23	$ 0.32

XML

Note 13 - Stockholders' (Deficit) (Details) - Warrants (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding (in Shares)	48,463,517	44,728,873
Number of Warrants Exercisable (in Shares)	48,463,517
Exercise Price Range $0.25 to $0.60 [Member] | Minimum [Member]
Class of Warrant or Right [Line Items]
Range of Exercise Price - Minimum	$ 0.25	$ 0.25
Exercise Price Range $0.25 to $0.60 [Member] | Maximum [Member]
Class of Warrant or Right [Line Items]
Range of Exercise Price - Minimum	$ 0.60	$ 0.60
Exercise Price Range $0.25 to $0.60 [Member]
Class of Warrant or Right [Line Items]
Number of Warrants Outstanding (in Shares)	48,463,517	44,728,873
Weighted Average Remaining Contractual Life	1 year 149 days	2 years 18 days
Weighted Average Exercise Price	$ 0.35	$ 0.36
Number of Warrants Exercisable (in Shares)	48,463,517	44,728,873
Weighted Average Exercise Price	$ 0.35	$ 0.36

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Revenue Recognition, Multiple-deliverable Arrangements [Table Text Block]

	For the nine months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	3,363,576	$	2,584,285
Change orders		337,903		344,400
Maintenance		3,187,173		3,495,908
Software licenses		2,730,770		2,333,016
Professional services		1,700,498		1,625,600
Hosting		595,793		572,935
Total	$	11,915,713	$	10,956,144

	For the three months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	1,419,722	$	988,990
Change orders		140,949		119,870
Maintenance		1,175,527		1,186,023
Software licenses		1,444,623		430,323
Professional services		747,693		552,719
Hosting		196,175		199,696
Total	$	5,124,689	$	3,477,621

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	September 30, 2014		December 31, 2013
Beginning of period	$	65,341	$	84,210
Bad debt expense		76,634		11,131
Write-offs		-0-		(30,000	)
Exchange rate impact		76		-0-
End of period	$	142,051	$	65,341

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Revenues				Accounts receivable
							Percentage of
	Number of		Percentage of		Number of		accounts
For the period ended	customers		total revenues		customers		receivable
September 30, 2014		1		13%		0		0%
December 31, 2013		1		11%		2		23%
September 30, 2013		1		11%		2		29%

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

European revenues
For the nine months ended
September 30, 2014				September 30, 2013
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,750,331		14.7%	$	1,214,121		11.1%

XML

Note 6 - Intangible Assets, At Cost (Details) - Intangible Assets, Future Amortization Expense (USD $)	Sep. 30, 2014
Intangible Assets, Future Amortization Expense [Abstract]
2014	$ 10,970
2015	43,880
2016	40,380
2017	22,883
2018	20,454
Thereafter	81,765
Total	$ 220,332

XML

Note 2 - Summary of Significant Accounting Policies (Details) - Revenue from European Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 2 - Summary of Significant Accounting Policies (Details) - Revenue from European Operations [Line Items]
	$ 5,124,689	$ 3,477,621	$ 11,915,713	$ 10,956,144
Reportable Geographical Components [Member] | Europe [Member]
Note 2 - Summary of Significant Accounting Policies (Details) - Revenue from European Operations [Line Items]
			$ 1,750,331	$ 1,214,121
Sales [Member] | Geographic Concentration Risk [Member] | Europe [Member]
Note 2 - Summary of Significant Accounting Policies (Details) - Revenue from European Operations [Line Items]
			14.70%	11.10%

XML

Note 14 - Employee Equity Incentive Plans (Details) - Stock Option Activity (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock Option Activity [Abstract]
Number of shares	5,745,000		10,452,500
Weighted average exercise price (per share)	$ 0.29		$ 0.36
Weighted average remaining contractual term (in years)	1 year 127 days	1 year 255 days	1 year 248 days
Aggregate intrinsic value	$ 115,650	$ 93,945	$ 149,598
Vested and exercisable at September 30, 2014	4,281,500
Vested and exercisable at September 30, 2014	$ 0.23
Vested and exercisable at September 30, 2014	1 year 36 days
Vested and exercisable at September 30, 2014	$ 108,475
Number of shares	150,000	350,000
Weighted average exercise price (per share)	$ 0.16	$ 0.17
Number of shares	0	(100,000)
Weighted average exercise price (per share)	$ 0	$ 0.18
Number of shares	(1,213,500)	(4,957,500)
Weighted average exercise price (per share)	$ 0.54	$ 0.42
Number of shares	4,681,500	5,745,000
Weighted average exercise price (per share)	$ 0.23	$ 0.29

XML

Note 1 - Organization and Nature of Operations (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Disclosure Text Block [Abstract]
Research and Development Expense	$ 2,092,125	$ 1,718,079

XML

Note 8 - Line of Credit and Notes Payable (Details) (USD $)	0 Months Ended	1 Months Ended					0 Months Ended												0 Months Ended
	Jan. 02, 2014	Mar. 18, 2013	Sep. 30, 2014	Dec. 31, 2013	Dec. 18, 2013	Jan. 02, 2013	Jan. 02, 2013 Promissory Note 1 [Member]	Sep. 30, 2014 Note Payable 7 [Member]	Dec. 31, 2013 Note Payable 7 [Member]	Jan. 02, 2013 Note Payable 7 [Member]	Jan. 02, 2013 Promissory Note 2 [Member]	Jan. 02, 2013 Promissory Note 3 [Member]	Feb. 02, 2013 Promissory Note 4 [Member]	Mar. 05, 2013 Promissory Note 5 [Member]	Apr. 02, 2013 Promissory Note 6 [Member]	Jan. 02, 2014 Promissory Note 7 [Member]	Jan. 02, 2014 Net of Warrants [Member]	Apr. 04, 2014 Promissory Note 8 [Member]	Apr. 04, 2014 Promissory Note 9 [Member]	Apr. 04, 2014 Promissory Note 10 [Member]	Apr. 04, 2014 Promissory Note 11 [Member]
Note 8 - Line of Credit and Notes Payable (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 2,000,000			$ 4,000,000
Debt Instrument, Interest Rate, Stated Percentage						2.00%	12.00%	12.00%	12.00%	10.00%	10.00%	12.00%	12.00%	12.00%	12.00%	12.00%		12.00%	10.00%	12.00%	12.00%
Debt Instrument, Periodic Payment, Interest		9,500
Long-term Line of Credit			3,700,000
Line of Credit Facility, Interest Rate at Period End			2.25%
Unsecured Debt			6,626,941	5,667,865
Debt Instrument, Face Amount							529,000			308,562	123,424	45,000	20,000	137,500	2,866,879	980,000		1,600,000	120,000	45,000	137,500
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)							2,116,000									3,920,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)							$ 0.25									$ 0.25
Interest Payable							529,000
Derivative Liability	628,086						400,141
Notes Payable			6,626,941	5,667,865			128,859	137,500	45,000								351,914
Debt Instrument, Convertible, Remaining Discount Amortization Period	39 months						36 months
Repayments of Notes Payable																			3,424
Debt Conversion, Original Debt, Amount																			$ 123,424

XML

Note 12 - Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended																	1 Months Ended			0 Months Ended	1 Months Ended		0 Months Ended		1 Months Ended				0 Months Ended	1 Months Ended	12 Months Ended															3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 18, 2013	Mar. 18, 2013	Jan. 02, 2013	Apr. 04, 2014 Chief Technology Officer [Member] Promissory Note [Member]	Feb. 01, 2013 Chief Technology Officer [Member] Promissory Note [Member]	Feb. 22, 2013 Chief Technology Officer [Member] Convertible Debentures [Member]	Apr. 21, 2014 Director [Member] Convertible Debentures [Member]	Dec. 05, 2013 Director [Member] Convertible Debentures [Member]	Feb. 22, 2013 Director [Member] Convertible Debentures [Member]	Feb. 22, 2013 Chief Operating Officer [Member] Convertible Debentures [Member]	Sep. 30, 2009 Chief Executive Officer [Member] Aggregated September 30, 2009 [Member]	Oct. 06, 2012 Chief Executive Officer [Member] Purchased From Chief Financial Officer [Member]	Feb. 22, 2013 Chief Executive Officer [Member] Convertible Debentures [Member]	Sep. 30, 2009 Chief Executive Officer [Member] Convertible Debentures [Member]	Dec. 31, 2009 Chief Executive Officer [Member] Aggregated December 31, 2009 [Member]	Dec. 31, 2010 Chief Executive Officer [Member] Issued December 31, 2010 [Member]	Dec. 31, 2010 Chief Executive Officer [Member] Issued December 31, 2010 2 [Member]	Sep. 30, 2009 Chief Executive Officer [Member] Aggregated September 30, 2009 [Member]	Oct. 05, 2011 Chief Executive Officer [Member]	Nov. 23, 2011 Chief Executive Officer [Member]	Oct. 28, 2011 Chief Executive Officer [Member]	May 13, 2011 Chief Executive Officer [Member]	Apr. 13, 2010 Chief Executive Officer [Member]	Oct. 31, 2011 Chief Executive Officer [Member]	Sep. 30, 2011 Chief Executive Officer [Member]	Sep. 30, 2010 Chief Executive Officer [Member]	Jun. 29, 2010 Chief Executive Officer [Member]	Dec. 16, 2008 Chief Executive Officer [Member]	Aug. 29, 2008 Chief Executive Officer [Member]	Dec. 31, 2011 Chief Executive Officer [Member]	Sep. 30, 2014 Chief Executive Officer [Member]	Jan. 02, 2014 Chief Executive Officer [Member]	Feb. 22, 2013 Chief Executive Officer [Member]	Jan. 02, 2013 Chief Executive Officer [Member]	Mar. 31, 2011 Chief Executive Officer [Member]	Sep. 30, 2009 Chief Executive Officer [Member]	Sep. 30, 2008 Chief Executive Officer [Member]	Jun. 30, 2008 Chief Executive Officer [Member]	Feb. 29, 2008 Chief Executive Officer [Member]	Dec. 16, 2008 Convertible Debentures [Member]	Aug. 29, 2008 Convertible Debentures [Member]	Jul. 31, 2014 Convertible Debentures 12% [Member] Former Director [Member]	Jul. 31, 2014 Convertible Debentures 10% [Member] Former Director [Member]	Apr. 04, 2014 Promissory Note 8 [Member]	Mar. 18, 2013 The Northern Trust Company [Member]	Sep. 30, 2014 The Northern Trust Company [Member]	Dec. 18, 2013 The Northern Trust Company [Member]
Note 12 - Related Party Transactions (Details) [Line Items]
Notes Payable, Related Parties									$ 20,000																									$ 1,600,000		$ 980,000		$ 529,000	$ 2,866,879				$ 150,000
Debt Instrument, Interest Rate, Stated Percentage							2.00%	12.00%		12.00%	10.00%	12.00%	10.00%	12.00%	12.00%				12.00%														10.00%	12.00%		12.00%		12.00%	12.00%					12.00%	10.00%			12.00%
Convertible Notes Payable	9,665,000		9,665,000							5,000	150,000	160,000	150,000	25,000		125,000	4,475,000	4,350,000	1,440,000			1,100,000											1,260,000				1,770,000			1,770,000	4,200,000	510,000		5,075,000	2,270,000	160,000	150,000
Due to Related Parties																																			14,760,879
Debt Conversion, Converted Instrument, Amount																																4,350,000	510,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)																250,000						0.25										8,700,000	3,540,000	6,400,000		3,920,000		2,116,000	11,467,517					10,150,000	4,540,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)																																$ 0.50	$ 0.50											$ 0.50	$ 0.50
Debt Conversion, Converted Instrument, Rate																																12.00%
Debt Instrument, Convertible, Number of Equity Instruments			24,620,000																			4,400,000
Warrants and Rights Outstanding																			5,760,000			4,400,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)																																		$ 0.25		$ 0.25		$ 0.25	$ 0.25
Debt Conversion, Original Debt, Amount																				1,197,500	409,379		130,000	60,000	123,000	96,000	450,000	82,000	342,000	695,000	115,000			767,000
Debt Instrument, Face Amount																																																1,600,000
Line of Credit Facility, Maximum Borrowing Capacity					4,000,000	2,000,000																																											2,000,000		4,000,000
Line of Credit Facility, Interest Rate During Period																																																	2.00%
Line of Credit Facility, Periodic Payment, Interest																																																	9,500
Long-term Line of Credit	3,700,000		3,700,000																																															3,700,000
Line of Credit Facility, Interest Rate at Period End	2.25%		2.25%																																															2.25%
Interest Expense, Related Party	$ 578,735	$ 588,425	$ 1,818,911	$ 1,750,327

XML

Note 10 - Fair Value Measurement (Details) - Fair Value of Goodwill (USD $)	Sep. 30, 2014	Dec. 31, 2013
Goodwill [Line Items]
Goodwill	$ 618,541	$ 675,710
Fair Value, Inputs, Level 3 [Member] | Promasys B.V. [Member]
Goodwill [Line Items]
Goodwill	$ 618,541	$ 675,710

XML

Note 5 - Property and Equipment, Net (Details) - Property And Equipment (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Cost	$ 3,644,471	$ 3,586,780
Accumulated Depreciation	3,152,635	2,979,347
Net Book Value	491,836	607,433
Computer And Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	1,852,102	1,822,098
Accumulated Depreciation	1,447,075	1,326,256
Net Book Value	405,027	495,842
Estimated Useful Lives	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	93,137	93,812
Accumulated Depreciation	81,170	75,735
Net Book Value	11,967	18,077
Estimated Useful Lives	5 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	1,585,252	1,556,497
Accumulated Depreciation	1,520,180	1,477,801
Net Book Value	65,072	78,696
Estimated Useful Lives	3 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	113,980	114,373
Accumulated Depreciation	104,210	99,555
Net Book Value	$ 9,770	$ 14,818
Estimated Useful Lives	5 years

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The Company’s accounts include those of all its wholly-owned subsidiaries, which are more fully described in the Company’s 2013 Annual Report filed on Form 10-K, as amended, with the Securities and Exchange Commission, and have been prepared in conformity with (i) accounting principles generally accepted in the United States of America; and (ii) the rules and regulations of the United States Securities and Exchange Commission. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

UNAUDITED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The results for the periods indicated are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

The operating results for the nine month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year-ended December 31, 2014. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K, as amended, for the year-ended December 31, 2013.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities, the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results may differ from those estimates.

Reclassifications

Certain reclassifications have been made in the 2013 financial statements to conform to the 2014 presentation. These reclassifications did not have any effect on our net income/(loss) or shareholders’ deficit.

foreign currency translation

The financial statements of the Company’s foreign subsidiaries are translated in accordance with Accounting Standards Codification (“ASC”) 830-30, Foreign Currency Matters—Translation of Financial Statements. The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s subsidiaries, OmniComm Europe GmbH in Germany, OmniComm Spain S.L. in Spain and OmniComm Promasys B.V. in the Netherlands is the Euro. The functional currency of the Company’s subsidiary OmniComm Ltd., in the United Kingdom, is the British Pound Sterling. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded translation losses of $110,839 and $30,485 for the nine month periods ended September 30, 2014 and September 30, 2013 respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products offered by the Company: TrialMaster, TrialOne, eClinical Suite and Promasys (the “EDC Software”). Service revenues are derived principally from the Company's delivery of the hosted solutions of its TrialMaster and eClinical Suite software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the collection of fees is probable; and (4) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in one reportable segment which is the delivery of EDC Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through four main activities, including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its TrialMaster and eClinical Suite software products as hosted application solutions delivered through a standard web-browser, with customer support and training services. The Company's TrialOne and Promasys solutions are presently available on a licensed basis. To date, hosted applications revenues have been primarily related to TrialMaster and eClinical Suite.

Revenues resulting from TrialMaster and eClinical Suite application hosting services consist of three components of services for each clinical trial. The first component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The second component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The third component involves services required to close out, or lock, the database for the clinical trial.

Fees charged and costs incurred for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work performed outside the original scope of work is contracted for separately as an additional fee and is generally recognized ratably over the remaining term of the hosting period. Fees for the first and third stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the second stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the eClinical Suite products consist of installation and server configuration, application hosting and related support services. Services for this offering are generally charged as a fixed fee payable on a quarterly or annual basis. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf software. From time-to-time a client might require significant modification or customization subsequent to delivery to the customer. The Company generally enters into software term licenses for its EDC Software products with its customers for three to five year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net 30 days.

In the past the Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and may, in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company may also enter into arrangements to provide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional services can be deemed to be as essential to the functionality of the software at inception and typically are for initial trial configuration, implementation planning, loading of software, building simple interfaces, running test data and documentation of procedures. Subsequent additions or extensions to license terms do not generally include additional professional services.

Pass-through Revenue and Expense

The Company accounts for pass-through revenue and expense in accordance with ASC 605-45, Principal Agent Considerations (“ASC 605-45”). In accordance with ASC 605-45 these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with third-party services provided to our customers by our service and product partners. These third-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

Maintenance Revenues

Maintenance includes telephone-based help desk support and software maintenance. The Company generally bundles customer support with the software license for the entire term of the arrangement. As a result, the Company generally recognizes revenues for both maintenance and software licenses ratably over the term of the software license and support arrangement. The Company allocates the revenues recognized for these arrangements to the different elements based on management's estimate of the relative fair value of each element. The Company generally invoices each of the elements based on separately quoted amounts and thus has a fairly accurate estimate of the relative fair values of each of the invoiced revenue elements.

The fees associated with each business activity for the periods ended September 30, 2014 and September 30, 2013, respectively are:

	For the nine months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	3,363,576	$	2,584,285
Change orders		337,903		344,400
Maintenance		3,187,173		3,495,908
Software licenses		2,730,770		2,333,016
Professional services		1,700,498		1,625,600
Hosting		595,793		572,935
Total	$	11,915,713	$	10,956,144

	For the three months ended
Revenue activity	September 30, 2014		September 30, 2013
Set-up fees	$	1,419,722	$	988,990
Change orders		140,949		119,870
Maintenance		1,175,527		1,186,023
Software licenses		1,444,623		430,323
Professional services		747,693		552,719
Hosting		196,175		199,696
Total	$	5,124,689	$	3,477,621

COST OF REVENUES

Cost of revenues primarily consists of costs related to hosting, maintaining and supporting the Company’s application suite and delivering professional services and support. These costs include salaries, benefits, and bonuses for the Company’s professional services staff. Cost of revenues also includes outside service provider costs. Cost of revenues is expensed as incurred.

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 consolidated balance sheets approximates fair value.

ACCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary. The allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. The Company had recorded an allowance for uncollectible accounts receivable of $142,051 as of September 30, 2014 and $65,341 as of December 31, 2013, respectively.

The following table summarizes activity in the Company's allowance for doubtful accounts for the periods presented.

	September 30, 2014		December 31, 2013
Beginning of period	$	65,341	$	84,210
Bad debt expense		76,634		11,131
Write-offs		-0-		(30,000	)
Exchange rate impact		76		-0-
End of period	$	142,051	$	65,341

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any one financial institution may be in excess of FDIC-insured limits. As of September 30, 2014, $767,672 was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

Except as follows, the Company has no significant off-balance-sheet risk or credit risk concentrations. Financial instruments that subject the Company to potential credit risks are principally cash equivalents and accounts receivable. Concentrated credit risk with respect to accounts receivable is limited to creditworthy customers. The Company's customers are principally located in the United States and Europe. The Company is directly affected by the overall financial condition of the pharmaceutical, biotechnology and medical device industries and management believes that credit risk exists and that any credit risk the Company faces has been adequately reserved for as of September 30, 2014. The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses, when incurred, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of September 30, 2014, the Company believes no additional credit risk exists beyond the amounts provided for in our allowance for uncollectible accounts. The Company evaluates its allowance for uncollectable accounts on a monthly basis based on a specific review of receivable aging and the period that any receivables are beyond the standard payment terms. The Company does not require collateral from its customers in order to mitigate credit risk.

One customer accounted for 13% of our revenues during the nine month period ended September 30, 2014 or approximately $1,585,000. One customer accounted for 11% of our revenues during the nine month period ended September 30, 2013 or approximately $1,221,000. The following table summarizes the number of customers who individually comprise greater than 10% of total revenue and/or total accounts receivable and their aggregate percentage of the Company's total revenue and gross accounts receivable for the periods presented.

	Revenues				Accounts receivable
							Percentage of
	Number of		Percentage of		Number of		accounts
For the period ended	customers		total revenues		customers		receivable
September 30, 2014		1		13%		0		0%
December 31, 2013		1		11%		2		23%
September 30, 2013		1		11%		2		29%

The table below provides revenues from European customers for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

European revenues
For the nine months ended
September 30, 2014				September 30, 2013
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,750,331		14.7%	$	1,214,121		11.1%

The Company serves all of its hosting customers from third-party web hosting facilities located in the United States. The Company does not control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the third-party web hosting facilities become unavailable, although in such circumstances, the Company's service may be interrupted during the transition.

PROPERTY AND EQUIPMENT

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

ASSET IMPAIRMENT

Acquisitions and Intangible Assets 

We account for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

OmniComm’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820, Fair Value Measurements and Disclosures.

DEFERRED REVENUE

Deferred revenue represents cash advances and amounts in accounts receivable as of the balance sheet date received in excess of revenue earned on on-going contracts. Payment terms vary with each contract but may include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation. As of September 30, 2014, the Company had $8,232,798 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 6.5 years. The Company had $5,702,672 in deferred revenues that are expected to be recognized in the next twelve fiscal months.

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $338,486 and $175,095 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

RESEARCH AND DEVELOPMENT EXPENSES

Software development costs are included in R&D and are expensed as incurred. ASC 985-20, Software Industry Costs of Software to Be Sold, Leased or Marketed (“ASC 985-20”), requires the capitalization of certain development costs of software to be sold once technological feasibility is established, which the Company defines as completion to the point of marketability. The capitalized cost is then amortized on a straight-line basis over the estimated product life. To date, the period between achieving technological feasibility and the general availability of such software has been short and software development costs qualifying for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs under ASC 985-20. During the nine month periods ended September 30, 2014 and September 30, 2013 we spent approximately $2,092,125 and $1,718,079 respectively, on R&D activities, which include costs associated with the development of our software products and services for our clients’ projects and which are primarily comprised of salaries and related expenses for our software developers and consulting fees paid to third-party consultants. R&D costs are primarily included under Salaries, benefits and related taxes in our Statement of Operations.

EMPLOYEE EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) was approved at our Annual Meeting of Shareholders on July 10, 2009. The 2009 Plan provides for the issuance of up to 7,500,000 shares to employees, directors and key consultants. The predecessor plan, the OmniComm Systems, Inc., 1998 Stock Incentive Plan (the “1998 Plan”) expired on December 31, 2008. The 1998 Plan provided for the issuance of up to 12,500,000 shares in accordance with the terms of the 1998 Plan document. Each plan is more fully described in “Note 14, Employee Equity Incentive Plans”. The Company accounts for its employee equity incentive plans under ASC 718, Compensation – Stock Compensation ("ASC 718") which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions.

ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company currently uses the Black Scholes option pricing model to determine grant date fair value.

EARNINGS PER SHARE

The Company accounts for Earnings per Share using ASC 260, Earnings per Share. Unlike diluted earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities.

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 has as its basic objective the recognition of current and deferred income tax assets and liabilities based upon all events that have been recognized in the financial statements as measured by the provisions of the enacted tax laws.

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

IMPACT OF NEW ACCOUNTING STANDARDS

During the first nine months of 2014, we adopted the following new accounting pronouncements:

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”, (“ASU No. 2013-11”). This ASU amends ASC 740, Income Taxes, to require that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward; to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward does not exist at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. Our adoption of this standard on January 1, 2014 did not have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Management is currently evaluating which transition approach to use and the impact of the adoption of this ASU on the Company's consolidated financial statements.

In August 2014, FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We believe the adoption of this guidance will not have a material effect on our consolidated financial statements.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.

XML

Note 10 - Fair Value Measurement (Details) - Unrealized Gain or Loss Included in Earnings (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Unrealized Gain or Loss Included in Earnings [Abstract]
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized gain/(loss) from changes in derivative liabilities at the reporting date	$ 4,410,241	$ (2,524,671)
Total unrealized gains/(losses) included in earnings	$ 4,410,241	$ (2,524,671)

XML

Note 4 - Earnings (Loss) Per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 4 - Earnings (Loss) Per Share (Details) [Line Items]
Weighted Average Number of Shares Outstanding, Basic (in Shares)	91,032,920	87,867,268	90,417,480	87,515,641
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)			81,482,435	79,502,620
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit			$ 0.045
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit			$ 0.64
Lower Range Limit [Member]
Note 4 - Earnings (Loss) Per Share (Details) [Line Items]
Investment Warrants, Exercise Price			$ 0.25
Upper Range Limit [Member]
Note 4 - Earnings (Loss) Per Share (Details) [Line Items]
Investment Warrants, Exercise Price			$ 0.60
Lower Range Limit [Member]
Note 4 - Earnings (Loss) Per Share (Details) [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.25		$ 0.25
Upper Range Limit [Member]
Note 4 - Earnings (Loss) Per Share (Details) [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.50		$ 0.50

XML

Note 7 - Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2014

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

Account	September 30, 2014		December 31, 2013
Accounts payable	$	570,092	$	724,421
Accrued payroll and related costs		620,026		260,072
Other accrued expenses		118,218		88,292
Accrued interest		948,168		1,468,171
Total accounts payable and accrued expenses	$	2,256,504	$	2,540,956

XML

Note 6 - Intangible Assets, At Cost (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
Asset	Cost		amortization		value		Cost		amortization		value		(years)
eClinical customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		124,725		7,622		117,103		136,253		1,514		134,739		15
Promasys B.V. software code		72,837		13,353		59,484		72,943		2,431		70,512		5
Promasys B.V. URLs/Website		62,993		19,248		43,745		68,814		3,823		64,991		3
Total	$	1,653,256	$	1,432,924	$	220,332	$	1,670,711	$	1,400,469	$	270,242

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2014	$	10,970
2015		43,880
2016		40,380
2017		22,883
2018		20,454
Thereafter		81,765
Total	$	220,332

XML

Note 9 - Convertible Notes Payable (Details) - Convertible Debt Maturity Payments (USD $)	Sep. 30, 2014
Note 9 - Convertible Notes Payable (Details) - Convertible Debt Maturity Payments [Line Items]
Total	$ 9,665,000
Convertible Debt [Member]
Note 9 - Convertible Notes Payable (Details) - Convertible Debt Maturity Payments [Line Items]
2014	75,000
2015	0
2016	$ 9,590,000

XML

Note 4 - Earnings (Loss) Per Share (Details) - Reconciliation of Anti-Dilutive Securities	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	81,482,435	79,502,620
Shares Of Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	2,750,149	2,750,149
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	4,681,500	6,175,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	48,463,517	44,728,873
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	24,620,000	24,620,000
Shares Issuable For Accrued Interest [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-Dilutive Security	967,269	1,228,598

XML

Note 8 - Line of Credit and Notes Payable (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		September 30,				Long				Long
date	date	rate		2014		Current		term		Current		term
12/17/2012	12/16/2014		12%	$	20,000	$	20,000	$	-0-	$	-0-	$	-0-
1/1/2013	1/1/2015		10%		308,562		308,562		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
4/4/2014	4/1/2017		12%		45,000		-0-		45,000		-0-		-0-
4/4/2014	4/1/2017		12%		137,500		-0-		137,500		-0-		-0-
4/4/2014	4/1/2017		10%		120,000		-0-		120,000		-0-		-0-
4/4/2014	4/1/2017		12%		1,600,000		-0-		-0-		-0-		1,600,000
1/1/2014	4/1/2017		12%		980,000		-0-		-0-		-0-		980,000
Discount on note payable							-0-		-0-		-0-		(670,535	)
Total				$	6,626,941	$	328,562	$	302,500	$	-0-	$	5,325,344

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		December 31,				Long				Long
date	date	rate		2013		Current		term		Current		term
12/31/2011	1/1/2015		12%	$	1,600,000	$	-0-	$	-0-	$	-0-	$	1,600,000
4/1/2012	1/1/2014		12%		17,500		17,500		-0-		-0-		-0-
12/17/2012	12/16/2014		12%		20,000		20,000		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
1/1/2013	1/1/2015		10%		308,562		-0-		308,562		-0-		-0-
1/1/2013	1/1/2015		10%		123,424		-0-		123,424		-0-		-0-
1/1/2013	1/1/2015		12%		45,000		-0-		45,000		-0-		-0-
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
3/5/2013	1/1/2015		12%		137,500		-0-		137,500		-0-		-0-
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
Discount on note payable							-0-		-0-		-0-		(447,666	)
Total				$	5,667,865	$	37,500	$	614,486	$	-0-	$	4,568,213

XML

Note 9 - Convertible Notes Payable (Tables)

9 Months Ended

Sep. 30, 2014

Note 9 - Convertible Notes Payable (Tables) [Line Items]

Schedule of Maturities of Long-term Debt [Table Text Block]

2014	$	75,000
2015		-0-
2016		9,590,000
Total	$	9,665,000

Convertible Debt [Member]

Note 9 - Convertible Notes Payable (Tables) [Line Items]

Schedule of Long-term Debt Instruments [Table Text Block]

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		September 30, 2014		Allocated discount		discount amortized		September 30, 2014		September 30, 2014		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	4/1/2016		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		-0-		150,000
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		-0-		160,000
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2016		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	8,815,000	$	775,000

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		December 31, 2013		Allocated discount		discount amortized		December 31, 2013		December 31, 2013		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	1/1/2015		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		150,000		-0-
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2015		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		160,000		-0-
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	9,125,000	$	465,000

XML

Note 1 - Organization and Nature of Operations

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Nature of Operations [Text Block]

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

OmniComm Systems, Inc. (“OmniComm” or the “Company”) is a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”), and other clinical trial sponsors principally located in the United States and Europe. Our proprietary EDC software applications; TrialMaster^®, TrialOne^®, eClinical Suite, and Promasys^® allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

Our ability to compete within the EDC industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC software and services. Our research and development (“R&D”) efforts are focused on developing new and complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. During the nine month periods ended September 30, 2014 and September 30, 2013 we spent approximately $2,092,125 and $1,718,079, respectively, on R&D activities, which are primarily comprised of salaries to our developers and other R&D personnel and related costs associated with the development of our software products.

XML

Note 10 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

	Fair value at September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2014		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,533,362	$	-0-	$	-0-	$	1,533,362
Warrant liability		3,754,666		-0-		-0-		3,754,666
Total of derivative liabilities	$	5,288,028	$	-0-	$	-0-	$	5,288,028

	Fair value at December 31,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	3,126,206	$	-0-	$	-0-	$	3,126,206
Warrant liability		5,943,977		-0-		-0-		5,943,977
Total of derivative liabilities	$	9,070,183	$	-0-	$	-0-	$	9,070,183

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

Significant valuation assumptions of derivative instruments at September 30, 2014
Risk free interest rate	0.11%
Dividend yield	0.00%
Expected volatility	124.6% to 178.8%
Expected life (range in years)
Conversion feature liability	1.25 to 1.50
Warrant liability	1.25 to 2.50

Significant valuation assumptions of derivative instruments at December 31, 2013
Risk free interest rate	0.12% to 0.13%
Dividend yield	0.00%
Expected volatility	166.7% to 217.1%
Expected life (range in years)
Conversion feature liability	1.00 to 2.00
Warrant liability	1.00 to 2.25

Fair Value Measurements, Nonrecurring [Table Text Block]

	Carrying amount December 31,		Carrying amount September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		2014		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer lists (4)	$	134,739	$	117,103	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		70,512		59,484		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		64,991		43,745		-0-		-0-		68,814
Total	$	270,242	$	220,332	$	-0-	$	-0-	$	278,010

Schedule of Goodwill [Table Text Block]

Fair Value Measurements
	September 30, 2014		December 31, 2013
(Level 3)
Goodwill	$	618,541	$	675,710

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block]

	Other income
	for the nine months ended
	September 30, 2014		September 30, 2013
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized gain/(loss) from changes in derivative liabilities at the reporting date	$	4,410,241	$	(2,524,671	)
Total unrealized gains/(losses) included in earnings	$	4,410,241	$	(2,524,671	)

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		period
Period ended September 30, 2014
Derivatives:
Conversion feature liability	$	3,126,206	$	-0-	$	(1,592,844	)	$	-0-	$	-0-	$	1,533,362
Warrant liability		5,943,977		-0-		(2,817,397	)		628,086		-0-		3,754,666
Total of derivative liabilities	$	9,070,183	$	-0-	$	(4,410,241	)	$	628,086	$	-0-	$	5,288,028

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		year
Year ended December 31, 2013
Derivatives:
Conversion feature liability	$	2,287,323	$	-0-	$	838,883		$	-0-	$	-0-	$	3,126,206
Warrant liability		6,287,598		-0-		(743,762	)		400,141		-0-		5,943,977
Total of derivative liabilities	$	8,574,921	$	-0-	$	95,121		$	400,141	$	-0-	$	9,070,183

XML

Note 15 - Income Taxes (Details) - The Components of Income Tax Expense (Benefit) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 15 - Income Taxes (Details) - The Components of Income Tax Expense (Benefit) [Line Items]
Current tax expense			$ 35,407	$ 48,599
Deferred tax expense/(benefit):
Deferred tax expense (benefit)			(1,267,477)	(480,839)
Valuation allowance			1,267,477	480,839
Total tax expense	1,446	30,869	35,407	48,599
Bad Debt Allowance [Member]
Deferred tax expense/(benefit):
Deferred tax expense (benefit)			(28,837)	13,106
Operating Loss Carryforward [Member]
Deferred tax expense/(benefit):
Deferred tax expense (benefit)			(1,288,211)	(531,031)
Amortization of Intangibles [Member]
Deferred tax expense/(benefit):
Deferred tax expense (benefit)			4,111	0
Patent Litigation Settlement [Member]
Deferred tax expense/(benefit):
Deferred tax expense (benefit)			$ 45,460	$ 37,086

XML

Note 2 - Summary of Significant Accounting Policies (Details) - Allowance for Doubtful Account Summary (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Allowance for Doubtful Account Summary [Abstract]
Beginning of period			$ 65,341	$ 84,210	$ 84,210
Bad debt expense	632	8,191	76,634	(4,830)	11,131
Write-offs			0		(30,000)
Exchange rate impact			76		0
End of period	$ 142,051		$ 142,051		$ 65,341

XML

Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Jan. 02, 2013
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Interest rate			2.00%
Ending principal	$ 6,626,941	$ 5,667,865
Short-term Debt [Member] | Note Payable 1 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	20,000	0
Short-term Debt [Member] | Note Payable 1 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 2 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	308,562	17,500
Short-term Debt [Member] | Note Payable 2 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 3 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	20,000
Short-term Debt [Member] | Note Payable 3 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 4 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 4 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 5 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 5 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 6 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 6 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 7 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 7 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 8 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 8 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 9 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 9 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 10 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Note Payable 10 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Short-term Debt [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	328,562	37,500
Discount on note payable	0	0
Short-term Debt [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Discount on note payable	0	0
Long-term Debt [Member] | Note Payable 1 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 1 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	1,600,000
Long-term Debt [Member] | Note Payable 2 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 2 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 3 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 3 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	529,000	0
Long-term Debt [Member] | Note Payable 4 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 4 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	20,000	529,000
Long-term Debt [Member] | Note Payable 5 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	308,562
Long-term Debt [Member] | Note Payable 5 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	2,866,879	0
Long-term Debt [Member] | Note Payable 6 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	45,000	123,424
Long-term Debt [Member] | Note Payable 6 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 7 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	137,500	45,000
Long-term Debt [Member] | Note Payable 7 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 8 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	120,000	0
Long-term Debt [Member] | Note Payable 8 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	20,000
Long-term Debt [Member] | Note Payable 9 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	137,500
Long-term Debt [Member] | Note Payable 9 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	1,600,000	0
Long-term Debt [Member] | Note Payable 10 [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	0	0
Long-term Debt [Member] | Note Payable 10 [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	980,000	2,866,879
Long-term Debt [Member] | Non-Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	302,500	614,486
Discount on note payable	0	0
Long-term Debt [Member] | Related Party [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Ending principal	5,325,344	4,568,213
Discount on note payable	(670,535)	(447,666)
Note Payable 1 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Dec. 16, 2014	Jan. 01, 2015
Interest rate	12.00%	12.00%
Ending principal	20,000	1,600,000
Note Payable 2 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Jan. 01, 2015	Jan. 01, 2014
Interest rate	10.00%	12.00%
Ending principal	308,562	17,500
Note Payable 3 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Jan. 01, 2016	Dec. 16, 2014
Interest rate	12.00%	12.00%
Ending principal	529,000	20,000
Note Payable 4 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Jan. 01, 2016	Jan. 01, 2016
Interest rate	12.00%	12.00%
Ending principal	20,000	529,000
Note Payable 5 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Mar. 31, 2016	Jan. 01, 2015
Interest rate	12.00%	10.00%
Ending principal	2,866,879	308,562
Note Payable 6 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Apr. 01, 2017	Jan. 01, 2015
Interest rate	12.00%	10.00%
Ending principal	45,000	123,424
Note Payable 7 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Apr. 01, 2017	Jan. 01, 2015
Interest rate	12.00%	12.00%	10.00%
Ending principal	137,500	45,000
Note Payable 8 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Apr. 01, 2017	Jan. 01, 2016
Interest rate	10.00%	12.00%
Ending principal	120,000	20,000
Note Payable 9 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Apr. 01, 2017	Jan. 01, 2015
Interest rate	12.00%	12.00%
Ending principal	1,600,000	137,500
Note Payable 10 [Member]
Note 8 - Line of Credit and Notes Payable (Details) - Notes Payable [Line Items]
Maturity date	Apr. 01, 2017	Mar. 31, 2016
Interest rate	12.00%	12.00%
Ending principal	$ 980,000	$ 2,866,879

XML

Note 13 - Stockholders' (Deficit) (Details) - Warrants Activity (USD $)	9 Months Ended
	Sep. 30, 2014
Warrants Activity [Abstract]
Balance at December 31, 2013	44,728,873
Issued (in Dollars)	$ 3,920,000
Exercised	0
Expired/forfeited	(185,356)
Balance at September 30, 2014	48,463,517
Warrants exercisable at September 30, 2014	48,463,517
Weighted average fair value of warrants granted during 2014 (in Dollars)	$ 0.15

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash	$ 1,093,682	$ 1,160,720
Accounts receivable, net of allowance for doubtful accounts of $142,051 and $65,341, respectively	2,887,083	1,599,568
Prepaid expenses	216,165	146,907
Prepaid stock compensation, current portion	153,500	0
Other current assets	16,138	0
Total current assets	4,366,568	2,907,195
Property and equipment, net	491,836	607,433
Intangible assets, net	220,332	270,242
Goodwill	618,541	675,710
Prepaid stock compensation	185,028	169,375
Other assets	50,342	82,501
TOTAL ASSETS	5,932,647	4,712,456
CURRENT LIABILITIES
Accounts payable and accrued expenses	2,256,504	2,540,956
Notes payable, current portion	328,562	37,500
Deferred revenue, current portion	5,702,672	2,866,356
Line of credit	3,700,000	3,500,000
Convertible notes payable, current portion, net of discount of $-0- and $-0-, respectively	75,000	75,000
Patent settlement liability, current portion	962,500	962,500
LONG TERM LIABILITIES
Notes payable, related parties, long term, net of current portion, net of discount of $670,535 and $447,666, respectively	5,325,344	4,568,213
Notes payable, long term, net of current portion	302,500	614,486
Deferred revenue, long term, net of current portion	2,530,126	1,385,017
Convertible notes payable, related parties, long term, net of current portion	8,815,000	9,125,000
Convertible notes payable, long term, net of current portion	775,000	465,000
Patent settlement liability, long term, net of current portion	746,432	963,124
TOTAL LIABILITIES	36,807,668	36,173,335
COMMITMENTS AND CONTINGENCIES (See Note 11)
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Common stock, 250,000,000 shares authorized, 91,504,659 and 90,104,659 issued and outstanding, respectively, at $0.001 par value	91,505	90,105
Additional paid in capital - preferred	4,717,804	4,717,804
Additional paid in capital - common	37,624,741	37,334,358
Accumulated other comprehensive (loss)	(198,443)	(87,604)
Accumulated deficit	(73,115,003)	(73,519,917)
TOTAL SHAREHOLDERS' (DEFICIT)	(30,875,021)	(31,460,879)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	5,932,647	4,712,456
Conversion Feature Liability, Related Parties [Member]
CURRENT LIABILITIES
Derivative liabilities, current	1,416,296	2,979,392
Conversion Feature Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	117,066	146,814
Warrant Liability, Related Parties [Member]
CURRENT LIABILITIES
Derivative liabilities, current	3,646,003	5,799,946
Warrant Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	108,663	144,031
Total current liabilities	18,313,266	19,052,495
Series B Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Series C Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Series A Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	4,125	4,125
Series D Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	$ 250	$ 250

XML

Note 4 - Earnings (Loss) Per Share (Details) - Computation of Diluted Earnings Per Share (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Computation of Diluted Earnings Per Share [Abstract]
Basic EPS	$ 1,229,741	$ 1,680,481	$ 250,642	$ (4,621,397)
Basic EPS	91,032,920	87,867,268	90,417,480	87,515,641
Basic EPS	$ 0.01	$ 0.02	$ 0.00	$ (0.05)
Effect of dilutive securities - none	0	0	0	0
Effect of dilutive securities - none	0	0	0	0
Effect of dilutive securities - none	$ 0	$ 0	$ 0	$ 0
Diluted EPS	$ 1,229,741	$ 1,680,481	$ 250,642	$ (4,621,397)
Diluted EPS	91,032,920	87,867,268	90,417,480	87,515,641
Diluted EPS	$ 0.01	$ 0.02	$ 0.00	$ (0.05)

XML

Condensed Consolidated Statement of Shareholders' (Deficit) (Unaudited) (USD $)	Series A Preferred Stock [Member] Preferred Stock [Member]	Series B Preferred Stock [Member] Preferred Stock [Member]	Series C Preferred Stock [Member] Preferred Stock [Member]	Series D Preferred Stock [Member] Preferred Stock [Member]	Additional Paid In Capital, Preferred [Member]	Common Stock [Member]	Additional Paid In Capital, Common [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2012	$ 4,125	$ 0	$ 0	$ 250	$ 4,717,804	$ 86,599	$ 36,645,589	$ (70,358,575)	$ (69,092)	$ (28,973,300)
Balance (in Shares) at Dec. 31, 2012	4,125,224	0	0	250,000		86,598,659
Employee stock option expense							83,875			83,875
Foreign currency translation adjustment									(18,512)	(18,512)
Restricted stock issuance						1,225	221,275			222,500
Restricted stock issuance (in Shares)						1,225,000
Employee stock option exercise						11	(11)			0
Employee stock option exercise (in Shares)						11,000				100,000
Shares issued for purchase of Promasys						2,270	383,630			385,900
Shares issued for purchase of Promasys (in Shares)						2,270,000
Net loss for the period	0	0	0	0	0	0	0	(3,161,342)	0	(3,161,342)
Balance at Dec. 31, 2013	4,125	0	0	250	4,717,804	90,105	37,334,358	(73,519,917)	(87,604)	(31,460,879)
Balance (in Shares) at Dec. 31, 2013	4,125,224	0	0	250,000		90,104,659
Employee stock option expense							53,783			53,783
Foreign currency translation adjustment									(110,839)	(110,839)
Restricted stock issuance						1,400	236,600			238,000
Restricted stock issuance (in Shares)						1,400,000
Employee stock option exercise (in Shares)										0
Net loss for the period	0	0	0	0	0	0	0	404,914	0	404,914
Balance at Sep. 30, 2014	$ 4,125	$ 0	$ 0	$ 250	$ 4,717,804	$ 91,505	$ 37,624,741	$ (73,115,003)	$ (198,443)	$ (30,875,021)
Balance (in Shares) at Sep. 30, 2014	4,125,224	0	0	250,000		91,504,659

XML

Note 10 - Fair Value Measurement (Details) - Fair Value Assumptions	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Risk free interest rate	0.11%
Dividend yield	0.00%	0.00%
Conversion Feature Liability [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Expected life	1 year 3 months	1 year
Conversion Feature Liability [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Expected life	1 year 6 months	2 years
Warrant Liability [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Expected life	1 year 3 months	1 year
Warrant Liability [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Expected life	2 years 6 months	2 years 3 months
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Risk free interest rate		0.12%
Expected volatility	124.60%	166.70%
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Risk free interest rate		0.13%
Expected volatility	178.80%	217.10%

XML

Note 14 - Employee Equity Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

						Weighted
				Weighted		average
				average		remaining
	Number of			exercise price		contractual term		Aggregate
	shares			(per share)		(in years)		intrinsic value
Outstanding at December 31, 2012		10,452,500		$	0.36		1.68	$	149,598
Granted		350,000			0.17
Exercised		(100,000	)		0.18
Forfeited/cancelled/expired		(4,957,500	)		0.42
Outstanding at December 31, 2013		5,745,000			0.29		1.70	$	93,945
Granted		150,000			0.16
Exercised		-0-			-0-
Forfeited/cancelled/expired		(1,213,500	)		0.54
Outstanding at September 30, 2014		4,681,500		$	0.23		1.35	$	115,650
Vested and exercisable at September 30, 2014		4,281,500		$	0.23		1.10	$	108,475

Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding [Table Text Block]

	Number of options		Fair value of
	vested		options vested
Fair value of options vesting during the nine months ended September 30, 2014		570,834	$	66,389
Fair value of options vesting during the nine months ended September 30, 2013		593,833	$	62,204

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

Awards breakdown by price range at September 30, 2014
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,302,500		1.55	$	0.15		2,952,500		1.25	$	0.15
0.21	to	0.29		600,000		1.18		0.24		550,000		0.95		0.25
0.30	to	0.49		80,000		0.23		0.38		80,000		0.23		0.38
0.50	to	0.70		699,000		0.68		0.55		699,000		0.68		0.55
0.00	to	0.70		4,681,500		1.35	$	0.23		4,281,500		1.10	$	0.23

Awards breakdown by price range at December 31, 2013
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,251,000		2.16	$	0.15		2,530,166		1.86	$	0.16
0.21	to	0.29		750,000		1.64		0.25		650,000		1.20		0.25
0.30	to	0.49		110,000		0.98		0.38		110,000		0.98		0.38
0.50	to	0.70		1,634,000		0.87		0.59		1,634,000		0.87		0.59
0.00	to	0.70		5,745,000		1.70	$	0.29		4,924,166		1.42	$	0.32

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Stock option assumptions for the nine months ended
Stock option assumptions	September 30, 2014		September 30, 2013
Risk-free interest rate		0.93%		0.70%
Expected dividend yield		0.0%		0.0%
Expected volatility		199.0%		203.4%
Expected life of options (in years)		5		5

Schedule of Share-based Compensation, Activity [Table Text Block]

	Weighted average grant date fair value
	2014		2013
Stock options granted during the nine month period ended September 30,	$	0.16	$	0.17
Stock options vested during the nine month period ended September 30,	$	0.12	$	0.10
Stock options forfeited during the nine month period ended September 30,	$	0.43	$	0.28

Schedule of Nonvested Share Activity [Table Text Block]

	Shares underlying stock		Weighted average grant
	options		date fair value
Nonvested shares at January 1, 2014		820,834	$	0.13
Nonvested shares at September 30, 2014		400,000	$	0.16

XML

Note 11 - Commitments and Contingencies (Details) - Future Minimum Lease Payments (USD $)	Sep. 30, 2014
Future Minimum Lease Payments [Abstract]
2014	$ 169,095
2015	657,752
2016	369,825
2017	52,234
2018	5,354
Total	$ 1,254,260

XML

Note 15 - Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 15: INCOME TAXES

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows:

	September 30, 2014			September 30, 2013
Federal statutory rate applied to income/(loss) before income taxes	$	165,693		$	(1,662,692	)
Increase/(decrease) in income taxes results from:
Current tax expense		35,407			48,599
Non deductible expenses		(1,482,741	)		1,144,767
Change in deferred assets		49,571			37,086
Change in valuation allowance		1,267,477			480,839
Income tax expense	$	35,407		$	48,599

The components of income tax expense/(benefit) for the nine month periods ended:

	September 30, 2014			September 30, 2013
Current tax expense	$	35,407		$	48,599
Deferred tax expense/(benefit):
Bad debt allowance		(28,837	)		13,106
Operating loss carryforward		(1,288,211	)		(531,031	)
Amortization of intangibles		4,111			-0-
Patent litigation settlement		45,460			37,086
		(1,267,477	)		(480,839	)
Valuation allowance		1,267,477			480,839
Total tax expense	$	35,407		$	48,599

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

	September 30, 2014			September 30, 2013
Amortization of intangibles	$	279,587		$	283,698
Bad debt allowance		52,452			17,608
Patent litigation liability accrual		269,948			349,596
Operating loss carryforwards		19,508,693			17,887,001
Gross deferred tax assets		20,110,680			18,537,903
Valuation allowance		(20,110,680	)		(18,537,903	)
Net deferred tax liability/(asset)	$	-0-		$	-0-

The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $54,089,558. This loss is allowed to be offset against future income until the year 2034 when the NOLs will expire. Other timing differences relate to depreciation and amortization for the stock acquisition of Education Navigator in 1998. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through September 30, 2014. The change in the valuation allowance for the nine month period ended September 30, 2014 was an increase of $1,267,477.

XML

Note 15 - Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	September 30, 2014			September 30, 2013
Federal statutory rate applied to income/(loss) before income taxes	$	165,693		$	(1,662,692	)
Increase/(decrease) in income taxes results from:
Current tax expense		35,407			48,599
Non deductible expenses		(1,482,741	)		1,144,767
Change in deferred assets		49,571			37,086
Change in valuation allowance		1,267,477			480,839
Income tax expense	$	35,407		$	48,599

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	September 30, 2014			September 30, 2013
Current tax expense	$	35,407		$	48,599
Deferred tax expense/(benefit):
Bad debt allowance		(28,837	)		13,106
Operating loss carryforward		(1,288,211	)		(531,031	)
Amortization of intangibles		4,111			-0-
Patent litigation settlement		45,460			37,086
		(1,267,477	)		(480,839	)
Valuation allowance		1,267,477			480,839
Total tax expense	$	35,407		$	48,599

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	September 30, 2014			September 30, 2013
Amortization of intangibles	$	279,587		$	283,698
Bad debt allowance		52,452			17,608
Patent litigation liability accrual		269,948			349,596
Operating loss carryforwards		19,508,693			17,887,001
Gross deferred tax assets		20,110,680			18,537,903
Valuation allowance		(20,110,680	)		(18,537,903	)
Net deferred tax liability/(asset)	$	-0-		$	-0-

XML

Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The Company’s accounts include those of all its wholly-owned subsidiaries, which are more fully described in the Company’s 2013 Annual Report filed on Form 10-K, as amended, with the Securities and Exchange Commission, and have been prepared in conformity with (i) accounting principles generally accepted in the United States of America; and (ii) the rules and regulations of the United States Securities and Exchange Commission. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities, the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results may differ from those estimates.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain reclassifications have been made in the 2013 financial statements to conform to the 2014 presentation. These reclassifications did not have any effect on our net income/(loss) or shareholders’ deficit.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

foreign currency translation

The financial statements of the Company’s foreign subsidiaries are translated in accordance with Accounting Standards Codification (“ASC”) 830-30, Foreign Currency Matters—Translation of Financial Statements. The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s subsidiaries, OmniComm Europe GmbH in Germany, OmniComm Spain S.L. in Spain and OmniComm Promasys B.V. in the Netherlands is the Euro. The functional currency of the Company’s subsidiary OmniComm Ltd., in the United Kingdom, is the British Pound Sterling. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded translation losses of $110,839 and $30,485 for the nine month periods ended September 30, 2014 and September 30, 2013 respectively.

Revenue Recognition, Policy [Policy Text Block]

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products offered by the Company: TrialMaster, TrialOne, eClinical Suite and Promasys (the “EDC Software”). Service revenues are derived principally from the Company's delivery of the hosted solutions of its TrialMaster and eClinical Suite software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the collection of fees is probable; and (4) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in one reportable segment which is the delivery of EDC Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through four main activities, including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its TrialMaster and eClinical Suite software products as hosted application solutions delivered through a standard web-browser, with customer support and training services. The Company's TrialOne and Promasys solutions are presently available on a licensed basis. To date, hosted applications revenues have been primarily related to TrialMaster and eClinical Suite.

Revenues resulting from TrialMaster and eClinical Suite application hosting services consist of three components of services for each clinical trial. The first component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The second component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The third component involves services required to close out, or lock, the database for the clinical trial.

Fees charged and costs incurred for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work performed outside the original scope of work is contracted for separately as an additional fee and is generally recognized ratably over the remaining term of the hosting period. Fees for the first and third stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the second stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the eClinical Suite products consist of installation and server configuration, application hosting and related support services. Services for this offering are generally charged as a fixed fee payable on a quarterly or annual basis. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf software. From time-to-time a client might require significant modification or customization subsequent to delivery to the customer. The Company generally enters into software term licenses for its EDC Software products with its customers for three to five year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net 30 days.

In the past the Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and may, in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company may also enter into arrangements to provide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional services can be deemed to be as essential to the functionality of the software at inception and typically are for initial trial configuration, implementation planning, loading of software, building simple interfaces, running test data and documentation of procedures. Subsequent additions or extensions to license terms do not generally include additional professional services.

Pass-through Revenue and Expense

The Company accounts for pass-through revenue and expense in accordance with ASC 605-45, Principal Agent Considerations (“ASC 605-45”). In accordance with ASC 605-45 these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with third-party services provided to our customers by our service and product partners. These third-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

Maintenance Revenues

Maintenance includes telephone-based help desk support and software maintenance. The Company generally bundles customer support with the software license for the entire term of the arrangement. As a result, the Company generally recognizes revenues for both maintenance and software licenses ratably over the term of the software license and support arrangement. The Company allocates the revenues recognized for these arrangements to the different elements based on management's estimate of the relative fair value of each element. The Company generally invoices each of the elements based on separately quoted amounts and thus has a fairly accurate estimate of the relative fair values of each of the invoiced revenue elements.

Cost of Sales, Policy [Policy Text Block]

COST OF REVENUES

Cost of revenues primarily consists of costs related to hosting, maintaining and supporting the Company’s application suite and delivering professional services and support. These costs include salaries, benefits, and bonuses for the Company’s professional services staff. Cost of revenues also includes outside service provider costs. Cost of revenues is expensed as incurred.

Cash and Cash Equivalents, Policy [Policy Text Block]

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 consolidated balance sheets approximates fair value.

Receivables, Policy [Policy Text Block]

ACCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary. The allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. The Company had recorded an allowance for uncollectible accounts receivable of $142,051 as of September 30, 2014 and $65,341 as of December 31, 2013, respectively.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any one financial institution may be in excess of FDIC-insured limits. As of September 30, 2014, $767,672 was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

Except as follows, the Company has no significant off-balance-sheet risk or credit risk concentrations. Financial instruments that subject the Company to potential credit risks are principally cash equivalents and accounts receivable. Concentrated credit risk with respect to accounts receivable is limited to creditworthy customers. The Company's customers are principally located in the United States and Europe. The Company is directly affected by the overall financial condition of the pharmaceutical, biotechnology and medical device industries and management believes that credit risk exists and that any credit risk the Company faces has been adequately reserved for as of September 30, 2014. The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses, when incurred, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of September 30, 2014, the Company believes no additional credit risk exists beyond the amounts provided for in our allowance for uncollectible accounts. The Company evaluates its allowance for uncollectable accounts on a monthly basis based on a specific review of receivable aging and the period that any receivables are beyond the standard payment terms. The Company does not require collateral from its customers in order to mitigate credit risk.

One customer accounted for 13% of our revenues during the nine month period ended September 30, 2014 or approximately $1,585,000. One customer accounted for 11% of our revenues during the nine month period ended September 30, 2013 or approximately $1,221,000. The following table summarizes the number of customers who individually comprise greater than 10% of total revenue and/or total accounts receivable and their aggregate percentage of the Company's total revenue and gross accounts receivable for the periods presented.

	Revenues				Accounts receivable
							Percentage of
	Number of		Percentage of		Number of		accounts
For the period ended	customers		total revenues		customers		receivable
September 30, 2014		1		13%		0		0%
December 31, 2013		1		11%		2		23%
September 30, 2013		1		11%		2		29%

The table below provides revenues from European customers for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

European revenues
For the nine months ended
September 30, 2014				September 30, 2013
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,750,331		14.7%	$	1,214,121		11.1%

The Company serves all of its hosting customers from third-party web hosting facilities located in the United States. The Company does not control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the third-party web hosting facilities become unavailable, although in such circumstances, the Company's service may be interrupted during the transition.

Property, Plant and Equipment, Policy [Policy Text Block]

PROPERTY AND EQUIPMENT

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

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

ASSET IMPAIRMENT

Acquisitions and Intangible Assets 

We account for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

Fair Value of Financial Instruments, Policy [Policy Text Block]

FAIR VALUE MEASUREMENT

OmniComm’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820, Fair Value Measurements and Disclosures.

Revenue Recognition, Deferred Revenue [Policy Text Block]

DEFERRED REVENUE

Deferred revenue represents cash advances and amounts in accounts receivable as of the balance sheet date received in excess of revenue earned on on-going contracts. Payment terms vary with each contract but may include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation. As of September 30, 2014, the Company had $8,232,798 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 6.5 years. The Company had $5,702,672 in deferred revenues that are expected to be recognized in the next twelve fiscal months.

Advertising Costs, Policy [Policy Text Block]

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $338,486 and $175,095 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

Research, Development, and Computer Software, Policy [Policy Text Block]

RESEARCH AND DEVELOPMENT EXPENSES

Software development costs are included in R&D and are expensed as incurred. ASC 985-20, Software Industry Costs of Software to Be Sold, Leased or Marketed (“ASC 985-20”), requires the capitalization of certain development costs of software to be sold once technological feasibility is established, which the Company defines as completion to the point of marketability. The capitalized cost is then amortized on a straight-line basis over the estimated product life. To date, the period between achieving technological feasibility and the general availability of such software has been short and software development costs qualifying for capitalization have been immaterial. Accordingly, the Company has not capitalized any software development costs under ASC 985-20. During the nine month periods ended September 30, 2014 and September 30, 2013 we spent approximately $2,092,125 and $1,718,079 respectively, on R&D activities, which include costs associated with the development of our software products and services for our clients’ projects and which are primarily comprised of salaries and related expenses for our software developers and consulting fees paid to third-party consultants. R&D costs are primarily included under Salaries, benefits and related taxes in our Statement of Operations.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

EMPLOYEE EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) was approved at our Annual Meeting of Shareholders on July 10, 2009. The 2009 Plan provides for the issuance of up to 7,500,000 shares to employees, directors and key consultants. The predecessor plan, the OmniComm Systems, Inc., 1998 Stock Incentive Plan (the “1998 Plan”) expired on December 31, 2008. The 1998 Plan provided for the issuance of up to 12,500,000 shares in accordance with the terms of the 1998 Plan document. Each plan is more fully described in “Note 14, Employee Equity Incentive Plans”. The Company accounts for its employee equity incentive plans under ASC 718, Compensation – Stock Compensation ("ASC 718") which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions.

ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company currently uses the Black Scholes option pricing model to determine grant date fair value.

Earnings Per Share, Policy [Policy Text Block]

EARNINGS PER SHARE

The Company accounts for Earnings per Share using ASC 260, Earnings per Share. Unlike diluted earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities.

Income Tax, Policy [Policy Text Block]

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 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.

New Accounting Pronouncements, Policy [Policy Text Block]

IMPACT OF NEW ACCOUNTING STANDARDS

During the first nine months of 2014, we adopted the following new accounting pronouncements:

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”, (“ASU No. 2013-11”). This ASU amends ASC 740, Income Taxes, to require that an unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward; to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward does not exist at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013, with early adoption permitted. Our adoption of this standard on January 1, 2014 did not have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, the Company will adopt this ASU on January 1, 2017. Management is currently evaluating which transition approach to use and the impact of the adoption of this ASU on the Company's consolidated financial statements.

In August 2014, FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, (“ASU 2014-15”), which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We believe the adoption of this guidance will not have a material effect on our consolidated financial statements.

Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.

XML

Note 13 - Stockholders' (Deficit) (Details) (USD $)	9 Months Ended			9 Months Ended									1 Months Ended
	Sep. 30, 2014	Jul. 31, 2014	Dec. 31, 2013	Sep. 30, 2014 Series A Preferred Stock [Member]	Jul. 31, 2014 Series A Preferred Stock [Member]	Dec. 31, 2013 Series A Preferred Stock [Member]	Sep. 30, 2014 Series B Preferred Stock [Member]	Dec. 31, 2013 Series B Preferred Stock [Member]	Sep. 30, 2014 Series C Preferred Stock [Member]	Dec. 31, 2013 Series C Preferred Stock [Member]	Sep. 30, 2014 Series D Preferred Stock [Member]	Dec. 31, 2013 Series D Preferred Stock [Member]	Jul. 31, 2014 Senior Management And Board Of Directors [Member] Equity Incentive Plan 2009 [Member]
Note 13 - Stockholders' (Deficit) (Details) [Line Items]
Common Stock, Shares Authorized	250,000,000		250,000,000
Common Stock, Par or Stated Value Per Share (in Dollars per share)	$ 0.001	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000	10,000,000	5,000,000	5,000,000	5,000,000	230,000	230,000	747,500	747,500	250,000	250,000
Preferred Stock, Par or Stated Value Per Share (in Dollars per share)	$ 0.001	$ 0.001	$ 0.001	$ 0.001		$ 0.001	$ 0.001	$ 0.001	$ 0.001	$ 0.001	$ 0.001	$ 0.001
Preferred Stock, Dividend Rate, Percentage				5.00%
Common Stock, Shares, Issued	91,504,659		90,104,659
Common Stock, Shares, Outstanding	91,504,659		90,104,659
Class of Warrant or Right, Outstanding	48,463,517		44,728,873
Preferred Stock, Shares Issued				4,125,224		4,125,224	0	0	0	0	250,000	250,000
Preferred Stock, Shares Outstanding				4,125,224		4,125,224	0	0	0	0	250,000	250,000
Convertible Debt (in Dollars)	$ 9,665,000
Debt Instrument, Convertible, Number of Equity Instruments	24,620,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross													1,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period													3 years

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$ 404,914	$ (4,467,125)	$ (3,161,342)
Adjustment to reconcile net income/(loss) to net cash (used in) operating activities
Change in derivative liabilities	(4,410,241)	2,524,671
Interest expense from derivative instruments	405,216	456,750
Employee stock compensation	122,630	94,637
Provision for doubtful accounts	76,634	(4,830)	11,131
Depreciation and amortization	216,069	174,436
Changes in operating assets and liabilities
Accounts receivable	(1,364,149)	(46,819)
Prepaid expenses	(69,257)	(6,032)
Other current assets	(16,138)	0
Other assets	32,159	(409)
Accounts payable and accrued expenses	695,548	410,815
Patent settlement liability	(216,692)	(192,527)
Deferred revenue	3,981,425	(83,604)
Net cash (used in) operating activities	(141,882)	(1,140,037)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(67,674)	(107,844)
Net cash (used in) investing activities	(67,674)	(107,844)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable	(20,925)	0
Proceeds from revolving line of credit	200,000	800,000
Net cash provided by financing activities	179,075	800,000
Effect of exchange rate changes	(36,557)	(30,485)
Net (decrease) in cash and cash equivalents	(67,038)	(478,366)
Cash and cash equivalents at beginning of period	1,160,720	873,315	873,315
Cash and cash equivalents at end of period	1,093,682	394,949	1,160,720
Cash paid during the period for:
Income taxes	35,264	48,599
Interest	1,114,666	725,546
Restricted Stock [Member]
Non-cash transactions:
Restricted stock issuance	238,000	222,500
Notes Payable Issued for Existing Notes Payable [Member]
Non-cash transactions:
Debt conversion, Notes Issued	1,902,500	2,866,879
Promissory Notes Issued for Accrued Interest [Member]
Non-cash transactions:
Debt conversion, Notes Issued	$ 980,000	$ 529,000

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Allowance for doubtful accounts (in Dollars)	$ 142,051	$ 65,341
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares undesignated (in Dollars)	3,772,500	3,772,500
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	91,504,659	90,104,659
Common stock, shares outstanding	91,504,659	90,104,659
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Series B Preferred Stock [Member]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	230,000	230,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, liquidation preference (in Dollars)	0	0
Series C Preferred Stock [Member]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	747,500	747,500
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred stock, liquidation preference (in Dollars)	0	0
Series A Preferred Stock [Member]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	4,125,224	4,125,224
Preferred stock, shares outstanding	4,125,224	4,125,224
Preferred stock, liquidation preference (in Dollars)	4,125,224	4,125,224
Series D Preferred Stock [Member]
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	250,000	250,000
Preferred stock, shares issued	250,000	250,000
Preferred stock, shares outstanding	250,000	250,000
Convertible Notes Payable [Member]
Note Payable discount (in Dollars)	0	0
Notes Payable, Other Payables [Member]
Note Payable discount (in Dollars)	$ 670,535	$ 447,666

XML

Note 10 - Fair Value Measurement

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 10: FAIR VALUE MEASUREMENT

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

● Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and

● Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities.

 The valuation techniques that may be used to measure fair value are as follows:

A. Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method

C. Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

The Company also adopted the provisions of ASC 825, Financial Instruments (“ASC 825”). ASC 825 allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to re-measure any of its existing financial assets or liabilities under the provisions of this Statement. The Company elected the fair value option for the issuance of warrants associated with the new promissory notes issued in the nine month periods ended September 30, 2014 and September 30, 2013.

The Company’s financial assets or liabilities subject to ASC 820 as of September 30, 2014 include the conversion feature and warrant liability associated with convertible debentures issued during fiscal 2008 and 2009 and the warrants issued during 2011, 2013 and 2014 that are associated with notes payable that were issued to our Chief Executive Officer and Director, Cornelis F. Wit. The conversion feature and warrants were deemed to be derivatives (the “Derivative Instruments”) since a fixed conversion price cannot be determined for either of the Derivative Instruments due to anti-dilution provisions embedded in the offering documents for the convertible debentures. The derivative instruments were not issued for risk management purposes and as such are not designated as hedging instruments under the provisions of ASC 815, Disclosures about Derivative Instruments and Hedging Activities. See Note 9 – Convertible Notes Payable.

Following is a description of the valuation methodologies used to determine the fair value of the Company’s financial assets including the general classification of such instruments pursuant to the valuation hierarchy.

A summary as of September 30, 2014 of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2014		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,533,362	$	-0-	$	-0-	$	1,533,362
Warrant liability		3,754,666		-0-		-0-		3,754,666
Total of derivative liabilities	$	5,288,028	$	-0-	$	-0-	$	5,288,028

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the nine months ended September 30, 2014

(2) The fair value at the measurement date is equal to their carrying value on the balance sheet

Significant valuation assumptions of derivative instruments at September 30, 2014
Risk free interest rate	0.11%
Dividend yield	0.00%
Expected volatility	124.6% to 178.8%
Expected life (range in years)
Conversion feature liability	1.25 to 1.50
Warrant liability	1.25 to 2.50

A summary as of December 31, 2013 of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at December 31,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	3,126,206	$	-0-	$	-0-	$	3,126,206
Warrant liability		5,943,977		-0-		-0-		5,943,977
Total of derivative liabilities	$	9,070,183	$	-0-	$	-0-	$	9,070,183

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the year ended December 31, 2013

(2) The fair value at the measurement date is equal to their carrying value on the balance sheet

Significant valuation assumptions of derivative instruments at December 31, 2013
Risk free interest rate	0.12% to 0.13%
Dividend yield	0.00%
Expected volatility	166.7% to 217.1%
Expected life (range in years)
Conversion feature liability	1.00 to 2.00
Warrant liability	1.00 to 2.25

A summary as of September 30, 2014 of the fair value of liabilities measured at fair value on a non-recurring basis follows:

	Carrying amount December 31,		Carrying amount September 30,		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	2013		2014		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer lists (4)	$	134,739	$	117,103	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		70,512		59,484		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		64,991		43,745		-0-		-0-		68,814
Total	$	270,242	$	220,332	$	-0-	$	-0-	$	278,010

(3) The fair value of the acquired assets was estimated using the Income Approach with a discounted cash flow valuation methodology applied.

(4) The acquired Promasys B.V. software code, customer list and URLs/website are not measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

Other identifiable intangible assets, which are subject to amortization, are being amortized using the straight-line method over their estimated useful lives ranging from 3 to 15 years. The Impairment or Disposal of Long-Lived Asset subsection of ASC 360, Property, Plant and Equipment requires us to test the recoverability of long-lived assets, including identifiable intangible assets with definite lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In testing for potential impairment, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of impairment, if any.

The Company’s goodwill and other identifiable intangible assets with indefinite lives are measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3).

The table below presents the fair value of the Goodwill as of September 30, 2014 and December 31, 2013.

Fair Value Measurements
	September 30, 2014		December 31, 2013
(Level 3)
Goodwill	$	618,541	$	675,710

Goodwill and other identifiable intangible assets with indefinite lives are reviewed for impairment annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets and identifiable intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that amounts may not be recoverable. If the testing performed indicates that impairment has occurred, the Company will record a noncash impairment charge for the difference between the carrying amount of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets in the period the determination is made. The $57,169 change in the value of Goodwill during the 9 month period ended September 30, 2014 is the result of exchange rate variance.

The table below presents the unrealized gains/losses for the nine month periods ended September 30, 2014 and September 30, 2013.

	Other income
	for the nine months ended
	September 30, 2014		September 30, 2013
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized gain/(loss) from changes in derivative liabilities at the reporting date	$	4,410,241	$	(2,524,671	)
Total unrealized gains/(losses) included in earnings	$	4,410,241	$	(2,524,671	)

The tables below set forth a summary of changes in fair value of the Company’s Level 3 financial liabilities at fair value for the periods ended September 30, 2014 and December 31, 2013. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of September 30, 2014 and December 31, 2013.

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		period
Period ended September 30, 2014
Derivatives:
Conversion feature liability	$	3,126,206	$	-0-	$	(1,592,844	)	$	-0-	$	-0-	$	1,533,362
Warrant liability		5,943,977		-0-		(2,817,397	)		628,086		-0-		3,754,666
Total of derivative liabilities	$	9,070,183	$	-0-	$	(4,410,241	)	$	628,086	$	-0-	$	5,288,028

	Level 3 financial assets and financial liabilities at fair value
					Net unrealized
					(gains)/losses			Net
					relating to			purchases,
	Balance,				instruments			issuances		Net transfers		Balance,
	beginning		Net realized		still held at the			and		in and/or out		end of
	of year		gains/(losses)		reporting date			settlements		of Level 3		year
Year ended December 31, 2013
Derivatives:
Conversion feature liability	$	2,287,323	$	-0-	$	838,883		$	-0-	$	-0-	$	3,126,206
Warrant liability		6,287,598		-0-		(743,762	)		400,141		-0-		5,943,977
Total of derivative liabilities	$	8,574,921	$	-0-	$	95,121		$	400,141	$	-0-	$	9,070,183

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	OMNICOMM SYSTEMS INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		91,504,659
Amendment Flag	false
Entity Central Index Key	0001034592
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

XML

Note 11 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 11: COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating leases for its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at September 30, 2014 are as follows:

2014	$	169,095
2015		657,752
2016		369,825
2017		52,234
2018		5,354
Total	$	1,254,260

In addition to annual base rental payments, the Company pays for the operating expenses associated with its leased office space and is responsible for any escalation in operating expenses as determined in the leases. Rent expense was $663,961 and $665,932 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

The Company’s Fort Lauderdale, Florida corporate office lease expires in September 2016. The Company’s lease on its New Jersey field office expires in February 2016. The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in September 2017. The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in July 2015. The Company currently operates its wholly-owned subsidiary, OmniComm Promasys B.V, in the Netherlands under the terms of a lease that expires in October 2018.

LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2014, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

PATENT LITIGATION SETTLEMENT

On April 9, 2009, we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the license, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from January 1, 2009 until the expiration of the Licensed Patent equal to two percent (2%) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater. The remaining minimum royalty payments per year are as follows:

2014	$	625,000
2015		450,000
2016		450,000
2017		450,000
Total	$	1,975,000

During the nine month periods ended September 30, 2014 and September 30, 2013 the Company recorded a charge to earnings of $120,809 and $144,972 respectively, which amounts represent (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci License Agreement during the nine month periods ended September 30, 2014 and September 30, 2013 and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

We have employment agreements in place with the following members of our executive management team:

Cornelis F. Wit, Chief Executive Officer

Randall G. Smith, Chief Technology Officer

Stephen E. Johnson, President and Chief Operating Officer

The employment agreements provide, among other things, for participation in employee benefits available to employees and executives. Each of the agreements will renew for successive one-year terms unless the agreement is expressly cancelled by either the employee or the Company ninety days prior to the end of the term. Under the terms of the agreement, we may terminate the employee’s employment upon 30 days notice of a material breach and the employee may terminate the agreement under the same terms and conditions. The employment agreements contain non-disclosure and severance provisions, as well as non-compete clauses.

XML

Note 14 - Employee Equity Incentive Plans (Details) - Status of Non-Vested Shares (USD $)	Sep. 30, 2014	Dec. 31, 2013
Status of Non-Vested Shares [Abstract]
Nonvested shares at January 1, 2014	400,000	820,834
Nonvested shares at January 1, 2014	$ 0.16	$ 0.13
Nonvested shares at September 30, 2014	400,000	820,834
Nonvested shares at September 30, 2014	$ 0.16	$ 0.13

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues	$ 4,943,015	$ 3,449,661	$ 11,554,553	$ 10,543,197
Reimbursable revenues	181,674	27,960	361,160	412,947
Total revenues	5,124,689	3,477,621	11,915,713	10,956,144
Cost of goods sold	773,948	648,369	2,341,107	1,942,126
Gross margin	3,985,288	2,765,142	8,945,262	8,716,690
Operating expenses
Salaries, benefits and related taxes	2,726,522	2,130,385	7,954,833	6,496,528
Rent and occupancy expenses	219,974	199,492	663,961	665,932
Consulting services	10,111	14,496	60,669	117,410
Legal and professional fees	77,365	53,312	277,262	205,767
Travel	178,211	100,860	595,571	326,578
Telephone and internet	52,063	38,618	142,554	131,476
Selling, general and administrative	299,940	197,765	892,912	634,481
Bad debt expense	632	8,191	76,634	(4,830)
Depreciation expense	59,087	54,894	181,520	174,436
Amortization expense	11,322	0	34,549	0
Total operating expenses	3,635,227	2,798,013	10,880,465	8,747,778
Operating income/(loss)	350,061	(32,871)	(1,935,203)	(31,088)
Other income/(expense)
Interest expense, related parties	(578,735)	(588,425)	(1,818,911)	(1,750,327)
Interest expense	(54,236)	(37,760)	(160,968)	(107,952)
Interest income	12	3	77	9
Change in derivative liabilities	1,607,670	2,418,612	4,410,241	(2,524,671)
Transaction gain/(loss)	(41,596)	3,780	(54,915)	(4,497)
Income/(loss) before income taxes	1,283,176	1,763,339	440,321	(4,418,526)
Income taxes	(1,446)	(30,869)	(35,407)	(48,599)
Net income/(loss)	1,281,730	1,732,470	404,914	(4,467,125)
Preferred stock dividends
Preferred stock dividends	(51,989)	(51,989)	(154,272)	(154,272)
Net income/(loss) attributable to common stockholders	1,229,741	1,680,481	250,642	(4,621,397)
Net income/(loss) per share
Basic and diluted (in Dollars per share)	$ 0.01	$ 0.02	$ 0.00	$ (0.05)
Weighted average number of shares outstanding
Basic and diluted (in Shares)	91,032,920	87,867,268	90,417,480	87,515,641
Reimbursable expenses-cost of goods sold	365,453	64,110	629,344	297,328
Cost of Goods Sold, Including Reimbursable Expenses [Member]
Cost of goods sold	1,139,401	712,479	2,970,451	2,239,454
Preferred Class A [Member]
Preferred stock dividends
Preferred stock dividends	$ (51,989)	$ (51,989)	$ (154,272)	$ (154,272)

XML

Note 5 - Property and Equipment, Net

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 5: PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
	Cost		depreciation		value		Cost		depreciation		value		(years)
Computer & office equipment	$	1,852,102	$	1,447,075	$	405,027	$	1,822,098	$	1,326,256	$	495,842		5
Leasehold improvements		93,137		81,170		11,967		93,812		75,735		18,077		5
Computer software		1,585,252		1,520,180		65,072		1,556,497		1,477,801		78,696		3
Office furniture		113,980		104,210		9,770		114,373		99,555		14,818		5
Total	$	3,644,471	$	3,152,635	$	491,836	$	3,586,780	$	2,979,347	$	607,433

Depreciation expense for the nine month periods ended September 30, 2014 and September 30, 2013 was $181,520 and $174,436, respectively.

XML

Note 4 - Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 4: EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share were calculated using the weighted average number of shares outstanding of 90,417,480 and 87,515,641 for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

Antidilutive shares of 81,482,435 and 79,502,620 have been omitted from the calculation of dilutive earnings/(loss) per share for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per shares. There were no differences between basic and diluted earnings per share for the nine month periods ended September 30, 2014 and September 30, 2013. The table below provides a reconciliation of anti-dilutive securities outstanding as of September 30, 2014 and September 30, 2013, respectively.

Anti-Dilutive Security	September 30, 2014		September 30, 2013
Preferred stock		2,750,149		2,750,149
Employee stock options		4,681,500		6,175,000
Warrants		48,463,517		44,728,873
Convertible notes		24,620,000		24,620,000
Shares issuable for accrued interest		967,269		1,228,598
Total		81,482,435		79,502,620

The employee stock options are exercisable at prices ranging from $0.045 to $0.64 per share. The exercise prices on the warrants range from $0.25 to $0.60 per share. Shares issuable upon conversion of Convertible Debentures have conversion prices ranging from $0.25 to $0.50 per share.

The Company’s convertible debt and convertible preferred stock have an anti-dilutive effect on net income/(loss) per share and were not included in the computation of diluted earnings per share.

For the nine months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)
Effect of dilutive securities - none		-0-		-0-		-0-		-0-			-0-		-0-
Diluted EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)

For the three months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)		Shares		Per-share
	numerator		denominator		amount		numerator		denominator		amount
Basic EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02
Effect of dilutive securities - none		-0-		-0-		-0-		-0-		-0-		-0-
Diluted EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02

XML

Note 16 - Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 16: SUBSEQUENT EVENTS

On October 7, 2014 the Company paid down $200,000 in principal on the Line of Credit.  As of October 7, 2014 the outstanding balance on the Line of Credit was $3,500,000.

XML

Note 12 - Related Party Transactions

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 12: RELATED PARTY TRANSACTIONS

On February 1, 2013, our Chairman and Chief Technology Officer, Randall G. Smith extended the maturity date of his $20,000 promissory note until January 1, 2016. The promissory note bears interest at 12% per annum. On December 31, 2011, Mr. Smith extended the maturity date of his promissory note until April 1, 2013. The note was originally issued on December 16, 2010 with a maturity date of December 31, 2011.     

On February 22, 2013, our Director, Guus van Kesteren, extended the maturity date of his $150,000 of convertible debentures to January 1, 2015. The debentures bear interest at 10% per annum. The convertible debentures were originally issued in August 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015.     

On February 22, 2013, our Chief Operating Officer and President, Stephen E. Johnson extended the maturity date of his $25,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On February 22, 2013, our Chairman and Chief Technology Officer, Randall G. Smith extended the maturity date of his $5,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On December 5, 2013, our Director, Guus van Kesteren, extended the maturity date of his $160,000 of convertible debentures to January 1, 2016. The debentures bear interest at 12% per annum. The convertible debentures were originally issued in December 2008. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party.

On April 21, 2014, our Director, Guus van Kesteren, extended the maturity date of his $150,000 of convertible debentures to April 1, 2016. The debentures bear an interest rate of 10% per annum. The convertible debentures were originally issued in August 2008. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party.

As of September 30, 2014, we have an aggregate of $14,760,879 principal amount of convertible debentures and promissory notes outstanding to Cornelis F. Wit, our Chief Executive Officer and Director, and have issued certain warrants to Mr. Wit, as follows:

● In June 2008, Mr. Wit invested $510,000 in convertible notes. On August 29, 2008, Mr. Wit converted the $510,000 and invested an additional $1,260,000 in a private placement of convertible debentures and warrants to purchase 3,540,000 shares of our common stock. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $1,770,000 of convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● In February 2008, Mr. Wit invested $150,000 in promissory notes and from September 2008 to December 2008, Mr. Wit invested $4,200,000 in convertible notes. On December 16, 2008, Mr. Wit converted the $4,350,000 into a private placement of convertible debentures and warrants to purchase 8,700,000 shares of our common stock. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, the Company and Mr. Wit extended the $4,350,000 of convertible debentures until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. In a private transaction on October 16, 2012, Mr. Wit purchased $125,000 of the December 2008 convertible debentures and the related 250,000 warrants from Mr. Ronald Linares, the Company’s former Chief Financial Officer. On February 22, 2013, the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● From July 2009 to September 2009, Mr. Wit invested $1,100,000 which amount was aggregated under the terms of one convertible note dated September 30, 2009.  On September 30, 2009, Mr. Wit agreed to convert this convertible note into a private placement of secured convertible debentures bearing interest at a rate of 12% per annum with a maturity date of March 30, 2011. The convertible debentures were convertible into 4,400,000 shares of common stock and Mr. Wit received 4,400,000 warrants to purchase common stock of the Company at a price of $0.25. On March 30, 2011, the Company and Mr. Wit extended the maturity date of his convertible note until April 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 4,400,000 warrants issued with convertible note by two years to September 30, 2015. On February 22, 2013, the Company and Mr. Wit extended the maturity date of his convertible debentures to January 1, 2016 in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● From October 2009 to December 2009, Mr. Wit invested $1,440,000, which amount was aggregated under the terms of one convertible note dated December 31, 2009. On December 31, 2009, Mr. Wit agreed to convert this Convertible Note into a private placement of unsecured convertible debentures bearing interest at a rate of 12% per annum, which Convertible Debentures were due on June 30, 2011. The Company and Mr. Wit extended the maturity date of his convertible note until October 1, 2013 in accordance with the terms of Amendment Number One To Securities Purchase Agreement. The Company also extended the expiration date of the 5,760,000 warrants issued with convertible note by two years to December 31, 2015. On February 22, 2013, the Company and Mr. Wit extended the maturity date of his convertible debentures to January 1, 2016 in accordance with the terms of Amendment Number Two To Securities Purchase Agreement. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

● On March 31, 2011, the Company issued a note payable in the principal amount of $2,866,879 and warrants to purchase 11,467,517 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of March 31, 2016 to Mr. Wit. The note accrues interest at a rate of 12% per annum and had a maturity date of April 1, 2014. On April 1, 2013, the Company and Mr. Wit extended the maturity date of the promissory note to March 31, 2016.

The Promissory Note consolidates the amounts owed as detailed below:

i.	Promissory Note issued on April 13, 2010 for $450,000 with a maturity date of December 31, 2011;
ii.	Promissory Note issued on June 29, 2010 for $115,000 with a maturity date of December 31, 2011;
iii.	Promissory Note issued on September 30, 2010 for $695,000 with a maturity date of December 31, 2011;
iv.	Promissory Note issued on December 31, 2010 for $1,197,500 with a maturity date of December 31, 2011; and
v.	Promissory Note issued on December 31, 2010 for $409,379 with a maturity date of April 01, 2012.

● On December 31, 2011, the Company issued a promissory note in the principal amount of $1,600,000 and warrants to purchase 6,400,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of December 31, 2015 to Mr. Wit. The note carried an interest rate of 12% per annum and had a maturity date of January 1, 2015.

The promissory note consolidates the amounts owed as detailed below: 

i.	Promissory Note issued on May 13, 2011 for $96,000 with a maturity date of January 01, 2013;
ii.	Promissory Note issued on September 30, 2011 for $342,000 with a maturity date of April 01, 2014;
iii.	Promissory Note issued on October 05, 2011 for $130,000 with a maturity date of April 01, 2014;
iv.	Promissory Note issued on October 28, 2011 for $123,000 with a maturity date of April 01, 2014;
v.	Promissory Note issued on October 31, 2011 for $82,000 with a maturity date of April 01, 2014;
vi.	Promissory Note issued on November 23, 2011 for $60,000 with a maturity date of January 1, 2013; and
vii.	Accrued and unpaid interest in the amount of $767,000.

On April 4, 2014 the Company issued a promissory note payable to Mr. Wit, in the amount of $1,600,000 in exchange for the existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

● On January 1, 2013, the Company issued a promissory note in the principal amount of $529,000 and warrants to purchase 2,116,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of January 31, 2016 to Mr. Wit. The note carries an interest rate of 12% per annum and is due on January 1, 2016.

● On January 1, 2014, the Company issued a promissory note in the principal amount of $980,000 and warrants to purchase 3,920,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2017 to Mr. Wit in exchange for accrued interest in the amount of $980,000. The note carries an interest rate of 12% per annum and is due on April 1, 2017.

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit with The Northern Trust Company guaranteed by our Chief Executive Officer and Director, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. The Line of Credit matures on December 17, 2014 and carries a variable interest rate based on the prime rate. At September 30, 2014, $3,700,000 was outstanding on the Line of Credit at an interest rate of 2.25%.

For the nine months ended September 30, 2014 and September 30, 2013 we incurred $1,818,911 and $1,750,327, respectively, in interest expense payable to related parties. 

XML

Note 15 - Income Taxes (Details) - Deferred Taxes Assets and Liabilities (USD $)	Sep. 30, 2014	Sep. 30, 2013
Deferred Taxes Assets and Liabilities [Abstract]
Amortization of intangibles	$ 279,587	$ 283,698
Bad debt allowance	52,452	17,608
Patent litigation liability accrual	269,948	349,596
Operating loss carryforwards	19,508,693	17,887,001
Gross deferred tax assets	20,110,680	18,537,903
Valuation allowance	(20,110,680)	(18,537,903)
Net deferred tax liability/(asset)	$ 0	$ 0

XML

Note 8 - Line of Credit and Notes Payable

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 8: LINES OF CREDIT AND NOTES PAYABLE

On March 18, 2013, the Company entered into a $2,000,000 revolving Line of Credit (“Line of Credit”) with The Northern Trust Company guaranteed by our Chief Executive Officer and Director, Cornelis F. Wit. Mr. Wit receives 2.0% interest (approximately $9,500 per month) from the Company on the assets pledged for the Line of Credit. On December 18, 2013 the Company renewed the Line of Credit and increased the available balance to $4,000,000. The Line of Credit matures on December 17, 2014 and carries a variable interest rate based on the prime rate. At September 30, 2014, $3,700,000 was outstanding on the Line of Credit at an interest rate of 2.25%.

At September 30, 2014, the Company owed $6,626,941 in notes payable all of which are unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		September 30,				Long				Long
date	date	rate		2014		Current		term		Current		term
12/17/2012	12/16/2014		12%	$	20,000	$	20,000	$	-0-	$	-0-	$	-0-
1/1/2013	1/1/2015		10%		308,562		308,562		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
4/4/2014	4/1/2017		12%		45,000		-0-		45,000		-0-		-0-
4/4/2014	4/1/2017		12%		137,500		-0-		137,500		-0-		-0-
4/4/2014	4/1/2017		10%		120,000		-0-		120,000		-0-		-0-
4/4/2014	4/1/2017		12%		1,600,000		-0-		-0-		-0-		1,600,000
1/1/2014	4/1/2017		12%		980,000		-0-		-0-		-0-		980,000
Discount on note payable							-0-		-0-		-0-		(670,535	)
Total				$	6,626,941	$	328,562	$	302,500	$	-0-	$	5,325,344

At December 31, 2013, the Company owed $5,667,865 in notes payable all of which were unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending
				principal		Non related party				Related party
Origination	Maturity	Interest		December 31,				Long				Long
date	date	rate		2013		Current		term		Current		term
12/31/2011	1/1/2015		12%	$	1,600,000	$	-0-	$	-0-	$	-0-	$	1,600,000
4/1/2012	1/1/2014		12%		17,500		17,500		-0-		-0-		-0-
12/17/2012	12/16/2014		12%		20,000		20,000		-0-		-0-		-0-
1/1/2013	1/1/2016		12%		529,000		-0-		-0-		-0-		529,000
1/1/2013	1/1/2015		10%		308,562		-0-		308,562		-0-		-0-
1/1/2013	1/1/2015		10%		123,424		-0-		123,424		-0-		-0-
1/1/2013	1/1/2015		12%		45,000		-0-		45,000		-0-		-0-
2/1/2013	1/1/2016		12%		20,000		-0-		-0-		-0-		20,000
3/5/2013	1/1/2015		12%		137,500		-0-		137,500		-0-		-0-
4/1/2013	3/31/2016		12%		2,866,879		-0-		-0-		-0-		2,866,879
Discount on note payable							-0-		-0-		-0-		(447,666	)
Total				$	5,667,865	$	37,500	$	614,486	$	-0-	$	4,568,213

On January 1, 2013, the Company issued a promissory note in the principal amount of $529,000 and warrants to purchase 2,116,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of January 31, 2016 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for accrued interest in the amount of $529,000. The note carries an interest rate of 12% per annum and is due on January 1, 2016.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $400,141 was calculated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $128,859. The warrant liability (discount) will be amortized over the 36 month duration of the note payable. The Company will continue to perform a fair value calculation periodically on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

On January 1, 2013, the Company issued a promissory note in the amount of $308,562 in exchange for an existing promissory note in the same amount. The note carries an interest rate of 10% per annum and matures on January 1, 2015.

On January 1, 2013, the Company issued a promissory note in the amount of $123,424 in exchange for an existing promissory note in the same amount. The note carries an interest rate of 10% per annum and matures on January 1, 2015.

On January 1, 2013 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On February 1, 2013 the Company issued a promissory note in the amount of $20,000 to our Chairman and Chief Technology Officer, Randall G. Smith, in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2016.

On March 5, 2013 the Company issued a promissory note in the amount of $137,500 in exchange for a promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of January 1, 2015.

On April 1, 2013 the Company issued a promissory note in the amount of $2,866,879 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of March 31, 2016. The expiration date of the warrants associated with the promissory note was also extended to March 31, 2016.

On January 1, 2014, the Company issued a promissory note in the principal amount of $980,000 and warrants to purchase 3,920,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2017 to our Chief Executive Officer and Director, Cornelis F. Wit, in exchange for accrued interest in the amount of $980,000. The note carries an interest rate of 12% per annum and is due on April 1, 2017.

This issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants were valued using the Black Scholes option pricing model. A value of $628,086 was calculated and allocated to the warrants and recorded as a liability to the issuance of the note payable. As a result of the liability we recorded a discount to the note payable. The carrying amount of the note at the time of issuance was therefore $351,914. The warrant liability (discount) will be amortized over the 39 month duration of the note payable. The Company will continue to perform a fair value calculation periodically on the warrant liability and accordingly the warrant liability is increased or decreased based on the fair value calculation. The resulting increase or decrease is reflected in operations as an unrealized gain or loss on changes in derivative liabilities.

On April 4, 2014 the Company issued a promissory note payable to our Chief Executive Officer and Director, Cornelis F. Wit, in the amount of $1,600,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $120,000 and paid $3,424 in principal in exchange for an existing promissory note in the amount of $123,424. The promissory note carries an interest rate of 10% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $45,000 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

On April 4, 2014 the Company issued a promissory note in the amount of $137,500 in exchange for an existing promissory note in the same amount. The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2017.

XML

Note 10 - Fair Value Measurement (Details) - Fair Value of Assets Aquired on Non-recurring Basis (Promasys B.V. [Member], Fair Value, Measurements, Nonrecurring [Member], USD $)	Sep. 30, 2014		Dec. 31, 2013
Acquired assets (3)
Promasys B.V. customer lists (4)	$ 117,103	[1],[2]	$ 134,739	[1],[2]
Promasys B.V. software code (4)	59,484	[1],[2]	70,512	[1],[2]
Promasys B.V. URLs/website (4)	43,745	[1],[2]	64,991	[1],[2]
Total	220,332	[1]	270,242	[1]
Fair Value, Inputs, Level 1 [Member]
Acquired assets (3)
Promasys B.V. customer lists (4)	0	[1],[2]
Promasys B.V. software code (4)	0	[1],[2]
Promasys B.V. URLs/website (4)	0	[1],[2]
Total	0	[1]
Fair Value, Inputs, Level 2 [Member]
Acquired assets (3)
Promasys B.V. customer lists (4)	0	[1],[2]
Promasys B.V. software code (4)	0	[1],[2]
Promasys B.V. URLs/website (4)	0	[1],[2]
Total	0	[1]
Fair Value, Inputs, Level 3 [Member]
Acquired assets (3)
Promasys B.V. customer lists (4)	136,253	[1],[2]
Promasys B.V. software code (4)	72,943	[1],[2]
Promasys B.V. URLs/website (4)	68,814	[1],[2]
Total	$ 278,010	[1]

[1] The fair value of the acquired assets was estimated using the Income Approach with a discounted cash flow valuation methodology applied.

[2] The acquired Promasys B.V. software code, customer list and URLs/website are not measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

XML

Note 6 - Intangible Assets, At Cost

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

NOTE 6: INTANGIBLE ASSETS, AT COST

Intangible assets consist of the following:

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
Asset	Cost		amortization		value		Cost		amortization		value		(years)
eClinical customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		124,725		7,622		117,103		136,253		1,514		134,739		15
Promasys B.V. software code		72,837		13,353		59,484		72,943		2,431		70,512		5
Promasys B.V. URLs/Website		62,993		19,248		43,745		68,814		3,823		64,991		3
Total	$	1,653,256	$	1,432,924	$	220,332	$	1,670,711	$	1,400,469	$	270,242

Amortization expense was $34,549 and $-0- for the nine month periods ended September 30, 2014 and September 30, 2013, respectively.

Remaining amortization expense for the Company’s intangible assets is as follows:

2014	$	10,970
2015		43,880
2016		40,380
2017		22,883
2018		20,454
Thereafter		81,765
Total	$	220,332

XML

Note 7 - Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2014

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE 7: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	September 30, 2014		December 31, 2013
Accounts payable	$	570,092	$	724,421
Accrued payroll and related costs		620,026		260,072
Other accrued expenses		118,218		88,292
Accrued interest		948,168		1,468,171
Total accounts payable and accrued expenses	$	2,256,504	$	2,540,956

XML

Note 9 - Convertible Notes Payable

9 Months Ended

Sep. 30, 2014

Convertible Debt Disclosure [Abstract]

Convertible Debt Disclosure [Text Block]

NOTE 9: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of September 30, 2014.

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		September 30, 2014		Allocated discount		discount amortized		September 30, 2014		September 30, 2014		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	4/1/2016		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		-0-		150,000
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		-0-		160,000
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2016		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	8,815,000	$	775,000

The following table summarizes the convertible debt outstanding as of December 31, 2013.

						Principal						Discount		Carrying		Carrying amount
						at				Total		at		amount at		Short term				Long term
Date of issuance	Maturity date	Interest rate		Original principal		December 31, 2013		Allocated discount		discount amortized		December 31, 2013		December 31, 2013		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	862,500	$	75,000	$	-0-	$	-0-	$	-0-	$	75,000	$	-0-	$	75,000	$	-0-	$	-0-
8/29/2008	1/1/2015		10%		150,000		150,000		135,600		135,600		-0-		150,000		-0-		-0-		150,000		-0-
8/29/2008	1/1/2016		10%		2,120,000		1,770,000		1,916,480		1,916,480		-0-		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	1/1/2015		12%		100,000		100,000		27,515		27,515		-0-		100,000		-0-		-0-		-0-		100,000
12/16/2008	1/1/2016		12%		160,000		160,000		44,024		44,024		-0-		160,000		-0-		-0-		160,000		-0-
12/16/2008	1/1/2016		12%		200,000		200,000		55,030		55,030		-0-		200,000		-0-		-0-		-0-		200,000
12/16/2008	1/1/2016		12%		4,615,000		4,520,000		1,243,681		1,243,681		-0-		4,520,000		-0-		-0-		4,505,000		15,000
9/30/2009	1/1/2016		12%		1,400,000		1,200,000		526,400		526,400		-0-		1,200,000		-0-		-0-		1,100,000		100,000
12/31/2009	1/1/2016		12%		1,490,000		1,490,000		935,720		935,720		-0-		1,490,000		-0-		-0-		1,440,000		50,000
Total				$	11,097,500	$	9,665,000	$	4,884,450	$	4,884,450	$	-0-	$	9,665,000	$	-0-	$	75,000	$	9,125,000	$	465,000

10% Convertible Notes

During 1999, the Company issued 10% Convertible Notes payable in the amount of $862,500 pursuant to a private offering. There were costs of $119,625 associated with this offering. The net proceeds to the Company were $742,875. The notes bear interest at ten percent annually, payable semi-annually. The notes were convertible after maturity, which was September 30, 2004, into shares of common stock of the Company at $1.25 per share. As of September 30, 2014, $787,500 of the Convertible Notes had been repaid in cash or converted into 1,495,179 shares of common stock of the Company leaving an outstanding principal balance of $75,000 that is in default. There was $115,358 of accrued interest at September 30, 2014.

Secured Convertible Debentures

On September 30, 2009, the Company sold an aggregate of $1,400,000 principal amount 12% Secured Convertible Debentures (the “Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The Debentures, which bear interest at 12% per annum, matured on March 30, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. On March 30, 2011, the Company repaid $200,000 of the outstanding principal amounts owed and extended $1,200,000 of the convertible debentures until April 1, 2013, including $1,100,000 in convertible debentures held by our Chief Executive Officer and Director, Cornelis F. Wit. The Company also extended the expiration date of the warrants associated with the offering until September 30, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,200,000 of the convertible debentures including $1,100,000 due to our Chief Executive Officer and Director, Cornelis F. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

Convertible Debentures

On August 29, 2008, the Company sold $2,270,000 of convertible debentures and warrants to purchase an aggregate of 4,540,000 shares of our common stock to four accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit, and Guus van Kesteren, a Director of the Company. The convertible debentures, which bear interest at 10% per annum, were due on August 29, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009, Mr. Wit and Mr. van Kesteren extended $1,920,000 of the convertible debentures until August 29, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On February 22, 2013 the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures due to Mr. Wit to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On April 21, 2014 the Company and Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to Mr. van Kesteren to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016. On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $150,000 was reclassified from Related Party to Non-Related Party.

On December 16, 2008, we sold $5,075,000 of convertible debentures and warrants to purchase an aggregate of 10,150,000 shares of our common stock to eleven accredited investors including our Chief Executive Officer and Director, Chief Operating Officer, Chairman and Chief Technology Officer, Chief Financial Officer and three of our Directors. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share. On September 30, 2009 the officers, directors and an affiliate of the Company extended $4,980,000 of Convertible Notes until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $4,505,000 of the convertible debentures including $4,475,000 due to our Chief Executive Officer and Director, Cornelis F. Wit, $25,000 due to our Chief Operating Officer and President, Stephen E. Johnson, and $5,000 due to our Chairman and Chief Technology Officer, Randall G. Smith, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On February 27, 2013 the Company and Matthew Veatch, a former director of the Company, extended the maturity date of $15,000 of convertible debentures issued to Mr. Veatch to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On March 6, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2014. The expiration date of the warrants associated with the debentures was also extended to January 1, 2014. On March 12, 2013, the Company and the lenders agreed to extend the maturity date of $100,000 of convertible debentures to January 1, 2015. The expiration date of the warrants associated with the debentures was also extended to January 1, 2015. On December 5, 2013 the Company and Guus van Kesteren, a Director of the Company, extended the maturity date of $160,000 of the convertible debentures due to Mr. van Kesteren to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On December 9, 2013, the Company and the lender agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016. On April 28, 2014, the Company and the lender agreed to extend the maturity date of $100,000 of convertible debentures to April 1, 2016. The expiration date of the warrants associated with the debentures was also extended to April 1, 2016.  On July 31, 2014 Mr. van Kesteren’s term on the Board of Directors ended. Effective on the same date, his convertible note in the amount of $160,000 was reclassified from Related Party to Non-Related Party.

On December 31, 2009, the Company sold an aggregate of $1,490,000 principal amount 12% convertible debentures and warrants to purchase an aggregate of 5,960,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to three accredited investors including our Chief Executive Officer and Director, Cornelis F. Wit. The debentures, which bear interest at 12% per annum, matured on June 30, 2011. The debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share. On June 30, 2011, the Company and the lenders agreed to extend all $1,490,000 of the convertible debentures until October 1, 2013, including $1,440,000 of the Debentures held by Mr. Wit. The Company also extended the expiration date of the warrants associated with the December 2009 offering until December 31, 2015. On February 22, 2013 the Company and the lenders agreed to extend the maturity date of $1,490,000 of the convertible debentures, including $1,440,000 due to Mr. Wit, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

The payments required at maturity under the Company’s outstanding convertible debt at September 30, 2014 are as follows:

2014	$	75,000
2015		-0-
2016		9,590,000
Total	$	9,665,000

XML

Note 11 - Commitments and Contingencies (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Rent Expense	$ 663,961	$ 665,932
Patent Royalty Percentage Obligation	2.00%
Other Expenses	$ 120,809	$ 144,972

XML

Note 16 - Subsequent Events (Details) (USD $)		0 Months Ended
	Sep. 30, 2014	Oct. 07, 2014 Subsequent Event [Member]
Note 16 - Subsequent Events (Details) [Line Items]
Repayments of Lines of Credit		$ 200,000
Long-term Line of Credit	$ 3,700,000	$ 3,500,000

XML

Note 11 - Commitments and Contingencies (Details) - Minimum Royalty Payments Per Year (USD $)	Sep. 30, 2014
Minimum Royalty Payments Per Year [Abstract]
2014	$ 625,000
2015	450,000
2016	450,000
2017	450,000
Total	$ 1,975,000

XML

Note 10 - Fair Value Measurement (Details) - Change in Level 3 Financial Liabilities Fair Value (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Derivatives:
Balance, Beginning of year	$ 9,070,183	$ 8,574,921
Net Realized Gains/(Losses)	0	0
Net Unrealized (gains)/losses relating to instruments still held at the reporting date	(4,410,241)	95,121
Net purchases, issuances and settlements	628,086	400,141
Net transfers in and/or out of Level 3	0	0
Balance, end of period	5,288,028	9,070,183
Conversion Feature Liability [Member]
Derivatives:
Balance, Beginning of year	3,126,206	2,287,323
Net Realized Gains/(Losses)	0	0
Net Unrealized (gains)/losses relating to instruments still held at the reporting date	(1,592,844)	838,883
Net purchases, issuances and settlements	0	0
Net transfers in and/or out of Level 3	0	0
Balance, end of period	1,533,362	3,126,206
Warrant Liability [Member]
Derivatives:
Balance, Beginning of year	5,943,977	6,287,598
Net Realized Gains/(Losses)	0	0
Net Unrealized (gains)/losses relating to instruments still held at the reporting date	(2,817,397)	(743,762)
Net purchases, issuances and settlements	628,086	400,141
Net transfers in and/or out of Level 3	0	0
Balance, end of period	$ 3,754,666	$ 5,943,977

XML

Note 13 - Stockholders' (Deficit) (Tables)

9 Months Ended

Sep. 30, 2014

Note 13 - Stockholders' (Deficit) (Tables) [Line Items]

Schedule of Dividends in Arrears [Table Text Block]

	Cumulative arrearage as of				Cumulative arrearage per share
	September 30,				as of September 30,
Series of preferred stock	2014		2013		2014		2013
Series A	$	2,534,711	$	2,328,450	$	0.61	$	0.56
Series B		609,887		609,887	$	3.05	$	3.05
Series C		1,472,093		1,472,093	$	4.37	$	4.37
Total preferred stock arrearage	$	4,616,691	$	4,410,430

Schedule of Dividends Payable [Table Text Block]

	Dividends accreted				Dividends per share
	nine months ended September 30,				nine months ended September 30,
	2014		2013		2014		2013
Preferred stock dividends in arrears Series A	$	154,272	$	154,272	$	0.037	$	0.037
Preferred stock dividends in arrears Series B	$	-0-	$	-0-	$	-0-	$	-0-
Preferred stock dividends in arrears Series C	$	-0-	$	-0-	$	-0-	$	-0-

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

September 30, 2014 warrants outstanding

September 30, 2014 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

September 30, 2014

remaining contractual life

exercise price

September 30, 2014

exercise price

$0.25

–

$0.60

48,463,517

1.41

$

0.35

48,463,517

$

0.35

December 31, 2013 warrants outstanding

December 31, 2013 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

December 31, 2013

remaining contractual life

exercise price

December 31, 2013

exercise price

$0.25

–

$0.60

44,728,873

2.05

$

0.36

44,728,873

$

0.36

Schedule of Share-based Compensation, Activity [Table Text Block]

	Weighted average grant date fair value
	2014		2013
Stock options granted during the nine month period ended September 30,	$	0.16	$	0.17
Stock options vested during the nine month period ended September 30,	$	0.12	$	0.10
Stock options forfeited during the nine month period ended September 30,	$	0.43	$	0.28

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Foreign currency			Accumulated other
	translation			comprehensive (loss)
Balance at December 31, 2012	$	(69,092	)	$	(69,092	)
2013 Activity		(18,512	)		(18,512	)
Balance at December 31, 2013		(87,604	)		(87,604	)
2014 Activity		(110,839	)		(110,839	)
Balance at September 30, 2014	$	(198,443	)	$	(198,443	)

Warrant [Member]

Note 13 - Stockholders' (Deficit) (Tables) [Line Items]

Schedule of Share-based Compensation, Activity [Table Text Block]

Warrants
Balance at December 31, 2013		44,728,873
Issued		3,920,000
Exercised		-0-
Expired/forfeited		(185,356	)
Balance at September 30, 2014		48,463,517
Warrants exercisable at September 30, 2014		48,463,517
Weighted average fair value of warrants granted during 2014	$	0.15

XML

Note 7 - Accounts Payable and Accrued Expenses (Details) - Accounts Payable and Accrued Expenses (USD $)	Sep. 30, 2014	Dec. 31, 2013
Accounts Payable and Accrued Expenses [Abstract]
Accounts payable	$ 570,092	$ 724,421
Accrued payroll and related costs	620,026	260,072
Other accrued expenses	118,218	88,292
Accrued interest	948,168	1,468,171
Total accounts payable and accrued expenses	$ 2,256,504	$ 2,540,956

XML

Note 14 - Employee Equity Incentive Plans

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 14: EMPLOYEE EQUITY INCENTIVE PLANS

Stock Option Plan

Description of 2009 Equity Incentive Plan

In 2009, the Company’s Board of Directors and shareholders approved the 2009 Equity Incentive Plan of OmniComm Systems, Inc. (the “2009 Plan”). The 2009 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. Pursuant to the 2009 Plan, 7,500,000 shares of the Company’s common stock are authorized for issuance.

The maximum term for any option grant under the 2009 Plan is ten years from the date of the grant; however, options granted under the 2009 Plan will generally expire five years from the date of grant for most employees, officers and directors of the Company. Options granted to employees generally vest either upon grant or in two installments. The first vesting, which is equal to 50% of the granted stock options, occurs upon completion of one full year of employment from the date of grant and the second vesting occurs on the second anniversary of the date of grant. The vesting period typically begins on the date of hire for new employees and on the date of grant for existing employees. The restrictions on restricted shares granted to employees generally lapse in three equal annual installments on the anniversary of the date of grant.  Any unvested stock options or restricted shares with restrictions that have not lapsed that are granted under the 2009 Plan are forfeited and expire upon termination of employment.

As of September 30, 2014, there were 3,902,500 outstanding options and 2,625,000 restricted stock shares that have been granted under the 2009 Plan. At September 30, 2014, there were 972,500 shares available for grant as options or other forms of share-based compensation under the 2009 Plan.

Description of 1998 Stock Incentive Plan

In 1998, the Company’s Board of Directors and shareholders approved the 1998 Stock Incentive Plan of OmniComm Systems, Inc. (the “1998 Plan”). The 1998 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. Pursuant to the 1998 Plan, 12,500,000 shares of the Company’s common stock were authorized for issuance. The 1998 Plan expired as of December 31, 2008. As of September 30, 2014, there were 779,000 outstanding options that have been granted under the 1998 Plan.

The following table summarizes the stock option activity for the Company’s equity incentive plans:

						Weighted
				Weighted		average
				average		remaining
	Number of			exercise price		contractual term		Aggregate
	shares			(per share)		(in years)		intrinsic value
Outstanding at December 31, 2012		10,452,500		$	0.36		1.68	$	149,598
Granted		350,000			0.17
Exercised		(100,000	)		0.18
Forfeited/cancelled/expired		(4,957,500	)		0.42
Outstanding at December 31, 2013		5,745,000			0.29		1.70	$	93,945
Granted		150,000			0.16
Exercised		-0-			-0-
Forfeited/cancelled/expired		(1,213,500	)		0.54
Outstanding at September 30, 2014		4,681,500		$	0.23		1.35	$	115,650
Vested and exercisable at September 30, 2014		4,281,500		$	0.23		1.10	$	108,475

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price at quarter-end and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2014.

The total number of shares vesting and the fair value of shares vesting for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, was:

	Number of options		Fair value of
	vested		options vested
Fair value of options vesting during the nine months ended September 30, 2014		570,834	$	66,389
Fair value of options vesting during the nine months ended September 30, 2013		593,833	$	62,204

Cash received from stock option exercises for the nine month periods ended September 30, 2014 and September 30, 2013 was $-0- and $-0-, respectively. Due to the Company’s net loss position, no income tax benefit has been realized during the nine month periods ended September 30, 2014 and September 30, 2013.

The following table summarizes information concerning options outstanding at September 30, 2014:

Awards breakdown by price range at September 30, 2014
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,302,500		1.55	$	0.15		2,952,500		1.25	$	0.15
0.21	to	0.29		600,000		1.18		0.24		550,000		0.95		0.25
0.30	to	0.49		80,000		0.23		0.38		80,000		0.23		0.38
0.50	to	0.70		699,000		0.68		0.55		699,000		0.68		0.55
0.00	to	0.70		4,681,500		1.35	$	0.23		4,281,500		1.10	$	0.23

The following table summarizes information concerning options outstanding at December 31, 2013:

Awards breakdown by price range at December 31, 2013
			Outstanding						Vested
											Weighted
					Weighted		Weighted				average
					average		average				remaining		Weighted
Strike price			Outstanding		remaining		outstanding		Vested stock		vested		average vested
range ($)			stock options		contractual life		strike price		options		contractual life		strike price
0.00	to	0.20		3,251,000		2.16	$	0.15		2,530,166		1.86	$	0.16
0.21	to	0.29		750,000		1.64		0.25		650,000		1.20		0.25
0.30	to	0.49		110,000		0.98		0.38		110,000		0.98		0.38
0.50	to	0.70		1,634,000		0.87		0.59		1,634,000		0.87		0.59
0.00	to	0.70		5,745,000		1.70	$	0.29		4,924,166		1.42	$	0.32

The weighted average fair value (per share) of options granted during the nine month period ended September 30, 2014 was $0.16 and $0.17 during the nine month period ended September 30, 2013. The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based Payments

Based on analysis of its historical volatility, the Company expects that the future volatility of its share price is likely to be similar to the historical volatility the Company experienced since the Company’s commercialization activities were initiated during the second half of 2000. The Company used a volatility calculation utilizing the Company’s own historical volatility to estimate its future volatility for purposes of valuing the share-based payments that have been granted. Actual volatility, and future changes in estimated volatility, may differ substantially from the Company’s current estimates.

The Company utilizes the historical data available regarding employee and director exercise activity to calculate an expected life of the options. The table below presents the weighted average expected life in years of options granted under the Plan as described above. The risk-free rate of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds with the expected term of the option granted.

Below are the assumptions for the fair value of share-based payments for the nine month periods ended September 30, 2014 and September 30, 2013.

	Stock option assumptions for the nine months ended
Stock option assumptions	September 30, 2014		September 30, 2013
Risk-free interest rate		0.93%		0.70%
Expected dividend yield		0.0%		0.0%
Expected volatility		199.0%		203.4%
Expected life of options (in years)		5		5

The following table summarizes weighted average grant date fair value activity for the Company’s incentive stock plans:

	Weighted average grant date fair value
	2014		2013
Stock options granted during the nine month period ended September 30,	$	0.16	$	0.17
Stock options vested during the nine month period ended September 30,	$	0.12	$	0.10
Stock options forfeited during the nine month period ended September 30,	$	0.43	$	0.28

A summary of the status of the Company’s non-vested shares underlying stock options as of September 30, 2014, and changes during the nine month period ended September 30, 2014 is as follows:

	Shares underlying stock		Weighted average grant
	options		date fair value
Nonvested shares at January 1, 2014		820,834	$	0.13
Nonvested shares at September 30, 2014		400,000	$	0.16

As of September 30, 2014, approximately $39,697 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.2 years.

XML

Note 4 - Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Anti-Dilutive Security	September 30, 2014		September 30, 2013
Preferred stock		2,750,149		2,750,149
Employee stock options		4,681,500		6,175,000
Warrants		48,463,517		44,728,873
Convertible notes		24,620,000		24,620,000
Shares issuable for accrued interest		967,269		1,228,598
Total		81,482,435		79,502,620

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

For the nine months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)
Effect of dilutive securities - none		-0-		-0-		-0-		-0-			-0-		-0-
Diluted EPS	$	250,642		90,417,480	$	0.00	$	(4,621,397	)		87,515,641	$	(0.05	)

For the three months ended
	September 30, 2014						September 30, 2013
	Income/(loss)		Shares		Per-share		Income/(loss)		Shares		Per-share
	numerator		denominator		amount		numerator		denominator		amount
Basic EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02
Effect of dilutive securities - none		-0-		-0-		-0-		-0-		-0-		-0-
Diluted EPS	$	1,229,741		91,032,920	$	0.01	$	1,680,481		87,867,268	$	0.02

XML

Note 6 - Intangible Assets, At Cost (Details) - Intangible Assets (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Cost	$ 1,653,256	$ 1,670,711
Accumulated Amortization	1,432,924	1,400,469
Net Book value	220,332	270,242
eClinical Customer List [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	1,392,701	1,392,701
Accumulated Amortization	1,392,701	1,392,701
Net Book value	0	0
Estimated Useful Lives	3 years
Promasys B.V. Customer List [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	124,725	136,253
Accumulated Amortization	7,622	1,514
Net Book value	117,103	134,739
Estimated Useful Lives	15 years
Promasys B.V. Software Code [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	72,837	72,943
Accumulated Amortization	13,353	2,431
Net Book value	59,484	70,512
Estimated Useful Lives	5 years
Promasys B.V. URLs/Website [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	62,993	68,814
Accumulated Amortization	19,248	3,823
Net Book value	$ 43,745	$ 64,991
Estimated Useful Lives	3 years

XML

Note 2 - Summary of Significant Accounting Policies (Details) - Customer Concentration (Customer Concentration Risk [Member])	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Sales [Member]
Concentration Risk [Line Items]
Number of Customers	1	1	1
Percentage of Concentration Risk	13.00%	11.00%	11.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Number of Customers	0	2	2
Percentage of Concentration Risk	0.00%	29.00%	23.00%

XML

Condensed Consolidated Statements of Comprehensive Income/(Loss) (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income/(loss) attributable to common stockholders	$ 1,229,741	$ 1,680,481	$ 250,642	$ (4,621,397)
Other comprehensive (loss)
Change in foreign currency translation adjustment	(86,887)	(3,006)	(110,839)	(30,485)
Other comprehensive (loss)	(86,887)	(3,006)	(110,839)	(30,485)
Comprehensive income/(loss)	$ 1,142,854	$ 1,677,475	$ 139,803	$ (4,651,882)

XML

Note 3 - Going Concern

9 Months Ended

Sep. 30, 2014

Going Concern Note [Abstract]

Going Concern Note

NOTE 3: GOING CONCERN

We have experienced net losses and negative cash flows from operations and have utilized debt and equity financings to help provide for our working capital, capital expenditure and R&D needs. We will continue to require substantial funds to continue our R&D activities and to market, sell and commercialize our technology. We may need to raise substantial additional capital to fund our future operations. Our capital requirements will depend on many factors, including the following: problems, delays, expenses and complications frequently encountered by companies developing and commercializing new technologies; the progress of our R&D activities; the rate of technological advances; determinations as to the commercial potential of our technology under development; the status of competitive technology; the establishment of collaborative relationships; the success of our sales and marketing programs; and other changes in economic, regulatory or competitive conditions in our planned business.

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

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

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 our historical operating losses, negative cash flows and accumulated deficits for the period ending September 30, 2014 there is substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Note 10 - Fair Value Measurement (Details) - Fair Value of Liabilities Measured on a Recurring Basis (USD $)	Sep. 30, 2014		Dec. 31, 2013
Derivatives: (1) (2)
Derivative liability fair value	$ 5,288,028	[1],[2]	$ 9,070,183	[1]
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives: (1) (2)
Derivative liability fair value	1,533,362	[1],[2]	3,126,206	[1]
Conversion Feature Liability [Member]
Derivatives: (1) (2)
Derivative liability fair value	1,533,362	[1],[2]	3,126,206	[1]
Warrant Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Warrant Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Warrant Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivatives: (1) (2)
Derivative liability fair value	3,754,666	[1],[2]	5,943,977	[1]
Warrant Liability [Member]
Derivatives: (1) (2)
Derivative liability fair value	3,754,666	[1],[2]	5,943,977	[1]
Fair Value, Inputs, Level 1 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Fair Value, Inputs, Level 2 [Member]
Derivatives: (1) (2)
Derivative liability fair value	0	[1],[2]	0	[1]
Fair Value, Inputs, Level 3 [Member]
Derivatives: (1) (2)
Derivative liability fair value	$ 5,288,028	[1],[2]	$ 9,070,183	[1]

[1] The fair value at the measurement date is equal to their carrying value on the balance sheet

[2] The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the nine months ended September 30, 2014

XML

Note 15 - Income Taxes (Details) - Reconciliation of Income Tax Expense (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Reconciliation of Income Tax Expense [Abstract]
Federal statutory rate applied to income/(loss) before income taxes			$ 165,693	$ (1,662,692)
Current tax expense			35,407	48,599
Non deductible expenses			(1,482,741)	1,144,767
Change in deferred assets			49,571	37,086
Change in valuation allowance			1,267,477	480,839
Income tax expense	$ 1,446	$ 30,869	$ 35,407	$ 48,599

XML

Note 13 - Stockholders' (Deficit) (Details) - Cumulative Arrearage of Undeclared Dividends (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Note 13 - Stockholders' (Deficit) (Details) - Cumulative Arrearage of Undeclared Dividends [Line Items]
Preferred Stock, Dividend, Cumulative Arrearage	$ 4,616,691	$ 4,410,430
Series A Preferred Stock [Member]
Note 13 - Stockholders' (Deficit) (Details) - Cumulative Arrearage of Undeclared Dividends [Line Items]
Preferred Stock, Dividend, Cumulative Arrearage	2,534,711	2,328,450
Preferred Stock, Dividend, Cumulative Arrearage Per Share (in Dollars per share)	$ 0.61	$ 0.56
Series B Preferred Stock [Member]
Note 13 - Stockholders' (Deficit) (Details) - Cumulative Arrearage of Undeclared Dividends [Line Items]
Preferred Stock, Dividend, Cumulative Arrearage	609,887	609,887
Preferred Stock, Dividend, Cumulative Arrearage Per Share (in Dollars per share)	$ 3.05	$ 3.05
Series C Preferred Stock [Member]
Note 13 - Stockholders' (Deficit) (Details) - Cumulative Arrearage of Undeclared Dividends [Line Items]
Preferred Stock, Dividend, Cumulative Arrearage	$ 1,472,093	$ 1,472,093
Preferred Stock, Dividend, Cumulative Arrearage Per Share (in Dollars per share)	$ 4.37	$ 4.37

XML

Note 5 - Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	September 30, 2014						December 31, 2013
													Estimated
			Accumulated		Net book				Accumulated		Net book		useful life
	Cost		depreciation		value		Cost		depreciation		value		(years)
Computer & office equipment	$	1,852,102	$	1,447,075	$	405,027	$	1,822,098	$	1,326,256	$	495,842		5
Leasehold improvements		93,137		81,170		11,967		93,812		75,735		18,077		5
Computer software		1,585,252		1,520,180		65,072		1,556,497		1,477,801		78,696		3
Office furniture		113,980		104,210		9,770		114,373		99,555		14,818		5
Total	$	3,644,471	$	3,152,635	$	491,836	$	3,586,780	$	2,979,347	$	607,433

XML

Note 14 - Employee Equity Incentive Plans (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2011
Note 14 - Employee Equity Incentive Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	4,681,500		5,745,000	10,452,500
Proceeds from Stock Options Exercised (in Dollars)	$ 0	$ 0
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense (in Dollars)	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 0.16	$ 0.17
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)	$ 39,697
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 73 days
Restricted Stock [Member]
Note 14 - Employee Equity Incentive Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	2,625,000
Maximum [Member] | Equity Incentive Plan 2009 [Member]
Note 14 - Employee Equity Incentive Plans (Details) [Line Items]
Stock Option Grant Term	10 years
Equity Incentive Plan 2009 [Member]
Note 14 - Employee Equity Incentive Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	7,500,000
Stock Option Expiration Term	5 years
Vesting Percentage Year 1	50.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	3,902,500
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	972,500
Stock Incentive Plan 1998 [Member]
Note 14 - Employee Equity Incentive Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	12,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	779,000

XML

Note 2 - Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended	9 Months Ended								12 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 Leasehold Improvements, Computers, Equipment and Furniture [Member]	Sep. 30, 2014 Software Development [Member]	Sep. 30, 2014 Customer 1 [Member] Sales [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Customer 1 [Member] Sales [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Customer 1 [Member]	Sep. 30, 2013 Customer 1 [Member]	Sep. 30, 2014 Sales [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Sales [Member] Customer Concentration Risk [Member]	Dec. 31, 2013 Sales [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]	Jul. 10, 2009 2009 Plan [Member]	Dec. 31, 2008 1998 Plan [Member]
Note 2 - Summary of Significant Accounting Policies (Details) [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ (86,887)	$ (3,006)	$ (110,839)	$ (30,485)	$ (18,512)
Number of Reportable Segments			1
Term of Software License															3 years	5 years
Allowance for Doubtful Accounts Receivable, Current	142,051		142,051		65,341
Cash, Uninsured Amount	767,672		767,672
Concentration Risk, Percentage								13.00%	11.00%			13.00%	11.00%	11.00%
Revenues	5,124,689	3,477,621	11,915,713	10,956,144						1,585,000	1,221,000
Property, Plant and Equipment, Useful Life						5 years	3 years
Deferred Revenue	8,232,798		8,232,798
Derivative, Term of Contract			6 years 6 months												1 month	6 years 6 months
Deferred Revenue, Current	5,702,672		5,702,672		2,866,356
Advertising Expense			338,486	175,095
Research and Development Expense			$ 2,092,125	$ 1,718,079
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)																	7,500,000	12,500,000

XML

Note 13 - Stockholders' (Deficit)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 13: STOCKHOLDERS’ (DEFICIT)

Our authorized capital stock consists of 250,000,000 shares of common stock, $.001 par value per share, and 10,000,000 shares of preferred stock, par value $.001 per share, of which 5,000,000 shares have been designated as 5% Series A Preferred Stock, 230,000 shares have been designated as Series B Preferred Stock, 747,500 shares have been designated as Series C Preferred Stock and 250,000 shares have been designated as Series D Preferred Stock.

As of September 30, 2014 we had the following outstanding securities:

o 91,504,659 shares of common stock issued and outstanding;

o 48,463,517 warrants issued and outstanding to purchase shares of our common stock;

o 4,125,224 shares of our Series A Preferred Stock issued and outstanding;

o -0- shares of our Series B Preferred Stock issued and outstanding;

o -0- shares of our Series C Preferred Stock issued and outstanding; 

o 250,000 share of our Series D Preferred Stock issued and outstanding; and

o $9,665,000 principal amount Convertible Debentures convertible into 24,620,000 shares of common stock.

Common Stock

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

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

On July31, 2014, we issued 1,400,000 restricted shares of our common stock to our senior management team and our Board of Directors under the 2009 Equity Incentive Plan of OmniComm Systems, Inc. (the “2009 Plan”). The restrictions on the shares lapse ratably over a 3 year period. The 2009 Plan is more fully described in “Note 14, Employee Equity Incentive Plans”.

Preferred Stock

Our Board of Directors, without further stockholder approval, may issue preferred stock in one or more series from time to time and fix or alter the designations, relative rights, priorities, preferences, qualifications, limitations and restrictions of the shares of each series. In addition, the Board of Directors may fix and determine all privileges and rights of the authorized preferred stock series including:

o  dividend and liquidation preferences;

o voting rights;

o conversion privileges; and 

o redemption terms. 

Our Board of Directors may authorize the issuance of preferred stock which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations and restrictions, if any, upon the payment of dividends on our common stock to be effective while any shares of preferred stock are outstanding.

The following table presents the cumulative arrearage of undeclared dividends by class of preferred stock as of September 30, 2014 and September 30, 2013, respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share
	September 30,				as of September 30,
Series of preferred stock	2014		2013		2014		2013
Series A	$	2,534,711	$	2,328,450	$	0.61	$	0.56
Series B		609,887		609,887	$	3.05	$	3.05
Series C		1,472,093		1,472,093	$	4.37	$	4.37
Total preferred stock arrearage	$	4,616,691	$	4,410,430

The following table presents preferred dividends accreted for the nine month periods ended September 30, 2014 and September 30, 2013, respectively, and the per share effect of the preferred dividends if their effect was not anti-dilutive.

	Dividends accreted				Dividends per share
	nine months ended September 30,				nine months ended September 30,
	2014		2013		2014		2013
Preferred stock dividends in arrears Series A	$	154,272	$	154,272	$	0.037	$	0.037
Preferred stock dividends in arrears Series B	$	-0-	$	-0-	$	-0-	$	-0-
Preferred stock dividends in arrears Series C	$	-0-	$	-0-	$	-0-	$	-0-

Warrants Issued for Services and in Capital Transactions

The following tables summarize all outstanding warrants for the periods ended September 30, 2014 and December 31, 2013, and the related changes during these periods.

September 30, 2014 warrants outstanding

September 30, 2014 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

September 30, 2014

remaining contractual life

exercise price

September 30, 2014

exercise price

$0.25

–

$0.60

48,463,517

1.41

$

0.35

48,463,517

$

0.35

December 31, 2013 warrants outstanding

December 31, 2013 warrants exercisable

Range of

Number outstanding at

Weighted average

Weighted average

Number exercisable at

Weighted average

exercise price

December 31, 2013

remaining contractual life

exercise price

December 31, 2013

exercise price

$0.25

–

$0.60

44,728,873

2.05

$

0.36

44,728,873

$

0.36

Warrants
Balance at December 31, 2013		44,728,873
Issued		3,920,000
Exercised		-0-
Expired/forfeited		(185,356	)
Balance at September 30, 2014		48,463,517
Warrants exercisable at September 30, 2014		48,463,517
Weighted average fair value of warrants granted during 2014	$	0.15

Other Comprehensive (Loss)

Due to the availability of net operating losses and related deferred tax valuations, there is no tax effect associated with any component of other comprehensive (loss). The following table lists the beginning balance, quarterly activity and ending balance of the components of accumulated other comprehensive (loss).

	Foreign currency			Accumulated other
	translation			comprehensive (loss)
Balance at December 31, 2012	$	(69,092	)	$	(69,092	)
2013 Activity		(18,512	)		(18,512	)
Balance at December 31, 2013		(87,604	)		(87,604	)
2014 Activity		(110,839	)		(110,839	)
Balance at September 30, 2014	$	(198,443	)	$	(198,443	)