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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-04-09 · 277 added, 326 removed, 63 unchanged (91% of the section changed)

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following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto that appear

elsewhere in this Annual Report on Form 10-K.

See “Risk Factors” elsewhere in this Annual Report on Form 10-K for a discussion

of certain risks associated with our business.

elsewhere in this Annual Report.

See “Risk Factors” elsewhere in this Annual Report for a discussion of certain risks associated

with our business.

The following discussion contains forward-looking statements.

Forward-looking statements

give our current expectations or forecasts of future events.

You can identify these statements by the fact that they do not relate strictly

to historical or current facts.

The use of words such as “anticipate,” “estimate,” “expect,” “project,”

“intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any

discussion of future operating or financial performance.

From time to time, we also may provide forward-looking statements in other materials

we release to the public.

Unless the context otherwise requires, references in this Item 7 “Management’s Discussion and Analysis

of Financial Condition and Results of Operations” to “OneMedNet Corporation,” “we,” “us,” “our”

and the “Company” are intended to mean the business and operations of OneMedNet Corporation.

in 2009, we provide innovative solutions that unlock the significant value contained within the clinical image archives of healthcare

Employing our proven OneMedNet iRWD™ solution, we securely de-identifies, searches, and curates a data archive locally,

bringing a wealth of internal and third-party research opportunities to providers.

By leveraging this extensive federated provider network,

together with industry leading technology and in-house clinical expertise, OneMedNet successfully meets the most rigorous RWD Life Science

requirements.

November 7, 2023, we held the closing of the previously announced merger (the “Merger”) whereby Data Knights Merger Sub,

Inc., merged with and into OneMedNet Solutions Corporation (formerly named OneMedNet Corporation), with OneMedNet Solutions Corporation

continuing as the surviving entity, which resulted in all of the issued and outstanding capital stock of OneMedNet Solutions Corporation

being exchanged for shares of the Company’s Common Stock upon the terms set forth in the Merger Agreement (collectively, the “the

Business Combination”).

The Merger and other transactions that closed on November 7, 2023, pursuant to the Merger Agreement, led

to Data Knights changing its name to “OneMedNet Corporation” and the business of the Company became the business of OneMedNet

Solutions Corporation.

to the terms of the Merger Agreement, the total consideration for the Business Combination and related transactions (the “Merger

Consideration”) was approximately $200 million.

In connection with the Special Meeting, certain public holders (the “Redeeming

Stockholders”) holding 1,600,741 shares of Common Stock exercised their right to redeem such shares for a pro rata portion of the

funds held by Continental Stock Transfer & Trust Company, as trustee (“Continental”) in the trust account established

in connection with Data Knights’ initial public offering (the “Trust Account”).

Effective November 7, 2023, Data Knights’

units ceased trading, and effective November 8, 2023, OneMedNet’s common stock began trading on the Nasdaq Global Market under

the symbol “ONMD” and the warrants began trading on the Nasdaq Global Market under the symbol “ONMDW.”

a result of the Merger and the Business Combination, holders of Data Knights common stock automatically received common stock of OneMedNet,

and holders of Data Knights warrants automatically received warrants of OneMedNet with substantively identical terms.

At the Closing

of the Business Combination, all shares of Data Knights owned by the Sponsor (consisting of shares of Common Stock and shares of Class

B common stock, which we refer to as the founder shares), automatically converted into an equal number of shares of OneMedNet’s

Common Stock, and the Private Placement Warrants held by the Sponsor, automatically converted into warrants to purchase one share of

OneMedNet Common Stock with substantively identical terms.

Forward-looking statements give our current expectations

or forecasts of future events.

You can identify these statements by the fact that they do not relate strictly to historical or current

The use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,”

“plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating

or financial performance.

From time to time, we also may provide forward-looking statements in other materials we release to the public.

provide innovative solutions that unlock the significant value contained within the clinical image archives of healthcare providers.

Employing our OneMedNet iRWD™ solution, which securely de-identifies, searches, and curates a data archive locally, bringing a

wealth of internal and third-party research opportunities to providers.

By leveraging our extensive federated provider network, together

with our technology and in-house clinical expertise, OneMedNet successfully meets the most rigorous Real World Data life science requirements.

November 7, 2023, we completed the Business Combination, whereby a subsidiary of Data Knights merged with and into Legacy ONMD, with

Legacy ONMD surviving as a wholly-owned subsidiary of Data Knights.

Following the Business Combination, Data Knights changed its name

to “OneMedNet Corporation”.

total consideration for the Business Combination and related transactions (the “Merger Consideration”) was approximately

$200 million.

In connection with the meeting of stockholders of Data Knights to approve the Business Combination (the “Special

Meeting”), certain public holders (the “Redeeming Stockholders”) holding 1,600,741 shares of Common Stock exercised

their right to redeem such shares for a pro rata portion of the funds held by Continental Stock Transfer & Trust Company, as trustee

(“Continental”) in the trust account established in connection with Data Knights’ initial public offering (the “Trust

Effective November 7, 2023, Data Knights’ common stock, warrants and units ceased trading, and effective November

8, 2023, our Common Stock began trading on the Nasdaq Global Market under the symbol “ONMD” and the Public Warrants began

trading on the Nasdaq Global Market under the symbol “ONMDW.”

a result of the Business Combination, holders of Data Knights common stock automatically received common stock of OneMedNet, and holders

of Data Knights warrants automatically received warrants of OneMedNet with substantively identical terms.

At the closing of the Business

Combination (the “Closing”), all shares of Data Knights owned by the Sponsor (consisting of shares of Common Stock and shares

of Class B common stock, which we refer to as the founder shares), automatically converted into an equal number of shares of OneMedNet’s

Common Stock, and the Private Placement Warrants held by the Sponsor automatically converted into warrants to purchase one share of OneMedNet

Common Stock with substantively identical terms.

Components of Consolidated Statements of Operations

Company generates revenue from two streams:

(1) iRWD (imaging Real World Data) which provides regulatory grade imaging and clinical data

in the Pharmaceutical, Device Manufacturing, CRO’s and AI markets and (2) BEAM which is a Medical Imaging Exchange platform between

(1) iRWD, which provides regulatory grade imaging and clinical data in the pharmaceutical,

device manufacturing, contract research organizations, and AI markets and (2) BEAM, which is a medical imaging exchange platform between

hospital/healthcare systems, imaging centers, physicians and patients.

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Revenue is recognized when the data is delivered to the customer.

Beam revenue is subscription-based revenue which is recognized ratably over the subscription period committed to by the customer.

BEAM revenue is subscription-based revenue that is recognized ratably over the subscription period committed to by the customer.

Company invoices its BEAM customers quarterly or annually in advance with the customer contracts automatically renewing unless the customer

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and Administrative

and administrative functions, includes 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.

consists primarily of labor cost for our operations team who provides services to our customers.

and administrative functions include finance, legal, operations, human resources, and information technology support.

These functions

include costs for items such as salaries and benefits and other personnel-related costs, maintenance and supplies, professional fees

for external legal, accounting, and other consulting services, and depreciation expense.

and Development

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contracted services, materials, and indirect costs involved in the design and development of new products and services, as well as hosting

and Marketing

sales and marketing costs consist of labor and tradeshow costs.

incurred on convertible notes and shareholder loans.

exchange and tax expenses related to the Company’s operations and revenue outside of the United States.

expense consists of interest incurred on our outstanding debt facilities, including loans with related parties, deferred underwriter

fees, insurance premiums paid in exchange for a note payable, and our line of credit.

(Income) Expenses, Net

(income) expenses, net, primarily includes the changes in fair value of convertible debt, change in fair value of PIPE Notes and change

in fair value of Yorkville Note (as defined below) for which we have elected the fair value option of accounting.

Convertible notes payable,

which include convertible promissory notes and PIPE Notes issued to related parties, including accrued interest and contingently issuable

warrants, contain embedded derivatives, including settlement of the contingent conversion features, which require bifurcation and separate

Accordingly, we have elected to measure the entire contingently convertible debt instruments, including accrued interest,

at fair value.

These debt instruments were initially recorded at fair value as liabilities and are subsequently re-measured at fair value

on our consolidated balance sheet at the end of each reporting period and at settlement, as applicable.

Other income or expenses, net,

also includes changes in fair value of warrants which are treated as liability instruments measured at fair value for accounting purposes,

initially recorded at fair value and subsequently re-measured to fair value on our consolidated balance sheets at the end of each reporting

The changes in the fair value of these debt and liability instruments are recorded in changes in fair value, included as a component

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

the Closing of the Business Combination, convertible promissory notes were converted into Common Stock immediately prior to the Closing

and were no longer outstanding as of the Closing Date.

(income) expenses, net, also includes change in fair value of our Bitcoin holdings, as well as foreign exchange and tax expenses related

to the Company’s operations and revenue outside of the United States.

of Operations

following tables set forth our consolidated statements of operations data for the periods presented:

Year Ended December 31,

For the year ended December 31,

Subscription revenue

Web imaging revenue

Total revenue

Cost of revenue

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General and administrative

Sales & Marketing

Sales and marketing

Research and development

Total operating expenses

Operating loss

(11,425,461 )

Other Expense (income)

Income tax provision

Loss from operations

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 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

Other expense

Change in FV of Warrants

Stock Expense

Unrealized gain or loss

$ (5,195,822 )

$ (23,205,456 )

$ (6,229,639 )

Ended December 31, 2023 Compared to the Year Ended December 31, 2022

Data Exchange (Beam)

Data Broker (RWD)

Master Reseller Agreement

revenue comprises of sales made from our data exchange (BEAM) and from data broker (RWD).

For the year ended 2023, overall revenue was

The primary driver for exchange revenue increase was delivery of revenue to a significant customer.

The primary drive for

the decrease in broker revenue was revenue deliveries pushed to Q1 of Fiscal 2024.

December 31, 2023

December 31, 2022

Total other (income) expenses, net

Loss before income taxes

Income tax (benefit) expense

For the year ended December 31,

Subscription revenue (BEAM)

Web imaging revenue (Real-World Data)

revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD).

For the year ended December

31, 2024, overall revenue decreased by 37%.

The primary driver for the decrease in subscription revenue was the planned discontinuation

of the BEAM platform in 2025.

As we move away from the BEAM platform to focus on iRWD sales, we have stopped renewals for most of our

customers leading to a $0.5 million decrease for the year ended December 31, 2024, as compared to the prior year.

The primary driver

for the increase in web imaging revenue was due to our enhanced focus on iRWD sales leading to increased customer deliveries during the

year ended December 31, 2024, as compared to the prior year.

For the year ended December 31,

Cost of revenue

As a percentage of Revenue

2023 we were able to reduce our cost of revenue as a percentage of revenue by 24%.

In the year ended 2023 our Software cost, iRWD consultants

and iRWD Data cost each decreased by $0.2 million.

The decrease was partially offset by a $0.2 million increase in payroll expenses.

decrease in cost of revenue of $0.2 million was primarily attributable to a decrease of $0.1 million in software and hosting costs due

to the planned shutdown of our BEAM platform and a decrease of $0.2 million in personnel costs driven by decreased headcount.

These decreases

are partially offset by an increase of $0.1 million in iRWD data charges as we shift our focus to the iRWD service line.

and Administrative

general and administrative expense increased year over year by $1.8 million from the year ended 2022 compared to the year ended 2023.

The increase is primarily due to the additional cost incurred in connection with our Business Combination.

We incurred an additional

$1.0 million legal cost, $0.7 million on warrants issued to convertible note holders that were converted into share of commons stock, $0.4 million

additional employees’ salaries, $0.3 million for investor relations cost, and $0.3 million in additional audit fees.

in general and administrative expenses were partially offset by $0.2 million decrease in both recruitment fees and bad debt expense.

operations expense includes payroll and consultant costs.

Operations expense decreased year over year by $0.2 million from the

year ended 2022 compared with the year ended 2023.

This decrease was primarily due to a decrease in headcount.

sales & marketing expense increased by $0.15 million year over year from the year ended 2022 compared to the year ended 2023.

The increase is due to the addition of an employee and consultant in 2023.

and administrative expenses were $7.0 million for the year ended December 31, 2024, compared to $3.5 million for the year ended

December 31, 2023.

The increase in total general and administrative expenses of $3.5 million was primarily due to an increase of

$2.2 million in accounting, audit and tax related services, an increase of $0.8 million in legal fees, an increase of $0.4 million

in insurance premiums and an increase of $0.1 million in other general and administrative expenses, each of which is attributable to enhanced public company reporting obligations and regulatory requirements

after the Business Combination closed in the fourth quarter of 2023.

and Marketing

and marketing expenses were $0.8 million for the year ended December 31, 2024, compared to $1.1 million for year ended December 31, 2023.

The decrease in total sales and marketing expenses of $0.3 million in 2024 was primarily due to a decrease of $0.3 million in personnel

costs driven by decreased headcount.

and development

research and development expense increased by $0.7 million year over year from the year ended 2022 compared to the year ended 2023.

The increase is primarily due to the additional cost in salaries for curators, consultants and increased hosting costs, which increased

by $0.4 million, $0.2 million and $0.1 million, respectively.

Company recorded goodwill of $10.5 million in connection with the Business Combination.

In December 2023, the Company concluded that

the entire goodwill was impaired, as such the $10.5 million of goodwill was written-off.

tax provision

the year ended 2023, the Company is in a significant loss, as such we did not record any income tax provision.

Company incurred interest expense on Loan extensions associated with the Business Combination, convertible promissory notes, the Pipe

Senior Secured Convertible Notes and Loans made from related parties (Management and Directors).

Interest expense in the year ended 2023

increased by $0.3 million.

The increase was mainly from the Pipe Senior Secured Convertible Notes issued in 2023.

and development expenses were $1.5 million for the year ended December 31, 2024, compared to $2.1 million for year ended December 31,

The decrease in total research and development expenses of $0.6 million in 2024 was primarily due to a decrease of $0.4 million

in stock based compensation expense and a decrease of $0.2 million in third-party contractor costs.

the year ended December 31, 2024, interest expense was primarily comprised of interest expense on loans made by related parties (Management

and Directors) and interest expense on the remaining $0.4 million of deferred underwriter fees that are payable in cash.

of $0.1 million in 2024 is primarily due to receiving additional loans from related parties, as well as interest on deferred underwriter

fees which did not accrue interest in 2023.

During the year ended December 31, 2023, interest expense was only comprised of interest

expense on loans made by related parties.

in Fair Value of Warrants

change in Warrant Fair Value was due to the closing of the Business Combination Agreement and the resulting fluctuations of the share

market price .

Company incurred approximately $3.5 million in common stock issuance expense for the Data Knight shares converted to OneMedNet Corporation

Financial Measure

addition to providing financial measurements based on generally accepted accounting principles in the United States of America, or GAAP,

we provide an additional financial metric that is not prepared in accordance with GAAP, or non-GAAP financial measure.

We use this non-GAAP

financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for

financial and operational decision making, for planning and forecasting purposes, to measure executive compensation, and to evaluate

our financial performance.

This non-GAAP financial measure is Adjusted EBITDA, as discussed below.

believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis

of trends in the business, as it facilitates comparing financial results across accounting periods and to those of peer companies.

also believe that this non-GAAP financial measure enables investors to evaluate our operating results and future prospects in the same

manner as we do.

This non-GAAP financial measure may exclude expenses and gains that may be unusual in nature, infrequent, or not reflective

of our ongoing operating results.

non-GAAP financial measure does not replace the presentation of our GAAP financial measures and should only be used as a supplement to,

not as a substitute for, our financial results presented in accordance with GAAP.

consider Adjusted EBITDA to be an important indicator of the operational strength and performance of our business and a good measure

of our historical operating trends.

Adjusted EBITDA eliminates items that we do not consider to be part of our core operations.

Adjusted EBITDA as GAAP net loss excluding the following items:

interest income;

income taxes;

depreciation and amortization of tangible

and intangible assets;

unit and stock-based compensation;

Business Combination transaction expenses;

and other non-recurring items that

may arise from time to time.

non-GAAP adjustments, and our basis for excluding them from our non-GAAP financial measure, are outlined below:

and Stock-based compensation – Although unit and stock-based compensation is an important aspect of the compensation paid

to our employees, the grant date fair value varies based on the derived stock price at the time of grant, varying valuation methodologies,

subjective assumptions, and the variety of award types.

This makes the comparison of our current financial results to previous and

future periods difficult to interpret;

therefore, we believe it is useful to exclude unit and stock-based compensation from our non-GAAP

financial measures in order to highlight the performance of our business and to be consistent with the way many investors evaluate

our performance and compare our operating results to peer companies.

Combination transaction expenses – Business Combination transaction expenses represent the expenses incurred solely related

to the Business Combination, which we completed on June 7, 2022.

It primarily includes investment banker fees, legal fees, professional

fees for accountants, transaction fees, advisory fees, due diligence costs, certain other professional fees, and other direct costs

associated with strategic activities.

These amounts are impacted by the timing of the Business Combination.

We exclude Business Combination

transaction expenses from our non-GAAP financial measures to provide a useful comparison of our operating results to prior periods

and to our peer companies because such amounts vary significantly based on the magnitude of the Business Combination transaction

and do not reflect our core operations.

following table reconciles GAAP net loss to Adjusted EBITDA during the periods presented (in thousands):

December 31, 2023

December 31, 2022

$ (23,205,456 )

$ (6,229,639 )

Interest Expense

Depreciation and amortization

Unit and Stock-based compensation

Business combination transaction expenses

Adjusted EBITDA

$ (6,932,966 )

$ (4,855,789 )

the closing of the Business Combination in 2023, we issued warrants in connection with the PIPE financing and

separately assumed certain private warrants from Data Knights.

We determined that these warrants should be accounted for as liabilities,

which are adjusted to fair value at the end of each reporting period.

The change in fair value is mainly due to the resulting fluctuations

in the market price of shares of Common Stock .

in Fair Value of PIPE Notes

the closing of the Business Combination in 2023, we issued PIPE Notes (as defined below) that are convertible into shares of Common Stock

and carried at fair value.

The change in fair value is mainly due to the resulting fluctuations in the market price of shares of Common

in Fair Value of Yorkville Note

June 2024, we issued the Yorkville Note (as defined below) which is convertible into shares of Common Stock and carried at fair value.

The change in fair value is mainly due to the resulting fluctuations in the market price of shares of Common Stock .

in Fair Value of Crypto Assets – Bitcoin

change in fair value of crypto assets – Bitcoin during the year ended December 31, 2024 reflects the increase in the price of

Bitcoin, which we began strategically investing in using excess cash from our private placement transactions.

During the year ended

December 31, 2023, we did not have any Bitcoin holdings.

Gain on Sale of Crypto Assets – Bitcoin

realized gain on sale of crypto assets – Bitcoin during the year ended December 31, 2024 reflects the increase in the price of

Bitcoin upon sale compared to its purchase price.

During the year ended December 31, 2023, we did not have any Bitcoin holdings.

in Fair Value of Derivative Liability

change in fair value of derivative liability during the year ended December 31, 2024 represents the issuance date fair value and remeasurement

adjustment of the SEPA put option with Yorkville.

The fair value is primarily driven by expected sales of our Common Stock to Yorkville

and projections on the future path of the Company’s stock price during the commitment period.

During the year ended December 31,

2023, we did not have the SEPA arrangement.

in Fair Value of Convertible Promissory Notes

was no change in fair value of our Convertible Promissory Notes (as defined below) in 2024 because all previously outstanding principal

and accrued interest was converted into shares of Common Stock at the closing of the Business Combination.

As a result, no obligation

remained on our Convertible Promissory Notes immediately after the Business Combination.

The change in fair value in 2023 was due to

the resulting fluctuations in the market price of shares of Common Stock .

Warrant Expense

warrant expense of $0.04 million during the year ended December 31, 2024 was due to the issuance of the Helena Termination Warrants (as

defined below) in December 2024 in connection with the Company’s termination of the Helena SPA (as defined below) .

warrant expense of $9.2 million during the year ended December 31, 2023 was due to the issuance of the Convertible Note Warrants (as

defined below) during 2023 in connection with the issuance of the Convertible Promissory Notes.

In connection with the closing of the

Business Combination, 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.

and Capital Resources

of December 31, 2023, our principal sources of liquidity were net proceeds received related to the Business Combination and cash received

of December 31, 2024, our principal sources of liquidity were net proceeds received related to debt and equity financings and cash received

from customers.

following table shows net cash and cash equivalents provided by (used in) operating activities, net cash and cash equivalents used in

investing activities, and net cash and cash equivalents provided by financing activities during the periods presented:

December 31, 2023

December 31, 2022

following table shows net cash and cash equivalents used in operating activities, net cash and cash equivalents used in investing activities,

and net cash and cash equivalents provided by financing activities during the periods presented:

For the year ended December 31,

Net cash provided by (used in)

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Financing activities

(88,032,226 )

net cash and cash equivalents provided by (used in) operating activities consists of net loss adjusted for certain non-cash items, including

depreciation and amortization, business combination cost, stock-based compensation expense, cash held in trust account, and as well as

changes in operating assets and liabilities.

The primary changes in working capital items, such as the changes in accounts receivable

and deferred revenue, result from the difference in timing of payments from our customers related to contract performance obligation.

This may result in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the

fulfillment of the performance obligation.

cash used in operating activities was $8.2 million during the year ended December 31, 2023.

Net cash used in operating activities was

due to our net loss of $23.2 million adjusted for non-cash items of $31.4 million, primarily consisting of the redemption of public shares

in connection with the Business Combination causing the withdrawal of $29.0 million of cash held in the trust account, $0.9 million business

combination cost, $0.4 million extension loan, and use of cash for operating assets and liabilities of $1.1million due to the timing

of cash payments to vendors and cash receipts from customers.

comparison, the Company’s net cash provided by operating activities was $87.2 million during the year ended December 31, 2022.

Net cash provided by operating activities was due to our net loss of $6.2 million adjusted for non-cash items of $93.5 million, primarily

consisting of the redemption of public shares in connection with the Business Combination causing the withdrawal of $88.3 million of

cash held in trust account $1.6 million of stock-based compensation expense, $2.5 million extension loan, less $0.5 million and use of

cash for operating assets and liabilities of $.5 million due to the timing of cash payments to vendors and cash receipts from customers.

investing activities have consisted primarily of property and equipment purchases.

cash and cash equivalents used in investing activities during the year ended December 31, 2023 consisted of $44 thousand of purchased

property and equipment.

comparison, the Company’s net cash and cash equivalents used in investing activities during the year ended December 31, 2022 consisted

primarily of $58 thousand of purchased property and equipment.

cash flows from financing activities was ($8.4 million) for the year ended December 31, 2023, which primarily consisted of $10.7 million

repayment on convertible promissory note payable, $1.5 million proceeds from issuance of PIPE Convertible Notes and Warrants, $0.5 proceeds

from related loan, $28.8 million from Common Stock subject to redemption in connection with the Business Combination, $0.5 million underwriting

fee related to the Business Combination, $0.3 million decrease in warrant liability, $18.2 million additional paid in capital and $11.6

million retained earning adjustment.

comparison, the Company’s net cash flows from financing activities was ($88.0 million) for the year ended December 31, 2023, which

primarily consisted of $5.5 million proceeds from convertible promissory notes payable, $88.5 million from common stock subject to redemption

in connection with the Business Combination, $4.5 million decrease in warrant liability, $2.8 million additional paid in capital and

$3.4 million retained earning adjustment.

Obligations and Commitments and Liquidity Outlook

management does not believe the cash and cash equivalents is sufficient to meet our foreseeable cash needs for at least the next 12 months.

Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support the

expansion of our infrastructure and workforce, interest expense and minimum contractual obligations.

Management hopes to raise cash either

through a public offering or private debt and equity offering.

Our inability to raise cash would cause to operate as a going concern.

net cash and cash equivalents used in operating activities consists of net loss adjusted for certain non-cash items, including depreciation

and amortization, stock-based compensation expense, changes in fair value of liability classified financial instruments, as well as changes

in operating assets and liabilities.

The primary changes in working capital items, such as the changes in accounts receivable and deferred

revenue, result from the difference in timing of payments from our customers related to contract performance obligation.

This may result

in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the fulfillment of

the performance obligation.

the year ended December 31, 2024, we used $7.0 million of cash in operating activities, primarily resulting from our net loss of $10.1

million, offset by non-cash charges of $1.6 million and cash provided by changes in our operating assets and liabilities of $1.5 million.

the year ended December 31, 2023, we used $4.8 million of cash in operating activities, primarily resulting from our net loss of $33.8

million, offset by non-cash charges of $28.4 million and cash provided by changes in our operating assets and liabilities of $0.6 million.

investing activities have consisted primarily of property and equipment purchases and Bitcoin purchases and sales.

the year ended December 31, 2024, net cash used in investing activities was $2.0 million, consisting of $1.9 million in net purchases

of Bitcoin and $0.1 million of purchases of property and equipment.

the year ended December 31, 2023, net cash used in investing activities was $44 thousand, consisting of purchases of property and equipment.

the year ended December 31, 2024, net cash provided by financing activities was $9.1 million, consisting of $6.3 million in net proceeds

from the private placements in July and September 2024, $1.8 million in net proceeds from shareholder loans, $1.4 million in net proceeds

from the Yorkville Note, partially offset by $0.2 million paid for the repurchase of Common Stock and $0.1 million in repayment of deferred

underwriter fees.

the year ended December 31, 2023, net cash provided by financing activities was $4.6 million, consisting of $4.2 million in proceeds

from convertible notes, $1.5 million in proceeds from PIPE Notes, and $0.5 million in proceeds from shareholder loans, partially offset

by $1.5 million in Business Combination costs paid.

Obligations and Commitments and Going Concern Outlook

management does not believe that cash and cash equivalents are sufficient to meet our foreseeable cash needs for at least the next 12

Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support

the expansion of our infrastructure and workforce, interest expense and minimum contractual obligations.

Management hopes to raise cash

either through a public offering or private debt and equity offering.

As a result of the Company’s recurring loss from operations

and the need for additional financing to fund its operating and capital requirements there is uncertainty regarding the Company’s

ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s

ability to continue as a going concern.

future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research

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Less than 1 year

Accounts payable and accrued expenses

Income tax payable

PIPE Notes, net of discount including interest

Loan, related party of OMN including interest

Accounts payable & accrued expenses

Loan extensions

Deferred underwriter fee payable

Loan - related party

Yorkville Note

Accounting Policies and Estimates

management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements

which have been prepared in accordance with accounting principles generally accepted in the United States of America.

In preparing our

financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenue, results

of operations, and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of

the reporting periods.

These estimates, assumptions, and judgments are necessary because future events and their effects on our results

and the value of our assets cannot be determined with certainty and are made based on our historical experience and on other assumptions

that we believe to be reasonable under the circumstances.

These estimates may change as new events occur or additional information is

obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known

for a prolonged period of time.

Because the use of estimates is inherent in the financial reporting process, actual results could differ

from those estimates.

which have been prepared in accordance with GAAP.

In preparing our financial statements, we make estimates, assumptions, and judgments

that can have a significant impact on our reported revenue, results of operations, and net income or loss, as well as on the value of

certain assets and liabilities on our balance sheet during and as of the reporting periods.

These estimates, assumptions, and judgments

are necessary because future events and their effects on our results of operations and the value of our assets cannot be determined with

certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances.

These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties,

the outcomes of which are not within our control and may not be known for a prolonged period of time.

Because the use of estimates is

inherent in the financial reporting process, actual results could differ from those estimates.

believe that the assumptions and estimates associated with the following critical accounting policies involve significant judgment and

thus have the most significant potential impact on our Consolidated Financial Statements.

generate revenue from the sale of products and services.

A description of our revenue recognition policies is included in Note 2,

Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual

Report on Form 10-K.

most of our sales agreements contain standard terms and conditions, certain agreements contain multiple performance obligations or non-standard

terms and conditions.

For customer contracts that contain more than one performance obligation, we allocate the total transaction consideration

to each performance obligation based on the relative stand-alone selling price of each performance obligation within the contract.

rely on either observable standalone sales or an expected cost plus a margin approach to determine the standalone selling price of offerings,

depending on the nature of the performance obligation.

we further discuss in Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements

included elsewhere in this Annual Report on Form 10-K, for contracts with customers entered into during fiscal years 2023 and 2022, revenue

from the sales of our iRWD and BEAM are recognized over time as the asset created by our performance does not have alternative use to

us and an enforceable right to payment for performance completed to date is present.

We recognize revenue as work progresses, using costs

incurred to date relative to total estimated costs at completion.

Incurred costs represent work performed, which correspond with and

best depict transfer of control to the customer.

Contract costs are incurred over a period of time, which can span periods, and the estimation

of these costs requires management’s judgment.

Due to the nature of the work required to be performed on the iRWD and BEAM and

our reliance on the availability the estimation of total revenue and cost at completion is complex, subject to many variables, and requires

significant judgment on a contract-by-contract basis.

As part of this process, we review information including, but not limited to, any

outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and

the related changes in estimates of revenue and costs.

The risks and opportunities relate to our judgment about the delays that may or

may not be within our control.

Risks and opportunities may also relate to supply chain trends and commodity pricing, as well as changes

in foreign currencies.

Changes in estimates of net sales, cost of sales, and the related impact to operating profit are recognized on

a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance

obligation’s percentage of completion in the current period.

A significant change in one or more of these estimates could affect

the profitability of one of more of our performance obligations and could have a material impact on our financial condition and results

of operations.

to the Business Combination, OneMedNet Corporation (now OneMedNet Solutions Corporation) had five authorized classes of membership interests,

consisting of a class of common units known as the Class A Common Units (the “Class A Units”), a class of preferred units

known as the Series A-2 Preferred Units (the “A-2 Preferred Units”), a class of preferred units known as the Series A-1 Preferred

Units (the “A-1 Preferred Units”), Convertible Notes, Stock Options units, known as the Options and Warrants units granted

to employees, officers, and directors pursuant to an incentive plan.

the Business Combination, the Company has authorized 101,000,000 shares of common stock, including 100,000,000 shares of Common Stock

and 1,000,000 shares of Preferred Stock.

In addition, the Company has three classes of warrants ( i.e.

, Public Warrants, Private

Warrants and PIPE Warrants) issued and outstanding.

the Business Combination is accounted for as a reverse recapitalization, all periods prior to the Business Combination have been retroactively

adjusted using the Exchange Ratio as stipulated by the Merger Agreement for the equivalent number of shares outstanding immediately after

the Merger to effect the reverse recapitalization.

The Class A Units, A-2 Preferred Units, A-1 Preferred Units, Options and Warrants

were converted into Common Stock using an exchange ratio of 1:1, the Convertible Notes were converted into Common Stock using an exchange

ratio of 2.5 per share.

This is presented within the consolidated statements of changes in redeemable preferred and common units and

equity (deficit).

typically issue restricted stock units (“RSUs”) as stock-based compensation.

For RSUs, the fair value is the closing market

price of the stock on the date immediately preceding the grant.

We recognize compensation expense over the requisite service period for

awards expected to vest.

We account for forfeitures as they occur, rather than applying an estimated forfeiture rate.

The graded-vesting

method of expense recognition is applied to all awards with service-only conditions.

RSUs involve stock to be issued upon the achievement of certain performance conditions.

Such RSUs become available, subject to time-based

vesting conditions if, and to the extent that, financial performance criteria for the applicable period are achieved.

Accordingly, the

number of RSUs earned will vary based on the level of achievement of financial performance objectives for the applicable period.

such time that our financial performance can ultimately be determined, each quarter we estimate the number of RSUs to be earned based

on an evaluation of the probability of achieving the financial performance objectives.

Such estimates are revised, if necessary, in subsequent

periods when the underlying factors change our evaluation of the probability of achieving the financial performance objectives.

stock-based compensation expense associated with performance-based RSUs may differ significantly from the amount recorded in the current

assumptions used in calculating the fair value of stock-based compensation awards represent management’s best estimates, but these

estimates involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change and we use

different assumptions, our stock-based compensation expense could be materially different in the future.

Warrants to purchase our shares of Common Stock may be accounted for as either liability or equity instruments depending on the terms

of the warrant agreements.

The warrants issued by us are accounted for as equity instruments due to our ability to settle the warrants

through the issuance of units and the absence of terms which would require liability classification, including the rights of the grantee

to require cash settlement.

We classify these equity instruments within additional paid-in capital on the consolidated balance sheets.

Warrants to purchase units accounted for as liability instruments represent the warrants issued to significant shareholders and related

order to calculate warrant charges, we used the Black-Scholes pricing model, which required key inputs including volatility and risk-free

interest rate and certain unobservable inputs for which there is little or no market data, requiring us to develop our own assumptions.

We estimated the fair value of unvested warrants, considered to be probable of vesting, at the time.

Based on that estimated fair value,

we determined warrant charges, which were recorded as a reduction of the transaction price.

Sheet Arrangements:

of December 31, 2023, we had no off-balance sheet arrangements as defined in Instruction 8 to Item 303(b) of Regulation S-K.

most of our sales agreements contain standard terms and conditions, certain agreements contain multiple performance obligations.

customer contracts that contain more than one performance obligation, we allocate the total transaction consideration to each performance

obligation based on the relative stand-alone selling price of each performance obligation within the contract.

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.

Subscriptions to the BEAM platform offering are 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.

The timing of revenue recognition is based on a time-based measure of progress as the Company

provides access to the programs evenly over the course of the subscription period.

Imaging Revenue

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.

Value of Certain Debt and Liability Instruments, and the Fair Value Option of Accounting

financial instruments contain various embedded derivatives which require bifurcation and separate accounting of those derivatives apart

from the host instruments, if eligible, GAAP allows issuers to elect the fair value option (“FVO”) of accounting for those

The FVO allows the issuer to account for the entire financial instrument, including accrued interest, at fair value with

subsequent remeasurements of that fair value recorded through the statements of operations.

We elected the FVO of accounting for contingently

convertible notes payable, including contingently issuable warrants and accrued interest, and certain term notes payable, including accrued

interest, as further described below and as discussed in Note 2, Summary of Significant Accounting Policies in our accompanying

consolidated financial statements included elsewhere in this Annual Report.

notes payable, the Yorkville Note and the PIPE Notes, which include the related contingently issuable warrants, contain embedded derivatives,

which require bifurcation and separate accounting under GAAP, for which the Company elected the FVO for the convertible notes payable,

Yorkville Note and PIPE Notes.

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

notes payable and PIPE Notes are recorded in changes in fair value of convertible debt, included as a component of other income and expenses,

net, in the consolidated statements of operations.

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

within the single line of change in fair value of convertible debt on the consolidated statements of operations.

See additional information

on valuation methodologies and significant assumptions used in Note 7, Convertible Debt , and Note 13, Fair Value Measurement

to the consolidated financial statements included elsewhere in this Annual Report.

estimated fair values of the convertible promissory notes and PIPE Notes are each 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.

Adopted Accounting Pronouncements

Note 2 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description

of recently adopted accounting standards.

Note 2, Summary of Significant Accounting Policies to the accompanying consolidated financial statements included elsewhere in

this Annual Report for a description of recently adopted accounting standards.

Issued Accounting Pronouncements

Note 2 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description

of certain recently issued accounting standards which may impact our financial statements in future reporting periods.

Note 2, Summary of Significant Accounting Policies to the accompanying consolidated financial statements included elsewhere in

this Annual Report for a description of certain recently issued accounting standards which may impact our financial statements in future

reporting periods.

Quantitative and Qualitative Disclosures About Market Risk

a smaller reporting company, we are not required to provide the information requested by this item pursuant to Item 305(e) of Regulation

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 7. Management’s Discussion and Analysis