What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-30 compared with 2025-04-15 · 1195 added, 1197 removed, 514 unchanged (82% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficit

Consolidated Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

1 unchanged sentence

have audited the accompanying consolidated balance sheets of OneMedNet Corporation (the “Company”) as of December 31, 2025

and 2023, and the related consolidated statements of operations, changes in temporary equity and stockholders’ deficit, and cash

and 2024, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash

flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated

66 unchanged sentences

Brunswick, New Jersey

April 15, 2025

March 30, 2026

ID Number 100

11 unchanged sentences

Current liabilities:

Accounts payable & accrued expenses

Accounts payable and accrued expenses

Deferred revenues

Loan extensions

Yorkville Note

Loans payable

Loans payable – related parties

Convertible notes at fair value

Deferred underwriter fee payable

Loan – related party

Other current liabilities

SEPA put option liability

Total current liabilities

Other long-term liabilities

Loans payable, net of current portion

Warrant liabilities

SEPA put option liability, net of current portion

Total liabilities

Commitments and contingencies (Note 13)

Stockholders’ (deficit) equity:

Stockholders’ deficit:

Preferred Stock, par value $ 0.0001 , 1,000,000 authorized at December 31, 2025 and 2024;

no shares issued and outstanding at December 31, 2025 and 2024

Common Stock, par value $ 0.0001 , 100,000,000 shares authorized, 28,175,172 shares issued and 27,987,427 shares outstanding at December 31, 2024, and 23,572,232 shares issued and outstanding at December 31, 2023

Common Stock, par value $ 0.0001 , 100,000,000 shares authorized, 52,172,219 shares issued and 51,984,474 shares outstanding at December 31, 2025, and 28,175,172 shares issued and 27,987,427 shares outstanding at December 31, 2024

Additional paid-in-capital

Treasury stock, at cost, 187,745 and 0 shares at December 31, 2024 and 2023, respectively

Treasury stock, at cost, 187,745 shares at December 31, 2025 and 2024

Accumulated deficit

4 unchanged sentences

thousands, except share and per share data)

For the year ended December 31,

Year Ended December 31,

Subscription revenue

Web imaging revenue

Data delivery revenue

Total revenue

6 unchanged sentences

Loss from operations

Other expense (income), net

Other (income) expense, net

Interest expense

Stock warrant 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 of convertible notes

Change in fair value of crypto assets – Bitcoin

Realized gain on sale of crypto assets – Bitcoin

Change in fair value of derivative liability

Change in fair value of convertible promissory notes

Change in fair value of SEPA derivative liabilities

Gain on troubled debt restructurings

Loss on extinguishment of debt

Other expense

Total other expense, net

Total other (income) expense, net

Loss before income taxes

4 unchanged sentences

accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

thousands, except share data)

Preferred Stock

Stockholders’

Balances as of December 31, 2022

Issuance of common shares in exchange for services

Issuance of Series A-2 Preferred Stock

Issuance of OMN warrants in conjunction with convertible promissory notes

Exercise of OMN stock options upon Business Combination

Exercise of OMN warrants upon Business Combination

Conversion of OMN convertible promissory notes upon Business Combination

Conversion of preferred stock to common stock upon Business Combination

( 3,421,596 )

( 2,839,957 )

Issuance of common stock upon Business Combination with Data Knights, net of liabilities assumed and transaction costs

Stock-based compensation expense

Balances as of December 31, 2023

Treasury Stock

12 unchanged sentences

$ ( 101,569 )

Issuance of common stock in connection with private placements, net of issuance costs

Issuance of common stock upon partial conversions of Yorkville Note

Issuance of common stock in connection with settlement of vendor payable

Issuance of common stock upon conversions of loans with related parties

Issuance of common stock upon conversions of PIPE Notes

Issuance of common stock upon conversions of loan extensions with related parties

Issuance of common stock in connection with subscription agreements with related parties

Issuance of common stock in connection with exercises of pre-funded warrants

Issuance of common stock in connection with exercises of Helena Termination Warrants

Issuance of common stock in connection with Yorkville SEPA

Issuance of common stock for consulting services rendered

Vesting of restricted stock units

Stock-based compensation expense

Balances as of December 31, 2025

$ ( 104,370 )

accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF CASH FLOWS

For the year ended December 31,

Year Ended December 31,

Cash flows from operating activities:

4 unchanged sentences

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 convertible promissory notes

Change in fair value of convertible notes

Change in fair value of crypto assets – Bitcoin

Change in fair value of derivative liability

Change in fair value of SEPA derivative liabilities

Realized gain on sale of crypto assets – Bitcoin

Gain on troubled debt restructurings

Loss on debt extinguishment

Non-cash SEPA commitment fee

4 unchanged sentences

Prepaid expenses and other current assets

Accounts payable & accrued expenses

Accounts payable and accrued expenses

Deferred revenues

4 unchanged sentences

Proceeds from sales of crypto assets – Bitcoin

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from private placements, net of issuance costs

Proceeds from related party subscription agreements, net of issuance costs

Proceeds from Yorkville SEPA

Proceeds from exercises of Helena Termination Warrants

Repayment of deferred underwriter fees

Repayment of Yorkville Note

Repayment of loans payable

Payment of issuance costs in connection with non-cash conversions of liabilities

Proceeds from issuance of shareholder loans

2 unchanged sentences

Repayment of CEBA loan

Repayment of deferred underwriter fees

Repayment for common stock repurchase

Repayment of shareholder loan

Repayment of line of credit borrowings

Proceeds from issuance of PIPE Notes

Proceeds from issuance of convertible notes

Proceeds from issuance of Series A-2 preferred stock

Business Combination costs

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning year

4 unchanged sentences

Supplemental disclosures of non-cash investing and financing activities:

Common shares issued to settle deferred underwriter fees

Issuance of common stock in connection with settlement of vendor payable

Issuance of common stock upon partial conversions of Yorkville Note

Issuance of common stock upon conversions of loans with related parties

Issuance of common stock upon conversion of PIPE Notes

Issuance of common stock upon conversion of loan extensions with related parties

Insurance premium settled by issuance of note payable

Common stock repurchase consideration in loans payable

Common shares issued to partially settle deferred underwriter fees

Recognition of prepaid forward contract in exchange for partial conversion of Yorkville Note

Common stock repurchase consideration in accounts payable and accrued expenses

Extinguishment of officer accrued salaries reclassified to additional paid-in capital

Insurance premium settled by issuance of note payable

Common shares issued to preferred shareholders

Common shares related to convertible promissory notes

Common shares issued to Data Knights shareholders

accompanying notes are an integral part of these consolidated financial statements.

8 unchanged sentences

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.

(Canada) Inc.

(“OneMedNet Canada”), incorporated on October 16, 2015 under the provisions of the Business Corporations Act

of British Columbia.

The Company’s headquarters location is Eden Prairie, Minnesota.

68 unchanged sentences

assets covered by the FDIC or SIPC.

March 12, 2025, the Company received written notice (the “MVLS Nasdaq Notice”) from Nasdaq indicating that for the preceding

31 consecutive business days, the market value of the Company’s listed securities (“MVLS”) did not maintain a minimum

market value of $ 35,000,000 (the “Minimum MVLS Requirement”) as required by Nasdaq Listing Rule 5550(b)(2).

Nasdaq also noted

that the Company is not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain a minimum stockholders’

equity of $ 2.5 million, and Nasdaq Listing Rule 5550(b)(3), which requires listed companies to maintain a minimum of $ 500,000 of net

income from continuing operations.

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has a compliance period of 180 calendar

days, or until September 8, 2025, to regain compliance with the Minimum MVLS Requirement.

Compliance could have been achieved if the

Company’s MVLS closed at $ 35,000,000 or more for a minimum of ten consecutive business days at any time during the 180-day compliance

period, in which case Nasdaq would notify the Company of its compliance and the matter would be closed.

the Company does not regain compliance with the Minimum MVLS Requirement by September 8, 2025, Nasdaq would have provided written notification

to the Company that its Common Stock was subject to delisting.

At that time, the Company could have appealed the relevant delisting determination

to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules.

addition, on April 10, 2025, the Company received a separate notice (the “Bid Price Notice”) from Nasdaq indicating that

the Company, based on the closing bid price of the Company’s common stock for the last 30 consecutive business days, is not in

compliance with the $ 1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing

Rule 5550(a)(2) (the “Bid Price Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a period of

180 calendar days, or until October 7, 2025, to regain compliance with the Bid Price Rule.

To regain compliance, the minimum bid price

of the Company’s common stock must meet or exceed $ 1.00 per share for a minimum of ten consecutive business days during this 180-calendar

day grace period.

In the event the Company does not regain compliance with the Bid Price Rule by October 7, 2025, the Company may be

eligible for an additional 180-calendar day compliance period.

To qualify, the Company will be required to meet the continued listing

requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the

exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second

compliance period, by effecting a reverse stock split, if necessary.

If the Company meets these requirements, Nasdaq will inform the

Company that it has been granted an additional 180 calendar days.

However, if it appears to Nasdaq that the Company will not be able

to cure the deficiency, or if the Company is otherwise not eligible, the Staff will provide notice that its securities will be subject

to delisting.

notices from Nasdaq described above have no immediate effect on the Company’s continued listing on the Nasdaq Capital Market or

the trading of the Company’s Common Stock, subject to the Company’s compliance with the other continued listing requirements.

The Company is presently evaluating potential actions to regain compliance with all applicable requirements for continued listing on

the Nasdaq Capital Market.

There can be no assurance that the Company will be successful in maintaining the listing of its Common Stock

on the Nasdaq Capital Market.

Summary of Significant Accounting Policies

9 unchanged sentences

All intercompany transactions and balances have been eliminated in consolidation.

Revision to Previously Issued Financial Statements

to the issuance of the consolidated financial statements as of and for the year ended December 31, 2023, the Company determined that

it had inadvertently excluded 1,240,644 shares from its calculation of basic and diluted net loss per share attributable to common stockholders

in conformity with the two-class method required for participating securities.

These shares represent a forward contract on the Company’s

common shares for no consideration and should be considered outstanding shares for purposes of calculating net loss per share.

the Company has revised its calculation of basic and diluted net loss per common share outstanding for the year ended December 31, 2023.

Basic and diluted net loss per share attributable to common stockholders for the year ended December 31, 2023 as previously presented

was $ ( 4.77 ) and as revised is $ ( 4.65 ) .

Company assessed the materiality of the change in the calculation of net loss per share resulting from its inadvertent exclusion of these

shares, considering both quantitative and qualitative factors, and concluded that the effects of the change to the calculation and presentation

of net loss per share was not material, individually or in the aggregate, to any previously reported quarterly or annual period.

the Company has revised its previously issued consolidated financial statements to reflect the change in presentation of net loss per

share inclusive of these shares.

All related amounts have been updated to reflect the effects of the revision through the financial statements

and related footnotes, as applicable.

loss per share for the interim periods within the annual periods ended December 31, 2024 and 2023, as revised in accordance with the

changes disclosed above, is presented below.

The Company will revise the presentation of net loss per share in the subsequent quarterly

filings on Form 10-Q in 2025.

Schedule of Revised Net Loss Per Share

Three Months Ended March 31, 2024

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

Six Months Ended June 30,

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

Three Months Ended June 30, 2024

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

Nine Months Ended September 30, 2024

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

Three Months Ended September 30, 2024

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

of Consolidation

consolidated financial statements include the accounts of the Company, including its subsidiaries.

consolidated financial statements include the accounts of the Company, including its subsidiary.

All intercompany accounts and transactions

5 unchanged sentences

Significant estimates, judgments, and assumptions used in these financial statements include, but are not limited to, the valuation of

the liability classified warrants, SEPA derivative liability, convertible debt measured at fair value, revenue recognition, provision

for income taxes, and stock-based compensation.

Estimates are periodically reviewed in light of changes in circumstances, facts, and

Company adopted Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements

to Reportable Segment Disclosures , as of January 1, 2024.

See the recently adopted accounting pronouncements section below for more

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

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.

Significant expenses

reviewed by the CODM include those that are presented in the consolidated statements of operations.

The measure of segment assets is

reported on the balance sheets as total assets.

Substantially all long-lived assets are located in the United States.

table below provides the Company’s total revenue by geographic region based on the location of the customer (in thousands):

of Revenue by Geographic Region

For the year ended December 31,

the liability classified warrants, SEPA put option liability, convertible debt measured at fair value, revenue recognition and provision

for income taxes.

Estimates are periodically reviewed in light of changes in circumstances, facts, and experience.

Company’s functional currency, including that of the Company’s Canadian subsidiary, OneMedNet Canada, is the United States

Foreign currency gains and losses resulting from remeasurement of assets and liabilities held in foreign currencies and transactions

settled in a currency other than the functional currency are included separately as non-operating income or expense in the consolidated

statements of operations as a component of other (income) expense, net.

The foreign currency amounts recorded for the periods presented

were insignificant.

segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief

operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company considers its chief executive officer to be the Company’s CODM.

The CODM manages its operations and allocates resources

based on the Company’s consolidated results and therefore operates as one segment.

Company’s operations consist of its real-world data (“RWD”) platform, which enables life sciences and healthcare customers

to access curated clinical and imaging datasets, as well as its legacy data exchange (BEAM) platform that facilitates the secure exchange

and aggregation of medical imaging data.

The Company decommissioned its legacy BEAM platform in May 2025 as part of its strategic transition

to a unified real-world data platform.

Revenue associated with the BEAM platform was generated through the date of decommissioning and

will not continue in future periods.

Company’s method for measuring segment profitability is operating loss, which the CODM uses to assess performance and make decisions

for resource allocation, consistent with the measurement principles for operating loss as reported on the Company’s consolidated

statements of operations.

The CODM uses consolidated operating loss to set budgets, evaluate margins, review actual results, and to make

decisions whether to engage in capital management transactions.

significant expenses regularly reviewed by the CODM are consistent with those reported on the Company’s consolidated statements

of operations, and expenses are not regularly reviewed on a more disaggregated basis for purposes of assessing segment performance and

deciding how to allocate resources.

Company’s disaggregation of revenue by major product offering is consistent with its presentation on the Company’s consolidated

statements of operations.

The table below provides the Company’s total revenue by geographic region based on the location of the

customer (in thousands):

Schedule of Revenue by Geographic Region

Year Ended December 31,

Europe and Middle East

Accounts Receivable and Allowance for Credit Losses section below for details on customers that accounted for more than 10 % of

total accounts receivable and total revenue as of and for the years ended December 31, 2025 and 2024, respectively.

and Cash Equivalents

7 unchanged sentences

financial condition, results of operations, and cash flows.

of December 31, 2025, the Company’s cash equivalents consisted of $ 0.03 million in money market funds.

The Company had no cash

equivalents as of December 31, 2024.

in Crypto Assets

Company adopted ASU No.

2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure

of Crypto Assets (“ASU 2023-08”), as of January 1, 2024.

ASU 2023-08 provides an update to existing crypto asset guidance

and requires an entity to measure certain crypto assets at fair value.

In addition, this guidance requires disclosures related to crypto

assets once it is adopted.

See the recently adopted accounting pronouncements section below for more information.

Company reflects crypto assets held at fair value on the consolidated balance sheets and consolidated statements of cash flows, the activity

from remeasurement of crypto assets at fair value on the consolidated statements of operations, and the required expanded disclosures

in Note 4, Investment in Crypto Assets – Bitcoin .

from remeasurement of crypto assets at fair value on the consolidated statements of operations, and the required disclosures in Note

3, Investment in Crypto Assets – Bitcoin .

assets are generally valued using prices as reported on reputable and liquid exchanges based on the quoted end-of-day price provided

2 unchanged sentences

Receivable and Allowance for Credit Losses

receivable is unsecured, recorded at net realizable value, and do not bear interest.

Unbilled receivables arise from services rendered

but not yet billed.

As of December 31, 2024 and 2023, unbilled receivables totaled $ 0.2 million and $ 0 , respectively.

Accounts receivable

are considered past due if not paid within the terms established between the Company and the customer.

Amounts are only written off after

all attempts at collections have been exhausted.

The Company determines the need for an allowance for credit losses based upon factors

surrounding the credit risk of specific customers, historical trends and other information.

Accounts receivable, net includes $ 0.2 million

and $ 0 as of December 31, 2024 and 2023, respectively, representing accounts not billed to customers.

receivable are unsecured, recorded at net realizable value, and do not bear interest.

Unbilled receivables arise when data delivery revenue

is recognized and the Company has an unconditional right to consideration and only the passage of time is required to receive the consideration.

Accounts receivable are considered past due if not paid within the terms established between the Company and the customer.

only written off after all attempts at collections have been exhausted.

The Company determines the need for an allowance for credit losses

based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Accounts receivable, net

includes unbilled receivables of $ 0.5 million and $ 0.2 as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024,

4 unchanged sentences

For the year ended December

31, 2024, there were 2 customers that accounted for 10 % or more of total revenue, and there was 1 customer that accounted for 10 % or

more of total revenue for the year ended December 31, 2023.

The following table represents these customers’ aggregate percent of

total revenue:

31, 2025, there were three customers that accounted for 10 % or more of total revenue.

For the year ended December 31, 2024, there were

two customers that accounted for 10 % or more of total revenue.

The following table represents these customers’ aggregate percentage

of total revenue:

of Aggregate Percentage Revenue and Accounts Receivable

For the year ended December 31,

Year Ended December 31,

Aggregate percent of revenue

of December 31, 2024, two customers accounted for more than 10 % of the Company’s accounts receivable balance, and three customers

accounted for over 10 % of the Company’s accounts receivable balance as of December 31, 2023.

The following table represents these

customers’ aggregate percent of total accounts receivable:

of December 31, 2025, there were three customers that accounted for more than 10 % of the Company’s accounts receivable balance.

As of December 31, 2024, there were two customers that accounted for more than 10 % of the Company’s accounts receivable balance.

The following table represents these customers’ aggregate percentage of total accounts receivable:

As of December 31,

Aggregate percent of accounts receivable

● Revenue and/or

accounts receivable was less than 10 %

of revenue and/or accounts receivable.

and Equipment

29 unchanged sentences

debt instruments in their entirety at each reporting date.

promissory notes, PIPE Notes and the Yorkville Note all contain embedded derivatives, which require bifurcation and separate accounting

under GAAP, for which the Company elected the FVO.

In addition, certain term PIPE Notes were issued with separately exercisable and freestanding

warrants to purchase common stock, were issued with substantial discounts at issuance and contained certain embedded derivatives to be

bifurcated and accounted for separately for those term notes, unless the FVO is eligible and elected.

Accordingly, the Company qualified

for and elected the FVO for the entire PIPE Notes instruments.

The convertible debt and accrued interest at their stated interest rates

were initially recorded at fair value as liabilities on the consolidated balance sheets and were subsequently re-measured at fair value

at the end of each reporting period presented within the consolidated financial statements.

PIPE Notes and Yorkville Note contained embedded derivatives, which required bifurcation and separate accounting under GAAP, for which

the Company elected the FVO.

In addition, certain term PIPE Notes were issued with separately exercisable and freestanding warrants to

purchase common stock, were issued with substantial discounts at issuance and contained certain embedded derivatives to be bifurcated

and accounted for separately for those term notes, unless the FVO is eligible and elected.

Accordingly, the Company qualified for and

elected the FVO for the entire PIPE Notes instruments.

The convertible debt and accrued interest at their stated interest rates were

initially recorded at fair value as liabilities on the consolidated balance sheets and were subsequently re-measured at fair value at

the end of each reporting period presented within the consolidated financial statements.

The changes in the fair value of the convertible

promissory notes, PIPE Notes and Yorkville Note are recorded in changes in fair value of convertible debt, change in fair value of PIPE

Notes and change in fair value of Yorkville Note, respectively, included as a component of other (income) expenses, net, in the consolidated

statements of operations.

The change in fair value related to the accrued interest components is also included within the respective

single line of change in fair value of convertible debt, change in fair value of PIPE Notes and change in fair value of Yorkville Note

on the consolidated statements of operations.

See additional information on valuation methodologies and significant assumptions used

in Note 7 and Note 13.

promissory notes, PIPE Notes and Yorkville Note are recorded in changes in fair value of convertible notes, included as a component of

other (income) expenses, net, in the consolidated statements of operations.

The change in fair value related to the accrued interest

components is also included within the respective single line of change in fair value of convertible notes on the consolidated statements

of operations.

See additional information on valuation methodologies and significant assumptions used in Note 7 and Note 11.

Financial Instruments

14 unchanged sentences

model”) which includes Level 3 inputs, as shown in Note 11 to the consolidated financial statements.

of Equity Classified Warrants

change in the terms or conditions of a warrant is accounted for as a modification.

For a warrant modification accounted for under ASC

815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant over and the fair

value of the original warrant immediately before its terms are modified, with each measured on the modification date.

The accounting

for any incremental fair value of the modified warrants over the original warrants is based on the specific facts and circumstances related

to the modification.

When a modification is directly attributable to an equity offering, the incremental change in fair value of the

warrants is accounted for as an equity issuance cost.

When a modification is directly attributable to a debt financing, the incremental

change in fair value of the warrants is accounted for as a debt discount or debt issuance cost.

For all other modifications, the incremental

change in fair value is recognized as a deemed dividend.

Modifications and Extinguishments

Company evaluates all modifications to its debt obligations in accordance with ASC 470-60, Debt-Troubled Debt Restructurings by Debtors

(“ASC 470-60”).

A modification is a troubled debt restructuring (“TDR”) if both (1) the borrower is experiencing

financial difficulty, and (2) the lender grants the borrower a concession.

In determining if a company is experiencing financial difficulties

for a TDR, as contemplated by the applicable standard, several factors are considered including whether the Company is currently in payment

default on any debt, if there is a high probability of future default without modification, bankruptcy considerations, or if there is

substantial doubt about the Company’s ability to continue as a going concern.

A lender is granting a concession when the effective

borrowing rate on the restructured debt is less than the effective borrowing rate on the original debt.

If a debt restructuring involves

a transfer of assets or the issuance of an equity interest in full satisfaction of a debt obligation, a concession is granted if the

debt’s carrying amount exceeds the fair value of such assets or equity interests.

recognition and measurement of the impact of a TDR on the condensed consolidated financial statements depends on whether the fair value

of consideration transferred or future undiscounted cash flows specified by the new terms are greater (gain is recorded in the condensed

consolidated statements of operations for the difference) or less (no gain is recorded in the condensed consolidated statements of operations

for the difference) than the carrying value of the debt.

a TDR is determined not to have occurred, the Company evaluates the modification in accordance with ASC Topic 470-50-40 (“ASC

470-50”), which requires modification to debt instruments to be evaluated to assess whether debt modification or debt extinguishment accounting

is applicable.

This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of

If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial

the change is reflected as a debt extinguishment.

extinguishment guidance applies, the Company accounts for the income or loss from extinguishment of debt by comparing the difference

between the reacquisition price and the net carrying amount of the debt being extinguished and recognizes this as gain or loss when the

debt is extinguished.

debt modification guidance applies, no gain or loss is recorded and the effective interest rate of the debt is updated based on the carrying

value of the debt and the revised future cash flows.

Any previously capitalized debt issuance costs in a debt modification are amortized

as interest expense over the term of the new debt instrument.

Value of Financial Instruments

23 unchanged sentences

on carrying values and future cash flows.

The Company’s financial

instruments consist of cash and cash equivalents, accounts receivable, accounts payable, convertible notes payable, liability classified

financial instruments and certain privately issued warrants.

The carrying amounts of cash and cash equivalents and accounts payable financial

instruments approximate their fair value due to their short-term nature.

The carrying amount of accounts receivable is net of an allowance

that reflects management’s best estimate of expected credit losses.

See Note 13 for fair value measurements.

Classification of Series A-1 and Series A-2

Preferred Stock

The Company originally classified

its Series A-1 and Series A-2 preferred stock (collectively “Preferred Stock”) outside of permanent equity because the Preferred

Stock contained certain redemption features that result in those shares being redeemable upon the occurrence of certain events that are

not solely within the Company’s control, including liquidation, sale or transfer of control.

Accordingly, the Preferred Stock was

recorded outside of permanent equity and was subject to the classification guidance provided under ASC 480-10-S99.

Because dividends were

not contractually required to be accrued on the Preferred Stock as there was no stated or required dividend rate per annum, the Company

was not required to accrete dividends into the carrying amount of the Preferred Stock in anticipation of a future contingent event or

redemption value.

Accordingly, the Company did not adjust the carrying values of the Preferred Stock to the respective liquidation preferences

of such shares because of the uncertainty of whether or when such events would occur.

All shares of Preferred Stock were converted into

Common Stock pursuant to their provisions in connection with the Business Combination, which closed on November 7, 2023 (see Note 3).

As such, there were no shares of Series A-1 or Series A-2 preferred stock issued or outstanding as of December 31, 2024 and 2023.

Treasury Stock

The Company records the repurchase

of its common stock, par value $ 0.0001 per share at cost on the trade date of the transaction.

These shares are considered treasury stock,

which is a reduction to stockholders’ equity (deficit).

Treasury stock is included in authorized and issued shares but excluded

from outstanding shares.

Revenue Recognition

The Company recognizes revenue

in accordance with ASC Topic 606, Revenue from Contracts with Customers , which aligns revenue recognition with the transference

of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in

exchange for those goods or services.

This core principle is achieved

to the application of a five-step model:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract,

(3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and (5) recognize

revenue as performance obligations are satisfied.

Payment terms between customers related to product and services sales vary by the type

of customer, country of sale, and the products or services offered and could result in an unbilled receivable or deferred revenue balance

depending on whether the performance obligation has been satisfied (or partially satisfied).

Revenue from all customers is

recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer.

A performance

obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606.

A contract’s transaction price is allocated to each distinct performance obligation in proportion to the standalone selling price

for each and recognized as revenue when, or as, the performance obligation is satisfied.

Individual promised goods and

services in a contract are considered a performance obligation and accounted for separately if the good or service is distinct.

or service is considered distinct if the customer can benefit from the good or service on its own or with other resources that are readily

available to the customer and the good or service is separately identifiable from other promises in the arrangement.

The transaction price for the

products is the invoiced amount.

Advanced billings from contracts are deferred and recognized as revenue when earned.

Revenue is recognized

only to the extent that it is probable that a significant reversal of revenue will not occur and when collection is considered probable.

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.

Deferred revenue consists of payments received in advance of performance under the contract.

Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, convertible notes

payable, liability classified financial instruments and certain privately issued warrants.

The carrying amounts of cash and cash equivalents

and accounts payable financial instruments approximate their fair value due to their short-term nature.

The carrying amount of accounts

receivable is net of an allowance that reflects management’s best estimate of expected credit losses.

See Note 11 for fair value

measurements.

Company records the repurchase of its common stock, par value $ 0.0001 per share at cost on the trade date of the transaction.

are considered treasury stock, which is a reduction to stockholders’ equity (deficit).

Treasury stock is included in authorized

and issued shares but excluded from outstanding shares.

Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , which aligns revenue recognition

with the transference of promised goods or services to customers in an amount that reflects the consideration to which the Company expects

to be entitled in exchange for those goods or services.

core principle is achieved to the application of a five-step model:

(1) identify the contract with a customer, (2) identify the performance

obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the

contract, and (5) recognize revenue as performance obligations are satisfied.

Payment terms between customers related to product and

services sales vary by the type of customer, country of sale, and the products or services offered and could result in an unbilled receivable

or deferred revenue balance depending on whether the performance obligation has been satisfied (or partially satisfied).

from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit

of account under Topic 606.

A contract’s transaction price is allocated to each distinct performance obligation in proportion to

the standalone selling price for each and recognized as revenue when, or as, the performance obligation is satisfied.

promised goods and services in a contract are considered a performance obligation and accounted for separately if the good or service

A good or service is considered distinct if the customer can benefit from the good or service on its own or with other resources

that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement.

transaction price for the products is the invoiced amount.

Advanced billings from contracts are deferred and recognized as revenue when

Revenue is recognized only to the extent that it is probable that a significant reversal of revenue will not occur and when collection

is considered probable.

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.

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.

Subscription Revenue

Subscription revenues are generated

from the Company’s data exchange (BEAM) product, which is a medical imaging exchange platform between hospital/healthcare systems,

imaging centers, physicians and patients.

Subscription revenue is recognized over time as the customer consumes the benefits of the services

as the Company stands ready to provide access to the programs throughout the subscription period.

Subscription customers are invoiced

either quarterly or annually in advance with the customer contracts automatically renewing unless the customer issues a cancellation notice.

Web Imaging Revenue

Web imaging revenues are generated

from the Company’s data broker (iRWD) product, which provides regulatory grade imaging and clinical data in the pharmaceutical,

device manufacturing, clinical research organizations, and artificial intelligence markets.

Web imaging customers are invoiced in installments

as the related data is delivered.

Revenue from the sale of web imaging products is recognized at a point in time using an output measure of progress,

which is based on the number of data units delivered relative to the total data units committed by the customer.

The Company recognizes income

taxes under the asset and liability method.

Deferred income taxes are recognized for differences between the financial reporting and tax

bases of assets and liabilities, at enacted statutory tax rates in effect for the years in which the differences are expected to reverse.

The Company establishes a valuation allowance if it believes it is more likely than not that the deferred tax assets will not be recovered

based on an evaluation of all available evidence.

The Company determines whether

it is more likely than not that a tax position will be sustained upon examination.

If it is not more likely than not that a position will

be sustained, none of the benefit attributable to the position is recognized.

The tax benefit to be recognized for any tax position that

meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely to be realized upon

resolution of the contingency.

The Company accounts for interest and penalties related to uncertain tax positions as part of its provision

for income taxes.

Patents and Trademarks

Costs associated with the submission

of a patent application are expensed as incurred given the uncertainty of the patents resulting in probable future economic benefits to

the Company and are included in research and development expenses on the consolidated statements of operations.

Research and Development

The Company accounts for its research

and development (“R&D”) costs in accordance with ASC 730, Research and Development (“ASC 730”).

730 requires that R&D costs are generally recognized as an expense as incurred.

However, some costs associated with R&D activities

that have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.

For the years ended December 31, 2024

and December 31, 2023, research and development expenditures were charged to operating expense as incurred.

Stock-based Compensation

The Company accounts for its stock-based

compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”).

Company has issued stock options and restricted stock units (“RSUs”).

In accordance with ASC 718, the Company recognizes compensation

expense for all stock-based awards based on the estimated grant-date fair value.

The Company uses the Black-Scholes

option-pricing model to determine the fair value of stock options granted.

The determination of fair value for stock options on the date

of grant using an option-pricing model requires management to make certain assumptions including expected volatility, expected term, risk-free

interest rate and expected dividends in addition to the Company’s common stock valuation.

For RSUs, the fair value of an

RSU is equal to the market price of the Company’s common stock (“Common Stock”) on the grant date.

The Company recognizes

forfeitures as they occur.

Stock-based compensation expense for stock-based awards is recognized on a straight-line basis based on the

grant date fair value over the associated service period of the award, which is generally the vesting period.

Stock-based awards generally

vest over three-year service periods and stock options expire after ten years.

The Company records stock-based

compensation expense to cost of revenue, general and administrative expense, sales and marketing expense or research and development expense

based on the underlying function of the individual that was granted the stock-based compensation award.

Shares issued upon stock option

exercise and RSU vesting are newly issued shares.

Prior to the Business Combination,

due to the absence of an active market for the Company’s common stock, the Company utilized methodologies, approaches, and assumptions

consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series:

Valuation of Privately

Held Company Equity Securities Issued as Compensation to estimate the fair value of its common stock.

In determining the exercise prices

for options granted, the Company considered the fair value of the Company as of the grant date.

The fair value of the Company was determined

based upon a variety of factors, including the Company’s financial position, historical performance and operating results, the Company’s

stage of development, the progress of the Company’s research and development programs, the prices at which the Company sold its

convertible preferred stock, the superior rights, preferences and privileges of the Company’s convertible preferred stock relative

to its common stock, external market conditions affecting the biotechnology industry, the lack of marketability of the Company’s

common stock and the prospects of a liquidity event and the analysis of initial public offering and market performance of similar companies

as well as recently completed mergers and acquisition of peer companies.

Significant changes to the key assumptions underlying the factors

used could result in different fair values of the Company at each valuation date.

Net Loss per Share

calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required

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.

revenues are generated from the Company’s data exchange (BEAM) product, which is a medical imaging exchange platform between hospital/healthcare

systems, imaging centers, physicians and patients.

Subscription revenue is recognized over time as the customer consumes the benefits

of the services as the Company stands ready to provide access to the programs throughout the subscription period.

Subscription customers

are invoiced either quarterly or annually in advance with the customer contracts automatically renewing unless the customer issues a

cancellation notice.

Delivery Revenue

delivery revenues are generated from the Company’s proprietary iRWD™ (Imaging Real-World Data) platform, which provides regulatory

grade imaging and clinical data in the pharmaceutical, device manufacturing, clinical research organizations, and artificial intelligence

Data delivery customers are invoiced in installments as the related data is delivered.

Revenue from the sale of data delivery

products is recognized at a point in time using an output measure of progress, which is based on the number of data units delivered relative

to the total data units committed by the customer.

Company recognizes income taxes under the asset and liability method.

Deferred income taxes are recognized for differences between the

financial reporting and tax bases of assets and liabilities, at enacted statutory tax rates in effect for the years in which the differences

are expected to reverse.

The Company establishes a valuation allowance if it believes it is more likely than not that the deferred tax

assets will not be recovered based on an evaluation of all available evidence.

Company determines whether it is more likely than not that a tax position will be sustained upon examination.

If it is not more likely

than not that a position will be sustained, none of the benefit attributable to the position is recognized.

The tax benefit to be recognized

for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than

50% likely to be realized upon resolution of the contingency.

The Company accounts for interest and penalties related to uncertain tax

positions as part of its provision for income taxes.

and Trademarks

associated with the submission of a patent application are expensed as incurred given the uncertainty of the patents resulting in probable

future economic benefits to the Company and are included in research and development expenses on the consolidated statements of operations.

and Development

Company accounts for its research and development (“R&D”) costs in accordance with ASC 730, Research and Development

ASC 730 requires that R&D costs are generally recognized as an expense as incurred.

However, some costs

associated with R&D activities that have an alternative future use (e.g., materials, equipment, facilities) may be capitalizable.

For the years ended December 31, 2025 and December 31, 2024, research and development expenditures were charged to operating expense

Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation

The Company has issued stock options and restricted stock units (“RSUs”).

In accordance with ASC

718, the Company recognizes compensation expense for all stock-based awards based on the estimated grant-date fair value.

Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted.

The determination of fair value

for stock options on the date of grant using an option-pricing model requires management to make certain assumptions including expected

volatility, expected term, risk-free interest rate and expected dividends in addition to the Company’s common stock valuation.

RSUs, the fair value of an RSU is equal to the market price of the Company’s common stock (“Common Stock”) on the grant

The Company recognizes forfeitures as they occur.

Stock-based compensation expense for stock-based awards is recognized on a straight-line

basis based on the grant date fair value over the associated service period of the award, which is generally the vesting period.

awards generally vest over three-year service periods and stock options expire after ten years.

Company records stock-based compensation expense to cost of revenue, general and administrative expense, sales and marketing expense

or research and development expense based on the underlying function of the individual that was granted the stock-based compensation

Shares issued upon stock option exercise and RSU vesting are newly issued shares.

Loss per Share

Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required

for participating securities.

Certain warrants participate in distributions of the Company.

The pre-funded warrants associated with

the July and September 2024 private placements (see Note 10) are considered outstanding shares in the basic earnings per share

The pre-funded warrants associated with the

July 2024, September 2024 and June 2025 private placements (see Note 8) are considered outstanding shares in the basic earnings per share

calculation given their nominal exercise price.

In addition, the shares issuable pursuant to the forward contracts are considered

outstanding shares in the basic earnings per share calculation because there is no consideration (see Note 7 and Note 10).

loss attributable to common stockholders is not allocated to the warrant holders as the warrant holders do not have a contractual

obligation to share in losses.

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of

common shares outstanding for the period.

Diluted net loss per share is computed by dividing the net loss by the weighted-average

number of shares of Common Stock and common stock equivalents outstanding for the period.

Common stock equivalents are only included

when their effect is dilutive.

The Company’s potentially dilutive securities, including outstanding stock options and RSUs

under the Company’s equity incentive plan, warrants to purchase Common Stock, convertible debt, deferred underwriter fees and

loan extensions have been excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive.

all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding to the

Company’s net loss position.

As a result of the Company reporting

net loss attributable to common stockholders for all periods presented herein, the following common stock equivalents were excluded from

the computation of diluted net loss per common share for the years ended December 31, 2024 and 2023 because including them would have

been antidilutive (in thousands):

In addition, the shares issuable pursuant to the forward contracts are considered outstanding

shares in the basic earnings per share calculation because there is no consideration (see Note 8 and Note 10).

The net loss attributable

to common stockholders is not allocated to the warrant holders as the warrant holders do not have a contractual obligation to share in

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for

Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of Common Stock

and common stock equivalents outstanding for the period.

Common stock equivalents are only included when their effect is dilutive.

Company’s potentially dilutive securities, including outstanding RSUs under the Company’s equity incentive plan, warrants

to purchase Common Stock, convertible debt, deferred underwriter fees and loan extensions have been excluded from the computation of

diluted net loss per share as their inclusion would be anti-dilutive.

For all periods presented, there is no difference in the number

of shares used to calculate basic and diluted shares outstanding to the Company’s net loss position.

a result of the Company reporting net loss attributable to common stockholders for all periods presented herein, the following common

stock equivalents were excluded from the computation of diluted net loss per common share for the years ended December 31, 2025 and 2024

because including them would have been antidilutive (in thousands):

Schedule of Antidilutive Earnings Per Share

For the year ended December 31,

Employee stock options

Year Ended December 31,

Restricted stock units

Warrants for common stock

Convertible debt

Warrants for common stock

Deferred underwriter fees

1 unchanged sentence

Total common stock equivalents

and Administrative

and administrative expenses include all costs that are not directly related to satisfaction of customer contracts.

General and administrative

General and administrative expenses

include all costs that are not directly related to satisfaction of customer contracts.

General and administrative expenses include items

for the Company’s selling and administrative functions, such as sales, finance, legal, human resources, and information technology

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.

Emerging Growth Company

The Company is an emerging growth

company, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial

accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective

or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”))

are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out

of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election

to opt out is irrevocable.

The Company has not elected to opt out of such extended transition period which means that when a standard

is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company,

can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Recently Adopted Accounting Pronouncements

Effective January 1, 2024, the

Company retrospectively adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

to Reportable Segment Disclosures (“ASU 2023-07”) on an annual 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 FASB ASC Topic 280, Segment Reporting .

The standard is effective for annual periods beginning after December 15,

2023 and interim periods within annual periods beginning after December 15, 2024.

The Company adopted this as of December 31, 2024 and

the adoption had no material impact on the Company’s consolidated financial statements or footnotes.

Effective January 1, 2024, the

Company adopted ASU No.

2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure

of Crypto Assets (“ASU 2023-08”), which provides an update to existing crypto asset guidance and requires an entity to

measure certain crypto assets at fair value.

In addition, this guidance requires disclosures related to crypto assets once it is adopted.

The adoption of ASU 2023-08 resulted in no cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2024.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued

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.

Business Combination

On November 7, 2023, the Company

closed the previously announced Business Combination pursuant to the Merger Agreement, dated April 25, 2022, by and among Data Knights,

Merger Sub, and Legacy ONMD, as described in Note 1.

Pursuant to the Merger Agreement:

(i) Merger Sub merged with and into Legacy ONMD, with Legacy ONMD surviving the Merger, as a wholly-owned subsidiary of Data Knights,

and (ii) Data Knights, which had been formed as a Delaware corporation solely for the purpose of facilitating the Business Combination,

changed its name to OneMedNet Corporation.

The Business Combination was accounted

for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Data Knights was treated as the acquired

company for financial reporting purposes.

This determination is primarily based on the fact that subsequent to the Business Combination,

Legacy ONMD’s stockholders have the majority of the voting power of the combined entity, Legacy ONMD comprised all of the ongoing

operations of the combined entity, Legacy ONMD comprised a majority of the governing body of the combined entity, and Legacy ONMD’s

senior management comprised all of the senior management of the combined entity.

Accordingly, for accounting purposes, the Business Combination

was treated as the equivalent of Legacy ONMD issuing shares for the net assets of Data Knights, accompanied by a recapitalization.

Since this is considered a recapitalization

for accounting purposes, the net assets of Data Knights were not remeasured at fair value but were stated at historical cost and there

was no goodwill or intangibles recognized.

Operations prior to the Business Combination are those of Legacy ONMD.

The aggregate consideration to

the stockholders of Legacy ONMD at the closing of the Business Combination was approximately $ 20.0 million, which consisted of the Company’s

shares of common stock, par value $ 0.0001 per share (“Common Stock”), valued at $ 10.00 per share, resulting in the issuance

of 20,000,000 shares of Common Stock.

Upon the closing, each of Legacy

ONMD’s outstanding convertible notes, with a fair value of $ 47.9 million, converted into 5,475,362 shares of the Company’s

Common Stock.

Also, upon the closing, 3,853,797

shares of Series A-2 Preferred Stock and 3,204,000 shares of Series A-1 Preferred Stock converted into 6,261,553 shares of Common Stock.

Legacy ONMD’s 612,670 outstanding stock options and 3,859,464 outstanding warrants converted into 543,057 and 3,420,945 shares,

respectively, of Common Stock.

As a result of the above, the

share figures in the consolidated statements of temporary equity and stockholders’ deficit for the year ended December 31, 2022

have been adjusted for the application of the recapitalization ratio of 0.88637847 per share.

The Company received net cash

consideration of approximately $ 0.1 million and net liabilities of Data Knights of approximately $ 11.0 million.

The net liabilities of

Data Knights were as follows (in thousands):

Schedule of Business Acquisition

Prepaid expenses and other current assets

Accounts payable & accrued expenses

Loan extensions

Deferred underwriter fee payable

Warrant liability

The Company incurred transaction

costs of $ 0.9 million in connection with the Business Combination.

Following consummation of the Business Combination, the Company owned

all of the issued and outstanding equity interests in Legacy ONMD and its subsidiary, and the Legacy ONMD securityholders held approximately

78.2 % of the Company.

Following consummation of the Business Combination, the Company’s Common Stock and the Company’s Public

Warrants began trading on the Nasdaq Global Market under the symbols “ONMD” and “ONMDW”, respectively.

Private Investment in Public Equity (“PIPE”)

June 28, 2023, the Company and Data Knights entered into a Securities Purchase Agreement (the “SPA”) with certain investors

(collectively referred to as the “Purchasers”) for PIPE financing in the aggregate original principal amount of $ 1.5 million.

Pursuant to the Securities Purchase Agreement, Data Knights issued and sold to each of the Purchasers, a new series of senior secured

convertible notes (the “PIPE Notes”), which are convertible into shares of Common Stock at the Purchasers election at a conversion

price equal to the lower of (i) $10.00 per share, or (ii) 92.5% of the lowest volume weighted average trading price for the ten (10) Trading

Days immediately preceding the Conversion Date.

The Purchasers’ $ 1.5 million investment in PIPE Notes closed and funded contemporaneous

to the Closing of the Business Combination.

immediately prior to the Closing, Data Knights issued the PIPE Notes to the Purchasers under the private offering exemptions under Securities

Act of 1933, as amended (the “Securities Act”).

Underwriter Fees

In connection with the Business

Combination, Data Knights entered into an agreement with their underwriters (“EF Hutton”) whereby EF Hutton agreed to waive

the related merger underwriting fees that were payable at closing ($ 4.0 million) in exchange for allocated payments as follows:

million in cash at closing;

(ii) a $ 0.5 million promissory note that matured on March 1, 2024 ;

and (iii) a transfer of 277,778 shares

of Common Stock, which were valued at the closing stock price of $ 10.89 per share on June 28, 2023.

If, five trading days prior to the

six-month anniversary, the aggregate VWAP value of the 277,778 shares of Common Stock was lower than the original share value of $ 3.0

million, the Company was obligated to compensate EF Hutton at a new share price equal to the difference in amount on such date.

the decrease in share value on the six-month anniversary, the Company was required to either pay to EF Hutton an additional $ 2.8 million

or issue to EF Hutton an additional 3,175,000 shares of Common Stock.

In January 2024, the Company issued the original 277,778 shares

of Common Stock as consideration for $ 0.2 million owed by the Company.

In August 2024, the Company made a promissory note payment of $ 0.1

As of December 31, 2024, the Company

was obligated to pay EF Hutton the true-up of either $ 2.8 million or 3,175,000 shares of Common Stock valued at $ 0.88 per share, plus

the remaining $0.4 million promissory note.

Upon the occurrence of an event of default, the promissory note bears interest at a rate of

12.5 % until such event of default is cured.

The promissory note remained unpaid upon maturity on March 1, 2024, and the Company recorded

interest expense of $ 0.1 million during the year ended December 31, 2024, because of the event of default.

As of December 31, 2024 and

2023, deferred underwriter fees payable totaled $ 3.3 million and $ 3.5 , respectively.

Loan Extensions

In connection with

the Business Combination, 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 $ 10.00 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

As of December 31, 2024 and December 31, 2023, a registration statement

has not yet been declared effective by the SEC, and a balance of $3.0 million remains outstanding on the Company’s consolidated

balance sheets.

expenses include items for the Company’s selling and administrative functions, such as sales, finance, legal, 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.

Growth Company

Company is an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups

Act of 2012 (the “JOBS Act”).

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to

comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act

registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934,

as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards.

Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging

growth companies but any such an election to opt out is irrevocable.

The Company has not elected to opt out of such extended transition

period which means that when a standard is issued or revised and it has different application dates for public or private companies,

the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised

Reclassification

prior period amounts have been reclassified to conform to the current year presentation.

These reclassifications had no impact on the

Company’s net loss, net cash flows, or stockholders’ deficit.

Adopted Accounting Pronouncements

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU

2023-09”), which requires public entities, on an annual basis, to provide disclosure of specific categories in their tax rate reconciliations,

as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December

15, 2024, with early adoption permitted, and may be applied prospectively or retrospectively.

The Company adopted ASU 2023-09 on a prospective

basis during the year ended December 31, 2025, and included the required disclosures in Note 6, Income Taxes .

The impact of the

adoption of this standard was not material to the Company’s financial statements or disclosures.

Issued Accounting Pronouncements

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 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 does not expect the impact of the adoption

of this standard to be material to its financial statements or disclosures.

July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts

Receivable and Contract Assets (“ASU 2025-05”), which allows entities to use a simplified approach when estimating credit

losses for current accounts receivable and contract assets arising from revenue transactions.

The standard update permits consideration

of collections after the balance sheet date when estimating expected credit losses, and allows consideration of subsequent collections

when estimating credit losses, reducing documentation burden.

The adoption of ASU 2025-05 is effective for annual and interim periods

within annual reporting periods beginning after December 15, 2025.

The Company is currently evaluating the potential effect of this accounting

standard update on its financial statements and related disclosures.

Investment in Crypto Assets – Bitcoin

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 consolidated balance sheets as of December 31, 2024 (in thousands):

Crypto Assets Held

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).

following table sets forth the units held, cost basis, and fair value of its investments in crypto assets, as shown on the consolidated

balance sheets as of December 31, 2025 (in thousands):

Schedule of Crypto Assets Held

Investments in crypto assets:

The following table

presents a reconciliation of the fair values of the Company’s investments in crypto assets for the year ended December 31, 2024

following table sets forth the units held, cost basis, and fair value of its investments in crypto assets, as shown on the consolidated

balance sheets as of December 31, 2024 (in thousands):

Investments in crypto assets:

following table presents a reconciliation of the fair values of the Company’s investments in crypto assets for the year ended December

31, 2025 (in thousands):

of Crypto Assets Reconciliation of Fair Values

Schedule of Crypto Assets Reconciliation of Fair Values

Balance, December 31, 2024

Unrealized gain, net

Unrealized loss, net

Balance, December 31, 2025

Additions are the result of the

Company acquiring Bitcoin with liquid assets from private placements, while dispositions are the result of sales of Bitcoin.

year ended December 31, 2024, the Company had Bitcoin dispositions of $ 0.8 million, inclusive of realized gains of $ 0.1 million.

uses a first-in, first-out methodology to assign costs to Bitcoin for purposes of the Bitcoin held and realized gains and losses disclosure

Bitcoin is included in current assets in the consolidated balance sheets due to the Company’s ability to sell them in a highly

liquid marketplace and its intent to liquidate its Bitcoin to support operations when needed.

are the result of the Company acquiring Bitcoin with liquid assets from equity financings, while dispositions are the result of sales

During the year ended December 31, 2025, the Company had Bitcoin dispositions of $ 4.1 million, inclusive of realized gains

of $ 0.9 million.

The Company uses a first-in, first-out methodology to assign costs to Bitcoin for purposes of the Bitcoin held and realized

gains and losses disclosure above.

Bitcoin is included in current assets in the consolidated balance sheets due to the Company’s

ability to sell them in a highly liquid marketplace and its intent to liquidate its Bitcoin to support operations when needed.

Property and Equipment

Property and equipment are summarized

as of December 31 (in thousands):

and equipment are summarized as of December 31 (in thousands):

of Property and Equipment

4 unchanged sentences

Property and equipment, net

Depreciation expense was $ 0.04

million and $ 0.03 million for the years ended December 31, 2024 and 2023, respectively, which is recorded within general and administrative

expenses in the consolidated statements of operations.

The Company has operations in

the United States and Canada.

The components of income (loss) before the provision for income taxes are as follows (in thousands):

expense was $ 0.07 million and $ 0.04 million for the years ended December 31, 2025 and 2024, respectively, which is recorded within general

and administrative expenses in the consolidated statements of operations.

Accounts Payable and Accrued Expenses

payable and accrued expenses consisted of the following (in thousands):

Schedule of Accounts Payable and Accrued Expenses

As of December 31,

Professional fees

Payroll liabilities

Data provider costs

the year ended December 31, 2025, the Company negotiated and settled certain trade payables owed by the Company with an aggregate carrying

value of $ 3.2 million.

At the time of these settlements, (1) the Company had negative cash flow from operations, historical losses, and

a significant accumulated deficit that raised substantial doubt about the Company’s ability to continue as a going concern, and

(2) a concession was granted to the Company, as the fair value of the consideration received by the vendors was less than the net carrying

value of the payables.

As a result, the Company accounted for these transactions as troubled debt restructurings in accordance with ASC

In accordance with the accounting for troubled debt restructurings, the Company derecognized the outstanding payables and recognized

the consideration transferred to the vendors at fair value.

The fair value of consideration transferred included $ 0.3 million in cash

payments made by the Company and equity interests comprised of 250,000 shares of the Company’s Common Stock valued at $ 0.1 million.

The fair value of the equity interests was determined using the closing price of the Company’s Common Stock of $ 0.45 on the agreement

effective date.

The difference in value between the carrying value of the payables and the fair value of consideration transferred resulted

in a gain on troubled debt restructuring of $ 2.8 million for the year ended December 31, 2025 in the Company’s consolidated statements

of operations.

Company has operations in the United States and Canada.

The components of income (loss) before the provision for income taxes are as

follows (in thousands):

of Income by Geographical Location

For the year ended December 31,

Year Ended December 31,

United States

Total loss before income taxes

The components of the income tax

provision for the years ended December 31, 2024 and 2023 were as follows (in thousands):

components of the income tax provision for the years ended December 31, 2025 and 2024 were as follows (in thousands):

of Components of Income Tax

9 unchanged sentences

Total income tax provision

A reconciliation of the U.S.

statutory income tax rate to the Company’s effective income tax rate is as follows:

the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis.

The following table is a reconciliation of

federal statutory rate of 21.0% to the effective tax rate for the year ended December 31, 2025, in accordance with ASU 2023-09:

Reconciliation Income Tax Expense

As of December 31,

December 31, 2025

(in thousands)

Tax provision at statutory rate

State taxes, net of federal benefit

State income taxes, net of federal benefit (1)

Foreign tax effects

Effects of cross-border transactions

Nontaxable or nondeductible items

Stock-based compensation expense

Change in valuation allowance

Effective income tax rate

(1) During the year ended December 31, 2025, state minimum taxes in California

and Massachusetts comprised greater than 50% of the tax effect in this category.

following table is a reconciliation of the U.S.

federal statutory tax rate of 21.0% to the effective tax rate for the years ended December

31, 2024, prior to the adoption of ASU 2023-09:

December 31, 2024

Tax provision at statutory rate

State income taxes, net of federal benefit

Stock-based compensation expense

Permanent differences - other

Change in fair value of convertible notes

Change in fair value of warrants

Change in fair value of Yorkville Note

SEPA commitment fee

1 unchanged sentence

Effective income tax rate

The tax effects of temporary differences

that give rise to significant components of the deferred tax assets and liabilities are as follows (in thousands):

tax effects of temporary differences that give rise to significant components of the deferred tax assets and liabilities are as follows

(in thousands):

of Deferred Income Taxes

3 unchanged sentences

Capitalized research costs

Stock-based compensation expense

Accrued expenses

Total gross deferred tax assets

4 unchanged sentences

Net deferred taxes

The Company has generated both

federal and state net operating losses (NOL) of approximately $ 38.8 million and $ 18.1 million, respectively.

The federal NOLs include

$ 12.2 million which expire at various dates beginning in 2030 and $ 26.6 million which carry forward indefinitely.

The state NOLs expire

at various dates beginning in 2030.

Ownership changes, as defined

in the Internal Revenue Code Section 382, could limit the amount of NOLs that can be utilized annually to offset future taxable income.

Generally, an ownership change occurs when the ownership percentage of 5% or greater stockholders increases by more than 50% over a three-year

The Company’s ability to utilize its federal and state tax attributes may be limited by ownership changes that have occurred

in the past or may occur in the future.

The Company has not yet conducted a formal study of whether, or to what extent, past changes in

control of the Company impacts its ability to utilize NOL carryforwards because such NOL carryforwards cannot be utilized until the Company

achieves profitability.

Management has evaluated the positive

and negative evidence bearing upon the realizability of the Company’s net deferred tax assets, which are comprised primarily of

net operating loss carryforwards and research costs capitalized for tax purposes.

Management has considered the Company’s history

of cumulative operating losses and estimated future tax losses and has determined that it is more likely than not that the Company will

not recognize the benefits of the net deferred tax assets.

As a result, the Company has recorded a full valuation allowance at December

31, 2024 and 2023.

The valuation allowance increased by $ 1.8 million in 2024 due to the increase in deferred tax assets, primarily due

to net operating loss carryforwards and capitalized research costs.

As of December 31, 2024 and 2023,

the Company had no uncertain tax positions.

The Company recognizes both interest and penalties associated with unrecognized tax benefits

as a component of income tax expense.

The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

The Company files federal, various

state, and Canada tax returns.

In the U.S., all tax years since inception remain open to examination by major tax jurisdictions to which

the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the respective tax

authorities if they have or will be used in a future period.

In Canada, the Company is generally no longer subject to income tax examinations

for the years before 2021.

Company has generated both federal and state net operating losses (NOL) of approximately $ 39.5 million and $ 16.7 million, respectively.

The federal NOLs include $ 12.2 million which expire at various dates beginning in 2030 and $ 27.3 million which carry forward indefinitely.

The state NOLs expire at various dates beginning in 2030.

changes, as defined in the Internal Revenue Code Section 382, could limit the amount of NOLs that can be utilized annually to offset

future taxable income.

Generally, an ownership change occurs when the ownership percentage of 5% or greater stockholders increases by

more than 50% over a three-year period.

The Company’s ability to utilize its federal and state tax attributes may be limited by

ownership changes that have occurred in the past or may occur in the future.

The Company has not yet conducted a formal study of whether,

or to what extent, past changes in control of the Company impacts its ability to utilize NOL carryforwards because such NOL carryforwards

cannot be utilized until the Company achieves profitability.

has evaluated the positive and negative evidence bearing upon the realizability of the Company’s net deferred tax assets,

which are comprised primarily of net operating loss carryforwards and research costs capitalized for tax purposes.

Management has

considered the Company’s history of cumulative operating losses and estimated future tax losses and has determined that it is

more likely than not that the Company will not recognize the benefits of the net deferred tax assets.

As a result, the Company has

recorded a full valuation allowance at December 31, 2025 and 2024.

The valuation allowance increased by $ 0.8

million in 2025 primarily due to the current year net operating loss and capitalized research costs.

of December 31, 2025 and 2024, the Company had no uncertain tax positions.

The Company recognizes both interest and penalties associated

with unrecognized tax benefits as a component of income tax expense.

The Company has not recorded any interest or penalties for unrecognized

tax benefits since its inception.

Company files federal, various state, and Canada tax returns.

In the U.S., all tax years since inception remain open to examination by

major tax jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon

examination by the respective tax authorities if they have or will be used in a future period.

In Canada, the Company is generally no

longer subject to income tax examinations for the years before 2022.

The Company is currently not under examination by any tax authority.

Convertible Debt

In June 2023, the Company entered

into the PIPE SPA in which the Company was required to sell senior secured convertible notes and warrants to directors of the Company.

The PIPE SPA stipulates a collateral security agreement between the Company and the directors for punctual payment and performance by

the Company on its obligations to the Directors.

The intellectual property of the Company serves as the collateral for the PIPE Notes.

The PIPE Notes and related warrants were issued through a PIPE financing transaction, which is a form of debt and equity offering under

an exemption in the securities laws for qualifying private placements by issuers of publicly traded securities.

On November 7, 2023, the

Company received a total of $ 1.5 million from the directors in exchange for PIPE Notes in the aggregate principal amount of $ 1.6 million

(plus accrued interest of $ 0.1 million) and 95,745 warrants to acquire Common Stock.

The PIPE Notes are convertible into shares of Common

Stock at the PIPE Investor’s election at a conversion price equal to the lower of (i) $10.00 per share, and (ii) 92.5% of the lowest

VWAP for the ten (10) trading days immediately preceding the conversion date, subject to the floor price of $1.14 (representing 20% of

the closing price of the Common Stock on the last trading day before the closing of the Business Combination), or the alternative conversion

ratio of the greater of the floor price and the lesser of 80% of the VWAP of the common stock as of the trading day and 80% of the price

computed as the quotient of the sum of the VWAP of the Common Stock for each of the three trading days with the lowest VWAP of the Common

Stock during the fifteen consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed

delivery of the applicable conversion notice, divided by three.

All such determinations are to be appropriately adjusted for any stock

dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common

July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted in the U.S.

The OBBB includes significant provisions, such

as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (“TCJA”) and restoration of favorable

tax treatment for certain business provisions including the expensing of domestic research and development expenditures.

not have a material impact on the Company’s consolidated financial statements or footnotes.

The Company did not make any

income tax payments (net of refunds received) that are required to be disclosed under ASU 2023-09.

following table summarizes outstanding debt for the periods indicated (in thousands):

Schedule of Outstanding Debt

As of December 31,

Convertible notes at fair value

Yorkville Note

Convertible notes at fair value

Related party loans

Non-convertible

Related party loans

Loans payable

Stock repurchase loan

Insurance premium loan

Extension loans

Loans payable

Long-term loans payable

Extension loans

Stock repurchase loan

Long- term loans payable

Notes at Fair Value

June 2023, the Company entered into the PIPE SPA in which the Company was required to sell senior secured convertible notes and warrants

to directors of the Company.

The PIPE SPA stipulates a collateral security agreement between the Company and the directors for punctual

payment and performance by the Company on its obligations to the Directors.

The intellectual property of the Company serves as the collateral

for the PIPE Notes.

The PIPE Notes and related warrants were issued through a PIPE financing transaction, which is a form of debt and

equity offering under an exemption in the securities laws for qualifying private placements by issuers of publicly traded securities.

On November 7, 2023, the Company received a total of $ 1.5 million from the directors in exchange for PIPE Notes in the aggregate principal

amount of $ 1.6 million (plus accrued interest of $ 0.1 million) and 95,745 warrants to acquire Common Stock.

The PIPE Notes are convertible

into shares of Common Stock at the PIPE Investor’s election at a conversion price equal to the lower of (i) $10.00 per share, and

(ii) 92.5% of the lowest VWAP for the ten (10) trading days immediately preceding the conversion date, subject to the floor price of

$1.14 (representing 20% of the closing price of the Common Stock on the last trading day before the closing of the Business Combination),

or the alternative conversion ratio of the greater of the floor price and the lesser of 80% of the VWAP of the common stock as of the

trading day and 80% of the price computed as the quotient of the sum of the VWAP of the Common Stock for each of the three trading days

with the lowest VWAP of the Common Stock during the fifteen consecutive trading day period ending and including the trading day immediately

preceding the delivery or deemed delivery of the applicable conversion notice, divided by three.

All such determinations are to be appropriately

adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases

or increases the Common Stock.

The PIPE Notes mature on the first anniversary of the issuance date, or November 7, 2024.

As of December 31, 2024, the PIPE Notes

have not been repaid or converted and remain outstanding.

The Company elected the FVO of

accounting for its PIPE Notes.

Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair

value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

The estimated fair value

adjustment is presented as a single line item within other (income) expenses, net in the accompanying consolidated statements of operations

under the caption change in fair value of pipe notes.

As of December 31, 2024 and 2023

the fair value of the PIPE Notes was $ 1.7 million and $ 1.6 million, respectively, which were included in current liabilities on the consolidated

balance sheets.

Shareholder Loans

For the year ended December 31,

2024, the Company received gross proceeds of $ 1.6 million in connection with shareholder loans with a related party investor which are

convertible into 2,123,312 shares of Common Stock at a conversion price of $ 0.7535 per share.

These loans do not bear interest and mature

one year from issuance.

The balance of $ 1.6 million is included in loan – related party on the consolidated balance sheets as of

As of December

31, 2024, the PIPE Notes had not been repaid or converted and remained outstanding.

Company elected the FVO of accounting for its PIPE Notes.

Under the FVO election, the financial instrument is initially measured at its

issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

The estimated fair value adjustment is presented within other (income) expenses, net in the accompanying consolidated statements of operations

under the caption change in fair value of convertible notes.

The fair value adjustment during the years ended December 31, 2025 and 2024

was $( 1.2 ) million and $ 0.1 million, respectively.

June 17, 2025 and June 18, 2025, the Purchasers agreed to convert $ 1.7 million of outstanding principal and accrued interest into an

aggregate of 1,453,174 shares of Common Stock, which was based on the floor price of $ 1.14 per share.

As such, the net carrying amount

of the PIPE Notes was adjusted to its fair value of $ 0.5 million on the conversion date and reclassified to stockholders’ deficit

in the consolidated balance sheets at the time the conversions took place in June 2025.

As such, there was no balance outstanding as

of December 31, 2025.

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 8).

Upon entry into the SEPA,

the Company issued Yorkville a $ 1.5 million convertible promissory note for $ 1.35 million in cash (after a 10 % original issue discount)

(the “Yorkville Note”).

The Yorkville Note does not bear interest and matures on June 17, 2025 .

The Yorkville Note is convertible

by Yorkville into shares of Common Stock at an aggregate purchase price based on a price per share equal to the lower of (a) $1.3408

per share (subject to downward reset upon the filing of the resale registration statement described below) or (b) 90% of the lowest daily

volume-weighted average price (“VWAP”) of the Common Stock on Nasdaq during the seven trading days immediately prior to each

conversion (the “Variable Price”), but which Variable Price may not be lower than the Floor Price then in effect.

Price” is $ 0.28 per share, subject to the Company’s option to reduce the Floor Price to any amounts set forth in a written

notice to Yorkville.

Upon the occurrence and during the continuation of an event of default (as defined in the Yorkville Note), the Yorkville

Note will become immediately due and payable.

The issuance of the Common Stock upon conversion of the note and otherwise under the SEPA

is capped at 19.9 % of the outstanding Common Stock as of June 18, 2024.

Further, the note and SEPA include a beneficial ownership blocker

for Yorkville such that Yorkville may not be deemed the beneficial owner of more than 4.99 % of the Company’s Common Stock.

any event of default, the interest rate increases to 18 % and the full unpaid principal amount may become immediately due and payable

at Yorkville’s election.

Company elected the FVO of accounting for the Yorkville Note.

The estimated fair value adjustment is presented within other expense (income),

net in the accompanying consolidated statements of operations under the caption change in fair value of convertible notes.

The fair value

adjustment during the years ended December 31, 2025 and 2024 was $( 0.1 ) million and $ 0.7 million, respectively.

December 20, 2024, Yorkville provided the Company with a form of conversion notice specifying their request to convert $ 0.2 million of

outstanding principal into 245,007 shares of the Company’s Common Stock, which was based on the Variable Price of $ 0.8163 .

December 31, 2024, the Company had not yet issued the 245,007 shares of Common Stock.

The fair value of $ 0.3 million was recorded as

an equity forward sale contract and was included in additional paid-in-capital in stockholders’ deficit in the consolidated balance

sheets as it met the criteria for equity accounting under ASC 815.

The shares were issued to Yorkville on January 22, 2025.

January 23, 2025, Yorkville provided notice specifying their request to convert $ 0.6 million of outstanding principal into 650,026 shares

of Common Stock, which was based on the Variable Price of $ 0.9230 .

As such, the net carrying amount was adjusted to its fair value of

$ 0.9 million on the conversion date and reclassified to stockholders’ deficit in the consolidated balance sheets at the time the

conversion took place in January 2025.

January 27, 2025, Yorkville provided notice specifying their request to convert $ 0.2 million of outstanding principal into 216,675 shares

of Common Stock, which was based on the Variable Price of $ 0.9230 .

As such, the net carrying amount was adjusted to its fair value of

$ 0.2 million on the conversion date and reclassified to stockholders’ deficit in the consolidated balance sheets at the time the

conversion took place in January 2025.

May 27, 2025, Yorkville provided notice specifying their request to convert $ 0.1 million of outstanding principal into 288,001 shares

of Common Stock, which was based on the Variable Price of $ 0.3472 .

As such, the net carrying amount was adjusted to its fair value of

$ 0.1 million on the conversion date and reclassified to stockholders’ deficit in the consolidated balance sheets at the time the

conversion took place in May 2025.

June 11, 2025, Yorkville provided notice specifying their request to convert $ 0.2 million of outstanding principal into 466,853 shares

of Common Stock, which was based on the Variable Price of $ 0.3213 .

As such, the net carrying amount was adjusted to its fair value of

$ 0.2 million on the conversion date and reclassified to stockholders’ deficit in the consolidated balance sheets at the time the

conversion took place in June 2025.

following table sets forth all conversions that have taken place with Yorkville as of December 31, 2025 (in thousands, except share amounts):

Schedule of Forth all Conversions that have taken Place with Yorkville

December 20, 2024

On March 28, 2024, the Company

entered into a definitive securities purchase agreement (the “Helena SPA”) with Helena Global Investment Opportunities 1 Ltd.

(“Helena”), an affiliate of Helena Partners Inc., a Cayman Islands-based advisor and investor providing for up to $ 4.5 million

in funding through a private placement for the issuance of senior secured convertible notes and warrants across multiple tranches.

Helena SPA was subsequently terminated in June 2024 prior to the closing of any tranches (the “Helena Termination Agreement”).

As such, except as described below, the Helena SPA had no impact on the Company’s consolidated financial statements as of and for

the year ended December 31, 2024.

Pursuant to the Helena Termination

Agreement, the Company agreed to issue to Helena a warrant to purchase 50,000 shares of Common Stock at an exercise price of $ 1.20 per

share (the “Helena Termination Warrants”) and agreed to reimburse Helena for certain reasonable and documented out-of-pocket

legal fees and expenses incurred in connection with entry into the Helena SPA and Helena Termination Agreement and related documents.

The Helena Termination Warrants were issued in December 2024 and the Company recorded stock warrant expense of $ 0.04 million in its consolidated

statements of operations.

January 23, 2025

January 27, 2025

June 11, 2025

June 18, 2025, the Company repaid the remaining balance outstanding under the Yorkville Note for a total of $ 0.3 million, which consisted

of the outstanding principal balance and payment premium.

As such, no balance remains outstanding under the Yorkville Note as of December

with Related Parties

January 2024 to June 2024, the Company received gross proceeds of $ 1.6 million in connection with shareholder loans with a related party

investor which are convertible into 2,123,424 shares of Common Stock at a conversion price of $ 0.7535 per share.

These loans did not

bear interest and matured one year from issuance.

June 17, 2025, the investor provided notice to convert all $ 1.6 million of outstanding principal into 2,123,424 shares of Common Stock,

which was based on the stated conversion price of $ 0.7535 per share.

The conversion occurred in accordance with the conversion privileges

provided in the terms of the loans and the net carrying value was reclassified to stockholders’ deficit in the consolidated balance

sheets at the time the conversion took place in June 2025.

Non-Convertible

April 2023 to February 2024, the Company also issued $ 0.7 million in non-convertible shareholder loans with two related party investors.

These loans bore an interest rate of 8.0 % with a maturity date one year from issuance.

June 19, 2025, these investors agreed to convert $ 0.7 million of non-convertible shareholder loans outstanding into 1,043,051 shares

of Common Stock at an agreed-upon conversion price of $ 0.71 per share.

At the time of the conversion notices, the Company was experiencing

financial difficulties (see Note 5), and a concession was granted to the Company because these loans were not convertible pursuant to

their original terms and the fair value of equity interests received by the shareholders was less than the carrying amounts of the loans

on such date.

In accordance with the accounting for troubled debt restructurings, the Company derecognized the remaining principal and

accrued interest associated with the loans and recognized the equity interests issued to the shareholders at fair value.

The fair value

of the equity interests issued was determined using the closing price of the Company’s Common Stock of $ 0.36 on the conversion

The difference in value between the carrying value of the loans and the fair value of consideration transferred was accounted

for as a capital transaction with related parties and no gain or loss was recognized related to this TDR.

As such, the net carrying value

of $ 0.7 million was reclassified to stockholders’ deficit in the consolidated balance sheets at the time the conversions took place

in June 2025.

Premium Loans

November 7, 2024, the Company entered into a financing agreement with First Insurance Funding (“FIF”) to finance certain

of its annual insurance premiums.

The Company financed $ 0.3 million, which were to be paid over a ten-month period with the first payment

due on December 7, 2024 .

The financing had an interest rate of 7.7 % and FIF has a security interest in the underlying policies that have

been financed.

This financing was paid as of December 31, 2025.

November 8, 2025, the Company entered into a financing agreement with FIF to finance certain of its annual insurance premiums.

financed $ 0.3 million, which will be paid over a ten-month period with the first payment due on December 8, 2025 .

The financing has an

interest rate of 7.4 % and FIF has a security interest in the underlying policies that have been financed.

Company assumed Data Knights’ liabilities at the closing of the Business Combination, 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 $ 10.00 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.

June 19, 2025, two related party investors agreed to convert $ 2.6 million of loan extensions outstanding into 3,650,248 shares of Common

Stock at an agreed-upon conversion price of $ 0.71 per share.

At the time of the conversion notices, the Company was experiencing financial

difficulties (see Note 5), and a concession was granted to the Company because the fair value of the equity interests received by the

investors was less than the carrying amounts of the loan extensions on such date.

In accordance with the accounting for troubled debt

restructurings, the Company derecognized the remaining balance associated with the loans and recognized the equity interests issued to

the related parties at fair value.

The fair value of the equity interests was determined using the closing price of the Company’s

Common Stock of $ 0.36 per share on the conversion notice date.

The difference in value between the carrying value of the loans and the

fair value of consideration transferred was accounted for as a capital transaction with related parties and no gain or loss was recognized

related to this TDR.

As such, the net carrying value of $ 2.6 million was reclassified to stockholders’ deficit in the consolidated

balance sheets at the time the conversions took place in June 2025.

July 11, 2025, the Company entered into an amended loan extension agreement with a former lender to the Company related to $ 0.1 million

of the outstanding balance.

Under the original terms of the loan extension agreement, the loan did not bear interest and matured upon

the closing of the Business Combination.

As amended, the extension loan bears an interest rate of 6.0 % with a maturity date of June 15,

The Company has agreed to make 24 consecutive monthly payments beginning on July 15, 2025 in equal installments of $4,413, which

includes principal plus accrued and unpaid interest.

The amendment was accounted for as a debt modification in accordance with ASC 470-50

because the change in cash flows with interest were not substantially different from the original terms without interest.

no gain or loss was recognized and there were no new or previously capitalized debt issuance costs to be amortized over the term of the

new debt instrument.

Repurchase Loan

February 2024, the Company entered into a stock repurchase agreement with a former holder of Legacy ONMD convertible notes pursuant to

which the Company repurchased 187,745 shares of Common Stock in exchange for a promissory note of $ 0.5 million.

The $ 0.5 million represents

the principal and accrued interest outstanding on the holder’s convertible debt immediately prior to the Business Combination.

The Company made payments of $ 0.1 million in July and October 2024 and $ 0.3 million remained outstanding as of December 31, 2024.

July 15, 2025, the Company entered into an amended promissory note related to the $ 0.3 million stock repurchase loan outstanding.

the original terms of the promissory note, the obligation did not bear interest and matured on July 30, 2024.

As amended, the loan bears

an interest rate of 7.0 % dating back to March 1, 2024 with a maturity date of June 15, 2028 .

The Company has agreed to make 36 consecutive

monthly payments beginning on July 15, 2025 in equal installments of $11,378, which includes principal plus accrued and unpaid interest.

The Company determined this transaction was not a troubled debt restructuring as there were no concessions granted to the Company.

the amendment was accounted for as a debt extinguishment in accordance with ASC 470-50 because the change in cash flows with interest

were substantially different from the original terms without interest.

As a result, the Company recognized $ 41,216 of debt extinguishment

loss during the year ended December 31, 2025 from this amendment.

The Company made payments totaling $ 68,270 after the amendment, which

included $ 39,460 of principal and $ 28,810 of interest.

March 28, 2024, the Company entered into a definitive securities purchase agreement (the “Helena SPA”) with Helena Global

Investment Opportunities 1 Ltd.

(“Helena”), an affiliate of Helena Partners Inc., a Cayman Islands-based advisor and investor

providing for up to $ 4.5 million in funding through a private placement for the issuance of senior secured convertible notes and warrants

across multiple tranches.

The Helena SPA was subsequently terminated in June 2024 prior to the closing of any tranches (the “Helena

Termination Agreement”).

As such, except as described below, the Helena SPA had no impact on the Company’s consolidated financial

statements as of and for the year ended December 31, 2024.

to the Helena Termination Agreement, the Company agreed to issue to Helena a warrant to purchase 50,000 shares of Common Stock at an

exercise price of $ 1.20 per share (the “Helena Termination Warrants”) and agreed to reimburse Helena for certain reasonable

and documented out-of-pocket legal fees and expenses incurred in connection with entry into the Helena SPA and Helena Termination Agreement

and related documents.

The Helena Termination Warrants were issued in December 2024 and the Company recorded stock warrant expense of

$ 0.04 million in its consolidated statements of operations, which is presented within other (income) expenses, net and included in the

other expense caption.

See additional information on the accounting for the warrants in Note 10.

1 unchanged sentence

and expenses of $ 0.04 million in connection with the Helena Termination Agreement.

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 $ 1.5 million convertible promissory note for $ 1.35 million in cash (after a 10 % original issue discount) (the “Yorkville Note”).

The Yorkville Note does not bear interest and matures on June 17, 2025 .

The Yorkville Note is convertible by Yorkville into shares of

Common Stock at an aggregate purchase price based on a price per share equal to the lower of (a) $1.3408 per share (subject to downward

reset upon the filing of the resale registration statement described below) or (b) 90% of the lowest daily volume-weighted average price

(“VWAP”) of the Common Stock on Nasdaq during the seven trading days immediately prior to each conversion (the “Variable

Price”), but which Variable Price may not be lower than the Floor Price then in effect.

The “Floor Price” is $ 0.28 per

share, subject to the Company’s option to reduce the Floor Price to any amounts set forth in a written notice to Yorkville.

the occurrence and during the continuation of an event of default (as defined in the Yorkville Note), the Yorkville Note will become immediately

due and payable.

The issuance of the Common Stock upon conversion of the note and otherwise under the SEPA is capped at 19.9 % of the outstanding

Common Stock as of June 18, 2024.

Further, the note and SEPA include a beneficial ownership blocker for Yorkville such that Yorkville

may not be deemed the beneficial owner of more than 4.99 % of the Company’s Common Stock.

The Company’s failure to file its

Form 10-Q for the fiscal quarter ended June 30, 2024 by August 14, 2024 was an event of default under the Yorkville Note.

A further event

of default occurred as a result of the Company’s failure to file a registration statement with the SEC for the resale by Yorkville

of the shares of Common Stock issuable under the SEPA by August 30, 2024 (see Note 10).

Upon any event of default, the interest rate increases

to 18 % and the full unpaid principal amount may become immediately due and payable at Yorkville’s election.

As of December 31, 2024,

the Company has not accrued any payments related to these events of default.

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 expense (income),

net in the accompanying consolidated statements of operations under the caption change in fair value of Yorkville Note.

On December 20, 2024, Yorkville

provided the Company with a form of conversion notice specifying their request to convert $ 0.2 million of outstanding principal into 245,007

shares of the Company’s Common Stock, which was based on the Variable Price of $ 0.8163 .

As of December 31, 2024, the Company had

not yet issued the 245,007 shares of Common Stock.

The fair value of $ 0.3 million was recorded as an equity forward sale contract and

was included in additional paid-in-capital in stockholders’ deficit in the consolidated balance sheets as it met the criteria for

equity accounting under ASC 815.

The shares were issued to Yorkville on January 22, 2025.

As of December 31, 2024, the fair

value of the Yorkville Note was $ 1.7 million, which is included in current liabilities on the consolidated balance sheets.

Convertible Promissory Notes

The following provides disclosure

on certain convertible promissory notes that existed prior to the Business Combination (the “Convertible Promissory Notes”).

As a result of the Business Combination, all outstanding principal and accrued interest was converted into shares of the Company’s

Common Stock, and no obligation related to the Convertible Promissory Notes remained immediately after the Business Combination.

there were no Convertible Promissory Notes outstanding as of December 31, 2024 and 2023.

Prior to the Business Combination,

the Convertible Promissory Notes bore interest at a rate of either 4 % or 6 % annually from the date of issuance until the outstanding principal

was paid or converted.

In connection with the issuance of Convertible Promissory Notes in 2022 and 2023, the Company also issued warrants

at an exercise price of $ 1.00 per share (the “Convertible Note Warrants”).

See additional information on the accounting for

the warrants in Note 12.

The Company elected the FVO of

accounting for its Convertible Promissory Notes.

Under the FVO election, the financial instrument is initially measured at its issue-date

estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

ended December 31, 2023, the estimated fair value adjustment is presented as a single line item within other (income) expenses, net in

the accompanying consolidated statements of operations under the caption change in fair value of convertible debt.

There was no change

in fair value of convertible debt during the year ended December 31, 2024, as the Convertible Promissory Notes no longer existed after

the Business Combination.

Line of Credit

In March 2024, the Company obtained

a line of credit of $ 1.0 million with BOC Bank to support short-term working capital needs.

The line of credit bore an interest rate of

5.0 % and was to mature in 120 days.

In July 2024, the maturity date was extended an additional 120 days to November 2, 2024.

of credit was terminated at maturity in November 2024 and there was no balance outstanding as of December 31, 2024.

The Company incurred

$ 0.02 million in loan fees, which were amortized over the access period and included in general and administrative expenses in the consolidated

statements of operations.

Canadian Emergency Business Loan Act (“CEBA”)

During December 2020, the Company

applied for and received a $ 0.06 CAD ($ 0.04 USD) equivalent CEBA loan.

The loan was provided by the Government of Canada to provide capital

to organizations to see them through the challenges related to the COVID-19 pandemic and better position them to return to providing services

and creating employment.

The Helena Termination Warrants were fully exercised

in October 2025 (see Note 10).

March 2024, the Company obtained a line of credit of $ 1.0 million with BOC Bank to support short-term working capital needs.

of credit bore an interest rate of 5.0 % and was to mature in 120 days.

In July 2024, the maturity date was extended an additional 120

days to November 2, 2024.

The line of credit was terminated at maturity in November 2024 and there was no balance outstanding as of December

The Company incurred $ 0.02 million in loan fees, which were amortized over the access period and included in general and administrative

expenses in the consolidated statements of operations.

Emergency Business Loan Act (“CEBA”)

December 2020, the Company applied for and received a $ 0.06 CAD ($ 0.04 USD) equivalent CEBA loan.

The loan was provided by the Government

of Canada to provide capital to organizations to see them through the challenges related to the COVID-19 pandemic and better position

them to return to providing services and creating employment.

The loan is unsecured.

The loan was interest free through December 31,

If the loan was paid back by January

18, 2024, $ 0.01 million of the loan would have been forgiven.

If the loan was not paid back by January 18, 2024, the full $ 0.04 million

loan would have been converted to loan repayable over three years with a 5 % interest rate.

The loan was paid back prior to January 18,

2024, and the Company recognized a gain on extinguishment of $ 15 thousand, which is presented in other expense (income), net in the consolidated

statements of operations for the year ended December 31, 2024.

As of December 31, 2023, the loan was classified under other long-term

liabilities on the consolidated balance sheets given the three-year maturity term if not repaid by January 18, 2024.

The Company accounted for the

loan as debt in accordance with FASB ASC 470, Debt , and accrued interest in accordance with the interest method under FASB ASC

If the loan was paid back by January 18, 2024, $ 0.01 million of the loan would have been forgiven.

If the loan was not paid back

by January 18, 2024, the full $ 0.04 million loan would have been converted to loan repayable over three years with a 5 % interest rate.

The loan was paid back prior to January 18, 2024, and the Company recognized a gain on extinguishment of $ 15 thousand, which is presented

in other expense (income), net in the consolidated statements of operations for the year ended December 31, 2024.

Company accounted for the loan as debt in accordance with FASB ASC 470, Debt , and accrued interest in accordance with the interest

method under FASB ASC 835-30.

Stockholders’ Deficit

During the year ended December

31, 2023, all shares of Series A-2 preferred stock and Series A-1 preferred stock were converted into Common Stock using an exchange ratio

Subsequent to the Business Combination, the Company is authorized to issue 100,000,000 shares of Common Stock.

Each share of Common Stock entitles

the stockholder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders are entitled to

receive dividends, as may be declared by the Company’s board of directors.

As of December 31, 2024, no dividends had been declared.

2024, the Company entered into a stock repurchase agreement with a former holder of Convertible Promissory Notes pursuant to which

the Company repurchased 187,745 shares

of Common Stock in exchange for cash of $ 0.5 million

that is payable in installments.

The Company made payments of $ 0.1 million

in July and October 2024 and the remaining $ 0.3 million

is expected to be repaid in early 2025.

million represents the principal and accrued interest outstanding on the holder’s Convertible Promissory Note

immediately prior to the Business Combination.

The $ 0.3 million

outstanding at December 31, 2024 is classified in accounts payable and accrued expenses on the consolidated balance sheets.

The 187,745 repurchased

shares were reclassified to treasury stock as of December 31, 2024.

As of December 31, 2024, the Company had an outstanding forward contract to issue 1,240,644 shares of its Common

Stock to ARC Group Limited for success fees earned from Data Knights in connection with the Business Combination.

The forward contract

was included in additional paid-in-capital in stockholders’ deficit in the consolidated balance sheets as it met the criteria for

equity accounting under ASC 815.

Standby Equity Purchase Agreement

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 $ 25.0 million of its Common

Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time, over a 24-month period.

Sales of the Common

Stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation

to sell any shares of Common Stock to Yorkville under the SEPA except in connection with notices that may be submitted by Yorkville, in

certain circumstances as described below.

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”).

An Advance may not exceed the greater of (i) 100% of the average of the daily trading volume of the Common Stock on Nasdaq, during the

five consecutive trading days immediately preceding the date of the Advance, and (ii) five hundred thousand (500,000) shares of Common

Yorkville will generally purchase

shares pursuant to an Advance at a price per share equal to 97% of the VWAP, on Nasdaq during the three consecutive trading days commencing

on the date of the delivery of the Advance (unless the Company specifies a minimum acceptable price or there is no VWAP on the subject

trading day).

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 $ 25.0 million.

The Company has the right to terminate

the SEPA at no cost or penalty upon five trading days’ prior written notice to Yorkville, provided that there are no outstanding

advances for which shares of Common Stock need to be issued and the Yorkville Note has been paid in full.

The Company and Yorkville may

also agree to terminate the SEPA by mutual written consent.

As consideration for Yorkville’s

commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company paid Yorkville a $ 25 thousand cash structuring fee.

In addition, the Company must pay a commitment fee in shares equal to $ 0.5 million.

In September 2024, the Company paid an equivalent

of the commitment fee by issuing 526,312 shares of Common Stock to Yorkville.

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.

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 10%, may become immediately due and payable at Yorkville’s election.

share of common stock entitles the stockholder to one vote on all matters submitted to a vote of the Company’s stockholders.

stockholders are entitled to receive dividends, as may be declared by the Company’s board of directors.

As of December 31, 2025,

2024, the Company has not accrued any payments related to these events of default.

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 the Company’s Common Stock.

The fair value of the derivative

liability related to the embedded put option was estimated at $ 0.2 million at the inception of the agreement and $ 0.4 million as of December

The $ 0.4 million outstanding at December 31, 2024 is classified in other long-term liabilities on the consolidated balance sheets.

The estimated issuance date fair value and remeasurement adjustment is presented as a single line item within other expense (income),

net in the accompanying consolidated statements of operations under the caption change in fair value of derivative liability.

forward option was deemed to have no value as there were no notices for the sale of the Company’s Common Stock as of December 31,

Private Placements

July 2024 Financings

On July 23, 2024, the Company

entered into a securities purchase agreement with a certain institutional investor, pursuant to which the Company

agreed to issue and sell 1,297,059 shares of its Common Stock at a price of $ 1.0278 per share and pre-funded warrants exercisable for

1,323,530 shares of its Common Stock at an exercise price of $ 1.0278 per share (the “July 2024 Pre-Funded Warrants”).

investor was required to prepay the exercise price for the pre-funded warrants, other than $ 0.0001 per share.

The warrants and pre-funded

warrants will be exercisable at any time after the date of issuance and will not expire.

Holders of pre-funded warrants are entitled

to receive dividends, if declared, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares

of the Common Stock.

On July 25, 2024, the Company

entered into a securities purchase agreement with a certain institutional investor, pursuant to which the Company

agreed to issue and sell 2,301,791 shares of its Common Stock at a price of $ 0.85 per share.

The Company received net proceeds

of approximately $ 4.5 million from the July 2024 private placements, after deducting offering expenses of $ 0.1 million.

September 2024 Financing

On September 24, 2024, the

Company entered into a securities purchase agreement with a certain institutional investor, pursuant to which the Company agreed to issue

and sell to the investor 1,918,591 shares of its Common Stock at a price of $ 0.65 per share, warrants exercisable for 133,095 shares of

its Common Stock at an exercise price of $ 0.325 per share (the “September 2024 Warrants”) and pre-funded warrants exercisable

for 743,314 shares of its Common Stock at an exercise price of $ 0.65 per share (the “September 2024 Pre-Funded Warrants”).

The investor was required to prepay the exercise price for the pre-funded warrants, other than $ 0.0001 per share.

The warrants and pre-funded

warrants will be exercisable at any time after the date of issuance and will not expire.

Holders of pre-funded warrants are entitled

to receive dividends, if declared, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares

of the Common Stock.

The Company received net proceeds of approximately $ 1.7 million, after deducting an immaterial amount of offering

As of December 31, 2024, the Company

had not yet issued the 1,918,591 shares of Common Stock in order to keep the investor’s ownership percentage below a defined threshold.

The net proceeds of $ 1.7 million was recorded akin to an equity forward sale contract and was included in additional paid-in-capital in

stockholders’ deficit in the consolidated balance sheets as it met the criteria for equity accounting under ASC 815.

Preferred Stock

Subsequent to the Business Combination,

the Company is authorized to issue 1,000,000 shares of preferred stock (“the Preferred Stock”).

As of December 31, 2024 and

2023, no shares of Preferred Stock were issued or outstanding.

no dividends had been declared.

the year ended December 31, 2025, the Company issued shares of its Common Stock as follows:

shares through a private placement with an institutional investor that closed in September

2024 (as amended through the Warrant Amendment described below).

These shares were unissued

as of December 31, 2024, and the modified number of shares were issued on January 21, 2025.

shares valued at $ 1.4 million through partial conversions of the Yorkville Note with an outstanding

principal balance of $ 1.1 million.

In addition, 250,000 shares were issued to settle the

conversion notice from December 2024 (see Note 7).

shares to a vendor in full satisfaction of $ 0.2 million of accounts payable owed by the Company

(see Note 5).

shares with a carrying amount of $ 2.3 million through the conversion of loans payable to

related parties (see Note 7).

shares valued at $ 0.5 million through the conversion of PIPE Notes with an outstanding principal

and accrued interest balance of $ 1.7 million (see Note 7).

shares with a carrying amount of $ 2.6 million through the conversion of loan extensions with

related parties (see Note 7).

shares through a private placement transaction with an accredited investor that closed in

June 2025 (see further details below).

and 581,395 shares through subscription agreements with related party investors that closed

in June and August 2025, respectively (see further details below).

shares from the partial exercise of pre-funded warrants issued in June 2025 (see Note 10).

shares from the full exercise of pre-funded warrants issued in July 2024 (see Note 10).

shares from the partial exercise of pre-funded warrants issued in September 2024 (see Note

shares from the full exercise of the Helena Termination Warrants issued in December 2024

(see Note 7).

shares from Advances under the SEPA with Yorkville (see further details below).

shares to a consulting firm for services rendered (see Note 9).

shares to holders of vested RSUs.

the year ended December 31, 2024, the Company issued shares of its Common Stock as follows:

shares to partially settle deferred underwriter fees outstanding from the Business Combination

(see further details below).

shares through private placements with institutional investors that closed in July 2024 (see

further details below).

shares to a holder of vested RSUs.

shares to Yorkville as a commitment fee for the SEPA (see further details below).

addition, the Company repurchased 187,745 shares of Common Stock in exchange for a promissory note of $ 0.5 million (see Note 7).

July 23, 2024, the Company entered into a securities purchase agreement with a certain institutional investor, pursuant to which the

Company agreed to issue and sell 1,297,059 shares of its Common Stock at a price of $ 1.0278 per

share and pre-funded warrants exercisable for 1,323,530 shares of its Common Stock at an exercise price of $ 1.0278 per share (the “July

2024 Pre-Funded Warrants”).

The investor was required to prepay the exercise price for the pre-funded warrants, other than $ 0.0001

The warrants and pre-funded warrants will be exercisable at any time after the date of issuance and will not expire.

of pre-funded warrants are entitled to receive dividends, if declared, on an as-if-converted-to-common-stock basis, and in the same form

as dividends actually paid on shares of the Common Stock.

July 25, 2024, the Company entered into a securities purchase agreement with a certain institutional investor, pursuant to which the

Company agreed to issue and sell 2,301,791 shares of its Common Stock at a price of $ 0.85 per share.

The Company received net proceeds of approximately $ 4.5 million from these July 2024 private placements, after deducting offering

expenses of $ 0.1 million.

September 24, 2024, the Company entered into a securities purchase agreement with a certain institutional

investor, pursuant to which the Company agreed to issue and sell to the investor 1,918,591 shares of its Common Stock at a price of $ 0.65

per share, warrants exercisable for 133,095 shares of its Common Stock at an exercise price of $ 0.325 per share (the “September

2024 Warrants”) and pre-funded warrants exercisable for 743,314 shares of its Common Stock at an exercise price of $ 0.65 per share

(the “September 2024 Pre-Funded Warrants”).

The investor was required to prepay the exercise price for the pre-funded warrants,

other than $ 0.0001 per share.

The warrants and pre-funded warrants will be exercisable at any time after the date of issuance and will

Holders of pre-funded warrants are entitled to receive dividends, if declared, on an as-if-converted-to-common-stock

basis, and in the same form as dividends actually paid on shares of the Common Stock.

The Company received net proceeds of approximately

$ 1.7 million, after deducting an immaterial amount of offering expenses.

of December 31, 2024, the Company had not yet issued the 1,918,591 shares of Common Stock in order to keep the investor’s ownership

percentage below a defined threshold.

The net proceeds of $ 1.7 million was recorded akin to an equity forward sale contract and were

included in additional paid-in-capital in stockholders’ deficit in the consolidated balance sheets as it met the criteria for equity

accounting under ASC 815.

On January 21, 2025, the Company entered into an amendment with the investor, which resulted in the number

of shares of Common Stock issuable upon exercise of the September 2024 Pre-Funded Warrants increasing from 743,314 to 1,188,209 (the

“Warrant Amendment”).

In exchange for the issuance of an additional 444,895 pre-funded warrants, the Company agreed to reduce

the number of issuable shares of its Common Stock from 1,918,591 to 1,473,696 .

The 1,473,696 shares of Common Stock were issued contemporaneously

with the exchange in January 2025.

The Company accounted for the exchange as a warrant modification.

The total fair value of the September

2024 Pre-Funded Warrants and issuable shares of Common Stock prior to the modification was approximately equal to the fair value after

the modification, and therefore, there was no incremental fair value related to the Warrant Amendment.

June 19, 2025, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company agreed

to issue and sell 3,390,923 shares of its Common Stock at a price of $ 0.42 per share and pre-funded warrants exercisable for 2,561,457

shares of its Common Stock at an exercise price of $ 0.42 per share (the “June 2025 Pre-Funded Warrants”).

The investor was

required to prepay the exercise price for the pre-funded warrants, other than $ 0.0001 per share.

The warrants and pre-funded warrants

will be exercisable at any time after the date of issuance and will not expire.

Holders of pre-funded warrants are entitled to receive

dividends, if declared, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the

Common Stock.

The Company received net proceeds of approximately $ 2.5 million from the private placement, after deducting an immaterial

amount of offering expenses.

Agreements – Related Parties

June 20, 2025, the Company entered into subscription agreements with two related party investors, pursuant to which the Company agreed

to issue and sell 2,857,142 shares of its Common Stock at a price of $ 0.42 per share.

The Company received net proceeds of approximately

$ 1.2 million from the related party subscription agreements, after deducting an immaterial amount of offering expenses.

August 29, 2025, the Company entered into a subscription agreement with a related party investor pursuant to which the Company agreed

to issue and sell 581,395 shares of its Common Stock at a price of $ 0.86 per share.

The Company received net proceeds of approximately

$ 0.5 million from the related party subscription agreement, after deducting an immaterial amount of offering expenses.

of Deferred Underwriter Fees

connection with the Business Combination, Data Knights entered into an agreement with their underwriters (“EF Hutton”) whereby

EF Hutton agreed to waive the related merger underwriting fees that were payable at closing ($ 4.0 million) in exchange for allocated

payments as follows:

(i) $ 0.5 million in cash at closing;

(ii) a $ 0.5 million promissory note that matured on March 1, 2024;

a transfer of 277,778 shares of Common Stock, which were valued at the closing stock price of $ 10.89 per share on June 28, 2023.

five trading days prior to the six-month anniversary, the aggregate VWAP value of the 277,778 shares of Common Stock was lower than the

original share value of $ 3.0 million, the Company was obligated to compensate EF Hutton at a new share price equal to the difference

in amount on such date.

Due to the decrease in share value on the six-month anniversary, the Company was required to either pay to EF

Hutton an additional $ 2.8 million or issue to EF Hutton an additional 3,175,000 shares of Common Stock.

In January 2024, the Company

issued the original 277,778 shares of Common Stock as consideration for $ 0.2 million owed by the Company.

In August 2024, the Company

made a payment of $ 0.1 million under the promissory note.

of December 31, 2024, the Company was obligated to pay EF Hutton the true-up of either $ 2.8 million or 3,175,000 shares of Common Stock

valued at $ 0.88 per share, plus the remaining $ 0.4 million promissory note.

Upon the occurrence of an event of default, the promissory

note bears interest at a rate of 12.5 % until such event of default is cured.

The promissory note remained unpaid upon maturity on March

1, 2024, and the Company recorded interest expense of $ 0.1 million during the year ended December 31, 2024, because of the event of default.

As of December 31, 2024, deferred underwriter fee payable totaled $ 3.3 million.

June 5, 2025, the Company entered into an amendment to the agreement with EF Hutton whereby the Company agreed to make a one-time cash

payment of $ 0.5 million in full satisfaction of all amounts due under the underwriter agreement.

At the time of settlement, the Company

was experiencing financial difficulties (see Note 5), and a concession was granted to the Company because the cash received by EF Hutton

was less than the carrying amount of the deferred underwriter fees payable.

The difference in value between the carrying value of the

deferred underwriter fees payable and the cash payment resulted in a gain on troubled debt restructuring of $ 2.8 million in the Company’s

consolidated statements of operations.

Equity Purchase Agreement

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

$ 25.0 million of its Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time, over a 24-month

Sales of the Common Stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and

the Company is under no obligation to sell any shares of Common Stock to Yorkville under the SEPA except in connection with notices that

may be submitted by Yorkville, in certain circumstances as described below.

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”).

An Advance may not exceed the greater of (i) 100% of the average of the daily trading

volume of the Common Stock on Nasdaq, during the five consecutive trading days immediately preceding the date of the Advance, and (ii)

five hundred thousand (500,000) shares of Common Stock.

will generally purchase shares pursuant to an Advance at a price per share equal to 97 % of the VWAP, on Nasdaq during the three consecutive

trading days commencing on the date of the delivery of the Advance (unless the Company specifies a minimum acceptable price or there

is no VWAP on the subject trading day).

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 $ 25.0 million.

The Company has the right to terminate the SEPA at no cost or penalty upon five trading days’ prior written notice to Yorkville,

provided that there are no outstanding advances for which shares of Common Stock need to be issued and the Yorkville Note has been paid

The Company and Yorkville may also agree to terminate the SEPA by mutual written consent.

consideration for Yorkville’s commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company paid Yorkville

a $ 25 thousand cash structuring fee.

In addition, the Company must pay a commitment fee in shares equal to $ 0.5 million.

2024, the Company paid an equivalent of the commitment fee by issuing 526,312 shares of Common Stock to Yorkville.

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 did 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 was declared effective

by the SEC, which occurred in July 2025.

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 the Company’s Common Stock.

fair value of the derivative liability related to the embedded put option was estimated at $ 0.2 million at the inception of the agreement

and $ 0.2 million and $ 0.4 million as of December 31, 2025 and 2024, respectively.

The $ 0.2 million outstanding at December 31, 2025 is

classified within short-term liabilities on the consolidated balance sheets because the commitment period expires in less than one year.

the year ended December 31, 2025, the Company delivered multiple advance notices for the sale of 1,020,880 shares of its Common Stock,

resulting in cumulative gross proceeds of $ 2.5 million.

A derivative asset or liability for each embedded forward option was initially

recorded at fair value upon delivery of each advance notice, which was subsequently remeasured with changes in fair value recorded in

the consolidated statements of operations until settlement.

The Company recognized an aggregate loss of $ 0.03 million related to embedded

forward options during the year ended December 31, 2025.

The embedded forward option was deemed to have no value at December 31, 2025

and 2024 as there were no outstanding notices for the sale of the Company’s Common Stock.

During the year ended December 31, 2024,

the Company did not deliver any advance notices under the SEPA.

estimated issuance date fair value and remeasurement adjustment for the embedded put option and embedded forward option are presented

as a single line within other (income) expense, net in the accompanying consolidated statements of operations under the caption change

in fair value of SEPA derivative liabilities.

The embedded put option fair value adjustment was $( 0.2 ) million and $ 0.4 million for the

years ended December 31, 2025 and 2024, respectively.

The embedded forward option fair value adjustment was $ 0.03 million and $ 0 for

the years ended December 31, 2025 and 2024, respectively.

Forward Contract

of December 31, 2025 and 2024, the Company had an outstanding forward contract to issue 1,240,644 shares of its Common Stock to ARC Group

Limited for success fees earned from Data Knights in connection with the Business Combination.

The forward contract was included in additional

paid-in-capital in stockholders’ deficit in the consolidated balance sheets as it met the criteria for equity accounting under

Stock Based Compensation

Equity Incentive Plan – Summary

2020 Equity Incentive Plan

In 2020, the Company adopted the

2020 Equity Incentive Plan (the “2020 Plan”) to provide long-term incentive for its employees and non-employee service providers.

On November 7, 2023, as part of the Business Combination, the 2020 Plan was cancelled and all vested shares were exercised and converted

at the appropriate conversion ratio to Common Stock of the Company.

2022 Equity Incentive Plan

In 2023, the Company’s Board

of Directors adopted the 2022 Equity Incentive Plan (the “2022 Plan”) and reserved an amount of shares of Common Stock equal

to 10% of the number of shares of Common Stock of OneMedNet immediately following the Business Combination.

The 2022 Plan was approved

by the Legacy ONMD Board of Directors on October 17, 2023.

The 2022 Plan became effective immediately upon the closing of the Business

Combination and replaced the 2020 Plan.

As of December 31, 2024, the Company had 384,819 shares available for issuance under the 2022

Equity Incentive Plan – Stock Options

The Company has historically granted

stock options to employees, directors, and consultants with vesting conditions based on continued service over time.

Accordingly, stock

compensation expense for such awards is recognized using a straight-line attribution model over the vesting term of each option.

The following table summarizes

activity for time-based stock options under the 2022 Equity Incentive Plan and 2020 Equity Incentive Plan for the years ended December

31, 2024 and 2023:

of Stock Options

Exercise Price

Outstanding as of December 31, 2022

Outstanding as of December 31, 2023

Outstanding as of December 31, 2024

Vested and exercisable as of December 31, 2024

For the years ended December 31,

2024 and 2023, the Company recorded stock-based compensation expense of $ 0.03 million and $ 0.4 million, respectively, on its outstanding

2023, the Company’s Board of Directors adopted the 2022 Equity Incentive Plan (the “2022 Plan”) and reserved an amount

of shares of Common Stock equal to 10% of the number of shares of Common Stock of OneMedNet immediately following the Business Combination.

The 2022 Plan is also subject to annual increases to be added on the first day of each fiscal year equal to 5% of the number of outstanding

shares on the immediately preceding December 31 (subject to a maximum annual increase of 1,000,000 shares).

On January 1, 2025, the number

of shares available for issuance under the 2022 Plan was increased by 1,000,000 shares of common stock.

There were 3,769,571 stock-based

awards available for issuance at December 31, 2025 under the 2022 Plan.

Stock Options

The fair value of each stock option granted is estimated using the Black-Scholes option pricing model, pursuant to which

the weighted-average grant date fair value was $ 0.23 during the year ended December 31, 2024.

There were no stock options granted during

the year ended December 31, 2023.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise

price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower

than the fair value of the Company’s common stock.

The aggregate intrinsic value of stock options exercised for the years ended

December 31, 2024 and 2023 was $ 0 and $ 4.1 million, respectively.

The following table summarizes the assumptions used in calculating the

fair value of the stock options granted:

Company has historically granted stock options to employees, directors, and consultants with vesting subject to continued service over

Accordingly, stock compensation expense for such awards is recognized using a straight-line attribution model over the vesting

the year ended December 31, 2024, the Company granted 147,000 fully vested stock options to a former executive of the Company at an exercise

price of $ 1.00 .

The stock options were forfeited without exercise 90 days after his termination of service with the Company and they

were no longer outstanding at December 31, 2024.

There was no other stock option activity during the year ended December 31, 2024, and

there was no stock option activity during the year ended December 31, 2025.

Company recorded stock-based compensation expense of $ 0.03 million during the year ended December 31, 2024.

The fair value was estimated

using the Black-Scholes option pricing, pursuant to which the weighted-average grant date fair value was $ 0.23 .

The following table summarizes

the assumptions used in calculating the fair value of the stock options granted.

of Stock Options Granted

For the year ended December 31,

December 31, 2024

Risk-free interest rate

2 unchanged sentences

Expected volatility

On November 7, 2023, as part of the Business Combination,

all vested shares under the 2020 Plan were exercised and converted at the appropriate conversion ratio to Common Stock of the Company.

The Company issued 543,057 shares of Common Stock which represents 613,510 vested options less an exercise price of $ 1.00 .

The expected term is applied to the time-based stock

option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among

the Company’s employees, directors, and consultants.

The risk-free interest rate is based on a U.S.

treasury instrument, whose term

is consistent with the expected term of the stock options.

The Company’s stock price volatility assumption is based on historical

volatility of a group of peer companies with similar characteristics to the Company and who have similar risk profiles and positions within

the industry.

expected term is applied to the time-based stock option grant group as a whole, as the Company does not expect substantially different

exercise or post-vesting termination behavior among the Company’s employees, directors, and consultants.

The risk-free interest

rate is based on a U.S.

treasury instrument, whose term is consistent with the expected term of the stock options.

The Company’s

stock price volatility assumption is based on historical volatility of a group of peer companies with similar characteristics to the

Company and who have similar risk profiles and positions within the industry.

The Company accounts for forfeitures as they occur.

As of December 31, 2024, there was no unrecognized

stock compensation related to unvested stock options.

Equity Incentive Plan – Restricted Stock

Awards (“RSAs”)

Prior to the Business Combination,

the Company granted RSAs to employees, directors and service providers under the 2020 Equity Incentive Plan.

The majority of RSAs granted

to date have vesting conditions based on continuous service over time.

Accordingly, stock compensation expense for the majority of such

awards is recognized using a straight-line attribution model over the vesting term of each RSA.

The fair value of each RSA is based on

the estimated fair value of Legacy ONMD’s common stock on the date of the grant.

The following table summarizes

activity for RSAs under the 2020 Equity Incentive Plan for the year ended December 31, 2023:

of December 31, 2025, there was no unrecognized stock compensation related to unvested stock options.

Company has historically granted RSUs to employees, directors, and consultants with vesting subject to continued service over time.

stock compensation expense for such awards is recognized using a straight-line attribution model over the vesting term.

The fair value

of each time-based RSU is based on the closing price of the Company’s Common Stock on the date of grant.

following table summarizes activity for time-based RSUs for the year ended December 31, 2025:

of Restricted Stock Awards

1 unchanged sentence

Date Fair Value

Nonvested as of December 31, 2022

Nonvested as of December 31, 2023

The total fair value of the Company’s

previous RSAs vested during the year ended December 31, 2023 was $ 1.1 million.

On November 7, 2023, as part of the Business Combination,

all vested shares were exercised and converted at the appropriate conversion ratio to Common Stock of the Company.

Equity Incentive Plan – Restricted Stock

Units (“RSUs”)

Starting in 2024, the Company

began granting RSUs to employees and directors under the 2022 Equity Incentive Plan.

Each of the RSUs represents the right to receive

one share of the Company’s Common Stock upon vesting.

The majority of RSUs granted to date have vesting conditions based on continuous

service over time.

Accordingly, stock compensation expense for the majority of such awards is recognized using a straight-line attribution

model over the vesting term of each RSU.

The fair value of each RSU is based on the closing price of the Company’s Common Stock

on the date of grant.

The following table summarizes

activity for RSUs under the 2022 Equity Incentive Plan for the year ended December 31, 2024:

of Restricted Stock Units

Average Grant

Date Fair Value

Unvested at December 31, 2024

Vested – issued

Vested – unissued

( 1,239,078 )

Unvested at December 31, 2025

For the year ended December 31,

2024, the Company recorded stock-based compensation expense of $ 0.6 million on its outstanding RSUs.

The fair value of RSUs that vested

during the year ended December 31, 2024 was $ 0.3 million.

As of December 31, 2024, the total unrecognized compensation related to unvested

RSUs granted was $ 0.4 million, which the Company expects to recognize over a weighted-average period of approximately 1.24 years.

The Company recorded stock-based

compensation expense in the following categories on the accompanying consolidated statements of operations for the periods presented (in

the year ended December 31, 2025, the Company issued a total of 970,574 shares of its Common Stock to settle vested RSUs, of which 518,278

were vested but not yet issued as of December 31, 2024.

As of December 31, 2025, there were a total of 876,812 RSUs that were vested

but had not yet been settled by the Company.

fair value of time-based RSUs vested during the year ended December 31, 2025 was $ 1.0 million.

As of December 31, 2025, the total unrecognized

compensation related to unvested time-based RSUs granted was $ 1.8 million, which the Company expects to recognize over a weighted-average

period of approximately 2.50 years.

Issued to Consulting Firm

November 2025, the Company issued 30,000 shares of Common Stock to a consulting firm for approximately 6 months of services.

recorded stock-based compensation expense of $ 0.1 million related to this arrangement for the year ended December 31, 2025.

value was determined using the closing price of the Company’s Common Stock of $ 2.34 on the grant date.

As of December 31, 2025,

there was no unrecognized stock compensation related to this arrangement.

Company recorded stock-based compensation expense in the following categories on the accompanying consolidated statements of operations

for the periods presented (in thousands):

of Stock-based Compensation Expense

For the year ended December 31,

Year Ended December 31,

Cost of revenue

4 unchanged sentences

Stock Warrants

The Company has the

following warrants outstanding for the periods presented:

Company has the following warrants outstanding for the periods presented:

of Warrants Outstanding

8 unchanged sentences

Warrants outstanding

Business Combination Warrants

In connection with the closing

of the Business Combination on November 7, 2023, the Company assumed 585,275 private warrants to purchase Common Stock with an exercise

price of $ 11.50 per share (the “Business Combination Warrants”).

The Business Combination Warrants (and shares of Common Stock

issued or issuable upon exercise of the Business Combination Warrants) in general were not transferable, assignable or salable until 30

days after the Closing (excluding permitted transferees) and they will not be redeemable under certain redemption scenarios by the Company

so long as they are held by the Sponsor or their respective permitted transferees.

Otherwise, the Business Combination Warrants have terms

and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period.

If the Business Combination Warrants are held by holders other than the Sponsor, Metric or their respective permitted transferees, the

Business Combination Warrants will be redeemable by the Company under all redemption scenarios and exercisable by the holders on the same

basis as the Public Warrants.

The Company accounts for the Business

Combination Warrants in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because the Business Combination

Warrants do not meet the criteria for equity treatment thereunder, each Business Combination Warrant must be recorded as a liability.

The accounting treatment of derivative

financial instruments in accordance with ASC 815, Derivatives and Hedging, required that the Company record a derivative liability

upon the closing of the Business Combination.

Accordingly, the Company classifies each Business Combination Warrant as a liability at

its fair value.

Combination Warrants

connection with the closing of the Business Combination on November 7, 2023, the Company assumed 585,275 private warrants to purchase

Common Stock with an exercise price of $ 11.50 per share (the “Business Combination Warrants”).

The Business Combination Warrants

(and shares of Common Stock issued or issuable upon exercise of the Business Combination Warrants) in general were not transferable,

assignable or salable until 30 days after the Closing (excluding permitted transferees) and they will not be redeemable under certain

redemption scenarios by the Company so long as they are held by the Sponsor or their respective permitted transferees.

Otherwise, the

Business Combination Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise

price, exercisability and exercise period.

If the Business Combination Warrants are held by holders other than the Sponsor, Metric or

their respective permitted transferees, the Business Combination Warrants will be redeemable by the Company under all redemption scenarios

and exercisable by the holders on the same basis as the Public Warrants.

Company accounts for the Business Combination Warrants in accordance with the guidance contained in ASC 815-40.

Such guidance provides

that because the Business Combination Warrants do not meet the criteria for equity treatment thereunder, each Business Combination Warrant

must be recorded as a liability.

accounting treatment of derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, required that the

Company record a derivative liability upon the closing of the Business Combination.

Accordingly, the Company classifies each Business

Combination Warrant as a liability at its fair value.

This liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the Business Combination

Warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations.

The Company will reassess the classification at each balance sheet date.

If the classification changes as a result of events during the

period, the Business Combination Warrants will be reclassified as of the date of the event that causes the reclassification.

As of December 31, 2024, all 585,275

Private Placement Warrants remained outstanding.

PIPE Warrants

In connection with the PIPE Notes

described in Note 7, the Company also issued 95,745 warrants to purchase Common Stock (“PIPE Warrants”).

The Company accounts

for the PIPE Warrants in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because the warrants do not

meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

The accounting treatment of derivative

financial instruments in accordance with ASC 815, Derivatives and Hedging, requires that the Company record a derivative liability

upon issuance of the warrants.

Accordingly, the Company classifies each warrant as a liability at its fair value and the warrants were

allocated a portion of the proceeds from the issuance of the Units equal to its fair value.

This liability is subject to re-measurement

at each balance sheet date.

With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair

value recognized in the Company’s statements of operations.

such re-measurement, the Business Combination Warrant liability will be adjusted to fair value, with the change in fair value recognized

in the Company’s statements of operations.

The Company will reassess the classification at each balance sheet date.

If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that

If the classification

changes as a result of events during the period, the Business Combination Warrants will be reclassified as of the date of the event that

causes the reclassification.

As of December 31, 2024, all 95,745

PIPE Warrants remain outstanding.

Public Warrants

In connection with the closing

of the Business Combination on November 7, 2023, the Company assumed 11,500,000 public warrants (the “Public Warrants”) to

purchase Common Stock with an exercise price of $ 11.50 per share.

The Public Warrants became exercisable 30 days after the Closing of

the Business Combination.

of December 31, 2025 and 2024, all 585,275 Private Placement Warrants remained outstanding.

connection with the PIPE Notes described in Note 7, the Company also issued 95,745 warrants to purchase Common Stock (“PIPE Warrants”).

The Company accounts for the PIPE Warrants in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because

the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

accounting treatment of derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, requires that the

Company record a derivative liability upon issuance of the warrants.

Accordingly, the Company classifies each warrant as a liability

at its fair value and the warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value.

liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the warrant liability will be adjusted

to fair value, with the change in fair value recognized in the Company’s statements of operations.

The Company will reassess the

classification at each balance sheet date.

If the classification changes as a result of events during the period, the warrants will be

reclassified as of the date of the event that causes the reclassification.

of December 31, 2025 and 2024, all 95,745 PIPE Warrants remain outstanding.

connection with the closing of the Business Combination on November 7, 2023, the Company assumed 11,500,000 public warrants (the “Public

Warrants”) to purchase Common Stock with an exercise price of $ 11.50 per share.

The Public Warrants became exercisable 30 days

after the Closing of the Business Combination.

Each Public Warrant is exercisable for one share of Common Stock.

The Company may redeem the outstanding

Public Warrants for $ 0.01 per Public Warrant upon at least 30 days’ prior written notice of redemption given after the Public Warrants

become exercisable, if the reported last sale price of the Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock dividends,

sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after

the Public Warrants become exercisable and ending on the third trading day before the Company sends the notice of redemption to the holders

of the Public Warrants.

Upon issuance of a redemption notice by the Company, the holders of the Public Warrants may, at any time after

the redemption notice, exercise the Public Warrants on a cashless basis.

The Public Warrants are classified

as equity, with the fair value of the Public Warrants as of the date of the Business Combination closed to additional paid-in capital.

As of December 31, 2024, all 11,500,000

Public Warrants remain outstanding.

Private Placement Warrants

As described in Note 10, the Company

issued the July 2024 Pre-Funded Warrants, the September 2024 Pre-Funded Warrants and the September 2024 Warrants in connection with the

July and September 2024 private placements (together, the “Private Placement Warrants”).

The Private Placement Warrants are

classified as equity in accordance with ASC Subtopic 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC

As of December 31, 2024, all 2,199,939

Private Placement Warrants remain outstanding.

Helena Termination Warrants

In connection with the Helena

Termination Agreement described in Note 7, the Company issued 50,000 warrants purchase Common Stock at an exercise price of $ 1.20 per

Company may redeem the outstanding Public Warrants for $ 0.01 per Public Warrant upon at least 30 days’ prior written notice of

redemption given after the Public Warrants become exercisable, if the reported last sale price of the Common Stock equals or exceeds

$ 18.00 per share (as adjusted for stock dividends, sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading

days within a 30-trading day period commencing after the Public Warrants become exercisable and ending on the third trading day before

the Company sends the notice of redemption to the holders of the Public Warrants.

Upon issuance of a redemption notice by the Company,

the holders of the Public Warrants may, at any time after the redemption notice, exercise the Public Warrants on a cashless basis.

Public Warrants are classified as equity, with the fair value of the Public Warrants as of the date of the Business Combination closed

to additional paid-in capital.

of December 31, 2025 and 2024, all 11,500,000 Public Warrants remain outstanding.

Placement Warrants

described in Note 10, the Company issued the July 2024 Pre-Funded Warrants, the September 2024 Pre-Funded Warrants, the September 2024

Warrants and the June 2025 Pre-Funded Warrants in connection with the July 2024, September 2024 and June 2025 private placements (together,

the “Private Placement Warrants”).

The Private Placement Warrants are classified as equity in accordance with ASC Subtopic

815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”).

January 21, 2025, the September 2024 Pre-Funded Warrants were amended to increase the number of warrants issued to the investor by 444,895

The Warrant Amendment had no accounting impact because the number of issuable shares of Common Stock were decreased by the same

number of shares and both instruments have approximately the same fair value.

See Note 8 for further details.

August 21, 2025, the Company issued 1,214,032 shares of Common Stock in connection with the partial exercise of the June 2025 Pre-Funded

As of December 31, 2025, 1,347,425 of the June 2025 Pre-Funded Warrants remain outstanding.

August 22, 2025, the Company issued 1,323,530 shares of Common Stock in connection with the full exercise of July 2024 Pre-Funded Warrants.

On the same day, the Company issued 510,670 shares of Common Stock to the same investor in connection with the partial exercise of the

September 2024 Pre-Funded Warrants.

As of December 31, 2025, 677,539 of the September 2024 Pre-Funded Warrants remain outstanding.

of December 31, 2025 and 2024, 2,199,939 and 2,158,059 Private Placement Warrants remain outstanding, respectively.

Termination Warrants

connection with the Helena Termination Agreement described in Note 7, the Company issued 50,000 warrants purchase Common Stock at an

exercise price of $ 1.20 per share.

The Helena Termination Warrants became immediately upon issuance on December 4, 2024.

Each Helena Termination Warrant is exercisable

for one share of Common Stock.

The Helena Termination Warrants

are classified as equity in accordance with ASC 815-40, with the fair value on the date of issuance recorded to stock warrant expense

as a cost to terminate the Helena SPA.

As of December 31, 2024, all 50,000

Helena Termination Warrants remain outstanding.

Convertible Note Warrants

As described in Note 7, the Company

issued Convertible Note Warrants in 2022 and 2023.

The Convertible Note Warrants are classified as equity in accordance with ASC 815.

The Company has elected to measure the Convertible Promissory Notes using the fair value option under ASC 825 discussed in Note 7.

Company determined that the fair value of the combined instrument significantly exceeds the proceeds received, therefore, the Company

concluded that the warrants are most accurately portrayed as an issuance cost related to the convertible promissory notes.

This resulted

in an expense of $ 9.2 million being allocated to the Convertible Promissory Notes Warrants during the year ended December 31, 2023, which

is classified as stock warrant expense in the consolidated statements of operations.

In connection with the closing

of the Business Combination on November 7, 2023, all Convertible Note Warrants were cashless exercised into shares of Legacy ONMD common

stock and exchanged based on the appropriate conversion ratio for the Common Stock less an exercise price of $ 1.00 .

Termination Warrant is exercisable for one share of Common Stock.

Helena Termination Warrants are classified as equity in accordance with ASC 815-40, with the fair value on the date of issuance recorded

to stock warrant expense as a cost to terminate the Helena SPA.

October 7, 2025, the Company issued 25,000 shares of Common Stock in connection with the partial exercise of the Helena Termination Warrants.

On October 15, 2025, the Company issued an additional 25,000 shares of Common Stock in connection with the exercise of the remaining

Helena Termination Warrants.

The Company received gross proceeds of $ 60,000 in connection with these exercises.

As of December 31, 2025,

the Helena Termination Warrants were fully exercised and none remain outstanding.

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):

of Assets and Liabilities Measured at Fair Value

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):

Schedule of Assets and Liabilities Measured at Fair Value

December 31, 2025

Money market funds

Total assets, at fair value

1 unchanged sentence

PIPE Warrants

Yorkville Note

SEPA derivative liability

SEPA put option liability

Total liabilities, at fair value

December 31, 2024

Private warrants

Total assets, at fair value

Business Combination Warrants

PIPE Warrants

Yorkville Note

SEPA put option 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 year ended December 31, 2024 (in thousands):

of December 31, 2025, cash equivalents are comprised of money market funds, which are classified within Level 1 of the fair value hierarchy

because they are valued using quoted market prices in active markets.

The Company had no cash equivalents as of December 31, 2024.

Combination Warrants and PIPE Warrants

following table presents the changes in the Business Combination Warrants and PIPE Warrants measured at fair value during the year ended

December 31, 2025 (in thousands):

of Warrants and Notes Measured at Fair Value

Business Combination Warrants

PIPE Warrants

Balance, December 31, 2024

Conversion to Common Stock

Changes in fair value

Balance, December 31, 2025

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:

Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at December 31, 2025 using the Black-Scholes

option-pricing model with the following assumptions:

of Fair Value Assumptions and Valuation

As of December 31, 2025

Business Combination

Exercise price

4 unchanged sentences

Expected term (in years)

PIPE Notes, Yorkville Note and Convertible Promissory Notes

As of December 31, 2023, in connection

with the Closing of the Business Combination described in Note 3, all Convertible Promissory Notes were converted to Common Stock in accordance

with the conversion provisions in the original agreements.

The following table presents the

changes in the PIPE Notes and Yorkville Note measured at fair value during the year ended December 31, 2024 (in thousands):

Notes and Yorkville Note

following table presents the changes in the PIPE Notes and Yorkville Note measured at fair value during the year ended December 31, 2025

(in thousands):

Yorkville Note

Balance, December 31, 2024

Conversion to Common Stock

Conversions to Common Stock (1)

Cash repayment

Changes in fair value

Balance, December 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

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

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 year ended December 31, 2024 (in thousands):

Yorkville SEPA

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.

Derivative Liabilities

following table presents the changes in the SEPA derivative liabilities measured at fair value during the year ended December 31, 2025

(in thousands):

Option Liability

Balance, December 31, 2024

Changes in fair value

Conversions to Common Stock

Balance, December 31, 2025

The estimated fair value of the

SEPA derivative liability was determined using a Monte Carlo simulation model in order to project the future path of the Company’s

stock price over the commitment period with the following assumptions:

Expected draws (in thousands)

estimated fair value of the SEPA put option liability was determined using a Monte Carlo simulation model in order to project the future

path of the Company’s stock price over the commitment period with the following assumptions:

As of December 31,

Term (in years)

Starting stock price

2 unchanged sentences

Derivative liability

SEPA forward option liability was deemed to have no value at December 31, 2025 and 2024 as there were no outstanding notices for the

sale of the Company’s Common Stock.

Related Party Transactions

PIPE Notes and Warrants

As disclosed in Note 3 and Note

7, Data Knights issued and sold PIPE Notes in connection with the Business Combination, which are

convertible into shares of the Company’s Common Stock.

Total proceeds raised from the PIPE Notes were $ 1.5 million, of which $ 1.0

million were with related party investors.

Refer to Note 3 and Note 7 for additional details on the terms of the PIPE Notes.

In connection with the issuance

of the PIPE Notes, the Company also issued a total of 95,744 shares of PIPE Warrants, of which 63,829 shares were issued to the same related

party investors.

Notes and Warrants

disclosed in Note 7, Data Knights issued and sold PIPE Notes in connection with the Business Combination,

which are convertible into shares of the Company’s Common Stock.

Total proceeds raised from the PIPE Notes were $ 1.5 million, of

which $ 1.0 million were with related party investors.

In June 2025, all holders of PIPE Notes agreed to convert the outstanding

principal and accrued interest into 1,453,174 shares of Common Stock, of which 972,326 shares were issued to these related party investors.

See Note 7 for further details.

connection with the issuance of the PIPE Notes, the Company also issued a total of 95,744 shares of PIPE Warrants, of which 63,829 shares

were issued to the same related party investors.

Refer to Note 10 for additional details on the terms of the PIPE Warrants.

Convertible Promissory Notes and Warrants

From 2019 to 2023, the Company

issued various Convertible Promissory Notes to related party investors.

Total gross proceeds raised from Convertible Promissory Notes

with related parties was $ 12.3 million (out of $ 14.2 million total).

In connection with the issuance of the Convertible Promissory Notes,

the Company also issued 2,976,000 shares of Convertible Note Warrants to the same related parties (out of 3,726,000 total).

Refer to Note

7 and Note 12 for additional details on the terms of the Convertible Promissory Notes and Convertible Promissory Note Warrants, respectively.

The Closing of the Business Combination

triggered the conversion of all Convertible Promissory Notes into shares of Common Stock of the Company, as disclosed in Note 3.

Shareholder Loans

In addition to the convertible

shareholder loans described in Note 7, the Company also entered into non-convertible shareholder loans with two related party investors

for aggregate gross proceeds of $ 0.4 million and $ 1.0 million during the years ended December 31, 2024 and 2023, respectively.

These non-convertible

shareholder loans bear interest at a rate of 8.0 % and mature one year after the commencement date of each agreement.

There are no financial

or non-financial covenants associated with the shareholder loans.

On November 7, 2023, in connection

with the Business Combination, one of the shareholder loans for $ 0.5 million was converted into a PIPE Note equal to the amount of principal

and interest outstanding at the time of Closing.

The Company accounted for the exchange as an extinguishment whereby the shareholder loan

was written off and a separate PIPE Note was recorded at fair value, as disclosed in Note 7.

The extinguishment had no impact on the Company’s

consolidated statements of operations for the year ended December 31, 2023.

In June and July 2024, the Company

made payments of $ 0.1 million to partially repay the outstanding non-convertible shareholder loan balance.

The following table summarizes

shareholder loans outstanding for the periods presented (in thousands):

of Shareholder Loans Outstanding

Shareholder loans – nonconvertible

Shareholder loans – convertible

Accrued interest

Total loan – related party

Loan Extensions

As disclosed in Note 3, the Company

assumed Data Knights’ liabilities, which included existing loan extensions to related parties.

Refer to Note 3 for details on the

loan extensions recorded on the Company’s consolidated balance sheets as of December 31, 2024 and 2023.

described in Note 7, the Company received gross proceeds of $ 1.6 and $ 0.7 million in connection with convertible and non-convertible

shareholder loans, respectively, with two related party investors between 2023 and 2024.

In June 2025, these investors agreed to convert

the outstanding balance into an aggregate of 3,166,476 shares of Common Stock.

See Note 7 for further details.

the closing of the Business Combination, the Company assumed Data Knights’ liabilities, which included existing loan extensions

to related parties.

In June 2025, two related party investors agreed to convert their outstanding balances under the loan extension agreements

into an aggregate of 3,650,248 shares of Common Stock.

See Note 7 for further details.

described in Note 8, the Company issued 3,438,537 shares of Common Stock in exchange for gross proceeds of $ 1.7 million pursuant to subscription

agreements with two related party investors in June and August 2025.

See Note 8 for further details.

Related Party Transactions

Services – The Company engages an accounting firm to provide accounting and bookkeeping services, which is majority owned by

the Company’s Chief Financial Officer (“CFO”), who serves as an independent contractor to the Company.

the years ended December 31, 2025 and 2024, the Company incurred expenses of $ 0.03 million and $ 0.01 million, respectively, related to

services provided by the CFO’s accounting firm.

Such amounts are included in general and administrative expenses in the accompanying

consolidated statements of operations.

of December 31, 2025 and 2024, there were no amounts payable to the accounting firm.

Development Services – The Company engages a software development company to provide software development services, which is

wholly owned by the Company’s Chief Technology Officer (“CTO”), who is an employee of the Company.

the years ended December 31, 2025 and 2024, the Company incurred expenses of $ 0.2 million and $ 0.1 million, respectively, for software

development services provided by the CTO’s company.

Such amounts are included in research and development expense in the accompanying

consolidated statements of operations.

As of December 31, 2025 and 2024, amounts payable to the CTO’s software development company

were $ 0.05 million and $ 0.2 million, respectively, and are included in accounts payable and accrued expenses in the accompanying consolidated

balance sheets.

the year ended December 31, 2025, the Company settled $ 0.2 million of trade payables owed to this vendor by issuing 250,000 shares of

its Common Stock (see Note 5).

The shares were issued at their fair value on the settlement date, which totaled $ 0.1 million, resulting

in a $ 0.1 million gain.

The gain was recognized within gain on troubled debt restructurings in the accompanying consolidated statements

of operations because the payables related to services previously provided by the vendor in the ordinary course of business.

of the settlement were negotiated and approved by management other than the CTO and the CTO does not have the ability to unilaterally

bind the Company.

As such, the substance of the transaction was a settlement of a commercial obligation, not a capital contribution.

Company believes that the terms of its arrangements with these vendors are consistent with those that would have been obtained from unaffiliated

third parties.

Commitments and Contingencies

Lease Agreement

The Company has a month-to-month

lease for a suite at a cost of $ 530 per month.

The Company incurred $ 7,830 and $ 7,695 of rent expense, including common tenant costs and

cancellation costs, during the years ended December 31, 2024 and 2023, respectively.

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 years ended December

31, 2024 and 2023.

Company has a month-to-month lease for a suite at a cost of $ 530 per month.

The Company incurred $ 7,743 and $ 7,830 of rent expense, including

common tenant costs and cancellation costs, during the years ended December 31, 2025 and 2024, respectively.

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.

November 6, 2025, ARC Group Limited and ARC Opportunity Fund Limited (together, “ARC”) filed a complaint against the Company

and certain officers of the Company in the District Court of Minnesota, Fourth Judicial District (the “ARC Complaint”).

ARC Complaint alleges that the Company has breached certain contracts that the Company entered into with ARC before the closing of the

Business Combination, including certain financial advisory contracts entered into by the Company at the direction of the sponsor of the

Business Combination (the “sponsor”;

the Company notes that the sponsor is an affiliate of ARC).

Specifically, the ARC Complaint

asserts that the Company breached these contracts by issuing certain shares of Common Stock to ARC contemporaneously with the closing

of the Business Combination and improperly cancelling those shares after the Business Combination as well as by failing to pay ARC certain

cash amounts when due.

The ARC Complaint seeks an order of specific performance requiring the Company to reinstate the cancelled shares

of Common Stock or, in the alternative, compensatory damages for such cancellation as well as payment of the other purported amounts

The ARC Complaint also asserts tort claims arising out of the Company’s actions and seeks compensatory damages (plus prejudgment

interest) and punitive damages in connection with such claims but does not specify an amount of damages.

Company notes that no shares of Common Stock were actually issued to ARC prior to or contemporaneously with the closing of the Business

Combination and that, as of December 31, 2025 and 2024, the Company has recorded a forward contract to issue 1,240,644 shares of its

Common Stock to ARC for success fees earned in connection with the Business Combination (see Note 8).

As of December 31, 2025 and 2024,

the Company has recorded aggregate cash liabilities payable to ARC equal to $ 0.4 million.

The Company intends to vigorously defend itself

against the claims in the ARC Complaint in excess of these amounts.

The Company is also assessing whether there are any counterclaims

available to it arising out of self-dealing transactions between ARC and the sponsor.

Accordingly, the Company has not recorded any additional

liability arising out of the ARC Complaint as the Company does not believe any incremental loss is probable, and the Company cannot estimate

any reasonably possible loss or range of possible loss.

On March 19, 2026, ARC voluntarily dismissed the complaint without prejudice.

Company was not subject to any other material legal proceedings during the years ended December 31, 2025 and 2024.

Subsequent Events

The Company has evaluated subsequent

events occurring through April 15, 2025, the date the consolidated financial statements were available to be issued, for events requiring

recording or disclosure in the Company’s consolidated financial statements.

During January 2025, pursuant

to the terms of the Yorkville Note, an aggregate of $ 0.8 million of outstanding principal was converted into 866,701 shares of the Company’s

Common Stock.

The Company also issued 245,007 shares of Common Stock to Yorkville to settle the conversion notice from December 2024,

as described in Note 7.

As previously announced on Form

8-K, on January 31, 2025, the Board appointed Mr.

Robert Golden as Chief Financial Officer (“CFO”) of the Company on a permanent

In connection with this appointment as CFO, Mr.

Golden will receive a cash bonus of $ 25,000 and a grant of restricted stock units

equal to $ 25,000 , which will be fully vested on the grant date.

Golden had previously been serving as the interim CFO of the Company

since August 30, 2024.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

Company has evaluated subsequent events occurring through March 30, 2026, the date the consolidated financial statements were available

to be issued, for events requiring recording or disclosure in the Company’s consolidated financial statements.

February 2026, the Company sold an aggregate of 400,000 shares of its Common Stock to Yorkville pursuant to advance notices delivered

under the SEPA at a price of $ 1.19 per share.

The Company received gross proceeds of approximately $ 0.5 million in connection with these

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data