Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

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

2017

Annual Report filed on Form

-K 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

2017

financial statements to conform to the

2018

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

("ASC

830

30"

). 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 Systems 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 a translation gain of

$1,287

and a translation loss of

$2,468

for the

three

month periods ended

March 31, 2018

and

March 31, 2017,

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.

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.

For revenue from product sales, the Company recognizes revenue in accordance with Financial Accounting Standards Board “FASB” Accounting Standards Codification “ASC”

606.

five

-step analysis must be met as outlined in Topic

606:

(i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has

not

been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or

refund will be required.

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 primarily deployed on a technology transfer or off-the-shelf 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 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. 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

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

days.

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.

Maintenance Revenues

Maintenance includes telephone-based help desk support and software maintenance, including updates to the software through new software version releases. 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.

Pass-through Revenue and Expense

The Company accounts for pass-through revenue and expense (reimbursable revenue and reimbursable expense) in accordance with ASU

2016

08,

Principal versus Agent Considerations (Reporting Revenue Gross versus Net),

(“ASU

2016

08”

). In accordance with ASU

2016

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.

The fees associated with each business activity for the

three

month periods ended

March 31, 2018

and

March 31, 2017,

respectively, are:

	For the three months ended
Revenue activity	March 31, 2018		March 31, 2017
Set-up fees	$	1,208,554	$	1,381,981
Change orders		420,080		330,411
Maintenance		1,370,091		1,219,391
Software licenses		3,269,400		1,964,857
Professional services		431,083		559,080
Hosting		491,264		279,810
Total	$	7,190,472	$	5,735,530

Cost of Sales, Policy [Policy Text Block]

COST OF GOODS SOLD

Cost of goods sold 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 goods sold also includes outside service provider costs

Cost of goods sold 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

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

$146,593

as of

March 31, 2018

and

$149,980

as of

December 31, 2017.

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

three

month period ended

March 31, 2018

and the year ended

December 31, 2017.

	March 31, 2018			December 31, 2017
Beginning of period	$	149,980		$	179,813
Bad debt expense		(3,387	)		130,346
Write-offs		-0-			(160,179	)
End of period	$	146,593		$	149,980

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

146,593

149,980

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

March 31, 2018,

$864,727

was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

Except as follows, the Company has

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, Europe and East Asia. 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

March 31, 2018.

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

March 31, 2018,

the Company believes

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 quarterly 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

11%

of our revenues during the

three

month period ended

March 31, 2018

or approximately

$770,000.

One customer accounted for

12%

of our revenues during the

three

month period ended

March 31, 2017

or approximately

$678,000.

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

three

month periods ended

March 31, 2018

and

March 31, 2017

and the year ended

December 31, 2017.

	Revenues		Accounts receivable
For the period ended	Number of customers	Percentage of total revenues	Number of customers	Percentage of accounts receivable
March 31, 2018	1	11%	2	20%
December 31, 2017	1	10%	1	24%
March 31, 2017	1	12%	2	30%

The table below provides revenues from European customers for the

three

month periods ended

March 31, 2018

and

March 31, 2017.

European revenues
For the three months ended
March 31, 2018		March 31, 2017
European revenues	% of Total revenues	European revenues	% of Total revenues
$1,068,475	15%	$687,209	12%

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

years for leasehold improvements, computers, equipment and furniture and

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

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, 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

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

(“ASC

820”

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

March 31, 2018,

the Company had

$7,234,826

in deferred revenues relating to contracts for services to be performed over periods ranging from

one

month to

years. The Company had

$5,388,991

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

$209,790

and

$171,268

for the

three

month periods ended

March 31, 2018

and

March 31, 2017,

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 PRODUCT DEVELOPMENT EXPENSES

Software development costs 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

three

month periods ended

March 31, 2018

and

March 31, 2017

we spent

$922,304

and

$778,488,

respectively, on research and product development 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. Research and product development 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]

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc.

2016

Equity Incentive Plan (the

“2016

Plan”) was approved at our Annual Meeting of Shareholders on

June 16, 2016.

The

2016

Plan initially provides for the issuance of up to

10,000,000

shares of our common stock. In addition, the number of shares of common stock available for issuance under the

2016

Plan automatically increases on

January

1st

of each year for a period of

nine

(

) years commencing on

January 1, 2017

and ending on (and including)

January 1, 2025,

in an amount equal to

five

percent (

) of the total number of shares authorized under the

2016

Plan. As of

March 31, 2018

11,025,000

shares of our common stock were authorized for issuance under the

2016

Plan.

The predecessor plan, the OmniComm Systems, Inc.

2009

Equity Incentive Plan (the

“2009

Plan”) was approved at our Annual Meeting of Shareholders on

July 10, 2009

and terminated on

June 16, 2016

upon the approval of the

2016

Plan. The

2009

Plan provided for the issuance of up to

7,500,000

shares to employees, directors and key consultants. The

2016

and

2009

Plans are more fully described in “Note

13,

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,

(“ASC

260”

). 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

three

months of

2018,

we adopted the following new accounting pronouncements:

April 2016,

the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)

2016–10

“Revenue from Contracts with Customers

(Topic

606

Identifying Performance Obligations and Licensing.”

The amendments in this Update do

not

change the core principle of the guidance in Topic

606.

Rather, the amendments in this Update clarify the following

two

aspects of Topic

606:

identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic

606

includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended to render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic

606.

The Company adopted the new standard effective

January 1, 2018

using the modified retrospective method. The adoption of the new standard did

not

have a material impact on the Company’s 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