OmniComm Systems, Inc. Reports Financial Results for the Year-to-Date and Quarter Ending September 30, 2018


FORT LAUDERDALE, Fla., Nov. 13, 2018 (GLOBE NEWSWIRE) -- OmniComm Systems, Inc. (OmniComm) (OTCQX: OMCM), a global leading provider of clinical data management technology, today announced financial results for the nine- and three-month periods ending September 30, 2018.

For the nine-month period ending September 30, 2018, OmniComm reported revenue of $20.33 million, as compared to revenue of $20.18 million for the nine-month period ending September 30, 2017. Gross margin improved by $0.67 million to $16.72 million, a 4% increase. Operating expenses increased by $1.54 million to $14.88 million.  Year-to-date operating income is $1.84 million, as compared to operating income of $2.71 million for the nine months ending September 30, 2017. EBITDA, a non-GAAP financial measure that OmniComm uses as an additional financial measure, was $2.37 million for the nine months ending September 30, 2018, as compared to EBITDA of $2.98 million for the nine months ending September 30, 2017.

“Our decision in the beginning of 2018 to transition from perpetual licensing to subscription or term licensing has had a short-term impact on our recognized revenue through the first three quarters,” said Kuno van der Post, chief commercial officer of OmniComm, “but the long-term positive impact can already be seen in our backlog, which has risen significantly to over $50 million.  Our contract bookings through the first three quarters of 2018 are a record $28.3 million, compared to our previous best year of $24.8 million through Q3 in 2017.  Despite the 14.1% increase in year-over-year bookings, this increase has only generated a modest increase in year-over-year revenue, due to the change.  However, it does put us in a better position for future growth.”

In 2018, 65% of OmniComm’s contracts are now subscription based, compared to 26% in 2017, and only 9% of OmniComm’s contracts are perpetual, compared to 52% in 2017 (the remaining part of OmniComm’s business are consulting and service contracts).  Perpetual licenses generally offer a much better short-term revenue benefit since they normally include a large one-time upfront license payment that allows for expedited revenue recognition in the first year the agreement was signed, but have a negative long-term effect on future revenue due to much smaller annual maintenance fees which are usually only 20% of the initial license fees. 

“Subscription licenses offer a more consistent revenue model in that the license fees are evenly spread out over the term of the agreement and the term is typically guaranteed, unlike with perpetual license deals,” added Stephen Johnson, chief executive officer and president of OmniComm.  “This does offer a more negative short-term effect on revenue in the first year of the agreement because there is no large upfront license payment, but it gives us a much smoother and more predictable revenue stream over the long-term.”

This licensing transition, coupled with the addition of three new product lines, has also had an impact on EBITDA this year.  A significant portion of the increase in operating expense was directly attributed to the increased headcount to support the new AutoEncoder and IRTMaster™ solutions developed by OmniComm and the addition of the 15 new employees who were part of the Algorics acquisition that introduced the Acuity Analytics product line.  OmniComm also opened up a new office in Bengaluru, India to further enhance global support, especially for our AsiaPac clients.

“We are continually looking to release new products and acquire new technologies that bolster our current technology offering,” said Keith Howells, chief technology officer at OmniComm.  “The addition of a coding solution, randomization and supply tracking, and a comprehensive analytics platform were a good investment for our clients and the long-term growth of OmniComm.”

OmniComm provides EBITDA, a non-GAAP financial measure as additional information to its financial results.  Non-GAAP EBITDA excludes the impact of depreciation and amortization expenses that are included in operating income. Non-GAAP EBITDA is not an alternative or substitute for the financial measure prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) of operating income. The non-GAAP EBITDA financial measure presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define this non-GAAP financial measure in the same way. OmniComm’s management uses non-GAAP EBITDA as a measure of operational efficiency and as a goal for incentive compensation.  Management believes non-GAAP EBITDA is a useful measure investors may use as an additional factor in their analysis of OmniComm’s performance. Please review the below reconciliation of the non-GAAP financial measure EBITDA to the GAAP financial measure operating income, as well as OmniComm’s financial statements as filed with the Securities and Exchange Commission.

OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES
Reconciliation of GAAP operating income to non-GAAP EBITDA
      
   For the nine months ended
   September 30,
    2018  2017
      
Operating income/(loss) (GAAP)$  1,840,512 $  2,712,635
Depreciation expense   279,532    249,801
Amortization expense   248,790    16,455
EBITDA (non-GAAP)$  2,368,834 $  2,978,891
      

Forward-Looking Statements

Statements contained in this press release that are not historical facts 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 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 press release. 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. OmniComm 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.



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,
    2018   2017   2018   2017 
Revenues $  19,557,161  $  19,420,456  $  6,379,641  $  6,490,147 
Reimbursable revenues   775,788     755,344     463,183     225,766 
Total revenues    20,332,949     20,175,800     6,842,824     6,715,913 
          
Cost of goods sold   3,240,449     3,320,190     1,044,020     1,133,480 
Reimbursable expenses-cost of goods sold   368,542     802,975     253,793     181,965 
Total cost of goods sold   3,608,991     4,123,165     1,297,813     1,315,445 
          
Gross margin     16,723,958     16,052,635     5,545,011     5,400,468 
          
Operating expenses       
Salaries, benefits and related taxes   10,695,132     9,906,293     3,483,627     3,393,915 
Rent and occupancy expenses   930,972     841,718     337,824     292,669 
Consulting services   219,856     185,222     55,736     64,488 
Legal and professional fees   381,648     367,403     72,776     126,959 
Travel     588,247     679,766     190,785     188,406 
Telephone and internet   114,696     115,660     43,682     39,786 
Selling, general and administrative   1,297,008     937,313     383,958     277,047 
Bad debt expense   47,931   40,369     21,679     87,366 
Intangible asset impairment   79,634    -0-   -0-   -0-
Depreciation expense   279,532     249,801     115,687     87,382 
Amortization expense   248,790     16,455     91,343     5,580 
Total operating expenses   14,883,446     13,340,000     4,797,097     4,563,598 
          
Operating income/(loss)   1,840,512     2,712,635     747,914     836,870 
          
Other income/(expense)       
Interest expense, related parties   (682,986)    (717,782)    (229,906)    (252,585)
Interest expense   (283,407)    (342,240)    (95,622)    (127,488)
Interest income    16     589     7     3 
Change in derivative liabilities   (1,160,473)    723,532     (2,918,886)    (812,535)
Transaction gain/(loss)   (97,984)    19,006     (12,128)    (3,104)
Income/(loss) before income taxes   (384,322)    2,395,740     (2,508,621)    (358,839)
Income tax (expense)   (155,106)    (1,194)    (154,071) -0- 
Net income/(loss) attributable to common stockholders$  (539,428) $  2,394,546  $  (2,662,692) $  (358,839)
          
Net income/(loss) per share       
  Basic $  (0.00) $  0.02  $  (0.02) $  (0.00)
  Diluted $  (0.00) $  0.02  $  (0.02) $  (0.00)
Weighted average number of shares outstanding       
  Basic    150,282,732     147,805,410     150,905,124     147,858,566 
  Diluted    150,282,732     147,850,886     150,905,124     147,858,566 
          


OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
       
       
    September 30,
2018
 December 31,
2017
    (unaudited)  
ASSETS
       
CURRENT ASSETS    
 Cash $  1,371,962  $  1,176,551 
 Accounts receivable, net of allowance for doubtful accounts of $197,911 and $149,980, respectively    5,124,404     7,492,597 
 Prepaid expenses    390,565     297,131 
 Other current assets    11,917     11,463 
  Total current assets    6,898,848     8,977,742 
 Property and equipment, net    1,330,744     552,538 
 Other assets    
 Intangible assets, net    819,750     97,925 
 Other assets    129,018     46,714 
       
TOTAL ASSETS $  9,178,360  $  9,674,919 
       
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
       
CURRENT LIABILITIES    
 Accounts payable and accrued expenses $  1,686,536  $  2,586,045 
 Notes payable, related parties, current portion, net of discount of $46,946 and  $-0-, respectively    353,054  -0- 
 Convertible notes payable, current portion -0-     50,000 
 Deferred revenue, current portion    6,209,198     7,564,587 
 Capital lease liability, current portion    114,594  -0- 
 Patent settlement liability, current portion -0-     112,500 
 Conversion feature liability, related parties    1,744,002     1,604,723 
 Conversion feature liability    96,510     81,224 
 Warrant liability, related parties    2,754,207     2,196,570 
 Warrant liability    1,682,000     1,244,229 
  Total current liabilities    14,640,101     15,439,878 
       
LONG TERM LIABILITIES    
 Line of credit, long term    3,200,000     2,650,000 
 Notes payable, related parties, long term, net of current portion, net of discount of $-0- and $117,365, respectively -0-     282,635 
 Notes payable, long term, net of current portion, net of discount of $186,268 and $279,402, respectively    516,232     423,098 
 Convertible notes payable, related parties, long term, net of current portion    5,770,000     5,770,000 
 Convertible notes payable, long term, net of current portion    200,000     350,000 
 Deferred revenue, long term, net of current portion    1,658,064     1,952,366 
 Capital lease liability, long term, net of current portion    206,010  -0- 
       
TOTAL LIABILITIES    26,190,407     26,867,977 
       
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, 152,309,472 and 148,542,805 issued and outstanding, respectively, at $0.001 par value    152,311     148,544 
 Additional paid in capital - preferred    999,750     999,750 
 Additional paid in capital - common    55,130,550     54,379,454 
 Accumulated other comprehensive (loss)    (431,661)    (397,237)
 Accumulated (deficit)    (72,863,247)    (72,323,819)
       
TOTAL SHAREHOLDERS' (DEFICIT)    (17,012,047)    (17,193,058)
       
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $  9,178,360  $  9,674,919 
       


OMNICOMM SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
     
    For the nine months ended
    September 30,
    2018  2017 
       
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income/(loss)$ (539,428)$2,394,546 
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities    
 Change in derivative liabilities   1,160,473    (723,532)
 Intangible asset impairment   79,634  -0- 
 Interest expense from derivative instruments   163,553    241,664 
 Employee stock compensation   199,363    467,930 
 Provision for doubtful accounts   47,931    40,369 
 Depreciation and amortization   528,322    266,256 
 Changes in operating assets and liabilities    
  Accounts receivable   2,320,262    (889)
  Prepaid expenses   (93,434)   (47,519)
  Other current assets   (454)   2,915 
  Other assets   (82,304)   4,843 
  Accounts payable and accrued expenses   (899,509)   (510,316)
  Patent settlement liability   (112,500)   (449,479)
  Deferred revenue   (1,649,691)   (406,867)
Net cash provided by/(used in) operating activities   1,122,218    1,279,921 
       
CASH FLOWS FROM INVESTING ACTIVITIES    
 Purchase of property and equipment   (700,028)   (212,173)
 Purchase of Acuity software   (552,403) -0- 
Net cash provided by/(used in) investing activities   (1,252,431)   (212,173)
       
CASH FLOWS FROM FINANCING ACTIVITIES    
 Repayments of notes payable   (200,000)   (1,020,000)
 Proceeds/(repayments) from revolving line of credit   550,000    (200,000)
 Proceeds from exercise of stock options   45,000    35,250 
 Principal repayment of capital lease obligation   (38,064) -0- 
Net cash provided by/(used in) financing activities   356,936    (1,184,750)
       
Effect of exchange rate changes on fixed and intangible assets   3,112    (18,125)
Effect of exchange rate changes on cash and cash equivalents   (34,424)   13,386 
Net increase/(decrease) in cash and cash equivalents   195,411    (121,741)
Cash and cash equivalents at beginning of period   1,176,551    1,439,332 
       
Cash and cash equivalents at end of period$  1,371,962 $  1,317,591 
       
Supplemental disclosures of cash flow information:    
 Cash paid during the period for:    
  Income taxes$  1,035 $  1,194 
  Interest$  889,984  $  802,327 
 
Non-cash transactions:    
 Notes payable issued in exchange for existing notes payable$-0- $350,000 
 Restricted stock issuance/(forfeiture)$41,735  $ (2,834)
 Common stock issued for the purchase of Acuity software $500,000  $-0-
 Capital expenditures funded by capital lease borrowing$359,603  $-0-
 Reclassification of conversion feature liability associated with convertible debt$10,500 $402,567 

About OmniComm Systems, Inc

OmniComm Systems, Inc. is a leading strategic software solutions provider to the life sciences industry. OmniComm is dedicated to helping the world’s pharmaceutical, biotechnology, contract research organizations, diagnostic and device firms, and academic medical centers maximize the value of their clinical research investments. Through the use of innovative and progressive technologies, these organizations drive efficiency in clinical development, better manage their risks, ensure regulatory compliance and manage their clinical operations performance. With an extensive global experience from more than 6,000 clinical trials, OmniComm provides comprehensive solutions for clinical research. Please visit www.omnicomm.com for more information.

Trademarks
OmniComm, TrialMaster, TrialOne, IRTMaster and Promasys are registered trademarks of OmniComm Systems, Inc. Other names may be trademarks of their respective owners.

Contact Info
Investor Relations
OmniComm Systems, Inc.
+1.954.473.1254
invrel@omnicomm.com