10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

[Mark One]

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2017

[   ]     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 and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [√] 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 (Do not check if smaller reporting company)	[ ]	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 November 10, 2017: 148,042,805 common stock $.001 par value.

1

Table of Contents to the Quarterly Report on Form 10-Q for the Nine month period ended September 30, 2017

PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	52
ITEM 4. CONTROLS AND PROCEDURES	52
PART II. OTHER INFORMATION	52
ITEM 1. LEGAL PROCEEDINGS	52
ITEM 1A. RISK FACTORS	52
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	52
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	52
ITEM 4. MINE SAFETY DISCLOSURES	53
ITEM 5. OTHER INFORMATION	53
ITEM 6. EXHIBITS	53
SIGNATURES	54

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	1,317,591		$	1,439,332
Accounts receivable, net of allowance for doubtful accounts of $220,182 and $179,813, respectively		5,415,730			5,455,210
Prepaid expenses		243,434			195,915
Prepaid stock compensation, current portion		-0-			148,422
Other current assets		32,140			35,055
Total current assets		7,008,895			7,273,934
Property and equipment, net		608,226			637,552
Other assets
Intangible assets, net		102,248			108,880
Prepaid stock compensation		-0-			58,663
Other assets		46,478			51,321
TOTAL ASSETS	$	7,765,847		$	8,130,350
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,612,757		$	2,123,073
Deferred revenue, current portion		7,131,466			7,250,061
Convertible notes payable, current portion		50,000			50,000
Patent settlement liability, current portion		521,723			862,500
Conversion feature liability, related parties		1,555,297			1,740,278
Conversion feature liability		86,913			585,452
Warrant liability, related parties		2,317,324			2,519,614
Warrant liability		1,239,459			1,479,748
Total current liabilities		14,514,939			16,610,726
LONG TERM LIABILITIES
Line of credit, long term		2,500,000			2,700,000
Notes payable, related parties, long term, net of current portion, net of discount of $140,838 and $237,664, respectively		259,162			212,336
Notes payable, long term, net of current portion, net of discount of $310,447 and $455,285, respectively		392,053			337,215
Deferred revenue, long term, net of current portion		2,000,897			2,289,169
Convertible notes payable, related parties, long term, net of current portion		5,770,000			5,825,000
Convertible notes payable, long term, net of current portion		350,000			1,175,000
Patent settlement liability, long term, net of current portion		-0-			108,702
TOTAL LIABILITIES		25,787,051			29,258,148
COMMITMENTS AND CONTINGENCIES (See Note 10)
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, 148,042,805 and 147,786,917 issued and outstanding, respectively, at $0.001 par value		148,044			147,788
Additional paid in capital - preferred		999,750			999,750
Additional paid in capital - common		54,124,362			53,425,956
Accumulated other comprehensive (loss)		(397,119	)		(410,505	)
Accumulated (deficit)		(72,896,491	)		(75,291,037	)
TOTAL SHAREHOLDERS' (DEFICIT)		(18,021,204	)		(21,127,798	)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$	7,765,847		$	8,130,350

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

3

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the nine months ended						For the three months ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenues	$	19,420,456		$	16,449,374		$	6,490,147		$	6,627,104
Reimbursable revenues		755,344			818,036			225,766			179,307
Total revenues		20,175,800			17,267,410			6,715,913			6,806,411
Cost of goods sold		3,320,190			2,937,145			1,133,480			1,026,115
Reimbursable expenses-cost of goods sold		802,975			824,383			181,965			185,090
Total cost of goods sold		4,123,165			3,761,528			1,315,445			1,211,205
Gross margin		16,052,635			13,505,882			5,400,468			5,595,206
Operating expenses
Salaries, benefits and related taxes		9,906,293			8,341,342			3,393,915			2,897,917
Rent and occupancy expenses		841,718			800,143			292,669			299,085
Consulting services		185,222			111,284			64,488			63,284
Legal and professional fees		367,403			281,745			126,959			78,449
Travel		679,766			577,266			188,406			177,204
Telephone and internet		115,660			122,923			39,786			39,256
Selling, general and administrative		937,313			1,122,847			277,047			298,072
Bad debt expense		40,369			57,862			87,366			24,555
Depreciation expense		249,801			224,302			87,382			77,725
Amortization expense		16,455			30,405			5,580			10,152
Total operating expenses		13,340,000			11,670,119			4,563,598			3,965,699
Operating income/(loss)		2,712,635			1,835,763			836,870			1,629,507
Other income/(expense)
Interest expense, related parties		(717,782	)		(681,063	)		(252,585	)		(237,377	)
Interest expense		(342,240	)		(303,827	)		(127,488	)		(128,454	)
Interest income		589			2			3			-0-
Change in derivative liabilities		723,532			(3,016,398	)		(812,535	)		(557,562	)
Transaction gain/(loss)		19,006			(12,238	)		(3,104	)		(11,728	)
Income/(loss) before income taxes		2,395,740			(2,177,761	)		(358,839	)		694,386
Income tax (expense)		(1,194	)		(1,069	)		-0-			(1,010	)
Net income/(loss) attributable to common stockholders	$	2,394,546		$	(2,178,830	)	$	(358,839	)	$	693,376
Net income/(loss) per share
Basic	$	0.02		$	(0.01	)	$	(0.00	)	$	0.00
Diluted	$	0.02		$	(0.01	)	$	(0.00	)	$	0.00
Weighted average number of shares outstanding
Basic		147,805,410			145,257,206			147,858,566			147,686,257
Diluted		147,850,886			145,257,206			147,858,566			147,972,209

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

4

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(unaudited)

	For the nine months ended					For the three months ended
	September 30,					September 30,
	2017		2016			2017			2016
Net income/(loss) attributable to common stockholders	$	2,394,546	$	(2,178,830	)	$	(358,839	)	$	693,376
Other comprehensive income/(loss)
Change in foreign currency translation adjustment		13,386		(25,567	)		1,310			(7,780	)
Other comprehensive income/(loss)		13,386		(25,567	)		1,310			(7,780	)
Comprehensive income/(loss)	$	2,407,932	$	(2,204,397	)	$	(357,529	)	$	685,596

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

5

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2016 AND THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(unaudited)

	Preferred Stock													Common Stock
	5% Series A Convertible						Series D Preferred				Additional									Additional						Accumulated
	Number			$0.001			Number		$0.001		paid in			Number			$0.001			paid in						other			Total
	of shares			Par value			of shares		Par value		capital  preferred			of shares			Par value			capital common			Accumulated (deficit)			comprehensive (loss)			shareholders' (deficit)
Balances at December 31, 2015		3,637,724		$	3,637			250,000	$	250	$	4,230,792			131,703,577		$	131,704		$	49,974,415		$	(75,392,917	)	$	(366,355	)	$	(21,418,474	)
Employee stock option expense																					35,046									35,046
Foreign currency translation adjustment																											(44,150	)		(44,150	)
Restricted stock issuance/(forfeiture)															360,000			360			68,040									68,400
Issuance of common stock, stock option exercise															1,100,000			1,100			128,400									129,500
Cashless issuance of common stock, stock option exercise															7,644			8			(8	)								-0-
Issuance of common stock, in exchange for Series A Preferred Stock		(3,637,724	)		(3,637	)						(3,231,042	)		14,615,696			14,616			3,220,063									-0-
Net income/(loss) for the year ended December 31, 2016		-0-			-0-			-0-		-0-		-0-			-0-			-0-			-0-			101,880			-0-			101,880
Balances at December 31, 2016		-0-			-0-			250,000		250		999,750			147,786,917			147,788			53,425,956			(75,291,037	)		(410,505	)		(21,127,798	)
Employee stock option expense																					263,679									263,679
Foreign currency translation adjustment																											13,386			13,386
Restricted stock issuance/(forfeiture)															(16,668	)		(17	)		(2,817	)								(2,834	)
Cashless issuance of common stock, stock option exercise															22,556			23			(23	)								-0-
Issuance of common stock, stock option exercise															250,000			250			35,000									35,250
Reclassification of conversion feature liability associated with convertible debt																					402,567									402,567
Net income/(loss) for the period ended September 30, 2017		-0-			-0-			-0-		-0-		-0-			-0-			-0-			-0-			2,394,546			-0-			2,394,546
Balances at September 30, 2017		-0-		$	-0-			250,000	$	250	$	999,750			148,042,805		$	148,044		$	54,124,362		$	(72,896,491	)	$	(397,119	)	$	(18,021,204	)

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

6

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the nine months ended
	September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	2,394,546		$	(2,178,830	)
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Change in derivative liabilities		(723,532	)		3,016,398
Interest expense from derivative instruments		241,664			96,639
Employee stock compensation		467,930			168,873
Provision for doubtful accounts		40,369			57,862
Depreciation and amortization		266,256			254,707
Changes in operating assets and liabilities
Accounts receivable		(889	)		(754,545	)
Prepaid expenses		(47,519	)		(9,648	)
Other current assets		2,915			(33,558	)
Other assets		4,843			(6,326	)
Accounts payable and accrued expenses		(510,316	)		184,731
Patent settlement liability		(449,479	)		(362,921	)
Deferred revenue		(406,867	)		198,209
Net cash provided by/(used in) operating activities		1,279,921			631,591
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(212,173	)		(220,672	)
Net cash (used in) investing activities		(212,173	)		(220,672	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable		(1,020,000	)		-0-
Proceeds/(repayments) from revolving line of credit		(200,000	)		(100,000	)
Proceeds from exercise of stock options		35,250			125,000
Net cash provided by/(used in) financing activities		(1,184,750	)		25,000
Effect of exchange rate changes on fixed and intangible assets		(18,125	)		(4,827	)
Effect of exchange rate changes on cash and cash equivalents		13,386			(25,567	)
Net increase/(decrease) in cash and cash equivalents		(121,741	)		405,525
Cash and cash equivalents at beginning of period		1,439,332			835,219
Cash and cash equivalents at end of period	$	1,317,591		$	1,240,744
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	1,194		$	1,069
Interest	$	802,327		$	1,078,795
Non-cash transactions:
Notes payable issued in exchange for existing notes payable	$	350,000		$	7,652,500
Restricted stock issuance/(forfeiture)	$	(2,834	)	$	68,400
Promissory notes issued for accrued interest	$	-0-		$	450,000
Common stock issued in exchange for 5% Series A Preferred Stock	$	-0-		$	3,637,724
Reclassification of conversion feature liability associated with convertible debt	$	402,567		$	-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

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

OmniComm Systems, Inc. (“OmniComm” or the “Company”) is a healthcare technology company that provides web-based electronic data capture (“EDC”) solutions and related value-added services to pharmaceutical and biotech companies, contract research organizations (“CROs”) and other clinical trial sponsors principally located in the United States, Europe and East Asia. Our proprietary EDC software applications; TrialMaster^®, TrialOne^®, eClinical Suite and Promasys^® (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 industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC Software and services. Our research and 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. During the nine month periods ended September 30, 2017 and September 30, 2016 we spent $2,230,566 and $1,946,737, 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 2016 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 nine month periods ended September 30, 2017 and September 30, 2016 are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

The operating results for the nine month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year-ended December 31, 2017. 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, 2016.

ESTIMATES IN FINANCIAL STATEMENTS

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

8

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

Reclassifications

Certain reclassifications have been made in the 2016 financial statements to conform to the 2017 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. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded a translation gain of $13,386 and a translation loss of $25,567 for the nine month periods ended September 30, 2017 and September 30, 2016, respectively.

REVENUE RECOGNITION POLICY

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

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

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

Hosted Application Revenues

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

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

9

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(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. Revenues resulting from hosting services for the eClinical Suite products consist of installation and server configuration, application hosting and related support services. Revenues are recognized ratably over the period of the service.

Licensing Revenues

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

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

Professional Services

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

Maintenance Revenues

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

Pass-through Revenue and Expense

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

10

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

The fees associated with each business activity for the nine month periods ended September 30, 2017 and September 30, 2016, respectively, are:

	For the nine months ended
Revenue activity	September 30, 2017		September 30, 2016
Set-up fees	$	3,948,687	$	4,891,415
Change orders		1,054,288		932,130
Maintenance		3,749,897		3,556,114
Software licenses		7,951,228		4,204,527
Professional services		2,526,379		2,909,143
Hosting		945,321		774,081
Total	$	20,175,800	$	17,267,410

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 $220,182 as of September 30, 2017 and $179,813 as of December 31, 2016.

The following table summarizes activity in the Company's allowance for doubtful accounts for the nine month period ended September 30, 2017 and the year ended December 31, 2016.

	September 30, 2017		December 31, 2016
Beginning of period	$	179,813	$	116,834
Bad debt expense		40,369		132,767
Write-offs		-0-		(69,788	)
End of period	$	220,182	$	179,813

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any one financial institution may be in excess of FDIC-insured limits. As of September 30, 2017, $902,864 was deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal.

11

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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 September 30, 2017. The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses, when incurred, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of September 30, 2017, 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 10% of our revenues during the nine month period ended September 30, 2017 or approximately $2,021,000. One customer accounted for 18% of our revenues during the nine month period ended September 30, 2016 or approximately $3,028,000. 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 nine month periods ended September 30, 2017 and September 30, 2016 and the year ended December 31, 2016.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
September 30, 2017		1		10%		2		38%
December 31, 2016		1		16%		2		21%
September 30, 2016		1		18%		1		11%

The table below provides revenues from European customers for the nine month periods ended September 30, 2017 and September 30, 2016.

European revenue
For the nine months ended
September 30, 2017				September 30, 2016
European revenues		% of Total revenues		European revenues		% of Total revenues
	$2,514,601		12%		$1,883,940		11%

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

PROPERTY AND EQUIPMENT

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

12

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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 September 30, 2017, the Company had $9,132,363 in deferred revenues relating to contracts for services to be performed over periods ranging from one month to 5 years. The Company had $7,131,466 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 $528,778 and $563,803 for the nine month periods ended September 30, 2017 and September 30, 2016, respectively, and are included under selling, general and administrative expenses in our unaudited condensed consolidated financial statements.

13

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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 nine month periods ended September 30, 2017 and September 30, 2016 we spent $2,230,566 and $1,946,737, 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 Shareholders on June 16, 2016. The 2016 Plan initially provides for the issuance of up to 10,000,000 shares of our common stock. In addition, the number of shares of common stock available for issuance under the 2016 Plan automatically increases on January 1st of each year for a period of nine (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 September 30, 2017 10,500,000 shares of our common stock were authorized for issuance under the 2016 Plan.

The predecessor plan, the OmniComm Systems, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) was approved at our Annual Meeting of Shareholders on July 10, 2009 and terminated on June 16, 2016 upon the approval of the 2016 Plan. The 2009 Plan provided for the issuance of up to 7,500,000 shares to employees, directors and key consultants. The 2016 and 2009 Plans are more fully described in “Note 13, Equity Incentive Plans”.

The Company accounts for its employee equity incentive plans under ASC 718, Compensation – Stock Compensation, (“ASC 718”) which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company currently uses the Black Scholes option pricing model to determine grant date fair value.

EARNINGS PER SHARE

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

During the first nine months of 2017, we adopted the following new accounting pronouncements:

In July 2017, The Financial Accounting Standards Board issued Accounting Standards Update 2017-11 “Earnings per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815)” (“ASU 2017-11”) to address narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. Part I of the amendment change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. Part II of the update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. Part I of ASU 2017-11 is effective for public business entities for fiscal years, and interim period within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU-2017-11.

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.

14

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 3: EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share were calculated using the weighted average number of shares outstanding of 147,805,410 and 145,257,206 for the nine month periods ended September 30, 2017 and September 30, 2016, respectively.

The outstanding share balance as of September 30, 2017 and September 30, 2016, respectively, includes -0- and 1,476,683 restricted shares that have been issued but are still at risk of forfeiture as the restrictions have not lapsed.

Antidilutive shares of 31,924,411 and 45,059,064 have been omitted from the calculation of dilutive earnings/(loss) per share for the nine month periods ended September 30, 2017 and September 30, 2016, respectively, as the shares were antidilutive. Provided below is the reconciliation between numerators and denominators of the basic and diluted earnings per shares. The table below provides a reconciliation of anti-dilutive securities outstanding as of September 30, 2017 and September 30, 2016, respectively.

Anti-dilutive security	September 30, 2017		September 30, 2016
Employee stock options		4,050,000		1,139,048
Warrants		27,020,000		27,860,000
Convertible notes		740,000		15,910,000
Shares issuable for accrued interest		114,411		150,016
Total		31,924,411		45,059,064

The employee stock options are exercisable at prices ranging from $0.17 to $0.25 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 conversion prices ranging from $0.25 to $1.25 per share.

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

	For the nine months ended
	September 30, 2017						September 30, 2016
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	2,394,546		147,805,410	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)
Effect of dilutive securities		-0-		45,476		-0-		-0-			-0-		-0-
Diluted EPS	$	2,394,546		147,850,886	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)

	For the three months ended
	September 30, 2017								September 30, 2016
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,686,257	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			-0-		285,952		-0-
Diluted EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,972,209	$	0.00

15

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 4: PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	September 30, 2017						December 31, 2016
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	2,298,388	$	1,903,556	$	394,832	$	2,125,067	$	1,761,879	$	363,188		5
Leasehold improvements		118,204		97,177		21,027		114,719		89,789		24,930		5
Computer software		2,001,828		1,846,238		155,590		1,925,462		1,720,399		205,063		3
Office furniture		161,024		124,247		36,777		158,436		114,065		44,371		5
Total	$	4,579,444	$	3,971,218	$	608,226	$	4,323,684	$	3,686,132	$	637,552

Depreciation expense for the nine month periods ended September 30, 2017 and September 30, 2016 was $249,801 and $224,302, respectively.

NOTE 5: INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	September 30, 2017						December 31, 2016
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		117,023		30,556		86,467		104,163		21,990		82,173		15
Promasys B.V. software code		72,837		57,056		15,781		72,837		46,130		26,707		5
Promasys B.V. URLs/website		59,103		59,103		-0-		52,608		52,608		-0-		3
Total	$	1,641,664	$	1,539,416	$	102,248	$	1,622,309	$	1,513,429	$	108,880

Amortization expense was $16,455 and $30,405 for the nine month periods ended September 30, 2017 and September 30, 2016, respectively.

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

2017	$	5,592
2018		19,940
2019		7,802
2020		7,802
2021		7,802
Thereafter		53,310
Total	$	102,248

16

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

Account	September 30, 2017		December 31, 2016
Accounts payable	$	494,633	$	697,060
Accrued payroll and related costs		806,586		886,334
Other accrued expenses		142,406		431,961
Accrued interest		169,132		107,718
Total accounts payable and accrued expenses	$	1,612,757	$	2,123,073

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 Executive Chairman, 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 September 30, 2017, $2,500,000 was outstanding on the Line of Credit at an interest rate of 3.25%.

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.

At September 30, 2017, the Company owed $1,102,500 in notes payable all of which are unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		September 30, 2017		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	400,000	$	-0-	$	-0-		$	-0-	$	400,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		282,500		-0-		282,500			-0-		-0-
Discount on notes payable							-0-		(310,447	)		-0-		(140,838	)
Total				$	1,102,500	$	-0-	$	392,053		$	-0-	$	259,162

At December 31, 2016, the Company owed $1,242,500 in notes payable all of which were unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2016		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	450,000	$	-0-	$	-0-		$	-0-	$	450,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		372,500		-0-		372,500			-0-		-0-
Discount on notes payable							-0-		(455,285	)		-0-		(237,664	)
Total				$	1,242,500	$	-0-	$	337,215		$	-0-	$	212,336

On April 1, 2015 the Company issued a promissory note in the amount of $20,000 to our Executive Vice Chairman, Randall G. Smith ("Mr. Smith"), in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2018. The note was repaid in full on December 14, 2016.

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 Executive Chairman, 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 to Mr. Wit.

17

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

The February 29, 2016 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 including our former Director, Mr. van Kesteren, 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 the $90,000 note payable to Mr. van Kesteren.

The June 30, 2016 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 June 30, 2016 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.

18

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 8: CONVERTIBLE NOTES PAYABLE

The following table summarizes the convertible debt outstanding as of September 30, 2017.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		September 30, 2017		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2019		10%		150,000		-0-		-0-		-0-		150,000
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				$	6,170,000	$	-0-	$	50,000	$	5,770,000	$	350,000

The following table summarizes the convertible debt outstanding as of December 31, 2016.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2016		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2018		10%		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2020		10%		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	4/1/2018		12%		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2020		12%		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2020		12%		4,055,000		-0-		-0-		4,055,000		-0-
9/30/2009	4/1/2018		12%		100,000		-0-		-0-		-0-		100,000
9/30/2009	4/1/2020		12%		625,000		-0-		-0-		-0-		625,000
Total				$	7,050,000	$	-0-	$	50,000	$	5,825,000	$	1,175,000

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. We are in default in the payment of principal and interest. As of September 30, 2017, $812,500 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 $50,000. There was $91,949 of accrued interest at September 30, 2017.

Secured Convertible Debentures

On September 30, 2009, the Company sold an aggregate of $1,400,000 principal amount 12% Secured Convertible Debentures (the “Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of 5,600,000 shares of our common stock exercisable at a price of $0.25 per share for four years subsequent to the closing of the transaction to four accredited investors including our Executive Chairman, Cornelis F. Wit (“Mr. Wit”). The Company received net proceeds of $1,400,000. The Debentures, which bear interest at 12% per annum, matured on March 30, 2011. The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.25 per share.

On March 30, 2011, the Company repaid $200,000 of the outstanding principal amounts owed and extended $1,200,000 of the convertible notes until April 1, 2013, including $1,100,000 in convertible notes held by Mr. Wit. The Company also extended the expiration date of the warrants associated with the September 2009 offering.

On February 22, 2013, the Company and two holders extended $1,200,000 of the convertible notes until January 1, 2016, including $1,100,000 in convertible notes held by Mr. Wit. Mr. Wit also waived all his rights to the security interest under his $1,100,000 convertible notes. The expiration date of the warrants associated with the September 2009 offering was also extended to January 1, 2016.

19

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

On January 31, 2015 the Company and Mr. Wit extended the maturity date of $1,100,000 of convertible debentures to Mr. Wit. The debentures carry an interest rate of 12% and have a maturity date of April 1, 2017. The expiration date of the warrants associated with the debentures was also extended to April 1, 2017. On November 19, 2015 Mr. Wit converted $475,000 of the convertible debentures into 1,900,000 shares of our common stock. On November 19, 2015 the Company and Mr. Wit agreed to cancel the 1,900,000 warrants related to the $475,000 in convertible debentures and $475,000 of unrelated promissory notes in exchange for 1,900,000 shares of our common stock. On November 23, 2015 Mr. Wit sold the remaining $625,000 of convertible debentures and the related warrants to two unrelated non-affiliate shareholders.

On April 1, 2015 the Company and the holder extended the maturity date of $100,000 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, 2016 the Company and two holders extended the maturity date of $625,000 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, 2017 the Company repaid $100,000 of convertible debentures to a holder.

On August 24, 2017 the Company repaid $400,000 of convertible debentures to a holder.

On August 31, 2017 the Company repaid $225,000 of convertible debentures to a holder.

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 Executive Chairman, Cornelis F. Wit (“Mr. Wit”), and one of our 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.

20

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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.

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 Executive Chairman, Cornelis F. Wit (“Mr. Wit”), our Chief Executive Officer and President, Stephen E. Johnson (“Mr. Johnson”), our Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), our former Chief Financial Officer, Ronald T. Linares, and four of our Directors. The convertible debentures, which bear interest at 12% per annum, were due on December 16, 2010. The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share.

On September 30, 2009 Affiliates of the Company extended $4,980,000 of Convertible Notes until December 16, 2013 in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the 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 Mr. Veatch extended the maturity date of $15,000 of convertible debentures issued to our former Director, Matthew Veatch, to January 1, 2016. The expiration date of the warrants associated with the debentures was also extended to January 1, 2016.

On March 6, 2013, the Company and the holder agreed to extend the maturity date of $200,000 of convertible debentures to January 1, 2014. The expiration date of the warrants associated with the debentures was also extended to January 1, 2014.

On March 12, 2013, the Company and the 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, including $160,000 due to our former Director, Guus van Kesteren (“Mr. van Kesteren”), 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 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 Mr. Wit 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.

21

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

On May 1, 2015 the Company and Mr. van Kesteren extended the maturity date of $160,000 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 May 1, 2015 the Company paid $5,000 to Mr. Smith in exchange for $5,000 of convertible debentures originally issued in December 2008.   

On May 7, 2015 the Company and our former Director, Matthew Veatch, extended the maturity date of $15,000 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 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 Mr. Wit 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 $160,000 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 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 June 30, 2017, the Company and the holder agreed to extend the maturity date of $200,000 of convertible debentures to April 1, 2021. The expiration date of the warrants associated with the debentures was also extended to April 1, 2021.

On August 31, 2017 the Company repaid $155,000 of convertible debentures to two holders, including $55,000 that was repaid to Mr. Wit.

The principal payments required at maturity under the Company’s outstanding convertible debt at September 30, 2017 are as follows:

2017	$	50,000
2018		-0-
2019		150,000
2020		5,770,000
2021		200,000
Total	$	6,170,000

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 generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

22

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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 elected the fair value option for the issuance of warrants associated with the promissory notes issued in the nine month period ended September 30, 2016.

The Company’s financial assets or liabilities subject to ASC 820 as of September 30, 2017 include the conversion feature and warrant liability associated with convertible debentures issued during 2008 and 2009 and the warrants issued during 2011 and 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.

23

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

A summary as of September 30, 2017 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
	September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,642,210	$	-0-	$	-0-	$	1,642,210
Warrant liability		3,556,783		-0-		-0-		3,556,783
Total of derivative liabilities	$	5,198,993	$	-0-	$	-0-	$	5,198,993

(1) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the nine month period ended September 30, 2017

(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 September 30, 2017
Risk free interest rate	1.23%	to	1.48%
Dividend yield		0.00%
Expected volatility	86.1%	to	115.5%
Expected life (range in years)
Conversion feature liability	1.50	to	3.50
Warrant liability	0.50	to	3.50

A summary as of December 31, 2016 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
	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	2,325,730	$	-0-	$	-0-	$	2,325,730
Warrant liability		3,999,362		-0-		-0-		3,999,362
Total of derivative liabilities	$	6,325,092	$	-0-	$	-0-	$	6,325,092

(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, 2016

(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, 2016
Risk free interest rate	0.82%	to	1.45%
Dividend yield		0.00%
Expected volatility	117.3%	to	143.8%
Expected life (range in years)
Conversion feature liability	1.25	to	3.25
Warrant liability	0.25	to	3.25

24

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

A summary as of September 30, 2017 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
	December 31, 2016		September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	82,173	$	86,467	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		26,707		15,781		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		-0-		-0-		-0-		-0-		68,814
Total	$	108,880	$	102,248	$	-0-	$	-0-	$	278,010

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

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

A summary as of December 31, 2016 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
	December 31, 2015		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	92,444	$	82,173	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		41,274		26,707		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		15,159		-0-		-0-		-0-		68,814
Total	$	148,877	$	108,880	$	-0-	$	-0-	$	278,010

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

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

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

The table below presents the unrealized gains/(losses) for the nine month periods ended September 30, 2017 and September 30, 2016.

	Other income/(expense)
	For the nine months ended
	September 30, 2017		September 30, 2016
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gain/(losses) from changes in derivative liabilities at the reporting date	$	723,532	$	(3,016,398	)
Total unrealized and realized gains/(losses) included in earnings	$	723,532	$	(3,016,398	)

25

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(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 nine month period ended September 30, 2017 and the year ended December 31, 2016. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of September 30, 2017 and December 31, 2016.

	Level 3 financial liabilities at fair value
								Net			Reclassification
								purchases,			of conversion
For the nine	Balance,							issuances			feature liability	Balance,
months ended	beginning			Net realized		Net unrealized		and		associated with		end
September 30, 2017	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of period
Derivatives:
Conversion feature liability	$	(2,325,730	)	$	48,375	$	232,578	$	-0-	$	402,567	$	(1,642,210	)
Warrant liability		(3,999,362	)		-0-		442,579		-0-		-0-		(3,556,783	)
Total of derivative liabilities	$	(6,325,092	)	$	48,375	$	675,157	$	-0-	$	402,567	$	(5,198,993	)

	Level 3 financial liabilities at fair value
									Net
									purchases,
	Balance,								issuances					Balance,
For the year ended	beginning			Net realized		Net unrealized			and			Net transfers		end
December 31, 2016	of year			gains/(losses)		gains/(losses)			settlements			in and/or out		of year
Derivatives:
Conversion feature liability	$	(901,243	)	$	29,108	$	(1,453,595	)	$	-0-		$	-0-	$	(2,325,730	)
Warrant liability		(1,914,923	)		-0-		(1,233,423	)		(851,016	)		-0-		(3,999,362	)
Total of derivative liabilities	$	(2,816,166	)	$	29,108	$	(2,687,018	)	$	(851,016	)	$	-0-	$	(6,325,092	)

NOTE 10: COMMITMENTS AND CONTINGENCIES

The Company currently leases office space under operating leases for its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at September 30, 2017 are as follows:

2017	$	203,132
2018		650,435
2019		475,233
2020		338,976
2021		269,962
Thereafter		310,550
Total	$	2,248,288

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 $841,718 and $800,143 for the nine month periods ended September 30, 2017 and September 30, 2016, respectively.

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 2018. The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of a lease that expires in October 2018.

LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2017, 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.

26

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

PATENT LITIGATION SETTLEMENT

Effective April 9, 2009, we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the Settlement and License Agreement, as amended, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from January 1, 2009 until the termination of the Settlement and License Agreement on December 31, 2017 equal to two percent (2%) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater.  In addition to the payment of royalties, the Settlement and Licensing Agreement imposes certain obligations on us including commercialization, certain sublicensing, other payments, insurance, and confidentiality. In addition and as a license fee for past use of the Licensed Patent which may have occurred prior to the effective date of the Settlement and Licensing Agreement, we issued a warrant to DataSci to purchase 1,000,000 shares of our common stock at an exercise price of $.01 per share. The Settlement and Licensing Agreement provides that upon the expiration date of the warrant, at DataSci’s sole discretion, DataSci shall exercise its option under the warrant or licensee shall pay DataSci $300,000. The warrant is exercisable commencing on the second anniversary of the Settlement and Licensing Agreement, April 2, 2011, through the expiration date of the warrant, on the termination date of the Settlement and Licensing Agreement on December 31, 2017. 

On June 23, 2009, we entered into an agreement to acquire the EDC assets of eResearch Technology. Concurrent with the consummation of that transaction we entered into the First Amendment to Settlement and Licensing Agreement with DataSci, (i) to include the eResearch Technology EDC assets acquired within the definition of Licensed Products, and as such subject to the royalty payment(s), under and in accordance with the Settlement and Licensing Agreement, and (ii) provide a release by DataSci of any and all claims of infringement of the Licensed Patent in connection with the eResearch Technology EDC assets acquired which may have occurred prior to the effective date of the First Amendment to Settlement and Licensing Agreement for an aggregate amount of $300,000.

The remaining minimum royalty payments per year are as follows:

2017	$	225,000
Total	$	225,000

During the nine month periods ended September 30, 2017 and September 30, 2016 the Company recorded a charge to earnings of ($111,979) and $74,579 respectively, which amounts represent (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci Settlement and License Agreement during the nine month periods ended September 30, 2017 and September 30, 2016 and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

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

Cornelis F. Wit, 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 the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, or termination by the employee pursuant to a material breach of the agreement by the Company.

27

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

NOTE 11: RELATED PARTY TRANSACTIONS

On April 1, 2015 the Company issued a promissory note in the amount of $20,000 to our Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of 12% and has a maturity date of April 1, 2018. The note was repaid in full on December 14, 2016.

On April 30, 2015, the Company and Stephen E. Johnson, our Chief Executive Officer and President (“Mr. Johnson”) extended the maturity date of $25,000 of convertible debentures to Mr.  Johnson, originally issued in December 2008. The debentures carry an interest rate of 12% and have a maturity date of 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.

As of September 30, 2017, we have an aggregate of $5,770,000 of convertible debentures and $400,000 of promissory notes outstanding to our Executive Chairman, 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.

28

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

● 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 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 Executive Chairman, 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 September 30, 2017, $2,500,000 was outstanding on the Line of Credit at an interest rate of 3.25%.

For the nine month periods ended September 30, 2017 and September 30, 2016 we incurred $717,782 and $681,063, respectively, in interest expense payable to related parties.

NOTE 12: STOCKHOLDERS’ (DEFICIT)

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

At the 2016 Annual Meeting of Stockholders the proposed amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of common stock by 250,000,000 shares to an aggregate of 500,000,000 shares received an affirmative vote from the holders of a majority of the outstanding shares of Voting Securities and an affirmative vote from the holders of a majority of the outstanding shares of common stock. Based on the votes received, the proposed amendment was approved and the number of authorized shares of common stock of the Company was increased from 250,000,000 shares to 500,000,000 shares.

As of September 30, 2017 we had the following outstanding securities:

o148,042,805 shares of common stock issued and outstanding;

o27,020,000 warrants issued and outstanding to purchase shares of our common stock;

o4,550,000 options issued and outstanding to purchase shares of our common stock;

o250,000 share of our Series D Preferred Stock issued and outstanding; and

o$6,170,000 principal amount Convertible Debentures convertible into 12,280,000 shares of common stock.

Common Stock

Holders of common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our voting securities do not have cumulative voting rights. Holders of common stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up 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.

29

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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:

odividend and liquidation preferences;

ovoting rights;

oconversion privileges; and

oredemption 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.

During the period from December 2015 through April 2016 all 5% Series A Preferred Stock shareholders accepted the Company’s Exchange Offer and converted a total of 4,125,224 Series A preferred shares into 16,565,696 common shares.

The following table presents the cumulative arrearage of undeclared dividends by class of preferred stock as of September 30, 2017 and September 30, 2016, respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share as of
	September 30,				September 30,
Series of preferred stock	2017		2016		2017		2016
Series A	$	-0-	$	-0-	$	-0-	$	-0-
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

30

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

Warrants Issued in Capital Transactions

The following tables summarize all outstanding warrants for the nine month period ended September 30, 2017 and the year ended December 31, 2016, and the related changes during these periods.

September 30, 2017									September 30, 2017
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,020,000		2.09	$	0.42		27,020,000	$	0.42

December 31, 2016									December 31, 2016
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,860,000		2.71	$	0.42		27,860,000	$	0.42

Warrants
Balance at December 31, 2015	22,900,000
Issued	4,970,000
Exercised	-0-
Expired/forfeited	(10,000	)
Balance at December 31, 2016	27,860,000
Issued	-0-
Exercised	-0-
Expired/forfeited	(840,000	)
Balance at September 30, 2017	27,020,000
Warrants exercisable at September 30, 2017	27,020,000
Weighted average fair value of warrants granted during 2017	n/a

Other Comprehensive (Loss)

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

					Accumulated other
		Foreign currency			comprehensive
		translation			(loss)
Balance at December 31, 2015	$	(366,355	)	$	(366,355	)
2016 Activity		(44,150	)		(44,150	)
Balance at December 31, 2016		(410,505	)		(410,505	)
2017 Activity		13,386			13,386
Balance at September 30, 2017	$	(397,119	)	$	(397,119	)

NOTE 13: EQUITY INCENTIVE PLANS

Stock Option Plans

Description of 2016 Equity Incentive Plan

In 2016, the Company’s Board of Directors and shareholders 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 September 30, 2017 10,500,000 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.

31

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(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.

As of September 30, 2017, there were 4,175,000 outstanding options and -0- restricted stock shares that have been granted under the 2016 Plan. At September 30, 2017, there were 6,325,000 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 shareholders 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 September 30, 2017, there were 375,000 outstanding options and 3,876,662 restricted stock shares that have been granted under the 2009 Plan. At September 30, 2017, 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, 2015		2,002,500		$	0.14		1.40	$	198,990
Granted		450,000			0.20
Exercised		(1,120,000	)		0.12
Forfeited/cancelled/expired		(107,500	)		0.29
Outstanding at December 31, 2016		1,225,000			0.17		2.62	$	83,425
Granted		3,925,000			0.25
Exercised		(300,000	)		0.13
Forfeited/cancelled/expired		(300,000	)		0.14
Outstanding at September 30, 2017		4,550,000		$	0.24		4.23	$	75,875
Vested and exercisable at September 30, 2017		400,000		$	0.19		1.67	$	27,838

32

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price at quarter-end and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2017.

The total number of shares vesting and the fair value of shares vesting for the nine month periods ended September 30, 2017 and September 30, 2016, respectively, was:

Fair value of options vesting for the nine months ended	Number of options vested		Fair value of options vested
September 30, 2017		62,500	$	12,742
September 30, 2016		162,500	$	33,622

Cash received for stock option exercises for the nine month periods ended September 30, 2017 and September 30, 2016 was $35,250 and $125,000, respectively. Due to the Company’s net loss position, no income tax benefit has been realized during the nine month periods ended September 30, 2017 and September 30, 2016.

The following table summarizes information concerning options outstanding at September 30, 2017:

Awards breakdown by price range at September 30, 2017
			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		300,000		2.19	$	0.18		250,000		1.74	$	0.17
0.21	to	0.30		4,250,000		4.38		0.25		150,000		1.55		0.22
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		4,550,000		4.23	$	0.24		400,000		1.67	$	0.19

33

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

The following table summarizes information concerning options outstanding at December 31, 2016:

Awards breakdown by price range at December 31, 2016
			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		850,000		2.15	$	0.15		625,000		1.32	$	0.14
0.21	to	0.30		375,000		3.70		0.23		112,500		1.67		0.21
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		1,225,000		2.62	$	0.17		737,500		1.38	$	0.15

The weighted average fair value (per share) of options granted during the nine month period ended September 30, 2017 was $0.19 and $0.19 during the nine month period ended September 30, 2016. The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based Payments

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

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

Below are the assumptions for the fair value of share-based payments for the nine month period ended September 30, 2017 and the year ended December 31, 2016.

	Stock option assumptions for the period ended
Stock option assumptions	September 30, 2017		December 31, 2016
Risk-free interest rate		1.48%		1.45%
Expected dividend yield		0.0%		0.0%
Expected volatility		133.1%		155.5%
Expected life of options (in years)		5		5

34

OMNICOMM SYSTEMS, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

(unaudited)

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 nine months ended September 30,
	2017		2016
Stock options granted during the period	$	0.19	$	0.19
Stock options vested during the period	$	0.20	$	0.21
Stock options forfeited during the period	$	0.13	$	0.11

A summary of the status of the Company’s non-vested shares underlying stock options as of September 30, 2017, and changes during the nine month period ended September 30, 2017 is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2017		487,500	$	0.20
Nonvested shares at September 30, 2017		4,150,000	$	0.23

As of September 30, 2017, $545,474 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of 1.6 years.

NOTE 14:     SUBSEQUENT EVENTS

Subsequent to September 30, 2017 the Company repaid $200,000 on its revolving Line of Credit.

35

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”) solutions and related value-added services to pharmaceutical and biotech companies, clinical research organizations (“CROs”) and other clinical trial sponsors worldwide. Our proprietary EDC software applications: TrialMaster^®; TrialOne^®; eClinical Suite and Promasys^® (the “EDC Software”), allow clinical trial sponsors and investigative sites to securely collect, validate, transmit and analyze clinical trial data electronically (“eClinical”).

In 2017, the primary focus of our strategy includes:

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

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

● Expanding our penetration of the large pharmaceutical sponsor market

● Broadening our suite of services and software applications on an organic 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 $2,230,566 and $1,946,737 on research and product development activities during the nine months ended September 30, 2017 and September 30, 2016, 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 2016 and year to date 2017 and our ability to retain clients for repeat engagements provide a good operating base from which to build during the remainder of 2017.  We increased the marketing and business development budget for our TrialOne product during 2016 and the first nine months of 2017 as we place increased emphasis on increasing our penetration of the Phase I market in the Unites States, Europe and East Asia. We believe that segment of the EDC market is the least penetrated and allows for the greatest potential increases in market share and in sales volumes.  We expect to continue increasing the level of resources deployed in our sales and marketing efforts through the addition of sales personnel and by increasing the number of industry tradeshows and conferences that we attend. We feel that a combination of our existing infrastructure, broadened array of eClinical products and services and increased success in new client acquisition, coupled with our ability to retain our existing clients will allow us to compete effectively within the EDC market. 

The nine months ended September 30, 2017 compared to the nine months ended September 30, 2016

Results of Operations

A summarized version of our results of operations for the nine months ended September 30, 2017 and September 30, 2016 is included in the table below.

Summarized Statement of Operations
For the nine months ended
September 30,
				% of						% of			$			%
	2017			Revenues			2016			Revenues			Change			Change
Total revenues	$	20,175,800					$	17,267,410					$	2,908,390			16.8	%
Total cost of goods sold		4,123,165			20.4	%		3,761,528			21.8	%		361,637			9.6	%
Gross margin		16,052,635			79.6	%		13,505,882			78.2	%		2,546,753			18.9	%
Salaries, benefits and related taxes		9,906,293			49.1	%		8,341,342			48.3	%		1,564,951			18.8	%
Rent		841,718			4.2	%		800,143			4.6	%		41,575			5.2	%
Consulting services		185,222			0.9	%		111,284			0.6	%		73,938			66.4	%
Legal and professional fees		367,403			1.8	%		281,745			1.6	%		85,658			30.4	%
Other expenses		1,102,051			5.5	%		1,012,758			5.9	%		89,293			8.8	%
Selling, general and administrative		937,313			4.6	%		1,122,847			6.5	%		(185,534	)		-16.5	%
Total operating expenses		13,340,000			66.1	%		11,670,119			67.5	%		1,669,881			14.3	%
Operating income/(loss)		2,712,635			13.4	%		1,835,763			10.6	%		876,872			47.8	%
Interest expense		(1,060,022	)		-5.3	%		(984,890	)		-5.7	%		(75,132	)		7.6	%
Interest income		589			0.0	%		2			0.0	%		587			29350.0	%
Change in derivatives		723,532			3.6	%		(3,016,398	)		-17.5	%		3,739,930			124.0	%
Transaction gain/(loss)		19,006			0.1	%		(12,238	)		-0.1	%		31,244			255.3	%
Income/(loss) before income taxes and dividends		2,395,740			11.9	%		(2,177,761	)		-12.6	%		4,573,501			210.0	%
Income tax (expense)		(1,194	)		0.0	%		(1,069	)		0.0	%		(125	)		11.7	%
Net income/(loss) attributable to common stockholders	$	2,394,546			11.9	%	$	(2,178,830	)		-12.6	%	$	4,573,376			209.9	%

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The table below provides a comparison of our recognized revenues for the nine months ended September 30, 2017 and September 30, 2016.

	For the nine months ended
Revenue activity	September 30, 2017				September 30, 2016				$ Change			% Change
Set-up fees	$	3,948,687	19.6	%	$	4,891,415	28.3	%	$	(942,728	)		-19.3	%
Change orders		1,054,288	5.2	%		932,130	5.4	%		122,158			13.1	%
Maintenance		3,749,897	18.6	%		3,556,114	20.6	%		193,783			5.4	%
Software licenses		7,951,228	39.4	%		4,204,527	24.4	%		3,746,701			89.1	%
Professional services		2,526,379	12.5	%		2,909,143	16.8	%		(382,764	)		-13.2	%
Hosting		945,321	4.7	%		774,081	4.5	%		171,240			22.1	%
Total	$	20,175,800	100.0	%	$	17,267,410	100.0	%	$	2,908,390			16.8	%

Overall revenue increased by $2,908,390 or 16.8% for the nine months ended September 30, 2017 compared with revenue for the nine months ended September 30, 2016. This increase is primarily the result of an increase in software licenses.

We recorded revenue of $15,184,340 including $3,948,687 from set-up fees, $4,838,537 from software licensing and $2,557,261 from maintenance revenues associated with our TrialMaster suite during the nine months ended September 30, 2017 compared with revenue of $13,036,982 that included $4,891,415 in set-up fees, $2,979,266 from software licensing and $2,294,550 in maintenance revenues during the nine months ended September 30, 2016.  

We recorded $1,329,257 in revenues associated with clients using the eClinical Suite during the nine months ended September 30, 2017 compared with revenue of $1,162,276 for the nine months ended September 30, 2016.  eClinical Suite revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.

We recorded $682,135 in revenues in maintenance and $188,367 from hosting activities associated with the eClinical Suite during the nine months ended September 30, 2017 compared with revenue of $820,979 from maintenance and $179,492 from hosting activities for the nine months ended September 30, 2016.  Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing the eClinical Suite.

We recorded revenue of $3,286,129 including $2,573,361 from software licensing and $261,466 from professional services for clients utilizing our TrialOne EDC software for the nine months ended September 30, 2017 compared with revenue of $2,353,213 including $996,406 from software licensing and $1,028,576 from professional services for the nine months ended September 30, 2016.   We are continuing to enhance our efforts at developing our sales and marketing campaign for the TrialOne application.  TrialOne revenues are primarily comprised of license subscriptions, professional services and maintenance services.

We recorded revenue of $376,074 for the nine months ended September 30, 2017 including $90,274 from software licensing and $196,950 from maintenance associated with clients utilizing the Promasys EDC solution as compared to revenue of $480,783 for the nine months ended September 30, 2016 including $131,205 from software licensing and $245,722 from maintenance.

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

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

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

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

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Our top five customers accounted for approximately 35% of our revenues during the nine months ended September 30, 2017 and approximately 36% of our revenues during the nine months ended September 30, 2016.  One customer accounted for approximately 10% of our revenues during the nine months ended September 30, 2017.   One customer accounted for approximately 18% of our revenues the nine months ended September 30, 2016. The loss of any of these contracts or these customers in the future could adversely affect our results of operations. 

Our international customers, who are principally located in Europe and East Asia, accounted for approximately 20% of our total revenues for the nine month period ended September 30, 2017 and approximately 17% of our total revenues for the nine months ended September 30, 2016.

One customer accounted for approximately 27% and another customer accounted for approximately 11% of our accounts receivables as of September 30, 2017. One customer accounted for approximately 11% of our accounts receivable as of September 30, 2016.

Cost of goods sold increased approximately 10% or $361,637 for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.  Cost of goods sold were approximately 20% of revenues for the nine months ended September 30, 2017 compared to approximately 22% for the nine months ended September 30, 2016. 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 increased during the nine months ended September 30, 2017 primarily due to an increase in salaries and related benefits. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin.

Overall, total operating expenses increased approximately 14% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.  The increase in operating expenses is primarily the result of an increase in salaries, benefits and related taxes.

Salaries and related expenses were our biggest operating expense at 74% of total operating expenses for the nine months ended September 30, 2017 compared to 71% of total operating expenses for the nine months ended September 30, 2016.  Salaries and related expenses increased by approximately 19% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.  The table below provides a summary of the significant components of salary and related expenses by primary cost category.

	For the nine months ended
Expense Category	September 30, 2017		September 30, 2016		$ Change			% Change
OmniComm corporate operations	$	6,815,015	$	5,751,904	$	1,063,111			18.5	%
New Jersey operations office		814,050		754,175		59,875			7.9	%
OmniComm Europe, GmbH		481,792		496,258		(14,466	)		-2.9	%
OmniComm Ltd.		655,418		531,343		124,075			23.4	%
OmniComm Spain S.L.		295,138		228,146		66,992			29.4	%
OmniComm Systems B.V.		376,950		410,643		(33,693	)		-8.2	%
Employee stock compensation		467,930		168,873		299,057			177.1	%
Total salaries and related expenses	$	9,906,293	$	8,341,342	$	1,564,951			18.8	%

As of September 30, 2017, we employed 137 employees and consultants Company-wide as follows: 64 out of our headquarters in Fort Lauderdale, Florida, 9 out of a regional operating office in Somerset, New Jersey, 26 in remote locations throughout the United States and Canada. Our wholly-owned subsidiary, OmniComm Europe, GmbH, employs 18 in Bonn, Germany. Our wholly-owned subsidiary, OmniComm Ltd., employs 12 in Southampton, England. Our wholly-owned subsidiary, OmniComm Spain, S. L. employs 2 in Barcelona, Spain. Our wholly-owned subsidiary, OmniComm Systems B.V. employs 4 in the Netherlands and 2 in Japan. We believe that relations with our employees are good.  None of our employees are represented by a collective bargaining agreement.

During the nine months ended September 30, 2017 and the nine months ended September 30, 2016 we incurred $467,930 and $168,873, respectively, in salary expense in connection with ASC 718, Compensation – Stock Compensation, which establishes standards for transactions in which an entity exchanges its equity instruments services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

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Rent and related expenses increased by approximately 5% during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.  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 2015 we added a third 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 2018. 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 Systems B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018. Our Fort Lauderdale corporate office lease expires in February 2023. The table below provides the significant components of our rent related expenses by location or subsidiary. Included in rent during the nine months ended September 30, 2017 was a decrease in expense of $2,882 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to an increase in expense of $77,780 for the nine months ended September 30, 2016.

	For the nine months ended
Expense Category	September 30, 2017			September 30, 2016		$ Change			% Change
Corporate office	$	310,813		$	211,016	$	99,797			47.3	%
Co-location and disaster recovery facilities		379,856			355,666		24,190			6.8	%
New Jersey operations office		39,444			40,265		(821	)		-2.0	%
OmniComm Europe, GmbH		58,254			59,043		(789	)		-1.3	%
OmniComm Ltd.		43,463			45,977		(2,514	)		-5.5	%
OmniComm Spain S.L.		5,958			5,012		946			18.9	%
OmniComm Systems B.V.		6,812			5,384		1,428			26.5	%
Straight-line rent expense		(2,882	)		77,780		(80,662	)		-103.7	%
Total	$	841,718		$	800,143	$	41,575			5.2	%

Consulting services expense increased to $185,222 for the nine months ended September 30, 2017 compared with $111,284 for the nine months ended September 30, 2016. Consulting services are comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. Product development consulting expenses increased year over year as we utilized the services of additional consultants during the nine month period ended September 30, 2017. The table provided below provides the significant components of the expenses incurred related to consulting services.

	For the nine months ended
Expense Category	September 30, 2017		September 30, 2016		$ Change			% Change
Sales and marketing	$	56,000	$	79,500	$	(23,500	)		-29.6	%
Product development		129,222		31,784		97,438			306.6	%
Total	$	185,222	$	111,284	$	73,938			66.4	%

Legal and professional fees increased approximately 30% for the nine months ended September 30, 2017 compared with the nine months ended September 30, 2016. Professional fees include fees paid to our auditors for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the nine months ended September 30, 2017 and September 30, 2016, respectively.

	For the nine months ended
Expense Category	September 30, 2017		September 30, 2016		$ Change			% Change
Financial advisory	$	52,974	$	-0-	$	52,974			n/a
Audit and related		39,777		43,963		(4,186	)		-9.5	%
Accounting services		178,588		134,781		43,807			32.5	%
Legal-employment related		21,778		17,211		4,567			26.5	%
Legal-financial related		67,122		64,810		2,312			3.6	%
General legal		7,164		20,980		(13,816	)		-65.9	%
Total	$	367,403	$	281,745	$	85,658			30.4	%

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Selling, general and administrative expenses (“SG&A”) decreased by $185,534 or approximately 17% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. 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 and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2016 we spent approximately $712,000 on marketing, sales and advertising. We expect that the 2017 marketing, sales and advertising expenses will be approximately $800,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

During the nine months ended September 30, 2017 we recognized bad debt expense of $40,369 compared to bad debt expense of $57,862 for the nine months ended September 30, 2016.  This change was primarily the result of a decrease in aged receivable balances that enabled us to decrease our reserve. During the remainder of 2017 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 2017.

Interest expense was $1,060,022 for the nine months ended September 30, 2017 compared to $984,890 for the nine months ended September 30, 2016, an increase of $75,132.  Interest incurred to related parties was $717,782 during the nine months ended September 30, 2017 and $681,063 for the nine months ended September 30, 2016.  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 increased year over year primarily due to the accretion of the discount from the derivatives associated with debt that was issued. The table below provides detail on the significant components of interest expense for the nine months ended September 30, 2017 and September 30, 2016.

	For the nine months ended
Debt Description	September 30, 2017		September 30, 2016		$ Change			% Change
Accretion of discount from derivatives	$	241,664	$	96,638	$	145,026			150.1	%
August 2008 convertible notes		143,605		144,131		(526	)		-0.4	%
December 2008 convertible notes		389,347		410,324		(20,977	)		-5.1	%
September 2009 secured convertible debentures		54,962		65,310		(10,348	)		-15.8	%
General interest		105,282		149,447		(44,165	)		-29.6	%
Related party notes payable		125,162		119,040		6,122			5.1	%
Total	$	1,060,022	$	984,890	$	75,132			7.6	%

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.

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 gain of $675,157 during the nine months ended September 30, 2017 compared with a net unrealized loss of $3,016,398 during the nine months ended September 30, 2016.  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 nine months ended September 30, 2017 and September 30, 2016 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.

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The below table contains the cumulative arrearage for each series of preferred stock as of September 30, 2017.

Series of Preferred Stock	Cumulative Arrearage
Series A	$	-0-
Series B		609,887
Series C		1,472,093
Total preferred stock arrearages	$	2,081,980

The three months ended September 30, 2017 compared to the three months ended September 30, 2016

Results of Operations

A summarized version of our results of operations for the three months ended September 30, 2017 and September 30, 2016 is included in the table below.

Summarized Statement of Operations
For the three months ended
September 30,
				% of						% of			$			%
	2017			Revenues			2016			Revenues			Change			Change
Total revenues	$	6,715,913					$	6,806,411					$	(90,498	)		-1.3	%
Total cost of goods sold		1,315,445			19.6	%		1,211,205			17.8	%		104,240			8.6	%
Gross margin		5,400,468			80.4	%		5,595,206			82.2	%		(194,738	)		-3.5	%
Salaries, benefits and related taxes		3,393,915			50.5	%		2,897,917			42.6	%		495,998			17.1	%
Rent		292,669			4.4	%		299,085			4.4	%		(6,416	)		-2.1	%
Consulting services		64,488			1.0	%		63,284			0.9	%		1,204			1.9	%
Legal and professional fees		126,959			1.9	%		78,449			1.2	%		48,510			61.8	%
Other expenses		408,520			6.1	%		328,892			4.8	%		79,628			24.2	%
Selling, general and administrative		277,047			4.1	%		298,072			4.4	%		(21,025	)		-7.1	%
Total operating expenses		4,563,598			68.0	%		3,965,699			58.3	%		597,899			15.1	%
Operating income/(loss)		836,870			12.5	%		1,629,507			23.9	%		(792,637	)		-48.6	%
Interest expense		(380,073	)		-5.7	%		(365,831	)		-5.4	%		(14,242	)		3.9	%
Interest income		3			0.0	%		-0-			0.0	%		3			n/a
Change in derivatives		(812,535	)		-12.1	%		(557,562	)		-8.2	%		(254,973	)		-45.7	%
Transaction gain/(loss)		(3,104	)		0.0	%		(11,728	)		-0.2	%		8,624			73.5	%
Income/(loss) before income taxes and dividends		(358,839	)		-5.3			694,386			10.2	%		(1,053,225	)		151.7	%
Income tax (expense)		-0-			0.0	%		(1,010	)		0.0	%		1010			100.0	%
Net income/(loss) attributable to common stockholders	$	(358,839	)		-5.3	%	$	693,376			10.2	%	$	(1,052,215	)		151.8	%

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The table below provides a comparison of our recognized revenues for the three months ended September 30, 2017 and September 30, 2016.

	For the three months ended
Revenue activity	September 30, 2017				September 30, 2016				$ Change			% Change
Set-up fees	$	1,256,579	18.7	%	$	1,578,682	23.2	%	$	(322,103	)		-20.4	%
Change orders		352,782	5.3	%		262,231	3.9	%		90,551			34.5	%
Maintenance		1,371,203	20.4	%		1,218,149	17.9	%		153,054			12.6	%
Software licenses		2,444,604	36.4	%		2,002,239	29.4	%		442,365			22.1	%
Professional services		919,821	13.7	%		1,511,007	22.2	%		(591,186	)		-39.1	%
Hosting		370,924	5.5	%		234,103	3.4	%		136,821			58.4	%
Total	$	6,715,913	100.0	%	$	6,806,411	100.0	%	$	(90,498	)		-1.3	%

Overall revenue decreased by $90,498 or 1.3% for the three months ended September 30, 2017 compared with revenue for the three months ended September 30, 2016. This decrease is primarily the result of decreases in professional services and set-up fees revenues partially offset by increases in software licenses, maintenance and hosting revenues.

We recorded revenue of $5,077,629 including $1,525,942 from software licensing, $1,256,579  from set-up fees, and $1,001,970 from maintenance revenues associated with our TrialMaster suite during the three months ended September 30, 2017 compared with revenue of $4,887,764 that included $1,578,682 in set-up fees, $1,529,115 from software licensing and $774,272 in maintenance revenues during the three months ended September 30, 2016.  

We recorded $469,712 in revenues associated with clients using the eClinical Suite during the three months ended September 30, 2017 compared with revenue of $388,649 for the three months ended September 30, 2016.  eClinical Suite revenues are primarily comprised of license subscriptions and revenues associated with our hosting and maintenance services.

We recorded $224,054 in software licenses during the three months ended September 30, 2017 compared with revenue of $27,227 from software licenses for the three months ended September 30, 2016. We recorded $190,758 in revenues from maintenance and $54,900 from hosting activities associated with the eClinical Suite during the three months ended September 30, 2017 compared with revenue of $285,993 from maintenance and $63,775 from hosting activities for the three months ended September 30, 2016.  Generally, these revenues are paid quarterly and are connected to hosting and client support for clients licensing the eClinical Suite.

We recorded revenue of $1,033,981, including $680,864 from software licensing and $173,887 from professional services, with clients utilizing our TrialOne EDC software for the three months ended September 30, 2017 compared with revenue of $1,322,480 including $414,333 from software licensing and $764,220 from professional services for the three months ended September 30, 2016.   We are continuing to enhance our efforts at developing our sales and marketing campaign for the TrialOne application.  TrialOne revenues are primarily comprised of license subscriptions, professional services and maintenance services.

We recorded revenue of $134,591 for the three months ended September 30, 2017 including $74,852 from professional services and $45,995 from maintenance associated with clients utilizing the Promasys EDC solution as compared to revenue of $139,468 for the three months ended September 30, 2016 including $31,564 from software licensing and $77,326 from maintenance.

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

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

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

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

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Our top five customers accounted for approximately 35% of our revenues during the three months ended September 30, 2017 and approximately 38% of our revenues during the three months ended September 30, 2016.  One customer accounted for approximately 14% and another accounted for approximately 10% of our revenues during the three months ended September 30, 2017.  One customer accounted for approximately 14% and another accounted for approximately 11% of our revenues the three months ended September 30, 2016. The loss of any of these contracts or these customers in the future could adversely affect our results of operations. 

Our international customers, who are principally located in Europe and East Asia, accounted for approximately 21% of our total revenues for the three month period ended September 30, 2017 and approximately 16% of our total revenues for the three months ended September 30, 2016.

One customer accounted for approximately 27% and another customer accounted for approximately 11% of our accounts receivables as of September 30, 2017. One customer accounted for approximately 11% of our accounts receivable as of September 30, 2016.

Cost of goods sold increased approximately 9% or $104,240 for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.  Cost of goods sold were approximately 20% of revenues for the three months ended September 30, 2017 compared to approximately 18% for the three months ended September 30, 2016. 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 increased during the three months ended September 30, 2017 primarily due to an increase in salaries and related benefits. The pass-through revenue and expense primarily relate to specific work being performed for a few clients. At this time we do not expect the volume of the pass-through revenue and expense to grow significantly and therefore we do not expect any significant degradation of our gross margin.

Overall, total operating expenses increased approximately 15% for the three months ended September 30, 2017 compared to the three months ended September 30, 2016.  The increase in operating expenses is primarily the result of an increase in salaries, benefits and related taxes.

Salaries and related expenses were our biggest operating expense at approximately 74% of total operating expenses for the three months ended September 30, 2017 compared to approximately 73% of total operating expenses for the three months ended September 30, 2016.  Salaries and related expenses increased by 17% for the three months ended September 30, 2017 compared to the three months ended September 30, 2016.  The table below provides a summary of the significant components of salary and related expenses by primary cost category.

	For the three months ended
Expense Category	September 30, 2017		September 30, 2016		$ Change			% Change
OmniComm corporate operations	$	2,345,258	$	2,026,366	$	318,892			15.7	%
New Jersey operations office		255,625		230,619		25,006			10.8	%
OmniComm Europe, GmbH		165,778		190,621		(24,843	)		-13.0	%
OmniComm Ltd.		222,079		163,559		58,520			35.8	%
OmniComm Spain S.L.		119,543		93,892		25,651			27.3	%
OmniComm Systems B.V.		79,628		134,646		(55,018	)		-40.9	%
Employee stock compensation		206,004		58,214		147,790			253.9	%
Total salaries and related expenses	$	3,393,915	$	2,897,917	$	495,998			17.1	%

As of September 30, 2017, we employed 137 employees and consultants Company-wide as follows: 64 out of our headquarters in Fort Lauderdale, Florida, 9 out of a regional operating office in Somerset, New Jersey, 26 in remote locations throughout the United States and Canada. Our wholly-owned subsidiary, OmniComm Europe, GmbH, employs 18 in Bonn, Germany. Our wholly-owned subsidiary, OmniComm Ltd., employs 12 in Southampton, England. Our wholly-owned subsidiary, OmniComm Spain, S. L. employs 2 in Barcelona, Spain. Our wholly-owned subsidiary, OmniComm Systems B.V. employs 4 in the Netherlands and 2 in Japan. 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 September 30, 2017 and the three months ended September 30, 2016 we incurred $206,004 and $58,214, respectively, in salary expense in connection with ASC 718, Compensation – Stock Compensation, which establishes standards for transactions in which an entity exchanges its equity instruments services from employees. This standard requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

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Rent and related expenses decreased by approximately 2% during the three months ended September 30, 2017 compared to the three months ended September 30, 2016.  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 2015 we added a third 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 2018. 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 Systems B.V. subsidiary leases office space in Leiden, the Netherlands under a lease that expires in October 2018. Our Fort Lauderdale corporate office lease expires in February 2023. The table below provides the significant components of our rent related expenses by location or subsidiary. Included in rent during the three months ended September 30, 2017 was a decrease in expense of $1,363 in non-cash, straight line rent recorded to give effect to contractual, inflation-based rent increases in our leases compared to an increase in expense of $3,516 for the three months ended September 30, 2016.

	For the three months ended
Expense Category	September 30, 2017			September 30, 2016		$ Change			% Change
Corporate office	$	104,652		$	101,883	$	2,769			2.7	%
Co-location and disaster recovery facilities		136,300			142,898		(6,598	)		-4.6	%
New Jersey operations office		13,148			13,148		-0-			0.0	%
OmniComm Europe, GmbH		20,751			19,792		959			4.8	%
OmniComm Ltd.		14,821			14,373		448			3.1	%
OmniComm Spain S.L.		2,463			1,677		786			46.9	%
OmniComm Systems B.V.		1,897			1,798		99			5.5	%
Straight-line rent expense		(1,363	)		3,516		(4,879	)		-138.8	%
Total	$	292,669		$	299,085	$	(6,416	)		-2.1	%

Consulting services expense increased slightly to $64,488 for the three months ended September 30, 2017 compared with $63,284 for the three months ended September 30, 2016. Consulting services are comprised of fees paid to consultants for help with product development and for services related to our sales and marketing efforts. Product development consulting expenses increased year over year as we utilized the services of additional consultants during the three month period ended September 30, 2017. The table provided below provides the significant components of the expenses incurred related to consulting services.

	For the three months ended
Expense Category	September 30, 2017		September 30, 2016		$ Change			% Change
Sales and marketing	$	18,000	$	31,500	$	(13,500	)		-42.9	%
Product development		46,488		31,784		14,704			46.3	%
Total	$	64,488	$	63,284	$	1,204			1.9	%

Legal and professional fees increased approximately 62% for the three months ended September 30, 2017 compared with the three months ended September 30, 2016. Professional fees include fees paid to our auditors and accountants for services rendered on a quarterly and annual basis in connection with our filings with the Securities and Exchange Commission (“SEC”) and fees paid to our attorneys in connection with representation in matters involving litigation and acquisitions or for services rendered to us related to securities and SEC related matters. The table below compares the significant components of our legal and professional fees for the three months ended September 30, 2017 and September 30, 2016, respectively.

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	For the three months ended
Expense Category	September 30, 2017			September 30, 2016		$ Change			% Change
Financial advisory	$	25,500		$	-0-	$	25,500			n/a
Audit and related		7,018			5,808		1,210			20.8	%
Accounting services		82,970			40,391		42,579			105.4	%
Legal-employment related		(1,176	)		11,767		(12,943	)		-110.0	%
Legal-financial related		11,235			14,510		(3,275	)		-22.6	%
General legal		1,412			5,973		(4,561	)		-76.4	%
Total	$	126,959		$	78,449	$	48,510			61.8	%

Selling, general and administrative expenses (“SG&A”) decreased by $21,025 or approximately 7% for the three months ended September 30, 2017 compared to the three months ended September 30, 2016. 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 and Leiden, the Netherlands on a day-to-day basis and other costs not directly related to other captioned items in our income statement. SG&A includes the cost of office equipment and supplies, the costs of attending conferences and seminars and other expenses incurred in the normal course of business. In 2016 we spent approximately $712,000 on marketing, sales and advertising. We expect that the 2017 marketing, sales and advertising expenses will be approximately $800,000 as we increase our attendance at tradeshows and our marketing efforts worldwide.

During the three months ended September 30, 2017 we recognized bad debt expense of $87,366 compared to $24,555 for bad debt expense for the three months ended September 30, 2016.  This change was primarily the result of an increase in aged receivable balances that prompted us to increase our reserve. During the remainder of 2017 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 2017.

Interest expense was $380,073 for the three months ended September 30, 2017 compared to $365,831 for the three months ended September 30, 2016, an increase of $14,242.  Interest incurred to related parties was $252,585 during the three months ended September 30, 2017 and $237,377 for the three months ended September 30, 2016.  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 increased year over year primarily due to the accretion of the discount from the derivatives associated with debt that was issued. The table below provides detail on the significant components of interest expense for the three months ended September 30, 2017 and September 30, 2016.

	For the three months ended
Debt Description	September 30, 2017		September 30, 2016		$ Change			% Change
Accretion of discount from derivatives	$	118,806	$	61,429	$	57,377			93.4	%
August 2008 convertible notes		48,394		48,394		-0-			0.0	%
December 2008 convertible notes		130,195		137,773		(7,578	)		-5.5	%
September 2009 secured convertible debentures		11,820		21,929		(10,109	)		-46.1	%
General interest		29,006		53,356		(24,350	)		-45.6	%
Related party notes payable		41,852		42,950		(1,098	)		-2.6	%
Total	$	380,073	$	365,831	$	14,242			3.9	%

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.

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 $812,535 during the three months ended September 30, 2017 compared with a net unrealized loss of $557,562 during the three months ended September 30, 2016.  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 months ended September 30, 2017 and September 30, 2016 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.

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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 September 30, 2017, we had working capital deficit of $7,506,044.

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

Liquidity and Capital Resources
Summarized Balance Sheet Disclosure
	September 30, 2017			December 31, 2016			$ Change			% Change
Cash	$	1,317,591		$	1,439,332		$	(121,741	)		-8.5	%
Accounts receivable, net of allowance for doubtful accounts		5,415,730			5,455,210			(39,480	)		-0.7	%
Prepaid expenses		243,434			195,915			47,519			24.3	%
Prepaid stock compensation, current portion		-0-			148,422			(148,422	)		-100.0	%
Other current assets		32,140			35,055			(2,915	)		-8.3	%
Current assets		7,008,895			7,273,934			(265,039	)		-3.6	%
Accounts payable and accrued expenses		1,612,757			2,123,073			(510,316	)		-24.0	%
Patent litigation settlement liability, current portion		521,723			862,500			(340,777	)		-39.5	%
Deferred revenue, current portion		7,131,466			7,250,061			(118,595	)		-1.6	%
Convertible notes payable, current portion, net of discount		50,000			50,000			-0-			0.0	%
Conversion feature liability, related parties		1,555,297			1,740,278			(184,981	)		-10.6	%
Conversion feature liability		86,913			585,452			(498,539	)		-85.2	%
Warrant liability, related parties		2,317,324			2,519,614			(202,290	)		-8.0	%
Warrant liability		1,239,459			1,479,748			(240,289	)		-16.2	%
Current liabilities		14,514,939			16,610,726			(2,095,787	)		-12.6	%
Working capital (deficit)	$	(7,506,044	)	$	(9,336,792	)	$	1,830,748			19.6	%

Statement of Cash Flows Disclosure
	For the nine months ended
	September 30, 2017			September 30, 2016			$ Change			% Change
Net cash provided by/(used in) operating activities	$	1,279,921		$	631,591		$	648,330			102.7	%
Net cash provided by/(used in) investing activities		(212,173	)		(220,672	)		8,499			3.9	%
Net cash provided by/(used in) financing activities		(1,184,750	)		25,000			(1,209,750	)		4839.0	%
Net increase/(decrease) in cash and cash equivalents		(121,741	)		405,525			(527,266	)		-130.0	%
Changes in operating accounts		(1,407,312	)		(784,058	)		(623,254	)		-79.5	%
Effect of non-cash transactions on cash and cash equivalents	$	292,687		$	3,594,479		$	(3,301,792	)		-91.9	%

Cash and Cash Equivalents

Cash and cash equivalents decreased by $121,741 to $1,317,591 at September 30, 2017 from $1,439,332 at December 31, 2016. The decrease is primarily comprised of a net income of $2,394,546, changes in working capital accounts of ($1,407,312) and a increase from non-cash transactions of $292,687. During the nine months ended September 30, 2017 we had investing activities comprised of net purchases of property and equipment of $212,173. We had financing activities that included the repayment of $1,020,000 of notes payable and the repayment of $200,000 on our revolving line of credit during the nine month period ended September 30, 2017.

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Capital Expenditures

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

Presently, we have approximately $200,000 planned for capital expenditures to further develop our infrastructure to allow for growth in our operations during the remainder of 2017.  We expect to fund these capital expenditure needs through a combination of vendor-provided financing, the use of operating or capital equipment leases and cash provided from operations.

Contractual Obligations

The following table sets forth our contractual obligations as of September 30, 2017:

Contractual obligation			Payments due by period
	Total		Less than 1 year			1-2 Years			2-3 Years			3+ Years
Promissory notes (1)	$	1,102,500	$	-0-		$	400,000	(2)	$	702,500	(3)	$	-0-
Convertible notes (1)		6,170,000		50,000	(4)		150,000	(5)		5,770,000	(6)		200,000	(7)
Lines of credit (8)		2,500,000		-0-			-0-			2,500,000			-0-
Operating lease obligations (9)		2,248,288		712,455			529,679			350,944			655,210	(10)
Patent licensing fees (11)		525,000		525,000			-0-			-0-			-0-
Total	$	12,545,788	$	1,287,455		$	1,079,679		$	9,323,444		$	855,210

1. Amounts do not include interest to be paid.

2. Includes $400,000 in 12% notes payable that mature in April 2019.

3. Includes $420,000 in 10% notes payable that mature in April 2020 and $282,500 in 12% notes payable that mature in April 2020.

4. Includes $50,000 in 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the holder at a conversion rate of $1.25 per share.

5. Includes $150,000 in 10% convertible notes that mature in April 2019.

6. 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.

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

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

9. 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 and our European headquarters in Germany.

10. Includes office lease obligations through 2023.

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

Off Balance Sheet Arrangements

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

Debt Obligations

As of September 30, 2017 we were in default on principal and interest payments owed totaling $141,949 on our 10% Convertible Notes that were issued in 1999. 

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 August 31, 2017 the Company repaid $50,000 to Mr. Wit.

On June 30, 2016 the Company and Mr. Wit extended the maturity date of $1,770,000 of convertible debentures to Mr. Wit 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 and Mr. Wit extended the maturity date of $4,055,000 of convertible debentures to Mr. Wit 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.

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On June 30, 2016 the Company and the holders extended the maturity date of $625,000 of convertible debentures originally issued in September 2009.  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 24, 2017 the Company repaid $400,000 and on  August 31, 2017 the Company repaid $225,000.

On June 30, 2016 the Company and the holder extended the maturity date of $100,000 of convertible debentures originally issued in December 2008.  The debentures carry an interest rate of 12% and have a maturity date of 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 $100,00 of convertible debentures.

On June 30, 2016 the Company and our former director, Mr. van Kesteren ("Mr. van Kesteren") extended the maturity date of $150,000 of convertible debentures originally issued in August 2008.  The debentures carry an interest rate of 10% and have a maturity date of April 1, 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 originally issued in August 2008.  The debentures carry an interest rate of 10% and have a maturity date of April 1, 2019.  The expiration date of the warrants associated with the debentures was also extended to April 1, 2019.

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 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 September 30, 2017, $2,500,000 was outstanding on the Line of Credit at an interest rate of 3.25%.

On June 30, 2017 the Company and our former director, Mr. van Kesteren ("Mr. van Kesteren") extended the maturity date of $150,000 of convertible debentures originally issued in August 2008.  The debentures carry an interest rate of 10% and have a maturity date of April 1, 2019.  The expiration date of the warrants associated with the debentures was also extended to April 1, 2019.

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.

On June 30, 2017 the Company repaid $100,00 of 12% convertible debentures originally issued in September 2009.

On August 31, 2017 the Company repaid $90,000 of 12% promissory notes originally issued to Mr. van Kesteren in 2014.

During the next twelve months we expect debt in the aggregate amount of $50,000 to mature as follows:  

● $50,000 of 10% convertible notes currently in default and due that are convertible into shares of common stock at the option of the debenture holder at a conversion rate of $1.25 per share.

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 September 30, 2017) 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.

49

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.

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 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.

50

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.

DEFERRED REVENUE

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

REVENUE RECOGNITION POLICY

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

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

STOCK BASED COMPENSATION.

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

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

51

EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

During the first nine months of 2017, we adopted the following new accounting pronouncements:

In July 2017, The Financial Accounting Standards Board issued Accounting Standards Update 2017-11 “Earnings per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815)” (“ASU 2017-11”) to address narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. Part I of the amendment change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. Part II of the update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. Part I of ASU 2017-11 is effective for public business entities for fiscal years, and interim period within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU-2017-11.

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, 2016 to determine their impact, if any, on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, being September 30, 2017, 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 third quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2017, 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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

52

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
10.47* †	Form of Promissory Note and Schedule of Substantially Identical Promisory Notes
10.48* †	Form of Extension of Maturity Date of Convertible Debenture [and related warrants] and Schedule of Substantially Identical Extensions of Maturity Date of Convertible Debenture [and related warrants]
10.58*	Lease Agreement Extension (Southampton, United Kingdom) dated September 10, 2017
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.

53

SIGNATURES

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

Dated: November 13, 2017

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)

54

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 September 30, 2017 of OmniComm Systems, Inc.;

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

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

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

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

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

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

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

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

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

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

November 13, 2017

By: /s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

[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 September 30, 2017 of OmniComm Systems, Inc.;

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

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

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

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

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

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

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

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

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

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

November 13, 2017

By: /s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

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

EX-32.1

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 September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, being, Cornelis F. Wit, Executive Chairman of the Company, and Thomas E. Vickers, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

November 13, 2017

/s/ Cornelis F. Wit

Cornelis F. Wit

Executive Chairman

November 13, 2017

/s/ Thomas E. Vickers

Thomas E. Vickers

Chief Financial Officer

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

EX-10.47

Exhibit 10.47

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]

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 September 30, 2017
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)	Noesis International Holdings 2700 North Military Trail, Boca Raton, FL 33431	$45,000	12%	April 1, 2020	$45,000
June 30,2016 (1)	Ad Klinkenberg Achtergracht 29 1017 WN Amsterdam The Netherlands	$120,000	10%	April 1, 2020	$120,000
June 30,2016 (1)	Noesis International Holdings 2700 North Military Trail, Boca Raton, FL 33431	$100,000	12%	April 1, 2020	$100,000
June 30,2016 (1)	Wim Boegem Singel 83 1012 VE Amsterdam The Netherlands	$300,000	10%	April 1, 2020	$300,000
February 29, 2016	Cornelis F. Wit 2101 West Commercial Blvd, Suite 3500, Ft. Lauderdale, FL 33309	$450,000	12%	April 1, 2019	$400,000

(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.

EX-10.48

Exhibit 10.48

Pursuant to Instruction 2 of Item 601(a) of Regulation S-K, the Company has filed only the form of this Extension of Maturity Date of Convertible Debenture [and related Warrants] although the Company has entered into various suchExtension of Maturity Date of Convertible Debenture [and related 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 Extension of Maturity Date of Convertible Debenture [and related Warrants] identifies each Extension of Maturity Date of Convertible Debenture [and related Warrants] that have not been filed (or incorporated by reference) because they are substantially identical in all material respects to the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed, and sets forth the material details in which the each omitted Extension of Maturity Date of Convertible Debenture [and related Warrants] differ from the form of Extension of Maturity Date of Convertible Debenture [and related Warrants] that is being filed.

EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE

This Extension of Maturity Date of Convertible Debenture (“Extension”) is by and between the individual or entity named on an executed counterpart of the signature page hereto (each such signatory is referred to as “Holder”) and OmniComm Systems, Inc., a Delaware corporation (“Maker”) and is entered into as of the day the last Holder executes a copy of this Extension.

     WHEREAS, Maker has delivered to each Holder that certain     % Convertible Debenture Series ( ) of the Maker (“Convertible Debenture”) dated            in the aggregate to Holder in the principal of $               .

     WHEREAS, the Maturity Date of the Convertible Debentures, as that term is defined in the Convertible Debenture, is                , and all principal and interest due thereunder remain unpaid as of the date hereof.

WHEREAS, the parties have agreed to extend the Maturity Date.

WHEREAS, each holder has all requisite power, authority, and capacity to enter into this Extension and to extend the Maturity Date of the Convertible Debenture.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, each Holder and the Maker hereby agree as follows:

1. Recitals. The foregoing recitals are true and correct.

2.     Extension of Maturity Date. The Maturity Date is hereby extended to                .

3. No Other Changes. Except as specifically set forth herein, all other terms and conditions of the Convertible Debenture remain in full force and effect.

4.     Warrants Extension. Maker hereby agrees to extend the expiration date on the Warrants issued in connection with the Convertible Debenture on ______________, which were originally expected to expire on                . The new expiration date is                .

IN WITNESS WHEREOF, this Extension of Maturity Date of Convertible Debenture is executed as of the day and date the last Holder executes a copy of this Extension.

OmniComm Systems, Inc.

By: ____________________

(name)

(title)

[HOLDERS SIGNATURE PAGE FOLLOWS]

[EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE SIGNATURE PAGE]

IN WITNESS WHEREOF, the undersigned represents that it has caused this extension of Maturity Date of Convertible Debenture and Warrants to be duly executed on its behalf (if an entity, by one of its officers thereunto duly authorized) as of the date written below.

HOLDER:

Printed Name of Holder

By: _________________________________

(Signature of Holder or Authorized Person)

_____________________________________

Printed Name and Title if Authorized Person

_____________________________________

Date

SCHEDULE OF SUBSTANTIALLY IDENTICAL

EXTENSION OF MATURITY DATE OF CONVERTIBLE DEBENTURE [AND RELATED WARRANTS]

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

Date of Agreement	Name of Holder	Amount	Series of Convertible Debentures and Warrants(2)	Maturity Date and Expiration of Warrants	Amount Outstanding at September 30, 2017
June 30, 2016 (1)	Cornelis F. Wit	$4,055,000 and 8,110,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2020	$4,000,000 and 8,000,000 warrants
June 30, 2016 (1)	Cornelis F. Wit	$1,770,000 and 3,540,000 warrants	August 2008	Changed from April 1, 2017 to April 1, 2020	$1,770,000 and 3,540,000 warrants
June 30, 2016 (1)	Guus van Kesteren	$160,000 and 320,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2018	$160,000 and 320,000 warrants
June 30, 2016 (1)	Noesis International Holdings	$100,000 and 200,000 warrants	December 2008	Changed from April 1, 2017 to April 1, 2020	$0 and 200,000 warrants
June 30, 2016 (1)	Ad Klinkenberg	$625,000 and 2,500,000 warrants	September 2009	Changed from April 1, 2017 to April 1, 2020	$0 and 2,500,000 warrants
June 30, 2017 (1)	Fernando MonteroIncentive Savings Trust	$200,000 and 400,000 warrants	December 2008	Changed from April 1, 2018 to April 1, 2021	$200,000 and 400,000 warrants
June 30, 2017 (1)	Guus van Kesteren	$150,000 and 300,000 warrants	August 2008	Changed from April 1, 2018 to April 1, 2019	$150,000 and 300,000 warrants

(1) This Extension of Maturity Date of Convertible Debenture [and related Warrants] supersedes and replaces a prior Extension of Maturity Date of Convertible Debenture [and related Warrants] to the holder, extends the maturity date of the Convertible Debenture and the expiration date of the Warrants of the priorExtension of Maturity Date of Convertible Debenture [and related Warrants].

(2) The form of Debenture and form of Warrant for each series is filed as an exhibit with the Company’s most recent Annual Report on Form 10-K.

EX-10.58

Dated

September 2017

(Dated & Signed by Landlord)

COUNTERPART LEASE

Roll on FROM 10th SEPTEMBER 20 l 7

relating to

FIRST FLOOR OFFICE (in part) MEDINO HOUSE RUSHINGTON BUSINESS PARK

TOTTON SOUTHAMPTON SO40 9LU

between

RA Martin Holdings Limited and

OmniComm Ltd

RA Martin Holdings Limited are in agreement with OmniComm Ltd to allow the 2012 Lease Agreement along with its terms and conditions to continue in its current format until 2027 with the following provisos.

New Term:

10th September 2017

to

9th September 2020 - Tenant / Landlord Break Notice - Three months in writing must be given for the lease to be terminated.

10th September 2020

to

9th September 2023 - Tenant / Landlord Break Notice - Three months in writing must be given for the lease to be terminated.

10th September 2023

to

9th September 2027 - Lease Period End

Rent:

Rental values will roll on from 9th September 2017 with a 3% increase on previous payment period along with a further 3% increase for every subsequent year until lease termination or Break Notice whichever comes first.

I agree to the terms of the lease extension and as a Director I am authorized to sign on behalf of OmniComm Ltd.

/s/ Duncan Kemp

Director Signature

Duncan Kemp

Name

Executive Director of UK Operations

Occupation

/s/ M. Athar

Witness Signature

M. Athar

Witness Name

Accepted on behalf of RA Martin Holdings Limited

/s/ Roy Martin

Roy Martin

Managing Director

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 10, 2017
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	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		148,042,805
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash	$ 1,317,591	$ 1,439,332
Accounts receivable, net of allowance for doubtful accounts of $220,182 and $179,813, respectively	5,415,730	5,455,210
Prepaid expenses	243,434	195,915
Prepaid stock compensation, current portion	0	148,422
Other current assets	32,140	35,055
Total current assets	7,008,895	7,273,934
Property and equipment, net	608,226	637,552
Intangible assets, net	102,248	108,880
Prepaid stock compensation	0	58,663
Other assets	46,478	51,321
TOTAL ASSETS	7,765,847	8,130,350
CURRENT LIABILITIES
Accounts payable and accrued expenses	1,612,757	2,123,073
Deferred revenue, current portion	7,131,466	7,250,061
Convertible notes payable, current portion	50,000	50,000
Patent settlement liability, current portion	521,723	862,500
Total current liabilities	14,514,939	16,610,726
LONG TERM LIABILITIES
Line of credit, long term	2,500,000	2,700,000
Notes payable, related parties, long term, net of current portion, net of discount of $140,838 and $237,664, respectively	259,162	212,336
Notes payable, long term, net of current portion, net of discount of $310,447 and $455,285, respectively	392,053	337,215
Deferred revenue, long term, net of current portion	2,000,897	2,289,169
Convertible notes payable, related parties, long term, net of current portion	5,770,000	5,825,000
Convertible notes payable, long term, net of current portion	350,000	1,175,000
Patent settlement liability, long term, net of current portion	0	108,702
TOTAL LIABILITIES	25,787,051	29,258,148
COMMITMENTS AND CONTINGENCIES (See Note 10)
SHAREHOLDERS' (DEFICIT)
Common stock, 500,000,000 shares authorized, 148,042,805 and 147,786,917 issued and outstanding, respectively, at $0.001 par value	148,044	147,788
Additional paid in capital - preferred	999,750	999,750
Additional paid in capital - common	54,124,362	53,425,956
Accumulated other comprehensive (loss)	(397,119)	(410,505)
Accumulated (deficit)	(72,896,491)	(75,291,037)
TOTAL SHAREHOLDERS' (DEFICIT)	(18,021,204)	(21,127,798)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	7,765,847	8,130,350
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	1,555,297	1,740,278
Conversion Feature Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	86,913	585,452
Warrant Liability Related Parties [Member]
CURRENT LIABILITIES
Derivative liabilities, current	2,317,324	2,519,614
Warrant Liability [Member]
CURRENT LIABILITIES
Derivative liabilities, current	$ 1,239,459	$ 1,479,748

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Allowance for doubtful accounts	$ 220,182	$ 179,813
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)	148,042,805	147,786,917
Common stock, shares outstanding (in shares)	148,042,805	147,786,917
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
Related Party Long Term [Member]
Notes payable discount	$ 140,838	$ 237,664
Notes Payable, Other Payables [Member]
Notes payable discount	$ 310,447	$ 455,285

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues	$ 6,490,147	$ 6,627,104	$ 19,420,456	$ 16,449,374
Reimbursable revenues	225,766	179,307	755,344	818,036
Total revenues	6,715,913	6,806,411	20,175,800	17,267,410
Cost of goods sold	1,133,480	1,026,115	3,320,190	2,937,145
Reimbursable expenses-cost of goods sold	181,965	185,090	802,975	824,383
Total cost of goods sold	1,315,445	1,211,205	4,123,165	3,761,528
Gross margin	5,400,468	5,595,206	16,052,635	13,505,882
Operating expenses
Salaries, benefits and related taxes	3,393,915	2,897,917	9,906,293	8,341,342
Rent and occupancy expenses	292,669	299,085	841,718	800,143
Consulting services	64,488	63,284	185,222	111,284
Legal and professional fees	126,959	78,449	367,403	281,745
Travel	188,406	177,204	679,766	577,266
Telephone and internet	39,786	39,256	115,660	122,923
Selling, general and administrative	277,047	298,072	937,313	1,122,847
Bad debt expense	87,366	24,555	40,369	57,862
Depreciation expense	87,382	77,725	249,801	224,302
Amortization expense	5,580	10,152	16,455	30,405
Total operating expenses	4,563,598	3,965,699	13,340,000	11,670,119
Operating income/(loss)	836,870	1,629,507	2,712,635	1,835,763
Other income/(expense)
Interest expense, related parties	(252,585)	(237,377)	(717,782)	(681,063)
Interest expense	(127,488)	(128,454)	(342,240)	(303,827)
Interest income	3	0	589	2
Change in derivative liabilities	(812,535)	(557,562)	723,532	(3,016,398)
Transaction gain/(loss)	(3,104)	(11,728)	19,006	(12,238)
Income/(loss) before income taxes	(358,839)	694,386	2,395,740	(2,177,761)
Income tax (expense)	0	(1,010)	(1,194)	(1,069)
Net income/(loss) attributable to common stockholders	$ (358,839)	$ 693,376	$ 2,394,546	$ (2,178,830)
Net income/(loss) per share
Basic (in dollars per share)	$ 0	$ 0	$ 0.02	$ (0.01)
Diluted (in dollars per share)	$ 0	$ 0	$ 0.02	$ (0.01)
Weighted average number of shares outstanding
Basic (in shares)	147,858,566	147,686,257	147,805,410	145,257,206
Diluted (in shares)	147,858,566	147,972,209	147,850,886	145,257,206

XML

Condensed Consolidated Statements of Comprehensive Income/(Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net income/(loss) attributable to common stockholders	$ (358,839)	$ 693,376	$ 2,394,546	$ (2,178,830)
Other comprehensive income/(loss)
Change in foreign currency translation adjustment	1,310	(7,780)	13,386	(25,567)
Other comprehensive income/(loss)	1,310	(7,780)	13,386	(25,567)
Comprehensive income/(loss)	$ (357,529)	$ 685,596	$ 2,407,932	$ (2,204,397)

XML

Condensed Consolidated Statement of Shareholders' (Deficit) (Unaudited) - USD ($)	Series A Preferred Stock [Member] Preferred Stock [Member]	Series D Preferred Stock [Member] Preferred Stock [Member]	Additional Paid In Capital Preferred [Member]	Common Stock [Member]	Additional Paid In Capital Common [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balances at September 30, 2017 (in shares)	3,637,724	250,000		131,703,577
Balance (in shares) at Dec. 31, 2015	3,637,724	250,000		131,703,577
Balance at Dec. 31, 2015	$ 3,637	$ 250	$ 4,230,792	$ 131,704	$ 49,974,415	$ (75,392,917)	$ (366,355)	$ (21,418,474)
Employee stock option expense					35,046			35,046
Change in foreign currency translation adjustment							(44,150)	(44,150)
Restricted stock issuance/(forfeiture) (in shares)				360,000
Restricted stock issuance/(forfeiture)				$ 360	68,040			$ 68,400
Issuance of common stock, stock option exercise (in shares)				1,100,000				1,120,000
Issuance of common stock, stock option exercise				$ 1,100	128,400			$ 129,500
Cashless issuance of common stock, stock option exercise (in shares)				7,644
Cashless issuance of common stock, stock option exercise				$ 8	(8)			0
Issuance of common stock, in exchange for Series A Preferred Stock (in shares)	(3,637,724)			14,615,696
Issuance of common stock, in exchange for Series A Preferred Stock	$ (3,637)		(3,231,042)	$ 14,616	3,220,063			0
Net income/(loss)	$ 0	$ 0	0	$ 0	0	101,880	0	101,880
Balances at September 30, 2017 (in shares)	3,637,724	250,000		131,703,577
Balance at Dec. 31, 2016	$ 0	$ 250	999,750	$ 147,788	53,425,956	(75,291,037)	(410,505)	(21,127,798)
Balances at September 30, 2017 (in shares)	0	250,000		147,786,917
Balance (in shares) at Dec. 31, 2016	0	250,000		147,786,917
Employee stock option expense					263,679			263,679
Change in foreign currency translation adjustment							13,386	13,386
Restricted stock issuance/(forfeiture) (in shares)				(16,668)
Restricted stock issuance/(forfeiture)				$ (17)	(2,817)			$ (2,834)
Issuance of common stock, stock option exercise (in shares)				250,000				300,000
Issuance of common stock, stock option exercise				$ 250	35,000			$ 35,250
Cashless issuance of common stock, stock option exercise (in shares)				22,556
Cashless issuance of common stock, stock option exercise				$ 23	(23)			0
Net income/(loss)	$ 0	$ 0	0	$ 0	0	2,394,546	0	2,394,546
Reclassification of conversion feature liability associated with convertible debt					402,567			402,567
Balances at September 30, 2017 (in shares)	0	250,000		147,786,917
Balance at Sep. 30, 2017	$ 0	$ 250	$ 999,750	$ 148,044	$ 54,124,362	$ (72,896,491)	$ (397,119)	$ (18,021,204)
Balances at September 30, 2017 (in shares)	0	250,000		148,042,805

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)			$ 2,394,546	$ (2,178,830)	$ 101,880
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Change in derivative liabilities	$ 812,535	$ 557,562	(723,532)	3,016,398
Interest expense from derivative instruments			241,664	96,639
Employee stock compensation			467,930	168,873
Provision for doubtful accounts	87,366	24,555	40,369	57,862	132,767
Depreciation and amortization			266,256	254,707
Changes in operating assets and liabilities
Accounts receivable			(889)	(754,545)
Prepaid expenses			(47,519)	(9,648)
Other current assets			2,915	(33,558)
Other assets			4,843	(6,326)
Accounts payable and accrued expenses			(510,316)	184,731
Patent settlement liability			(449,479)	(362,921)
Deferred revenue			(406,867)	198,209
Net cash provided by/(used in) operating activities			1,279,921	631,591
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(212,173)	(220,672)
Net cash (used in) investing activities			(212,173)	(220,672)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable			(1,020,000)	0
Proceeds/(repayments) from revolving line of credit			(200,000)	(100,000)
Proceeds from Stock Options Exercised			35,250	125,000
Net cash provided by/(used in) financing activities			(1,184,750)	25,000
Effect of exchange rate changes on fixed and intangible assets			(18,125)	(4,827)
Effect of exchange rate changes on cash and cash equivalents			13,386	(25,567)
Net increase/(decrease) in cash and cash equivalents			(121,741)	405,525
Cash and cash equivalents at beginning of period			1,439,332	835,219	835,219
Cash and cash equivalents at end of period	$ 1,317,591	$ 1,240,744	1,317,591	1,240,744	$ 1,439,332
Supplemental disclosures of cash flow information:
Income taxes			1,194	1,069
Interest			802,327	1,078,795
Non-cash transactions:
Notes payable issued in exchange for existing notes payable			350,000	7,652,500
Restricted stock issuance/(forfeiture)			(2,834)	68,400
Common stock issued in exchange for 5% Series A Preferred Stock			0	3,637,724
Reclassification of conversion feature liability associated with convertible debt			402,567	0
Promasys B.V. [Member]
Non-cash transactions:
Promissory notes issued for accrued interest			$ 0	$ 450,000

XML

Note 1 - Organization and Nature of Operations

9 Months Ended

Sep. 30, 2017

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”) 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 software applications; TrialMaster

®

, TrialOne

®

, eClinical Suite and Promasys

®

(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 industry is predicated on our ability to continue enhancing and broadening the scope of solutions offered through our EDC

Software and services. Our research and 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. During the

nine

month periods ended

September 30, 2017

and

September 30, 2016

we spent

$2,230,566

and

$1,946,737,

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

9 Months Ended

Sep. 30, 2017

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

2016

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 a

nd 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

nine

month periods ended

September 30, 2017

and

September 30, 2016

 are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

Th

e operating results for the

nine

month period ended

September 30, 2017

are

not

necessarily indicative of the results that

may

be expected for the year-ended

December 

31,

2017.

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, 2016.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the

unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities

, the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results

may

differ from those estimates.

Reclassifications

Certain reclassifications have been made in the

2016

financial statements to conform to the

2017

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. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded a translation gain of

$13,386

 and a translation loss of

$25,567

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively.

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products of

fered by the Company:

TrialMaster, TrialOne

,

eClinical Suite

and

Promas

y

s

.

Service revenues are derived principally from the Company's delivery of the hosted solutions of its

TrialMaster

and

eClinical

Suite

software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (

1

)

 there is persuasive evidence of an arrangement; (

2

) the product or service has been provided to the customer; (

3

) the collection of fees is probable; and (

4

) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in

one

reportable segment which is the delivery of EDC

Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through

four

main activities

, including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its

 

TrialMaster

 and 

eClinical Suite

 software products as hosted application solutions delivered through a standard web browser, with customer support and training services. The Company's 

TrialOne

 and 

Promasys

 solutions are presently available on a technology transfer or off-the-shelf basis. To date, hosted applications revenues have been primarily related to 

TrialMaster

 and 

eClinical Suite

.

Revenues result

ing from

TrialMaster

and

eClin

i

cal

Suite

application hosting services consist of

three

components of services for each clinical trial. The

first

component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The

second

component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The

third

component involves services required to close out, or lock, the database for the clinical trial.

Fees charged for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work perfor

med outside the original scope of work is contracted for separately as an additional fee and is generally recognized ratably over the remaining term of the hosting period. Fees for the

first

and

third

stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the

second

stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the

eClinical

Suite

products consist of installation and server configuration, application hosting and related support services. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf software. From time to time a client might require significant modification or customization subsequent to delivery to the customer.

The Company generally enters into software term licenses for its EDC Software products with its customers for

three

to

five

 year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net

30

 days.

The

Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and

may,

in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company

may

also enter into arrangements to provide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional serv

ices 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 ASC

605

-

45,

Principal Agent Considerations

(“ASC

605

-

45”

). In accordance with ASC

605

-

45

these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with

third

-party services provided to our customers by our service and product partners. These

third

-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

The fees associated with each business activity for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively

, are:

	For the nine months ended
Revenue activity	September 30, 2017		September 30, 2016
Set-up fees	$	3,948,687	$	4,891,415
Change orders		1,054,288		932,130
Maintenance		3,749,897		3,556,114
Software licenses		7,951,228		4,204,527
Professional services		2,526,379		2,909,143
Hosting		945,321		774,081
Total	$	20,175,800	$	17,267,410

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

$220,182

 as of

September 30, 2017

and

$179,813

as of

December 31, 2016.

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

nine

month period ended

September 30, 2017

and the year ended

December 31, 2016.

	September 30, 2017		December 31, 2016
Beginning of period	$	179,813	$	116,834
Bad debt expense		40,369		132,767
Write-offs		-0-		(69,788	)
End of period	$	220,182	$	179,813

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any

one

financial institution

may

be in excess of FDIC-insured limits. As of

September 30, 2017,

$902,864

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

September 30, 2017.

The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses

, when incurred

, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of

September 30, 2017,

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

1

0%

of our revenues during the

nine

month period ended

September 30, 2017

or approximately

$2

,021

,000.

One customer accounted for

18%

of our revenues during the

nine

month period ended

September 30, 2016

or approximately

$3

,028,000.

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

nine

month periods ended

September 30, 2017

and

September 30, 2016

and the year ended

December 31, 2016.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
September 30, 2017		1		10%		2		38%
December 31, 2016		1		16%		2		21%
September 30, 2016		1		18%		1		11%

The table below provides revenues from European customers for the

nine

month periods ended

September 30, 2017

and

September 30, 2016.

European revenue
For the nine months ended
September 30, 2017				September 30, 2016
European revenues		% of Total revenues		European revenues		% of Total revenues
	$2,514,601		12%		$1,883,940		11%

The Company serves all of its hosting

customers from

third

-party web hosting facilities located in the United States. The Company does

not

control the operation of these facilities and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the

third

-party web hosting facilities become unavailable, although in such circumstances, the Company's service

may

be interrupted during the transition.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Add

itions and betterments are capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the asset’s estimated useful life, which is

5

years for leasehold improvements, computers, equipment and furniture and

3

years for software. Gains or losses on disposal are charged to operations.

ASSET IMPAIRMENT

Acquisitions and Intangible Assets

We account for acquisitions in accordance with

ASC

805

,

Business Combinations

(“ASC

805”

) and

ASC

350,

Intangibles- Goodwill and Other

(“ASC

350”

). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay

no

more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts

may

not

be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset

’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

FAIR VALUE MEASUREMENT

OmniComm

’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC

815

,

Derivatives and Hedging

(“ASC

815”

)

.

ASC

815

requires that changes in the fair value of derivative financial instruments with

no

hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC

820

,

Fair Value Measurements and Disclosures

(“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

September 30, 2017,

the Company had

$9,132,363

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

one

month to

5

years. The Company had

$7,131,466

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 $

528,778

and

$563,803

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

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

nine

month periods ended

September 30, 2017

and

September 30, 2016

we spent

$2,230,566

and

$1,946,737

, 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 Shareholders on

June 16, 2016.

The

2016

Plan initially provides for the issuance of up to

10,000,000

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

2016

Plan automatically increases on

January

1st

of each year for a period of

nine

(

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

September 30, 2017

10,500,000

shares of our common stock were authorized for issuance under the

2016

Plan.

The predecessor plan, t

he OmniComm Systems, Inc.

2009

Equity Incentive Plan (the

“2009

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

July 10, 2009

and terminated on

June 16, 2016

upon the approval of the

2016

Plan. The

2009

Plan provided for the issuance of up to

7,500,000

shares to employees, directors and key consultants. The

2016

and

2009

Plans are more fully described in “Note

13,

Equity Incentive Plans”.

The Company accounts for its employee equity incentive

plans 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 Compan

y accounts for income taxes in accordance with ASC

740,

Income Taxe

s

(“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 a

re established

, when necessary

, to reduce deferred tax assets to the estimated amount to be realized. Income tax expense represents the tax payable for the current period and the change during the period in the deferred tax assets and liabilities.

IMPACT

OF NEW ACCOUNTING STANDARDS

During

the

first

nine

months of

2017,

we adopted the following new accounting pronouncements:

In

July 2017,

The Financial Accounting Standards Board issued Accounting Standards Update

2017

-

11

“Earnings per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

), Derivatives and Hedging (Topic

815

)” (“ASU

2017

-

11”

) to address narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. Part I of the amendment change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. Part II of the update recharacterize the indefinite deferral of certain provisions of Topic

480

that now are presented as pending content in the Codification, to a scope exception. Those amendments do

not

have an accounting effect. Part I of ASU

2017

-

11

is effective for public business entities for fiscal years, and interim period within those fiscal years, beginning after

December 15, 2018,

with early adoption permitted. The Company is currently evaluating the impact of adopting ASU-

2017

-

11.

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

9 Months Ended

Sep. 30, 2017

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

147,805

,410

and

145

,257

,206

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively.

The outstanding share balance as of

September 30, 2017

and

September 30, 2016,

respectively, includes -

0

- and

1,476,683

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

not

lapsed.

Antidilutive shares

of

31,924,411

 and

45,059,064

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

nine

month periods ended

September 30, 2017

and

September 30, 2016,

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

September 30, 2017

and

September 30, 2016,

respectively.

Anti-dilutive security	September 30, 2017		September 30, 2016
Employee stock options		4,050,000		1,139,048
Warrants		27,020,000		27,860,000
Convertible notes		740,000		15,910,000
Shares issuable for accrued interest		114,411		150,016
Total		31,924,411		45,059,064

The employee stock o

ptions are exercisable at prices ranging from

$0.17

 to

$0.25

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 conversion prices ranging from

$0.25

to

$1.25

per share.

Some of t

he Company’s convertible debt and convertible preferred stock have an anti-dilutive effect on net income/(loss) per share and were

not

included in the computation of diluted earnings per share.

	For the nine months ended
	September 30, 2017						September 30, 2016
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	2,394,546		147,805,410	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)
Effect of dilutive securities		-0-		45,476		-0-		-0-			-0-		-0-
Diluted EPS	$	2,394,546		147,850,886	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)

	For the three months ended
	September 30, 2017								September 30, 2016
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,686,257	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			-0-		285,952		-0-
Diluted EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,972,209	$	0.00

XML

Note 4 - Property and Equipment, Net

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 : PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	September 30, 2017						December 31, 2016
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	2,298,388	$	1,903,556	$	394,832	$	2,125,067	$	1,761,879	$	363,188		5
Leasehold improvements		118,204		97,177		21,027		114,719		89,789		24,930		5
Computer software		2,001,828		1,846,238		155,590		1,925,462		1,720,399		205,063		3
Office furniture		161,024		124,247		36,777		158,436		114,065		44,371		5
Total	$	4,579,444	$	3,971,218	$	608,226	$	4,323,684	$	3,686,132	$	637,552

Depreciation expense for the

nine

month periods ended

September 30, 2017

and

September 30, 2016

was

$249,801

and

$224,302,

respectively.

XML

Note 5 - Intangible Assets, Net

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE 5 : INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	September 30, 2017						December 31, 2016
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		117,023		30,556		86,467		104,163		21,990		82,173		15
Promasys B.V. software code		72,837		57,056		15,781		72,837		46,130		26,707		5
Promasys B.V. URLs/website		59,103		59,103		-0-		52,608		52,608		-0-		3
Total	$	1,641,664	$	1,539,416	$	102,248	$	1,622,309	$	1,513,429	$	108,880

Amortization expense was $

16,455

and

$30,405

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively.

Remaining amortization expense for the Company

’s intangible assets is as follows:

2017	$	5,592
2018		19,940
2019		7,802
2020		7,802
2021		7,802
Thereafter		53,310
Total	$	102,248

XML

Note 6 - Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2017

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	September 30, 2017		December 31, 2016
Accounts payable	$	494,633	$	697,060
Accrued payroll and related costs		806,586		886,334
Other accrued expenses		142,406		431,961
Accrued interest		169,132		107,718
Total accounts payable and accrued expenses	$	1,612,757	$	2,123,073

XML

Note 7 - Line of Credit, Notes Payable and Liquidity

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 7 : LINE OF CREDIT , NOTES PAYABLE AND LIQUIDITY

On

March 18, 2013,

the Company enter

ed into a

$2,000,000

revolving Line of Credit (“Line of Credit”) with The Northern Trust Company guaranteed by our Executive Chairman, 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

September 30, 2017,

$2

,5

00,000

was outstanding on the Line of Credit at an interest rate of

3

.25%

.

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.

At

September 30, 2017,

the Company owed

$1,102

,500

in notes payable all of which are unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		September 30, 2017		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	400,000	$	-0-	$	-0-		$	-0-	$	400,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		282,500		-0-		282,500			-0-		-0-
Discount on notes payable							-0-		(310,447	)		-0-		(140,838	)
Total				$	1,102,500	$	-0-	$	392,053		$	-0-	$	259,162

At

December 31, 2016,

the Company owed

$1,242,500

in notes payable all of which were unsecured. The table below provides details as to the terms and conditions of the notes payable.

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2016		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	450,000	$	-0-	$	-0-		$	-0-	$	450,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		372,500		-0-		372,500			-0-		-0-
Discount on notes payable							-0-		(455,285	)		-0-		(237,664	)
Total				$	1,242,500	$	-0-	$	337,215		$	-0-	$	212,336

On

April 1, 2015

the Company issued a promissory note in the amount of

$20,000

to our

Executive Vice Chairman, Randall G. Smith ("Mr. Smith"), in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of

12%

and has a maturity date of

April 1, 2018.

The note was repaid in full on

December 14, 2016.

On

February

29,

2016,

t

he 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 Executive Chairman, 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

to Mr. Wit.

The

February

29,

2016

 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 princip

al 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 including our former Director, Mr. van Kesteren, 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 the

$90,000

note payable to Mr. van Kesteren.

The

June 30, 2016 

issuance caused us to calculate and record a derivative liability for the warrant liability. The warrants we

re 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

June 30, 2016 

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

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Convertible Debt Disclosure [Text Block]

NOTE 8 : CONVERTIBLE NOTES PAYABLE

T

he following table summarizes the convertible debt outstanding as of

September 30, 2017

.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		September 30, 2017		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2019		10%		150,000		-0-		-0-		-0-		150,000
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				$	6,170,000	$	-0-	$	50,000	$	5,770,000	$	350,000

The following table summarizes the convertible debt outstanding as of

December 31, 2016

.

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2016		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2018		10%		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2020		10%		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	4/1/2018		12%		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2020		12%		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2020		12%		4,055,000		-0-		-0-		4,055,000		-0-
9/30/2009	4/1/2018		12%		100,000		-0-		-0-		-0-		100,000
9/30/2009	4/1/2020		12%		625,000		-0-		-0-		-0-		625,000
Total				$	7,050,000	$	-0-	$	50,000	$	5,825,000	$	1,175,000

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.

T

he 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. We are in default in the payment of principal and interest. As of

September 30, 2017,

$812,500

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

$5

0,000.

There was

$91

,949

of accrued interest at

September 30

,

2017

.

Secured Convertible Debentures

On

September 30, 2009,

the Company sold an aggregate of

$1,400,000

principal amount

12%

Secured Convertible Debentures (the “

Debentures”) and common stock purchase warrants (the “Warrants”) to purchase an aggregate of

5,600,000

shares of our common stock exercisable at a price of

$0.25

per share for

four

years subsequent to the closing of the transaction to

four

accredited investors including our Executive Chairman, Cornelis F. Wit (“Mr. Wit”). The Company received net proceeds of

$1,400,000.

The Debentures, which bear interest at

12%

per annum, matured on

March 30, 2011.

The Debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of

$0.25

per share.

On

March 30, 2011,

the Company repaid

$200,000

of the outstanding principal amounts owed and extended

$1,200,000

of the convertible notes until

April 1, 2013,

including

$1,100,000

in convertible notes held by Mr. Wit. The Company also extended the ex

piration date of the warrants associated with the

September 2009

offering.

On

February 22, 2013,

the Company and

two

holders extended

$1,200,000

of the convertible notes until

January 1, 2016,

including

$1,100,000

in convertible notes held by Mr. Wit. Mr. Wit also waived all his rights to the security interest under his

$1,100,000

convertible notes. The expiration date of the warrants associated with the

September 2009

offering was also extended to

January 1, 2016.

On

January 31, 2015

the Company and M

r. Wit extended the maturity date of

$1,100,000

of convertible debentures to Mr. Wit. The debentures carry an interest rate of

12%

and have a maturity date of

April 1, 2017.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2017.

On

November 19, 2015

Mr. Wit converted

$475,000

of the convertible debentures into

1,900,000

shares of our common stock. On

November 19, 2015

the Company and Mr. Wit agreed to cancel the

1,900,000

warrants related to the

$475,000

in convertible debentures and

$475,000

of unrelated promissory notes in exchange for

1,900,000

shares of our common stock. On

November 23, 2015

Mr. Wit sold the remaining

$625,000

of convertible debentures and the related warrants to

two

unrelated non-affiliate shareholders.

On

April 1, 2015

the Company and the

holder extended the maturity date of

$100,000

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

Jun

e

30,

2016

the Company and

two

holders extended the maturity date of

$625,000

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,

2017

the Company repaid

$100,000

of convertible debentures to a holder.

On

August 24, 2017

the Company repaid

$400,000

of convertible debentures to a holder.

On

August 31, 2017

the Company repaid

$225,000

of convertible debentures to a holder.

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

Executive Chairman, Cornelis F. Wit (“Mr. Wit”), and

one

of our 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 Kest

eren (“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 conve

rtible 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 warr

ants 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 wi

th 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.

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 Executive Chairman, Cornelis F. Wit (“Mr. Wit”), our Chief Executive Officer and President, Stephen E. Johnson (“Mr. Johnson”), our Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), our former Chief Financial Officer, Ronald T. Linares, and

four

of our Directors. The convertible debentures, which bear interest at

12%

per annum, were due on

December 16, 2010.

The convertible debentures are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of

$0.50

per share.

On

September 30, 2009

Af

filiates of the Company extended

$4,980,000

of Convertible Notes until

December 16, 2013

in accordance with the terms of a Secured Convertible Debenture issued on that date. The expiration date of the warrants associated with the 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 Mr. Veatch extended the maturity date of

$15,000

of convertible debentures issued to our former

Director, Matthew Veatch, to

January 1, 2016.

The expiration date of the warrants associated with the debentures was also extended to

January 1, 2016.

On

March 6, 2013,

the Company and the

 holder agreed to extend the maturity date of

$200,000

of convertible debentures to

January 1, 2014.

The expiration date of the warrants associated with the debentures was also extended to

January 1, 2014.

On

March 12, 2013,

the Company and

the 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,

including

$160,000

due to our former Director, Guus van Kesteren (“Mr. van Kesteren”), 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

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 Mr.

Wit 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 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

 paid

$5,000

to Mr. Smith in exchange for

$5,000

of convertible debentures originally issued in

December 2008.   

On

May 7, 2015

the Company and our former Director, Matthew

Veatch, extended the maturity date of

$15,000

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

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

t

he Company and Mr. Wit extended the maturity date of

$4,055,000

of convertible debentures to Mr. Wit 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

$160,000

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

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

Jun

e

30,

2017,

the Company and the holder agreed to extend the maturity date of

$200,000

of convertible debentures to

April 1, 2021.

The expiration date of the warrants associated with the debentures was also extended to

April 1, 2021.

On

August 31, 2017

the

Company repaid

$155,000

of convertible debentures to

two

holders, including

$55,000

that was repaid to Mr. Wit.

The

principal payments required at maturity under the Company’s outstanding convertible debt at

September 30, 2017

are as follows:

2017	$	50,000
2018		-0-
2019		150,000
2020		5,770,000
2021		200,000
Total	$	6,170,000

XML

Note 9 - Fair Value Measurement

9 Months Ended

Sep. 30, 2017

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 generally accepted accounting principles and expands disclosures about fair value measurements. ASC

820

does

not

require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC

820

clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC

820

requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

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

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

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

 

The valuation techniques that

may

be used to measure fair value are as follows:

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

B. Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings 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 elected the fair value option for the issuance of warrants associated with the promissory notes issued in the

nine

month period ended

September 30, 2016.

The Company

’s financial assets or liabilities subject to ASC

820

as of

September 30, 2017

include the conversion feature and warrant liability associated with convertible debentures issued during

2008

and

2009

and the warrants issued during

2011

and

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

September 30, 2017

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
	September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,642,210	$	-0-	$	-0-	$	1,642,210
Warrant liability		3,556,783		-0-		-0-		3,556,783
Total of derivative liabilities	$	5,198,993	$	-0-	$	-0-	$	5,198,993

(

1

) The fair value of the derivative instruments was estimated using the Income Approach and the Black Scholes option pricing model with the following assumptions for the

nine

month period ended

September 30, 2017

(

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 September 30, 2017
Risk free interest rate	1.23%	to	1.48%
Dividend yield		0.00%
Expected volatility	86.1%	to	115.5%
Expected life (range in years)
Conversion feature liability	1.50	to	3.50
Warrant liability	0.50	to	3.50

A summary as of

December 31, 2016

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
	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	2,325,730	$	-0-	$	-0-	$	2,325,730
Warrant liability		3,999,362		-0-		-0-		3,999,362
Total of derivative liabilities	$	6,325,092	$	-0-	$	-0-	$	6,325,092

(

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, 2016

(

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, 2016
Risk free interest rate	0.82%	to	1.45%
Dividend yield		0.00%
Expected volatility	117.3%	to	143.8%
Expected life (range in years)
Conversion feature liability	1.25	to	3.25
Warrant liability	0.25	to	3.25

A summary as of

September 30, 2017

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
	December 31, 2016		September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	82,173	$	86,467	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		26,707		15,781		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		-0-		-0-		-0-		-0-		68,814
Total	$	108,880	$	102,248	$	-0-	$	-0-	$	278,010

(

3

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

(

4

) The acquired Promasys B.V. software code, customer list and URLs/website are

not

measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

A summary as of

December 31, 2016

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
	December 31, 2015		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	92,444	$	82,173	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		41,274		26,707		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		15,159		-0-		-0-		-0-		68,814
Total	$	148,877	$	108,880	$	-0-	$	-0-	$	278,010

(

3

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

(

4

) The acquired Promasys B.V. software code, customer list and URLs/website are

not

measured on a recurring basis since their initial fair value has been deemed to have a finite life and is being amortized periodically. Instead the Company performs an impairment analysis on a quarterly basis in order to determine whether the carrying value of the assets reflects the fair value of the assets in a market based transaction.

Other identifiable intangible assets, which are subject to amortization, are being amortized using the straight-line method over their estimated useful lives ranging from

3

to

15

years. The Impairment or Disposal of Long-Lived Asset subsection of

ASC

360,

Property, Plant and Equipment

requires us to test the recoverability of long-lived assets, including identifiable intangible assets with definite lives, whenever events or changes in circumstances indicate that the carrying amount

may

not

be recoverable. In testing for potential impairment, if the carrying value of the asset group exceeds the expected undiscounted cash flows, we must then determine the amount by which the fair value of those assets exceeds the carrying value and determine the amount of impairment, if any.

The table below presents the

unrealized gains/(losses) for the

nine

month periods ended

September 30, 2017

and

September 30, 2016

.

	Other income/(expense)
	For the nine months ended
	September 30, 2017		September 30, 2016
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gain/(losses) from changes in derivative liabilities at the reporting date	$	723,532	$	(3,016,398	)
Total unrealized and realized gains/(losses) included in earnings	$	723,532	$	(3,016,398	)

The table

s below set forth a summary of changes in fair value of the Company’s Level

3

financial liabilities at fair value for the

nine

month period ended

September 30, 2017

and the year ended

December 31, 2016.

The tables reflect changes for all financial liabilities at fair value categorized as Level

3

as of

September 30, 2017

and

December 31, 2016

.

	Level 3 financial liabilities at fair value
								Net			Reclassification
								purchases,			of conversion
For the nine	Balance,							issuances			feature liability	Balance,
months ended	beginning			Net realized		Net unrealized		and		associated with		end
September 30, 2017	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of period
Derivatives:
Conversion feature liability	$	(2,325,730	)	$	48,375	$	232,578	$	-0-	$	402,567	$	(1,642,210	)
Warrant liability		(3,999,362	)		-0-		442,579		-0-		-0-		(3,556,783	)
Total of derivative liabilities	$	(6,325,092	)	$	48,375	$	675,157	$	-0-	$	402,567	$	(5,198,993	)

	Level 3 financial liabilities at fair value
									Net
									purchases,
	Balance,								issuances					Balance,
For the year ended	beginning			Net realized		Net unrealized			and			Net transfers		end
December 31, 2016	of year			gains/(losses)		gains/(losses)			settlements			in and/or out		of year
Derivatives:
Conversion feature liability	$	(901,243	)	$	29,108	$	(1,453,595	)	$	-0-		$	-0-	$	(2,325,730	)
Warrant liability		(1,914,923	)		-0-		(1,233,423	)		(851,016	)		-0-		(3,999,362	)
Total of derivative liabilities	$	(2,816,166	)	$	29,108	$	(2,687,018	)	$	(851,016	)	$	-0-	$	(6,325,092	)

XML

Note 10 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 1 0 : COMMITMENTS AND CONTINGENCIES

The Company currently leases

office space under operating leases for its office locations and has operating leases related to server and network co-location and disaster recovery for its operations. The minimum future lease payments required under the Company’s operating leases at

September 30, 2017

are as follows:

2017	$	203,132
2018		650,435
2019		475,233
2020		338,976
2021		269,962
Thereafter		310,550
Total	$	2,248,288

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

$841,718

and

$800,143

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively.

The Comp

any’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 2018.

The Company currently operates its wholly-owned subsidiary, OmniComm Systems B.V, in the Netherlands under the terms of a lease that expires in

October 2018.

LEGAL PROCEEDINGS

From time to time the Com

pany

may

be involved in litigation relating to claims arising out of our operations in the normal course of business. As of 

September 30, 2017,

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.

PATENT LITIGATION SETTLEMENT

Effective

 

April 9, 2009,

we entered into a Settlement and License Agreement with DataSci, LLC (“DataSci”). DataSci granted us a worldwide, non-exclusive non-transferable right and license under the Licensed Patent and the right to sublicense TrialMaster on a Technology Transfer and Technology Transition basis. Under the terms of the Settlement and License Agreement, as amended, we are obligated to pay royalties quarterly for sales of Licensed Products, as defined therein, from

January 1, 2009

until the termination of the Settlement and License Agreement on

December 31, 2017 

equal to

two

percent (

2%

) of OmniComm’s annual Gross Revenues or, alternatively, the annual minimum royalty payment(s), whichever is greater.  In addition to the payment of royalties, the Settlement and Licensing Agreement imposes certain obligations on us including commercialization, certain sublicensing, other payments, insurance, and confidentiality. In addition and as a license fee for past use of the Licensed Patent which

may

have occurred prior to the effective date of the Settlement and Licensing Agreement, we issued a warrant to DataSci to purchase

1,000,000

shares of our common stock at an exercise price of

$.01

per share. The Settlement and Licensing Agreement provides that upon the expiration date of the warrant, at DataSci’s sole discretion, DataSci shall exercise its option under the warrant or licensee shall pay DataSci

$300,000.

The warrant is exercisable commencing on the

second

anniversary of the Settlement and Licensing Agreement,

April 2, 2011,

through the expiration date of the warrant, on the termination date of the Settlement and Licensing Agreement on

December 31, 2017. 

On

June 23, 2009,

we entered into an agreement to acquire the EDC assets of eResearch Technology. Concurrent with the consummation of that transaction we entered into the First Amendment to Settlement and Licensing Agreement with DataSci, (i) to include the eResearch Technology EDC assets acquired within the definition of Licensed Products, and as such subject to the royalty payment(s), under and in accordance with the Settlement and Licensing Agreement, and (ii) provide a release by DataSci of any and all claims of infringement of the Licensed Patent in connection with the eResearch Technology EDC assets acquired which

may

have occurred prior to the effective date of the First Amendment to Settlement and Licensing Agreement for an aggregate amount of

$300,000.

The remaining minimum royalty payments per year are as follows:

2017	$	225,000
Total	$	225,000

During the

 

nine

month periods ended

September 30, 2017

and

September 30, 2016

the Company recorded a charge to earnings of (

$111

,979

) and

$74,579

 respectively, which amounts represent (i) the amount of additional license expense incurred above the stipulated minimum in the DataSci Settlement and License Agreement during the

nine

month periods ended

September 30, 2017

and

September 30, 2016

and (ii) the accretion of the difference between the total stipulated annual minimum royalty payments and the recorded present value accrual of the annual minimum royalty payments.

EMPLOYMENT AGREEMENTS

We have employment agreements

in place with the following members of our executive management team:

Cornelis F. Wit, 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 the employee's termination by the Company for any reason other than for cause, as described in the employment agreement, or termination by the employee pursuant to a material breach of the agreement by the Company.

XML

Note 11 - Related Party Transactions

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

NOTE 1 1 : RELATED PARTY TRANSACTIONS

On

April 1, 2015

the Company issued a promissory note in the amount of

$20,000

to our

Executive Vice Chairman, Randall G. Smith (“Mr. Smith”), in exchange for an existing promissory note in the same amount.  The promissory note carries an interest rate of

12%

and has a maturity date of

April 1, 2018. 

The note was repaid in full on

December 14, 2016.

On

April 30, 2015,

the Company and Stephen E. Johnson, our

 Chief Executive Officer and President (“Mr. Johnson”) extended the maturity date of

$25,000

of convertible debentures to Mr.  Johnson, originally issued in

December 2008.

The debentures carry an interest rate of

12%

and have a maturity date of

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.

As of

September 30, 2017,

we have an aggregate of

$5,770,000

of convertible debentures and

$4

00,000

of promissory notes outstanding to our Executive Chairman, 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 converti ble 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, M r. 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 th e 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

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 Executive Chairman, 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

September 30, 2017,

$2

,500,000

was outstanding on the Line of Credit at an interest rate of

3.25%.

For the

nine

month periods ended

September 30, 2017

and

September 30, 2016

we incurred

$717,782

and

$681,063

, respectively, in interest expense payable to related parties.

XML

Note 12 - Stockholders' (Deficit)

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 1 2 : STOCKHOLDERS’ (DEFICIT)

Our authorized capital

stock consists of

500,000,000

shares of common stock,

$.001

par value per share, and

10,000,000

shares of preferred stock, par value

$.001

per share, of which

5,000,000

shares have been designated as

5%

Series A Preferred Stock,

230,000

shares have been designated as Series B Preferred Stock,

747,500

shares have been designated as Series C Preferred Stock and

250,000

shares have been designated as Series D Preferred Stock.

At the

2

016

Annual Meeting of Stockholders the proposed amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of common stock by

250,000,000

shares to an aggregate of

500,000,000

shares received an affirmative vote from the holders of a majority of the outstanding shares of Voting Securities and an affirmative vote from the holders of a majority of the outstanding shares of common stock. Based on the votes received, the proposed amendment was approved and the number of authorized shares of common stock of the Company was increased from

250,000,000

shares to

500,000,000

shares.

As of

September 30, 2017

we had the following outstanding securities:

o

148

,042

,805

shares of common stock issued and outstanding;

o

27,020

,000

warrants issued and outstanding to purchase shares of our common stock;

o

4,55

0,000

options issued and outstanding to purchase shares of our common stock;

o

250,000

share of our Series D Preferred Stock issued and outstanding; and

o

$6

,170,000

principal amount Convertible Debentures convertible into

12

,280

,000

shares of common stock.

Common Stock

Holders of common stock are entitled to

one

vote for each share on all matters submitted to a stockholder vote. Holders of our voting securities do

not

have cumulati

ve 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 oth

er 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.

Preferred

S

tock

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 th

e shares of each series. In addition, the Board of Directors

may

fix and determine all privileges and rights of the authorized preferred stock series including:

o

dividend and liquidation preferences;

o

voting rights;

o

conversion privileges; and

o

redemption terms

.

Our Board of Directors

may

authorize the issuance of preferred stock which ranks senior to our common stock for the payment of dividends and the distribution of assets on liquidation. In addition, our Board of Directors can fix limitations and restric

tions, if any, upon the payment of dividends on our common stock to be effective while any shares of preferred stock are outstanding.

During the

period from

December 2015

through

April 2016

all

5%

Series A Preferred Stock shareholders accepted the Company’s Exchange Offer and converted a total of

4,125,224

Series A preferred shares into

16,565

,696

common shares.

The following table presents the cumulative arrearage

of undeclared dividends by class of preferred stock as of

September 30, 2017

and

September 30, 2016,

respectively, and the per share amount by class of preferred stock.

	Cumulative arrearage as of				Cumulative arrearage per share as of
	September 30,				September 30,
Series of preferred stock	2017		2016		2017		2016
Series A	$	-0-	$	-0-	$	-0-	$	-0-
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

nine

month period ended

September

30,

2017

and the year ended

December 31, 2016,

and the related changes during these periods

.

September 30, 2017									September 30, 2017
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,020,000		2.09	$	0.42		27,020,000	$	0.42

December 31, 2016									December 31, 2016
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,860,000		2.71	$	0.42		27,860,000	$	0.42

Warrants
Balance at December 31, 2015	22,900,000
Issued	4,970,000
Exercised	-0-
Expired/forfeited	(10,000	)
Balance at December 31, 2016	27,860,000
Issued	-0-
Exercised	-0-
Expired/forfeited	(840,000	)
Balance at September 30, 2017	27,020,000
Warrants exercisable at September 30, 2017	27,020,000
Weighted average fair value of warrants granted during 2017	n/a

Other Comprehensive (Loss)

Due to the availability of net operating losses and related

deferred tax valuations, there is

no

tax effect associated with any component of other comprehensive (loss). The following table lists the beginning balance, activity and ending balance of the components of accumulated other comprehensive (loss).

					Accumulated other
		Foreign currency			comprehensive
		translation			(loss)
Balance at December 31, 2015	$	(366,355	)	$	(366,355	)
2016 Activity		(44,150	)		(44,150	)
Balance at December 31, 2016		(410,505	)		(410,505	)
2017 Activity		13,386			13,386
Balance at September 30, 2017	$	(397,119	)	$	(397,119	)

XML

Note 13 - Employee Equity Incentive Plans

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

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

NOTE 1 3 : EQUITY INCENTIVE PLANS

Stock Option Plan

s

Description of

2016

Equity Incentive Plan

In

2016,

the Company

’s Board of Directors and shareholders 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

September 30, 2017

10,500,000

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, o

ptions 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.

As of

September 30, 2017,

there were

4,175,000

 outstanding options and -

0

- restricted stock shares that have been granted under the

2016

Plan. At

September 30, 2017,

there were

6,325,000

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 shareholders 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

September 30, 2017,

there were

375

,000

outstanding options and

3

,876,662

restricted stock shares that have been granted under the

2009

Plan. At

September 30, 2017,

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, 2015		2,002,500		$	0.14		1.40	$	198,990
Granted		450,000			0.20
Exercised		(1,120,000	)		0.12
Forfeited/cancelled/expired		(107,500	)		0.29
Outstanding at December 31, 2016		1,225,000			0.17		2.62	$	83,425
Granted		3,925,000			0.25
Exercised		(300,000	)		0.13
Forfeited/cancelled/expired		(300,000	)		0.14
Outstanding at September 30, 2017		4,550,000		$	0.24		4.23	$	75,875
Vested and exercisable at September 30, 2017		400,000		$	0.19		1.67	$	27,838

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company

’s closing stock price at quarter-end and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on

September 30, 2017.

The total number of

shares vesting and the fair value of shares vesting for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively, was:

Fair value of options vesting for the nine months ended	Number of options vested		Fair value of options vested
September 30, 2017		62,500	$	12,742
September 30, 2016		162,500	$	33,622

Cash received f

or stock option exercises for the

nine

month periods ended

September 30, 2017

and

September 30, 2016

was

$35,250

and

$125,000,

respectively. Due to the Company’s net loss position,

no

income tax benefit has been realized during the

nine

month periods ended

September 30, 2017

and

September 30, 2016.

The following table summarizes information concerning options outstanding at

September 30, 2017:

Awards breakdown by price range at September 30, 2017
			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		300,000		2.19	$	0.18		250,000		1.74	$	0.17
0.21	to	0.30		4,250,000		4.38		0.25		150,000		1.55		0.22
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		4,550,000		4.23	$	0.24		400,000		1.67	$	0.19

The following table summarizes information concerning options outstanding at

December 31, 2016:

Awards breakdown by price range at December 31, 2016
			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		850,000		2.15	$	0.15		625,000		1.32	$	0.14
0.21	to	0.30		375,000		3.70		0.23		112,500		1.67		0.21
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		1,225,000		2.62	$	0.17		737,500		1.38	$	0.15

The weighted average fair value (per share) of options granted during the

 

nine

month period ended

September 30, 2017

was

$0.19

and

$0.19

 during the

nine

month period ended

September 30, 2016. 

The Black Scholes option-pricing model was utilized to calculate these values.

Basis for Fair Value Estimate of Share-Based Payments

Based on analysis of its historical volatility, the Company expects that the future volatility of its share price is likely to be similar to the historical volatility the Company experienced since the

Company’s commercialization activities were initiated during the

second

half of

2000.

The Company used a volatility calculation utilizing the Company’s own historical volatility to estimate its future volatility for purposes of valuing the share-based payments that have been granted. Actual volatility, and future changes in estimated volatility,

may

differ substantially from the Company’s current estimates.

The Company utilizes the historical data available regarding employee and director exercise activity

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

Below are the assumptions for the fair value of share-based payments for the

nine

month period ended

September 30, 2017

and the year ended

December 31, 2016.

	Stock option assumptions for the period ended
Stock option assumptions	September 30, 2017		December 31, 2016
Risk-free interest rate		1.48%		1.45%
Expected dividend yield		0.0%		0.0%
Expected volatility		133.1%		155.5%
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 nine months ended September 30,
	2017		2016
Stock options granted during the period	$	0.19	$	0.19
Stock options vested during the period	$	0.20	$	0.21
Stock options forfeited during the period	$	0.13	$	0.11

A summary of the status of the Company

’s non

-vested shares underlying stock options as of

September 30, 2017,

and changes during the

nine

month period ended

September 30, 2017

is as follows:

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2017		487,500	$	0.20
Nonvested shares at September 30, 2017		4,150,000	$	0.23

As of

September 30, 2017,

$545,474

 of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted-average period of

1.6

 years.

XML

Note 14 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

1

4

:     

SUBSEQUENT EVENTS

Subsequent to

September 30, 2017

the Company repaid

$200,000

on its revolving Line of Credit.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

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

2016

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.

Consolidation, Policy [Policy Text Block]

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 a

nd 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

nine

month periods ended

September 30, 2017

and

September 30, 2016

 are unaudited, but reflect all adjustments (consisting only of normally recurring adjustments) which management considers necessary for a fair presentation of operating results.

Th

e operating results for the

nine

month period ended

September 30, 2017

are

not

necessarily indicative of the results that

may

be expected for the year-ended

December 

31,

2017.

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, 2016.

Use of Estimates, Policy [Policy Text Block]

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of the

unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Significant estimates incorporated in our financial statements include the recorded allowance for doubtful accounts, the estimate of the appropriate amortization period of our intangible assets, the evaluation of whether our intangible assets have suffered any impairment, the allocation of revenues under multiple-element customer contracts, royalty-based patent liabilities

, the value of derivatives associated with debt issued by the Company and the valuation of any corresponding discount to the issuance of our debt. Actual results

may

differ from those estimates.

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain reclassifications have been made in the

2016

financial statements to conform to the

2017

presentation. These reclassifications did

not

have any effect on our net income/(loss) or shareholders’ deficit.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

foreign currency translation

The financial statements of the Company

’s foreign subsidiaries are translated in accordance with Accounting Standards Codification (“ASC”)

830

-

30,

Foreign Currency Matters—Translation of Financial Statements

("ASC

830

-

30"

). The reporting currency for the Company is the U.S. dollar. The functional currency of the Company’s subsidiaries, OmniComm Europe GmbH in Germany, OmniComm Spain S.L. in Spain and OmniComm Systems B.V. in the Netherlands is the Euro. The functional currency of the Company’s subsidiary, OmniComm Ltd. in the United Kingdom, is the British Pound Sterling. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at each balance sheet date. Revenue and expense accounts of the Company’s foreign subsidiaries are translated using an average rate of exchange during the period. Foreign currency translation adjustments are accumulated as a component of other comprehensive income/(loss) as a separate component of stockholders’ equity. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and accordingly, are recorded directly to the statement of operations. We record translation gains and losses in accumulated other comprehensive income as a component of stockholders’ equity. We recorded a translation gain of

$13,386

 and a translation loss of

$25,567

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively.

Revenue Recognition, Policy [Policy Text Block]

REVENUE RECOGNITION POLICY

The Company derives revenues from software licenses and services of its EDC products and services which can be purchased on a stand-alone basis. License revenues are derived principally from the sale of term licenses for the following software products of

fered by the Company:

TrialMaster, TrialOne

,

eClinical Suite

and

Promas

y

s

.

Service revenues are derived principally from the Company's delivery of the hosted solutions of its

TrialMaster

and

eClinical

Suite

software products, and consulting services and customer support, including training, for all of the Company's products.

The Company recognizes revenues when all of the following conditions are satisfied: (

1

)

 there is persuasive evidence of an arrangement; (

2

) the product or service has been provided to the customer; (

3

) the collection of fees is probable; and (

4

) the amount of fees to be paid by the customer is fixed or determinable.

The Company operates in

one

reportable segment which is the delivery of EDC

Software and services to clinical trial sponsors. The Company segregates its revenues based on the activity cycle used to generate its revenues. Accordingly, revenues are currently generated through

four

main activities

, including hosted applications, licensing, professional services and maintenance-related services.

Hosted Application Revenues

The Company offers its

 

TrialMaster

 and 

eClinical Suite

 software products as hosted application solutions delivered through a standard web browser, with customer support and training services. The Company's 

TrialOne

 and 

Promasys

 solutions are presently available on a technology transfer or off-the-shelf basis. To date, hosted applications revenues have been primarily related to 

TrialMaster

 and 

eClinical Suite

.

Revenues result

ing from

TrialMaster

and

eClin

i

cal

Suite

application hosting services consist of

three

components of services for each clinical trial. The

first

component is comprised of application set up, including design of electronic case report forms and edit checks, installation and server configuration of the system. The

second

component involves application hosting and related support services as well as billable change orders which consist of amounts billed to customers for functionality changes made. The

third

component involves services required to close out, or lock, the database for the clinical trial.

Fees charged for the trial system design, set up and implementation are amortized and recognized ratably over the estimated hosting period. Work perfor

med outside the original scope of work is contracted for separately as an additional fee and is generally recognized ratably over the remaining term of the hosting period. Fees for the

first

and

third

stages of the service are typically billed based upon milestones. Revenues earned upon completion of a contractual milestone are deferred and recognized over the estimated remaining hosting period. Fees for application hosting and related services in the

second

stage are generally billed monthly or quarterly in advance. Revenues resulting from hosting services for the

eClinical

Suite

products consist of installation and server configuration, application hosting and related support services. Revenues are recognized ratably over the period of the service.

Licensing Revenues

The Company's software license revenues are earned from the sale of off-the-shelf software. From time-to-time a client might require significant modification or customization subsequent to delivery to the customer.

The Company generally enters into software term licenses for its EDC Software products with its customers for

three

to

five

 year periods, although customers have entered into both longer and shorter term license agreements. These arrangements typically include multiple elements: software license, consulting services and customer support. The Company bills its customers in accordance with the terms of the underlying contract. Generally, the Company bills license fees in advance for each billing cycle of the license term, which typically is either on a quarterly or annual basis. Payment terms are generally net

30

 days.

The

Company has sold perpetual licenses for EDC Software products in certain situations to existing customers with the option to purchase customer support, and

may,

in the future, do so for new customers based on customer requirements or market conditions. The Company has established vendor specific objective evidence of fair value for the customer support. Accordingly, license revenues are recognized upon delivery of the software and when all other revenue recognition criteria are met. Customer support revenues are recognized ratably over the term of the underlying support arrangement. The Company generates customer support and maintenance revenues from its perpetual license customer base.

Professional Services

The Company

may

also enter into arrangements to provide consulting services separate from a license arrangement. In these situations, revenue is recognized on a time-and-materials basis. Professional serv

ices 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 ASC

605

-

45,

Principal Agent Considerations

(“ASC

605

-

45”

). In accordance with ASC

605

-

45

these amounts are recorded as revenue in the statement of operations with a corresponding expense recorded in cost of goods sold. Pass-through revenues and expenses include amounts associated with

third

-party services provided to our customers by our service and product partners. These

third

-party services are primarily comprised of Interactive Voice and Web Response software services (IVR and IWR), travel and shipping that are incurred on our clients’ behalf.

The fees associated with each business activity for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

respectively

, are:

	For the nine months ended
Revenue activity	September 30, 2017		September 30, 2016
Set-up fees	$	3,948,687	$	4,891,415
Change orders		1,054,288		932,130
Maintenance		3,749,897		3,556,114
Software licenses		7,951,228		4,204,527
Professional services		2,526,379		2,909,143
Hosting		945,321		774,081
Total	$	20,175,800	$	17,267,410

Cost of Sales, Policy [Policy Text Block]

COST OF

GOODS SOLD

Cost of

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

.

Cost of goods sold is expensed as incurred.

Cash and Cash Equivalents, Policy [Policy Text Block]

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid, short-term investments with maturities of

90

days or less. The

carrying amount reported in the accompanying consolidated balance sheets approximates fair value.

Receivables, Policy [Policy Text Block]

ACCOUNTS RECEIVABLE

Accounts receivable are judged as to collectability by management and an allowance for bad debts is established as necessary.

The allowance is based on an evaluation of the collectability of accounts receivable and prior bad debt experience. The Company had recorded an allowance for uncollectible accounts receivable of

$220,182

 as of

September 30, 2017

and

$179,813

as of

December 31, 2016.

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

nine

month period ended

September 30, 2017

and the year ended

December 31, 2016.

	September 30, 2017		December 31, 2016
Beginning of period	$	179,813	$	116,834
Bad debt expense		40,369		132,767
Write-offs		-0-		(69,788	)
End of period	$	220,182	$	179,813

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

Concentration of Credit Risk

Cash and cash equivalents and restricted cash are deposited with major financial institutions and, at times, such balances with any

one

financial institution

may

be in excess of FDIC-insured limits. As of

September 30, 2017,

$902,864

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

September 30, 2017.

The Company maintains an allowance for doubtful accounts based on accounts past due according to contractual terms and historical collection experience. Actual losses

, when incurred

, are charged to the allowance. The Company's losses related to collection of accounts receivable have consistently been within management's expectations. As of

September 30, 2017,

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

1

0%

of our revenues during the

nine

month period ended

September 30, 2017

or approximately

$2

,021

,000.

One customer accounted for

18%

of our revenues during the

nine

month period ended

September 30, 2016

or approximately

$3

,028,000.

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

nine

month periods ended

September 30, 2017

and

September 30, 2016

and the year ended

December 31, 2016.

	Revenues				Accounts receivable
For the period ended	Number of customers		Percentage of total revenues		Number of customers		Percentage of accounts receivable
September 30, 2017		1		10%		2		38%
December 31, 2016		1		16%		2		21%
September 30, 2016		1		18%		1		11%

The table below provides revenues from European customers for the

nine

month periods ended

September 30, 2017

and

September 30, 2016.

European revenue
For the nine months ended
September 30, 2017				September 30, 2016
European revenues		% of Total revenues		European revenues		% of Total revenues
	$2,514,601		12%		$1,883,940		11%

The Company serves all of its hosting

customers from

third

-party web hosting facilities located in the United States. The Company does

not

control the operation of these facilities, and they are vulnerable to damage or interruption. The Company maintains redundant systems that can be used to provide service in the event the

third

-party web hosting facilities become unavailable, although in such circumstances, the Company's service

may

be interrupted during the transition.

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

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Add

itions and betterments are capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the asset’s estimated useful life, which is

5

years for leasehold improvements, computers, equipment and furniture and

3

years for software. Gains or losses on disposal are charged to operations.

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

ASSET IMPAIRMENT

Acquisitions and Intangible Assets

We account for acquisitions in accordance with

ASC

805

,

Business Combinations

(“ASC

805”

) and

ASC

350,

Intangibles- Goodwill and Other

(“ASC

350”

). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay

no

more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

Long-lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts

may

not

be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset

’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use quoted market prices when available and independent appraisals and management estimates of future operating cash flows, as appropriate, to determine fair value.

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

FAIR VALUE MEASUREMENT

OmniComm

’s capital structure includes the use of warrants and convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC

815

,

Derivatives and Hedging

(“ASC

815”

)

.

ASC

815

requires that changes in the fair value of derivative financial instruments with

no

hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC

820

,

Fair Value Measurements and Disclosures

(“ASC

820”

)

.

Revenue Recognition, Deferred Revenue [Policy Text Block]

DEFERRED REVENUE

Deferred revenue represents cash advances

and amounts in accounts receivable as of the balance sheet date received in excess of revenue earned on on-going contracts. Payment terms vary with each contract but

may

include an initial payment at the time the contract is executed, with future payments dependent upon the completion of certain contract phases or targeted milestones. In the event of contract cancellation, the Company is generally entitled to payment for all work performed through the point of cancellation. As of

September 30, 2017,

the Company had

$9,132,363

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

one

month to

5

years. The Company had

$7,131,466

in deferred revenues that are expected to be recognized in the next

twelve

fiscal months.

Advertising Costs, Policy [Policy Text Block]

ADVERTISING

Advertising costs are expensed as incurred. Advertising costs were $

528,778

and

$563,803

for the

nine

month periods ended

September 30, 2017

and

September 30, 2016,

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

nine

month periods ended

September 30, 2017

and

September 30, 2016

we spent

$2,230,566

and

$1,946,737

, respectively, on research and product development activities, which include costs associated with the development of our software products and services for our clients’ projects and which are primarily comprised of salaries and related expenses for our software developers and consulting fees paid to

third

-party consultants

. Research and product development costs are primarily included under Salaries, benefits and related taxes in our Statement of Operations.

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

EQUITY INCENTIVE PLANS

The OmniComm Systems, Inc.

2016

Equity Incentive Plan (the “

2016

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

June 16, 2016.

The

2016

Plan initially provides for the issuance of up to

10,000,000

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

2016

Plan automatically increases on

January

1st

of each year for a period of

nine

(

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

September 30, 2017

10,500,000

shares of our common stock were authorized for issuance under the

2016

Plan.

The predecessor plan, t

he OmniComm Systems, Inc.

2009

Equity Incentive Plan (the

“2009

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

July 10, 2009

and terminated on

June 16, 2016

upon the approval of the

2016

Plan. The

2009

Plan provided for the issuance of up to

7,500,000

shares to employees, directors and key consultants. The

2016

and

2009

Plans are more fully described in “Note

13,

Equity Incentive Plans”.

The Company accounts for its employee equity incentive

plans 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 Compan

y accounts for income taxes in accordance with ASC

740,

Income Taxe

s

(“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 a

re established

, when necessary

, to reduce deferred tax assets to the estimated amount to be realized. Income tax expense represents the tax payable for the current period and the change during the period in the deferred tax assets and liabilities.

New Accounting Pronouncements, Policy [Policy Text Block]

IMPACT

OF NEW ACCOUNTING STANDARDS

During

the

first

nine

months of

2017,

we adopted the following new accounting pronouncements:

In

July 2017,

The Financial Accounting Standards Board issued Accounting Standards Update

2017

-

11

“Earnings per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

), Derivatives and Hedging (Topic

815

)” (“ASU

2017

-

11”

) to address narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. Part I of the amendment change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. Part II of the update recharacterize the indefinite deferral of certain provisions of Topic

480

that now are presented as pending content in the Codification, to a scope exception. Those amendments do

not

have an accounting effect. Part I of ASU

2017

-

11

is effective for public business entities for fiscal years, and interim period within those fiscal years, beginning after

December 15, 2018,

with early adoption permitted. The Company is currently evaluating the impact of adopting ASU-

2017

-

11.

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)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	For the nine months ended
Revenue activity	September 30, 2017		September 30, 2016
Set-up fees	$	3,948,687	$	4,891,415
Change orders		1,054,288		932,130
Maintenance		3,749,897		3,556,114
Software licenses		7,951,228		4,204,527
Professional services		2,526,379		2,909,143
Hosting		945,321		774,081
Total	$	20,175,800	$	17,267,410

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

	September 30, 2017		December 31, 2016
Beginning of period	$	179,813	$	116,834
Bad debt expense		40,369		132,767
Write-offs		-0-		(69,788	)
End of period	$	220,182	$	179,813

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
September 30, 2017		1		10%		2		38%
December 31, 2016		1		16%		2		21%
September 30, 2016		1		18%		1		11%

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

European revenue
For the nine months ended
September 30, 2017				September 30, 2016
European revenues		% of Total revenues		European revenues		% of Total revenues
	$2,514,601		12%		$1,883,940		11%

XML

Note 3 - Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Anti-dilutive security	September 30, 2017		September 30, 2016
Employee stock options		4,050,000		1,139,048
Warrants		27,020,000		27,860,000
Convertible notes		740,000		15,910,000
Shares issuable for accrued interest		114,411		150,016
Total		31,924,411		45,059,064

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the nine months ended
	September 30, 2017						September 30, 2016
	Income/(loss)		Shares		Per-share		Income/(loss)			Shares		Per-share
	numerator		denominator		amount		numerator			denominator		amount
Basic EPS	$	2,394,546		147,805,410	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)
Effect of dilutive securities		-0-		45,476		-0-		-0-			-0-		-0-
Diluted EPS	$	2,394,546		147,850,886	$	0.02	$	(2,178,830	)		145,257,206	$	(0.01	)

	For the three months ended
	September 30, 2017								September 30, 2016
	Income/(loss)			Shares		Per-share			Income/(loss)		Shares		Per-share
	numerator			denominator		amount			numerator		denominator		amount
Basic EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,686,257	$	0.00
Effect of dilutive securities		-0-			-0-		-0-			-0-		285,952		-0-
Diluted EPS	$	(358,839	)		147,858,566	$	(0.00	)	$	693,376		147,972,209	$	0.00

XML

Note 4 - Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	September 30, 2017						December 31, 2016
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		Estimated useful life (years)
Computer & office equipment	$	2,298,388	$	1,903,556	$	394,832	$	2,125,067	$	1,761,879	$	363,188		5
Leasehold improvements		118,204		97,177		21,027		114,719		89,789		24,930		5
Computer software		2,001,828		1,846,238		155,590		1,925,462		1,720,399		205,063		3
Office furniture		161,024		124,247		36,777		158,436		114,065		44,371		5
Total	$	4,579,444	$	3,971,218	$	608,226	$	4,323,684	$	3,686,132	$	637,552

XML

Note 5 - Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

	September 30, 2017						December 31, 2016
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		117,023		30,556		86,467		104,163		21,990		82,173		15
Promasys B.V. software code		72,837		57,056		15,781		72,837		46,130		26,707		5
Promasys B.V. URLs/website		59,103		59,103		-0-		52,608		52,608		-0-		3
Total	$	1,641,664	$	1,539,416	$	102,248	$	1,622,309	$	1,513,429	$	108,880

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

2017	$	5,592
2018		19,940
2019		7,802
2020		7,802
2021		7,802
Thereafter		53,310
Total	$	102,248

XML

Note 6 - Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

Account	September 30, 2017		December 31, 2016
Accounts payable	$	494,633	$	697,060
Accrued payroll and related costs		806,586		886,334
Other accrued expenses		142,406		431,961
Accrued interest		169,132		107,718
Total accounts payable and accrued expenses	$	1,612,757	$	2,123,073

XML

Note 7 - Line of Credit, Notes Payable and Liquidity (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		September 30, 2017		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	400,000	$	-0-	$	-0-		$	-0-	$	400,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		282,500		-0-		282,500			-0-		-0-
Discount on notes payable							-0-		(310,447	)		-0-		(140,838	)
Total				$	1,102,500	$	-0-	$	392,053		$	-0-	$	259,162

				Ending		Non related party					Related party
Origination	Maturity	Interest		principal				Long					Long
date	date	rate		December 31, 2016		Current		term			Current		term
2/29/2016	4/1/2019		12%	$	450,000	$	-0-	$	-0-		$	-0-	$	450,000
6/30/2016	4/1/2020		10%		420,000		-0-		420,000			-0-		-0-
6/30/2016	4/1/2020		12%		372,500		-0-		372,500			-0-		-0-
Discount on notes payable							-0-		(455,285	)		-0-		(237,664	)
Total				$	1,242,500	$	-0-	$	337,215		$	-0-	$	212,336

XML

Note 8 - Convertible Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

2017	$	50,000
2018		-0-
2019		150,000
2020		5,770,000
2021		200,000
Total	$	6,170,000

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		September 30, 2017		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2019		10%		150,000		-0-		-0-		-0-		150,000
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				$	6,170,000	$	-0-	$	50,000	$	5,770,000	$	350,000

						Carrying amount
Date of	Maturity	Interest		Principal at		Short term				Long term
issuance	date	rate		December 31, 2016		Related		Non related		Related		Non related
8/1/1999	6/30/2004		10%	$	50,000	$	-0-	$	50,000	$	-0-	$	-0-
8/29/2008	4/1/2018		10%		150,000		-0-		-0-		-0-		150,000
8/29/2008	4/1/2020		10%		1,770,000		-0-		-0-		1,770,000		-0-
12/16/2008	4/1/2018		12%		200,000		-0-		-0-		-0-		200,000
12/16/2008	4/1/2020		12%		100,000		-0-		-0-		-0-		100,000
12/16/2008	4/1/2020		12%		4,055,000		-0-		-0-		4,055,000		-0-
9/30/2009	4/1/2018		12%		100,000		-0-		-0-		-0-		100,000
9/30/2009	4/1/2020		12%		625,000		-0-		-0-		-0-		625,000
Total				$	7,050,000	$	-0-	$	50,000	$	5,825,000	$	1,175,000

XML

Note 9 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2017

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
	September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	1,642,210	$	-0-	$	-0-	$	1,642,210
Warrant liability		3,556,783		-0-		-0-		3,556,783
Total of derivative liabilities	$	5,198,993	$	-0-	$	-0-	$	5,198,993

	Fair value at		Quoted prices in active markets for identical assets/ liabilities		Significant other observable inputs		Significant unobservable inputs
	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Derivatives: (1) (2)
Conversion feature liability	$	2,325,730	$	-0-	$	-0-	$	2,325,730
Warrant liability		3,999,362		-0-		-0-		3,999,362
Total of derivative liabilities	$	6,325,092	$	-0-	$	-0-	$	6,325,092

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

Significant valuation assumptions for derivative instruments at September 30, 2017
Risk free interest rate	1.23%	to	1.48%
Dividend yield		0.00%
Expected volatility	86.1%	to	115.5%
Expected life (range in years)
Conversion feature liability	1.50	to	3.50
Warrant liability	0.50	to	3.50

Significant valuation assumptions for derivative instruments at December 31, 2016
Risk free interest rate	0.82%	to	1.45%
Dividend yield		0.00%
Expected volatility	117.3%	to	143.8%
Expected life (range in years)
Conversion feature liability	1.25	to	3.25
Warrant liability	0.25	to	3.25

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
	December 31, 2016		September 30, 2017		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	82,173	$	86,467	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		26,707		15,781		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		-0-		-0-		-0-		-0-		68,814
Total	$	108,880	$	102,248	$	-0-	$	-0-	$	278,010

	Carrying amount		Carrying amount		Quoted prices in active markets for identical assets/liabilities		Significant other observable inputs		Significant unobservable inputs
	December 31, 2015		December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Acquired assets (3)
Promasys B.V. customer list (4)	$	92,444	$	82,173	$	-0-	$	-0-	$	136,253
Promasys B.V. software code (4)		41,274		26,707		-0-		-0-		72,943
Promasys B.V. URLs/website (4)		15,159		-0-		-0-		-0-		68,814
Total	$	148,877	$	108,880	$	-0-	$	-0-	$	278,010

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

	Other income/(expense)
	For the nine months ended
	September 30, 2017		September 30, 2016
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gain/(losses) from changes in derivative liabilities at the reporting date	$	723,532	$	(3,016,398	)
Total unrealized and realized gains/(losses) included in earnings	$	723,532	$	(3,016,398	)

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

	Level 3 financial liabilities at fair value
								Net			Reclassification
								purchases,			of conversion
For the nine	Balance,							issuances			feature liability	Balance,
months ended	beginning			Net realized		Net unrealized		and		associated with		end
September 30, 2017	of year			gains/(losses)		gains/(losses)		settlements		convertible debt		of period
Derivatives:
Conversion feature liability	$	(2,325,730	)	$	48,375	$	232,578	$	-0-	$	402,567	$	(1,642,210	)
Warrant liability		(3,999,362	)		-0-		442,579		-0-		-0-		(3,556,783	)
Total of derivative liabilities	$	(6,325,092	)	$	48,375	$	675,157	$	-0-	$	402,567	$	(5,198,993	)

	Level 3 financial liabilities at fair value
									Net
									purchases,
	Balance,								issuances					Balance,
For the year ended	beginning			Net realized		Net unrealized			and			Net transfers		end
December 31, 2016	of year			gains/(losses)		gains/(losses)			settlements			in and/or out		of year
Derivatives:
Conversion feature liability	$	(901,243	)	$	29,108	$	(1,453,595	)	$	-0-		$	-0-	$	(2,325,730	)
Warrant liability		(1,914,923	)		-0-		(1,233,423	)		(851,016	)		-0-		(3,999,362	)
Total of derivative liabilities	$	(2,816,166	)	$	29,108	$	(2,687,018	)	$	(851,016	)	$	-0-	$	(6,325,092	)

XML

Note 10 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

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

2017	$	203,132
2018		650,435
2019		475,233
2020		338,976
2021		269,962
Thereafter		310,550
Total	$	2,248,288

Schedule Of Minimum Royalty Payments [Table Text Block]

2017	$	225,000
Total	$	225,000

XML

Note 12 - Stockholders' (Deficit) (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule Of Dividends In Arrears [Table Text Block]

	Cumulative arrearage as of				Cumulative arrearage per share as of
	September 30,				September 30,
Series of preferred stock	2017		2016		2017		2016
Series A	$	-0-	$	-0-	$	-0-	$	-0-
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]

September 30, 2017									September 30, 2017
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,020,000		2.09	$	0.42		27,020,000	$	0.42

December 31, 2016									December 31, 2016
Warrants outstanding									Warrants exercisable
					Weighted average
Range of exercise price			Number outstanding		remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
$0.25	–	$0.60		27,860,000		2.71	$	0.42		27,860,000	$	0.42

Share-based Compensation, Activity [Table Text Block]

	Weighted average grant date fair value
	for the nine months ended September 30,
	2017		2016
Stock options granted during the period	$	0.19	$	0.19
Stock options vested during the period	$	0.20	$	0.21
Stock options forfeited during the period	$	0.13	$	0.11

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

					Accumulated other
		Foreign currency			comprehensive
		translation			(loss)
Balance at December 31, 2015	$	(366,355	)	$	(366,355	)
2016 Activity		(44,150	)		(44,150	)
Balance at December 31, 2016		(410,505	)		(410,505	)
2017 Activity		13,386			13,386
Balance at September 30, 2017	$	(397,119	)	$	(397,119	)

Warrant [Member]

Notes Tables

Share-based Compensation, Activity [Table Text Block]

Warrants
Balance at December 31, 2015	22,900,000
Issued	4,970,000
Exercised	-0-
Expired/forfeited	(10,000	)
Balance at December 31, 2016	27,860,000
Issued	-0-
Exercised	-0-
Expired/forfeited	(840,000	)
Balance at September 30, 2017	27,020,000
Warrants exercisable at September 30, 2017	27,020,000
Weighted average fair value of warrants granted during 2017	n/a

XML

Note 13 - Employee Equity Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Share-based Compensation, Stock Options, 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, 2015		2,002,500		$	0.14		1.40	$	198,990
Granted		450,000			0.20
Exercised		(1,120,000	)		0.12
Forfeited/cancelled/expired		(107,500	)		0.29
Outstanding at December 31, 2016		1,225,000			0.17		2.62	$	83,425
Granted		3,925,000			0.25
Exercised		(300,000	)		0.13
Forfeited/cancelled/expired		(300,000	)		0.14
Outstanding at September 30, 2017		4,550,000		$	0.24		4.23	$	75,875
Vested and exercisable at September 30, 2017		400,000		$	0.19		1.67	$	27,838

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 nine months ended	Number of options vested		Fair value of options vested
September 30, 2017		62,500	$	12,742
September 30, 2016		162,500	$	33,622

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

Awards breakdown by price range at September 30, 2017
			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		300,000		2.19	$	0.18		250,000		1.74	$	0.17
0.21	to	0.30		4,250,000		4.38		0.25		150,000		1.55		0.22
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		4,550,000		4.23	$	0.24		400,000		1.67	$	0.19

Awards breakdown by price range at December 31, 2016
			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		850,000		2.15	$	0.15		625,000		1.32	$	0.14
0.21	to	0.30		375,000		3.70		0.23		112,500		1.67		0.21
0.31	to	0.50		-0-		0.00		0.00		-0-		0.00		0.00
0.00	to	0.50		1,225,000		2.62	$	0.17		737,500		1.38	$	0.15

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

	Stock option assumptions for the period ended
Stock option assumptions	September 30, 2017		December 31, 2016
Risk-free interest rate		1.48%		1.45%
Expected dividend yield		0.0%		0.0%
Expected volatility		133.1%		155.5%
Expected life of options (in years)		5		5

Share-based Compensation, Activity [Table Text Block]

	Weighted average grant date fair value
	for the nine months ended September 30,
	2017		2016
Stock options granted during the period	$	0.19	$	0.19
Stock options vested during the period	$	0.20	$	0.21
Stock options forfeited during the period	$	0.13	$	0.11

Schedule of Nonvested Share Activity [Table Text Block]

	Shares underlying stock options		Weighted average grant date fair value
Nonvested shares at January 1, 2017		487,500	$	0.20
Nonvested shares at September 30, 2017		4,150,000	$	0.23

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Note 1 - Organization and Nature of Operations (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Research and Development Expense	$ 2,230,566	$ 1,946,737

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Note 2 - Summary of Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Jul. 10, 2009 shares
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ 1,310	$ (7,780)	$ 13,386	$ (25,567)	$ (44,150)
Number of Reportable Segments			1
Number of Revenue Producing Activities	4		4
Allowance for Doubtful Accounts Receivable, Current	$ 220,182		$ 220,182		179,813
Cash, Uninsured Amount	902,864		902,864
Revenues	6,715,913	$ 6,806,411	20,175,800	17,267,410
Deferred Revenue	9,132,363		9,132,363
Deferred Revenue, Current	$ 7,131,466		7,131,466		$ 7,250,061
Advertising Expense			528,778	563,803
Research and Development Expense			$ 2,230,566	$ 1,946,737
Common Stock Available for Issuance, Annual Increase Percent			5.00%
The 2016 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares	10,000,000		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 | shares	10,500,000		10,500,000
Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares						7,500,000
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
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage			10.00%	18.00%	16.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer 1 [Member]
Concentration Risk, Percentage			10.00%	18.00%
Revenues			$ 2,021,000	$ 3,028,000
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			5 years

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Note 2 - Summary of Significant Accounting Policies - Revenue by Business Activity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues	$ 6,715,913	$ 6,806,411	$ 20,175,800	$ 17,267,410
Set Up Fees [Member]
Revenues			3,948,687	4,891,415
Change Orders [Member]
Revenues			1,054,288	932,130
Maintenance [Member]
Revenues			3,749,897	3,556,114
Software Licenses [Member]
Revenues			7,951,228	4,204,527
Professional Services [Member]
Revenues			2,526,379	2,909,143
Hosting [Member]
Revenues			$ 945,321	$ 774,081

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Note 2 - Summary of Significant Accounting Policies - Allowance for Doubtful Account Summary (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Beginning of period			$ 179,813	$ 116,834	$ 116,834
Bad debt expense	$ 87,366	$ 24,555	40,369	$ 57,862	132,767
Write-offs			0		(69,788)
End of period	$ 220,182		$ 220,182		$ 179,813

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Note 2 - Summary of Significant Accounting Policies - Customer Concentration (Details) - Customer Concentration Risk [Member]	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Sales Revenue, Net [Member]
Number of customers	1	1	1
Concentration risk, percentage	10.00%	18.00%	16.00%
Accounts Receivable [Member]
Number of customers	2	1	2
Concentration risk, percentage	38.00%	11.00%	21.00%

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Note 2 - Summary of Significant Accounting Policies - Revenue From European Operations (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
European revenues	$ 6,715,913	$ 6,806,411	$ 20,175,800	$ 17,267,410
Reportable Geographical Components [Member] | Europe [Member]
European revenues			$ 2,514,601	$ 1,883,940
Concentration risk, percentage			12.00%	11.00%

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Note 3 - Earnings (Loss) Per Share (Details Textual) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Weighted Average Number of Shares Outstanding, Basic	147,858,566	147,686,257	147,805,410	145,257,206
Common Stock, Shares, Outstanding	148,042,805		148,042,805		147,786,917
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			31,924,411	45,059,064
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 0.19		$ 0.19
Lower Range Limit [Member]
Debt Instrument, Convertible, Conversion Price	0.25		0.25
Upper Range Limit [Member]
Debt Instrument, Convertible, Conversion Price	1.25		1.25
Lower Range Limit [Member]
Investment Warrants, Exercise Price			0.25
Upper Range Limit [Member]
Investment Warrants, Exercise Price			0.60
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	0.17		0.17
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 0.25		$ 0.25
Restricted Stock [Member]
Common Stock, Shares, Outstanding	0	1,476,683	0	1,476,683

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Note 3 - Earnings (Loss) Per Share - Reconciliation of Anti-dilutive Securities (Details) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Anti-dilutive Security (in shares)	31,924,411	45,059,064
Employee Stock Option [Member]
Anti-dilutive Security (in shares)	4,050,000	1,139,048
Warrant [Member]
Anti-dilutive Security (in shares)	27,020,000	27,860,000
Convertible Debt Securities [Member]
Anti-dilutive Security (in shares)	740,000	15,910,000
Shares Issuable For Accrued Interest [Member]
Anti-dilutive Security (in shares)	114,411	150,016

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Note 3 - Earnings (Loss) Per Share - Computation of Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Basic EPS, Income (loss) numerator	$ (358,839)	$ 693,376	$ 2,394,546	$ (2,178,830)
Weighted Average Number of Shares Outstanding, Basic	147,858,566	147,686,257	147,805,410	145,257,206
Basic EPS, Per-share amount (in dollars per share)	$ 0	$ 0	$ 0.02	$ (0.01)
Effect of dilutive securities, Income (loss) numerator	$ 0	$ 0	$ 0	$ 0
Effect of dilutive securities, Shares denominator (in shares)	0	285,952	45,476	0
Effect of dilutive securities, Per-share amount (in dollars per share)	$ 0	$ 0	$ 0	$ 0
Diluted EPS, Income (loss) numerator	$ (358,839)	$ 693,376	$ 2,394,546	$ (2,178,830)
Diluted EPS, Shares denominator (in shares)	147,858,566	147,972,209	147,850,886	145,257,206
Diluted EPS (in dollars per share)	$ 0	$ 0	$ 0.02	$ (0.01)

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Note 4 - Property and Equipment, Net (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Depreciation	$ 249,801	$ 224,302

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Note 4 - Property and Equipment, Net - Property and Equipment (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Cost	$ 4,579,444	$ 4,323,684
Accumulated Depreciation	3,971,218	3,686,132
Net Book Value	608,226	637,552
Computer And Office Equipment [Member]
Cost	2,298,388	2,125,067
Accumulated Depreciation	1,903,556	1,761,879
Net Book Value	$ 394,832	363,188
Estimated Useful Lives (Year)	5 years
Leasehold Improvements [Member]
Cost	$ 118,204	114,719
Accumulated Depreciation	97,177	89,789
Net Book Value	$ 21,027	24,930
Estimated Useful Lives (Year)	5 years
Computer Equipment [Member]
Cost	$ 2,001,828	1,925,462
Accumulated Depreciation	1,846,238	1,720,399
Net Book Value	$ 155,590	205,063
Estimated Useful Lives (Year)	3 years
Furniture and Fixtures [Member]
Cost	$ 161,024	158,436
Accumulated Depreciation	124,247	114,065
Net Book Value	$ 36,777	$ 44,371
Estimated Useful Lives (Year)	5 years

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Note 5 - Intangible Assets, Net (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Amortization of Intangible Assets	$ 5,580	$ 10,152	$ 16,455	$ 30,405

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Note 5 - Intangible Assets, Net - Intangible Assets (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Cost	$ 1,641,664	$ 1,622,309
Accumulated Amortization	1,539,416	1,513,429
Net Book Value	102,248	108,880
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	$ 117,023	104,163
Accumulated Amortization	30,556	21,990
Net Book Value	$ 86,467	82,173
Finite-Lived Intangible Asset, Useful Life	15 years
Promasys B.V. Software Code [Member]
Cost	$ 72,837	72,837
Accumulated Amortization	57,056	46,130
Net Book Value	$ 15,781	26,707
Finite-Lived Intangible Asset, Useful Life	5 years
Promasys B.V. URLs/Website [Member]
Cost	$ 59,103	52,608
Accumulated Amortization	59,103	52,608
Net Book Value	$ 0	$ 0
Finite-Lived Intangible Asset, Useful Life	3 years

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Note 5 - Intangible Assets, Net - Intangible Assets, Future Amortization Expense (Details)	Sep. 30, 2017 USD ($)
2017	$ 5,592
2018	19,940
2019	7,802
2020	7,802
2021	7,802
Thereafter	53,310
Total	$ 102,248

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Note 6 - Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts payable	$ 494,633	$ 697,060
Accrued payroll and related costs	806,586	886,334
Other accrued expenses	142,406	431,961
Accrued interest	169,132	107,718
Total accounts payable and accrued expenses	$ 1,612,757	$ 2,123,073

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Note 7 - Line of Credit, Notes Payable and Liquidity (Details Textual) - USD ($)	Aug. 31, 2017	Dec. 05, 2016	Jun. 30, 2016	Feb. 29, 2016	Mar. 18, 2013	Sep. 30, 2017	Dec. 31, 2016	Apr. 01, 2015	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						$ 2,500,000
Line of Credit Facility, Interest Rate at Period End						3.25%
Unsecured Debt						$ 1,102,500	$ 1,242,500
Note Payable 17 [Member] | Chairman and Chief Technology Officer [Member]
Debt Instrument, Interest Rate, Stated Percentage								12.00%
Debt Instrument, Face Amount								$ 20,000
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				1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.25
Extinguishment of Debt, Amount				$ 450,000
Warrants Sold During the Period		1,000,000
Repayments of Long-term Debt	$ 50,000
Warrants and Rights Outstanding				325,689
Debt Instrument, Fair Value Disclosure				$ 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	$ 90,000
Warrants and Rights Outstanding			$ 246,921
Debt Instrument, Fair Value Disclosure			$ 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			$ 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 ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Mar. 18, 2013
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Ending principal	$ 1,102,500	$ 1,242,500
Discount on notes payable
Short-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Discount on notes payable	0
Short-term Debt [Member] | Non-Related Party [Member]
Ending principal	0	0
Discount on notes payable	0
Long-term Debt [Member] | Related Party [Member]
Ending principal	259,162	212,336
Discount on notes payable	(140,838)	(237,664)
Long-term Debt [Member] | Non-Related Party [Member]
Ending principal	392,053	337,215
Discount on notes payable	$ (310,447)	$ (455,285)
Notes Payable, Matures April 1, 2019 [Member]
Maturity date	Apr. 01, 2019	Apr. 01, 2019
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Ending principal	$ 400,000	$ 450,000
Notes Payable, Matures April 1, 2019 [Member] | Short-term Debt [Member] | Non-Related Party Current [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2019 [Member] | Short-term Debt [Member] | Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2019 [Member] | Long-term Debt [Member] | Non-Related Party Current [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2019 [Member] | Long-term Debt [Member] | Related Party [Member]
Ending principal	$ 400,000	$ 450,000
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] | Related Party [Member]
Ending principal	0	0
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] | Long-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 II [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Ending principal	$ 282,500	$ 372,500
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] | Short-term Debt [Member] | Non-Related Party [Member]
Ending principal	0	0
Notes Payable, Matures April 1, 2020 II [Member] | Long-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	$ 282,500	$ 372,500

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Note 8 - Convertible Notes Payable (Details Textual) - USD ($)											1 Months Ended	9 Months Ended
	Aug. 31, 2017	Aug. 24, 2017	Jun. 30, 2017	Feb. 29, 2016	Nov. 23, 2015	Nov. 19, 2015	May 01, 2015	Mar. 30, 2011	Sep. 30, 2009	Dec. 31, 1999	Aug. 29, 2008	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Jun. 30, 2016	Jun. 30, 2015	May 07, 2015	Apr. 30, 2015	Apr. 27, 2015	Apr. 01, 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	Dec. 16, 2008	Jun. 30, 2008	Jun. 30, 2004
Convertible Notes Payable												$ 6,170,000		$ 7,050,000
Debt Instrument, Interest Rate, Stated Percentage																										2.00%
Repayments of Notes Payable												1,020,000	$ 0
Director Mr. Wit [Member]
Class of Warrant or Right Cancelled During the Period						1,900,000
Chief Executive Officer [Member]
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Interest Payable				$ 450,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.25
Repayments of Notes Payable	$ 50,000
Convertible Notes 10% [Member]
Convertible Notes Payable										$ 862,500
Payments of Debt Issuance Costs										119,625
Proceeds from Issuance of Debt										$ 742,875
Debt Instrument, Interest Rate, Stated Percentage										10.00%
Debt Instrument, Convertible, Conversion Price																																	$ 1.25
Debt Conversion, Converted Instrument, Amount												$ 812,500
Debt Conversion, Converted Instrument, Shares Issued												1,495,179
Long-term Debt, Gross												$ 50,000
Interest Payable												$ 91,949
Secured Convertible Debenture [Member]
Convertible Notes Payable									$ 1,400,000
Debt Instrument, Interest Rate, Stated Percentage									12.00%
Proceeds from Issuance of Secured Debt									$ 1,400,000
Repayments of Notes Payable	225,000	$ 400,000	$ 100,000					$ 200,000
Secured Convertible Debenture [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable								1,200,000
Secured Convertible Debenture [Member] | Chief Executive Officer and Director Mr. Wit [Member]
Convertible Notes Payable								$ 1,100,000																						$ 1,100,000
Debt Instrument, Convertible, Conversion Price									$ 0.25
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									5,600,000
Class of Warrant or Right, Exercise Price of Warrants or Rights									$ 0.25
Secured Convertible Debenture [Member] | Chief Executive Officer and Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																					$ 1,100,000
Secured Convertible Debenture [Member] | Lenders [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable															$ 625,000					$ 100,000										1,200,000
Secured Convertible Debenture [Member] | Director Mr. Wit [Member]
Debt Conversion, Converted Instrument, Amount						$ 475,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						1,900,000
Extinguishment of Debt, Amount						$ 475,000
Stock Issued During Period Converted Cancelled Debt and Cancelled Warrants Shares						1,900,000
Increase (Decrease) in Notes Payable, Related Parties					$ 625,000
Convertible Debentures Issued August 2008 [Member]
Convertible Notes Payable											$ 2,270,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																					1,770,000									1,770,000
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									$ 1,920,000																					150,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. van Kesteren [Member] | Non-Related Party [Member]
Convertible Notes Payable																						$ 150,000
Convertible Debentures Issued August 2008 [Member] | Director Mr. van Kesteren [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable																$ 150,000
Convertible Debentures [Member] | Director Mr. Wit [Member]
Convertible Notes Payable																																$ 510,000
Debt Conversion, Converted Instrument, Amount											$ 510,000
Convertible Debentures [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member]
Convertible Notes Payable																								$ 150,000
Convertible Debentures [Member] | Chief Operating Officer [Member]
Convertible Notes Payable																		$ 25,000
Debt Instrument, Interest Rate, Stated Percentage																		12.00%
Matures April 1, 2020 I [Member] | Director Mr. Wit [Member]
Convertible Notes Payable															4,055,000
Matures April 1, 2020 I [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable															1,770,000
Notes Payable, Matures April 1, 2018 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member]
Convertible Notes Payable															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															150,000
Matures on April 1, 2019 [Member] | Chief Executive Officer and Director Mr. Wit [Member]
Debt Instrument, Interest Rate, Stated Percentage				12.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				1,800,000
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.25
Extinguishment of Debt, Amount				$ 450,000
Matures on April 1, 2019 [Member] | Chief Officer, Mr. Wit and Mr. Van Kesteren [Member] | Extended Maturity Debentures 2 [Member]
Convertible Notes Payable			150,000
Convertible Debentures Issued December 2008 [Member]
Convertible Notes Payable																															$ 5,075,000
Convertible Debentures Issued December 2008 [Member] | Non-Related Party [Member]
Convertible Notes Payable																						$ 160,000
Convertible Debentures Issued December 2008 [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																									$ 360,000
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] | Lenders [Member]
Convertible Notes Payable			$ 200,000													$ 100,000			$ 200,000
Repayments of Notes Payable	$ 155,000
Convertible Debentures Issued December 2008 [Member] | Lenders [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																							$ 100,000				$ 100,000	$ 200,000		4,505,000
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
Class of Warrant or Right Cancelled During the Period						1,680,000
Extinguishment of Debt, Amount						$ 420,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. Wit [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																					$ 4,475,000
Convertible Debentures Issued December 2008 [Member] | Director Mr. van Kesteren [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable							$ 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									$ 4,980,000
Convertible Debentures Issued December 2008 [Member] | Chief Executive Officer [Member]
Convertible Notes Payable																														4,475,000
Convertible Debentures Issued December 2008 [Member] | Chief Operating Officer [Member]
Convertible Notes Payable																														25,000
Convertible Debentures Issued December 2008 [Member] | Chairman and Chief Technology Officer [Member]
Convertible Notes Payable							5,000																							$ 5,000
Related Party Transaction, Amounts of Transaction							$ 5,000
Convertible Debentures Issued December 2008 [Member] | Former Director [Member]
Convertible Notes Payable																	$ 15,000
Convertible Debentures Issued December 2008 [Member] | Former Director [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																													$ 15,000
Convertible Debentures Issued December 2008 [Member] | President [Member]
Convertible Notes Payable																		$ 25,000
Matures April 1, 2020 II [Member] | Lenders [Member]
Convertible Notes Payable															$ 100,000

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Note 8 - Convertible Notes Payable - Convertible Debt (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Mar. 18, 2013
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Convertible Notes Payable	$ 6,170,000	$ 7,050,000
Convertible notes payable, short term	50,000	50,000
Convertible notes payable, related parties, long term	5,770,000	5,825,000
Convertible notes payable, long term	350,000	1,175,000
Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	5,770,000	5,825,000
Non-Related Party [Member]
Convertible notes payable, short term	50,000	50,000
Convertible notes payable, long term	$ 350,000	$ 1,175,000
Convertible Notes Payable 10% $50,000 [Member]
Maturity date	Jun. 30, 2004	Jun. 30, 2004
Debt Instrument, Interest Rate, Stated Percentage	10.00%	10.00%
Convertible Notes Payable	$ 50,000	$ 50,000
Convertible Notes Payable 10% $50,000 [Member] | Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	0	0
Convertible Notes Payable 10% $50,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	50,000	50,000
Convertible notes payable, long term	$ 0	$ 0
Convertible Notes Payable 10% $150,000 [Member]
Maturity date	Apr. 01, 2019	Apr. 01, 2018
Debt Instrument, Interest Rate, Stated Percentage	10.00%	10.00%
Convertible Notes Payable	$ 150,000	$ 150,000
Convertible Notes Payable 10% $150,000 [Member] | Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, related parties, long term	0	0
Convertible Notes Payable 10% $150,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 150,000	$ 150,000
Convertible Notes Payable 10% $1,770,000 [Member]
Maturity date	Apr. 01, 2020	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	10.00%	10.00%
Convertible Notes Payable	$ 1,770,000	$ 1,770,000
Convertible Notes Payable 10% $1,770,000 [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% $1,770,000 [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, 2018
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Convertible Notes Payable	$ 4,000,000	$ 200,000
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	0
Convertible Notes Payable12 Percent, 200,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term	0	0
Convertible notes payable, long term	$ 0	$ 200,000
Convertible Notes Payable 12 Percent,100,000 [Member]
Maturity date	Apr. 01, 2021	Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage	12.00%	12.00%
Convertible Notes Payable	$ 200,000	$ 100,000
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	$ 100,000
Convertible Notes Payable 12% $4,055,000 [Member]
Maturity date		Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage		12.00%
Convertible Notes Payable		$ 4,055,000
Convertible Notes Payable 12% $4,055,000 [Member] | Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, related parties, long term		4,055,000
Convertible Notes Payable 12% $4,055,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, long term		$ 0
Convertible Notes Payable, 12%, $100,000 issued 9/30/2009 [Member]
Maturity date		Apr. 01, 2018
Debt Instrument, Interest Rate, Stated Percentage		12.00%
Convertible Notes Payable		$ 100,000
Convertible Notes Payable, 12%, $100,000 issued 9/30/2009 [Member] | Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, related parties, long term		0
Convertible Notes Payable, 12%, $100,000 issued 9/30/2009 [Member] | Non-Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, long term		$ 100,000
Convertible Notes Payable 12% $625,000 [Member]
Maturity date		Apr. 01, 2020
Debt Instrument, Interest Rate, Stated Percentage		12.00%
Convertible Notes Payable		$ 625,000
Convertible Notes Payable 12% $625,000 [Member] | Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, related parties, long term		0
Convertible Notes Payable 12% $625,000 [Member] | Non-Related Party [Member]
Convertible notes payable, short term		0
Convertible notes payable, long term		$ 625,000

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Note 8 - Convertible Notes Payable - Convertible Debt Maturity Payments (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Total	$ 6,170,000	$ 7,050,000
Convertible Debt [Member]
2017	50,000
2018	0
2019	150,000
2020	5,770,000
2021	200,000
Total	$ 6,170,000

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Note 9 - Fair Value Measurement (Details Textual)	9 Months Ended
	Sep. 30, 2017
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) - USD ($)		Sep. 30, 2017	[2]	Dec. 31, 2016	[3]
Derivative Liability fair value	[1]	$ 5,198,993		$ 6,325,092
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]	5,198,993		6,325,092
Conversion Feature Liability [Member]
Derivative Liability fair value	[1]	1,642,210		2,325,730
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]	1,642,210		2,325,730
Warrant Liability [Member]
Derivative Liability fair value	[1]	3,556,783		3,999,362
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]	$ 3,556,783		$ 3,999,362

[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 nine month period ended September 30, 2017

[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, 2016

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Note 9 - Fair Value Measurement - Fair Value Assumptions (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Dividend yield	0.00%	0.00%
Minimum [Member]
Risk free interest rate	1.23%	0.82%
Expected volatility	86.10%	117.30%
Minimum [Member] | Conversion Feature Liability [Member]
Expected life (Year)	1 year 182 days	1 year 91 days
Minimum [Member] | Warrant Liability [Member]
Expected life (Year)	182 days	91 days
Maximum [Member]
Risk free interest rate	1.48%	1.45%
Expected volatility	115.50%	143.80%
Maximum [Member] | Conversion Feature Liability [Member]
Expected life (Year)	3 years 182 days	3 years 91 days
Maximum [Member] | Warrant Liability [Member]
Expected life (Year)	3 years 182 days	3 years 91 days

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Note 9 - Fair Value Measurement - Fair Value of Assets Acquired on Non-recurring Basis (Details) - USD ($)		Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Promasys B.V. customer list	[1],[2]	$ 86,467	$ 82,173	$ 92,444
Promasys B.V. software code	[1],[2]	15,781	26,707	41,274
Promasys B.V. URLs/website	[1],[2]	0	0	15,159
Total	[2]	102,248	108,880	$ 148,877
Fair Value, Inputs, Level 1 [Member]
Promasys B.V. customer list	[1],[2]	0	0
Promasys B.V. software code	[1],[2]	0	0
Promasys B.V. URLs/website	[1],[2]	0	0
Total	[2]	0	0
Fair Value, Inputs, Level 2 [Member]
Promasys B.V. customer list	[1],[2]	0	0
Promasys B.V. software code	[1],[2]	0	0
Promasys B.V. URLs/website	[1],[2]	0	0
Total	[2]	0	0
Fair Value, Inputs, Level 3 [Member]
Promasys B.V. customer list	[1],[2]	136,253	136,253
Promasys B.V. software code	[1],[2]	72,943	72,943
Promasys B.V. URLs/website	[1],[2]	68,814	68,814
Total	[2]	$ 278,010	$ 278,010

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

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

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Note 9 - Fair Value Measurement - Unrealized Gain or Loss Included in Earnings (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
The net amount of gains/(losses) for the period included in earnings attributable to the unrealized and realized gain/(losses) from changes in derivative liabilities at the reporting date	$ 723,532	$ (3,016,398)

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Note 9 - Fair Value Measurement - Change in Level 3 Financial Liabilities Fair Value (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Balance, beginning of year	$ (6,325,092)	$ (2,816,166)
Net realized gains/(losses)	48,375	29,108
Net unrealized gains/(losses) relating to instruments still held at the reporting date	675,157	(2,687,018)
Net purchases, issuances and settlements	0	(851,016)
Net transfers in and/or out of Level 3	402,567	0
Balance, end of period	(5,198,993)	(6,325,092)
Conversion Feature Liability [Member]
Balance, beginning of year	(2,325,730)	(901,243)
Net realized gains/(losses)	48,375	29,108
Net unrealized gains/(losses) relating to instruments still held at the reporting date	232,578	(1,453,595)
Net purchases, issuances and settlements	0	0
Net transfers in and/or out of Level 3	402,567	0
Balance, end of period	(1,642,210)	(2,325,730)
Warrant Liability [Member]
Balance, beginning of year	(3,999,362)	(1,914,923)
Net realized gains/(losses)	0	0
Net unrealized gains/(losses) relating to instruments still held at the reporting date	442,579	(1,233,423)
Net purchases, issuances and settlements	0	(851,016)
Net transfers in and/or out of Level 3	0	0
Balance, end of period	$ (3,556,783)	$ (3,999,362)

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Note 10 - Commitments and Contingencies (Details Textual)		9 Months Ended
	Jun. 23, 2009 USD ($)	Sep. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)
Operating Leases, Rent Expense		$ 841,718	$ 800,143
Loss Contingency, Pending Claims, Number		0
License Payments	$ 300,000
Additional Income (Expense) Related to Settlement Agreement		$ (111,979)	$ 74,579
Settlement and Licensing Agreement [Member]
Patent Royalty Percentage Obligation		2.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares		1,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 0.01
Loss Contingency, Estimate of Possible Loss		$ 300,000

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Note 10 - Commitments and Contingencies - Future Minimum Lease Payments (Details)	Sep. 30, 2017 USD ($)
2017	$ 203,132
2018	650,435
2019	475,233
2020	338,976
2021	269,962
Thereafter	310,550
Total	$ 2,248,288

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Note 10 - Commitments and Contingencies - Minimum Royalty Payments Per Year (Details)	Sep. 30, 2017 USD ($)
2017	$ 225,000
Total	$ 225,000

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Note 11 - Related Party Transactions (Details Textual) - USD ($)					1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 31, 2017	Nov. 19, 2015	Mar. 18, 2013	Dec. 16, 2008	Aug. 29, 2008	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Jun. 30, 2016	Feb. 29, 2016	May 01, 2015	Apr. 30, 2015	Apr. 01, 2015	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
Debt Instrument, Interest Rate, Stated Percentage			2.00%
Convertible Notes Payable						$ 6,170,000		$ 6,170,000		$ 7,050,000
Repayments of Notes Payable								1,020,000	$ 0
Line of Credit Facility, Maximum Borrowing Capacity			$ 2,000,000													$ 5,000,000			$ 4,000,000
Long-term Line of Credit						$ 2,500,000		$ 2,500,000
Line of Credit Facility, Interest Rate at Period End						3.25%		3.25%
Interest Expense, Related Party						$ 252,585	$ 237,377	$ 717,782	$ 681,063
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						$ 2,500,000		$ 2,500,000
Line of Credit Facility, Interest Rate at Period End						3.25%		3.25%
Director Mr. Wit [Member]
Class of Warrant or Right Cancelled During the Period		1,900,000
Interest Expense, Related Party Approximately Monthly Amount			$ 9,500
Chief Executive Officer [Member]
Notes Payable, Related Parties												$ 450,000
Debt Instrument, Interest Rate, Stated Percentage												12.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights												1,800,000
Repayments of Notes Payable	$ 50,000
Class of Warrant or Right, Exercise Price of Warrants or Rights												$ 0.25
Interest Payable												$ 450,000
12% Promissory Notes [Member] | Chairman and Chief Technology Officer [Member]
Debt Instrument, Interest Rate, Stated Percentage															12.00%
12% Promissory Notes [Member] | Chairman and Chief Technology Officer [Member]
Notes Payable, Related Parties															$ 20,000
Convertible Debentures [Member] | Chief Operating Officer [Member]
Debt Instrument, Interest Rate, Stated Percentage														12.00%
Convertible Notes Payable														$ 25,000
Convertible Debentures [Member] | Director Mr. Wit [Member]
Convertible Notes Payable																							$ 510,000
Due to Related Parties						$ 5,770,000		$ 5,770,000
Debt Conversion, Converted Instrument, Amount					$ 510,000
Promissory Notes [Member] | CEO And Director [Member]
Notes Payable, Related Parties						$ 400,000		$ 400,000
Convertible Debenture Initiated In June 2008 [Member] | Director Mr. Wit [Member]
Debt Instrument, Interest Rate, Stated Percentage					10.00%
Convertible Notes Payable					$ 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, Convertible, Conversion Price					$ 0.50
Convertible Debenture Initiated In February 2008 [Member] | Director Mr. Wit [Member]
Notes Payable, Related Parties																								$ 150,000
Convertible Notes Payable																	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
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											$ 4,055,000
Convertible Debentures Issued December 2008 [Member]
Convertible Notes Payable				$ 5,075,000
Convertible Debentures Issued December 2008 [Member] | Extended Maturity Debentures [Member]
Convertible Notes Payable																		$ 360,000
Convertible Debentures Issued December 2008 [Member] | Chairman and Chief Technology Officer [Member]
Convertible Notes Payable													$ 5,000							5,000
Convertible Debentures Issued December 2008 [Member] | Chief Operating Officer [Member]
Convertible Notes Payable																				25,000
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																	$ 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																				$ 4,475,000

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Note 12 - Stockholders' (Deficit) (Details Textual)	5 Months Ended	9 Months Ended	12 Months Ended
	Apr. 30, 2016 shares	Sep. 30, 2017 USD ($) $ / shares shares	Dec. 31, 2016 $ / shares shares	Dec. 31, 2015 shares
Common Stock, Shares Authorized		500,000,000	500,000,000	250,000,000
Preferred Stock, Shares Authorized		10,000,000	10,000,000
Common Stock, Shares Authorized, Increase in Amount			250,000,000
Common Stock, Shares, Issued		148,042,805	147,786,917
Class of Warrant or Right, Issued		27,020,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		4,550,000	1,225,000	2,002,500
Convertible Debt | $		$ 6,170,000
Debt Instrument, Convertible, Number of Equity Instruments		12,280,000
Common Stock, Shares, Outstanding		148,042,805	147,786,917
Class of Warrant or Right, Outstanding		27,020,000	27,860,000	22,900,000
Common Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001
Conversion of Series A Preferred Stock into Common Shares [Member]
Conversion of Stock, Shares Converted	4,125,224
Stock Issued During Period, Shares, Conversion of Convertible Securities	16,565,696
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized		5,000,000	5,000,000
Preferred Stock, Dividend Rate, Percentage		5.00%
Preferred Stock, Shares Outstanding		0	0
Preferred Stock, Shares Issued		0	0
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001
Series B Preferred Stock [Member]
Preferred Stock, Shares Authorized		230,000	230,000
Preferred Stock, Shares Outstanding		0	0
Preferred Stock, Shares Issued		0	0
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001
Series C Preferred Stock [Member]
Preferred Stock, Shares Authorized		747,500	747,500
Preferred Stock, Shares Outstanding		0	0
Preferred Stock, Shares Issued		0	0
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001
Series D Preferred Stock [Member]
Preferred Stock, Shares Authorized		250,000	250,000
Preferred Stock, Shares Outstanding		250,000	250,000
Preferred Stock, Shares Issued		250,000	250,000
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.001	$ 0.001

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Note 12 - Stockholders' (Deficit) - Cumulative Arrearage of Undeclared Dividends (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Preferred Stock, Dividend, Cumulative Arrearage	$ 2,081,980	$ 2,081,980
Series A Preferred Stock [Member]
Preferred Stock, Dividend, Cumulative Arrearage	$ 0	$ 0
Preferred Stock, Dividend, Cumulative Arrearage Per Share (in dollars per share)	$ 0	$ 0
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 12 - Stockholders' (Deficit) - Warrants (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Class of Warrant or Right, Outstanding	27,020,000	27,860,000	22,900,000
Weighted average remaining contractual life (Year)	2 years 32 days	2 years 259 days
Weighted average exercise price (in dollars per share)	$ 0.42	$ 0.42
Warrants exercisable at September 30, 2017 (in shares)	27,020,000	27,860,000
Warrants exercisable, weighted average exercise price (in dollars per share)	$ 0.42	$ 0.42
Minimum [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	0.25	0.25
Maximum [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.60	$ 0.60

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Note 12 - Stockholders' (Deficit) - Warrants Activity (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Balance (in shares)	27,860,000	22,900,000
Issued (in shares)	0	4,970,000
Exercised (in shares)	0	0
Expired/forfeited (in shares)	(840,000)	(10,000)
Balance (in shares)	27,020,000	27,860,000
Warrants exercisable at September 30, 2017 (in shares)	27,020,000	27,860,000

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Note 12 - Stockholders' (Deficit) - Accumulated Other Comprehensive Gain (Loss) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Balance	$ (21,127,798)	$ (21,418,474)
Balance	(18,021,204)	(21,127,798)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	(410,505)	(366,355)
Activity	13,386	(44,150)
Balance	(397,119)	(410,505)
AOCI Attributable to Parent [Member]
Balance	(410,505)	(366,355)
Activity	13,386	(44,150)
Balance	$ (397,119)	$ (410,505)

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Note 13 - Employee Equity Incentive Plans (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Common Stock Available for Issuance, Annual Increase Percent	5.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	4,550,000		1,225,000	2,002,500
Proceeds from Stock Options Exercised	$ 35,250	$ 125,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	$ 0	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.19	$ 0.19
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 545,474
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 219 days
The 2016 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	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	10,500,000
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	4,175,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	6,325,000
The 2016 Plan [Member] | Share-based Compensation Award, 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] | Employee Stock 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	0
The 2016 Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
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, Restricted Shares Granted to Employees, Number of Installments in Which Restrictions Lapse	3
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	375,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	0
Equity Incentive Plan 2009 [Member] | Share-based Compensation Award, 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	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 13 - Employee Equity Incentive Plans - Stock Option Activity (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Number of shares (in shares)	1,225,000	2,002,500
Weighted average exercise price (per share) (in dollars per share)	$ 0.17	$ 0.14
Weighted average remaining contractual term (in years) (Year)	4 years 83 days	2 years 226 days	1 year 146 days
Aggregate intrinsic value	$ 75,875	$ 83,425	$ 198,990
Number of shares, granted (in shares)	3,925,000	450,000
Weighted average exercise price (per share), granted (in dollars per share)	$ 0.25	$ 0.20
Number of shares, exercised (in shares)	(300,000)	(1,120,000)
Weighted average exercise price (per share), exercised (in dollars per share)	$ 0.13	$ 0.12
Number of shares, forfeited/cancelled/expired (in shares)	(300,000)	(107,500)
Weighted average exercise price (per share), forfeited/cancelled/expired (in dollars per share)	$ 0.14	$ 0.29
Number of shares (in shares)	4,550,000	1,225,000	2,002,500
Weighted average exercise price (per share) (in dollars per share)	$ 0.24	$ 0.17	$ 0.14
Vested and exercisable at September 30, 2017 (in shares)	400,000
Vested and exercisable at September 30, 2017 (in dollars per share)	$ 0.19
Vested and exercisable at September 30, 2017 (Year)	1 year 244 days
Vested and exercisable at September 30, 2017	$ 27,838

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Note 13 - Employee Equity Incentive Plans - Vested Shares (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Number of options vested (in shares)	62,500	162,500
Fair value of options vested	$ 12,742	$ 33,622

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Note 13 - Employee Equity Incentive Plans - Stock Options Outstanding (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
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)	4,550,000	1,225,000
Weighted average remaining contractual life - outstanding (Year)	4 years 83 days	2 years 226 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.24	$ 0.17
Vested stock options (in shares)	400,000	737,500
Weighted average remaining contractual life - vested (Year)	1 year 244 days	1 year 138 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.19	$ 0.15
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)	300,000	850,000
Weighted average remaining contractual life - outstanding (Year)	2 years 69 days	2 years 54 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.18	$ 0.15
Vested stock options (in shares)	250,000	625,000
Weighted average remaining contractual life - vested (Year)	1 year 270 days	1 year 116 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.17	$ 0.14
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)	4,250,000	375,000
Weighted average remaining contractual life - outstanding (Year)	4 years 138 days	3 years 255 days
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0.25	$ 0.23
Vested stock options (in shares)	150,000	112,500
Weighted average remaining contractual life - vested (Year)	1 year 200 days	1 year 244 days
Weighted average outstanding strike price - vested (in dollars per share)	$ 0.22	$ 0.21
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)	0	0
Weighted average remaining contractual life - outstanding (Year)	0 years	0 years
Weighted average outstanding strike price - outstanding (in dollars per share)	$ 0	$ 0
Vested stock options (in shares)	0	0
Weighted average remaining contractual life - vested (Year)	0 years	0 years
Weighted average outstanding strike price - vested (in dollars per share)	$ 0	$ 0

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Note 13 - Employee Equity Incentive Plans - Fair Value Assumptions of Share-based Payments (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Risk-free interest rate	1.48%	1.45%
Expected dividend yield	0.00%	0.00%
Expected volatility	133.10%	155.50%
Expected life of options (in years) (Year)	5 years	5 years

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Note 13 - Employee Equity Incentive Plans - Weighted Average Grant Date Fair Value Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Stock options granted during the period (in dollars per share)	$ 0.19	$ 0.19
Stock options vested during the period (in dollars per share)	0.20	0.21
Stock options forfeited during the period (in dollars per share)	$ 0.13	$ 0.11

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Note 13 - Employee Equity Incentive Plans - Status of Non-vested Shares (Details) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Shares underlying stock options (in shares)	4,150,000	487,500
Weighted average grant date fair value (in dollars per share)	$ 0.23	$ 0.20

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Note 14 - Subsequent Events (Details Textual)	1 Months Ended
	Nov. 13, 2017 USD ($)
Subsequent Event [Member]
Repayments of Lines of Credit	$ 200,000