UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| 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
(Exact name of Registrant as specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area
code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
Indicate by check mark whether the Registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
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 | ☐ |
| ☒ | 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
As of May 14, 2025, there were shares of common stock, par value $ per share, issued and outstanding.
Table of Contents
| i |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements that we make from time to time, including statements contained in this Quarterly Report on Form 10-Q (“Form 10-Q”) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q are forward-looking statements. The forward-looking statements in this Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs.
Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. Forward-looking statements in this Form 10-Q include, without limitation, statements reflecting management’s expectations regarding future financial performance and operating expenditures (including our ability to continue as a going concern, to raise additional capital and to succeed in our future operations), expected growth, profitability and business outlook, liquidity, operating expenses, and enhancement of our internal control structure.
Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, among other things, the unknown risks and uncertainties that we believe could cause actual results to differ from these forward looking statements as set forth under the heading, “Risk Factors” and elsewhere in this Form 10-Q and other documents we file with the SEC. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to:
| ● | our projected financial position and estimated cash burn rate; | |
| ● | our estimates regarding expenses, future revenues and capital requirements; | |
| ● | our ability to continue as a going concern; | |
| ● | our ability to raise substantial additional capital in sufficient amounts or on acceptable terms to fund our operations and our business plan; | |
| ● | our ability to reverse the recent decline in our revenue and resume growing our revenue; | |
| ● | our ability to obtain and maintain intellectual property protection for our current products and services; | |
| ● | our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights; | |
| ● | the possibility that a third party may claim we have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against these claims; |
| ii |
| ● | our reliance on third-party suppliers; | |
| ● | the success of competing products or services that are or become available; | |
| ● | our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; | |
| ● | the potential for us to incur substantial costs resulting from lawsuits against us and the potential for these lawsuits to cause us to limit our commercialization of our products and services; and | |
| ● | changes in demand for our products and services as a result of geopolitical and/or macroeconomic conditions. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in our Form 10-K and in other documents we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations.
You should read this Form 10-Q and the documents that we incorporate by reference in this Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements including those described in this Form 10-Q and in the “Risk Factors” section of our Form 10-K and other documents we file with the SEC.
| iii |
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
ONEMEDNET CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
March 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment in crypto assets – Bitcoin | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Deferred revenues | ||||||||
| Loan extensions | ||||||||
| PIPE Notes | ||||||||
| Yorkville Note | ||||||||
| Deferred underwriter fee payable | ||||||||
| Loan – related party | ||||||||
| Total current liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred Stock, par value $, shares authorized at March 31, 2025 and December 31, 2024; shares issued and outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| Common Stock, par value $; shares authorized, shares issued and shares outstanding at March 31, 2025; shares issued and shares outstanding as of December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost, shares at March 31, 2025 and December 31, 2024 | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
ONEMEDNET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Subscription revenue | $ | $ | ||||||
| Web imaging revenue | ||||||||
| Total revenue | ||||||||
| Cost of revenue | ||||||||
| Gross margin | ( | ) | ( | ) | ||||
| Operating expenses | ||||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (income) expense, net | ||||||||
| Interest expense | ||||||||
| Change in fair value of warrants | ( | ) | ||||||
| Change in fair value of PIPE Notes | ( | ) | ( | ) | ||||
| Change in fair value of Yorkville Note | ( | ) | ||||||
| Change in fair value crypto assets – Bitcoin | ||||||||
| Realized gain on sale of crypto assets – Bitcoin | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Other (income) expense | ( | ) | ||||||
| Total other (income) expense, net | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Earnings per share: | ||||||||
| Basic and diluted net loss per common share outstanding | $ | ) | $ | ) | ||||
| Basic and diluted weighted average number of common shares outstanding | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
ONEMEDNET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ DEFICIT
(In thousands, except share data)
(Unaudited)
Three Months Ended March 31, 2025
| Additional | Total | |||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Issuance of common stock in connection with September 2024 private placement | - | |||||||||||||||||||||||||||
| Partial conversion of Yorkville Note | - | |||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Three Months Ended March 31, 2024
| Additional | Total | |||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balances as of December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of common stock to settle deferred underwriter fee payable | - | |||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||
| Repurchase of common stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances as of March 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ONEMEDNET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Change in fair value of PIPE Notes | ( | ) | ( | ) | ||||
| Change in fair value of Yorkville Note | ( | ) | ||||||
| Change in fair value of crypto assets – Bitcoin | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Realized gain on sale of crypto assets – Bitcoin | ( | ) | ||||||
| Gain on forgiveness of CEBA loan | ( | ) | ||||||
| Non-cash interest | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenues | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Sales of crypto assets – Bitcoin | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of shareholder loans | ||||||||
| Proceeds from line of credit borrowings | ||||||||
| Repayment of CEBA loan | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Issuance of common stock in exchange for partial conversion of Yorkville Note | $ | $ | ||||||
| Issuance of common stock to settle deferred underwriter fee payable | $ | $ | ||||||
| Common stock repurchase consideration in accounts payable and accrued expenses | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ONEMEDNET CORPORATION
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Organization and description of business
OneMedNet Corporation (the “Company”) is a healthcare software company with solutions focused on digital medical image management, exchange, and sharing. The Company was founded in Delaware on November 20, 2015. The Company has been solely focused on creating solutions that simplify digital medical image management, exchange, and sharing. The Company has one wholly owned subsidiary, OneMedNet Technologies (Canada) Inc., incorporated on October 16, 2015 under the provisions of the Business Corporations Act of British Columbia whose functional currency is the Canadian dollar. The Company’s headquarters location is Eden Prairie, Minnesota.
On November 7, 2023, Data Knights Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and a wholly owned subsidiary of Data Knights Acquisition Corp. (“Data Knights”), a Delaware corporation, merged with and into OneMedNet Solutions Corporation (formerly named OneMedNet Corporation) (“Legacy ONMD”), with Legacy ONMD surviving as a wholly owned subsidiary of Data Knights (the “Business Combination”). Following the consummation of the Business Combination, Data Knights was renamed to “OneMedNet Corporation.”
Basis of presentation and consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain notes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring adjustments that are necessary to present fairly the Company’s results for the interim periods presented. The results from operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future annual or interim period.
The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2024 in the Company’s Annual Report on Form 10-K, filed with the SEC on April 15, 2025 (the “Form 10-K”).
The interim unaudited condensed consolidated financial statements include the consolidated accounts of the Company’s wholly owned subsidiary, OneMedNet Technologies (Canada) Inc. All significant intercompany transactions have been eliminated in consolidation.
Liquidity and going concern
The
Company has incurred recurring net losses since its inception, including $
To continue and expand its operations, the Company will be required to, and management plans to, raise additional working capital through an equity or debt offerings and ultimately hopes to attain profitable operations to fulfill its operating and capital requirements for at least 12 months from the date of the issuance of the condensed consolidated financial statements. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to continue receiving working capital cash payments and generating cash flow from operations.
| 5 |
Risks and uncertainties
The Company is subject to risks common to companies in the markets it serves, including, but not limited to, global economic and financial market conditions, fluctuations in customer demand, acceptance of new products, development by its competitors of new technological innovations, dependence on key personnel, and protection of proprietary technology.
In addition, the Company has invested in Bitcoin, which is a crypto asset. Crypto assets are loosely regulated and there is no central marketplace for currency exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Certain crypto asset exchanges have been closed due to fraud, failure or security breaches. Any of the Company’s crypto assets that reside on an exchange that shuts down may be lost. Several factors may affect the price of crypto assets, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of crypto assets, and the use of crypto assets as a form of payment. There is no assurance that crypto assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of crypto asset payments by mainstream retail merchants and commercial businesses will continue to grow.
As crypto assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing the crypto asset industry. To the extent future regulatory actions or policies limit the ability to exchange crypto assets or utilize them for payments, the demand for crypto assets could be reduced. Furthermore, regulatory actions may limit the ability of end-users to convert crypto assets into fiat currency (e.g., U.S. dollars) or use crypto assets to pay for goods and services. Such regulatory actions or policies could result in a reduction of demand, and in turn, a decline in the underlying crypto asset unit prices.
The effect of any future regulatory change on crypto assets in general is impossible to predict, but such change could be substantial and adverse to the Company and the value of the Company’s investments in crypto assets.
Crypto assets are not insured or protected under the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Company (“SIPC”). Accordingly, with respect to its Bitcoin investment, the Company does not enjoy the protections of other assets covered by the FDIC or SIPC.
2. Summary of Significant Accounting Policies
Except as described below, the accounting policies of the Company are set forth in Note 2 to the consolidated financial statements contained in the Form 10-K, and the accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies therein.
Emerging growth company status
The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (1) is no longer an emerging growth company or (2) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.
Recently adopted accounting pronouncements
Effective January 1, 2025, the Company retrospectively adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) on an interim basis, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items. ASU 2023-07 also requires public entities with a single reportable segment to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 280, Segment Reporting.
| 6 |
Accounting pronouncements not yet adopted
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740) (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. ASU 2023-09 is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of adopting ASU 2023-09 on the presentation of its condensed consolidated financial statements and footnotes.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities, at annual and interim reporting periods, to disclose in a tabular format additional information about specific expense categories in the notes to the consolidated financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the presentation of its condensed consolidated financial statements and footnotes.
3. Segment Information
Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company is a healthcare software company with solutions focused on digital medical image management, exchange, and sharing. The Company’s operations are organized and reported as a single reportable segment, which includes all activities related to digital medical image management, exchange, and sharing. The Company’s CODM, its chief executive officer, reviews operating results on an aggregate basis and manages the operations as a single operating segment. The CODM evaluates performance and allocates resources based on operating loss that also is reported on the statements of operations as operating loss, and cash used in operations which is reported on the statements of cash flows. Significant expenses reviewed by the CODM include those that are presented in the condensed consolidated statements of operations. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets. Substantially all long-lived assets are located in the United States.
The table below provides the Company’s total revenue by geographic region based on the location of the customer (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Americas | $ | $ | ||||||
| Europe and Middle East | ||||||||
| Asia Pacific | ||||||||
| Total | $ | $ | ||||||
4. Crypto Assets Held
The Company’s crypto assets are comprised solely of Bitcoin. In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its Bitcoin based on the quoted end-of-day price on the measurement date for a single Bitcoin on an active trading platform, River.com. Management has determined that River.com, an active exchange market, represents a principal market for Bitcoin and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The following table sets forth the units held, cost basis, and fair value of its investments in crypto assets, as shown on the condensed consolidated balance sheets as of March 31, 2025 (in thousands):
| Units | Cost Basis | Fair Value | ||||||||||
| Crypto assets held: | ||||||||||||
| Bitcoin | $ | $ | ||||||||||
| Total | $ | $ | ||||||||||
| 7 |
The following table presents a reconciliation of the fair values of the Company’s investments in crypto assets for the three months ended March 31, 2025 (in thousands):
| Bitcoin | ||||
| Balance, December 31, 2024 | $ | |||
| Dispositions | ( | ) | ||
| Unrealized loss, net | ( | ) | ||
| Balance, March 31, 2025 | $ | |||
Dispositions
are the result of sales of Bitcoin to support operational cash requirements. During the three months ended March 31, 2025, the Company
had Bitcoin dispositions of $
5. Convertible Debt
PIPE Notes
On
June 28, 2023,
The
Company elected the fair value option (“FVO”) of accounting for its PIPE Notes. The estimated fair value adjustment is presented
as a single line item within other (income) expense, net in the accompanying condensed consolidated statements of operations under the
caption change in fair value of PIPE Notes. As of March 31, 2025 and December 31, 2024, the fair value of the PIPE Notes was $
Shareholder Loans
From
January to June 2024, the Company received gross proceeds of $
| 8 |
Yorkville Note
On
June 17, 2024, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands
exempt limited partnership managed by Yorkville Advisors Global, LP (“Yorkville”) (see Note 7). Upon entry into the SEPA,
the Company issued Yorkville a $
The Company elected the FVO of accounting for the Yorkville Note. The estimated fair value adjustment is presented as a single line item within other (income) expense, net in the accompanying condensed consolidated statements of operations under the caption change in fair value of Yorkville Note.
On
December 20, 2024, Yorkville provided notice specifying their request to convert $
On
January 23, 2025, Yorkville provided notice specifying their request to convert $
On
January 27, 2025, Yorkville provided notice specifying their request to convert $
As
of March 31, 2025 and December 31, 2024, the fair value of the Yorkville Note was $
| 9 |
6. Stockholders’ Deficit
Common Stock
On
June 17, 2024, the Company and Yorkville entered into the SEPA. Under the SEPA, the Company has the right to sell to Yorkville up to
$
Upon
the satisfaction of the conditions precedent in the SEPA, which include having a resale shelf for shares of Common Stock issued to Yorkville
declared effective, the Company has the right to direct Yorkville to purchase a specified number of shares of Common Stock by delivering
written notice (each an “Advance”).
Yorkville
will generally purchase shares pursuant to an Advance at a price per share equal to
The
SEPA will automatically terminate on the earliest to occur of (i) the first day of the month next following the 24-month anniversary
of the date of the SEPA or (ii) the date on which Yorkville shall have made payment for shares of Common Stock equal to $
As
consideration for Yorkville’s commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company paid Yorkville
a $
In
connection with the entry into the SEPA, on June 17, 2024, the Company entered into a registration rights agreement with Yorkville, pursuant
to which the Company agreed to file with the SEC no later than August 30, 2024, a registration statement for the resale by Yorkville
of the shares of Common Stock issued under the SEPA (including the commitment fee shares). The Company agreed to use commercially reasonable
efforts to have such registration statement declared effective within 30 days of such filing and to maintain the effectiveness of such
registration statement during the 24-month commitment period. The Company will not have the ability to request any Advances under the
SEPA (nor may Yorkville convert the Yorkville Note into Common Stock) until such resale registration statement is declared effective
by the SEC. The Company has not yet filed a registration statement with the SEC for the resale by Yorkville of the shares of Common Stock
issued under the SEPA, which is deemed an event of default under the SEPA. As a result, the full unpaid principal and accrued interest
amount of the Yorkville Note, plus a payment premium of
The
SEPA was accounted for as a liability under ASC 815 as it includes an embedded put option and an embedded forward option. The put option
is recognized at inception and the forward option is recognized upon issuance of notice for the sale of Common Stock. The fair value
of the derivative liability related to the embedded put option was estimated at $
| 10 |
For the three months ended March 31, 2025 and 2024, the weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share is the same. In computing diluted net loss per share for the three months ended March 31, 2025 and 2024, the Company excluded the following potentially dilutive securities, as the effect would be anti-dilutive and reduce the net loss per share calculated for each period:
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Options to purchase Common Stock | ||||||||
| Unvested restricted stock units | ||||||||
| Warrants for Common Stock | ||||||||
| Convertible debt | ||||||||
| Deferred underwriter fees | ||||||||
| Loan extensions | ||||||||
| Total | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cost of revenue | $ | $ | ||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Research and development | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
9. Stock Warrants
The Company has the following warrants outstanding for the periods presented:
| As of | ||||||||
March 31, 2025 | December
31, 2024 | |||||||
| Liability Classified Warrants | ||||||||
| Business Combination Warrants | ||||||||
| PIPE Warrants | ||||||||
| Subtotal | ||||||||
| Equity Classified Warrants | ||||||||
| Public Warrants | ||||||||
| Private Placement Warrants | ||||||||
| Helena Termination Warrants | ||||||||
| Subtotal | ||||||||
| Grand Total | ||||||||
| 11 |
10. Fair Value Measurements
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, inclusive of related party (in thousands):
| March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Investment in crypto assets – Bitcoin | $ | $ | $ | $ | ||||||||||||
| Total assets, at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Business Combination Warrants | $ | $ | $ | $ | ||||||||||||
| PIPE Warrants | ||||||||||||||||
| PIPE Notes | ||||||||||||||||
| Yorkville Note | ||||||||||||||||
| SEPA derivative liability | ||||||||||||||||
| Total liabilities, at fair value | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Investment in crypto assets – Bitcoin | $ | $ | $ | $ | ||||||||||||
| Total assets, at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Business Combination Warrants | $ | $ | $ | $ | ||||||||||||
| PIPE Warrants | ||||||||||||||||
| PIPE Notes | ||||||||||||||||
| Yorkville Note | ||||||||||||||||
| SEPA derivative liability | ||||||||||||||||
| Total liabilities, at fair value | $ | $ | $ | $ | ||||||||||||
Business Combination Warrants and PIPE Warrants
The following table presents the changes in the Business Combination Warrants and PIPE Warrants measured at fair value during the three months ended March 31, 2025 (in thousands):
| Business Combination Warrants | PIPE Warrants | |||||||
| Balance, December 31, 2024 | $ | $ | ||||||
| Changes in fair value | ||||||||
| Balance, March 31, 2025 | $ | $ | ||||||
The Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at March 31, 2025 using the Black-Scholes option-pricing model with the following assumptions:
| As of March 31, 2025 | ||||||||
| PIPE | Business Combination | |||||||
| Warrants | Warrants | |||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Weighted average risk-free rate | % | % | ||||||
| Expected dividend yield | ||||||||
| Expected term (in years) | ||||||||
| 12 |
The Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at December 31, 2024 using the Black-Scholes option-pricing model with the following assumptions:
| As of December 31, 2024 | ||||||||
| PIPE | Business Combination | |||||||
| Warrants | Warrants | |||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Weighted average risk-free rate | % | % | ||||||
| Expected dividend yield | ||||||||
| Expected term (in years) | ||||||||
PIPE Notes and Yorkville Note
The following table presents the changes in the PIPE Notes and Yorkville Note measured at fair value during the three months ended March 31, 2025 (in thousands):
| PIPE Notes | Yorkville Note | |||||||
| Balance, December 31, 2024 | $ | $ | ||||||
| Conversions into Common Stock | ( |
) | ||||||
| Changes in fair value | ( |
) | ( |
) | ||||
| Balance, March 31, 2025 | $ | $ | ||||||
The estimated fair values of the PIPE Notes and Yorkville Note are determined based on the aggregated, probability-weighted average of the outcomes of certain possible scenarios. The combined value of the probability-weighted average of those outcomes is then discounted back to each reporting period in which the convertible notes are outstanding, in each case, based on a risk-adjusted discount rate estimated based on the implied discount rate. The discount rate was held constant over the valuation periods given the fact pattern associated with the Company and the stage of development.
SEPA Derivative Liability
The following table presents the changes in the SEPA derivative liability measured at fair value during the three months ended March 31, 2025 (in thousands):
| Yorkville SEPA | ||||
| Balance, December 31, 2024 | $ | |||
| Changes in fair value | ( | ) | ||
| Balance, March 31, 2025 | $ | |||
| As of | ||||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Expected draws (in thousands) | $ | $ | ||||||
| Starting stock price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| 13 |
11. Related Party Transactions
PIPE Notes and Warrants
Data
Knights issued and sold PIPE Notes in connection with the Business Combination, which are convertible into shares of Common Stock. Total
proceeds raised from the PIPE Notes were $
In
connection with the issuance of the PIPE Notes, the Company also issued a total of
Shareholder Loans
In
addition to the convertible shareholder loans described in Note 5, the Company also issued $
| As of | ||||||||
March 31, 2025 |
December
31, 2024 |
|||||||
| Shareholder loans – nonconvertible | $ | $ | ||||||
| Shareholder loans – convertible | ||||||||
| Accrued interest | ||||||||
| Total loan – related party | $ | $ | ||||||
Loan Extensions
The
Company assumed Data Knights’ liabilities, which included existing loan extensions to related parties. The loan extensions were
to be either repaid in cash or, at the option of the lender, exchanged for a fixed amount of Common Stock at a price of $ per share
upon the closing of a business combination or a similar event. At the closing of the Business Combination, all lenders provided notice
to have their loans converted into shares upon the filing of a registration statement on Form S-1 with the SEC. As of March 31, 2025
and December 31, 2024, a registration statement has not yet been declared effective by the SEC, and a balance of $
12. Commitments and Contingencies
Lease Agreement
The
Company has a month-to-month lease for a suite at a cost of $
Litigation
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recognized, if and when it is probable that a liability has been incurred and the amount can be reasonably estimated. The Company was not subject to any material legal proceedings during the three months ended March 31, 2025 and 2024.
13. Subsequent Events
The Company has evaluated subsequent events occurring through May 14, 2025, the date the condensed consolidated financial statements were issued, for events requiring recording or disclosure in the Company’s condensed consolidated financial statements.
Between April and May 2025, the Company entered into securities purchase agreements with two related party investors, pursuant to which
the Company agreed to issue and sell shares of its Common Stock at a price of $ per share. The Company received gross proceeds
of approximately $
| 14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis are intended to help you understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and in the Form 10-K.
In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Cautionary Note Regarding Forward Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, risks and uncertainties, including those set forth under “Risk Factors” included elsewhere (or incorporated by reference) in this Report and in the Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “OneMedNet”, “we”, “us”, “our,” and “the Company” are intended to mean the business and operations of OneMedNet Corporation and its consolidated subsidiary following the completion of the business combination on November 7, 2023 involving OneMedNet Solutions Corporation (formerly named OneMedNet Corporation) (“Legacy ONMD”), with Legacy ONMD surviving as a wholly owned subsidiary of Data Knights Acquisition Corp. (“Data Knights”) (the “Business Combination”).
Company Overview
We provide innovative solutions that unlock the significant value contained within the clinical image archives of healthcare providers. Employing our OneMedNet iRWD™ solution, which securely de-identifies, searches, and curates a data archive locally, bringing a wealth of internal and third-party research opportunities to providers. By leveraging our extensive federated provider network, together with our technology and in-house clinical expertise, OneMedNet is positioned to meet the most rigorous Real World Data life science requirements.
Key Components of Consolidated Statements of Operations
Revenue
The Company generates revenue from two streams: (1) iRWD, which provides regulatory grade imaging and clinical data in the pharmaceutical, device manufacturing, contract research organizations, and AI markets and (2) BEAM, which is a medical imaging exchange platform between hospital/healthcare systems, imaging centers, physicians and patients. iRWD is sold on a fixed fee basis based on the number of data units and the cost per data unit committed to in the customer contract. Revenue is recognized when the data is delivered to the customer. BEAM revenue is subscription-based revenue that is recognized ratably over the subscription period committed to by the customer. The Company invoices its BEAM customers quarterly or annually in advance with the customer contracts automatically renewing unless the customer issues a cancellation notice.
The Company excludes from revenue taxes collected from a customer that are assessed by a governmental authority and imposed on and concurrent with a specific revenue-producing transaction. The transaction price for the products is the invoiced amount. Advanced billings from contracts are deferred and recognized as revenue when earned. Deferred revenue consists of payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. The Company receives payments from customers based upon contractual billing schedules. Accounts receivable is recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts typically range from zero to 90 days, with typical terms of 30 days.
Cost of Revenue
Our cost of revenue is composed of our distinct performance obligations of hosting, labor, and data cost.
| 15 |
General and Administrative
General and administrative functions include finance, legal, operations, human resources, and information technology support. These functions include costs for items such as salaries and benefits and other personnel-related costs, maintenance and supplies, professional fees for external legal, accounting, and other consulting services, and depreciation expense.
Research and Development
Costs incurred in the research and development of our products are expensed as incurred. Research and development costs include personnel, contracted services, materials, and indirect costs involved in the design and development of new products and services, as well as hosting expense.
Sales and Marketing
Our sales and marketing costs consist of labor and tradeshow costs.
Interest Expense
Interest expense consists of interest incurred on our outstanding debt facilities, including loans with related parties, deferred underwriter fees and insurance premiums paid in exchange for a note payable.
Other (Income) Expenses, Net
Other (income) expenses, net, primarily includes the change in fair value of PIPE Notes and change in fair value of Yorkville Note (as defined below) for which we have elected the fair value option of accounting. Convertible notes payable, which include the Yorkville Note and PIPE Notes issued to related parties, including accrued interest and contingently issuable warrants, contain embedded derivatives, including settlement of the contingent conversion features, which require bifurcation and separate accounting. Accordingly, we have elected to measure the entire contingently convertible debt instruments, including accrued interest, at fair value. These debt instruments were initially recorded at fair value as liabilities and are subsequently re-measured at fair value on our condensed consolidated balance sheet at the end of each reporting period and at settlement, as applicable. Other income or expenses, net, also includes changes in fair value of warrants which are treated as liability instruments measured at fair value for accounting purposes, initially recorded at fair value and subsequently re-measured to fair value on our condensed consolidated balance sheets at the end of each reporting period. The changes in the fair value of these debt and liability instruments are recorded in changes in fair value, included as a component of other (income) expenses, net, in the condensed consolidated statements of operations.
Other (income) expenses, net, also includes change in fair value and realized gains of our Bitcoin holdings, as well as foreign exchange and tax expenses related to the Company’s operations and revenue outside of the United States.
| 16 |
Results of Operations
Comparison of the three months ended March 31, 2025 and 2024
The following table sets forth our condensed consolidated statements of operations data for the periods presented:
Three Months Ended March 31, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Revenue | ||||||||||||||||
| Subscription revenue | $ | 58 | $ | 201 | $ | (143 | ) | -71 | % | |||||||
| Web imaging revenue | 79 | 47 | 32 | 68 | % | |||||||||||
| Total revenue | 137 | 248 | (111 | ) | -45 | % | ||||||||||
| Cost of revenue | 361 | 317 | 44 | 14 | % | |||||||||||
| Gross margin | (224 | ) | (69 | ) | (155 | ) | 225 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 1,362 | 1,358 | 4 | 0 | % | |||||||||||
| Sales and marketing | 290 | 229 | 61 | 27 | % | |||||||||||
| Research and development | 348 | 445 | (97 | ) | -22 | % | ||||||||||
| Total operating expenses | 2,000 | 2,032 | (32 | ) | -2 | % | ||||||||||
| Loss from operations | (2,224 | ) | (2,101 | ) | (123 | ) | 6 | % | ||||||||
| Other (income) expense, net | ||||||||||||||||
| Interest expense | 31 | 42 | (11 | ) | -26 | % | ||||||||||
| Change in fair value of warrants | 3 | (7 | ) | 10 | -143 | % | ||||||||||
| Change in fair value of PIPE Notes | (133 | ) | (20 | ) | (113 | ) | 565 | % | ||||||||
| Change in fair value of Yorkville Note | (30 | ) | - | (30 | ) | N/A | ||||||||||
| Change in fair value of crypto assets – Bitcoin | 662 | - | 662 | N/A | ||||||||||||
| Realized gain on sale of crypto assets – Bitcoin | (531 | ) | - | (531 | ) | N/A | ||||||||||
| Change in fair value of derivative liability | (324 | ) | - | (324 | ) | N/A | ||||||||||
| Other (income) expense | - | (7 | ) | 7 | -100 | % | ||||||||||
| Total other (income) expense, net | (322 | ) | 8 | (330 | ) | -4,125 | % | |||||||||
| Net loss | $ | (1,902 | ) | $ | (2,109 | ) | $ | 207 | -10 | % | ||||||
Revenue
Three Months Ended March 31, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Subscription revenue (Beam) | $ | 58 | $ | 201 | $ | (143 | ) | -71 | % | |||||||
| Web imaging revenue (Real-World Data) | 79 | 47 | (30 | ) | 68 | % | ||||||||||
| Total | $ | 137 | $ | 248 | $ | (111 | ) | -45 | % | |||||||
Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the three months ended March 31, 2025, overall revenue decreased by 45%. The primary driver for the decrease in subscription revenue was the planned discontinuation of the BEAM platform in 2025. As we move away from the BEAM platform to focus on iRWD sales, we have stopped renewals for most of our customers leading to a $0.1 million decrease for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The primary driver for the increase in web imaging revenue was due to our enhanced focus on iRWD sales leading to increased customer deliveries during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.
| 17 |
Cost of Revenue
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cost of revenue | 361 | 317 | ||||||
| % of revenue | 264 | % | 128 | % | ||||
For the three months ended March 31, 2025, our cost of revenue as a percentage of revenue increased by 136% compared to the prior year period. The increase is primarily driven by the planned transition away from the BEAM platform, which has resulted in lower subscription revenue without the benefit of cost savings until the platform is discontinued later in 2025. The increase is also driven by higher iRWD data and personnel costs to support anticipated iRWD sales growth.
General and Administrative
General and administrative expenses for the three months ended March 31, 2025, were generally consistent with the general and administrative expenses for the three months ended March 31, 2024.
Sales and Marketing
Our sales & marketing expense increased $61 thousand, or 27%, to $290 thousand for the three months ended March 31, 2025, from $229 thousand for the three months ended March 31, 2024. The increase is primarily due to an increase in personnel costs of $101 thousand resulting from increased headcount, which is partially offset by a $52 thousand decrease in consulting expenses.
Research and development
Our research and development expense decreased $97 thousand, or 22%, to $348 thousand for the three months ended March 31, 2025, from $445 thousand for the three months ended March 31, 2024. The decrease is primarily due to a decrease in personnel costs of $69 thousand and software and hosting expenses of $29 thousand. These decreases are driven by the focus on iRWD sales growth and less resources being allocated to research and development efforts.
Interest Expense
During the three months ended March 31, 2025 and 2024, interest expense was primarily comprised of interest expense on loans made by related parties (Management and Directors) and interest expense on the portion of deferred underwriter fees relating to the Business Combination that are payable in cash.
Change in Fair Value of Warrants
At the closing of the Business Combination in 2023, we issued warrants in connection with the PIPE financing and separately assumed certain private warrants from Data Knights. We determined that these warrants should be accounted for as liabilities, which are adjusted to fair value at the end of each reporting period. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock.
Change in Fair Value of PIPE Notes
At the closing of the Business Combination in 2023, we issued PIPE Notes that are convertible into shares of Common Stock and carried at fair value. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock.
Change in Fair Value of Yorkville Note
In June 2024, we issued the Yorkville Note which is convertible into shares of Common Stock and carried at fair value. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock.
| 18 |
Change in Fair Value of Bitcoin
The change in fair value of Bitcoin during the three months ended March 31, 2025 relates to the mark-to-market adjustment of Bitcoin, which we began strategically investing in using excess cash from our private placement transactions in the third quarter of 2024. As of March 31, 2024, we did not have any Bitcoin holdings.
Realized Gain on Sale of Crypto Assets – Bitcoin
The realized gain on sale of crypto assets – Bitcoin during the three months ended March 31, 2025 reflects the increase in the price of Bitcoin upon sale compared to its purchase price. As of March 31, 2024, we did not have any Bitcoin holdings.
Change in Fair Value of Derivative Liability
The change in fair value of derivative liability during the three months ended March 31, 2025 represents the remeasurement adjustment of the SEPA put option with Yorkville. The fair value is primarily driven by expected sales of our Common Stock to Yorkville and projections on the future path of the Company’s stock price during the commitment period. During the three months ended March 31, 2024, we did not have the SEPA arrangement which explains the change between the periods.
Liquidity and Capital Resources
As of March 31, 2025, our principal sources of liquidity were proceeds from related party investors and private placement transactions and cash received from customers.
The following table shows net cash and cash equivalents used in operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities during the periods presented:
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in) | ||||||||
| Operating activities | $ | (1,948 | ) | $ | (1,547 | ) | ||
| Investing activities | 1,920 | (6 | ) | |||||
| Financing activities | - | 1,680 | ||||||
Operating Activities
Our net cash and cash equivalents used in operating activities consists of net loss adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation expense, changes in fair value of liability classified financial instruments, as well as changes in operating assets and liabilities. The primary changes in working capital items, such as the changes in accounts receivable and deferred revenue, result from the difference in timing of payments from our customers related to contract performance obligations. This may result in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the fulfillment of the performance obligation.
During the three months ended March 31, 2025, we used $1.9 million of cash in operating activities, primarily resulting from our net loss of $1.9 million and non-cash charges of $0.1 million, offset by cash provided by changes in our operating assets and liabilities of $0.1 million.
During the three months ended March 31, 2024, we used $1.5 million of cash in operating activities, primarily resulting from our net loss of $2.1 million, offset by non-cash charges of $0.1 million and cash provided by changes in our operating assets and liabilities of $0.4 million.
| 19 |
Investing Activities
Our investing activities have consisted primarily of property and equipment purchases and Bitcoin purchases and sales.
During the three months ended March 31, 2025, net cash provided by investing activities was $1.9 million, which primarily consisted of $1.9 million in sales of Bitcoin.
During the three months ended March 31, 2024, net cash used in investing activities was $6 thousand, consisting of purchases of property and equipment.
Financing Activities
During the three months ended March 31, 2025, we did not engage in any financing activities.
During the three months ended March 31, 2024, net cash provided by financing activities was $1.7 million, which primarily consisted of $1.3 million and $0.4 million of proceeds from shareholder loans and our revolving line of credit, respectively.
Contractual Obligations and Commitments and Going Concern Outlook
Currently, management does not believe that our cash and cash equivalents is sufficient to meet our foreseeable cash needs for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support the expansion of our infrastructure and workforce, interest expense and minimum contractual obligations. Management intends to raise cash for operations through debt and equity offerings. As a result of the Company’s recurring loss from operations and the need for additional financing to fund its operating and capital requirements there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, and the cost of any future acquisitions of technology or businesses. In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all.
The following table summarizes our current and long-term material cash requirements as of March 31, 2025:
| Payments due in: | ||||||||||||
| Total | Less than 1 year | 1-3 years | ||||||||||
| Accounts payable & accrued expenses | $ | 6,870 | $ | 6,870 | $ | - | ||||||
| Loan extensions | 2,992 | 2,992 | - | |||||||||
| Deferred underwriter fee payable | 3,262 | 3,262 | - | |||||||||
| Loan, related party | 2,332 | 2,332 | - | |||||||||
| PIPE Notes | 1,601 | 1,601 | - | |||||||||
| Yorkville Note | 594 | 594 | - | |||||||||
| $ | 17,651 | $ | 17,651 | $ | - | |||||||
| 20 |
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements which have been prepared in accordance with GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenue, results of operations, and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our results of operations and the value of our assets cannot be determined with certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.
For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K, the notes to our audited financial statements appearing in the Form 10-K, and the notes to the financial statements appearing elsewhere in this Report. Except as described in this Report, there have been no material changes to these critical accounting policies and estimates through March 31, 2025 from those discussed in the Form 10-K.
Recently Issued and Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements included elsewhere in this Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act), as of March 31, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures were ineffective because of material weaknesses in our internal controls over financial reporting which were not designed properly to ensure proper identification of non-routine transactions and ensure appropriate segregation of duties.
Material Weaknesses
As disclosed elsewhere in this Report, we completed the Business Combination on November 7, 2023. Prior to the Business Combination, Data Knights, our predecessor, was a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization or similar business combination with one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date, because Data Knights’ operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination. As a result, management is aware of material weaknesses in the Company’s internal control related to user access/segregation of duties, lack of a formalized control environment and oversight of controls over financial reporting, errors in accounting for non-routine transactions, and lack of record keeping. Due to the limited transactional volume currently experienced, combined with our financial limitations, we do not currently have an expanded accounting department that would allow us to better segregate duties. Over time, as we continue to grow and add accounting staff, we expect to continue to enhance our internal control structure, including appropriate segregation of duties.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 21 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We may be subject from time to time to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief. We are not presently party to any legal proceedings that, in the opinion of management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Item 1A. Risk Factors.
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in the “Risk Factors” in the Form 10-K and our other public filings, which could materially affect our business, financial condition or future results. There have been no material changes from risk factors previously disclosed in “Risk Factors” in the Form 10-K and our other public filings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2025, we did not have sales of unregistered securities not previously included in a Current Report on Form 8-K
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the three months ended March 31, 2025, no director or officer of the Company
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Item 6. Exhibits.
The following documents are included as exhibits to this Quarterly Report on Form 10-Q:
* Filed herewith.
+ Management or compensatory agreement or arrangement.
# The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements 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, on May 14, 2025.
| OneMedNet Corporation | ||
| By: | /s/ Robert Golden | |
| Robert Golden | ||
Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) | ||
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