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 March 31, 2019

[   ]      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 [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes [√] No [ ]

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[√]
		Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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

The number of shares outstanding of each of the issuer’s classes of common equity as of May 14, 2019: 159,128,341 common stock $0.001 par value.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	OMCM	OTCQX Market

1

Table of Contents to the Quarterly Report on Form 10-Q for the three month

period ended MArch 31, 2019

PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 4. CONTROLS AND PROCEDURES	43
PART II. OTHER INFORMATION	43
ITEM 1. LEGAL PROCEEDINGS	43
ITEM 1A. RISK FACTORS	43
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	43
ITEM 4. MINE SAFETY DISCLOSURES	44
ITEM 5. OTHER INFORMATION	44
ITEM 6. EXHIBITS	44
SIGNATURES	45

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2019			December 31, 2018
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	1,351,916		$	1,440,524
Accounts receivable, net of allowance for doubtful accounts of $152,867 and $176,220, respectively		3,989,881			6,175,277
Prepaid expenses		261,741			384,212
Other current assets		1,633			5,204
Total current assets		5,605,171			8,005,217
Property and equipment, net		1,500,338			1,360,315
Other assets
Intangible assets, net		643,135			730,835
Operating lease right-of-use assets		1,569,465			-0-
Other assets		89,088			131,847
TOTAL ASSETS	$	9,407,197		$	10,228,214
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,230,092		$	2,070,158
Deferred revenue, current portion		5,302,370			6,457,319
Finance lease liability, current portion		116,728			115,761
Conversion feature liability, related parties		862,083			670,634
Conversion feature liability		45,415			35,705
Warrant liability, related parties		750,625			601,781
Warrant liability		853,991			687,118
Operating lease liability, current portion		598,108			-0-
Total current liabilities		9,759,412			10,638,476
LONG TERM LIABILITIES
Line of credit, long term		2,500,000			2,900,000
Notes payable, long term, net of current portion, net of discount of $98,548 and $123,184, respectively		458,952			434,316
Convertible notes payable, related parties, long term, net of current portion		5,770,000			5,770,000
Convertible notes payable, long term, net of current portion		200,000			200,000
Deferred revenue, long term, net of current portion		1,912,260			1,794,237
Finance lease liability, long term, net of current portion		143,757			175,089
Operating lease liability, long term, net of current portion		971,357			-0-
TOTAL LIABILITIES		21,715,738			21,912,118
COMMITMENTS AND CONTINGENCIES (See Note 11)
SHAREHOLDERS' (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 3,772,500 shares undesignated
Series A convertible preferred stock, 5,000,000 shares authorized, -0- and -0- issued and outstanding, respectively, at $0.001 par value; liquidation preference $-0- and $-0-, respectively		-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 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, 500,000,000 shares authorized, 158,278,341 and 155,368,647 issued and outstanding, respectively, at $0.001 par value		158,280			155,370
Additional paid in capital - preferred		999,750			999,750
Additional paid in capital - common		56,877,493			56,233,085
Accumulated other comprehensive (loss)		(441,935	)		(436,505	)
Accumulated (deficit)		(69,902,379	)		(68,635,854	)
TOTAL SHAREHOLDERS' (DEFICIT)		(12,308,541	)		(11,683,904	)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$	9,407,197		$	10,228,214

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 three months ended
	March 31,
	2019			2018
Revenues	$	5,534,298		$	7,040,369
Reimbursable revenues		181,521			150,103
Total revenues		5,715,819			7,190,472
Cost of goods sold		1,054,681			1,153,625
Reimbursable expenses-cost of goods sold		69,219			57,876
Total cost of goods sold		1,123,900			1,211,501
Gross margin		4,591,919			5,978,971
Operating expenses
Salaries, benefits and related taxes		3,662,432			3,659,340
Rent and occupancy expenses		311,799			289,334
Consulting services		50,827			125,536
Legal and professional fees		131,763			221,252
Travel		148,562			200,396
Telephone and internet		50,634			29,683
Selling, general and administrative		440,533			409,756
Bad debt expense		(23,353	)		(3,387	)
Depreciation expense		128,800			77,776
Amortization expense		87,700			64,149
Total operating expenses		4,989,697			5,073,835
Operating income/(loss)		(397,778	)		905,136
Other income/(expense)
Interest expense, related parties		(190,109	)		(225,418	)
Interest expense		(79,270	)		(90,943	)
Interest income		4			5
Change in derivative liabilities		(583,657	)		28,416
Transaction gain/(loss)		(15,726	)		(22,678	)
Income/(loss) before income taxes		(1,266,536	)		594,518
Income tax (expense)		11			(1,035	)
Net income/(loss) attributable to common stockholders	$	(1,266,525	)	$	593,483
Net income/(loss) per share
Basic	$	(0.01	)	$	0.00
Diluted	$	(0.01	)	$	0.00
Weighted average number of shares outstanding
Basic		157,341,946			149,653,916
Diluted		157,341,946			152,693,666

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 three months ended
	March 31,
	2019			2018
Net income/(loss) attributable to common stockholders	$	(1,266,525	)	$	593,483
Other comprehensive income/(loss)
Change in foreign currency translation adjustment		(5,430	)		1,287
Other comprehensive income/(loss)		(5,430	)		1,287
Comprehensive income/(loss)	$	(1,271,955	)	$	594,770

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 THREE MONTH PERIODS ENDED MARCH 31, 2019 AND MARCH 31, 2018

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2019

	Preferred Stock						Common Stock
	Series D Preferred				Additional						Additional					Accumulated other			Total
	Number		$0.001		paid in capital		Number		$0.001		paid in capital		Accumulated			comprehensive			shareholders'
	of shares		Par value		preferred		of shares		Par value		common		(deficit)			(loss)			(deficit)
Balances at December 31, 2018		250,000	$	250	$	999,750		155,368,647	$	155,370	$	56,233,085	$	(68,635,854	)	$	(436,505	)	$	(11,683,904	)
Employee stock option expense												52,927								52,927
Foreign currency translation adjustment																	(5,430	)		(5,430	)
Restricted stock issuance/forfeiture								900,000		900		76,710								77,610
Issuance of common stock, stock option exercise								1,800,000		1,800		448,200								450,000
Cashless issuance of common stock, warrant exercise								209,694		210		66,571								66,781
Net income/(loss) for the period ended March 31, 2019		-0-		-0-		-0-		-0-		-0-		-0-		(1,266,525	)		-0-			(1,266,525	)
Balances at March 31, 2019 (unaudited)		250,000	$	250	$	999,750		158,278,341	$	158,280	$	56,877,493	$	(69,902,379	)	$	(441,935	)	$	(12,308,541	)

 FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2018

	Preferred Stock						Common Stock
	Series D Preferred				Additional						Additional					Accumulated other			Total
	Number		$0.001		paid in capital		Number		$0.001		paid in capital		Accumulated			comprehensive			shareholders'
	of shares		Par value		preferred		of shares		Par value		common		(deficit)			(loss)			(deficit)
Balances at December 31, 2017		250,000	$	250	$	999,750		148,542,805	$	148,544	$	54,379,454	$	(72,323,819	)	$	(397,237	)	$	(17,193,058	)
Employee stock option expense												56,526								56,526
Foreign currency translation adjustment																	1,287			1,287
Issuance of common stock, purchase of Acuity								1,666,667		1,667		498,333								500,000
Net income/(loss) for the period ended March 31, 2018		-0-		-0-		-0-		-0-		-0-		-0-		593,483			-0-			593,483
Balances at March 31, 2018 (unaudited)		250,000	$	250	$	999,750		150,209,472	$	150,211	$	54,934,313	$	(71,730,336	)	$	(395,950	)	$	(16,041,762	)

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 three months ended
	March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	(1,266,525	)	$	593,483
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Change in derivative liabilities		583,657			(28,416	)
Interest expense from derivative instruments		24,637			54,518
Employee stock compensation		130,537			56,526
Provision for doubtful accounts		(23,353	)		(3,387	)
Depreciation and amortization		216,500			141,925
Operating lease right-of-use assets		160,165			-0-
Changes in operating assets and liabilities
Accounts receivable		2,208,749			1,502,206
Prepaid expenses		122,471			29,547
Other current assets		3,571			(9,271	)
Other assets		42,759			(20,977	)
Accounts payable and accrued expenses		(840,066	)		(1,024,533	)
Operating lease liability		(160,165	)		-0-
Patent settlement liability		-0-			(112,500	)
Deferred revenue		(1,036,926	)		(2,282,127	)
Net cash provided by/(used in) operating activities		166,011			(1,103,006	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(270,711	)		(92,794	)
Purchase of Acuity software		-0-			(552,403	)
Net cash (used in) investing activities		(270,711	)		(645,197	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds/(repayments) from revolving line of credit		(400,000	)		1,750,000
Proceeds from exercise of warrants		450,000			-0-
Principal repayment of finance lease obligation		(30,365	)		-0-
Net cash provided by/(used in) financing activities		19,635			1,750,000
Effect of exchange rate changes on fixed and intangible assets		1,887			(3,898	)
Effect of exchange rate changes on cash and cash equivalents		(5,430	)		1,287
Net increase/(decrease) in cash and cash equivalents		(88,608	)		(814	)
Cash and cash equivalents at beginning of period		1,440,524			1,176,551
Cash and cash equivalents at end of period	$	1,351,916		$	1,175,737
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	75,041		$	1,035
Interest	$	245,256		$	254,092
Non-cash transactions:
Restricted stock issuance/(forfeiture)	$	77,610		$	-0-
Common stock issued for the purchase of Acuity software	$	-0-		$	500,000
Reclassification of warrant feature liability associated with warrant exercise	$	66,781		$	-0-
Operating lease right of use assets and operating lease liability upon adoption of ASU 2016-02, Leases (Topic 842)	$	1,729,630		$	-0-

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

MARCH 31, 2019 AND MARCH 31, 2018

(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”) and eClinical solutions and related value-added services to pharmaceutical and biotech companies, contract research organizations (“CROs”) and other clinical trial sponsors principally located in the United States, Europe and East Asia. Our proprietary EDC and eClinical software applications: TrialMaster^®, TrialOne^®, eClinical Suite, Promasys^®, IRTMaster, AutoEncoder and Acuity (the “EDC Software”) allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

Our ability to compete within the EDC and eClinical industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC and eClinical software and services. Our research and product development efforts are focused on developing new and complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. While our main product development efforts are conducted in our Fort Lauderdale, Florida office, we also conduct product development in other parts of the U.S. as well as in Southampton, England and Bengaluru, India. During the three month periods ended March 31, 2019 and March 31, 2018 we spent $1,089,081, which represents 19% of revenue, and $922,304, which represents 13% of revenue, respectively, on research and product development activities, which are primarily comprised of salaries to our developers and other research and product development 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 2018 Annual Report filed on Form 10-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.

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 three month periods ended March 31, 2019 and March 31, 2018 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 three month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year-ended December 31, 2019. 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 for the year-ended December 31, 2018.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles ("GAAP") 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, the determination of lease term and lease assets and 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

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

Reclassifications

Certain reclassifications have been made in the 2018 financial statements to conform to the 2019 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 ("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. The functional currency of the Company’s subsidiary, OmniComm eClinical Solutions Pvt. Ltd. in India, is the Indian Rupee. 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 loss of $5,430 and a translation gain of $1,287 for the three month periods ended March 31, 2019 and March 31, 2018, respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC and eClinical 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 software product, 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") ASC 606 (“ASC 606"). A five-step analysis must be met as outlined in ASC 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 no refund will be required.

The Company operates in one reportable segment which is the delivery of EDC and eClinical 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 TrialOne 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. OmniComm announced that it would decommission its eClinical Suite hosting platform effective April 30, 2019 as many of the eClinical Suite clients utilizing these hosting services have transitioned to TrialMaster, the eClinical Suite studies have been completed or the studies have transitioned to another hosting platform. Currently there is one remaining client utilizing the hosting platform and we are finalizing the transition plan with the client.

Revenues resulting from TrialMaster 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

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

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.

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 and eClinical 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 to net 45 days.

The Company has sold perpetual licenses for EDC and eClinical 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 or  upon completion of milestones. 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 Accounting Standards Update ("ASU") 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), (“ASU 2016-08”). In accordance with ASU 2016-08 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.

10

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

The fees associated with each business activity for the three month periods ended March 31, 2019 and March 31, 2018, respectively, are:

	For the three months ended
Revenue activity	March 31, 2019		March 31, 2018
Set-up fees	$	811,354	$	1,208,554
Change orders		218,622		420,080
Maintenance		1,413,243		1,370,091
Software licenses		2,300,130		3,269,400
Professional services		603,731		431,083
Hosting		368,739		491,264
Total	$	5,715,819	$	7,190,472

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

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 $152,867 as of March 31, 2019 and $176,220 as of December 31, 2018.

The following table summarizes activity in the Company's allowance for doubtful accounts for the three month period ended March 31, 2019 and the year ended December 31, 2018.

	March 31, 2019			December 31, 2018
Beginning of period	$	176,220		$	149,980
Bad debt expense		(23,353	)		41,782
Write-offs		-0-			(15,542	)
End of period	$	152,867		$	176,220

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, 2019, $932,167 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, 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, 2019. 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, 2019, 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 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.

11

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

One customer accounted for 7% of our revenues during the three month period ended March 31, 2019 or approximately $417,000. One customer accounted for 11% of our revenues during the three month period ended March 31, 2018 or approximately $770,000. 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, 2019 and March 31, 2018 and the year ended December 31, 2018.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
March 31, 2019		-0-		0%		1		10%
December 31, 2018		1		13%		1		20%
March 31,2018		1		11%		2		20%

The table below provides revenues from European customers for the three month periods ended March 31, 2019 and March 31, 2018.

European revenues
For the three months ended
March 31, 2019				March 31, 2018
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,167,460		20%	$	1,068,475		15%

The Company serves its hosting customers from third-party web hosting facilities located in the United States and Europe. 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.

LEASES

The Company accounts for leases in accordance with ASU No. 2016-02, “Leases (Topic 842)”, (“ASU 2016-02”). We determine if an arrangement is a lease at inception. As part of the lease determination process, we assess several factors, including, but not limited to, assessing our right to control and direct the use of the asset, as well as, assessing if the other party has a substantive substitution right. If we enter into leases that contain multiple components, we identify separate lease components based on whether or not the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in operating lease assets and operating lease liabilities on our balance sheet at March 31, 2019. Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

With the adoption of Topic 842 on January 1, 2019, the Company recognized operating lease assets and operating lease liabilities of $1,729,630. There was no impact to the opening accumulated deficit balance as of January 1, 2019. Prior period amounts continue to be reported in accordance with our historic accounting under previous lease guidance, Topic 840.

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.

12

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

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 (“ASC 820”).

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, 2019, the Company had $7,214,630 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 6.25 years. The Company had $5,302,370 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 $185,181 and $209,790 for the three month periods ended March 31, 2019 and March 31, 2018, respectively, and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

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, 2019 and March 31, 2018 we spent $1,089,081, which represents 19% of revenue, and $922,304, which represents 13% of revenue, 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.

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) was approved at our Annual Meeting of Stockholders 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 (9) years commencing on January 1, 2017 and ending on (and including) January 1, 2025, in an amount equal to five percent (5%) of the total number of shares authorized under the 2016 Plan. As of March 31, 2019 11,576,250 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 Stockholders 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 14, 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.

13

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

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 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

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, (“ASU 2016-02”). ASU 2016-02 requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than 12 months. On January 1, 2019, we adopted ASU 2016-02, as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. 

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have 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.

NOTE 3: EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share were calculated using the weighted average number of shares outstanding of 157,341,946 and 149,653,916 for the three month periods ended March 31, 2019 and March 31, 2018, respectively.

The outstanding share balance as of March 31, 2019 and March 31, 2018, respectively, includes 1,825,000 and -0- restricted shares that have been issued but are still at risk of forfeiture as the restrictions have not lapsed.

Antidilutive shares of 33,495,677 have been omitted from the calculation of dilutive earnings/(loss) per share for the three month period ended March 31, 2019 and 26,343,224 for the three month period ended March 31, 2018, as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per share. The table below provides a reconciliation of anti-dilutive securities outstanding as of March 31, 2019 and March 31, 2018, respectively.

Anti-dilutive security	March 31, 2019		March 31, 2018
Employee stock options		2,420,000		1,295,000
Warrants		19,020,000		12,950,000
Convertible notes		11,940,000		11,980,000
Shares issuable for accrued interest		115,677		118,224
Total		33,495,677		26,343,224

The employee stock options are exercisable at prices ranging from $0.17 to $0.34 per share. The exercise prices on the warrants range from $0.25 to $0.60 per share. Shares issuable upon conversion of convertible debentures or accrued interest have a conversion price of $0.50 per share.

14

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

Some of the Company’s convertible debt has an anti-dilutive effect on net earnings/(loss) per share and was not included in the computation of diluted earnings per share.

	For the three months ended
	March 31, 2019								March 31, 2018
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,483		149,653,916	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			139		3,039,750		-0-
Diluted EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,622		152,693,666	$	0.00

NOTE 4: PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	March 31, 2019						December 31, 2018
Description	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	3,105,515	$	2,264,773	$	840,742	$	3,067,069	$	2,202,166	$	864,903		5
Leasehold improvements		138,383		108,926		29,457		136,648		106,362		30,286		5
Computer software		2,653,982		2,051,411		602,571		2,426,339		1,991,842		434,497		3
Office furniture		168,839		141,271		27,568		169,120		138,491		30,629		5
Total	$	6,066,719	$	4,566,381	$	1,500,338	$	5,799,176	$	4,438,861	$	1,360,315

Depreciation expense for the three month period ended March 31, 2019 was $128,800 and $77,776 for the three month period ended March 31, 2018.

NOTE 5: INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	March 31, 2019						December 31, 2018
Asset	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value		Estimated useful life (years)
eClinical Suite customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		111,057		111,057		-0-		113,220		113,220		-0-		15
Promasys B.V. software code		72,837		72,837		-0-		72,837		72,837		-0-		5
Promasys B.V. URLs/website		56,090		56,090		-0-		57,182		57,182		-0-		3
Acuity software code		1,052,403		409,268		643,135		1,052,403		321,568		730,835		3
Total	$	2,685,088	$	2,041,953	$	643,135	$	2,688,343	$	1,957,508	$	730,835

During the second quarter of 2018 we recognized an impairment loss of $79,634 on the Promasys B.V. customer list after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations. 

Amortization expense for the three month period ended March 31, 2019 was $87,700 and $64,149 for the three month period ended March 31, 2018.

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

Year	Amortization
2019	$	263,101
2020		350,801
2021		29,233
Total	$	643,135

15

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	March 31, 2019		December 31, 2018
Accounts payable	$	473,266	$	895,145
Accrued payroll and related costs		541,369		851,530
Other accrued expenses		142,544		250,570
Accrued interest		72,913		72,913
Total accounts payable and accrued expenses	$	1,230,092	$	2,070,158

NOTE 7: LINE OF CREDIT, NOTES PAYABLE AND LIQUIDITY

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 then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. 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. On February 3, 2015 the Company renewed the Line of Credit and increased the available balance to $5,000,000. On April 7, 2017 the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At March 31, 2019, $2,500,000 was outstanding on the Line of Credit at an interest rate of 4.50%.

Our primary sources of working capital are funds from operations and borrowings under our revolving Line of Credit. In the event that the Line of Credit is called for any reason, Mr. Wit has pledged to replace the borrowing capacity under the Line of Credit with a promissory note that utilizes the same maturity date and interest rate as the Line of Credit.

To satisfy our capital requirements, we may seek additional financing. 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 securities or result in increased interest expense in future periods.

The following table summarizes the notes payable outstanding as of March 31, 2019.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		March 31, 2019		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(98,548	)		-0-		-0-
Total				$	557,500	$	-0-	$	458,952		$	-0-	$	-0-

The following table summarizes the notes payable outstanding as of December 31, 2018.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2018		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(123,184	)		-0-		-0-
Total				$	557,500	$	-0-	$	434,316		$	-0-	$	-0-

On February 29, 2016, the Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to our then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”), in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019. On December 5, 2016, Mr. Wit sold 1,000,000 of the warrants to an employee of the Company. On August 31, 2017, the Company repaid $50,000 of the outstanding principal to Mr. Wit. On December 27, 2018, the Company and Mr. Wit cancelled the remaining outstanding $400,000 in principal in exchange for the exercise price of $400,000 for 1,600,000 warrants of the 2,000,000 warrants with an exercise price of $0.25 per share that he exercised on that date.

16

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

The 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 $325,689 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 $124,311. The warrant liability (discount) will be amortized over the 37 month duration of the note payable. The Company will continue to perform a fair value calculation quarterly 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 June 30, 2016, the Company issued promissory notes in the principal amount of $372,500 and warrants to purchase 1,490,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 12% per annum and have a maturity date of April 1, 2020. On August 31, 2017, the Company repaid $90,000 to one of the lenders. On December 31, 2018, the Company repaid $145,000 to one of the lenders.

The 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 $246,921 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 $125,579. The warrant liability (discount) will be amortized over the 45 month duration of the note payables. The Company will continue to perform a fair value calculation quarterly 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 June 30, 2016, the Company issued promissory notes in the principal amount of $420,000 and warrants to purchase 1,680,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 10% per annum and have a maturity date of April 1, 2020.

The 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 $278,408 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 $141,592. The warrant liability (discount) will be amortized over the 45 month duration of the note payables. The Company will continue to perform a fair value calculation quarterly 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.

NOTE 8: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of March 31, 2019.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		March 31, 2019		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

The following table summarizes the convertible debt outstanding as of December 31, 2018. 

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2018		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

17

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

10% Convertible Notes

During 1999, the Company issued 10% Convertible Notes payable in the amount of $862,500 pursuant to a Confidential Private Placement Memorandum. There were costs of $119,625 associated with this offering. The net proceeds to the Company were $742,875. The notes bear interest at 10% annually, payable semi-annually. The notes were convertible after maturity, which was June 30, 2004, into shares of common stock of the Company at $1.25 per share. On September 30, 2018, the final $50,000 note was repaid in full along with the accrued interest of $96,949. As of March 31, 2019, $862,500 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 $-0-.

Convertible Debentures

August 2008

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 then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”) and one of our then Directors. 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 two Affiliates of the Company 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. The expiration date of the warrants associated with the debentures was also extended to August 29, 2013.

On February 22, 2013, the Company and Mr. Wit extended the maturity date of $1,770,000 of the convertible debentures to 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 Mr. van Kesteren extended the maturity date of $150,000 of the convertible debentures due to our former Director, Guus van Kesteren (“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 April 21, 2014, the Company and Mr. van Kesteren extended the maturity date of his $150,000 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 $150,000 was reclassified from Related Party to Non-Related Party.

On January 31, 2015, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On June 30, 2015, the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On June 30, 2016, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

On June 30, 2016, the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On June 30, 2017, the Company and Mr. van Kesteren extended the maturity date of $150,000 of convertible debentures to April 1, 2019. The expiration date of the warrants associated with the debentures was also extended to April 1, 2019. The $150,000 of convertible debentures was repaid in full on June 30, 2018.

18

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

December 2008

On December 16, 2008, the Company sold $5,075,000 of convertible debentures and warrants to purchase an aggregate of 10,150,000 shares of common stock to eleven accredited investors, including our then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”), our then Chief Operating Officer and President, Stephen E. Johnson (“Mr. Johnson”), our then Chief Technology Officer, Randall G. Smith (“Mr. Smith”), our then Chief Financial Officer, Ronald T. Linares and four of our then 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 Company and eight Affiliates of the Company extended $4,980,000 of the convertible debentures until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the convertible debentures was also extended to December 16, 2013.

On February 22, 2013, the Company and the holders agreed to extend the maturity date of $4,505,000 of the convertible debentures including $4,475,000 due to Mr. Wit, $25,000 due to Mr. Johnson and $5,000 due to Mr. 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 our former director Mr. Veatch extended the maturity date of $15,000 of the convertible debentures 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 holder extended 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 holder 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.

In December 2013, the Company and two holders agreed to extend the maturity date of $360,000 of the convertible debentures, including $160,000 due to our then director, Guus van Kesteren (“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 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 28, 2014, the Company and the holder extended 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 January 31, 2015, the Company and Mr. Wit extended the maturity date of $4,475,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015, the Company and Mr. Wit agreed to cancel $420,000 of the debentures and 1,680,000 of unrelated warrants in exchange for 1,680,000 shares of our common stock.

On April 27, 2015, the Company and the holder extended the maturity date of $200,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018.

On April 30, 2015, the Company and Mr. Johnson extended the maturity date of $25,000 of convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The convertible debentures were repaid in full on December 14, 2016.

On May 1, 2015, the Company and Mr. van Kesteren extended the maturity date of $160,000 of the convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On May 1, 2015, the Company repaid $5,000 of the convertible debentures to Mr. Smith.

On May 7, 2015, the Company and Mr. Veatch, extended the maturity date of $15,000 of the convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The $15,000 of convertible debentures were repaid in full on December 14, 2016.

On June 30, 2015, the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017.

On June 30, 2016, the Company and Mr. Wit extended the maturity date of $4,055,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. On August 31, 2017, the Company repaid $55,000 of the convertible debentures to Mr. Wit.

On June 30, 2016, the Company and Mr. van Kesteren extended the maturity date of $160,000 of the convertible debentures to April 1, 2018. The expiration date of the warrants associated with the debentures was also extended to April 1, 2018. The $160,000 of convertible debentures was repaid in full on December 14, 2016.

On June 30, 2016, the Company and the holder extended the maturity date of $100,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. On August 31, 2017, the Company repaid $100,000 of convertible debentures to the holder.

19

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

On June 30, 2017, the Company and the holder extended the maturity date of $200,000 of the convertible debentures to April 1, 2021. The expiration date of the warrants associated with the debentures was also extended to April 1, 2021.

The principal payments required at maturity under the Company’s outstanding convertible debt at March 31, 2019 are as follows:

Year	Amount
2019	$	-0-
2020		5,770,000
2021		200,000
Total	$	5,970,000

NOTE 9: 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 GAAP 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 methods

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’s financial assets or liabilities subject to ASC 820 as of March 31, 2019 include the conversion feature and warrant liability associated with convertible debentures issued during 2008 and 2009 and the warrants issued during 2016 that are associated with notes payable. 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 8 – Convertible Notes Payable.

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

20

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

A summary, as of March 31, 2019, of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	907,498	$	-0-	$	-0-	$	907,498
Warrant liability		1,604,616		-0-		-0-		1,604,616
Total of derivative liabilities	$	2,512,114	$	-0-	$	-0-	$	2,512,114

(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 period ended March 31, 2019.

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

	Significant valuation assumptions for derivative instruments at March 31, 2019
Risk free interest rate	2.55%	to	2.55%
Dividend yield		0.00%
Expected volatility	88.4%	to	95.4%
Expected life (range in years)
Conversion feature liability	1.01	to	2.01
Warrant liability	0.00	to	2.01

A summary, as of December 31, 2018, of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	706,339	$	-0-	$	-0-	$	706,339
Warrant liability		1,288,899		-0-		-0-		1,288,899
Total of derivative liabilities	$	1,995,238	$	-0-	$	-0-	$	1,995,238

(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, 2018.

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

	Significant valuation assumptions for derivative instruments at December 31, 2018
Risk free interest rate	2.70%	to	2.70%
Dividend yield		0.00%
Expected volatility	92.2%	to	97.0%
Expected life (range in years)
Conversion feature liability	1.25	to	2.25
Warrant liability	0.00	to	2.25

21

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

A summary, as of March 31, 2019, of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2018		March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	-0-	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		-0-		-0-		-0-		-0-		72,943
Acuity software code (4)	$	730,835		643,135		-0-		-0-		1,052,403
Total	$	730,835	$	643,135	$	-0-	$	-0-	$	1,261,599

(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 and customer list 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.

(3) During the second quarter of 2018 we recognized an impairment loss of $79,634 on the Promasys B.V. Customer List after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations.

(4) The acquired Acuity software code is not measured on a recurring basis since the 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.

A summary, as of December 31, 2018, of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2017		December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	85,786	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		12,139		-0-		-0-		-0-		72,943
Acuity software code (4)		-0-		730,835		-0-		-0-		1,052,403
Total	$	97,925	$	730,835	$	-0-	$	-0-	$	1,261,599

(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 and customer list 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.

(3) During the second quarter of 2018 we recognized an impairment loss of $79,634 on the Promasys B.V. Customer List after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations.

(4) The acquired Acuity software code is not measured on a recurring basis since the 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 table below presents the unrealized gains/(losses) for the three month periods ended March 31, 2019 and March 31, 2018.

	Other income/(expense)
	For the three months ended
	March 31, 2019			March 31, 2018
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gains/(losses) from changes in derivative liabilities at the reporting date	$	(583,657	)	$	28,416
Total unrealized and realized gains/(losses) included in earnings	$	(583,657	)	$	28,416

22

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

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 three month period ended March 31, 2019 and the year ended December 31, 2018. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of March 31, 2019 and December 31, 2018.

The table below presents the Level 3 financial liabilities at fair value for the three month period ended March 31, 2019.

	Level 3 financial liabilities at fair value
									Net		Reclassification
									purchases,		of conversion
	Balance,								issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized			and		associated with		end
Derivatives:	of period			gains/(losses)		gains/(losses)			settlements		convertible debt		of period
Conversion feature liability	$	(706,339	)	$	-0-	$	(201,159	)	$	-0-	$	-0-	$	(907,498	)
Warrant liability		(1,288,899	)		-0-		(382,498	)		66,781		-0-		(1,604,616	)
Total of derivative liabilities	$	(1,995,238	)	$	-0-	$	(583,657	)	$	66,781	$	-0-	$	(2,512,114	)

The table below presents the Level 3 financial liabilities at fair value for the year ended December 31, 2018.

	Level 3 financial liabilities at fair value
								Net		Reclassification
								purchases,		of conversion
	Balance,							issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized		and		associated with		end
Derivatives:	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of year
Conversion feature liability	$	(1,685,947	)	$	-0-	$	969,108	$	-0-	$	10,500	$	(706,339	)
Warrant liability		(3,440,799	)		-0-		2,142,652		9,248		-0-		(1,288,899	)
Total of derivative liabilities	$	(5,126,746	)	$	-0-	$	3,111,760	$	9,248	$	10,500	$	(1,995,238	)

NOTE 10: LEASES

We adopted ASU 2016-02, Leases ("Topic 842"), as of January 1, 2019, using the modified retrospective transition approach. The financial results reported in periods prior to 2019 are unchanged. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and use hindsight to determine the lease term.

Adoption of the new standard resulted in additional operating lease liabilities and lease assets of $1,729,630, as of January 1, 2019. The standard did not materially impact our consolidated net income or cash flow classification. 

Operating right of use asset and operating lease liability are recognized at the lease commencement date. Operating lease liability represents the present value of lease payments not yet paid. Operating right of use asset represent our right to use an underlying asset and are based upon the operating lease liability adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. The Company used our incremental borrowing rate to determine the present value of lease payments not yet paid.

 If we enter into leases that contain multiple components, we identify separate lease components based on whether or not the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception.

We evaluate arrangements at inception to determine if lease components are included. An arrangement includes a lease component if it identifies an asset and we have control over the asset. For new leases beginning January 1, 2019 or later, we have elected to separate lease components from the non-lease components, included in an arrangement, when measuring the leased asset and leased liability.

Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense on a straight-line basis over the lease term. The discount rate selected is our incremental borrowing rate.

Some of our leases include one or more options to extend the lease term. Certain leases also include options to terminate early. Optional periods may be included in the lease term and measured as part of the lease asset and lease liability if we are reasonably certain to exercise our right to use the leased asset during the optional periods. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
 

23

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

The Company currently leases office space under operating leases for most of its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The Company’s Fort Lauderdale, Florida corporate office lease expires in February 2023. The Company’s lease on its New Jersey field office expires in March 2021. The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in September 2020. The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in July 2020. The Company currently operates its wholly-owned subsidiary, OmniComm eClinical Solutions Pvt. Ltd., in India under the terms of a lease that expires in May 2023. The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of an agreement that expires in October 2019. Our offices in Barcelona, Spain and Tokyo, Japan are administered under service agreements that include the use of office space and other services. 

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating lease assets	$	1,569,465
Current lease liability	Current operating lease liability		598,108
Non-current lease liability	Long term operating lease liability		971,357
Total lease liabilities		$	1,569,465

Our weighted average lease terms and discount rates are as follows:

	March 31, 2019
Weighted-average remaining lease term (in years)
Operating leases		3.30
Finance leases		2.12
Weighted-average discount rate
Operating leases		4.50%
Finance leases		6.94%

The components of lease cost were as follows:

	For the three months ended March 31, 2019
Operating lease cost	$	167,888
Variable lease cost (1)		140,910
Total lease cost	$	308,798
(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate

Supplemental disclosures of cash flow information related to leases were as follows:

	For the three months ended March 31, 2019
Cash paid for operating lease cost	$	167,942
Operating lease assets obtained in exchange for operating lease liabilities	$	1,729,630

The minimum future lease payments required under the Company’s operating leases at March 31, 2019 are as follows:

Year	Payments
2019	$	468,042
2020		476,293
2021		340,478
2022		340,746
Thereafter		76,446
Total undiscounted lease payments		1,702,005
Less: amount representing interest		(132,540	)
Present value of lease payments	$	1,569,465

24

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, minimum future lease payments were as follows as of December 31, 2018:

Year	Payments
2019	$	655,901
2020		414,973
2021		340,029
2022		340,270
Thereafter		76,243
Total	$	1,827,416

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 $311,799 and $289,334 for the three month periods ended March 31, 2019 and March 31, 2018, respectively.

The Company currently leases computer hardware for its operations under leases classified as finance leases. The leased equipment is amortized on a straight line basis over five years. Our finance lease costs for the three month period ending March 31, 2019 was $32,683. The minimum future lease payments required under the Company’s finance leases at March 31, 2019 are as follows:

Year	Payments
2019	$	97,552
2020		130,069
2021		51,898
Total minimum finance lease payments		279,519
Less: amount representing interest		(19,034	)
Present value of minimum finance lease payments	$	260,485

NOTE 11: COMMITMENTS AND CONTINGENCIES

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 March 31, 2019, there were no pending legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject that could reasonably be expected to have a material effect on the results of our operations.

EMPLOYMENT AGREEMENTS

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

Cornelis F. Wit, Executive Chairman

Randall G. Smith, Executive Vice Chairman

Stephen E. Johnson, Chief Executive Officer and President

Thomas E. Vickers, Chief Financial 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 terminated by either the employee or the Company prior to the end of the then current term as provided for in the employment agreement. Under the terms of the agreement, we may terminate the employee’s employment upon 30 or 60 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 provisions, as well as non-compete clauses. The agreements for Mr. Smith, Mr. Johnson and Mr. Vickers contain severance provisions which entitles the employee to severance pay equal to one (1) year's salary and benefits in the event of (i) the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, (ii) termination by the employee pursuant to a material breach of the agreement by the Company or for good reason in connection with a change of control, or (iii) non-renewal of the employment agreement by the Company.

25

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

NOTE 12: RELATED PARTY TRANSACTIONS

As of March 31, 2019, we have an aggregate of $5,770,000 of convertible debentures outstanding to our Executive Chairman and Executive Chairman of the Board, Cornelis F. Wit (“Mr. Wit”) 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. The expiration date of the warrants associated with the debentures was also extended to August 29, 2013.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. On January 31, 2015, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On June 30, 2016, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

● 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. The expiration date of the warrants associated with the debentures was also extended to December 16, 2013. 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. On January 31, 2015, the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015, the Company and Mr. Wit agreed to cancel $420,000 of the debentures and 1,680,000 of unrelated warrants in exchange for 1,680,000 shares of our common stock. On June 30, 2016, the Company and Mr. Wit extended the maturity date of the $4,055,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. On August 31, 2017, the Company repaid $55,000 to Mr. Wit.

● On February 29, 2016, the Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to Mr. Wit in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019. On Aug 31, 2017, the Company repaid $50,000 to Mr. Wit. On December 27, 2018, the Company and Mr. Wit cancelled the remaining outstanding $400,000 in principal in exchange for the exercise price of $400,000 for 1,600,000 warrants of the 2,000,000 warrants with an exercise price of $0.25 per share that he exercised on that date.

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 then 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. On February 3, 2015, the Company renewed the Line of Credit and increased the available balance to $5,000,000. On April 7, 2017, the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At March 31, 2019, $2,500,000 was outstanding on the Line of Credit at an interest rate of 4.50%.

For the three month period ended March 31, 2019 we incurred $190,109 in interest expense payable to related parties and $225,418 for the three month period ended March 31, 2018.

26

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

NOTE 13: STOCKHOLDERS’ (DEFICIT)

Our authorized capital stock consists of 500,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, par value $0.001 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 March 31, 2019 we had the following outstanding securities:

○ 158,278,341 shares of common stock issued and outstanding;

○ 19,020,000 warrants issued and outstanding to purchase shares of our common stock;

○ 2,420,000 options issued and outstanding to purchase shares of our common stock;

○ 250,000 shares of our Series D Preferred Stock issued and outstanding; and

○ $5,970,000 principal amount of Convertible Debentures and $57,838 of accrued interest convertible into 11,940,000 and 115,677 shares of common stock, respectively.

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 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 January 1, 2019 the Company issued 1,800,000 shares of common stock to Randall G. Smith, our Executive Vice Chairman, upon the exercise of 1,800,000 warrants with an exercise price of $0.25 per share for an aggregate purchase price of $450,000.

On March 14, 2019, the Company entered into restricted stock award agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. Under the terms of the RSAs, each executive was awarded 225,000 performance related restricted shares of the Company's common stock subject to forfeiture restrictions based on certain milestones having been met for the year ended December 31, 2019 as follows: a) 75,000 performance related shares are subject to individual performance, b) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $32.5 million and the Company’s 2019 Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") does not equal or exceed $6.5 million, and c) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $33.9 million and the Company’s 2019 EBITDA does not equal or exceed $6.8 million. The restrictions on 1/3 of the awarded performance shares will lapse on the 1st of April in 2020, 2021 and 2022 provided the individual remains an employee of the Company. The restricted shares granted under the RSAs were valued as of the grant date at $0.28 per share.

On March 21, 2019 the Company issued 209,694 shares of Common stock to an employee upon the cashless exercise of 1,000,000 warrants with an exercise price of $0.25 per share.

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:

○ dividend and liquidation preferences;

○ voting rights;

○ conversion privileges; and

○ 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 March 31, 2019 and March 31, 2018, respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share as of
	March 31,				March 31,
Series of preferred stock	2019		2018		2019		2018
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	$	2,081,980	$	2,081,980

27

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

Warrants Issued in Capital Transactions

The following tables summarize all outstanding warrants for the three month period ended March 31, 2019 and the year ended December 31, 2018, and the related changes during these periods.

March 31, 2019

March 31, 2019

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

19,020,000

0.97

$

0.48

19,020,000

$

0.48

December 31, 2018

December 31, 2018

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

22,020,000

1.06

$

0.45

22,020,000

$

0.45

Warrants
Balance at December 31, 2017	27,020,000
Issued	-0-
Exercised	(4,000,000	)
Expired/forfeited	(1,000,000	)
Balance at December 31, 2018	22,020,000
Issued	-0-
Exercised	(2,800,000	)
Expired/forfeited	(200,000	)
Balance at March 31, 2019	19,020,000
Warrants exercisable at March 31, 2019	19,020,000
Weighted average fair value of warrants granted during 2019	n/a

Other Comprehensive Income/(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 income/(loss). The following table lists the beginning balance, activity and ending balance of the components of accumulated other comprehensive income/(loss).

	Foreign currency translation			Accumulated other comprehensive income/(loss)
Balance at December 31, 2017	$	(397,237	)	$	(397,237	)
2018 Activity		(39,268	)		(39,268	)
Balance at December 31, 2018		(436,505	)		(436,505	)
2019 Activity		(5,430	)		(5,430	)
Balance at March 31, 2019	$	(441,935	)	$	(441,935	)

NOTE 14: EQUITY INCENTIVE PLANS

Stock Option Plans

Description of 2016 Equity Incentive Plan

In 2016, the Company’s Board of Directors and stockholders approved the OmniComm Systems, Inc. 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. The 2016 Plan initially provides for the issuance of up to 10,000,000 shares of our common stock for issuance upon awards granted under the 2016 Plan. 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 (9) years commencing on January 1, 2017 and ending on (and including) January 1, 2025, in an amount equal to five percent (5%) of the total number of shares authorized under the 2016 Plan. As of March 31, 2019 11,576,250 shares of our common stock were authorized for issuance under the 2016 Plan. Unless earlier terminated by the Board, the 2016 Plan shall terminate on June 29, 2026.

28

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

The maximum term for any option grant under the 2016 Plan is ten years from the date of the grant; however, options granted under the 2016 Plan will generally expire five years from the date of grant. 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, usually occurs upon completion of one full year of employment from the date of grant and the second vesting usually 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 2016 Plan are forfeited and expire upon termination of employment.

On September 6, 2018, the Company entered into restricted stock agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. The shares issuable under the RSAs were valued as of the grant date at $0.33 per share. The RSAs provided for the issuance of up to 225,000 performance related shares of the Company's common stock to each of the executives provided certain milestones were met as follows: a) 75,000 performance related shares are subject to individual performance; b) If the Company's 2018 Revenue equals or exceeds $30 million and the Company’s 2018 EBITDA equals or exceeds $6 million, the Company would award 75,000 shares of common stock; and c) If the Company's 2018 Revenue equals or exceeds $32 million and the Company’s 2018 EBITDA equals or exceeds $7 million, the Company would award an additional 75,000 shares of common stock. The restrictions on 1/3 of the awarded performance shares will lapse on the first, second and third anniversaries of the 2018 Annual Stockholder Meeting, which was held on June 7, 2018. Effective December 31, 2018 the Company had not achieved the milestones relating to Revenue and EBITDA and therefore each of the Officers forfeited 150,000 of the 225,000 restricted shares that had been issued to each of them.

On September 6, 2018, the Company entered into restricted stock agreements (“RSAs”) with its Board of Directors intended to provide incentive to ensure certain economic performance of the Company. The shares issuable under the RSAs were valued as of the grant date at $0.33 per share. The RSAs provided for the issuance of a total of 200,000 restricted shares with the restrictions lapsing on the day prior to the the 2019 Annual Stockholder Meeting to each director. The RSAs include 75,000 performance related shares of the Company's common stock that are subject to the Company's 2018 Revenue equaling or exceeding $30 million and the Company’s 2018 EBITDA equaling or exceeding $6 million. Effective December 31, 2018 the Company had not achieved the milestones relating to Revenue and EBITDA and therefore each of the directors forfeited 75,000 of the 200,000 restricted shares that had been issued to each of them.

On March 14, 2019, the Company entered into restricted stock award agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. Under the terms of the RSAs, each executive was awarded 225,000 performance related restricted shares of the Company's common stock subject to forfeiture restrictions based on certain milestones having been met for the year ended December 31, 2019 as follows: a) 75,000 performance related shares are subject to individual performance, b) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $32.5 million and the Company’s 2019 EBITDA does not equal or exceed $6.5 million, and c) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $33.9 million and the Company’s 2019 EBITDA does not equal or exceed $6.8 million. The restrictions on 1/3 of the awarded performance shares will lapse on the 1st of April in 2020, 2021 and 2022 provided the individual remains an employee of the Company. The restricted shares granted under the RSAs were valued as of the grant date at $0.28 per share.

The total combined restricted stock compensation expense recognized, in the statement of operations, during the quarter ended March 31, 2019 was $77,610.

As of March 31, 2019, there were 2,245,000 outstanding stock options, 100,000 exercised stock options and 1,825,000 restricted stock shares that have been granted under the 2016 Plan. At March 31, 2019, there were 7,406,250 shares available for grant as options or other forms of share-based compensation under the 2016 Plan.

Description of 2009 Equity Incentive Plan

In 2009, the Company’s Board of Directors and stockholders approved the OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”). On June 16, 2016, the 2009 Plan terminated upon the approval of the 2016 Plan. The 2009 Plan provided 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 were authorized for issuance.

The maximum term for any option grant under the 2009 Plan was ten years from the date of the grant; however, options granted under the 2009 Plan generally expired five years from the date of grant. Options granted to employees generally vested either upon grant or in two installments. The first vesting, which was equal to 50% of the granted stock options, usually occurred upon completion of one full year of employment from the date of grant and the second vesting usually occurred on the second anniversary of the date of grant. The vesting period typically began 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 lapsed in three equal annual installments on the anniversary of the date of grant. Any unvested stock options or restricted shares with restrictions that had not lapsed that were granted under the 2009 Plan were forfeited and expired upon termination of employment.

As of March 31, 2019, there were 175,000 outstanding options and 3,876,662 restricted stock shares that have been granted under the 2009 Plan. At March 31, 2019, there were -0- shares available for grant as options or other forms of share-based compensation under the 2009 Plan.

29

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

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

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2017		5,275,000		$	0.26		4.09	$	130,475
Granted		570,000			0.28
Exercised		(300,000	)		0.21
Forfeited/cancelled/expired		(2,975,000	)		0.25
Outstanding at December 31, 2018		2,570,000			0.28		3.47	$	16,675
Granted		-0-			-0-
Exercised		-0-			-0-
Forfeited/cancelled/expired		(150,000	)		0.25
Outstanding at March 31, 2019		2,420,000		$	0.28		3.20	$	109,000
Vested and exercisable at March 31, 2019		1,547,500		$	0.26		2.96	$	94,275

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 March 31, 2019.

The total number of shares vesting and the fair value of shares vesting for the three month periods ended March 31, 2019 and March 31, 2018, respectively, was:

Fair value of options vesting for the period ended	Number of options vested		Fair value of options vested
March 31, 2019		660,000	$	136,775
March 31, 2018		500,000	$	99,121

Cash received for stock option exercises for the three month periods ended March 31, 2019 and March 31, 2018 was $-0- and $-0-, respectively. Due to the Company’s net loss position, no income tax benefit has been realized during the three month periods ended March 31, 2019 and March 31, 2018.

The following table summarizes information concerning options outstanding at March 31, 2019:

Awards breakdown by price range at March 31, 2019
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.68	$	0.17		150,000		0.68	$	0.17
0.21	to	0.30		1,545,000		3.28		0.26		1,210,000		3.15		0.26
0.31	to	0.50		725,000		3.57		0.34		187,500		3.57		0.34
0.00	to	0.50		2,420,000		3.20	$	0.28		1,547,500		2.96	$	0.26

30

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

The following table summarizes information concerning options outstanding at December 31, 2018:

Awards breakdown by price range at December 31, 2018
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.93	$	0.17		150,000		0.93	$	0.17
0.21	to	0.30		1,695,000		3.54		0.26		550,000		3.15		0.25
0.31	to	0.50		725,000		3.82		0.34		187,500		3.82		0.34
0.00	to	0.50		2,570,000		3.47	$	0.28		887,500		2.92	$	0.25

The weighted average fair value (per share) of options granted during the three month period ended March 31, 2019 was $0.00 as no options were granted during the period and $0.23 during the three month period ended March 31, 2018. 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 three month period ended March 31, 2019 and the year ended December 31, 2018.

	Stock option assumptions for the period ended
Stock option assumptions	March 31, 2019		December 31, 2018
Risk-free interest rate		2.48%		2.91%
Expected dividend yield		0.0%		0.0%
Expected volatility		102.6%		111.0%
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
	for the period ended March 31,
	2019		2018
Stock options granted during the period	$	-0-	$	0.23
Stock options vested during the period	$	0.21	$	0.20
Stock options forfeited during the period	$	0.21	$	0.19

31

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019 AND MARCH 31, 2018

(unaudited)

A summary of the status of the Company’s non-vested shares underlying stock options as of March 31, 2019 and changes during the three month period ended March 31, 2019 is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2019		1,682,500	$	0.24
Nonvested shares at March 31, 2019		872,500	$	0.27

As of March 31, 2019, $195,598 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.9 years.

NOTE 15: SUBSEQUENT EVENTS

Subsequent to March 31, 2019 the Company repaid $1,400,000 on its revolving Line of Credit.

Subsequent to March 31, 2019 an employee exercised options that had been granted to him in 2014. As a result 50,000 common shares were issued to the employee.

Subsequent to March 31, 2019 Cornelis F. Wit, the Company's Executive Chairman, exercised 800,000 warrants with an exercise price of $0.25 per share, as a result 800,000 shares were issued to Mr. Wit.

32

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 and are based on information available at the time and/or management’s good faith belief with respect to future events. 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. Forward-looking statements speak only as of the date the statement was made. 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”) and eClinical solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”) and other clinical trial sponsors worldwide. Our proprietary software applications: TrialMaster^®; TrialOne^®; eClinical Suite; Promasys^®; IRTMaster; AutoEncoder and Acuity (the “EDC Software”), allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data electronically (“eClinical”).

In 2019, 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 including our new AutoEncoder, coding solution as well as Acuity our new data analytics solution

● Expanding our penetration of the large pharmaceutical sponsor market

● Broadening our suite of services and software applications on an organic research and product development basis and on a selective basis via the acquisition or licensing of complementary solutions

● Expanding our business development efforts in Europe and East Asia to capitalize on our operational and clinical capabilities vis-à-vis our competition in those geographic markets

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. 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 research and product development 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 $1,089,081, which represents 19% of revenue, and $922,304, which represents 13% of revenue, on research and product development activities during the three months ended March 31, 2019 and March 31, 2018, 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. Our research and product development team is comprised of software programmers, engineers and related support personnel. 

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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.

We feel that the momentum established from new client acquisitions in 2018 and the first three months of 2019 coupled with our ability to retain clients for repeat engagements provide a good operating base from which to build during the remainder of 2019. 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 our marketing efforts. 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. 

The three months ended March 31, 2019 compared to the three months ended March 31, 2018

RESULTS OF OPERATIONS

A summarized version of our results of operations for the three months ended March 31, 2019 and March 31, 2018 is included in the table below.

Summarized Statement of Operations
For the three months ended
March 31,
				% of						% of						%
	2019			Revenues			2018			Revenues			Change			Change
Total revenues	$	5,715,819					$	7,190,472					$	(1,474,653	)		-20.5	%
Cost of goods sold		1,123,900			19.7	%		1,211,501			16.8	%		(87,601	)		-7.2	%
Gross margin		4,591,919			80.3	%		5,978,971			83.2	%		(1,387,052	)		-23.2	%
Salaries, benefits and related taxes		3,662,432			64.1	%		3,659,340			51.0	%		3,092			0.1	%
Rent		311,799			5.5	%		289,334			4.0	%		22,465			7.8	%
Consulting services		50,827			0.9	%		125,536			1.7	%		(74,709	)		-59.5	%
Legal and professional fees		131,763			2.3	%		221,252			3.1	%		(89,489	)		-40.4	%
Other expenses		392,343			6.9	%		368,617			5.1	%		23,726			6.4	%
Selling, general and administrative		440,533			7.7	%		409,756			5.7	%		30,777			7.5	%
Total operating expenses		4,989,697			87.4	%		5,073,835			70.6	%		(84,138	)		-1.7	%
Operating income/(loss)		(397,778	)		-7.0	%		905,136			12.6	%		(1,302,914	)		-143.9	%
Interest expense		(269,379	)		-4.7	%		(316,361	)		-4.4	%		46,982			14.9	%
Interest income		4			0.0	%		5			0.0	%		(1	)		-20.0	%
Change in derivatives		(583,657	)		-10.2	%		28,416			0.4	%		(612,073	)		-2,154.0	%
Transaction gain/(loss)		(15,726	)		-0.3	%		(22,678	)		-0.3	%		6,952			30.7	%
Income/(loss) before income taxes and dividends		(1,266,536	)		-22.2	%		594,518			8.3	%		(1,861,054	)		-313.0	%
Income tax (expense)		11			0.0	%		(1,035	)		0.0	%		1,046			101.1	%
Net income/(loss) attributable to common stockholders	$	(1,266,525	)		-22.2	%	$	593,483			8.3	%	$	(1,860,008	)		-313.4	%

The table below provides a comparison of our recognized revenues for the three months ended March 31, 2019 and March 31, 2018.

	For the three months ended
Revenue activity	March 31, 2019				March 31, 2018				$ Change			% Change
Set-up fees	$	811,354	14.2	%	$	1,208,554	16.8	%	$	(397,200	)		-32.9	%
Change orders		218,622	3.8	%		420,080	5.8	%		(201,458	)		-48.0	%
Maintenance		1,413,243	24.7	%		1,370,091	19.1	%		43,152			3.1	%
Software licenses		2,300,130	40.2	%		3,269,400	45.5	%		(969,270	)		-29.6	%
Professional services		603,731	10.6	%		431,083	6.0	%		172,648			40.0	%
Hosting		368,739	6.5	%		491,264	6.8	%		(122,525	)		-24.9	%
Total	$	5,715,819	100.0	%	$	7,190,472	100.0	%	$	(1,474,653	)		-20.5	%

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Overall revenue decreased by $1,474,653 or 20.5% for the three months ended March 31, 2019 compared with revenue for the three months ended March 31, 2018. This decrease is primarily the result of decreases in software licenses and set-up fees.

We recorded revenue of $3,946,133 including $1,337,323 from software licensing, $765,397 from set-up fees and $845,729 from maintenance revenues associated with TrialMaster during the three months ended March 31, 2019 compared with revenue of $4,853,099 that included $1,564,561 from software licensing, $1,208,554 in set-up fees and $875,080 in maintenance revenues during the three months ended March 31, 2018.

We recorded $223,365 in revenues associated with clients using the eClinical Suite during the three months ended March 31, 2019 compared with revenue of $354,924 for the three months ended March 31, 2018. eClinical Suite revenues are primarily comprised of license subscriptions and revenues associated with maintenance services.

We recorded $179,607 in revenues in maintenance and $12,300 from hosting activities associated with the eClinical Suite during the three months ended March 31, 2019 compared with revenue of $279,040 from maintenance and $15,500 from hosting activities for the three months ended March 31, 2018. OmniComm announced that it would decommission its eClinical Suite hosting platform effective April 30, 2019, as many of the eClinical Suite clients utilizing these hosting services have transitioned to TrialMaster, the eClinical Suite studies have been completed or the studies have transitioned to another hosting platform. Currently there is one remaining client utilizing the hosting platform and we are finalizing the transition plan with the client.

We recorded revenue of $1,190,088 including $834,577 from software licensing and $276,920 for maintenance for clients utilizing our TrialOne EDC software for the three months ended March 31, 2019 compared with revenue of $1,824,492 including $1,622,926 from software licensing and $162,341 for maintenance for the three months ended March 31, 2018. TrialOne revenues are primarily comprised of license subscriptions, professional services and maintenance services.

We recorded revenue of $162,448 for the three months ended March 31, 2019 including $33,508 from software licensing and $43,924 from maintenance associated with clients utilizing the Promasys EDC solution as compared to revenue of $147,958 for the three months ended March 31, 2018 including $11,529 from software licensing and $53,630 from maintenance.

We recorded revenue of $193,785 from our other products for the three months ended March 31, 2019 compared to revenue of $10,000 for our other products for the three months ended March 31, 2018.

Our TrialMaster EDC application has historically primarily 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, in 2013 we acquired Promasys and in 2018 we acquired Acuity (collectively the “Acquired Software”). These software applications have historically been sold on a licensed or technology transfer basis. As we have continued developing our software applications and our client relationships mature, an increasing potion of our clients are deploying 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 setup fees are generally recognized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606 (“ASC 606"). ASC 606, which requires that the revenues be recognized when or as performance obligations are satisfied. 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 EDC and 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 most licenses it sells of its software products to be sold under three to five year term licenses.

Our top five customers accounted for approximately 28% of our revenues during the three month period ended March 31, 2019 and approximately 35% of our revenues during the three month period ended March 31, 2018. One customer accounted for approximately 7% of our revenues during the three month period ended March 31, 2019. One customer accounted for approximately 11% of our revenues during the three month period ended March 31, 2018. The loss of any of these contracts or these customers in the future could adversely affect our results of operations. 

We currently have business operations in Southampton, England; Leiden, the Netherlands; Bonn, Germany; Barcelona, Spain; Tokyo, Japan; and Bengaluru, India, and our international customers, who are principally located in Europe and East Asia, accounted for approximately 32% of our total revenues for the three month period ended March 31, 2019 and approximately 30% of our total revenues for the three month period ended March 31, 2018.

One customer accounted for approximately 10% of our accounts receivables as of March 31, 2019. One customer accounted for approximately 20% and another customer accounted for approximately 10% of our accounts receivable as of December 31, 2018.

Cost of goods sold decreased approximately 7% or $87,601 from $1,211,501 for the three months ended March 31, 2018 as compared to $1,123,900 for the three months ended March 31, 2019. Cost of goods sold were approximately 20% of revenues for the three months ended March 31, 2019 compared to approximately 17% for the three months ended March 31, 2018. 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 (reimbursable revenues). Cost of goods sold decreased during the three months ended March 31, 2019 primarily due to a decrease in the costs associated with producing clinical trials on behalf of our clients. 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.

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Overall, total operating expenses decreased approximately 2% for the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The decrease in operating expenses is primarily the result of a decrease in legal and professional fees, consulting services and travel expenses partially offset by increases in depreciation, amortization and selling, general and administrative expenses.

Salaries and related expenses were our biggest operating expense at 73% of total operating expenses for the three months ended March 31, 2019 compared to 72% of total operating expenses for the three months ended March 31, 2018. Salaries and related expenses increased by approximately 0% for the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The table below provides a summary of the significant components of salaries and related expenses by primary cost category.

	For the three months ended
Expense category	March 31, 2019		March 31, 2018		$ Change			% Change
OmniComm corporate operations	$	2,592,374	$	2,623,054	$	(30,680	)		-1.2	%
New Jersey operations office		302,513		296,874		5,639			1.9	%
OmniComm Europe, GmbH		100,239		168,124		(67,885	)		-40.4	%
OmniComm Ltd.		321,905		330,566		(8,661	)		-2.6	%
OmniComm Spain S.L.		92,653		99,991		(7,338	)		-7.3	%
OmniComm Systems B.V.		1,933		84,205		(82,272	)		-97.7	%
OmniComm eClinical Solutions Pvt. Ltd.		120,278		-0-		120,278			n/a
Employee stock compensation		130,537		56,526		74,011			130.9	%
Total salaries and related expenses	$	3,662,432	$	3,659,340	$	3,092			0.1	%

As of March 31, 2019, we employed 175 employees and consultants Company-wide as follows: 69 out of our headquarters in Fort Lauderdale, Florida, 8 out of a regional operating office in Somerset, New Jersey, 27 in remote locations throughout the United States. Our wholly-owned subsidiary, OmniComm Europe, GmbH, employs 17 in Bonn, Germany. Our wholly-owned subsidiary, OmniComm Ltd., employs 16 in Southampton, England. Our wholly-owned subsidiary, OmniComm Spain, S. L. employs 3 in Barcelona, Spain. Our wholly-owned subsidiary, OmniComm Systems B.V. employs 2 in the Netherlands and 2 in Japan. Our wholly-owned subsidiary, OmniComm eClinical Solutions Pvt. Ltd., formed in July 2018, employs 31 in the Bengaluru, India. We believe that relations with our employees are good. None of our employees are represented by a collective bargaining agreement.

During the three months ended March 31, 2019 and the three months ended March 31, 2018 we incurred $130,537 and $56,526, respectively, in salary expense in connection with ASC 718, Compensation – Stock Compensation, (“ASC 718”) 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 8% during the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The table below details the significant portions of our rent expense. Our primary data site is located at a 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 also utilize co-location and disaster recovery space in the Fort Lauderdale, Florida area. This facility provides us with disaster recovery and business continuity services for our operations. In 2018 we added a new co-location facility in Frankfurt, Germany. We currently lease office space in Bonn, Germany for our European subsidiary, OmniComm Europe, GmbH under a lease that expires in July 2020. We currently lease office space for a regional operating office in New Jersey under a lease that expires in March 2021. Our OmniComm Ltd. subsidiary leases office space in Southampton, UK under a lease that expires in September 2020. Our OmniComm eClinical Solutions Pvt. Ltd. subsidiary leases office space in Bengaluru, India under the terms of a lease that expires in May 2023. The Company currently operates its office space for our OmniComm Systems B.V, in the Netherlands under the terms of an agreement that expires in October 2019. Our Fort Lauderdale corporate office lease expires in February 2023. Our offices in Barcelona, Spain and Tokyo, Japan are administered under service agreements that include the use of office space and other services. The table below provides the significant components of our rent related expenses by location or subsidiary. Included in rent during the three months ended March 31, 2019 was a decrease in expense of $54 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 $561 for the three months ended March 31, 2018.

	For the three months ended
Expense category	March 31, 2019			March 31, 2018			$ Change			% Change
Corporate office	$	106,785		$	104,200		$	2,585			2.5	%
Co-location and disaster recovery facilities		126,109			129,785			(3,676	)		-2.8	%
New Jersey operations office		13,148			13,148			-0-			0.0	%
OmniComm Europe, GmbH		18,775			21,524			(2,749	)		-12.8	%
OmniComm Ltd.		18,038			16,325			1,713			10.5	%
OmniComm Spain S.L.		3,001			3,454			(453	)		-13.1	%
OmniComm Systems B.V.		500			1,459			(959	)		-65.7	%
OmniComm eClinical Solutions Pvt. Ltd.		25,497			-0-			25,497			n/a
Straight-line rent expense		(54	)		(561	)		507			90.3	%
Total	$	311,799		$	289,334		$	22,465			7.8	%

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Consulting services expense decreased to $50,827 for the three months ended March 31, 2019 compared with $125,536 for the three months ended March 31, 2018. Consulting services are comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. Expenses for both categories decreased year over year. The table provided below provides the significant components of the expenses incurred related to consulting services.

	For the three months ended
Expense category	March 31, 2019		March 31, 2018		$ Change			% Change
Sales and marketing	$	8,276	$	13,250	$	(4,974	)		-37.5	%
Product development		42,551		112,286		(69,735	)		-62.1	%
Total	$	50,827	$	125,536	$	(74,709	)		-59.5	%

Legal and professional fees decreased approximately 40% for the three months ended March 31, 2019 compared with the three months ended March 31, 2018. 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 March 31, 2019 and March 31, 2018, respectively.

	For the three months ended
Expense category	March 31, 2019		March 31, 2018		$ Change			% Change
Financial advisory	$	-0-	$	27,633	$	(27,633	)		-100.0	%
Audit and related		44,253		35,223		9,030			25.6	%
Accounting services		47,261		59,934		(12,673	)		-21.1	%
Legal-employment related		14,646		10,661		3,985			37.4	%
Legal-financial related		16,231		66,976		(50,745	)		-75.8	%
General legal		9,372		20,825		(11,453	)		-55.0	%
Total	$	131,763	$	221,252	$	(89,489	)		-40.4	%

Selling, general and administrative expenses (“SG&A”) increased by $30,777 or approximately 8% from $409,756 for the three months ended March 31, 2018 compared to $440,533 for the three months ended March 31, 2019. SG&A expenses relate primarily to costs incurred in running our offices in Fort Lauderdale, Florida; Somerset, New Jersey; Southampton, England; Barcelona, Spain; Bonn, Germany; Leiden, the Netherlands; Tokyo, Japan and Bengaluru, India 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. 

During the three months ended March 31, 2019 we recognized a reduction in bad debt expense of $23,353 compared to a reduction of bad debt expense of $3,387 for the three months ended March 31, 2018. This change was primarily the result of a decrease in aged receivable balances that allowed us to decrease our reserve. During the remainder of 2019 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 2019.

Interest expense was $269,379 for the three months ended March 31, 2019 compared to $316,361 for the three months ended March 31, 2018, a decrease of $46,982. Interest incurred to related parties was $190,109 during the three months ended March 31, 2019 and $225,418 for the three months ended March 31, 2018. 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 2008 and 2009 and relating to warrants issued during 2011 and 2016. Interest expense decreased year over year primarily due to the repayment of outstanding debt. The table below provides detail on the significant components of interest expense for the three months ended March 31, 2019 and March 31, 2018.

	For the three months ended
Debt description	March 31, 2019		March 31, 2018		$ Change			% Change
Accretion of discount from derivatives	$	24,637	$	54,518	$	(29,881	)		-54.8	%
August 2008 convertible notes		43,644		47,342		(3,698	)		-7.8	%
December 2008 convertible notes		124,274		124,274		-0-			0.0	%
General interest		48,715		50,282		(1,567	)		-3.1	%
Related party notes payable		28,109		39,945		(11,836	)		-29.6	%
Total	$	269,379	$	316,361	$	(46,982	)		-14.9	%

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 2016 and 2017 were obtained at the best terms available to the Company.

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We record unrealized gains/losses related to changes in our derivative liabilities associated with the issuance of convertible debt that occurred during 2008 and 2009 and warrants associated with promissory notes issued in 2011 and 2016. We recorded a net unrealized loss of $583,657 during the three month period ended March 31, 2019 compared with a net unrealized gain of $28,416 during the three month period ended March 31, 2018. 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 quarterly balance sheet date. These non-cash gains and losses have materially impacted our results of operations during the three month periods ended March 31, 2019 and March 31, 2018 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 OTCQX Marketplace. 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, if we issue securities in the future 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 below table contains the cumulative arrearage for each series of preferred stock as of March 31, 2019.

Series of Preferred Stock	Cumulative Arrearage
Series B	$	609,887
Series C		1,472,093
Total preferred stock arrearages	$	2,081,980

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. At March 31, 2019, we had working capital deficit of $4,154,241.

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

Liquidity and Capital Resources
Summarized Balance Sheet Disclosure
	March 31, 2019			December 31, 2018			$ Change			% Change
Cash	$	1,351,916		$	1,440,524		$	(88,608	)		-6.2	%
Accounts receivable, net of allowance for doubtful accounts		3,989,881			6,175,277			(2,185,396	)		-35.4	%
Prepaid expenses		261,741			384,212			(122,471	)		-31.9	%
Other current assets		1,633			5,204			(3,571	)		-68.6	%
Current assets		5,605,171			8,005,217			(2,400,046	)		-30.0	%
Accounts payable and accrued expenses		1,230,092			2,070,158			(840,066	)		-40.6	%
Deferred revenue, current portion		5,302,370			6,457,319			(1,154,949	)		-17.9	%
Finance lease liability		116,728			115,761			967			0.8	%
Conversion feature liability, related parties		862,083			670,634			191,449			28.5	%
Conversion feature liability		45,415			35,705			9,710			27.2	%
Warrant liability, related parties		750,625			601,781			148,844			24.7	%
Warrant liability		853,991			687,118			166,873			24.3	%
Operating lease liability, current portion		598,108			-0-			598,108			n/a
Current liabilities		9,759,412			10,638,476			(879,064	)		-8.3	%
Working capital (deficit)	$	(4,154,241	)	$	(2,633,259	)	$	(1,520,982	)		-57.8	%

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Statement of Cash Flows Disclosure
	For the three months ended
	March 31, 2019			March 31, 2018			$ Change			% Change
Net cash provided by/(used in) operating activities	$	166,011		$	(1,103,006	)	$	1,269,017			-115.1	%
Net cash provided by/(used in) investing activities		(270,711	)		(645,197	)		374,486			58.0	%
Net cash provided by/(used in) financing activities		19,635			1,750,000			(1,730,365	)		98.9	%
Net increase/(decrease) in cash and cash equivalents		(88,608	)		(814	)		(87,794	)		-10,785.5	%
Changes in operating accounts		340,393			(1,917,655	)		2,258,048			117.8	%
Effect of non-cash transactions on cash and cash equivalents	$	1,092,143		$	221,166		$	870,977			393.8	%

Cash and Cash Equivalents

Cash and cash equivalents decreased by $88,608 to $1,351,916 at March 31, 2019 from $1,440,524 at December 31, 2018. The decrease is primarily comprised of a net loss of ($1,266,525), changes in working capital accounts of $340,393 and an increase from non-cash transactions of $1,092,143. During the three months ended March 31, 2019 we had investing activities of ($270,711). We had financing activities that included repayments of $400,000 to our revolving line of credit, proceeds of $450,000 from warrant exercises and payment of $30,365 for finance leases during the three month period ended March 31, 2019.

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 primarily paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future.

Presently, we have approximately $500,000 planned for capital expenditures to further develop our infrastructure to allow for growth in our operations during the remainder of 2019. We expect to fund these capital expenditure needs through a combination of vendor-provided financing, the use of operating or finance equipment leases and cash provided from operations.

Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2019:

Contractual obligation			Payments due by period
	Total		Less than 1 year		1-2 Years			2-3 Years			3+ Years
Promissory notes (1)	$	557,500	$	-0-	$	557,500	(2)	$	-0-		$	-0-
Convertible notes (1)		5,970,000		-0-		5,770,000	(3)		200,000	(4)		-0-
Lines of credit (5)		2,500,000		-0-		2,500,000			-0-			-0-
Operating lease obligations (6)		1,824,770		732,268		427,193			331,698			333,611	(7)
Finance lease obligations (8)		260,485		116,729		124,523			19,233			-0-
Total	$	11,112,755	$	848,997	$	9,379,216		$	550,931		$	333,611

1. Amounts do not include interest to be paid.

2. Includes $420,000 in 10% notes payable that mature in April 2020 and $137,500 in 12% notes payable that mature in April 2020.

3. Includes $1,770,000 in 10% convertible notes that mature in April 2020 and $4,000,000 in 12% convertible notes that mature in April 2020.

4. Includes $200,000 in 12% convertible notes that mature in April 2021.

5. Includes $2,500,000 due on the revolving Line of Credit with The Northern Trust Company.

6. 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, Florida and Germany, our office in England, our office in the Netherlands, our European headquarters in Germany and our office in India.

7. Includes office lease obligations through 2023.

8. Includes finance lease obligations for hardware located in our co-location sites in Ohio and Germany.

39

Leases

We had operating lease assets and operating lease liabilities of $1,569,465 as of March 31, 2019.

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

On June 30, 2016, the Company and Mr. Wit extended the maturity date of $4,055,000 of convertible debentures originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. On August 31, 2017 the Company repaid $55,000 to Mr. Wit.

On June 30, 2016, the Company and Mr. Wit extended the maturity date of $1,770,000 of convertible debentures originally issued in August 2008. The debentures carry an interest rate of 10% and have a maturity date of April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. 

On June 30, 2016, the Company issued promissory notes in the principal amount of $420,000 and warrants to purchase 1,680,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 10% per annum and have a maturity date of April 1, 2020.

On June 30, 2016, the Company issued promissory notes in the principal amount of $372,500 and warrants to purchase 1,490,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2020 to two investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of 12% per annum and have a maturity date of April 1, 2020. On August 31, 2017, the Company repaid $90,000 to one of the lenders. On December 31, 2018, the Company repaid $145,000 to one of the lenders.

On April 7, 2017, the Company renewed the Line of Credit. The Line of Credit currently matures on April 7, 2020 and carries a variable interest rate based on the prime rate. At March 31, 2019, $2,500,000 was outstanding on the Line of Credit at an interest rate of 4.50%.

On June 30, 2017, the Company and the holder 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 April 1, 2021. The expiration date of the warrants associated with the debentures was also extended to April 1, 2021.

During the next twelve months we expect debt in the aggregate amount of $-0- to mature.

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, the $5,000,000 revolving line of credit with The Northern Trust Company, $2,500,000 of which is outstanding as of March 31, 2019, 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 research and product development 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 research and product development 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 research and product development 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 research and product development 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.

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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 our stockholders or impose restrictive covenants that may adversely impact our business. Further, there can be no assurance that even if such additional capital is obtained or 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 officers and 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.

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 condensed 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.

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”). 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.

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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 in accordance with FASB ASC 606. A 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.

STOCK BASED COMPENSATION

The Company accounts for its employee equity incentive plans under ASC 718, Compensation–Stock Compensation 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.

LEASES

The Company accounts for leases in accordance with ASU No. 2016-02, “Leases (Topic 842)”, (“ASU 2016-02”). We determine if an arrangement is a lease at inception. As part of the lease determination process, we assess several factors, including, but not limited to, assessing our right to control and direct the use of the asset, as well as, assessing if the other party has a substantive substitution right. If we enter into leases that contain multiple components, we identify separate lease components based on whether or not the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in operating lease assets and operating lease liabilities on our balance sheet. Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, “Leases (Topic 842)”, (“ASU 2016-02”). ASU 2016-02 requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than 12 months. On January 1, 2019, we adopted ASU 2016-02, as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance on using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. 

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s 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 for the year ended December 31, 2018 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.

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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 March 31, 2019, 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.

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 quarter ended March 31, 2019 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 March 31, 2019, there were no pending legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject that could reasonably be expected to have a material effect on the results of our operations.

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition, or future results.

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

On January 1, 2019 the Company issued 1,800,000 shares of common stock to Randall G. Smith, our Executive Vice Chairman, upon the exercise of 1,800,000 warrants with an exercise price of $0.25 per share for an aggregate purchase price of $450,000. 

On March 14, 2019, the Company entered into restricted stock award agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. Under the terms of the RSAs, each executive was awarded 225,000 performance related restricted shares of the Company's common stock subject to forfeiture restrictions based on certain milestones having been met for the year ended December 31, 2019 as follows: a) 75,000 performance related shares are subject to individual performance, b) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $32.5 million and the Company’s 2019 Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") does not equal or exceed $6.5 million, and c) 75,000 performance related shares shall be forfeited if the Company's 2019 revenue does not equal or exceed $33.9 million and the Company’s 2019 EBITDA does not equal or exceed $6.8 million. The restrictions on 1/3 of the awarded performance shares will lapse on the 1st of April in 2020, 2021 and 2022 provided the individual remains an employee of the Company. The restricted shares granted under the RSAs were valued as of the grant date at $0.28 per share.

On March 21, 2019 the Company issued 209,694 shares of Common stock to an employee upon the cashless exercise of 1,000,000 warrants with an exercise price of $0.25 per share. 

The securities described above in this section were issued in reliance upon the exemption from the registration requirements of the Securities Act as set forth in Section 4(a)(2) under the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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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
10.39† *	Form of Promissory Note and Schedule of Substantially Identical Promissory Notes
10.45† *	Form of Common Stock Purchase Warrant and Schedule of Substantially Identical Common Stock Purchase Warrants
10.51*	Lease Agreement (Bengaluru, India) dated November 1, 2018
31.1*	Certification of Principal 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 Principal 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
101.LAB*	XBRL Taxonomy Extension Label Document
101.PRE*	XBRL Taxonomy Extension Presentation Document

*	Filed herewith
**	Furnished herewith
†	Pursuant to Instruction 2 of Item 601(a) of Regulation SK, the Company has filed only the form of the contract, and other contracts substantially identical in all material respects, except as to the parties thereto and certain other details, are described in a Schedule to the exhibit.

44

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: May 15, 2019

OMNICOMM SYSTEMS, INC.

By: /s/ Cornelis F. Wit

Cornelis F. Wit, Executive Chairman

(Principal Executive Officer)

By: /s/ Thomas E. Vickers

Thomas E. Vickers, Chief Financial Officer

(Principal Financial Officer)

45

EX-10.39

Exhibit 10.39

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Promissory Note although the Company has entered into various such Promissory Notes that are substantially identical in all material respects except as to the parties thereto and certain other details. The Schedule that follows the form of Promissory Note identifies Promissory Notes that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Promissory Note that is being filed, and sets forth the material details in which the omitted Promissory Notes differ from the form of Promissory Note that is being filed.

PROMISSORY NOTE

$______________[Amount]

Broward County, Florida

______________ [Date]

FOR VALUE RECEIVED, the undersigned, (hereinafter referred to as the ("Maker") promises to pay to the order of____________, his successors or assigns, (hereinafter referred to as "Payee"), the principal sum of ________________________________ ($______________), together with interest on the principal balance from time to time outstanding, at the rate of _______ percent (__.00%) per annum; principal and interest shall be payable as follows: interest shall be payable monthly and the balance of the principal sum, together with any accrued and unpaid accrued interest, shall be paid no later than ________, 20__.

[This Promissory Note is intended to replace and substitute in its entirety the Notes issued to the Payee in the following amounts received on the following dates:_______________]

In the event that the Maker defaults in the payment of any payment of the principal sum or interest owing hereunder when and as the same shall become due and payable and such default shall continue for a period of 15 days, then the Payee may declare this Promissory Note to be in default. The Payee must provide written notice to the Maker that the Payee is declaring the Note to be in default. The Maker shall have a cure period of 15 days to resolve the default. If at the end of the cure period the default has not been resolved, then the entire principal sum and all accrued interest shall become due and payable at once without any additional notice and demand at the option of the Payee. While in default, amounts outstanding under this Promissory Note shall bear interest at the rate of _____ percent (___%) per annum.

This Promissory Note may be prepaid in whole or in part at any time without penalty or premium. All payments made shall first be applied to accrued and unpaid interest and then to principal. Any prepayment shall require payment of all accrued interest thereon.

In the event of an action to enforce this Promissory Note is commenced in a court of competent jurisdiction or in the event recourse to any court shall be deemed necessary by Payee or Payee deems it necessary to employ legal counsel in order to collect or enforce the terms and provisions hereof for any reason, including but not limited to the filing of a proof(s) of claim or any other proceedings under the Acts of Congress relating to Bankruptcy Proceedings or in any other type of receivership or insolvency proceedings, Payee shall be entitled to reasonable attorney’s fees (through and including any appellate proceedings) and all costs and expenses incurred by Payee in collecting or enforcing payment hereof.

The Maker and any endorsers, sureties, guarantors, and all others who are, or may become liable for the payment hereof, (a) severally waive presentment for payment, demand, notice of protest of this Promissory Note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Promissory Note, (b) expressly consent to all extensions of time, renewals, postponements of time of payment of this Promissory Note or other modifications hereof from time to time prior to or after the day they became due without notice, consent or consideration to any of the foregoing, (c) expressly agree to the addition or release of any party or person primarily or secondarily liable hereon, (d) expressly agree that the Payee shall not be required first to institute any suit, or to exhaust its remedies against the undersigned or any other person or party to become liable hereunder in order to enforce the payment of this Promissory Note, and (e) expressly agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by the Payee of any such person), the Maker shall be and remain, directly and primarily liable for all sums due under this Promissory Note.

Notwithstanding any other provisions of this Promissory Note or any other instrument executed in connection with the loan evidenced here by, it is expressly agreed that the amounts payable under this Promissory Note or under the other aforesaid instruments for the payment of interest or any other payment in the nature of or which would be considered as interest or other charge for the use or loan of money shall not exceed the highest rate allowed by the laws of the State of Florida, from time to time, and in the event the provisions of this Promissory Note or of such other instrument referred to above in this paragraph with respect to the payment of interest or other payments in the nature of or which would be considered as interest or other charge for the use or loan of money shall result in exceeding such limitation, then the excess over such limitation shall not be payable and the amount otherwise agreed to have been paid shall be reduced by the excess so that such limitation will not be exceeded. If any payment is actually made which shall result in such limitation being exceeded, the amount of the excess shall constitute and be treated as a payment on the principal hereof and shall operate to reduce such principal by the amount of such excess, or if in excess of the principal indebtedness, such excess shall be refunded.

This Promissory Note shall be construed in accordance with the laws of the State of Florida.

MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREUNDER, OR ARISING OUT OF, OR IN CONNECTION WITH THIS PROMISSORY NOTE OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER THE MAKER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE TO EXTEND THE CREDIT EVIDENCED BY THIS NOTE.

MAKER:

OMNICOMM SYSTEMS, INC.

_________________________

[Name]

[Title]

ACCEPTED BY:

_________________________

[Name]

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SCHEDULE OF SUBSTANTIAL IDENTICAL PROMISSORY NOTES

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Promissory Note although the Company has entered into various such Promissory Notes that are substantially identical in all material respects except as to the parties thereto and certain other details. The following schedule identifies Promissory Notes that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Promissory Note that is being filed, and sets forth the material details in which the omitted Promissory Notes differ from the form of Promissory Note that is being filed.

Promissory Note Date	Name of Payee	Amount	Interest	Balance due	Amount Outstanding at March 31, 2019
June 30, 2016 (1)	Noesis International Holdings 2700 North Military Trail, Boca Raton, FL 33431	$137,500	12%	April 1, 2020	$137,500
June 30, 2016 (1)	Ad Klinkenberg Warder 39 , 1473 PC Warder The Netherlands	$120,000	10%	April 1, 2020	$120,000
January 24, 2019 (1)(2)	Wim Boegem Singel 83 1012 VE Amsterdam The Netherlands	$100,000	10%	April 1, 2020	$100,000
January 24, 2019 (2)	Ad Klinkenberg Warder 39 , 1473 PC Warder The Netherlands	$200,000	10%	April 1, 2020	$200,000

(1) This Promissory Note supersedes and replaces a prior Promissory Note to the payee, extends the maturity date of the prior Promissory Note, and may have reduced or increased the amount of the prior Promissory Note.

(2) On January 24, 2019 Wim Boegem sold $200,000 of his existing $300,000 promissory note to Ad Klinkenberg.

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EX-10.45

Exhibit 10.45

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of the Common Stock Purchase Warrant although the Company has issued various such Common Stock Purchase Warrants that are substantially identical in all material respects except as to the parties thereto and certain other details. The Schedule that follows the form of Common Stock Purchase Warrant identifies each Common Stock Purchase Warrant that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Common Stock Purchase Warrant that is being filed, and sets forth the material details in which each omitted Common Stock Purchase Warrant differ from the form of Common Stock Purchase Warrant that is being filed.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No. X-X-X

OmniComm Systems, Inc.

COMMON STOCK PURCHASE WARRANT

CLASS 20XX

         1.     Issuance. In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by OmniComm Systems, Inc., a Delaware corporation (the “Company”),                 or registered assigns (the “Holder”) is hereby granted the right to purchase at any time, on or after the Issue Date (as defined below) until 5:00 P.M., New York City time, on the Expiration Date (as defined below),                 (XXX,XXX,) fully paid and non-assessable shares of the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), at an initial exercise price per share (the “Exercise Price”) of $_____ per share, subject to further adjustment as set forth herein. This Warrant was originally issued to the Holder or the Holder’s predecessor in interest on                 (the “Issue Date”).

2.     Exercise of Warrants.

2.1     General.

(a) This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by facsimile transmission) a completed and duly executed Notice of Exercise included herein. The date such Notice of Exercise is faxed to the Company shall be the “Exercise Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder of this Warrant tenders this Warrant Certificate to the Company within five (5) Trading Days thereafter. The Notice of Exercise shall be executed by the Holder of this Warrant and shall indicate (i) the number of shares then being purchased pursuant to such exercise and (ii) whether the exercise is a cashless exercise.

(b) If the Notice of Exercise form elects a “cashless” exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (w) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then being exercised, divided by (x) the Market Price of the Common Stock. For the purposes of this Warrant, the terms (y) “Current Market Value” shall mean an amount equal to the Market Price of the Common Stock, multiplied by the number of shares of Common Stock specified in the applicable Notice of Exercise, and (z) “Market Price of the Common Stock” shall mean the average Closing Price of the Common Stock for the three (3) Trading Days ending on the Trading Day immediately prior to the Exercise Date.

(c) If the Holder provides on the Notice of Exercise form that the Holder has elected a “cash” exercise (or if the cashless exercise referred to in the immediately preceding paragraph (b) is not available in accordance with its terms), the Exercise Price per share of Common Stock for the shares then being exercised shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder.

(d) Upon the appropriate payment, if any, of the Exercise Price for the shares of Common Stock purchased, together with the surrender of this Warrant Certificate (if required), the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. The Company shall deliver such certificates representing the Warrant Shares in accordance with the instructions of the Holder as provided in the Notice of Exercise (the certificates delivered in such manner, the “Warrant Share Certificates”) within three (3) Trading Days (such third Trading Day, a “Delivery Date”) of (i) with respect to a “cashless exercise,” the Exercise Date or the Automatic Exercise Date, as the case may be, or, (ii) with respect to a “cash” exercise, the later of the Exercise Date or the date the payment of the Exercise Price for the relevant Warrant Shares is received by the Company.

(e) The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date.

2.2     Automatic Exercise. If any portion of this Warrant remains unexercised as of the Expiration Date and the Market Price of the Common Stock as of the Expiration Date is greater than the applicable Exercise Price as of the Expiration Date, then, without further action by the Holder, this Warrant shall be deemed to have been exercised automatically on the date (the “Automatic Exercise Date”) which is the day immediately prior to the close of business on the Expiration Date (or, in the event that the Expiration Date is not a Business Day, the immediately preceding Business Day) as if the Holder had duly given a Notice of Exercise for a “cashless” exercise as contemplated by Section 2.1(b) hereof, and the Holder (or such other person or persons as directed by the Holder) shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such Automatic Exercise Date. This Warrant shall be deemed to be surrendered to the Company on the Automatic Exercise Date by virtue of this Section 2.2 without any action by the Holder.

               2.3     Certain Definitions. As used herein, the term “Expiration Date” means                     .

3.     Reservation of Shares. The Company hereby agrees that, at all times during the term of this Warrant, there shall be reserved for issuance upon exercise of this Warrant, one hundred percent (100%) of the number of shares of its Common Stock as shall be required for issuance of the Warrant Shares for the then unexercised portion of this Warrant. For the purposes of such calculations, the Company should assume that the outstanding portion of these Warrants was exercisable in full at any time, without regard to any restrictions which might limit the Holder’s right to exercise all or any portion of this Warrant held by the Holder.

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4.     Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

5.     Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

6.     Protection Against Dilution and Other Adjustments.

6.1     Adjustment Mechanism. If an adjustment of the Exercise Price is required pursuant to this Section 6 (other than pursuant to Section 6.4), the Holder shall be entitled to purchase such number of shares of Common Stock as will cause (i) (v) the total number of shares of Common Stock Holder is entitled to purchase pursuant to this Warrant following such adjustment, multiplied by (w) the adjusted Exercise Price per share, to equal the result of (ii) (x) the total number of shares of Common Stock Holder is entitled to purchase before adjustment, multiplied by (y) the total Exercise Price before adjustment.

6.2     Capital Adjustments. In case of any stock split or reverse stock split, stock dividend, reclassification of the Common Stock, recapitalization, merger or consolidation (where the Company is not the surviving entity), the provisions of this Section 6 shall be applied as if such capital adjustment event had occurred immediately prior to the date of this Warrant and the original Exercise Price had been fairly allocated to the stock resulting from such capital adjustment; and in other respects the provisions of this Section shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to the purposes hereof. A rights offering to stockholders shall be deemed a stock dividend to the extent of the bargain purchase element of the rights. The Company will not effect any consolidation or merger, unless prior to the consummation thereof, the successor or acquiring entity (if other than the Company) and, if an entity different from the successor or acquiring entity, the entity whose capital stock or assets the holders of the Common Stock of the Company are entitled to receive as a result of such consolidation or merger assumes by written instrument the obligations under this Warrant (including under this Section 6) and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire.

6.3     Adjustment for Spin Off. If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or of a part of its assets in a transaction (the “Spin Off”) in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the “Spin Off Securities”) to be issued to security holders of the Company, then the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder’s unexercised Warrants outstanding on the record date (the “Record Date”) for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the “Outstanding Warrants”) been exercised as of the close of business on the Trading Day immediately before the Record Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants.

7.     Transfer to Comply with the Securities Act. This Warrant has not been registered under the Securities Act of 1933, as amended, (the “1933 Act”) and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the 1933 Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the 1933 Act. Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section.

8.     Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein.

9.     Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of Florida for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the County of Broward or the state courts of the State of Florida sitting in the County of Broward in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. To the extent determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in enforcement of or protection of any of its rights under any of the Transaction Agreements.

10.     JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with this Warrant.

11.     Remedies. The Company stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

12.     Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

13.     Severability. If any one of the provisions contained in this Agreement, for any reason, shall be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall remain in full force and effect and be construed as if the invalid, illegal or unenforceable provision had never been contained herein.

14.     Waiver. No waiver of any provision of this Agreement shall be effective unless it is in writing, signed by the party against whom it is asserted and any such written waiver shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver.

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15.     Descriptive Headings. Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

Dated:                          

OmniComm Systems, Inc.

By: ________________________________

Thomas E. Vickers     

(Name)

Chief Financial Officer

(Title)

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NOTICE OF EXERCISE OF WARRANT

TO:     OmniComm Systems, Inc               VIA FAX: (954) 473-1256

2101 W. Commercial Blvd., Suite 3500

Ft. Lauderdale, FL 33309

Attn: CFO

     The undersigned hereby irrevocably elects to exercise the right, represented by the Common Stock Purchase Warrant Class 20XX, No. X-X-X dated as of           , to purchase ___________ shares of the Common Stock, $0.001 par value (“Common Stock”), of OmniComm Systems, Inc. and tenders herewith payment in accordance with Section 2 of said Common Stock Purchase Warrant, as follows:

●               CASH:     $                                                    = (Exercise Price x Exercise Shares)

Payment is being made by:

☐      enclosed check

☐     wire transfer

☐     other                                        

● CASHLESS EXERCISE:

Net number of Warrant Shares to be issued to Holder :     _________*

          * based on:      Current Market Value - (Exercise Price x Exercise Shares)     

Market Price of Common Stock

where:

          Market Price of Common Stock [“MP”]          =     $_______________

          Current Market Value [MP x Exercise Shares]     =     $_______________

As contemplated by the Warrant, this Notice of Exercise is being sent by facsimile to the telecopier number and officer indicated above.

If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Exercise.

The certificates representing the Warrant Shares should be transmitted by the Company to the Holder

☐     via express courier, or

☐     by electronic transfer

after receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

Dated: ______________________

________________________________

Holder’s Name

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SCHEDULE OF SUBSTANTIALLY IDENTICAL

COMMON STOCK PURCHASE WARRANTS

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Common Stock Purchase Warrant although the Company has issued various such Common Stock Purchase Warrants that are substantially identical in all material respects except as to the parties thereto and certain other details. The following Schedule identifies each Common Stock Purchase Warrant that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Common Stock Purchase Warrant that is being filed, and sets forth the material details in which each omitted Common Stock Purchase Warrant differ from the form of Common Stock Purchase Warrant that is being filed.

Original Date of Issuance	Name of Holder	Amount of Warrants	Exercise Price	Expiration of Warrants
February 29, 2016	Cornelis F. Wit	800,000	$0.25 per share	April 1, 2019
June 30, 2016	Noesis International	550,000	$0.25 per share	April 1, 2020
June 30, 2016	Noesis International	400,000	$0.25 per share	April 1, 2020
June 30, 2016	Noesis International	180,000	$0.25 per share	April 1, 2020
June 30, 2016	Guus van Kesteren	360,000	$0.25 per share	April 1, 2020
June 30, 2016	Ad Klinkenberg	480,000	$0.25 per share	April 1, 2020
June 30, 2016	Wim Boegem	1,200,000	$0.25 per share	April 1, 2020

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EX-10.51

DEED OF SUB-LEASE

This DEED OF SUB-LEASE ('Sub-Lease Deed ') is made and executed at Bengaluru

Karnataka, India on this the 1st Day of November 2018(01-11-2018):

BY AND BETWEEN:

INNOVENT SPACES PRIVATE LIMITED, a company incorporated under the provisions

of the Indian Companies Act 2013, having its office at Plot No 53, Kariyammana Agrahara

Road, Devarabisana Halli (Next to Intel Junction Flyover), Outer Ring Road, Bengaluru –

560103 (CIN U45400UP2015PTC068253), represented herein by its Director, Mr. Rishi Das,

hereinafter referred to as the ‘Sub-Lessor’, (Which expression shall wherever the context so

requires or admits be deemed to mean and include all its directors, successors in interest,

administrators, representatives and assigns of the FIRST PART.

AND

OMNICOMM ECLINICAL SOLUTIONS PRIVATE LIMITED, a company

incorporated and validly existing under the provisions of the Companies Act, 2013 and having its

Registered office at Indiqube-Eta, No.38/4, Adjacent To Emc2, Dodanekundi Outer Ring

Road Bengaluru – 560048, (CIN U72900KA2018FTC115009), represented herein by its

Director, Mr. Thomas Edward Vickers hereinafter, referred to as the ‘Sub-Lessee’, (which

expression shall wherever the context so requires or admits be deemed to mean and include all

its successors in interest, representatives and administrators) of the OTHER PART.

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(Sub-Lessor and Sub-Lessee shall, wherever the context may hereinafter so require, be

individually referred to as the ‘Party’ and jointly as the ‘Parties’, as the case may be).

WHEREAS:

Mrs. N. Nirmala residing at #33, Lakshmi Nilaya, 5th cross, 1st phase, Veerabhadra

Nagar, Marathahalli post, Bangalore – 560037,

Mrs. N. Shylaja residing at #103, 10th Main, 6th Sector HSR Layout, Bangalore –

560102,

Mrs. N. Kanakamma residing at #257, Annapoorneshwari Nilaya, 22 main, JP Nagar 5th

Phase, Bangalore – 560078,

Mrs. N. Anila residing at #143/4 CMR Colony, 1st Block HRBR Layout, Kalyanagar

Post, Bangalore– 560043,

Mrs. N. Shakuntala residing at #356, Lakshmi Nilaya, Nanjappa Reddy Layout, Koramangala 8^th

Block, Bangalore – 560095,

Mrs. Rajini. N residing at #601, Nanjappa Reddy Layout, Koramangala 8th Block, Bangalore –

560095,

Mrs. Rakesh. M residing at #601, Nanjappa Reddy Layout, Koramangala 8th Block, Bangalore –

560095,

Mrs. Kiran Kumar. M residing at#601, Nanjappa Reddy Layout, Koramangala 8th Block,

Bangalore – 560095, (‘Owner’) are the owners of a building situated at “Indiqube ETA”

Survey Number 38/4, Adjacent to EMC2, Doddanekundi, Outer Ring Road, Bangalore,

Karnataka measuring Super Built Area 74000 Square Feet (Approx), situated at, Survey

Number 38/4, Adjacent to EMC2, Doddanekundi, Outer Ring Road, Bangalore,

Karnataka Consisting of Ground and 6 (six) floors, more fully described in Schedule A

hereto (‘Building’).

A. The Sub-Lessor has acquired leasehold rights in respect of the Schedule “A” Premises by

virtue of the Lease Deed dated 25-05-2017 executed with the Owner (‘Principal Lease

Deed’).

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B. The Sub-Lessor has been put in possession of the Schedule ‘A’ Premises with the right to

sub-lease any portion of the schedule ‘A’ Premises as per the terms of the principal

Lease Deed;

C. The Sub-lessee has expressed its interest in taking on sub-lease a part of the Schedule

“A” Premises, being the office unit measuring 4800 square feet of Leasable Area, (Defined

below under Clause 1), on the Fifth Floor of the Building as shown on the Plan attached

hereto as Annexure-1and 600 square feet in common cafeteria along with 5 (Five) car

parking space, which is more fully described in the Schedule B hereunder and hereinafter

referred to as the “SCHEDULE-B PREMISES” from the Sub-Lessor, for the exclusive

use and occupation of the Sub-Lessee on terms and conditions set out herein; and

D. The Sub-Lessor has agreed to grant and the Sub-Lessee has agreed to take from the Sub¬-

Lessor the Schedule ‘B’ Premises on Sub-lease on the terms and conditions set out

herein.

NOW THIS DEED OF SUB-LEASE WITNESSETH AND IT IS HEREBY AGREED

BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

1.     PREMISE

1.1     In consideration of the Rent hereinafter reserved and agreed to be paid by the Sub-

Lessee to the Sub-Lessor as set out hereunder and the Parties having agreed to comply

with the covenants and conditions mentioned herein, the Sub-Lessor hereby grants BY

WAY OF SUB-LEASE to the Sub-Lessee, the Schedule ‘B’ Premises under the terms

and conditions set out herein.

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1.2     Leasable Area used in this Deed shall mean the total area for which Rent shall be charged viz;

(a) the Built-Up Area of the Schedule ‘B’ Premises including walls and external finish; (b) the

balconies and sit-outs of the Schedule ‘B’ Premises; (c) proportionate share of the floor

common area such as toilets, AHU rooms, electrical rooms, common passages and common

pantry (d) proportionate share of the common areas of the building including lobbies, common

amenities and services like lift-wells, staircase, electro mechanical rooms, society rooms, security

rooms, etc therein.

2.     HANDOVER, TERM AND RENEWAL

2.1     The sub-lease of the Schedule ‘B’ Premises granted herein shall come into effect from

the date of delivery of possession of the Schedule ‘B’ Premises, which shall be on 24th

day of May 2018 (‘Sub-Lease Commencement Date’) and shall remain in effect for a

period of 5 (Five) years (‘Term’).

2.2 Upon the expiry of the term of Sub-Lease, if the Sub-Lessee wishes to renew the Sub-

Lease Deed, the Sub-Lessee shall give an advance written notice of 6(Six) months prior

to expiry of the Term. The Sub-Lessor may at its sole discretion renew the Sub-Lease

Deed for a further period of 3 (Thee) years on the same terms and conditions as those

contained herein, subject to escalation in Rent and other charges. Further it is agreed that,

any such renewal will be affected by executing a fresh deed of sub-lease duly stamped

and registered by the Sub-Lessee at least 2 (Two) months prior to the expiry of the Term.

3. RENT, RENT COMMENCEMENT DATE AND ESCALATION

In consideration of the grant of the Sub-Lease, the Sub-Lessee shall from 24-05-2018

pay to the Sub-Lessor Monthly Office Rent and other charges as specified below:

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3.1 Office Rent: The Sub-Lessee shall pay to the Sub-Lessor office rent of Rs.3,50,400/-

(Rupees Three Lakhs Fifty Thousand Four Hundred Only) per month ("Rent"),

consisting of office Unit Rent calculated at the rate of Rs.73/- (Rupees Seventy-Three

only) per square feet per month.

3.2. Terrace Charges: The sub-lessee shall pay common cafeteria Charges of Rs. 18,000/-

(Rupees Eighteen Thousand Only) per month calculated at the rate of

Rs.30/- per square feet on the area of 600 Square feet.

3.3. Car Parking Charges: The Sub-Lessee shall pay Car parking charges of Rs. 16,000/-

(Rupees Sixteen Thousand Only) per month for 5 (Five) Car parking space calculated

at the rate of Rs. 3,200/- per car parking per month. The Sub-Lessee has been allotted

5 (Five) number of dedicated 4 wheeler parking spaces in Basement 1/2/ Surface level of

the Building. Any additional car parking shall be charged extra subject to availability. The

Two Wheeler and the Wheeler Parking shall be at Sub-Lessee’s risk against any

damage, losses, theft etc.

3.4. Two Wheeler Parking Charges: The Sub-Lessee has not availed Two Wheeler parking

space under this Deed. Four numbers of Two wheeler parking space is equals to one car

parking space. Any 2 wheeler parking space if required by the client may be

accommodated in the common 2 wheeler parking area in the building, subject to

availability at the rate of Rs.850/ - per Two wheeler parking space per month. All

payments will attract applicable taxes.

3.5.     Rent Payment: The Rent shall be paid on or before the 7th day of every month in

advance and shall be subject to deduction of tax at source at applicable rates.

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3.6.     Escalation: There will be escalation the office Rent, escalation on charges towards

Cafeteria/Terrace area, Car Parking Spaces and Two-Wheeler parking at the rate of 6%

every year after completion of every 12(Twelve) months from the Sub-Lease

commencement date over the last rent paid.

3.4.     Common Area, Maintenance Charges (‘CAM Charges’): The Sub- Lessee shall, in

addition to the Rent, shall bear and pay an amount of Rs. 45,900/- (Rupees Forty Five

Thousand Nine Hundred Only) per month calculated at the rate of Rs.8.5/ - per

square feet of Leasable Area of the Office Unit of 4800 Sq. ft plus proportionate

common cafeteria of 600 sq. ft as CAM Charges payable from the Sub-Lease

Commencement Date. The CAM Charges shall be subject to escalation @10% or

higher, every year after completion of every 12 months and shall be paid by the Sub¬

Lessee directly to the Sub-Lessor on or before the 7th day of every month in advance. In

the event the Monthly Rent, Charges towards Cafeteria/Terrace, CAM, Car Parking

Spaces and, Two Wheeler parking or any other sum due from the Sub-Lessee is not paid

on the due date, the Sub-Lessee shall be liable to pay interest thereon at the rate of 1.5%

per month or part thereof.

3.5 Security and House keeping services for the common area of external building shall be

maintained by the Sub-Lessor at no extra cost. The Sub-Lessee shall take care of the

Housekeeping and Maintenance of the Schedule ‘B’ Premises at the Sub-Lessee's cost. In

addition, Sub-Lessee shall be paying for the common wash room cleaning charges of

Rs. 8,640/- (Rupees Eight Thousand Six Hundred and Forty Only) per month to

the Sub-Lessor calculated at the rate of Rs.1.8/- per square feet per month on the area

of 4800 square feet and Pest control charges to the Sub-Lessor at Actuals. For this

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purpose, Sub-Lessor shall be raising separate invoice and it shall be paid within 05 days

of submission of invoice. Internal Housekeeping shall be under the scope of Sub-Lessee.

3.6. Annual Maintenance Contracts (AMC’s) of all the equipments provided by Sub-Lessor,

which includes but not limited to procuring of spare parts shall be within the scope of

Sub-Lessor.

3.7. Commencing from the Sub-Lease Commencement Date, the Sub-Lessor shall be

responsible for the maintenance of list of few items falling within the warranty period of

initial 6 (Six) months as detailed under Annexure 4 attached herewith. It is specifically

agreed that beyond the warranty period of 6 (Six) months, the Sub-Lessee shall be

responsible for the maintenance of the said items.

3.8 Applicable Taxes: Goods and Service Taxes or any other taxes as applicable on the

Rent and other charges as mentioned in this Sub-Lease Deed (i.e., at the rates as

prevalent at the given time) shall be borne by the Sub-Lessee, subject to the Sub-Lessor

having obtained necessary registration and giving particulars of the same to the Sub¬-

Lessee.

3.9 TDS Deductions: The Sub-Lessee shall not be entitled to make any deductions on the

Monthly Rent, Charges towards Cafeteria/terrace, Car Parking Spaces and Two-

Wheeler parking or other payments due under this Sub-Lease Deed, except to deduct

taxes at source in accordance with the provisions of the Income Tax Act or any other

law or regulation for the time being in force. The Sub-Lessee shall be obliged to furnish

to the Sub-Lessor appropriate certificates for the tax/taxes so deducted from the Rents

and other charges within 15 (Fifteen) days of the expiry of each financial quarter.

7

4 INTEREST FREE REFUNDABLE SECURITY DEPOSIT (IFRSD)

4.1 The Sub-Lessee has agreed to pay to the Sub-Lessor a sum of Rs.30,12,100/- (Rupees

Thirty Lakhs Twelve Thousand One Hundred Only) to the Sub-Lessor as interest

free Refundable Security Deposit (hereinafter referred to as the ‘Security Deposit’).

The Security Deposit shall be payable by the Sub-Lessee to the Sub-Lessor in the

following manner:

a. The Sub-Lessee has paid a sum of Rs.30,12,100/- (Rupees Thirty Lakhs

Twelve Thousand One Hundred Only) via Cheque No/Wire Transfer

NO.000001 dated 28-09-2018 which receipt will be acknowledged by the Sub-

Lessor.

4.2 The Security Deposit shall be returned by the Sub-Lessor, subject to deduction of such

sum as may be due by the Sub-Lessee to the Sub-Lessor in the manner set out in Clause

9.1 below.

5     Power & Power Back-up & Water:

5.1 The Sub-lessor shall charge to sub-lessee as per the below (Fixed + Variable)

 Charges Model:

Fixed Charges: Sub-Lessor shall charge to Sub-Lessee an amount of Rs.5 / - per Sq.ft.

calculated on leasable area as a fixed charge towards;

•     Demand Charges of Raw Power as per the current rate of BESCOM which is

      currently Rs.230/ - KVA Provided Load is 1 KVA per 100 Sq.ft.

•     Load Charges of UPS & Provided Load is 1 KVA per 1000 Sq.ft.

•     Pro-rata floor & pantry (cafeteria) consumption

•     Depreciation & AMC of UPS & Batteries, UPS Room Rent & Power Charges

      of 24 x 7 AC running in UPS Room

•     AMC of Installed AC units in dedicated office area

•     UPS Loss of Load

•     UPS will be provided in N+1 Configuration to ensure continuity during failure of

      any UPS.

8

Variable Charges: Sub-lessor shall charge to Sub-Lessee at the composite rate of-

Rs.13.69/- KWH unit consumed. This includes the power through, any of the sources

(BESCOM/DG).

Additional Charges:

•     Extra Load charges for UPS is 2000/KVA per month & for Raw power as per

BESCOM per month subject to availability of load & BESCOM approval.

•     The above electricity charges are linked to BESCOM & Diesel rate. The charges

are subject to change as per BESCOM tariff & Diesel rates.

The Sub-Lessee shall pay Electricity Power charges within 3 (Three) days from the date of

invoice.

5.2     Water charges shall be borne by Sub-Lessee on consumption at actuals. All these charges

are exclusive of applicable Tax.

5.3     In the event of the failure of the Sub-Lessee to make payments as above within the

stipulated time period, the Sub-Lessee shall be liable to pay the said charges along with

interest at the rate of 1.5% per month or part thereof from the due date till the date of

actual payment. Further, it is agreed that if the delay continues beyond 15 days from the

due date, then the Sub-Lessor shall be entitled to discontinue the supply of services to

the Schedule ‘B’ Premises till the payments along with interest is received from the Sub-

Lessee.

6     RIGHTS, OBLIGATIONS AND COVENANTS OF THE SUB-LESSEE

6.1     Access to Schedule ‘B’ Premises:

6. l. l The employees, officers, clients, and visitors, of the Sub-Lessee shall have free and

unimpaired access to the Schedule B” Premises at all times o n a 24-hour basis. The Sub-

9

Lessee shall be entitled to enjoy the Schedule ‘B’ Premises peacefully as a tenant, to use

the entrances, staircases, corridors, passages, vacant land and other areas and, amenities in

the Building.

6.1.2 The Sub-Lessor shall, if required by the Sub-Lessee provide necessary documents that

the authorities may require for enabling the Sub-Lessee to carry on its operations at the

Schedule “B” Premises.

6.2     Signage:

6.2.1 The Sub-Lessee shall be entitled to display their signboards, logos etc. at the Common

Building Directory at Reception (The Sub-Lessee shall pay Rs.2,500/-plus applicable

taxes to the Sub-Lessor towards the cost of putting signage at Reception as one-time

cost). The Sub-Lessee shall be entitled to install exterior Signage at pre-determined space

mutually agreed between the Sub-Lessor and the Sub-Lessee. The cost of putting exterior

signage shall be borne by the Sub-Lessee. The Sub-Lessee shall not put up signage on the

glass façade the entrance of the building and exterior area of the said building. It is

specifically agreed that the Sub-Lessor shall be entitled to display/project the Sub-

Lessee's Signage for the branding activities of the Sub-Lessor in various marketing and

media platforms. Further, the Sub-Lessee shall allow access to the Sub-Lessor to take

photos/pictures of the nameboards/Logos/signs of the Sub-Lessee in connection with

the said branding activities.

6. 2.2     All Signages shall be on prior written approval of the Sub-Lessor.

10

6.3 Tele phone, Fax, Internet, Cable Lines, etc.

6.3.1     The Sub-Lessee has the right to apply for, obtain and install as many telephones, fax,

internet, cable lines, V-Sat and other telecommunication equipments, in the Schedule ‘B’

Premises, as they may deem and necessary for their business requirements in their own

name, and at their own cost. The Sub-Lessee shall pay the charges pertaining to such

telephone, fax and other telecommunication equipments installed directly to the

appropriate authorities. The Sub-Lessee shall be entitled to install its V-Sat and other

equipments at the terrace of the Building if so required by the Sub-Lessee after taking

written consent of the Sub-Lessor and subject to payment of any charges/ taxes etc, to

the authorities by Sub-Lessee, in respect of the same and in accordance with the

directions issued by the Sub-Lessor in that regard. The area in the Terrace that may be

used by the sub-Lessee for installing its equipment as stated above shall not exceed 50

sq. ft. The Sub-Lessee shall remove the telephone, fax, Internet, cable lines, equipments

etc, so obtained / installed by it on expiry of Sub-Lease or earlier determination thereof.

6.4     Minor Repairs and Routine maintenance of the Schedule ‘B’ Premises:

6.4.l The Sub-Lessee shall attend to all day to day minor routine repairs such as fuses, leakage

of taps, replacement of consumable parts etc in the Schedule ‘B’ Premises at its own cost,

as are required to keep the Schedule Premises in good and tenantable condition.

6.5     Use of Schedule ‘B’ Premises:

6.5.1     The Schedule ‘B’ Premises shall be used for carrying on the Sub-Lessee's business/office

purpose only. The Sub-Lessee shall use the Schedule ‘B’ Premises in accordance with the

Tenant operating guidelines of the Sub-Lessor. The Tenant operating guidelines are

11

subject to revision/amendments by the Sub-Lessor from time to time and shall be

adhered to by the Sub-Lessee. The Sub-Lessee shall not be permitted to carry on any

other activity other than for its business purpose as mentioned above. The Sub-Lessee

shall obtain prior written consent of the Sub-Lessor in the event of any change in the

nature of its business in the Schedule ‘B’ Premises.

6.5.2 The Sub-Lessee is not permitted to carry out any renovation works or make any

additions or alterations to the Schedule ‘B’ Premises without the Sub-Lessor’s prior

written consent. The Sub-Lessee shall not be permitted to do any structural alterations or

any alterations to the exterior and elevation of the Building. In the event of the Sub-

Lessor permitting any renovation or additions or alterations, the Sub-Lessee shall pay

such amount as may be decided by the Sub-Lessor as an additional deposit as security for

any damage caused to the Schedule ‘B’ Premises or the Building during the course of

such alteration, and addition works. Further, Sub- Lessee shall adhere to the Tenant

Operating Guidelines of the Sub-Lessor during the course of carrying out any such non-

structural alterations. However, it shall be the responsibility of the Sub-Lessee to clear

and dispose all debris and waste materials resulting from such renovation or additions or

alterations.

6.5.3 The Sub-Lessee shall not store or bring into the Schedule ‘B’ Premises any article,

substance or liquid of a specially combustible, toxic, noxious, inflammable or explosive

nature and shall comply with the requirements and recommendations of all governmental

and statutory authorities, including, the fire authority and municipal authorities.

6.5.4 The Sub-Lessee shall at all times comply with the relevant laws and regulations and the

directions of the relevant governmental and statutory authorities and shall not carry out

12

or permitted to carryout in any part of the Schedule ‘B’ Premises, or the Building any

offensive, illegal or unlawful manufacture, business or activities.

6.5.5     The Sub-Lessee shall always observe, perform and abide by all the rules, regulations and

Tenant Operating Guidelines/amendments, by-laws of Association etc, of the Sub-

Lessor which may be put in place from time to time for the effective management,

control and maintenance of the Building.

6.5.6     The Sub-Lessee shall not damage or allow damage to be done to the Schedule ‘B’.

Premises or Building.

6.5.7     The Sub-Lessee shall keep the Schedule “B” Premises clean and usable and shall maintain

at their cost the Schedule “B” Premises in a state of good repair;

6.5.8     The Sub-Lessee shall on regular basis and at its own costs and expenses maintain the

fixtures, furnitures, carpets, and interiors etc, installed by the Sub-Lessor in the Schedule “B”

Premises. The detailed scope of maintenance to be carried out by the Sub-Lessee within

the Schedule “B” Premises is attached hereto as Annexure -2.

6.5.9     The Sub-Lessee shall not do any acts, deeds or things which may cause any annoyance

or nuisance to the co-occupants of the Building.

6.5.10     The Sub-Lessee acknowledges that the Sub-Lessor or the Owner shall be entitled to

make additions, alterations and repairs of the interiors, base-built equipments and the

building. The Sub-Lessee shall provide necessary co-operations in conducting all such

works.

6.5.11      The Sub-Lessee shall obtain at its own costs, suitable insurance policies to cover as

under;

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i) in respect of its belongings/items, insurance against fire, theft, vandalism and such other

insurable hazards

ii) comprehensive public and third-party liability insurance, insuring the Sub-Lessee's legal

liabilities towards public/third party, arising out of bodily injuries and/or damage to the

Sub-Lessor's property due to accident within the Schedule ‘B’ Premises

iii)           insurance to cover its liability towards its employees

iii) Insurance Policies obtained by the Sub-Lessor are exclusively to cover the loss and/or

damage to the property belonging to the Sub-Lessor and legal liability of the Sub-Lessor

alone towards the public. Under no circumstances, shall the Sub-Lessor be liable or

responsible for the consequences of any negligence on the part of the Sub-Lessee or for

the damages to the Sub-Lessee's belongings in the Schedule ‘B’ Premises and the Liability

accruing on the Sub-Lessee due to its business activities in the Schedule ‘B’ Premises

6.6     Sub-leasing/letting Schedule ‘B’ Premises:

6.6.1 The Sub-Lessee shall not be entitled to further sub-lease, assign, sub-let, grant leave or

license or part with possession of the Schedule “B” Premises or any portion thereof to

anybody or entity in any manner whatsoever and any violation of this clause shall

constitute a critical breach of the Sub-Lease, resulting in immediate and automatic

termination thereof.

7.     COVENANTS, RIGHTS AND OBLIGATIONS OF THE SUB-LESSOR:

7.1     The Sub-Lessor represents as follows:

7.1.1 The Owner has clear and marketable title and authority to lease out the Schedule “A”

Premises and the Schedule “A” Premises has been lawfully leased out to the Sub-1essor

and that the Sub-Lessor has not entered into any sub-lease, license or other transaction in

respect of the Schedule “B” Premises or any part thereof with any other person or third

party.

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7.l.2 That the Sub-Lessor holds legal and valid Leasehold rights over the Schedule “B”

Premises and have full right and authority to grant sub-lease of the Schedule “B” Premises

to the Sub- Lessee in terms hereof.

7.1.3 No agreements have been entered into that would in any manner affect the occupation

and use of the Schedule “B” Premises by the Sub-Lessee.

7.1.4 The Sub-1essor shall subject to payment of Rent, Utility Charges and CAM Charges and

all other amounts payable under this Sub-Lease Deed, by the Sub-Lessee, shall ensure

that power; water and sewerage facilities are available during the Term of this Sub-Lease.

In particular, but without prejudice to the generality of the above, the Sub-Lessor and the

Owner shall ensure the electricity and water bills in respect of the Building are paid

and remitted in a timely and efficient manner.

7.1 .5 The Owner has paid the Property tax, electricity and water charges, if any and all other

outgoings in respect of the Building up to date and there are no dues as on this date .

7.1.6      There are no restrictions for the bonding of the portion of Schedule ‘B’ Premises as a

customs bonded warehouse. However, on expiry or termination of this Deed, the Sub-

Lessee shall be liable to de-bond the Schedule “B” Premises and handover back to the

Sub-Lessor in the condition as agreed under this Deed. In Particular, the Schedule ‘B’

Premises has not been subject matter of any such bonding prior to the execution of this

Sub-Lease.

7.1.7     Taxes & Outgoings:

The Owners have agreed to bear and pay all municipal taxes, property taxes and other

taxes, levies, cesses, outgoings and charges payable in respect of the Schedule ‘B’

15

Premises other than those agreed to be paid by the Sub-Lessee under this Deed and any

increase /enhancement thereto, directly to the concerned authorities.

7.1.8     At the time of handing over of the vacant possession of the Schedule ‘B’ Premises, if any

bills/outgoings are due and payable to any person or authorities for utility and other

services provided to the Sub-Lessee in the Schedule “B” Premises, the Sub- Lessor shall be

entitled to deduct the amounts from the Security Deposit of the Sub- Lessee and return

the balance to the Sub-Lessee.

7.2     Repairs and Rectification:

7.2.1     Rectification of Defects: All structural shall be rectified by the Owner and if the

Owner fails to carry out necessary repairs, the Sub-Lessor shall rectify the same, at its

own cost, during the term of the Sub-Lease and any renewal thereof.

7.2.2     Repairs: The Sub-Lessor shall, at its expense, carry out all major and structural repairs

and maintain in good condition the roof and walls of the Schedule ‘B’ Premises, and be

responsible for repairs relating to leakage of roof, damage to the walls, bursting of water

pipes or defective sewerage system in the Schedule “B” Premises. 1f the Sub-Lessee causes

any damage to the Schedule ‘B’ Premises, the same shall be rectified at the cost of the

Sub-Lessee.

7.2.3     Access to Schedule ‘B’ Premises: The Sub -Lessee shall upon not less than Twenty Four

(24) hours' notice in writing from the Sub-Lessor; permit the Sub-Lessor, its authorized

agents or representatives to enter upon the Schedule “B” Premises for inspecting the

state and condition of the Schedule “B” Premises or to carry out any repairs as may be

required from time to time. The Sub-Lessor shall on inspection, call for reports of

16

Maintenance/supporting documents from the Sub-Lessee with regard to the

maintenance being carried out within the Schedule “B” Premises. The Sub-Lessee shall

provide said reports and supporting documents and co-operate with the Sub-Lessor

during inspection. The Sub-Lessor shall also have a right to enter the Schedule ‘B’

Premises, without notice, at any point of time, if necessary to carry out any emergency

repairs or to take any steps as may be necessary for ensuring the safety and security of

the Building. The Sub-Lessor shall undertake best efforts to ensure that it does not cause

any disturbance to the Sub -Lessee's operations during such inspection and /or repair.

Further it is specifically agreed that 6 (Six) months prior to termination/expiry of the

Sub-Lease Deed, the Sub-Lessee shall upon 24 (Twenty Four) notice from the Sub-Lessor

allow the Sub-Lessor, its representatives or prospective tenants to access the Schedule ‘B’

Premises for inspection if any of the prospective tenants intend to take the Schedule ‘B’

Premises on Sub-Lease and the Sub-Lessee shall not make any objections for the same.

7.2.4     The Sub-Lessee shall maintain the fit outs and furniture in good condition, subject to

normal wear and tear. (physical damages falling outside the purview of Normal Wear and

Tear are more fully described under annexure-3 attached hereto and the same shall be

rectified/repaired by the Sub-Lessee at its own costs, failing which it shall be construed

as breach by the Sub-Lessee and the Sub-Lessor shall be constrained to rectify the same

and recover the costs incurred from the Security Deposit). The Sub-Lessor shall not be

responsible for the maintenance of the same. The Sub-Lessee shall be responsible for all

repairs of the said fit outs and furniture except to HVAC system, including periodic and

preventive maintenance to ensure that the fit outs and furniture are kept in good and

serviceable condition until possession of the Schedule “B” Premises is returned to the

Sub-Lessor in accordance with this deed.

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8     TERMINATION AND LOCK-IN

8.1     Subject to Clause 8.2 below, the parties shall not be entitled to terminate this Sub-Lease

Deed for a period of 30 (Thirty) months, exclusive of 3 (Three) months prior period

notice for Termination from the Lease Commencement Date (“Lock-in Period”).

The Sub-Lessee and the Sub-Lessor shall not have the right to terminate the sub-lease

during the lock-in period without cause except in case of a breach by Owner in which

case Sub-Lessee is not liable for any termination penalty.

In the event of the Sub-Lessee terminating the Sub-Lease during the Lock-in Period or

causing the Sub-Lease deed to be terminated by the Sub-Lessor due to the breach of the

Sub-Lessee, the Sub-Lessee shall be bound to pay to the Sub-Lessor the Monthly Rent,

Charges towards Cafeteria/terraces, Car Parking Spaces, Two-Wheeler parking and any

other amounts due under this Sub-Lease Deed for the remaining period of the Lock-in

Period. The Sub-Lessor may deduct the amount so payable from the Security Deposit in

case, the above mentioned balance amount is not paid by the Sub-Lessee.

Subsequent to the expiry of the Lock-in Period, the Sub-Lessee or Sub-Lessor shall be

entitled to terminate the Sub-Lease Deed by giving written notice of 3 (Three) months

(“Termination Notice”).

8.2     In the event of either Party (“Defaulting Party”) committing any breach of any of the

terms and conditions of the Sub-Lease Deed the other Party (“Aggrieved Party”) shall be

entitled to terminate the Sub-Lease Deed by prior written notice of 30 days, provided the

breach complained of is not cured at the end of the notice period to the satisfaction of

the aggrieved Party.

18

8.3     The Sub-Lessee agrees that it is bound and liable to hand over full and free possession of

the Schedule “B” Premises with fit out and furniture to the Sub-Lessor upon the expiry or

earlier termination of the Sub-Lease in the same condition as on the Sub-Lease

Commencement Date, subject to normal wear and tear that is consistent with their

maintenance obligations.

9     SURRENDER OF SCHEDULE “B” PREMISES:

9. l Damages to the Schedule “B” Premises: Upon expiry of the Sub-Lease Term or earlier

termination of this sub-lease deed, the Sub-Lessee shall restore the flooring, installed

equipments, branding and signage materials to its original condition which are installed

by the Sub-Lessee including furniture, fixtures and fit-outs. In the event of failure to

restore the same into its original condition to the satisfaction to the Sub -Lessor, in such

case the Sub-Lessor shall be entitled to deduct cost of such damages from the Security

Deposit for removal of any installed equipments, furniture's, fixtures and fit-outs,

flooring, branding and signage materials, repairs, refurbish and to restore Schedule “B”

Premises to its original condition.

9.2     Within 30 (Thirty) days from the date of return of the possession of the Schedule “B”

Premises, the Sub-Lessor shall refund the Security Deposit to the Sub-Lessee, subject to

deduction of any arrears of all the Rent, electricity charges, CAM Charges or any other

claims that the Sub-Lessor might have under this Deed. The Sub-Lessor shall also be

entitled to retain any amount that may be necessary to repair, refurbish or return the

Schedule “B” Premises and the fit outs and furniture to their original condition, in the

event of any loss, damage or excessive wear and tear caused by the Sub-Lessee. The

19

Security Deposit shall be repaid to the Sub-Lessee by way of a demand draft/

Online/ Cheque.

9.4 If there are any outstanding amounts to be paid by the Sub-Lessee and the Security

Deposit falls short, the said outstanding amounts shall be paid immediately by the Sub-

Lessee failing which the Sub-Lessor shall be entitled for the said outstanding amount at

the rate of l .5% per month and shall also be entitled for all remedies avaib1ble to it under

the law. In the event if the Sub-Lessee fails to return possession upon the termination of

this Sub-Lease Deed by efflux of time or otherwise, the Sub-Lessee shall be liable to pay

damages to the Sub-Lessor twice of the office Rent, Charges towards Cafeteria/Terrace,

Car Parking Spaces and Two-wheeler Charges and CAM Charges along with Utility bills

per day until the possession has been handed over. During this period, there shall be no

obligation upon on the Sub- Lessor to provide any utilities or maintenance or other services

to the Sub-Lessee, but it is made clear that the Sub-Lessor may provide such services and

that the provision of such services and charging thereof shall not in itself amount to an

extension/renewal of the Sub-Lease Deed.

9.5     In the event the Security Deposit is not refunded to the Sub-Lessee in terms of Clause

9.2 above, the Sub-Lessor shall be liable to pay interest on the said outstanding sum at

the rate of 1.5% per month from the date of return of the possession of the Schedule 'B'

Premises until repayment of the Security Deposit.

10     DISPUTE RESOLUTION:

10.1 If any dispute or difference relating to or arising under this Sub-Lease Deed arises

between the Sub-Lessor and the Sub-Lessee during the period of Sub-Lease or upon the

expiry of the said Sub-Lease, the same shall be referred to arbitration in accordance with

20

the provisions of the Arbitration and Conciliation Act, 1996 for the time being In force.

Arbitration shall be by a sole arbitrator to be appointed jointly by the Sub- Lessor and

Sub-Lessee on mutual consent, whose decision shall be final and binding. The arbitration

shall be conducted in English language and venue shall be at Bengaluru. It is also

understood between the parties herein that a default in payment of Rent, charges and/or

other payments agreed to be paid by the Sub- Lessee shall be construed as a dispute or

difference arising under the Sub-Lease Deed.

10.2 Subject to the provisions of the foregoing clause, this Deed shall be subject to the

exclusive jurisdiction of the courts at Bangalore, Karnataka, India and shall be subject to

the laws applicable in India.

11     FORCE MAJEURE:

11.1 Notwithstanding anything contained in this Deed of Sub-Lease, neither Party shall be

liable to the other for failure to perform part any or all of its obligations under this Deed

of Sub-Lease to the extent that such failure is caused by a Force Majeure Event defined

hereinafter and to the extent such failure is during or for the period of such event,

provided that the Party so prevented gives the other Party a notice specifying the nature

of the of Force Majeure event and its likely consequences, within 30 (thirty) days of the

occurrence of the Force Majeure event.

11.2 Force Majeure Event shall mean any act, event or circumstance or a combination

thereof which are beyond the reasonable control of the Parties and which the Parties

could not have prevented by the exercise of reasonable skill and care and which, or any

consequences of which, prevents or delays, in whole or in part, the performance of its

obligations under this Deed, such acts being any acts of God, acts of war (whether

21

declared or undeclared), invasion, armed conflict or act of foreign enemy, blockade, embargo,

revolution, insurrection, terrorist or military action, coup d'etat, sabotage or

riots.

12     INDEMNITY:

12.1 Each Party shall defend, indemnify, and hold harmless the other Party from and against

any claim, liability, demand, loss, damage, judgment or other obligation or right of action,

which may arise as a result of reach of the terms and conditions of this Deed of Sub-

Lease by such Party.

13     BUSINESS ACQUISITION, MERGER, DEMERGER

In the event of the Sub-Lessor's business is acquired, taken over, merged or demerged with

or into another company, the Sub-Lessor shall be entitled to transfer assets and assign this

Sub-Lease to the said company, provided such assignment is subject to rights of the Sub-

Lessee under this Deed and the terms and conditions of this Deed are binding on the said

company, including renewal term.

14 NOTICES:

14.1 Any notice required to be issued or given as per the provisions of this Agreement, will be

deemed to have been served at the end of three working days after the issuance of such

notice by registered post acknowledgement due, addressed to the address mentioned below:

In respect of the Sub-Lessee:

OMNICOMM ECLINICAL SOLUTIONS PRIVATE LIMITED,

Indiqube-Eta, No.38 / 4,

Adjacent To Emc2,

22

Doddanekundi Outer Ring Road,

Bengaluru - 560048.

Represented by its Director Mr. Thomas Edward Vickers

In respect of the Sub-Lessor:

Innovent Spaces Private Limited.

Plot No 53, Kariyammana Agrahara Road,

Devarabisana Halli (Next to Intel junction Flyover),

Outer Ring Road, Bangalore-560103.

Represented by its Director Mr. Rishi Das.

15 MISCELLANEOUS:

15.1 This Sub-Lease Deed has been executed in two sets, the original being retained by the

Sub-Lessee and the duplicate by the Sub-Lessor.

15.2 The stamp duty and registration charges or any other incidental charge related to

registration payable in respect of this Sub-Lease Deed shall be borne and paid by the

Sub-Lessee. The Sub-Lessee shall be responsible for making all requisite arrangements

for registration of this Deed of Sub-Lease. The Sub-Lessee shall extend all requisite co-

operations to secure registration of the Sub-Lease Deed under the provisions of the

Registration Act, 1908.

15.3 No part of this Sub-Lease Deed shall be amended, varied, substituted or changed in any

manner except by a written instrument duly signed by both Parties.

15.4 This Sub-Lease Deed constitute the entire agreement and understanding of the Parties in

respect of this Sub-Lease and supersedes any and all prior negotiations, correspondence,

23

agreements, understanding duties or obligations between the Parties in respect hereof.

This Sub-Lease Deed and shall be read as part and parcel of the same transaction.

SCHEDULE 'A' PREMISES

All that piece and parcel of immovable property comprising of 3 Basements, Ground Floor plus

6 upper floor, of the building known “INDIQUBE ETA” (“Building”), constructed on property

bearing Survey Number 38/4, adjacent to EMC2, Doddanekundi, Outer Ring Road, Bangalore

having a super built-up area of measuring 74000 Square Feet and bounded as follows:

North : Land of Survey no. 61 &60

South : Outer Ring Road

East : Remaining land of Survey no. 38/4

West : Survey no. 38/3;

SCHEDULE 'B' PREMISES

(Hereby granted for Sub-Lease)

All that Office Unit measuring 4800 square feet (Leasable Area) on the Fifth Floor of the

building known as 'INDIQUBE-ETA' and 600 sq. ft common cafeteria area along with 5(Five)

car Parking space, constructed on the property bearing Survey Number 38/4, Adjacent to

EMC2, Doddanekundi, Outer Ring Road, Bangalore, Karnataka.

24

IN WITNESS WHEREOF THE SUB-LESSOR AND THE SUB-LESSEE HAVE AFFIXED

THEIR SIGNATURES TO THIS DEED OF SUB-LEASE ON THE DAY, MONTH AND

YEAR FIRST ABOVE MENTIONED IN THE PRESENCE OF THE FOLLOWING WITNESSES:

SUB-LESSOR	SUB-LESSEE
For Innovent Spaces Private Limited /s/ Rishi Das Name: Mr. Rishi Das Designation: Director	For OmniComm eClinical Solutions Pvt. Ltd. /s/ Thomas Edward Vickers Name: Mr. Thomas Edward Vickers Designation: Director
WITNESSES
1. ________________________________________ Name: Address:	2. ________________________________________ Name: Address:

25

ANNEXURES-1

Floor Plan

26

ANNEXURE-2

Scope of Maintenance by Sub- Lessee within the Schedule 'B' Premises on a regular basis.

SL.NO	Description	Frequency of Service	AMCs to be taken
01	Carpet Shampooing	Quarterly	General Services
02	Chair Shampooing	Quarterly	General Services
03	Chair maintenance	Monthly
04	Window Blinds maintenance	Monthly
05	Painting of the Schedule ' B' Premises	Annually	General Services
06	Facility maintenance (Electrical, Carpentry & Plumbing)	Weekly	General Services
07	Floor Spring & Door closure maintenance	Monthly
08	Pest Control	Monthly	General Services
09	Fixtures & Furniture maintenance	Monthly	General Services
10	Restroom maintenance	Daily	General Services
11	Deep Cleaning	Weekly	General Services

27

ANNEXURE-3

Physical Damage to below listed assets will not be covered under Normal Wear and Tear

1.     Carpet

2.     Glass doors

3.     Writing boards

4.     Work stations

5.     Chairs

6.     Tables

7.     Flooring

8.     Walls

9.     Plumbing assets (Wash basins, Taps, sinks, W/C's, plumbing lines etc.)

10.     Window Blinds.

11.     Printers

12.     Cupboards or any storage equipment.

13.     HVAC Assets.

14.     Furnitures & Fixtures

15.     Damages to cables

16.     Damages to server racks

17.     Doors, door closures, floor springs, door handles, etc.

18.     Fire extinguishers

19.     Light fixtures

20.     Electrical panels

21.     Gardening assets

ANNEXURE 4

Maintenance by the Sub-Lessor within the warranty period of initial 6(Six) months

SI. No	Description		Scope of Maintenance
01	Light Fittings	If any of the light fittings are not operational that will be under the scope of Sub-Lessor and will be changed accordingly.
02	Chairs	Maintenance will be under scope of Sub-Lessor, except physical damage, which will be charged to the Sub-Lessee
03	Window blinds	Maintenance will be under scope of Sub-Lessor, except physical damage which will be charged to the Sub-Lessee
04	Floor Spring & Door closure	Maintenance will be under scope of Sub-Lessor.

28

05	Pedestal locks	If pedestal locks are not working then the replacement will be under scope of Sub-Lessor, but if the Sub-Lessee loses the keys then the cost of replacement will be under the scope of Sub-Lessee
06	Electrical system	which includes (Switches, sockets, MCB etc) will be under scope of Sub-Lessor
07	Pantry Plumbing	Maintenance of plumbing system in pantry will be under scope of Sub-Lessor
08	Dedicated restroom	Maintenance of plumbing system in dedicated restroom will be under scope of Sub-Lessor
09	Furniture & Workstations	Maintenance of Furnitures and Workstations will be under scope of Sub-Lessor, except physical damage which will be charged to the Sub-Lessee

Exclusions:

1.     Designer Lights: Warranty of the lights will be as provided by the manufacturers

2.     Sofa set maintenance will not be covered under scope of Sub-Lessor

3.     Break out areas are not covered under scope of Sub-Lessor

NOTE: Furnitures, chairs & Workstation warranty are covered only if Sub-Lessor has

provided the assets to the client.

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL 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 March 31, 2019 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.

May 15, 2019

By: /s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

(Principal 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-31.2

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 March 31, 2019 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.

May 15, 2019

By: /s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

(Principal 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-32.1

EXHIBIT 32.1

CERTIFICATIONS OF PRINCIPAL 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 March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, being, Cornelis F. Wit, Principal 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, as amended; and

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

May 15, 2019

/s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

(Principal Executive Officer)

May 15, 2019

/s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

(Principal 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

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 14, 2019
Document Information [Line Items]
Entity Registrant Name	OMNICOMM SYSTEMS INC
Entity Central Index Key	0001034592
Trading Symbol	omcm
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		159,128,341
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 1,351,916	$ 1,440,524
Accounts receivable, net of allowance for doubtful accounts of $152,867 and $176,220, respectively	3,989,881	6,175,277
Prepaid expenses	261,741	384,212
Other current assets	1,633	5,204
Total current assets	5,605,171	8,005,217
Property and equipment, net	1,500,338	1,360,315
Intangible assets, net	643,135	730,835
Right-of-use assets	1,569,465	0
Other assets	89,088	131,847
TOTAL ASSETS	9,407,197	10,228,214
CURRENT LIABILITIES
Accounts payable and accrued expenses	1,230,092	2,070,158
Deferred revenue, current portion	5,302,370	6,457,319
Finance lease liability, current portion	116,728	115,761
Current lease liability	598,108	0
Total current liabilities	9,759,412	10,638,476
LONG TERM LIABILITIES
Line of credit, long term	2,500,000	2,900,000
Notes payable, long term, net of current portion, net of discount of $98,548 and $123,184, respectively	458,952	434,316
Convertible notes payable, related parties, long term, net of current portion	5,770,000	5,770,000
Convertible notes payable, long term, net of current portion	200,000	200,000
Deferred revenue, long term, net of current portion	1,912,260	1,794,237
Finance lease liability, long term, net of current portion	143,757	175,089
Non-current lease liability	971,357	0
TOTAL LIABILITIES	21,715,738	21,912,118
COMMITMENTS AND CONTINGENCIES (See Note 11)
SHAREHOLDERS' (DEFICIT)
Common stock, 500,000,000 shares authorized, 158,278,341 and 155,368,647 issued and outstanding, respectively, at $0.001 par value	158,280	155,370
Additional paid in capital - preferred	999,750	999,750
Additional paid in capital - common	56,877,493	56,233,085
Accumulated other comprehensive (loss)	(441,935)	(436,505)
Accumulated (deficit)	(69,902,379)	(68,635,854)
TOTAL SHAREHOLDERS' (DEFICIT)	(12,308,541)	(11,683,904)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	9,407,197	10,228,214
Series A Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Series B Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Series C Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	0	0
Series D Preferred Stock [Member]
SHAREHOLDERS' (DEFICIT)
Preferred stock	250	250
Conversion Feature Liability Related Parties [Member]
CURRENT LIABILITIES
Derivative liabilities, current	862,083	670,634
Conversion Feature Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	45,415	35,705
Warrant Liability Related Parties [Member]
CURRENT LIABILITIES
Derivative liabilities, current	750,625	601,781
Warrant Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	$ 853,991	$ 687,118

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 152,867	$ 176,220
Notes payable discount
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares undesignated	$ 3,772,500	$ 3,772,500
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	158,278,341	155,368,647
Common stock, shares outstanding (in shares)	158,278,341	155,368,647
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, liquidation preference	$ 0	$ 0
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	230,000	230,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, liquidation preference	$ 0	$ 0
Series C Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	747,500	747,500
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, liquidation preference	$ 0	$ 0
Series D Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	250,000	250,000
Preferred stock, shares issued (in shares)	250,000	250,000
Preferred stock, shares outstanding (in shares)	250,000	250,000
Notes Payable, Other Payables [Member]
Notes payable discount	$ 98,548	$ 123,184

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 5,534,298	$ 7,040,369
Reimbursable revenues	181,521	150,103
Total revenues	5,715,819	7,190,472
Cost of goods sold	1,054,681	1,153,625
Reimbursable expenses-cost of goods sold	69,219	57,876
Total cost of goods sold	1,123,900	1,211,501
Gross margin	4,591,919	5,978,971
Operating expenses
Salaries, benefits and related taxes	3,662,432	3,659,340
Rent and occupancy expenses	311,799	289,334
Consulting services	50,827	125,536
Legal and professional fees	131,763	221,252
Travel	148,562	200,396
Telephone and internet	50,634	29,683
Selling, general and administrative	440,533	409,756
Bad debt expense	(23,353)	(3,387)
Depreciation expense	128,800	77,776
Amortization expense	87,700	64,149
Total operating expenses	4,989,697	5,073,835
Operating income/(loss)	(397,778)	905,136
Other income/(expense)
Interest expense, related parties	(190,109)	(225,418)
Interest expense	(79,270)	(90,943)
Interest income	4	5
Change in derivative liabilities	(583,657)	28,416
Transaction gain/(loss)	(15,726)	(22,678)
Income/(loss) before income taxes	(1,266,536)	594,518
Income tax (expense)	11	(1,035)
Net income/(loss) attributable to common stockholders	$ (1,266,525)	$ 593,483
Net income/(loss) per share
Basic (in dollars per share)	$ (0.01)	$ 0
Diluted (in dollars per share)	$ (0.01)	$ 0
Weighted average number of shares outstanding
Basic (in shares)	157,341,946	149,653,916
Diluted (in shares)	157,341,946	152,693,666

XML

Condensed Consolidated Statements of Comprehensive Income/(Loss) (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net income/(loss) attributable to common stockholders	$ (1,266,525)	$ 593,483
Other comprehensive income/(loss)
Change in foreign currency translation adjustment	(5,430)	1,287
Other comprehensive income/(loss)	(5,430)	1,287
Comprehensive income/(loss)	$ (1,271,955)	$ 594,770

XML

Condensed Consolidated Statement of Shareholders' (Deficit) (Unaudited) - USD ($)	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]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2017	250,000		148,542,805
Balance at Dec. 31, 2017	$ 250	$ 999,750	$ 148,544	$ 54,379,454	$ (72,323,819)	$ (397,237)	$ (17,193,058)
Employee stock option expense				56,526			56,526
Foreign currency translation adjustment						1,287	1,287
Net income/(loss)	$ 0	0	$ 0	0	593,483	0	593,483
Balance (in shares) at Mar. 31, 2018	250,000		150,209,472
Balance at Mar. 31, 2018	$ 250	999,750	$ 150,211	54,934,313	(71,730,336)	(395,950)	(16,041,762)
Issuance of common stock, purchase of Acuity (in shares)			1,666,667
Issuance of common stock, purchase of Acuity			$ 1,667	498,333			500,000
Balance (in shares) at Dec. 31, 2017	250,000		148,542,805
Balance at Dec. 31, 2017	$ 250	999,750	$ 148,544	54,379,454	(72,323,819)	(397,237)	$ (17,193,058)
Issuance of common stock, stock option exercise (in shares)							300,000
Balance (in shares) at Dec. 31, 2018	250,000		155,368,647
Balance at Dec. 31, 2018	$ 250	999,750	$ 155,370	56,233,085	(68,635,854)	(436,505)	$ (11,683,904)
Employee stock option expense				52,927			52,927
Foreign currency translation adjustment						(5,430)	(5,430)
Restricted stock issuance/forfeiture (in shares)			900,000
Restricted stock issuance/forfeiture			$ 900	76,710			$ 77,610
Issuance of common stock, stock option exercise (in shares)			1,800,000				0
Issuance of common stock, stock option exercise			$ 1,800	448,200			$ 450,000
Cashless issuance of common stock, warrant exercise (in shares)			209,694
Cashless issuance of common stock, warrant exercise			$ 210	66,571			66,781
Net income/(loss)	$ 0	0	$ 0	0	(1,266,525)	0	(1,266,525)
Balance (in shares) at Mar. 31, 2019	250,000		158,278,341
Balance at Mar. 31, 2019	$ 250	$ 999,750	$ 158,280	$ 56,877,493	$ (69,902,379)	$ (441,935)	$ (12,308,541)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$ (1,266,525)	$ 593,483
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Change in derivative liabilities	583,657	(28,416)
Interest expense from derivative instruments	24,637	54,518
Employee stock compensation	130,537	56,526
Provision for doubtful accounts	(23,353)	(3,387)	$ 41,782
Depreciation and amortization	216,500	141,925
Operating lease right-of-use assets	160,165	0
Changes in operating assets and liabilities
Accounts receivable	2,208,749	1,502,206
Prepaid expenses	122,471	29,547
Other current assets	3,571	(9,271)
Other assets	42,759	(20,977)
Accounts payable and accrued expenses	(840,066)	(1,024,533)
Operating lease liability	(160,165)	0
Patent settlement liability	0	(112,500)
Deferred revenue	(1,036,926)	(2,282,127)
Net cash provided by/(used in) operating activities	166,011	(1,103,006)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(270,711)	(92,794)
Purchase of Acuity software	0	(552,403)
Net cash (used in) investing activities	(270,711)	(645,197)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds/(repayments) from revolving line of credit	(400,000)	1,750,000
Proceeds from exercise of warrants	450,000	0
Principal repayment of finance lease obligation	(30,365)	0
Net cash provided by/(used in) financing activities	19,635	1,750,000
Effect of exchange rate changes on fixed and intangible assets	1,887	(3,898)
Effect of exchange rate changes on cash and cash equivalents	(5,430)	1,287
Net increase/(decrease) in cash and cash equivalents	(88,608)	(814)
Cash and cash equivalents at beginning of period	1,440,524	1,176,551	1,176,551
Cash and cash equivalents at end of period	1,351,916	1,175,737	$ 1,440,524
Supplemental disclosures of cash flow information:
Income taxes	75,041	1,035
Interest	245,256	254,092
Non-cash transactions:
Restricted stock issuance/(forfeiture)	77,610	0
Common stock issued for the purchase of Acuity software	0	500,000
Reclassification of warrant feature liability associated with warrant exercise	66,781	0
Operating lease right of use assets and operating lease liability upon adoption of ASU 2016-02, Leases (Topic 842)	$ 1,729,630	$ 0

XML

Note 1 - Organization and Nature of Operations

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

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”) and eClinical solutions and related value-added services to pharmaceutical and biotech companies, contract research organizations (“CROs”) and other clinical trial sponsors principally located in the United States, Europe and East Asia. Our proprietary EDC and eClinical software applications: TrialMaster

®

, TrialOne

®

, eClinical Suite, Promasys

®

, IRTMaster, AutoEncoder and Acuity (the “EDC Software”) allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data.

Our ability to compete within the EDC and eClinical industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC and eClinical software and services. Our research and product development efforts are focused on developing new and complementary software solutions, as well as enhancing our existing software solutions through the addition of increased functionality. While our main product development efforts are conducted in our Fort Lauderdale, Florida office, we also conduct product development in other parts of the U.S. as well as in Southampton, England and Bengaluru, India. During the

three

month periods ended

March 31, 2019

and

March 31, 2018

we spent

$1,089,081,

 which represents

19%

of revenue, and

$922,304,

which represents

13%

of revenue, respectively, on research and product development activities, which are primarily comprised of salaries to our developers and other research and product development personnel and related costs associated with the development of our software products.

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

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

2018

 Annual Report filed on Form

10

-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.

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

three

month periods ended

March 31, 2019

and

March 31, 2018 

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

three

month period ended

March 31, 2019

are

not

necessarily indicative of the results that

may

be expected for the year-ended

December 

31,

2019.

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 for the year-ended

December 31, 2018.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles ("GAAP") 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, the determination of lease term and lease assets and 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

2018

 financial statements to conform to the

2019

 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

("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. The functional currency of the Company’s subsidiary, OmniComm eClinical Solutions Pvt. Ltd. in India, is the Indian Rupee. 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 loss of

$5,430

 and a translation gain of

$1,287

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC and eClinical 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 software product, 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") ASC 

606

(“ASC 

606"

). A

five

-step analysis must be met as outlined in ASC 

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

no

refund will be required.

The Company operates in

one

reportable segment which is the delivery of EDC and eClinical 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 TrialOne 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. OmniComm announced that it would decommission its eClinical Suite hosting platform effective

April 30, 2019

as many of the eClinical Suite clients utilizing these hosting services have transitioned to TrialMaster, the eClinical Suite studies have been completed or the studies have transitioned to another hosting platform. Currently there is

one

remaining client utilizing the hosting platform and we are finalizing the transition plan with the client.

Revenues resulting from TrialMaster 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.

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 and eClinical 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

to net

45

 days.

The Company has sold perpetual licenses for EDC and eClinical 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 or  upon completion of milestones. 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 Accounting Standards Update ("ASU")

2016

-

08,

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

(“ASU 

2016

-

08”

). In accordance with ASU 

2016

-

08

 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, 2019

and

March 31, 2018,

respectively, are:

	For the three months ended
Revenue activity	March 31, 2019		March 31, 2018
Set-up fees	$	811,354	$	1,208,554
Change orders		218,622		420,080
Maintenance		1,413,243		1,370,091
Software licenses		2,300,130		3,269,400
Professional services		603,731		431,083
Hosting		368,739		491,264
Total	$	5,715,819	$	7,190,472

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

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

$152,867

 as of

March 31, 2019

and

$176,220

 as of

December 31, 2018.

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

three

month period ended

March 31, 2019

and the year ended

December 31, 2018.

	March 31, 2019			December 31, 2018
Beginning of period	$	176,220		$	149,980
Bad debt expense		(23,353	)		41,782
Write-offs		-0-			(15,542	)
End of period	$	152,867		$	176,220

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, 2019,

$932,167

 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, 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, 2019.

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, 2019,

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 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

7%

of our revenues during the

three

month period ended

March 31, 2019

or approximately

$417,000.

One customer accounted for

11%

of our revenues during the

three

month period ended

March 31, 2018

or approximately

$770,000.

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, 2019

and

March 31, 2018

and the year ended

December 31, 2018.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
March 31, 2019		-0-		0%		1		10%
December 31, 2018		1		13%		1		20%
March 31,2018		1		11%		2		20%

The table below provides revenues from European customers for the

three

month periods ended

March 31, 2019

and

March 31, 2018.

European revenues
For the three months ended
March 31, 2019				March 31, 2018
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,167,460		20%	$	1,068,475		15%

The Company serves its hosting customers from

third

-party web hosting facilities located in the United States and Europe. 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.

LEASES

The Company accounts for leases in accordance with ASU 

No.

2016

-

02,

“Leases (Topic

842

)”, (“ASU

2016

-

02”

). We determine if an arrangement is a lease at inception. As part of the lease determination process, we assess several factors, including, but

not

limited to, assessing our right to control and direct the use of the asset, as well as, assessing if the other party has a substantive substitution right. If we enter into leases that contain multiple components, we identify separate lease components based on whether or

not

the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in operating lease assets and operating lease liabilities on our balance sheet at

March 31, 2019.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Our lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

With the adoption of Topic

842

on

January 1, 2019,

the Company recognized operating lease assets and operating lease liabilities of

$1,729,630.

There was

no

impact to the opening accumulated deficit balance as of

January 1, 2019. 

Prior period amounts continue to be reported in accordance with our historic accounting under previous lease guidance, Topic

840.

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

(“ASC

820”

).

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, 2019,

the Company had

$7,214,630

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

one

month to

6.25

 years. The Company had

$5,302,370

 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

$185,181

 and

$209,790

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively, and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

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, 2019

and

March 31, 2018

we spent

$1,089,081,

which represents

19%

of revenue, and

$922,304,

which represents

13%

of revenue, 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.

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc.

2016

Equity Incentive Plan (the

“2016

Plan”) was approved at our Annual Meeting of Stockholders 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

(

9

) years commencing on

January 1, 2017

and ending on (and including)

January 1, 2025,

in an amount equal to

five

percent (

5%

) of the total number of shares authorized under the

2016

Plan. As of

March 31, 2019

11,576,250

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 Stockholders 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

14,

Equity Incentive Plans”.

The Company accounts for its employee equity incentive plans underASC

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,

(“ASC

260”

). 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

In

February 2016,

the FASB issued ASU 

No.

2016

-

02,

“Leases (Topic

842

)”, (“ASU

2016

-

02”

). ASU

2016

-

02

requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than

12

months. On

January 1, 2019,

we adopted ASU

2016

-

02,

as amended, which supersedes the lease accounting guidance under Topic

840,

and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and

not

restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. 

In

August 2018,

the FASB issued ASU

2018

-

15,

Intangibles - Goodwill and other - Internal-Use Software (Topic

350

-

40

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic

350

-

40

to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have 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.

XML

Note 3 - Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE 3: EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share were calculated using the weighted average number of shares outstanding of

157,341,946

 and

149,653,916

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively.

The outstanding share balance as of

March 31, 2019

and

March 31, 2018,

respectively, includes

1,825,000

 and -

0

- restricted shares that have been issued but are still at risk of forfeiture as the restrictions have

not

lapsed.

Antidilutive shares of

33,495,677

 have been omitted from the calculation of dilutive earnings/(loss) per share for the

three

month period ended

March 31, 2019

and

26,343,224

 for the

three

month period ended

March 31, 2018,

as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per share. The table below provides a reconciliation of anti-dilutive securities outstanding as of

March 31, 2019

and

March 31, 2018,

respectively.

Anti-dilutive security	March 31, 2019		March 31, 2018
Employee stock options		2,420,000		1,295,000
Warrants		19,020,000		12,950,000
Convertible notes		11,940,000		11,980,000
Shares issuable for accrued interest		115,677		118,224
Total		33,495,677		26,343,224

The employee stock options are exercisable at prices ranging from

$0.17

 to

$0.34

per share. The exercise prices on the warrants range from

$0.25

to

$0.60

per share. Shares issuable upon conversion of convertible debentures or accrued interest have a conversion price of

$0.50

per share.

Some of the Company’s convertible debt has an anti-dilutive effect on net earnings/(loss) per share and was

not

included in the computation of diluted earnings per share.

	For the three months ended
	March 31, 2019								March 31, 2018
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,483		149,653,916	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			139		3,039,750		-0-
Diluted EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,622		152,693,666	$	0.00

XML

Note 4 - Property and Equipment, Net

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4: PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	March 31, 2019						December 31, 2018
Description	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	3,105,515	$	2,264,773	$	840,742	$	3,067,069	$	2,202,166	$	864,903		5
Leasehold improvements		138,383		108,926		29,457		136,648		106,362		30,286		5
Computer software		2,653,982		2,051,411		602,571		2,426,339		1,991,842		434,497		3
Office furniture		168,839		141,271		27,568		169,120		138,491		30,629		5
Total	$	6,066,719	$	4,566,381	$	1,500,338	$	5,799,176	$	4,438,861	$	1,360,315

Depreciation expense for the

three

month period ended

March 31, 2019

was

$128,800

 and

$77,776

 for the

three

month period ended

March 31, 2018.

XML

Note 5 - Intangible Assets, Net

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 5: INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	March 31, 2019						December 31, 2018
Asset	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value		Estimated useful life (years)
eClinical Suite customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		111,057		111,057		-0-		113,220		113,220		-0-		15
Promasys B.V. software code		72,837		72,837		-0-		72,837		72,837		-0-		5
Promasys B.V. URLs/website		56,090		56,090		-0-		57,182		57,182		-0-		3
Acuity software code		1,052,403		409,268		643,135		1,052,403		321,568		730,835		3
Total	$	2,685,088	$	2,041,953	$	643,135	$	2,688,343	$	1,957,508	$	730,835

During the

second

quarter of

2018

we recognized an impairment loss of

$79,634

on the Promasys B.V. customer list after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations. 

Amortization expense for the

three

month period ended

March 31, 2019

was

$87,700

 and

$64,149

 for the

three

month period ended

March 31, 2018.

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

Year	Amortization
2019	$	263,101
2020		350,801
2021		29,233
Total	$	643,135

XML

Note 6 - Accounts Payable and Accrued Expenses

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	March 31, 2019		December 31, 2018
Accounts payable	$	473,266	$	895,145
Accrued payroll and related costs		541,369		851,530
Other accrued expenses		142,544		250,570
Accrued interest		72,913		72,913
Total accounts payable and accrued expenses	$	1,230,092	$	2,070,158

XML

Note 7 - Line of Credit, Notes Payable and Liquidity

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 7: LINE OF CREDIT, NOTES PAYABLE AND LIQUIDITY

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 then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. 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.

On

February 3, 2015

the Company renewed the Line of Credit and increased the available balance to

$5,000,000.

On

April 7, 2017

the Company renewed the Line of Credit. The Line of Credit currently matures on

April 7, 2020

and carries a variable interest rate based on the prime rate. At

March 31, 2019,

$2,500,000

was outstanding on the Line of Credit at an interest rate of

4.50%.

Our primary sources of working capital are funds from operations and borrowings under our revolving Line of Credit. In the event that the Line of Credit is called for any reason, Mr. Wit has pledged to replace the borrowing capacity under the Line of Credit with a promissory note that utilizes the same maturity date and interest rate as the Line of Credit.

To satisfy our capital requirements, we

may

seek additional financing. 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 securities or result in increased interest expense in future periods.

The following table summarizes the notes payable outstanding as of

March 31, 2019.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		March 31, 2019		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(98,548	)		-0-		-0-
Total				$	557,500	$	-0-	$	458,952		$	-0-	$	-0-

The following table summarizes the notes payable outstanding as of

December 31, 2018.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2018		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(123,184	)		-0-		-0-
Total				$	557,500	$	-0-	$	434,316		$	-0-	$	-0-

On

February

29,

2016,

the Company issued a promissory note in the principal amount of

$450,000

and warrants to purchase

1,800,000

shares of common stock of the Company at an exercise price of

$0.25

per share with an expiration date of

April 1, 2019

to our then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”), in exchange for accrued interest in the amount of

$450,000.

The note carries an interest rate of

12%

per annum and has a maturity date of

April 1, 2019. 

On

December 5, 2016,

Mr. Wit sold

1,000,000

of the warrants to an employee of the Company. On

August 31, 2017,

the Company repaid

$50,000

of the outstanding principal to Mr. Wit. On

December 27, 2018,

the Company and Mr. Wit cancelled the remaining outstanding

$400,000

in principal in exchange for the exercise price of

$400,000

for

1,600,000

warrants of the

2,000,000

warrants with an exercise price of

$0.25

per share that he exercised on that date.

The 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

$325,689

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

$124,311.

The warrant liability (discount) will be amortized over the

37

month duration of the note payable. The Company will continue to perform a fair value calculation quarterly 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

June 30, 2016,

the Company issued promissory notes in the principal amount of

$372,500

and warrants to purchase

1,490,000

shares of common stock of the Company at an exercise price of

$0.25

per share with an expiration date of

April 1, 2020

to

two

investors in exchange for existing promissory notes in the same amount. The notes carry an interest rate of

12%

per annum and have a maturity date of

April 1, 2020. 

On

August 31, 2017,

the Company repaid

$90,000

to

one

of the lenders. On

December 31, 2018,

the Company repaid

$145,000

to

one

of the lenders.

The 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

$246,921

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

$125,579.

The warrant liability (discount) will be amortized over the

45

month duration of the note payables. The Company will continue to perform a fair value calculation quarterly 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

June 30, 2016,

the Company issued promissory notes in the principal amount of

$420,000

and warrants to purchase

1,680,000

shares of common stock of the Company at an exercise price of

$0.25

per share with an expiration date of

April 1, 2020

to

two

investors, in exchange for existing promissory notes in the same amount. The notes carry an interest rate of

10%

per annum and have a maturity date of

April 1, 2020.

The 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

$278,408

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

$141,592.

The warrant liability (discount) will be amortized over the

45

month duration of the note payables. The Company will continue to perform a fair value calculation quarterly 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.

XML

Note 8 - Convertible Notes Payable

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Convertible Debt Disclosure [Text Block]

NOTE 8: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of

March 31, 2019.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		March 31, 2019		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

The following table summarizes the convertible debt outstanding as of

December 31, 2018. 

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2018		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

10%

Convertible Notes

During

1999,

the Company issued

10%

Convertible Notes payable in the amount of

$862,500

pursuant to a Confidential Private Placement Memorandum. There were costs of

$119,625

associated with this offering. The net proceeds to the Company were

$742,875.

The notes bear interest at

10%

annually, payable semi-annually. The notes were convertible after maturity, which was

June 30, 2004,

into shares of common stock of the Company at

$1.25

per share. On

September 30, 2018,

the final

$50,000

note was repaid in full along with the accrued interest of

$96,949.

As of

March 31, 2019,

$862,500

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 $-

0

-.

Convertible Debentures

August 2008

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 then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”) and

one

of our then Directors. 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

two

Affiliates of the Company 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. The expiration date of the warrants associated with the debentures was also extended to

August 29, 2013.

On

February 22, 2013, 

the Company and Mr. Wit extended the maturity date of

$1,770,000

of the convertible debentures to

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 Mr. van Kesteren extended the maturity date of

$150,000

of the convertible debentures due to our former Director, Guus van Kesteren (“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

April 21, 2014,

the Company and Mr. van Kesteren extended the maturity date of his

$150,000

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

$150,000

was reclassified from Related Party to Non-Related Party.

On

January 31, 2015,

the Company and Mr. Wit extended the maturity date of the

$1,770,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

June 30, 2015,

the Company and Mr. van Kesteren extended the maturity date of

$150,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

June 30, 2016,

the Company and Mr. Wit extended the maturity date of the

$1,770,000

of convertible debentures to

April 1, 2020.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2020.

On

June 30, 2016,

the Company and Mr. van Kesteren extended the maturity date of

$150,000

of convertible debentures to

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

On

June 30, 2017,

the Company and Mr. van Kesteren extended the maturity date of

$150,000

of convertible debentures to

April 1, 2019.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2019.

The

$150,000

of convertible debentures was repaid in full on

June 30, 2018.

December 2008

On

December 16, 2008, 

the Company sold

$5,075,000

of convertible debentures and warrants to purchase an aggregate of

10,150,000

shares of common stock to

eleven

accredited investors, including our then Chief Executive Officer and Director, Cornelis F. Wit (“Mr. Wit”), our then Chief Operating Officer and President, Stephen E. Johnson (“Mr. Johnson”), our then Chief Technology Officer, Randall G. Smith (“Mr. Smith”), our then Chief Financial Officer, Ronald T. Linares and

four

of our then 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 Company and

eight

Affiliates of the Company extended

$4,980,000

of the convertible debentures until

December 16, 2013

in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the convertible debentures was also extended to

December 16, 2013.

On

February 22, 2013,

the Company and the holders agreed to extend the maturity date of

$4,505,000

of the convertible debentures including

$4,475,000

due to Mr. Wit,

$25,000

due to Mr. Johnson and

$5,000

due to Mr. 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 our former director Mr. Veatch extended the maturity date of

$15,000

of the convertible debentures 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 holder extended 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 holder 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.

In

December 2013,

the Company and

two

 holders agreed to extend the maturity date of

$360,000

of the convertible debentures, including

$160,000

due to our then director, Guus van Kesteren (“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

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 28, 2014,

the Company and the holder extended 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

January 31, 2015,

the Company and Mr. Wit extended the maturity date of

$4,475,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

November 19, 2015,

the Company and Mr. Wit agreed to cancel

$420,000

of the debentures and

1,680,000

of unrelated warrants in exchange for

1,680,000

shares of our common stock.

On

April 27, 2015,

the Company and the holder extended the maturity date of

$200,000

of convertible debentures to

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

On

April 30, 2015,

the Company and Mr. Johnson extended the maturity date of

$25,000

 of convertible debentures to

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

The convertible debentures were repaid in full on

December 14, 2016.

On

May 1, 2015,

the Company and Mr. van Kesteren extended the maturity date of

$160,000

of the convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

May 1, 2015,

the Company repaid

$5,000

of the convertible debentures to Mr. Smith.

On

May 7, 2015,

the Company and Mr. Veatch, extended the maturity date of

$15,000

of the convertible debentures to

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

The

$15,000

of convertible debentures were repaid in full on

December 14, 2016.

On

June 30, 2015,

the Company and the holder extended the maturity date of

$100,000

of convertible debentures to

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

June 30, 2016,

the Company and Mr. Wit extended the maturity date of

$4,055,000

of convertible debentures to

April 1, 2020.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2020.

On

August 31, 2017,

the Company repaid

$55,000

of the convertible debentures to Mr. Wit.

On 

June 30, 2016,

the Company and Mr. van Kesteren extended the maturity date of

$160,000

of the convertible debentures to

April 1, 2018.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2018.

The

$160,000

of convertible debentures was repaid in full on

December 14, 2016.

On

June 30, 2016,

the Company and the holder extended the maturity date of

$100,000

of convertible debentures to

April 1, 2020.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2020.

On

August 31, 2017,

the Company repaid

$100,000

of convertible debentures to the holder.

On

June 30, 2017,

the Company and the holder extended the maturity date of

$200,000

of the convertible debentures to

April 1, 2021.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2021.

The principal payments required at maturity under the Company’s outstanding convertible debt at

March 31, 2019

are as follows:

Year	Amount
2019	$	-0-
2020		5,770,000
2021		200,000
Total	$	5,970,000

XML

Note 9 - Fair Value Measurement

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 9: 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 GAAP 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 methods

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’s financial assets or liabilities subject to ASC

820

as of

March 31, 2019

include the conversion feature and warrant liability associated with convertible debentures issued during

2008

and

2009

and the warrants issued during

2016

that are associated with notes payable. 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

8

– Convertible Notes Payable.

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

A summary, as of

March 31, 2019,

of the fair value of liabilities measured at fair value on a recurring basis follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	907,498	$	-0-	$	-0-	$	907,498
Warrant liability		1,604,616		-0-		-0-		1,604,616
Total of derivative liabilities	$	2,512,114	$	-0-	$	-0-	$	2,512,114

(

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 period ended

March 31, 2019.

(

2

) The fair value at the measurement date is equal to the carrying value on the balance sheet.

	Significant valuation assumptions for derivative instruments at March 31, 2019
Risk free interest rate	2.55%	to	2.55%
Dividend yield		0.00%
Expected volatility	88.4%	to	95.4%
Expected life (range in years)
Conversion feature liability	1.01	to	2.01
Warrant liability	0.00	to	2.01

A summary, as of

December 31, 2018,

of the fair value of liabilities measured at fair value on a recurring ba

s

is follows:

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	706,339	$	-0-	$	-0-	$	706,339
Warrant liability		1,288,899		-0-		-0-		1,288,899
Total of derivative liabilities	$	1,995,238	$	-0-	$	-0-	$	1,995,238

(

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, 2018.

(

2

) The fair value at the measurement date is equal to the carrying value on the balance sheet.

	Significant valuation assumptions for derivative instruments at December 31, 2018
Risk free interest rate	2.70%	to	2.70%
Dividend yield		0.00%
Expected volatility	92.2%	to	97.0%
Expected life (range in years)
Conversion feature liability	1.25	to	2.25
Warrant liability	0.00	to	2.25

A summary, as of

March 31, 2019,

of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2018		March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	-0-	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		-0-		-0-		-0-		-0-		72,943
Acuity software code (4)	$	730,835		643,135		-0-		-0-		1,052,403
Total	$	730,835	$	643,135	$	-0-	$	-0-	$	1,261,599

(

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 and customer list 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.

(

3

) During the

second

quarter of

2018

we recognized an impairment loss of

$79,634

on the Promasys B.V. Customer List after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations.

(

4

) The acquired Acuity software code is

not

measured on a recurring basis since the 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.

A summary, as of

December 31, 2018,

of the fair value of assets measured at fair value on a non-recurring basis follows:

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2017		December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	85,786	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		12,139		-0-		-0-		-0-		72,943
Acuity software code (4)		-0-		730,835		-0-		-0-		1,052,403
Total	$	97,925	$	730,835	$	-0-	$	-0-	$	1,261,599

(

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 and customer list 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.

(

3

) During the

second

quarter of

2018

we recognized an impairment loss of

$79,634

on the Promasys B.V. Customer List after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations.

(

4

) The acquired Acuity software code is

not

measured on a recurring basis since the 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 table below presents the unrealized gains/(losses) for the

three

month periods ended

March 31, 2019

and

March 31, 2018.

	Other income/(expense)
	For the three months ended
	March 31, 2019			March 31, 2018
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gains/(losses) from changes in derivative liabilities at the reporting date	$	(583,657	)	$	28,416
Total unrealized and realized gains/(losses) included in earnings	$	(583,657	)	$	28,416

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

three

month period ended

March 31, 2019

and the year ended

December 31, 2018.

The tables reflect changes for all financial liabilities at fair value categorized as Level

3

as of

March 31, 2019

and

December 31, 2018.

The table below presents the Level

3

financial liabilities at fair value for the

three

month period ended

March 31, 2019.

	Level 3 financial liabilities at fair value
									Net		Reclassification
									purchases,		of conversion
	Balance,								issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized			and		associated with		end
Derivatives:	of period			gains/(losses)		gains/(losses)			settlements		convertible debt		of period
Conversion feature liability	$	(706,339	)	$	-0-	$	(201,159	)	$	-0-	$	-0-	$	(907,498	)
Warrant liability		(1,288,899	)		-0-		(382,498	)		66,781		-0-		(1,604,616	)
Total of derivative liabilities	$	(1,995,238	)	$	-0-	$	(583,657	)	$	66,781	$	-0-	$	(2,512,114	)

The table below presents the Level

3

financial liabilities at fair value for the year ended

December 31, 2018.

	Level 3 financial liabilities at fair value
								Net		Reclassification
								purchases,		of conversion
	Balance,							issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized		and		associated with		end
Derivatives:	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of year
Conversion feature liability	$	(1,685,947	)	$	-0-	$	969,108	$	-0-	$	10,500	$	(706,339	)
Warrant liability		(3,440,799	)		-0-		2,142,652		9,248		-0-		(1,288,899	)
Total of derivative liabilities	$	(5,126,746	)	$	-0-	$	3,111,760	$	9,248	$	10,500	$	(1,995,238	)

XML

Note 10 - Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessee, Leases [Text Block]

NOTE 10: LEASES

We adopted ASU

2016

-

02,

Leases ("Topic

842"

), as of

January 1, 2019,

using the modified retrospective transition approach. The financial results reported in periods prior to

2019

are unchanged. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and use hindsight to determine the lease term.

Adoption of the new standard resulted in additional operating lease liabilities and lease assets of

$1,729,630,

as of

January 1, 2019.

The standard did

not

materially impact our consolidated net income or cash flow classification. 

Operating right of use asset and operating lease liability are recognized at the lease commencement date. Operating lease liability represents the present value of lease payments

not

yet paid. Operating right of use asset represent our right to use an underlying asset and are based upon the operating lease liability adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. The Company used our incremental borrowing rate to determine the present value of lease payments

not

yet paid.

 If we enter into leases that contain multiple components, we identify separate lease components based on whether or

not

the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception.

We evaluate arrangements at inception to determine if lease components are included. An arrangement includes a lease component if it identifies an asset and we have control over the asset. For new leases beginning

January 1, 2019

or later, we have elected to separate lease components from the non-lease components, included in an arrangement, when measuring the leased asset and leased liability.

Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases with an initial term of 

12

 months or less are

not

recorded on the balance sheet. We recognize lease expense on a straight-line basis over the lease term. The discount rate selected is our incremental borrowing rate.

Some of our leases include

one

or more options to extend the lease term. Certain leases also include options to terminate early. Optional periods

may

be included in the lease term and measured as part of the lease asset and lease liability if we are reasonably certain to exercise our right to use the leased asset during the optional periods. Our lease agreements do

not

contain any material residual value guarantees or material restrictive covenants.
 

The Company currently leases office space under operating leases for most of its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The Company’s Fort Lauderdale, Florida corporate office lease expires in

February 2023.

The Company’s lease on its New Jersey field office expires in

March 2021.

The Company currently operates its wholly-owned subsidiary, OmniComm Ltd., in the United Kingdom under the terms of a lease that expires in

September 2020.

The Company currently operates its wholly-owned subsidiary, OmniComm Europe, GmbH, in Germany under the terms of a lease that expires in

July 2020. 

The Company currently operates its wholly-owned subsidiary, OmniComm eClinical Solutions Pvt. Ltd., in India under the terms of a lease that expires in

May 2023. 

The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of an agreement that expires in

October 2019. 

Our offices in Barcelona, Spain and Tokyo, Japan are administered under service agreements that include the use of office space and other services. 

Supplemental balance sheet information related to leases was as follows:

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating lease assets	$	1,569,465
Current lease liability	Current operating lease liability		598,108
Non-current lease liability	Long term operating lease liability		971,357
Total lease liabilities		$	1,569,465

Our weighted average lease terms and discount rates are as follows:

	March 31, 2019
Weighted-average remaining lease term (in years)
Operating leases		3.30
Finance leases		2.12
Weighted-average discount rate
Operating leases		4.50%
Finance leases		6.94%

The components of lease cost were as follows:

	For the three months ended March 31, 2019
Operating lease cost	$	167,888
Variable lease cost (1)		140,910
Total lease cost	$	308,798
(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate

Supplemental disclosures of cash flow information related to leases were as follows:

	For the three months ended March 31, 2019
Cash paid for operating lease cost	$	167,942
Operating lease assets obtained in exchange for operating lease liabilities	$	1,729,630

The minimum future lease payments required under the Company’s operating leases at

March 31, 2019

are as follows:

Year	Payments
2019	$	468,042
2020		476,293
2021		340,478
2022		340,746
Thereafter		76,446
Total undiscounted lease payments		1,702,005
Less: amount representing interest		(132,540	)
Present value of lease payments	$	1,569,465

As previously disclosed in our

2018

Annual Report on Form

10

-K and under the previous lease accounting, minimum future lease payments were as follows as of

December 31, 2018:

Year	Payments
2019	$	655,901
2020		414,973
2021		340,029
2022		340,270
Thereafter		76,243
Total	$	1,827,416

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

$311,799

 and

$289,334

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively.

The Company currently leases compute

r hardware for its operations under leases classified as finance leases. The leased equipment is amortized on a straight line basis over

five

 years. Our finance lease costs for the

three

month period ending

March 31, 2019

was

$32,683.

The minimum future lease payments required under the Company’s finance leases at

March 31, 2019

are as follows:

Year	Payments
2019	$	97,552
2020		130,069
2021		51,898
Total minimum finance lease payments		279,519
Less: amount representing interest		(19,034	)
Present value of minimum finance lease payments	$	260,485

XML

Note 11 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 11: COMMITMENTS AND CONTINGENCIES

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 

March 31, 2019,

there were

no

pending legal proceedings to which the Company or its subsidiaries are a party or to which any of its property is subject that could reasonably be expected to have a material effect on the results of our operations.

EMPLOYMENT AGREEMENTS

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

Cornelis F. Wit, Executive Chairman

Randall G. Smith, Executive Vice Chairman

Stephen E. Johnson, Chief Executive Officer and President

Thomas E. Vickers, Chief Financial 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 terminated by either the employee or the Company prior to the end of the then current term as provided for in the employment agreement. Under the terms of the agreement, we

may

terminate the employee’s employment upon

30

or

60

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 provisions, as well as non-compete clauses. The agreements for Mr. Smith, Mr. Johnson and Mr. Vickers contain severance provisions which entitles the employee to severance pay equal to

one

(

1

) year's salary and benefits in the event of (i) the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, (ii) termination by the employee pursuant to a material breach of the agreement by the Company or for good reason in connection with a change of control, or (iii) non-renewal of the employment agreement by the Company.

XML

Note 12 - Related Party Transactions

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE 12: RELATED PARTY TRANSACTIONS

As of

March 31, 2019,

we have an aggregate of

$5,770,000

of convertible debentures outstanding to our Executive Chairman and Executive Chairman of the Board, Cornelis F. Wit (“Mr. Wit”) 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. The expiration date of the warrants associated with the debentures was also extended to August 29, 2013.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. On January 31, 2015, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On June 30, 2016, the Company and Mr. Wit extended the maturity date of the $1,770,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020.

● 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. The expiration date of the warrants associated with the debentures was also extended to December 16, 2013. 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. On January 31, 2015, the Company and Mr. Wit extended the maturity date of the $4,475,000 of convertible debentures to April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015, the Company and Mr. Wit agreed to cancel $420,000 of the debentures and 1,680,000 of unrelated warrants in exchange for 1,680,000 shares of our common stock. On June 30, 2016, the Company and Mr. Wit extended the maturity date of the $4,055,000 of convertible debentures to April 1, 2020. The expiration date of the warrants associated with the debentures was also extended to April 1, 2020. On August 31, 2017, the Company repaid $55,000 to Mr. Wit.

● On February 29, 2016, the Company issued a promissory note in the principal amount of $450,000 and warrants to purchase 1,800,000 shares of common stock of the Company at an exercise price of $0.25 per share with an expiration date of April 1, 2019 to Mr. Wit in exchange for accrued interest in the amount of $450,000. The note carries an interest rate of 12% per annum and has a maturity date of April 1, 2019. On Aug 31, 2017, the Company repaid $50,000 to Mr. Wit. On December 27, 2018, the Company and Mr. Wit cancelled the remaining outstanding $400,000 in principal in exchange for the exercise price of $400,000 for 1,600,000 warrants of the 2,000,000 warrants with an exercise price of $0.25 per share that he exercised on that date.

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 then 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.

On

February 3, 2015,

the Company renewed the Line of Credit and increased the available balance to

$5,000,000.

On

April 7, 2017,

the Company renewed the Line of Credit. The Line of Credit currently matures on

April 7, 2020 

and carries a variable interest rate based on the prime rate. At

March 31, 2019,

$2,500,000

was outstanding on the Line of Credit at an interest rate of

4.50%.

For the

three

month period ended

March 31, 2019

we incurred

$190,109

 in interest expense payable to related parties and

$225,418

 for the

three

month period ended

March 31, 2018.

XML

Note 13 - Stockholders' (Deficit)

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 13: STOCKHOLDERS’ (DEFICIT)

Our authorized capital stock consists of

500,000,000

shares of common stock,

$0.001

par value per share and

10,000,000

shares of preferred stock, par value

$0.001

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

March 31, 2019

we had the following outstanding securities:

○ 158,278,341  shares of common stock issued and outstanding;

○ 19,020,000 warrants issued and outstanding to purchase shares of our common stock;

○ 2,420,000 options issued and outstanding to purchase shares of our common stock;

○ 250,000 shares of our Series D Preferred Stock issued and outstanding; and

○ $5,970,000 principal amount of Convertible Debentures and $57,838  of accrued interest convertible into 11,940,000 and 115,677 shares of common stock, respectively.

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 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

January 1, 2019

the Company issued

1,800,000

shares of common stock to Randall G. Smith, our Executive Vice Chairman, upon the exercise of

1,800,000

warrants with an exercise price of

$0.25

per share for an aggregate purchase price of

$450,000.

On

March 14, 2019,

the Company entered into restricted stock award agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. Under the terms of the RSAs, each executive was awarded

225,000

performance related restricted shares of the Company's common stock subject to forfeiture restrictions based on certain milestones having been met for the year ended

December 31, 2019

as follows: a)

75,000

performance related shares are subject to individual performance, b)

75,000

performance related shares shall be forfeited if the Company's

2019

revenue does

not

equal or exceed

$32.5

million and the Company’s

2019

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") does

not

equal or exceed

$6.5

million, and c)

75,000

performance related shares shall be forfeited if the Company's

2019

revenue does

not

equal or exceed

$33.9

million and the Company’s

2019

EBITDA does

not

equal or exceed

$6.8

million. The restrictions on

1/3

of the awarded performance shares will lapse on the

1st

of

April

in

2020,

2021

and

2022

provided the individual remains an employee of the Company. The restricted shares granted under the RSAs were valued as of the grant date at

$0.28

per share.

On

March 21, 2019

the Company issued

209,694

shares of Common stock to an employee upon the cashless exercise of

1,000,000

warrants with an exercise price of

$0.25

per share.

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:

○ dividend and liquidation preferences;

○ voting rights;

○ conversion privileges; and

○ 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

March 31, 2019

and

March 31, 2018,

respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share as of
	March 31,				March 31,
Series of preferred stock	2019		2018		2019		2018
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	$	2,081,980	$	2,081,980

Warrants Issued in Capital Transactions

The following tables summarize all outstanding warrants for the

three

month period ended

March 31, 2019

and the year ended

December 31, 2018,

and the related changes during these periods.

March 31, 2019

March 31, 2019

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

19,020,000

0.97

$

0.48

19,020,000

$

0.48

December 31, 2018

December 31, 2018

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

22,020,000

1.06

$

0.45

22,020,000

$

0.45

Warrants
Balance at December 31, 2017	27,020,000
Issued	-0-
Exercised	(4,000,000	)
Expired/forfeited	(1,000,000	)
Balance at December 31, 2018	22,020,000
Issued	-0-
Exercised	(2,800,000	)
Expired/forfeited	(200,000	)
Balance at March 31, 2019	19,020,000
Warrants exercisable at March 31, 2019	19,020,000
Weighted average fair value of warrants granted during 2019	n/a

Other Comprehensive Income/(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 income/(loss). The following table lists the beginning balance, activity and ending balance of the components of accumulated other comprehensive income/(loss).

	Foreign currency translation			Accumulated other comprehensive income/(loss)
Balance at December 31, 2017	$	(397,237	)	$	(397,237	)
2018 Activity		(39,268	)		(39,268	)
Balance at December 31, 2018		(436,505	)		(436,505	)
2019 Activity		(5,430	)		(5,430	)
Balance at March 31, 2019	$	(441,935	)	$	(441,935	)

XML

Note 14 - Equity Incentive Plans

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE 14: EQUITY INCENTIVE PLANS

Stock Option Plans

Description of

2016

Equity Incentive Plan

In

2016,

the Company’s Board of Directors and stockholders approved the OmniComm Systems, Inc.

2016

Equity Incentive Plan (the

“2016

Plan”). The

2016

Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards and Performance Share Units. The

2016

Plan initially provides for the issuance of up to

10,000,000

shares of our common stock for issuance upon awards granted under the

2016

Plan. 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

(

9

) years commencing on

January 1, 2017

and ending on (and including)

January 1, 2025,

in an amount equal to

five

percent (

5%

) of the total number of shares authorized under the

2016

Plan. As of

March 31, 2019

11,576,250

 shares of our common stock were authorized for issuance under the

2016

Plan. Unless earlier terminated by the Board, the

2016

Plan shall terminate on

June 29, 2026.

The maximum term for any option grant under the

2016

Plan is

ten

years from the date of the grant; however, options granted under the

2016

Plan will generally expire

five

years from the date of grant. 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, usually occurs upon completion of

one

full year of employment from the date of grant and the

second

vesting usually 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

2016

Plan are forfeited and expire upon termination of employment.

On

September 6, 2018,

the Company entered into restricted stock agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. The shares issuable under the RSAs were valued as of the grant date at

$0.33

per share. The RSAs provided for the issuance of up to

225,000

performance related shares of the Company's common stock to each of the executives provided certain milestones were met as follows: a)

75,000

performance related shares are subject to individual performance; b) If the Company's

2018

Revenue equals or exceeds 

$30

million and the Company’s

2018

EBITDA equals or exceeds 

$6

million, the Company would award

75,000

shares of common stock; and c) If the Company's

2018

Revenue equals or exceeds 

$32

million and the Company’s

2018

EBITDA equals or exceeds 

$7

million, the Company would award an additional

75,000

shares of common stock. The restrictions on

1/3

of the awarded performance shares will lapse on the first,

second

and

third

anniversaries of the

2018

 Annual Stockholder Meeting, which was held on

June 7, 2018. 

Effective

December 31, 2018

the Company had

not

achieved the milestones relating to Revenue and EBITDA and therefore each of the Officers forfeited

150,000

of the

225,000

restricted shares that had been issued to each of them.

On

September 6, 2018,

the Company entered into restricted stock agreements (“RSAs”) with its Board of Directors intended to provide incentive to ensure certain economic performance of the Company. The shares issuable under the RSAs were valued as of the grant date at

$0.33

per share. The RSAs provided for the issuance of a total of

200,000

restricted shares with the restrictions lapsing on the day prior to the the

2019

Annual Stockholder Meeting to each director. The RSAs include 

75,000

performance related shares of the Company's common stock that are subject to the Company's

2018

Revenue equaling or exceeding 

$30

million and the Company’s

2018

EBITDA equaling or exceeding 

$6

million. Effective

December 31, 2018

the Company had

not

achieved the milestones relating to Revenue and EBITDA and therefore each of the directors forfeited

75,000

of the

200,000

restricted shares that had been issued to each of them.

On

March 14, 2019,

the Company entered into restricted stock award agreements (“RSAs”) with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer intended to provide incentive to the executives to ensure certain economic performance of the Company. Under the terms of the RSAs, each executive was awarded

225,000

performance related restricted shares of the Company's common stock subject to forfeiture restrictions based on certain milestones having been met for the year ended

December 31, 2019

as follows: a)

75,000

performance related shares are subject to individual performance, b)

75,000

performance related shares shall be forfeited if the Company's

2019

revenue does

not

equal or exceed

$32.5

million and the Company’s

2019

EBITDA does

not

equal or exceed

$6.5

million, and c)

75,000

performance related shares shall be forfeited if the Company's

2019

revenue does

not

equal or exceed

$33.9

million and the Company’s

2019

EBITDA does

not

equal or exceed

$6.8

million. The restrictions on

1/3

of the awarded performance shares will lapse on the

1st

of

April

in

2020,

2021

and

2022

provided the individual remains an employee of the Company. The restricted shares granted under the RSAs were valued as of the grant date at

$0.28

per share.

The total combined restricted stock compensation expense recognized, in the statement of operations, during the quarter ended

March 31, 2019

was

$77,610.

As of

March 31, 2019,

there were

2,245,000

outstanding stock options,

100,000

exercised stock options and

1,825,000

restricted stock shares that have been granted under the

2016

Plan. At

March 31, 2019,

there were

7,406,250

 shares available for grant as options or other forms of share-based compensation under the

2016

Plan.

Description of

2009

Equity Incentive Plan

In

2009,

the Company’s Board of Directors and stockholders approved the OmniComm Systems, Inc.

2009

Equity Incentive Plan (the

“2009

Plan”). On

June 16, 2016,

the

2009

Plan terminated upon the approval of the

2016

Plan. The

2009

Plan provided 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 were authorized for issuance.

The maximum term for any option grant under the

2009

Plan was

ten

years from the date of the grant; however, options granted under the

2009

Plan generally expired

five

years from the date of grant. Options granted to employees generally vested either upon grant or in

two

installments. The

first

vesting, which was equal to

50%

of the granted stock options, usually occurred upon completion of

one

full year of employment from the date of grant and the

second

vesting usually occurred on the

second

anniversary of the date of grant. The vesting period typically began 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 lapsed in

three

equal annual installments on the anniversary of the date of grant. Any unvested stock options or restricted shares with restrictions that had

not

lapsed that were granted under the

2009

Plan were forfeited and expired upon termination of employment.

As of

March 31, 2019,

there were

175,000

outstanding options and

3,876,662

restricted stock shares that have been granted under the

2009

Plan. At

March 31, 2019,

there were -

0

- shares available for grant as options or other forms of share-based compensation under the

2009

Plan.

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

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2017		5,275,000		$	0.26		4.09	$	130,475
Granted		570,000			0.28
Exercised		(300,000	)		0.21
Forfeited/cancelled/expired		(2,975,000	)		0.25
Outstanding at December 31, 2018		2,570,000			0.28		3.47	$	16,675
Granted		-0-			-0-
Exercised		-0-			-0-
Forfeited/cancelled/expired		(150,000	)		0.25
Outstanding at March 31, 2019		2,420,000		$	0.28		3.20	$	109,000
Vested and exercisable at March 31, 2019		1,547,500		$	0.26		2.96	$	94,275

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

March 31, 2019.

The total number of shares vesting and the fair value of shares vesting for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively, was:

Fair value of options vesting for the period ended	Number of options vested		Fair value of options vested
March 31, 2019		660,000	$	136,775
March 31, 2018		500,000	$	99,121

Cash received for stock option exercises for the

three

month periods ended

March 31, 2019

and

March 31, 2018

was $-

0

- and $-

0

-, respectively. Due to the Company’s net loss position,

no

income tax benefit has been realized during the

three

month periods ended

March 31, 2019

and

March 31, 2018.

The following table summarizes information concerning options outstanding at

March 31, 2019:

Awards breakdown by price range at March 31, 2019
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.68	$	0.17		150,000		0.68	$	0.17
0.21	to	0.30		1,545,000		3.28		0.26		1,210,000		3.15		0.26
0.31	to	0.50		725,000		3.57		0.34		187,500		3.57		0.34
0.00	to	0.50		2,420,000		3.20	$	0.28		1,547,500		2.96	$	0.26

The following table summarizes information concerning options outstanding at

December 31, 2018:

Awards breakdown by price range at December 31, 2018
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.93	$	0.17		150,000		0.93	$	0.17
0.21	to	0.30		1,695,000		3.54		0.26		550,000		3.15		0.25
0.31	to	0.50		725,000		3.82		0.34		187,500		3.82		0.34
0.00	to	0.50		2,570,000		3.47	$	0.28		887,500		2.92	$	0.25

The weighted average fair value (per share) of options granted during the 

three

month period ended

March 31, 2019

was

$0.00

as

no

options were granted during the period and

$0.23

 during the

three

month period ended

March 31, 2018. 

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

three

month period ended

March 31, 2019

and the year ended

December 31, 2018.

	Stock option assumptions for the period ended
Stock option assumptions	March 31, 2019		December 31, 2018
Risk-free interest rate		2.48%		2.91%
Expected dividend yield		0.0%		0.0%
Expected volatility		102.6%		111.0%
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
	for the period ended March 31,
	2019		2018
Stock options granted during the period	$	-0-	$	0.23
Stock options vested during the period	$	0.21	$	0.20
Stock options forfeited during the period	$	0.21	$	0.19

A summary of the status of the Company’s non-vested shares underlying stock options as of

March 31, 2019 

and changes during the

three

month period ended

March 31, 2019

is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2019		1,682,500	$	0.24
Nonvested shares at March 31, 2019		872,500	$	0.27

As of

March 31, 2019,

$195,598

 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of

1.9

 years.

XML

Note 15 - Subsequent Events

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE 15: SUBSEQUENT EVENTS

Subsequent to

March 31, 2019

the Compan

y repaid

$1,400,000

on its re

volving Line of Credit.

Subsequent to

March 31, 2019 

an employee exercised options that had been granted to him in

2014.

As a result

50,000

common shares were issued to the employee.

Subsequent to

March 

31,

2019

 Cornelis F. Wit, the Company's Executive Chairman, exercised

800,000

warrants with an exercise price of

$0.25

per share, as a result

800,000

shares were issued to Mr. Wit.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

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

2018

 Annual Report filed on Form

10

-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 ("GAAP") 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, the determination of lease term and lease assets and 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

2018

 financial statements to conform to the

2019

 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. The functional currency of the Company’s subsidiary, OmniComm eClinical Solutions Pvt. Ltd. in India, is the Indian Rupee. 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 loss of

$5,430

 and a translation gain of

$1,287

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

respectively.

Revenue from Contract with Customer [Policy Text Block]

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC and eClinical 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 software product, 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") ASC 

606

(“ASC 

606"

). A

five

-step analysis must be met as outlined in ASC 

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

no

refund will be required.

The Company operates in

one

reportable segment which is the delivery of EDC and eClinical 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 TrialOne 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. OmniComm announced that it would decommission its eClinical Suite hosting platform effective

April 30, 2019

as many of the eClinical Suite clients utilizing these hosting services have transitioned to TrialMaster, the eClinical Suite studies have been completed or the studies have transitioned to another hosting platform. Currently there is

one

remaining client utilizing the hosting platform and we are finalizing the transition plan with the client.

Revenues resulting from TrialMaster 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.

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 and eClinical 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

to net

45

 days.

The Company has sold perpetual licenses for EDC and eClinical 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 or  upon completion of milestones. 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 Accounting Standards Update ("ASU")

2016

-

08,

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

(“ASU 

2016

-

08”

). In accordance with ASU 

2016

-

08

 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, 2019

and

March 31, 2018,

respectively, are:

	For the three months ended
Revenue activity	March 31, 2019		March 31, 2018
Set-up fees	$	811,354	$	1,208,554
Change orders		218,622		420,080
Maintenance		1,413,243		1,370,091
Software licenses		2,300,130		3,269,400
Professional services		603,731		431,083
Hosting		368,739		491,264
Total	$	5,715,819	$	7,190,472

Cost of Goods and Service [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

90

days or less. The carrying amount reported in the accompanying consolidated balance sheets approximates fair value.

Receivable [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

$152,867

 as of

March 31, 2019

and

$176,220

 as of

December 31, 2018.

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

three

month period ended

March 31, 2019

and the year ended

December 31, 2018.

	March 31, 2019			December 31, 2018
Beginning of period	$	176,220		$	149,980
Bad debt expense		(23,353	)		41,782
Write-offs		-0-			(15,542	)
End of period	$	152,867		$	176,220

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

March 31, 2019,

$932,167

 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, 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, 2019.

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, 2019,

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 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

7%

of our revenues during the

three

month period ended

March 31, 2019

or approximately

$417,000.

One customer accounted for

11%

of our revenues during the

three

month period ended

March 31, 2018

or approximately

$770,000.

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, 2019

and

March 31, 2018

and the year ended

December 31, 2018.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
March 31, 2019		-0-		0%		1		10%
December 31, 2018		1		13%		1		20%
March 31,2018		1		11%		2		20%

The table below provides revenues from European customers for the

three

month periods ended

March 31, 2019

and

March 31, 2018.

European revenues
For the three months ended
March 31, 2019				March 31, 2018
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,167,460		20%	$	1,068,475		15%

The Company serves its hosting customers from

third

-party web hosting facilities located in the United States and Europe. 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.

Lessee, Leases [Policy Text Block]

LEASES

The Company accounts for leases in accordance with ASU 

No.

2016

-

02,

“Leases (Topic

842

)”, (“ASU

2016

-

02”

). We determine if an arrangement is a lease at inception. As part of the lease determination process, we assess several factors, including, but

not

limited to, assessing our right to control and direct the use of the asset, as well as, assessing if the other party has a substantive substitution right. If we enter into leases that contain multiple components, we identify separate lease components based on whether or

not

the right to use the underlying assets is distinct and either highly dependent or highly interrelated with other rights in the contract. We also evaluate whether there are any non-lease components in the arrangement. If separate lease and non-lease components are identified, we allocate the consideration in the contract to the lease and non-lease components at the lease inception. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in operating lease assets and operating lease liabilities on our balance sheet at

March 31, 2019.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future payments. Our lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

With the adoption of Topic

842

on

January 1, 2019,

the Company recognized operating lease assets and operating lease liabilities of

$1,729,630.

There was

no

impact to the opening accumulated deficit balance as of

January 1, 2019. 

Prior period amounts continue to be reported in accordance with our historic accounting under previous lease guidance, Topic

840.

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 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

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

(“ASC

820”

).

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, 2019,

the Company had

$7,214,630

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

one

month to

6.25

 years. The Company had

$5,302,370

 in deferred revenues that are expected to be recognized in the next

twelve

fiscal months.

Advertising Cost [Policy Text Block]

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were

$185,181

 and

$209,790

 for the

three

month periods ended

March 31, 2019

and

March 31, 2018,

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, 2019

and

March 31, 2018

we spent

$1,089,081,

which represents

19%

of revenue, and

$922,304,

which represents

13%

of revenue, 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 Payment Arrangement [Policy Text Block]

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc.

2016

Equity Incentive Plan (the

“2016

Plan”) was approved at our Annual Meeting of Stockholders 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

(

9

) years commencing on

January 1, 2017

and ending on (and including)

January 1, 2025,

in an amount equal to

five

percent (

5%

) of the total number of shares authorized under the

2016

Plan. As of

March 31, 2019

11,576,250

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 Stockholders 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

14,

Equity Incentive Plans”.

The Company accounts for its employee equity incentive plans underASC

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

In

February 2016,

the FASB issued ASU 

No.

2016

-

02,

“Leases (Topic

842

)”, (“ASU

2016

-

02”

). ASU

2016

-

02

requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than

12

months. On

January 1, 2019,

we adopted ASU

2016

-

02,

as amended, which supersedes the lease accounting guidance under Topic

840,

and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and

not

restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. 

In

August 2018,

the FASB issued ASU

2018

-

15,

Intangibles - Goodwill and other - Internal-Use Software (Topic

350

-

40

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic

350

-

40

to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have 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.

XML

Note 2 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	For the three months ended
Revenue activity	March 31, 2019		March 31, 2018
Set-up fees	$	811,354	$	1,208,554
Change orders		218,622		420,080
Maintenance		1,413,243		1,370,091
Software licenses		2,300,130		3,269,400
Professional services		603,731		431,083
Hosting		368,739		491,264
Total	$	5,715,819	$	7,190,472

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	March 31, 2019			December 31, 2018
Beginning of period	$	176,220		$	149,980
Bad debt expense		(23,353	)		41,782
Write-offs		-0-			(15,542	)
End of period	$	152,867		$	176,220

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

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
March 31, 2019		-0-		0%		1		10%
December 31, 2018		1		13%		1		20%
March 31,2018		1		11%		2		20%

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

European revenues
For the three months ended
March 31, 2019				March 31, 2018
European revenues		% of Total revenues		European revenues		% of Total revenues
$	1,167,460		20%	$	1,068,475		15%

XML

Note 3 - Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Anti-dilutive security	March 31, 2019		March 31, 2018
Employee stock options		2,420,000		1,295,000
Warrants		19,020,000		12,950,000
Convertible notes		11,940,000		11,980,000
Shares issuable for accrued interest		115,677		118,224
Total		33,495,677		26,343,224

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the three months ended
	March 31, 2019								March 31, 2018
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,483		149,653,916	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			139		3,039,750		-0-
Diluted EPS	$	(1,266,525	)		157,341,946	$	(0.01	)	$	593,622		152,693,666	$	0.00

XML

Note 4 - Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31, 2019						December 31, 2018
Description	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	3,105,515	$	2,264,773	$	840,742	$	3,067,069	$	2,202,166	$	864,903		5
Leasehold improvements		138,383		108,926		29,457		136,648		106,362		30,286		5
Computer software		2,653,982		2,051,411		602,571		2,426,339		1,991,842		434,497		3
Office furniture		168,839		141,271		27,568		169,120		138,491		30,629		5
Total	$	6,066,719	$	4,566,381	$	1,500,338	$	5,799,176	$	4,438,861	$	1,360,315

XML

Note 5 - Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

	March 31, 2019						December 31, 2018
Asset	Cost		Accumulated amortization		Net book value		Cost		Accumulated amortization		Net book value		Estimated useful life (years)
eClinical Suite customer lists	$	1,392,701	$	1,392,701	$	-0-	$	1,392,701	$	1,392,701	$	-0-		3
Promasys B.V. customer lists		111,057		111,057		-0-		113,220		113,220		-0-		15
Promasys B.V. software code		72,837		72,837		-0-		72,837		72,837		-0-		5
Promasys B.V. URLs/website		56,090		56,090		-0-		57,182		57,182		-0-		3
Acuity software code		1,052,403		409,268		643,135		1,052,403		321,568		730,835		3
Total	$	2,685,088	$	2,041,953	$	643,135	$	2,688,343	$	1,957,508	$	730,835

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

Year	Amortization
2019	$	263,101
2020		350,801
2021		29,233
Total	$	643,135

XML

Note 6 - Accounts Payable and Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

Account	March 31, 2019		December 31, 2018
Accounts payable	$	473,266	$	895,145
Accrued payroll and related costs		541,369		851,530
Other accrued expenses		142,544		250,570
Accrued interest		72,913		72,913
Total accounts payable and accrued expenses	$	1,230,092	$	2,070,158

XML

Note 7 - Line of Credit, Notes Payable and Liquidity (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Debt [Table Text Block]

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		March 31, 2019		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(98,548	)		-0-		-0-
Total				$	557,500	$	-0-	$	458,952		$	-0-	$	-0-

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2018		Current		term			Current		term
6/30/2016	4/1/2020		10%	$	420,000	$	-0-	$	420,000		$	-0-	$	-0-
6/30/2016	4/1/2020		12%		137,500		-0-		137,500			-0-		-0-
Discount on notes payable							-0-		(123,184	)		-0-		-0-
Total				$	557,500	$	-0-	$	434,316		$	-0-	$	-0-

XML

Note 8 - Convertible Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

Year	Amount
2019	$	-0-
2020		5,770,000
2021		200,000
Total	$	5,970,000

Convertible Debt [Member]

Notes Tables

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

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		March 31, 2019		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2018		Related		Non related		Related		Non related
8/29/2008	4/1/2020		10%	$	1,770,000	$	-0-	$	-0-	$	1,770,000	$	-0-
12/16/2008	4/1/2020		12%		4,000,000		-0-		-0-		4,000,000		-0-
12/16/2008	4/1/2021		12%		200,000		-0-		-0-		-0-		200,000
Total				$	5,970,000	$	-0-	$	-0-	$	5,770,000	$	200,000

XML

Note 9 - Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

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

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	907,498	$	-0-	$	-0-	$	907,498
Warrant liability		1,604,616		-0-		-0-		1,604,616
Total of derivative liabilities	$	2,512,114	$	-0-	$	-0-	$	2,512,114

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Derivatives: (1) (2)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Conversion feature liability	$	706,339	$	-0-	$	-0-	$	706,339
Warrant liability		1,288,899		-0-		-0-		1,288,899
Total of derivative liabilities	$	1,995,238	$	-0-	$	-0-	$	1,995,238

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

	Significant valuation assumptions for derivative instruments at March 31, 2019
Risk free interest rate	2.55%	to	2.55%
Dividend yield		0.00%
Expected volatility	88.4%	to	95.4%
Expected life (range in years)
Conversion feature liability	1.01	to	2.01
Warrant liability	0.00	to	2.01

	Significant valuation assumptions for derivative instruments at December 31, 2018
Risk free interest rate	2.70%	to	2.70%
Dividend yield		0.00%
Expected volatility	92.2%	to	97.0%
Expected life (range in years)
Conversion feature liability	1.25	to	2.25
Warrant liability	0.00	to	2.25

Fair Value Measurements, Nonrecurring [Table Text Block]

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2018		March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	-0-	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		-0-		-0-		-0-		-0-		72,943
Acuity software code (4)	$	730,835		643,135		-0-		-0-		1,052,403
Total	$	730,835	$	643,135	$	-0-	$	-0-	$	1,261,599

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
Acquired assets (1)	December 31, 2017		December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Promasys B.V. customer list (2) (3)	$	85,786	$	-0-	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (2)		12,139		-0-		-0-		-0-		72,943
Acuity software code (4)		-0-		730,835		-0-		-0-		1,052,403
Total	$	97,925	$	730,835	$	-0-	$	-0-	$	1,261,599

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

	Other income/(expense)
	For the three months ended
	March 31, 2019			March 31, 2018
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gains/(losses) from changes in derivative liabilities at the reporting date	$	(583,657	)	$	28,416
Total unrealized and realized gains/(losses) included in earnings	$	(583,657	)	$	28,416

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

	Level 3 financial liabilities at fair value
									Net		Reclassification
									purchases,		of conversion
	Balance,								issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized			and		associated with		end
Derivatives:	of period			gains/(losses)		gains/(losses)			settlements		convertible debt		of period
Conversion feature liability	$	(706,339	)	$	-0-	$	(201,159	)	$	-0-	$	-0-	$	(907,498	)
Warrant liability		(1,288,899	)		-0-		(382,498	)		66,781		-0-		(1,604,616	)
Total of derivative liabilities	$	(1,995,238	)	$	-0-	$	(583,657	)	$	66,781	$	-0-	$	(2,512,114	)

	Level 3 financial liabilities at fair value
								Net		Reclassification
								purchases,		of conversion
	Balance,							issuances		feature liability		Balance,
	beginning			Net realized		Net unrealized		and		associated with		end
Derivatives:	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of year
Conversion feature liability	$	(1,685,947	)	$	-0-	$	969,108	$	-0-	$	10,500	$	(706,339	)
Warrant liability		(3,440,799	)		-0-		2,142,652		9,248		-0-		(1,288,899	)
Total of derivative liabilities	$	(5,126,746	)	$	-0-	$	3,111,760	$	9,248	$	10,500	$	(1,995,238	)

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Note 10 - Leases (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Lease, Cost [Table Text Block]

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating lease assets	$	1,569,465
Current lease liability	Current operating lease liability		598,108
Non-current lease liability	Long term operating lease liability		971,357
Total lease liabilities		$	1,569,465

	March 31, 2019
Weighted-average remaining lease term (in years)
Operating leases		3.30
Finance leases		2.12
Weighted-average discount rate
Operating leases		4.50%
Finance leases		6.94%

	For the three months ended March 31, 2019
Operating lease cost	$	167,888
Variable lease cost (1)		140,910
Total lease cost	$	308,798
(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate

	For the three months ended March 31, 2019
Cash paid for operating lease cost	$	167,942
Operating lease assets obtained in exchange for operating lease liabilities	$	1,729,630

Lessee, Operating and Finance Lease, Liability, Maturity [Table Text Block]

Year	Payments
2019	$	468,042
2020		476,293
2021		340,478
2022		340,746
Thereafter		76,446
Total undiscounted lease payments		1,702,005
Less: amount representing interest		(132,540	)
Present value of lease payments	$	1,569,465

Year	Payments
2019	$	97,552
2020		130,069
2021		51,898
Total minimum finance lease payments		279,519
Less: amount representing interest		(19,034	)
Present value of minimum finance lease payments	$	260,485

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

Year	Payments
2019	$	655,901
2020		414,973
2021		340,029
2022		340,270
Thereafter		76,243
Total	$	1,827,416

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Note 13 - Stockholders' (Deficit) (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule Of Dividends In Arrears [Table Text Block]

	Cumulative arrearage as of				Cumulative arrearage per share as of
	March 31,				March 31,
Series of preferred stock	2019		2018		2019		2018
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	$	2,081,980	$	2,081,980

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

March 31, 2019

March 31, 2019

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

19,020,000

0.97

$

0.48

19,020,000

$

0.48

December 31, 2018

December 31, 2018

Warrants outstanding

Warrants exercisable

Weighted average

Weighted average

Weighted average

Range of exercise price

Number outstanding

remaining contractual life

exercise price

Number exercisable

exercise price

$0.25

–

$0.60

22,020,000

1.06

$

0.45

22,020,000

$

0.45

Share-based Payment Arrangement, Activity [Table Text Block]

	Weighted average grant date fair value
	for the period ended March 31,
	2019		2018
Stock options granted during the period	$	-0-	$	0.23
Stock options vested during the period	$	0.21	$	0.20
Stock options forfeited during the period	$	0.21	$	0.19

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

	Foreign currency translation			Accumulated other comprehensive income/(loss)
Balance at December 31, 2017	$	(397,237	)	$	(397,237	)
2018 Activity		(39,268	)		(39,268	)
Balance at December 31, 2018		(436,505	)		(436,505	)
2019 Activity		(5,430	)		(5,430	)
Balance at March 31, 2019	$	(441,935	)	$	(441,935	)

Warrant [Member]

Notes Tables

Share-based Payment Arrangement, Activity [Table Text Block]

Warrants
Balance at December 31, 2017	27,020,000
Issued	-0-
Exercised	(4,000,000	)
Expired/forfeited	(1,000,000	)
Balance at December 31, 2018	22,020,000
Issued	-0-
Exercised	(2,800,000	)
Expired/forfeited	(200,000	)
Balance at March 31, 2019	19,020,000
Warrants exercisable at March 31, 2019	19,020,000
Weighted average fair value of warrants granted during 2019	n/a

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Note 14 - Equity Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2017		5,275,000		$	0.26		4.09	$	130,475
Granted		570,000			0.28
Exercised		(300,000	)		0.21
Forfeited/cancelled/expired		(2,975,000	)		0.25
Outstanding at December 31, 2018		2,570,000			0.28		3.47	$	16,675
Granted		-0-			-0-
Exercised		-0-			-0-
Forfeited/cancelled/expired		(150,000	)		0.25
Outstanding at March 31, 2019		2,420,000		$	0.28		3.20	$	109,000
Vested and exercisable at March 31, 2019		1,547,500		$	0.26		2.96	$	94,275

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

Fair value of options vesting for the period ended	Number of options vested		Fair value of options vested
March 31, 2019		660,000	$	136,775
March 31, 2018		500,000	$	99,121

Share-based Payment Arrangement, Option, Exercise Price Range [Table Text Block]

Awards breakdown by price range at March 31, 2019
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.68	$	0.17		150,000		0.68	$	0.17
0.21	to	0.30		1,545,000		3.28		0.26		1,210,000		3.15		0.26
0.31	to	0.50		725,000		3.57		0.34		187,500		3.57		0.34
0.00	to	0.50		2,420,000		3.20	$	0.28		1,547,500		2.96	$	0.26

Awards breakdown by price range at December 31, 2018
			Outstanding						Vested
Strike price range ($)			Outstanding stock options		Weighted average remaining contractual life		Weighted average outstanding strike price		Vested stock options		Weighted average remaining vested contractual life		Weighted average vested strike price
0.00	to	0.20		150,000		0.93	$	0.17		150,000		0.93	$	0.17
0.21	to	0.30		1,695,000		3.54		0.26		550,000		3.15		0.25
0.31	to	0.50		725,000		3.82		0.34		187,500		3.82		0.34
0.00	to	0.50		2,570,000		3.47	$	0.28		887,500		2.92	$	0.25

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

	Stock option assumptions for the period ended
Stock option assumptions	March 31, 2019		December 31, 2018
Risk-free interest rate		2.48%		2.91%
Expected dividend yield		0.0%		0.0%
Expected volatility		102.6%		111.0%
Expected life of options (in years)		5		5

Share-based Payment Arrangement, Activity [Table Text Block]

	Weighted average grant date fair value
	for the period ended March 31,
	2019		2018
Stock options granted during the period	$	-0-	$	0.23
Stock options vested during the period	$	0.21	$	0.20
Stock options forfeited during the period	$	0.21	$	0.19

Schedule of Nonvested Share Activity [Table Text Block]

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2019		1,682,500	$	0.24
Nonvested shares at March 31, 2019		872,500	$	0.27

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Note 1 - Organization and Nature of Operations (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Research and Development Expense, Total	$ 1,089,081	$ 922,304
Research and Development Expense, Percent of Revenue	19.00%	13.00%

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Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jan. 01, 2019	Jun. 16, 2016	Jul. 10, 2009
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Total	$ (5,430)	$ 1,287
Accounts Receivable, Allowance for Credit Loss, Current	152,867		$ 176,220
Cash, Uninsured Amount	932,167
Revenues, Total	5,715,819	7,190,472
Operating Lease, Right-of-Use Asset	1,569,465		0
Deferred Revenue, Total	7,214,630
Deferred Revenue, Current, Total	5,302,370		$ 6,457,319
Advertising Expense	185,181	209,790
Research and Development Expense, Total	$ 1,089,081	$ 922,304
Research and Development Expense, Percent of Revenue	19.00%	13.00%
Operating Lease, Liability, Total	$ 1,569,465
The 2016 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	11,576,250				10,000,000
Common Stock Available for Issuance Increasing Period	9 years
Common Stock Available for Issuance, Annual Increase Percent	5.00%
Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						7,500,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset				$ 1,729,630
Operating Lease, Liability, Total				$ 1,730,907
Leasehold Improvements Computers Equipment And Furniture [Member]
Property, Plant and Equipment, Useful Life	5 years
Software Development [Member]
Property, Plant and Equipment, Useful Life	3 years
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Concentration Risk, Percentage	0.00%	11.00%	13.00%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer 1 [Member]
Concentration Risk, Percentage	7.00%	11.00%
Revenues, Total	$ 417,000	$ 770,000
Minimum [Member]
Term Of Software License	3 years
Deferred Revenue, Service Contract Term	30 days
Maximum [Member]
Term Of Software License	5 years
Deferred Revenue, Service Contract Term	6 years 91 days

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Note 2 - Summary of Significant Accounting Policies - Revenue by Business Activity (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues, Total	$ 5,715,819	$ 7,190,472
Set Up Fees [Member]
Revenues, Total	811,354	1,208,554
Change Orders [Member]
Revenues, Total	218,622	420,080
Maintenance 1 [Member]
Revenues, Total	1,413,243	1,370,091
Software Licenses [Member]
Revenues, Total	2,300,130	3,269,400
Professional Services [Member]
Revenues, Total	603,731	431,083
Hosting [Member]
Revenues, Total	$ 368,739	$ 491,264

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Note 2 - Summary of Significant Accounting Policies - Allowance for Doubtful Account Summary (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Beginning of period	$ 176,220	$ 149,980	$ 149,980
Bad debt expense	(23,353)	$ (3,387)	41,782
Write-offs	0		(15,542)
End of period	$ 152,867		$ 176,220

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Note 2 - Summary of Significant Accounting Policies - Customer Concentration (Details) - Customer Concentration Risk [Member]	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Revenue Benchmark [Member]
Number of customers	0	1	1
Concentration Risk, Percentage	0.00%	11.00%	13.00%
Accounts Receivable [Member]
Number of customers	1	2	1
Concentration Risk, Percentage	10.00%	20.00%	20.00%

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Note 2 - Summary of Significant Accounting Policies - Revenue From European Operations (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Revenues	$ 5,715,819	$ 7,190,472
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Concentration risk, percentage	0.00%	11.00%	13.00%
Reportable Geographical Components [Member] | Europe [Member]
Revenues	$ 1,167,460	$ 1,068,475
Reportable Geographical Components [Member] | Europe [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Concentration risk, percentage	20.00%	15.00%

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Note 3 - Earnings (Loss) Per Share (Details Textual) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Weighted Average Number of Shares Outstanding, Basic, Total	157,341,946	149,653,916
Common Stock, Shares, Outstanding, Ending Balance	158,278,341		155,368,647
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	33,495,677	26,343,224
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 0.26
Debt Instrument, Convertible, Conversion Price	0.50
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	0.17
Class of Warrant or Right, Exercise Price of Warrants or Rights	0.25		$ 0.25
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	0.34
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.60		$ 0.60
Restricted Stock [Member]
Common Stock, Shares, Outstanding, Ending Balance	1,825,000	0

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Note 3 - Earnings (Loss) Per Share - Reconciliation of Anti-dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Anti-dilutive Security (in shares)	33,495,677	26,343,224
Share-based Payment Arrangement, Option [Member]
Anti-dilutive Security (in shares)	2,420,000	1,295,000
Warrant [Member]
Anti-dilutive Security (in shares)	19,020,000	12,950,000
Convertible Debt Securities [Member]
Anti-dilutive Security (in shares)	11,940,000	11,980,000
Shares Issuable For Accrued Interest [Member]
Anti-dilutive Security (in shares)	115,677	118,224

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Note 3 - Earnings (Loss) Per Share - Computation of Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Basic EPS, Income (loss) numerator	$ (1,266,525)	$ 593,483
Weighted Average Number of Shares Outstanding, Basic, Total	157,341,946	149,653,916
Basic EPS, Per-share amount (in dollars per share)	$ (0.01)	$ 0
Effect of dilutive securities, Income (loss) numerator	$ 0	$ 139
Effect of dilutive securities, Shares denominator (in shares)	0	3,039,750
Effect of dilutive securities, Per-share amount (in dollars per share)	$ 0	$ 0
Diluted EPS, Income (loss) numerator	$ (1,266,525)	$ 593,622
Diluted EPS, Shares denominator (in shares)	157,341,946	152,693,666
Diluted EPS, Per-share amount (in dollars per share)	$ (0.01)	$ 0

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Note 4 - Property and Equipment, Net (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Depreciation, Total	$ 128,800	$ 77,776

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Note 4 - Property and Equipment, Net - Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Cost	$ 6,066,719	$ 5,799,176
Accumulated Depreciation	4,566,381	4,438,861
Net Book Value	1,500,338	1,360,315
Computer And Office Equipment [Member]
Cost	3,105,515	3,067,069
Accumulated Depreciation	2,264,773	2,202,166
Net Book Value	$ 840,742	864,903
Estimated Useful Lives (Year)	5 years
Leasehold Improvements [Member]
Cost	$ 138,383	136,648
Accumulated Depreciation	108,926	106,362
Net Book Value	$ 29,457	30,286
Estimated Useful Lives (Year)	5 years
Software and Software Development Costs [Member]
Cost	$ 2,653,982	2,426,339
Accumulated Depreciation	2,051,411	1,991,842
Net Book Value	$ 602,571	434,497
Estimated Useful Lives (Year)	3 years
Furniture and Fixtures [Member]
Cost	$ 168,839	169,120
Accumulated Depreciation	141,271	138,491
Net Book Value	$ 27,568	$ 30,629
Estimated Useful Lives (Year)	5 years

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Note 5 - Intangible Assets, Net (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
Impairment of Intangible Assets, Finite-lived		$ 79,634
Amortization of Intangible Assets, Total	$ 87,700		$ 64,149

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Note 5 - Intangible Assets, Net - Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Cost	$ 2,685,088	$ 2,688,343
Accumulated Amortization	2,041,953	1,957,508
Net Book Value	643,135	730,835
eClinical Customer List [Member]
Cost	1,392,701	1,392,701
Accumulated Amortization	1,392,701	1,392,701
Net Book Value	$ 0	0
Finite-Lived Intangible Asset, Useful Life	3 years
Promasys B.V. Customer List [Member]
Cost	$ 111,057	113,220
Accumulated Amortization	111,057	113,220
Net Book Value	$ 0	0
Finite-Lived Intangible Asset, Useful Life	15 years
Promasys B.V. Software Code [Member]
Cost	$ 72,837	72,837
Accumulated Amortization	72,837	72,837
Net Book Value	$ 0	0
Finite-Lived Intangible Asset, Useful Life	5 years
Promasys B.V. URLs/Website [Member]
Cost	$ 56,090	57,182
Accumulated Amortization	56,090	57,182
Net Book Value	$ 0	0
Finite-Lived Intangible Asset, Useful Life	3 years
Acuity Software Code [Member]
Cost	$ 1,052,403	1,052,403
Accumulated Amortization	409,268	321,568
Net Book Value	$ 643,135	$ 730,835
Finite-Lived Intangible Asset, Useful Life	3 years

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Note 5 - Intangible Assets, Net - Intangible Assets, Future Amortization Expense (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
2019	$ 263,101
2020	350,801
2021	29,233
Total	$ 643,135	$ 730,835

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Note 6 - Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Accounts payable	$ 473,266	$ 895,145
Accrued payroll and related costs	541,369	851,530
Other accrued expenses	142,544	250,570
Accrued interest	72,913	72,913
Total accounts payable and accrued expenses	$ 1,230,092	$ 2,070,158

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Note 7 - Line of Credit, Notes Payable and Liquidity (Details Textual) - USD ($)								3 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 27, 2018	Aug. 31, 2017	Dec. 05, 2016	Jun. 30, 2016	Feb. 29, 2016	Mar. 18, 2013	Mar. 31, 2019	Dec. 31, 2018	Feb. 03, 2015	Dec. 18, 2013
Line of Credit Facility, Maximum Borrowing Capacity							$ 2,000,000			$ 5,000,000	$ 4,000,000
Debt Instrument, Interest Rate, Stated Percentage							2.00%
Debt Instrument, Periodic Payment, Interest							$ 9,500
Long-term Line of Credit, Total								$ 2,500,000
Line of Credit Facility, Interest Rate at Period End								4.50%
Class of Warrant or Right, Exercised During Period								(2,800,000)	(4,000,000)
Matures on April 1, 2019 [Member] | Chief Executive Officer and Director Mr. Wit [Member]
Debt Instrument, Interest Rate, Stated Percentage						12.00%
Debt Instrument, Face Amount						$ 450,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		2,000,000				1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.25				$ 0.25
Extinguishment of Debt, Amount			$ 400,000			$ 450,000
Warrants Sold During the Period				1,000,000
Repayments of Long-term Debt, Total			50,000
Warrants and Rights Exercised		$ 400,000
Class of Warrant or Right, Exercised During Period		1,600,000
Warrants and Rights Outstanding						325,689
Debt Instrument, Fair Value Disclosure, Total						$ 124,311
Amortization Period of Warrant Liabilities						3 years 30 days
Matures April 1, 2020 I [Member] | Investor [Member]
Debt Instrument, Interest Rate, Stated Percentage					12.00%
Debt Instrument, Face Amount					$ 372,500
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					1,490,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.25
Repayments of Long-term Debt, Total	$ 145,000		$ 90,000
Warrants and Rights Outstanding					$ 246,921
Debt Instrument, Fair Value Disclosure, Total					$ 125,579
Amortization Period of Warrant Liabilities					3 years 270 days
Matures April 1, 2020 II [Member] | Investor [Member]
Debt Instrument, Interest Rate, Stated Percentage					10.00%
Debt Instrument, Face Amount					$ 420,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					1,680,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 0.25
Warrants and Rights Outstanding					$ 278,408
Debt Instrument, Fair Value Disclosure, Total					$ 141,592
Amortization Period of Warrant Liabilities					3 years 270 days

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Note 7 - Line of Credit, Notes Payable and Liquidity - Notes Payable (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 18, 2013
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Ending principal	$ 557,500	$ 557,500
Discount on notes payable
Short-term Debt [Member] | Non-Related Party [Member]
Ending principal	0	0
Discount on notes payable	0	0
Short-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Discount on notes payable	0	0
Long-term Debt [Member] | Non-Related Party [Member]
Ending principal	458,952	434,316
Discount on notes payable	(98,548)	(123,184)
Long-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Discount on notes payable	$ 0	$ 0
Notes Payable, Matures April 1, 2020 I [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	10.00%	10.00%
Ending principal	$ 420,000	$ 420,000
Notes Payable, Matures April 1, 2020 I [Member] | Short-term Debt [Member] | Non-Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2020 I [Member] | Short-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2020 I [Member] | Long-term Debt [Member] | Non-Related Party [Member]
Ending principal	420,000	420,000
Notes Payable, Matures April 1, 2020 I [Member] | Long-term Debt [Member] | Related Party [Member]
Ending principal	$ 0	$ 0
Notes Payable, Matures April 1, 2020 II [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Ending principal	$ 137,500	$ 137,500
Notes Payable, Matures April 1, 2020 II [Member] | Short-term Debt [Member] | Non-Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2020 II [Member] | Short-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2020 II [Member] | Long-term Debt [Member] | Non-Related Party [Member]
Ending principal	137,500	137,500
Notes Payable, Matures April 1, 2020 II [Member] | Long-term Debt [Member] | Related Party [Member]
Ending principal	$ 0	$ 0

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Note 8 - Convertible Notes Payable (Details Textual) - USD ($)									1 Months Ended	3 Months Ended
	Dec. 27, 2018	Sep. 30, 2018	Jun. 30, 2018	Aug. 31, 2017	Dec. 14, 2016	Nov. 19, 2015	May 01, 2015	Dec. 31, 1999	Aug. 29, 2008	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jun. 30, 2017	Jun. 30, 2016	Feb. 29, 2016	Jun. 30, 2015	May 07, 2015	Apr. 30, 2015	Apr. 27, 2015	Jan. 31, 2015	Jul. 31, 2014	Apr. 28, 2014	Apr. 21, 2014	Dec. 31, 2013	Mar. 18, 2013	Mar. 12, 2013	Mar. 06, 2013	Feb. 27, 2013	Feb. 22, 2013	Sep. 30, 2009	Dec. 16, 2008	Jun. 30, 2008	Jun. 30, 2004
Debt Instrument, Interest Rate, Stated Percentage																									2.00%
Convertible Notes Payable, Total										$ 5,970,000		$ 5,970,000
Debt Instrument, Convertible, Conversion Price										$ 0.50
Interest Paid, Excluding Capitalized Interest, Operating Activities										$ 245,256	$ 254,092
Chief Executive Officer [Member]
Debt Instrument, Interest Rate, Stated Percentage															12.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	2,000,000														1,800,000
Extinguishment of Debt, Amount	$ 400,000
Convertible Notes 10% [Member]
Debt Instrument, Interest Rate, Stated Percentage								10.00%
Convertible Notes Payable, Total								$ 862,500
Payments of Debt Issuance Costs								119,625
Proceeds from Issuance of Debt								$ 742,875
Debt Instrument, Convertible, Conversion Price																																	$ 1.25
Repayments of Convertible Debt		$ 50,000
Interest Paid, Excluding Capitalized Interest, Operating Activities		$ 96,949
Debt Conversion, Converted Instrument, Amount										$ 862,500
Debt Conversion, Converted Instrument, Shares Issued										1,495,179
Long-term Debt, Gross										$ 0
Convertible Debentures Issued August 2008 [Member]
Convertible Notes Payable, Total									$ 2,270,000
Convertible Debentures Issued August 2008 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member]
Debt Instrument, Interest Rate, Stated Percentage									10.00%
Debt Instrument, Convertible, Conversion Price									$ 0.50
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									4,540,000
Convertible Debentures Issued August 2008 [Member] | Mr. van Kesteren and Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																													$ 150,000	$ 1,920,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																				$ 1,770,000									1,770,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. van Kesteren [Member] | Non-Related Party [Member]
Convertible Notes Payable, Total																					$ 150,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. van Kesteren [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable, Total																$ 150,000
Convertible Debentures [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member]
Convertible Notes Payable, Total																							$ 150,000
Convertible Debentures [Member] | Director Mr. Wit [Member]
Convertible Notes Payable, Total																																$ 510,000
Debt Conversion, Converted Instrument, Amount									$ 510,000
Matures April 1, 2020 I [Member] | Director Mr. Wit [Member]
Convertible Notes Payable, Total														$ 4,055,000
Repayments of Convertible Debt				$ 55,000
Matures April 1, 2020 I [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable, Total														1,770,000
Notes Payable, Matures April 1, 2018 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member]
Convertible Notes Payable, Total														160,000
Repayments of Convertible Debt					$ 160,000
Notes Payable, Matures April 1, 2018 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable, Total														150,000
Matures on April 1, 2019 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable, Total													$ 150,000
Repayments of Convertible Debt			$ 150,000
Convertible Debentures Issued December 2008 [Member]
Convertible Notes Payable, Total																															$ 5,075,000
Convertible Debentures Issued December 2008 [Member] | Non-Related Party [Member]
Convertible Notes Payable, Total																					$ 160,000
Convertible Debentures Issued December 2008 [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																								$ 360,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. Wit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						1,680,000
Extinguishment of Debt, Amount						$ 420,000
Class of Warrant or Right Cancelled During the Period						1,680,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																				$ 4,475,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. van Kesteren [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total							$ 160,000																	$ 160,000
Convertible Debentures Issued December 2008 [Member] | Chief Executive Officer, Director, Chief Operating Officer, Chairman, Chief Technology Officer, Chief Financial Officer and Directors [Member]
Debt Instrument, Interest Rate, Stated Percentage																															12.00%
Debt Instrument, Convertible, Conversion Price																															$ 0.50
Class of Warrant or Right, Number of Securities Called by Warrants or Rights																															10,150,000
Convertible Debentures Issued December 2008 [Member] | Officers, Directors and Affiliate [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																														$ 4,980,000
Convertible Debentures Issued December 2008 [Member] | Lenders [Member]
Convertible Notes Payable, Total																$ 100,000			$ 200,000
Convertible Debentures Issued December 2008 [Member] | Lenders [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																						$ 100,000				$ 100,000	$ 200,000		4,505,000
Convertible Debentures Issued December 2008 [Member] | Chief Executive Officer [Member]
Convertible Notes Payable, Total																													4,475,000
Convertible Debentures Issued December 2008 [Member] | Chief Operating Officer [Member]
Convertible Notes Payable, Total																													25,000
Convertible Debentures Issued December 2008 [Member] | Chairman and Chief Technology Officer [Member]
Convertible Notes Payable, Total																													$ 5,000
Convertible Debentures Issued December 2008 [Member] | Former Director [Member]
Convertible Notes Payable, Total																	$ 15,000
Repayments of Convertible Debt					$ 15,000
Convertible Debentures Issued December 2008 [Member] | Former Director [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total																												$ 15,000
Convertible Debentures Issued December 2008 [Member] | President [Member]
Convertible Notes Payable, Total																		$ 25,000
Convertible Debentures Issued December 2008 [Member] | Chief Financial Officer [Member]
Repayments of Related Party Debt							$ 5,000
Matures April 1, 2020 II [Member] | Lenders [Member]
Convertible Notes Payable, Total														$ 100,000
Repayments of Debt				$ 100,000
Matures April 2021 [Member] | Lenders [Member]
Convertible Notes Payable, Total													$ 200,000

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Note 8 - Convertible Notes Payable - Convertible Debt (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 18, 2013
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Convertible Notes Payable, Total	$ 5,970,000	$ 5,970,000
Convertible notes payable, related parties, long term	5,770,000	5,770,000
Convertible notes payable, long term	200,000	200,000
Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	5,770,000	5,770,000
Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 200,000	$ 200,000
Convertible Notes Payable 10% $150,000 [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	10.00%	10.00%
Convertible Notes Payable, Total	$ 1,770,000	$ 1,770,000
Convertible Notes Payable 10% $150,000 [Member] | Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	1,770,000	1,770,000
Convertible Notes Payable 10% $150,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 0	$ 0
Convertible Notes Payable12 Percent, 200,000 [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Convertible Notes Payable, Total	$ 4,000,000	$ 4,000,000
Convertible Notes Payable12 Percent, 200,000 [Member] | Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	4,000,000	4,000,000
Convertible Notes Payable12 Percent, 200,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 0	$ 0
Convertible Notes Payable 12 Percent,100,000 [Member]
Maturity date	Apr. 01, 2021	Apr. 01, 2021
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Convertible Notes Payable, Total	$ 200,000	$ 200,000
Convertible Notes Payable 12 Percent,100,000 [Member] | Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	0	0
Convertible Notes Payable 12 Percent,100,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 200,000	$ 200,000

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Note 8 - Convertible Notes Payable - Convertible Debt Maturity Payments (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Total	$ 5,970,000	$ 5,970,000
Convertible Debt [Member]
2019	0
2020	5,770,000
2021	200,000
Total	$ 5,970,000

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Note 9 - Fair Value Measurement (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Jun. 30, 2018
Impairment of Intangible Assets, Finite-lived		$ 79,634
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	3 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	15 years

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Note 9 - Fair Value Measurement - Fair Value of Liabilities Measured on a Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($)		Mar. 31, 2019	[2]	Dec. 31, 2018	[3]
Derivative Liability fair value	[1]	$ 2,512,114		$ 1,995,238
Fair Value, Inputs, Level 1 [Member]
Derivative Liability fair value	[1]	0		0
Fair Value, Inputs, Level 2 [Member]
Derivative Liability fair value	[1]	0		0
Fair Value, Inputs, Level 3 [Member]
Derivative Liability fair value	[1]	2,512,114		1,995,238
Conversion Feature Liability [Member]
Derivative Liability fair value	[1]	907,498		706,339
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Liability fair value	[1]	0		0
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Liability fair value	[1]	0		0
Conversion Feature Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Liability fair value	[1]	907,498		706,339
Warrant Liability [Member]
Derivative Liability fair value	[1]	1,604,616		1,288,899
Warrant Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative Liability fair value	[1]	0		0
Warrant Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative Liability fair value	[1]	0		0
Warrant Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative Liability fair value	[1]	$ 1,604,616		$ 1,288,899

[1] The fair value at the measurement date is equal to the 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 period ended March 31, 2019.

[3] 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, 2018.

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Note 9 - Fair Value Measurement - Fair Value Assumptions (Details)	Mar. 31, 2019	Dec. 31, 2018
Measurement Input, Expected Dividend Rate [Member]
Risk free interest rate	0	0
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Risk free interest rate	0.0255	0.027
Minimum [Member] | Measurement Input, Price Volatility [Member]
Risk free interest rate	0.884	0.922
Minimum [Member] | Measurement Input, Expected Term [Member] | Conversion Feature Liability [Member]
Risk free interest rate	1.01	1.25
Minimum [Member] | Measurement Input, Expected Term [Member] | Warrant Liability [Member]
Risk free interest rate	0	0
Maximum [Member] | Measurement Input, Risk Free Interest Rate [Member]
Risk free interest rate	0.0255	0.027
Maximum [Member] | Measurement Input, Price Volatility [Member]
Risk free interest rate	0.954	0.97
Maximum [Member] | Measurement Input, Expected Term [Member] | Conversion Feature Liability [Member]
Risk free interest rate	2.01	2.25
Maximum [Member] | Measurement Input, Expected Term [Member] | Warrant Liability [Member]
Risk free interest rate	2.01	2.25

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Note 9 - Fair Value Measurement - Fair Value of Assets Acquired on Non-recurring Basis (Details) - Fair Value, Nonrecurring [Member] - USD ($)		Mar. 31, 2019		Dec. 31, 2018		Dec. 31, 2017
Reported Value Measurement [Member]
Acquired assets	[1]	$ 643,135		$ 730,835		$ 97,925
Reported Value Measurement [Member] | Promasys B.V. Customer List [Member]
Acquired assets	[1],[3]	0	[2]	0		85,786
Reported Value Measurement [Member] | Promasys B.V. Software Code [Member]
Acquired assets	[1],[3]	0		0		12,139
Reported Value Measurement [Member] | Acuity Software Code [Member]
Acquired assets		643,135	[1],[4]	730,835	[1],[4]	$ 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Acquired assets	[1]	0		0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Acquired assets	[1]	0		0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Acquired assets	[1]	1,261,599		1,261,599
Estimate of Fair Value Measurement [Member] | Promasys B.V. Customer List [Member] | Fair Value, Inputs, Level 1 [Member]
Acquired assets	[1],[3]	0	[2]	0
Estimate of Fair Value Measurement [Member] | Promasys B.V. Customer List [Member] | Fair Value, Inputs, Level 2 [Member]
Acquired assets	[1],[3]	0	[2]	0
Estimate of Fair Value Measurement [Member] | Promasys B.V. Customer List [Member] | Fair Value, Inputs, Level 3 [Member]
Acquired assets	[1],[3]	136,253	[2]	136,253
Estimate of Fair Value Measurement [Member] | Promasys B.V. Software Code [Member] | Fair Value, Inputs, Level 1 [Member]
Acquired assets	[1],[3]	0		0
Estimate of Fair Value Measurement [Member] | Promasys B.V. Software Code [Member] | Fair Value, Inputs, Level 2 [Member]
Acquired assets	[1],[3]	0		0
Estimate of Fair Value Measurement [Member] | Promasys B.V. Software Code [Member] | Fair Value, Inputs, Level 3 [Member]
Acquired assets	[1],[3]	72,943		72,943
Estimate of Fair Value Measurement [Member] | Acuity Software Code [Member] | Fair Value, Inputs, Level 1 [Member]
Acquired assets		0	[1],[4]	0
Estimate of Fair Value Measurement [Member] | Acuity Software Code [Member] | Fair Value, Inputs, Level 2 [Member]
Acquired assets		0	[1],[4]	0
Estimate of Fair Value Measurement [Member] | Acuity Software Code [Member] | Fair Value, Inputs, Level 3 [Member]
Acquired assets		$ 1,052,403	[1],[4]	$ 1,052,403

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

[2] During the second quarter of 2018 we recognized an impairment loss of $79,634 on the Promasys B.V. Customer List after performing a fair value analysis on the asset utilizing a discounted cash flow model. The impairment charge is separately presented on the Statement of Operations.

[3] The acquired Promasys B.V. software code and customer list 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.

[4] The acquired Acuity software code is not measured on a recurring basis since the 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.

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Note 9 - Fair Value Measurement - Unrealized Gain or Loss Included in Earnings (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gains/(losses) from changes in derivative liabilities at the reporting date	$ (583,657)	$ 28,416

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Note 9 - Fair Value Measurement - Change in Level 3 Financial Liabilities Fair Value (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Balance, beginning of year	$ (1,995,238)	$ (5,126,746)
Net realized gains/(losses)	0	0
Net unrealized gains/(losses) relating to instruments still held at the reporting date	(583,657)	3,111,760
Net purchases, issuances and settlements	66,781	9,248
Net transfers in and/or out of Level 3	0	10,500
Balance, end of period	(2,512,114)	(1,995,238)
Conversion Feature Liability [Member]
Balance, beginning of year	(706,339)	(1,685,947)
Net realized gains/(losses)	0	0
Net unrealized gains/(losses) relating to instruments still held at the reporting date	(201,159)	969,108
Net purchases, issuances and settlements	0	0
Net transfers in and/or out of Level 3	0	10,500
Balance, end of period	(907,498)	(706,339)
Warrant Liability [Member]
Balance, beginning of year	(1,288,899)	(3,440,799)
Net realized gains/(losses)	0	0
Net unrealized gains/(losses) relating to instruments still held at the reporting date	(382,498)	2,142,652
Net purchases, issuances and settlements	66,781	9,248
Net transfers in and/or out of Level 3	0	0
Balance, end of period	$ (1,604,616)	$ (1,288,899)

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Note 10 - Leases (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset	$ 1,569,465			$ 0
Operating Lease, Expense	311,799	$ 289,334
Finance Lease, Right-of-Use Asset, Amortization	32,683
Operating Lease, Liability, Total	$ 1,569,465
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset			$ 1,729,630
Operating Lease, Liability, Total			$ 1,730,907

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Note 10 - Leases - Lease Information (Details) - USD ($)		3 Months Ended
		Mar. 31, 2019	Dec. 31, 2018
Right-of-use assets		$ 1,569,465	$ 0
Current lease liability		598,108	0
Non-current lease liability		971,357	$ 0
Total lease liabilities		$ 1,569,465
Operating leases. weighted-average remaining lease term (Year)		3 years 109 days
Finance leases, weighted-average remaining lease term (Year)		2 years 43 days
Operating leases, discount rate		4.50%
Finance leases, discount rate		6.94%
Operating lease cost		$ 167,888
Variable lease cost (1)	[1]	140,910
Total lease cost		308,798
Cash paid for operating lease cost		167,942
Operating lease assets obtained in exchange for operating lease liabilities		$ 1,729,630

[1] Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate

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Note 10 - Leases - Minimum Lease Payments (Details)	Mar. 31, 2019 USD ($)
2019, operating leases	$ 468,042
2020, operating leases	476,293
2021, operating leases	340,478
2022, operating leases	340,746
Thereafter, operating leases	76,446
Total undiscounted lease payments, operating leases	1,702,005
Less: amount representing interest	(132,540)
Present value of lease payments, operating leases	1,569,465
2019, finance leases	97,552
2020, finance leases	130,069
2021, finance leases	51,898
Total minimum finance lease payments, finance leases	279,519
Less: Amount representing interest, finance leases	(19,034)
Present value of minimum finance lease payments, finance leases	$ 260,485

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Note 10 - Leases - Future Minimum Lease Payments (Details)	Dec. 31, 2018 USD ($)
2019	$ 655,901
2020	414,973
2021	340,029
2022	340,270
Thereafter	76,243
Total	$ 1,827,416

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Note 12 - Related Party Transactions (Details Textual) - USD ($)						1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 27, 2018	Aug. 31, 2017	Nov. 19, 2015	Mar. 18, 2013	Dec. 16, 2008	Aug. 29, 2008	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jun. 30, 2016	Feb. 29, 2016	Feb. 03, 2015	Jan. 31, 2015	Dec. 31, 2013	Dec. 18, 2013	Feb. 22, 2013	Oct. 16, 2012	Sep. 30, 2009	Jun. 30, 2008	Feb. 29, 2008
Convertible Notes Payable, Total							$ 5,970,000		$ 5,970,000
Debt Instrument, Interest Rate, Stated Percentage				2.00%
Debt Instrument, Convertible, Conversion Price							$ 0.50
Class of Warrant or Right, Exercised During Period							(2,800,000)		(4,000,000)
Line of Credit Facility, Maximum Borrowing Capacity				$ 2,000,000								$ 5,000,000			$ 4,000,000
Long-term Line of Credit, Total							$ 2,500,000
Line of Credit Facility, Interest Rate at Period End							4.50%
Interest Expense, Related Party							$ 190,109	$ 225,418
The Northern Trust Company [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 2,000,000								$ 5,000,000			$ 4,000,000
Line of Credit Facility, Interest Rate During Period				2.00%
Long-term Line of Credit, Total							$ 2,500,000
Line of Credit Facility, Interest Rate at Period End							4.50%
Director Mr. Wit [Member]
Interest Expense, Related Party Approximately Monthly Amount				$ 9,500
Chief Executive Officer [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	2,000,000										1,800,000
Debt Instrument, Interest Rate, Stated Percentage											12.00%
Notes Payable, Related Parties											$ 450,000
Extinguishment of Debt, Amount	$ 400,000
Repayments of Notes Payable		$ 50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.25										$ 0.25
Interest Payable											$ 450,000
Warrants and Rights Exercised	$ 400,000
Class of Warrant or Right, Exercised During Period	1,600,000
Convertible Debentures [Member] | Director Mr. Wit [Member]
Due to Related Parties, Total							$ 5,770,000
Convertible Notes Payable, Total																			$ 510,000
Debt Conversion, Converted Instrument, Amount						$ 510,000
Convertible Debenture Initiated In June 2008 [Member] | Director Mr. Wit [Member]
Convertible Notes Payable, Total						$ 1,260,000				$ 1,770,000			$ 1,770,000			$ 1,770,000		$ 1,770,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						3,540,000
Debt Instrument, Interest Rate, Stated Percentage						10.00%
Debt Instrument, Convertible, Conversion Price						$ 0.50
Convertible Debenture Initiated In February 2008 [Member] | Director Mr. Wit [Member]
Convertible Notes Payable, Total													4,475,000			4,475,000	$ 125,000	$ 4,350,000		$ 4,200,000
Debt Conversion, Converted Instrument, Amount					$ 4,350,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			1,680,000		8,700,000												250,000
Debt Instrument, Convertible, Conversion Price					$ 0.50
Notes Payable, Related Parties																				$ 150,000
Debt Conversion, Converted Instrument, Rate					12.00%
Extinguishment of Debt, Amount			$ 420,000
Class of Warrant or Right Cancelled During the Period			1,680,000
Convertible Debenture Initiated In February 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total										$ 4,055,000
Convertible Debentures Issued December 2008 [Member]
Convertible Notes Payable, Total					$ 5,075,000
Convertible Debentures Issued December 2008 [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total														$ 360,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. Wit [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			1,680,000
Extinguishment of Debt, Amount			$ 420,000
Class of Warrant or Right Cancelled During the Period			1,680,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable, Total													$ 4,475,000
Convertible Debentures Issued December 2008 [Member] | Chief Executive Officer and Director Mr. Wit [Member]
Repayments of Notes Payable		$ 55,000
Convertible Debentures Issued December 2008 [Member] | Chief Executive Officer [Member]
Convertible Notes Payable, Total																$ 4,475,000

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Note 13 - Stockholders' (Deficit) (Details Textual)						3 Months Ended	12 Months Ended
	Mar. 21, 2019 $ / shares shares	Mar. 14, 2019 USD ($) $ / shares shares	Mar. 04, 2019 USD ($) $ / shares shares	Jan. 01, 2019 USD ($) $ / shares shares	Sep. 06, 2018 USD ($) $ / shares shares	Mar. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 $ / shares shares	Mar. 31, 2018 shares	Dec. 31, 2017 shares
Common Stock, Shares Authorized						500,000,000	500,000,000
Common Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Preferred Stock, Shares Authorized						10,000,000	10,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Common Stock, Shares, Issued, Total						158,278,341	155,368,647
Class of Warrant or Right, Issued						19,020,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Issued, Number						2,420,000
Convertible Debt, Total | $						$ 5,970,000
Debt Instrument, Convertible, Number of Equity Instruments						115,677
Class of Warrant or Right, Exercised During Period						(2,800,000)	(4,000,000)
Common Stock, Shares, Outstanding, Ending Balance						158,278,341	155,368,647
Class of Warrant or Right, Outstanding						19,020,000	22,020,000		27,020,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance						2,420,000	2,570,000		5,275,000
Restricted Stock [Member]
Common Stock, Shares, Outstanding, Ending Balance						1,825,000		0
Executive Vice Chairman [Member]
Stock Issued During Period, Shares, New Issues				1,800,000
Class of Warrant or Right, Exercised During Period				1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 0.25
Proceeds from Warrant Exercises | $				$ 450,000
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer [Member] | Restricted Stock [Member] | RSAs [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant For Each Recipient		225,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant Subject to Individual Performance		75,000			75,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issuable upon Milestones Achieved		75,000	75,000		75,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Revenues to be Recognized | $		$ 32,500,000	$ 32,500,000		$ 30,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum EBITDA to be Recognized | $		$ 6,500,000	$ 6,500,000		$ 6,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Additional Shares Issuable upon Milestones Achieved		75,000	75,000		75,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Revenues to be Recognized for Additional Shares | $		$ 33,900,000	$ 33,900,000		$ 32,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum EBITDA to be Recognized for Additional Shares | $		$ 6,800,000	$ 6,800,000		$ 7,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares		$ 0.28	$ 0.28		$ 0.33
Employee [Member]
Stock Issued During Period, Shares, New Issues	209,694
Class of Warrant or Right, Exercised During Period	1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.25
Conversion of Conversion Debt into Common Stock [Member]
Debt Instrument, Convertible, Number of Equity Instruments						11,940,000
Convertible Debt [Member]
Interest Payable | $						$ 57,838
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized						5,000,000	5,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Preferred Stock, Dividend Rate, Percentage						5.00%
Preferred Stock, Shares Outstanding, Ending Balance						0	0
Preferred Stock, Shares Issued, Total						0	0
Series B Preferred Stock [Member]
Preferred Stock, Shares Authorized						230,000	230,000
Preferred Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Preferred Stock, Shares Outstanding, Ending Balance						0	0
Preferred Stock, Shares Issued, Total						0	0
Series C Preferred Stock [Member]
Preferred Stock, Shares Authorized						747,500	747,500
Preferred Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Preferred Stock, Shares Outstanding, Ending Balance						0	0
Preferred Stock, Shares Issued, Total						0	0
Series D Preferred Stock [Member]
Preferred Stock, Shares Authorized						250,000	250,000
Preferred Stock, Par or Stated Value Per Share | $ / shares						$ 0.001	$ 0.001
Preferred Stock, Shares Outstanding, Ending Balance						250,000	250,000
Preferred Stock, Shares Issued, Total						250,000	250,000

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Note 13 - Stockholders' (Deficit) - Cumulative Arrearage of Undeclared Dividends (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Preferred Stock, Dividend, Cumulative Arrearage	$ 2,081,980	$ 2,081,980
Preferred Stock, Dividend, Cumulative Arrearage Per Share (in dollars per share)
Series B Preferred Stock [Member]
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]
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

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Note 13 - Stockholders' (Deficit) - Warrants (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number outstanding (in shares)	19,020,000	22,020,000	27,020,000
Weighted average remaining contractual life (Year)	354 days	1 year 21 days
Weighted average exercise price (in dollars per share)	$ 0.48	$ 0.45
Class of Warrant or Right, Exercisable (in shares)	19,020,000	22,020,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 0.48	$ 0.45
Minimum [Member]
Range of exercise price (in dollars per share)	0.25	0.25
Maximum [Member]
Range of exercise price (in dollars per share)	$ 0.60	$ 0.60

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Note 13 - Stockholders' (Deficit) - Warrants Activity (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Balance (in shares)	22,020,000	27,020,000
Issued (in shares)	0	0
Class of Warrant or Right, Exercised During Period	(2,800,000)	(4,000,000)
Expired/forfeited (in shares)	(200,000)	(1,000,000)
Balance (in shares)	19,020,000	22,020,000
Warrants exercisable at March 31, 2019 (in shares)	19,020,000	22,020,000

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Note 13 - Stockholders' (Deficit) - Accumulated Other Comprehensive Gain (Loss) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Balance	$ (11,683,904)	$ (17,193,058)
Balance		(11,683,904)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	(436,505)	(397,237)
Activity	(5,430)	(39,268)
Balance	(441,935)	(436,505)
AOCI Attributable to Parent [Member]
Balance	(436,505)	(397,237)
Activity	(5,430)	(39,268)
Balance	$ (441,935)	$ (436,505)

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Note 14 - Equity Incentive Plans (Details Textual) - USD ($)					3 Months Ended		12 Months Ended
	Mar. 14, 2019	Mar. 04, 2019	Dec. 31, 2018	Sep. 06, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Jun. 16, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance			2,570,000		2,420,000		2,570,000	5,275,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period					0		300,000
Proceeds from Stock Options Exercised					$ 0	$ 0
Share-based Payment Arrangement, Expense, Tax Benefit					$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value					$ 0	$ 0.23
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					0		570,000
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount					$ 195,598
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition					1 year 328 days
Restricted Stock [Member]
Share-based Payment Arrangement, Expense					$ 77,610
Restricted Stock [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period			150,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				225,000
Restricted Stock [Member] | Board of Director One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period			75,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				200,000
The 2016 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					11,576,250				10,000,000
Common Stock Available for Issuance Increasing Period					9 years
Common Stock Available for Issuance, Annual Increase Percent					5.00%
Common Stock, Capital Shares Reserved for Future Issuance					11,576,250
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					5 years
Share-based Compensation Arrangement, Restricted Shares Granted to Employees, Number of Installments in Which Restrictions Lapse					3
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance					2,245,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period					100,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					7,406,250
The 2016 Plan [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage					50.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period					1 year
The 2016 Plan [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement, Installments for Vesting					2
The 2016 Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance					1,825,000
The 2016 Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					10 years
RSAs [Member] | Restricted Stock [Member] | Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance	$ 0.28	$ 0.28		$ 0.33
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant For Each Recipient	225,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant Subject to Individual Performance	75,000			75,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Revenues to be Recognized	$ 32,500,000	$ 32,500,000		$ 30,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum EBITDA to be Recognized	$ 6,500,000	$ 6,500,000		$ 6,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issuable upon Milestones Achieved	75,000	75,000		75,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Revenues to be Recognized for Additional Shares	$ 33,900,000	$ 33,900,000		$ 32,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum EBITDA to be Recognized for Additional Shares	$ 6,800,000	$ 6,800,000		$ 7,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Additional Shares Issuable upon Milestones Achieved	75,000	75,000		75,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				3 years
RSAs [Member] | Restricted Stock [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance				$ 0.33
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant For Each Recipient				200,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Revenues to be Recognized				$ 30,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum EBITDA to be Recognized				$ 6,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issuable upon Milestones Achieved				75,000
RSAs [Member] | Maximum [Member] | Restricted Stock [Member] | Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Technology Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant For Each Recipient				225,000
Equity Incentive Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					7,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					5 years
Share-based Compensation Arrangement, Installments for Vesting					2
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance					175,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					0
Equity Incentive Plan 2009 [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage					50.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period					1 year
Equity Incentive Plan 2009 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance					3,876,662
Equity Incentive Plan 2009 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					10 years

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Note 14 - Equity Incentive Plans - Stock Option Activity (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of shares (in shares)	2,570,000	5,275,000
Weighted average exercise price (per share) (in dollars per share)	$ 0.28	$ 0.26
Weighted average remaining contractual term (in years) (Year)	3 years 73 days	3 years 171 days	4 years 32 days
Aggregate intrinsic value	$ 109,000	$ 16,675	$ 130,475
Number of shares, granted (in shares)	0	570,000
Weighted average exercise price (per share), granted (in dollars per share)	$ 0	$ 0.28
Number of shares, exercised (in shares)	0	(300,000)
Weighted average exercise price (per share), exercised (in dollars per share)	$ 0	$ 0.21
Number of shares, forfeited/cancelled/expired (in shares)	(150,000)	(2,975,000)
Weighted average exercise price (per share), forfeited/cancelled/expired (in dollars per share)	$ 0.25	$ 0.25
Number of shares (in shares)	2,420,000	2,570,000	5,275,000
Weighted average exercise price (per share) (in dollars per share)	$ 0.28	$ 0.28	$ 0.26
Vested and exercisable at March 31, 2019 (in shares)	1,547,500
Vested and exercisable at March 31, 2019 (in dollars per share)	$ 0.26
Vested and exercisable at March 31, 2019 (Year)	2 years 350 days
Vested and exercisable at March 31, 2019	$ 94,275

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Note 14 - Equity Incentive Plans - Vested Shares (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Number of options vested (in shares)	660,000	500,000
Fair value of options vested	$ 136,775	$ 99,121

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Note 14 - Equity Incentive Plans - Stock Options Outstanding (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Low price range (in dollars per share)	$ 0	$ 0
High price range (in dollars per share)	$ 0.50	$ 0.50
Outstanding stock options (in shares)	2,420,000	2,570,000
Weighted average remaining contractual life - outstanding (Year)	3 years 73 days	3 years 171 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.28	$ 0.28
Vested stock options (in shares)	1,547,500	887,500
Weighted average remaining contractual life - vested (Year)	2 years 350 days	2 years 335 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.26	$ 0.25
Range One [Member]
Low price range (in dollars per share)	0	0
High price range (in dollars per share)	$ 0.20	$ 0.20
Outstanding stock options (in shares)	150,000	150,000
Weighted average remaining contractual life - outstanding (Year)	248 days	339 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.17	$ 0.17
Vested stock options (in shares)	150,000	150,000
Weighted average remaining contractual life - vested (Year)	248 days	339 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.17	$ 0.17
Range Two [Member]
Low price range (in dollars per share)	0.21	0.21
High price range (in dollars per share)	$ 0.30	$ 0.30
Outstanding stock options (in shares)	1,545,000	1,695,000
Weighted average remaining contractual life - outstanding (Year)	3 years 102 days	3 years 197 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.26	$ 0.26
Vested stock options (in shares)	1,210,000	550,000
Weighted average remaining contractual life - vested (Year)	3 years 54 days	3 years 54 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.26	$ 0.25
Range Three [Member]
Low price range (in dollars per share)	0.31	0.31
High price range (in dollars per share)	$ 0.50	$ 0.50
Outstanding stock options (in shares)	725,000	725,000
Weighted average remaining contractual life - outstanding (Year)	3 years 208 days	3 years 299 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.34	$ 0.34
Vested stock options (in shares)	187,500	187,500
Weighted average remaining contractual life - vested (Year)	3 years 208 days	3 years 299 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.34	$ 0.34

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Note 14 - Equity Incentive Plans - Fair Value Assumptions of Share-based Payments (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Risk-free interest rate	2.48%	2.91%
Expected dividend yield	0.00%	0.00%
Expected volatility	102.60%	111.00%
Expected life of options (Year)	5 years	5 years

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Note 14 - Equity Incentive Plans - Weighted Average Grant Date Fair Value Activity (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock options granted during the period (in dollars per share)	$ 0	$ 0.23
Stock options vested during the period (in dollars per share)	0.21	0.20
Stock options forfeited during the period (in dollars per share)	$ 0.21	$ 0.19

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Note 14 - Equity Incentive Plans - Status of Non-vested Shares (Details) - $ / shares	Mar. 31, 2019	Jan. 01, 2019
Shares underlying stock options (in shares)	872,500	1,682,500
Weighted average grant date fair value (in dollars per share)	$ 0.27	$ 0.24

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Note 15 - Subsequent Events (Details Textual) - USD ($)			1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 21, 2019	Jan. 01, 2019	May 13, 2019	Mar. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period				0	300,000
Class of Warrant or Right, Exercised During Period				(2,800,000)	(4,000,000)
Employee [Member]
Class of Warrant or Right, Exercised During Period	1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.25
Executive Vice Chairman [Member]
Class of Warrant or Right, Exercised During Period		1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.25
Subsequent Event [Member]
Repayments of Lines of Credit			$ 1,400,000
Subsequent Event [Member] | Employee [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			50,000
Subsequent Event [Member] | Executive Vice Chairman [Member]
Class of Warrant or Right, Exercised During Period			800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.25