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Item 8. Financial Statements and Supplementary Data

2025-04-15 compared with 2024-04-09 · 1595 added, 862 removed, 116 unchanged (95% of the section changed)

1 unchanged sentence

TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Redeemable Preferred and Common Units and Equity (Deficit)

Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficit

Consolidated Statements of Cash Flows

1 unchanged sentence

of Independent Registered Public Accounting Firm

the shareholders and the board of directors of OneMedNet Corporation

on the Financial Statements

have audited the accompanying consolidated balance sheets of OneMedNet Corporation as of December 31, 2023 and 2022, the related statements

of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred

to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended,

in conformity with accounting principles generally accepted in the United States.

Doubt about the Company’s Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit.

addition, the Company continues to experience negative cash flows from operations.

These factors raise substantial doubt about the Company's

ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The financial statements

do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

the Board of Directors and Stockholders of

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of OneMedNet Corporation (the “Company”) as of December 31, 2024

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

flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2024 and 2023, and the results of their operations and their cash flows for each of the two

years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the consolidated financial statements, the Company has suffered recurring operating losses and negative cash flows from

operating activities since inception and expects to continue incurring operating losses and negative cash flows in the future.

matters raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters

are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

BF Borgers CPA PC

Borgers CPA PC (PCAOB ID 5041)

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

of Matter – Crypto Assets

Associated with Crypto Assets and Risks of Ownership

of the date of these consolidated financial statements, digital assets are loosely regulated and there is no central marketplace or currency

Supply is not determined by a central bank, and prices have been extremely volatile during the periods presented in the financial

Transferability and ownership of digital assets is verified by a thirty-two-character cryptographic key.

Digital asset exchanges

in the marketplace have been closed due to fraud, failure or security breaches.

Any of the Company’s digital assets that reside

on an exchange that shuts down may be lost.

Several factors may affect the price of digital assets, including, but not limited to, supply

and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory

measures (if any) that restrict the trading of digital assets or the use of digital assets as a form of payment.

There is no assurance

that digital assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of digital asset

payments by mainstream retail merchants and commercial businesses will continue to grow.

Associated With Crypto Asset Regulation

digital assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing

the digital assets industry.

To the extent that future regulatory actions or policies limit the ability to exchange digital assets or

utilize them for payments, the demand for digital assets will be reduced.

Furthermore, regulatory actions may limit the ability of end-users

to convert digital assets into fiat currency (e.g., U.S.

dollars) or use digital assets to pay for goods and services.

Such regulatory

actions or policies would result in a reduction of demand, and in turn, a decline in the underlying digital asset unit prices.

of any future regulatory change on the Company or digital assets in general is impossible to predict, but such change could be substantial

and adverse to the Company and the value of the Company’s investments in digital assets.

Associated With No FDIC or SIPC Protection

Company’s crypto assets are held by a custodian that is not a banking institution or otherwise a member of the Federal Deposit

Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”).

Accordingly, deposits

or assets held by the custodian are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.

WithumSmith+Brown, PC

have served as the Company’s auditor since 2024.

Brunswick, New Jersey

April 15, 2025

ID Number 100

BALANCE SHEETS

December 31, 2023

December 31, 2022

thousands, except share and per share data)

As of December 31,

Current assets:

Cash and cash equivalents

Investments held in Trust

Accounts receivable, net of allowance

Prepaid expenses and other assets

Receivable from SPAC

Investment in crypto assets – Bitcoin

Accounts receivable, net

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Liabilities and stockholders’ deficit

Current liabilities:

Accounts payable & accrued expenses

Loan Amount due to related parties

Loan Extensions

Deferred revenues

Convertible promissory notes

Canada Emergency Business Loan Act

Income tax payable

Franchise tax payable

Pipe Notes, net of discount including interest

Loan extensions

Yorkville Note

Deferred underwriter fee payable

Loan – related party

Other current liabilities

Total current liabilities

Long Term Liabilities

Convertible promissory note

Canada Emergency Business Loan Act

Accrued interest

Loan, related party of OMN

Warrant liabilities

Deferred underwriter fee payable

Working capital Loan

Extension loans

Other long-term liabilities

Total liabilities

Stockholders’ Equity (Deficit)

Preferred Series A-2, par value $ 0.0001 , 4,200,000 shares authorized and, 0 and 3,853,797 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Preferred Shares A-1, par value $ 0.0001 , 4,400,000 shares authorized and, 0 and 3,204,000 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Preferred value

Common Stock, par value $ 0.0001 , 30,000,000 shares authorized and 23,572,232 and 4,550,166 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Data Knights Acquisition Corp.

Class A Common Stock, par value $ 0.0001 , 4,200,000 shares authorized and, 0 and 3,853,797 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Data Knights Acquisition Corp.

Class A Common Stock, par value $ 0.0001 , 4,200,000 shares authorized and, 0 and 3,853,797 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Common stock value

Commitments and contingencies

Commitments and contingencies (Note 15)

Stockholders’ (deficit) equity:

Preferred Stock, par value $ 0.0001 , 1,000,000 authorized at December 31, 2024 and 2023;

no shares issued and outstanding at December 31, 2024 and 2023

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

Additional paid-in-capital

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

Accumulated deficit

( 55,082,677 )

( 43,509,964 )

Total stockholders’ equity (deficit)

( 12,859,606 )

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

STATEMENTS OF OPERATIONS

thousands, except share and per share data)

For the year ended December 31,

Subscription revenue

Web imaging revenue

Total revenue

Cost of revenue

1 unchanged sentence

General and administrative

Sales & Marketing

Sales and marketing

Research and development

Total operating expenses

Operating loss

( 8,374,250 )

( 11,425,461 )

Other Expense (income)

Income tax provision

Loss from operations

Other expense (income), 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

( 4,489,110 )

Stock Expense

Unrealized gain or loss

( 1,371,689 )

Other Expense (income)

( 5,195,822 )

$ ( 23,205,456 )

$ ( 6,229,639 )

Loss per share of Common

Basic and Diluted

Weighted-average shares of Common Stock outstanding:

Basic and Diluted

per share information has not been presented for periods prior to the Business Combination (as defined in Note 3, Business Combination ),

as it resulted in values that would not be meaningful to the users of these consolidated financial statements.

Refer to Note 3, Business

Combination for further information.

This has been indicated on these statements of operations as “N/M”.

Total other expense, net

Loss before income taxes

Income tax expense

Earnings per share:

Basic and diluted net loss per common share outstanding

Basic and diluted weighted average number of common shares outstanding

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

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Knights Acquisition Corp.

Data Knights Acquisition Corp.

A-2 Preferred Stock

A-1 Preferred Stock

A-Common Stock

B-Common Stock

A-Common Stock

STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

thousands, except share data)

Preferred Stock

Stockholders’

December 31, 2021

$ ( 33,920,734 )

of common shares in exchange for services

of common shares in exchange for cash at $ 1.00 per share

of Data Knights Acquisition Corp.

Class B Common Stock

Re-Measurement

of Data Knights Acquisition Corp.

Class A Common Stock Subject to Possible Redemption

( 3,359,591 )

compensation expense

( 6,229,639 )

December 31, 2022

$ ( 43,509,964 )

compensation expense

Stock to Common Stock

( 3,853,797 )

( 3,204,000 )

Notes to Common Stock

Options to Common Stock

of Warrants to Common Stock

OneMedNet to ONMD Public Shares

( 2,257,326 )

( 2,257,100 )

( 2,257,326 )

of PIPE Warrants

Data Knights Common Shares (A and B) to ONMD Public Shares

( 4,253,517 )

stock redemption

( 28,750,110 )

Public Shares

earnings adjustment

( 23,205,456 )

December 31, 2023

$ ( 55,082,677 )

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

Stockholders’

Balances as of December 31, 2023

Issuance of common stock to settle deferred underwriter fee payable

Repurchase of common stock

Vesting of restricted stock units

Issuance of common stock and pre-funded warrants in connection with private placements, net of issuance costs

Issuance of common stock to settle Yorkville commitment fee

Issuance of warrants to terminate Helena SPA

Extinguishment of officer accrued salaries

Partial conversion of Yorkville Note

Stock-based compensation expense

Balances as of December 31, 2024

$ ( 101,569 )

1 unchanged sentence

STATEMENTS OF CASH FLOWS

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Cash flow from Operating Activities

$ ( 23,205,456 )

$ ( 6,229,639 )

Adjustments to reconcile net loss to net cash flows from operating activities:

For the year ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Business combination cost

Stock-based compensation expense

Cash Held in Trust Account

Prepaid Expenses

Other current assets

Accounts payable and accrued Expenses

Accounts receivable, net of allowance

Deferred Revenue & Customer Deposits

Amount due to related party

Exercise tax liability

Extension loan

Franchise tax payable

Income Tax Payable

Working capital loan

Net cash flows used in operating activities

Cash used for Investing Activities

Purchase of property and equipment

Cash flow from Financing Activities

Class B Common Stock

Proceeds (repayment) from issuance of convertible promissory note payable

( 10,680,772 )

Proceeds from issuance of PIPE Convertible Notes and Warrants

Proceed from related party loan

Proceeds from Canada Emergency Business Loan Act

Common Stock Subject to Redemption

( 28,750,109 )

( 88,549,890 )

Deferred underwriting fee

Warrant liability

( 4,489,110 )

Additional Paid-in Capital

Class A Common Stock

Class B Common Stock

Retained Earnings adjustment

( 3,359,594 )

Net cash flows from financing activities

( 8,431,875 )

( 88,032,226 )

Net change in cash and cash equivalents

Cash and Cash Equivalents, Beginning

Cash and Cash Equivalents, Ending

Stock warrant expense

Change in fair value of warrant liabilities

Change in fair value of PIPE Notes

Change in fair value of Yorkville Note

Change in fair value of convertible promissory notes

Change in fair value of crypto assets – Bitcoin

Change in fair value of derivative liability

Realized gain on sale of crypto assets – Bitcoin

Non-cash SEPA commitment fee

Gain on forgiveness of CEBA loan

Non-cash interest

Change in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Accounts payable & accrued expenses

Deferred revenues

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Purchases of crypto assets – Bitcoin

Proceeds from sales of crypto assets – Bitcoin

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from private placements, net of issuance costs

Proceeds from issuance of shareholder loans

Proceeds from issuance of Yorkville Note, net of issuance costs

Proceeds from line of credit borrowings

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

Cash and cash equivalents at beginning year

Cash and cash equivalents at end of year

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for taxes

Supplemental disclosures of non-cash investing and financing activities:

Common shares issued to 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.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

Organization and Operations

Description of Business

and Description of Business

Corporation (the “Company”) is a healthcare software company with solutions focused on digital medical image management,

exchange, and sharing.

The Company was incorporated in Delaware on September 20, 2006.

The Company has been solely focused on creating

solutions that simplify digital medical image management, exchange, and sharing.

The Company has one wholly-owned subsidiary, OneMedNet

Technologies (Canada) Inc., incorporated on October 16, 2015 under the provisions of the Business Corporations Act of British Columbia

whose functional currency is the Canadian dollar.

The Company was founded in Delaware on November 20, 2015.

The Company has been solely focused on creating solutions

that simplify digital medical image management, exchange, and sharing.

The Company has one wholly-owned subsidiary, OneMedNet Technologies

(Canada) Inc., incorporated on October 16, 2015 under the provisions of the Business Corporations Act of British Columbia whose functional

currency is the Canadian dollar.

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

November 7, 2023, as contemplated by the Company, Data Knights Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and

Data Knights, LLC, the Merger Sub’s sponsor merged with and into OneMedNet Corporation, with OneMedNet Corporation surviving the

The Business Combination is further described in Note 3, Business Combination.

Knights Acquisition Corp Merger

November 7, 2023, we consummated a merger (the “Merger”) following

the approval at the special meeting of the shareholders of Data Knights Acquisition Corp., a Delaware corporation held on October 17,

2023 (the “Special Meeting”), Data Knights Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and a wholly-owned

subsidiary of Data Knights Acquisition Corp., a Delaware corporation (“Data Knights”), consummated a merger (the “Merger”)

with and into OneMedNet Solutions Corporation (formerly named OneMedNet Corporation), a Delaware corporation (“OneMedNet”)

pursuant to an agreement and plan of merger, dated as of April 25, 2022 (the “Merger Agreement”), by and among Data Knights,

Merger Sub, OneMedNet, Data Knights, LLC, a Delaware limited liability company (“Sponsor” or “Purchaser Representative”)

in its capacity as the representative of the stockholders of Data Knights, and Paul Casey in his capacity as the representative of the

stockholders of OneMedNet (“Seller Representative”).

Accordingly, the Merger Agreement was adopted, and the Merger and other

transactions contemplated thereby (collectively, the “Business Combination”) were approved and completed.

Business Combination was accounted for as a as a reverse

recapitalization with OneMedNet as the accounting acquirer under the accounting principles generally

accepted in the United States of America (“U.S.

Accordingly, the financial statements of the combined company represent

a continuation of the financial statements of OneMedNet.

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

(collectively referred to herein as the “Purchasers”) for PIPE financing in the aggregate original principal amount of $ 1,595,744.70

and the purchase price of $ 1.5 million.

Pursuant to the Securities Purchase Agreement, Data Knights will issue and sell 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, and (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 the PIPE Notes closed and funded contemporaneous to the Closing of the Business Combination.

immediately prior to the Closing, OneMedNet, Inc.

issued the PIPE Notes to the Purchasers under the private offering exemptions under

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

November 7, 2023, the Company consummated a merger (the “Merger”) following

the approval at the special meeting of the shareholders of Data Knights Acquisition Corp.

(“Data Knights”), a Delaware corporation,

held on October 17, 2023 (the “Special Meeting”), of the agreement and plan of merger, dated as of April 25, 2022 (the “Merger

Agreement”), by and among Data Knights, Data Knights Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and a

wholly-owned subsidiary of Data Knights, OneMedNet Solutions Corporation (formerly named OneMedNet Corporation) (“Legacy ONMD”),

Data Knights, LLC, a Delaware limited liability company (“Sponsor”), and Paul Casey, in his capacity as representative of

the stockholders of Legacy ONMD.

Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy ONMD, with Legacy ONMD surviving

the Merger as a wholly-owned subsidiary of Data Knights (such transactions contemplated by the Merger Agreement, the “Business

Combination”).

and Uncertainties

2 unchanged sentences

dependence on key personnel, and protection of proprietary technology.

previously reported on Form 8-K on February 9, 2024, the Company received written notice (the “Nasdaq Notice”), dated February

7, 2024, from the Nasdaq Stock Market (“Nasdaq”) indicating that for the preceding 30 consecutive business days, the market

value of the Company’s listed securities (“MVLS”) did not maintain a minimum market value of $50,000,000 (the “Minimum

MVLS Requirement”) as required by Nasdaq Listing Rule 5450(b)(2)(A).

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the

Company has a compliance period of 180 calendar days, or until August 5, 2024, to regain compliance with the Minimum MVLS Requirement.

Compliance may be achieved if the Company’s MVLS closes at $50,000,000 or more for a minimum of ten consecutive business days at

any time during the 180-day compliance period, in which case Nasdaq will notify the Company of its compliance and the matter will be

the Company does not regain compliance with the Minimum MVLS Requirement by August 5, 2024, Nasdaq will provide written notification

to the Company that its common stock is subject to delisting.

At that time, the Company may appeal the relevant delisting determination

and Going Concern

accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets

and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects

on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this

Company has incurred recurring net losses since its inception, including $ 10.1 million and $ 33.8 million for the years ended December

31, 2024 and 2023, respectively.

In addition, the Company had an accumulated deficit of $ 101.6 million as of December 31, 2024.

The Company’s

cash balance of $ 0.2 million is not adequate to fund its operations through at least twelve months from the date these consolidated financial

statements were available for issuance.

Therefore, these conditions raise substantial doubt about the Company’s ability to continue

as a going concern.

continue in existence and expand its operations, the Company will be required to, and management plans to, raise additional working capital

through an equity or debt offering and ultimately attain profitable operations to fulfill its operating and capital requirements for

at least 12 months from the date of the issuance of the consolidated financial statements.

However, the Company may not be able to secure

such financing in a timely manner or on favorable terms, if at all.

Furthermore, if the Company issues equity securities to raise additional

funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior

to those of the Company’s existing stockholders.

The consolidated financial statements do not include any adjustments relating

to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as

a going concern.

The Company’s continuation as a going concern is dependent upon its ability to continue receiving working capital

cash payments and generating cash flow from operations.

in Crypto Assets – Bitcoin

Company has also invested in Bitcoin, which is a crypto asset.

Crypto assets are loosely regulated and there is no central marketplace

for currency exchange.

Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile.

crypto asset exchanges have been closed due to fraud, failure or security breaches.

Any of the Company’s crypto assets that reside

on an exchange that shuts down may be lost.

Several factors may affect the price of crypto assets, including, but not limited to:

and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory

measures (if any) that restrict the trading of crypto assets, and the use of crypto assets as a form of payment.

There is no assurance

that crypto assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of crypto asset

payments by mainstream retail merchants and commercial businesses will continue to grow.

crypto assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing

the crypto asset industry.

To the extent future regulatory actions or policies limit the ability to exchange crypto assets or utilize

them for payments, the demand for crypto assets could be reduced.

Furthermore, regulatory actions may limit the ability of end-users

to convert crypto assets into fiat currency (e.g., U.S.

dollars) or use crypto assets to pay for goods and services.

Such regulatory

actions or policies could result in a reduction of demand, and in turn, a decline in the underlying crypto asset unit prices.

effect of any future regulatory change on crypto assets in general is impossible to predict, but such change could be substantial and

adverse to the Company and the value of the Company’s investments in crypto assets.

assets are not insured or protected under the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection

Company (“SIPC”).

Accordingly, with respect to its Bitcoin investment, the Company does not enjoy the protections of other

assets covered by the FDIC or SIPC.

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.

However, there can be no assurance,

if the Company does appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful.

event, the Company may also seek to apply for a transfer to The Nasdaq Global Market if it meets the requirements for continued listing

The Nasdaq Notice received have no immediate effect on the Company’s continued listing on the Nasdaq Global Market or

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

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 Global Market.

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 Global Market.

on the Nasdaq Capital Market.

Summary of Significant Accounting Policies

of Presentation and Foreign Currency Translation

consolidated financial statements have been prepared in U.S.

dollars, in accordance with accounting principles generally accepted in

the United States of America (“GAAP”).

The accompanying consolidated financial statements include the accounts of the Company

and its wholly owned subsidiaries.

The consolidated financial statements include 100% of the accounts of wholly-owned subsidiaries.

intercompany balances and transactions have been eliminated in consolidation.

account for business acquisitions under ASC Topic 805, Business Combinations (“ASC Topic 805”).

The total purchase consideration

for an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities assumed at the acquisition

Costs that are directly attributable to the acquisition are expensed as incurred.

Identifiable assets (including intangible assets)

and liabilities assumed (including contingent liabilities) are measured initially at their fair values at the acquisition date.

goodwill if the fair value of the total purchase consideration is in excess of the net fair value of the identifiable assets acquired

and the liabilities assumed.

We recognize a bargain purchase gain within Other income (expense), net, in the consolidated statement of

operations if the net fair value of the identifiable assets acquired and the liabilities assumed is in excess of the fair value of the

total purchase consideration.

We include the results of operations of the acquired business in the consolidated financial statements

beginning on the acquisition date.

of Presentation

accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America (“GAAP”) and the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”)

regarding annual financial reporting.

The accompanying consolidated financial statements have been prepared on a going concern basis,

which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

accompanying consolidated financial statements include the accounts of OneMedNet Corporation, formerly Data Knights, and its wholly-owned

subsidiary, OneMedNet Technologies Canada Ltd.

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.

All intercompany accounts and transactions

have been eliminated in consolidation.

preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions

that affect the reported amounts of assets, liabilities, revenue, and expenses, and the amounts disclosed in the related notes to the

consolidated financial statements.

Actual results and outcomes may differ materially from management’s estimates, judgments, and

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

related to revenue, useful lives and realizability of long-lived assets, accounting for income taxes and related valuation allowances,

and unit and stock-based compensation.

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

Company operates as one operating segment.

Operating segments are defined as components of an enterprise for which separate financial

information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive

Officer, in deciding how to allocate resources and assess performance.

The Company’s CODM evaluates the Company’s financial

information and resources and assesses the performance of these resources on a consolidated basis.

The Company is not organized by market

and is managed and operated as one business.

A single management team that reports to the chief executive officer comprehensively manages

the entire business.

Accordingly, the Company does not accumulate discrete financial information with respect to separate divisions and

does not have separate operating or reportable segments.

Since the Company operates in one operating segment, all required financial

segment information can be found in the consolidated financial statements.

that affect the reported amounts of assets, liabilities, revenue, and expenses, and the amounts disclosed in these notes to the consolidated

financial statements.

Actual results and outcomes may differ materially from management’s estimates, judgments, and assumptions.

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,

Europe and Middle East

and Cash Equivalents

3 unchanged sentences

The balances, at times, may exceed FDIC insured

The Company believes that, as of December 31, 2023, its risk relating to deposits exceeding federally insured limits was not

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

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 doubtful accounts based upon factors surrounding the credit

risk of specific customers, historical trends and other information.

As of December 31, 2023 and 2022, the Company established allowances

of $ 0 and $ 102,700 respectively.

The net receivable balances outstanding are fully collectible.

The Company believes that, as of December 31, 2024 and 2023, its risk relating to deposits exceeding federally insured limits

was not significant.

Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s

financial condition, results of operations, and cash flows.

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 .

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

by such exchanges as of the date and time of determination.

The time used is 23:59 UTC.

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.

As of December 31, 2024 and 2023,

the Company established allowances for credit losses of $ 0 .

Company believes its credit policies are prudent and reflect normal industry terms and business risk.

2 unchanged sentences

For the year ended December

31, 2023, there was 1 customer that accounted for 10 % or more of total revenue, and there were 2 customers that accounted for 10 % or

more of total revenue for the years ended December 31, 2022 .

The following table represents these customers’ aggregate percent

of total revenue:

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:

Of Aggregate Percentage Revenue and Accounts Receivable

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Aggregate Percent of Total Revenue

of December 31, 2023, three customers accounted for more than 10 % of the Company’s accounts receivable balance, and two customers

accounted for over 10 % of the Company’s accounts receivable balance at December 31, 2022.

For the 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:

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Aggregate Percent of Total Accounts Receivable

Aggregate Percent of Revenue and Accounts Receivable

As of December 31,

Aggregate percent of accounts receivable

and Equipment

and equipment are recorded at cost.

The straight-line method is used for computing depreciation and amortization.

Assets are depreciated

over their estimated useful lives ranging from three to five years.

Cost of maintenance and repairs are charged to expense when incurred.

and equipment are recorded at cost, less accumulated depreciation and amortization.

The straight-line method is used for computing depreciation

and amortization.

Assets are depreciated and amortized over their estimated useful lives ranging from three to five years.

Cost of maintenance

and repairs are charged to expense when incurred.

of Long-Lived Assets

3 unchanged sentences

future undiscounted net cash flows from the use of the asset are less than the carrying amount of that asset.

There have been no losses

There were no such losses

during the years ended December 31, 2024 or December 31, 2023.

Value Option of Accounting

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

apart from the entire host instrument, if eligible, Accounting Standards Codification (“ASC”) 825, Financial Instruments ,

allows issuers to elect the fair value option (“FVO”) of accounting for those instruments.

The FVO may be elected on an instrument-by-instrument

basis and is irrevocable unless a new election date occurs.

The FVO allows the issuer to account for the entire financial instrument

at fair value with subsequent remeasurements of that fair value recorded through the statements of operations at each reporting date.

A financial instrument is generally eligible for the FVO if, amongst other factors, no part of the convertible, or contingently convertible,

instrument is classified in stockholders’ equity and the instrument does not contain a beneficial conversion feature at issuance.

In addition, because a contingent beneficial conversion feature, if any, is not separately recognized within stockholders’ equity

at the issuance date, a convertible debt instrument with a contingent beneficial conversion feature is therefore eligible for the FVO

if all other criteria are met.

on the eligibility assessment discussed above, the Company concluded that its convertible notes payable is eligible for the FVO and accordingly

elected the FVO for those debt instruments.

This election was made because of operational efficiencies in valuing and reporting for these

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.

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.

Financial Instruments

Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts

qualify as derivatives to be separately accounted for in accordance with ASC 480, Distinguishing Liabilities from Equity and ASC

815, Derivatives and Hedging .

Instruments that meet the definition of a derivative financial instrument and the equity scope exception

in ASC 815-10-15-74(a) are classified as equity and are not subject to remeasurement provided that the Company continues to meet the

criteria for equity classification.

Instruments that are classified as liabilities are accounted for at fair value and remeasured at

each reporting date until exercise, expiration, or modification that results in equity classification.

Any change in the fair value of

the warrants is recognized as change in fair value of warrant liabilities included as a component of other (income) expenses, net in

the consolidated statements of operations.

classification of warrants, including whether warrants should be recorded as liabilities or as equity, is re-assessed at the end of each

reporting period.

The fair value of liability-classified warrants is determined using the Black-Scholes options pricing model (“Black-Scholes

model”) which includes Level 3 inputs, as shown in Note 13 to the consolidated financial statements.

Value of Financial Instruments

7 unchanged sentences

inputs that are observable or can be corroborated by observable market data.

3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions

made by other market participants.

3 - Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made

by other market participants.

These valuations require significant judgment.

measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical

assets or liabilities.

Other marketable securities were valued either based on recent trades of securities in inactive markets or based

on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

did not hold significant amounts of marketable securities categorized as Level 3 assets as of the years ended December 31, 2022 and December

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

payable and certain privately issued warrants.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable

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

The Company’s Private Warrants estimated fair

values are provided by a third party pricing vendor and are reviewed by the Company’s management.

The Private Warrants valuations

are based on unobservable inputs reflecting the vendor’s assumptions, consistent with reasonably available assumptions made by

other market participants and thus are classified as Level 3.

is recognized in accordance with the five-step model set forth by Accounting Standards Update (“ASU”) 2014-09, Revenue from

Contracts with Customers (“Topic 606”), which involves identification of the contract, identification of performance obligations

in the contract, determination of the transaction price, allocation of the transaction price to the previously identified performance

obligations, and revenue recognition as the performance obligations are 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.

quoted market prices are available in active markets, the fair value of assets and liabilities is estimated within Level 1 of the valuation

If quoted prices are not available, then fair values are estimated by using pricing models, quoted prices of assets and liabilities

with similar characteristics, or discounted cash flows, within Level 2 of the valuation hierarchy.

In cases where Level 1 or Level 2

inputs are not available, the fair values are estimated by using inputs within Level 3 of the hierarchy.

Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however,

considerable judgment is required to develop these estimates.

Accordingly, these estimated fair values are not necessarily indicative

of the amounts the Company could realize in a current market exchange.

The estimated fair values can be materially affected by using

different assumptions or methodologies.

The methods and assumptions used in estimating the fair values of financial instruments are based

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.

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.

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

Hospital/Healthcare Systems, Imaging Centers, Physicians and Patients.

iRWD is sold on a fixed fee basis based on the number of data

units and the cost per data unit committed to in the customer contract.

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

Beam revenue is subscription-based revenue which 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

issues a cancellation notice.

Company is subject to U.S.

federal, state and local income taxes.

The Company accounts for income taxes in accordance with ASC Topic

740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary

differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for

the year in which the differences are expected to reverse.

Such net tax effects on temporary differences are reflected on the Company’s

consolidated balance sheets as deferred tax assets and liabilities.

Topic 740 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected

to be taken in a tax return that affects amounts reported in the financial statements.

The Company has reviewed and will continue to

review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based

on ongoing analyses of tax laws, regulations and interpretations thereof.

To the extent that the Company’s assessment of the conclusions

reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded

in the period in which such determination is made.

The Company reports income tax-related interest and penalties relating to uncertain

tax positions, if applicable, as a component of income tax expense

tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of

the deferred tax assets will not be realized.

The Company provides deferred taxes at the enacted tax rate that is expected to apply when

the temporary differences reverse.

The Company has recorded a full valuation allowance against the net deferred tax asset due to the

uncertainty of realizing the related benefits.

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 account for its research and development cost in accordance with ASC Topic 730, Research and Development (“ASC Topic 730”).

ASC Topic 730 requires that all R&D costs be recognized as an expense as incurred.

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

2 unchanged sentences

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

Company has a stock-based compensation plan, which is described in more detail in Note 8.

The fair value of stock option and warrant

grants are determined on the date of grant using the Black Scholes valuation model.

Forfeitures of stock based awards are recorded as

the actual forfeitures occur.

Stock based compensation expense is recognized over the service period, net of estimated forfeitures, using

the straight-line method.

The Company converted all unvested stock based compensation awards to common shares in the year ended December

and Administrative Expenses

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

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

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

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):

Schedule of Antidilutive Earnings Per Share

For the year ended December 31,

Employee stock options

Restricted stock units

Warrants for common stock

Convertible debt

Deferred underwriter fees

Loan extensions

Total common stock equivalents

General and Administrative

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, intangible asset amortization,

and depreciation expense.

Growth Company

Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (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.

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.

Pronouncements Not Yet Adopted

November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment

Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable

segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported

measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified

as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance

and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented

in the financial statements.

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

This ASU will likely result in us including the additional required disclosures

when adopted.

We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.

December 2023, the Financial Accounting Standards Board issued an Accounting Standards Update (“ASU”) amending existing income

tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied

on either a prospective or retroactive basis.

We are currently evaluating the ASU to determine its impact on our income tax disclosures.

adopted accounting pronouncements

October 2021, the FASB issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

(ASC Topic 805).

This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities

(deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

At the acquisition date, the acquirer

applies the revenue model as if it had originated the acquired contracts.

The ASU is effective for annual periods beginning after December

15, 2022, including interim periods within those fiscal years.

We adopted this ASU prospectively on January 1, 2023.

This ASU has not

and is currently not expected to have a material impact on our consolidated financial statements.

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

Business Combination was accounted for as a reverse recapitalization as OneMedNet Corporation was determined to be the accounting acquirer

under Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 805,

Business Combinations.

This determination was primarily based on OneMedNet Corporation comprising the ongoing operations of the combined

entity, OneMedNet Corporation’s senior management comprising of all the senior management of the combined company, and the prior

shareholders of OneMedNet owning a majority of the voting power of the combined entity.

Accordingly, for accounting purposes, the financial

statements of the combined entity upon consummation of the Business Combination represented a continuation of the financial statements

of OneMedNet Corporation with the merger being treated as the equivalent of OneMedNet issuing stock for the net assets of Data Knights

Inc., accompanied by a recapitalization.

Operations prior to the Business Combination are presented as those of OneMedNet Corporation

in future reports of the combined entity.

Going Concern

accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets

and satisfaction of liabilities and commitments in the normal course of business.

The Company does not have adequate liquidity to fund

its operations through at least twelve months from the date these financial statements were available for issuance.

The Company has an

accumulated deficit 55,082,677 as of year-end December 31, 2023 and $ 43,509,964 , as of year-end December 31, 2022 and has had negative

cash flows from operating activities for the year ended December 31, 2023.

These conditions raise substantial doubt about the Company’s

ability to continue as a going concern.

To continue in existence and expand its operations, the Company will be required to, and management

plans to, raise additional working capital through an equity or debt offering and ultimately attain profitable operations.

If the Company

is not able to raise additional working capital, it would have a material adverse effect on the operations of the Company and continuing

research and development of its product.

The consolidated financial statements do not include any adjustments relating to the recoverability

and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Company’s continuation as a going concern is dependent upon its ability to continue receiving working capital cash payments and

generating cash flow from operations.

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.

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

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

(in thousands):

of Crypto Assets Reconciliation of Fair Values

Balance, December 31, 2023

Unrealized gain, net

Balance, December 31, 2024

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.

Property and Equipment

and equipment are summarized as of December 31:

Property and equipment are summarized

as of December 31 (in thousands):

of Property and Equipment

As of December 31,

Furniture and equipment

1 unchanged sentence

accumulated depreciation

Net Property and Equipment

and amortization expense was $ 27,983 and $ 24,807 for the years ended December 31, 2023 and 2022, respectively.

Company has generated both federal and state net operating losses (NOL) of approximately $ 21

million and $ 23 million, respectively, which if not used, will begin to expire in 2030 .

The Company believes that its ability to fully utilize the existing NOL carryforwards could be restricted on a portion of the NOL by

changes in control that may have occurred or may occur in the future and by its ability to generate net income.

The Company has not yet

conducted a formal study of whether, or to what extent, past changes in control of the Company impairs its NOL carryforwards because

such NOL carryforwards cannot be utilized until the Company achieves profitability.

of deferred income taxes are as follows as of December 31:

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):

of Income by Geographical Location

For the 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):

of Components of Income Tax

As of December 31,

Current federal

Current state

Current foreign

Total current tax provision (benefit)

Deferred federal

Deferred state

Deferred foreign

Total deferred tax provision (benefit)

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:

Reconciliation Income Tax Expense

As of December 31,

Tax provision at statutory rate

State 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

Change in valuation allowance

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):

of Deferred Income Taxes

As of December 31,

Deferred tax assets

Net operating loss carry forward

Stock Compensation

Gross deferred tax assets

Less valuation allowance

( 7,859,732 )

( 7,507,999 )

Net operating loss carryforwards

Capitalized research costs

Total gross deferred tax assets

valuation allowance

Net deferred tax assets

change in the valuation allowance was $ 351,734 and $ 1,384,220 for the years ended December 31, 2023 and 2022, respectively.

The effective

tax rate for the years ended December 31, 2023 and 2022 differs from the federal and state statutory rates due to the full valuation

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority

would more likely than not sustain the position following an audit.

The tax years from inception through December 31, 2023 remain subject

to examination by all major taxing authorities due to the net operating loss carryovers.

The Company is not currently under examination

by any taxing jurisdiction.

The Company did not incur any interest or penalties during the years ended December 31, 2023 or 2022.

a result of the Business Combination, the Company was appointed as the sole managing member of Data Knights.

The Company is subject to

federal income taxes, in addition to state and local income taxes.

The Company accounts for income taxes using the asset and liability

method, which requires the recognition of deferred tax assets and liabilities for the estimated future tax consequences attributable

to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective

Deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements

and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected

to be settled or recovered.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred

tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income

during the periods in which those temporary differences become deductible.

The Company considers the scheduled reversal of deferred tax

liabilities, projected future income, and tax planning strategies in making this assessment.

Company has established a valuation allowance related deferred tax assets on deductible temporary differences, tax losses, and tax credit

carryforwards.

The valuation allowance as of December 31, 2023 was $ 168.3 .

in the valuation allowance in fiscal year 2023 of $ 155.7 million primarily relates to the

Company’s investment in Data Knights, and tax carryforward attributes.

of December 31, 2023, the Company had a U.S.

federal net operating loss carryforwards of $ 10.3

million and gross state net operating loss carryforwards of $ 8.9 million.

Convertible Promissory Notes held by Related Party

2023, the Company entered various Convertible Promissory Notes (“Note”) with related party investors totaling $ 2,300,000

(2022 - $ 4,700,000 ) and unrelated party investors of $ 1,875,000 (2022 - $ 440,000 ).

The Notes issued are unsecured and bear an interest

rate of six percent annually from the date of issuance until the outstanding principal is paid or converted.

Deferred tax liabilities

Total deferred tax liabilities

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.

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

Convertible note agreement was amended and restated in order to (i) provide for the sale and issuance to Purchasers from the effective

date of January 1, 2022 and after the date of this Agreement of up to an additional $ 5,000,000 aggregate principal amount of Notes and

warrants to purchase shares of the Company’s capital stock, (ii) provide for the sale and issuance to Purchasers who purchased

Notes under the Prior Agreement between the Effective Date and the date of this Agreement of warrants to purchase shares of the Company’s

common stock at an exercise price of $ 1.00 per share;

(iii) extend the maturity date of all outstanding Notes from December 31, 2022

to November 7, 2023.

principal and unpaid accrued interest on each Note will convert:

(i) automatically, upon the Company’s issuance of equity securities

(the “Next Equity Financing”) in a single transaction, or series of related transactions, with aggregate gross proceeds to

the Company of at least $ 5,000,000 , into shares of the Company’s capital stock issued to investors in the Next Equity Financing,

at a conversion price equal to the lesser of (A) a 20% discount to the lowest price per share of shares sold in the Next Equity Financing,

or (B) $2.50 per share;

(ii) at the noteholder’s option, in the event of a defined Corporate Transaction while such Note remains

outstanding, into shares of the Company’s Series A-2 Preferred Stock at a conversion price equal to $ 2.50 per share;

at the noteholder’s option, on or after the Maturity Date while such Note remains outstanding, into shares of the Company’s

Series A-2 Preferred Stock at a conversion price equal to $ 2.50 per share.

a Corporate Transaction occurs before the repayment or conversion of the Notes, the Company will pay at the closing of the Corporate

Transaction to each noteholder that elects not to convert its Notes in connection with such Corporate Transaction an amount equal to

the outstanding principal amount of such noteholder’s Note plus a 20% premium.

“Corporate Transaction” means (a) a

sale by the Company of all or substantially all of its assets, (b) a merger of the Company with or into another entity (if after such

merger the holders of a majority of the Company’s voting securities immediately prior to the transaction do not hold a majority

of the voting securities of the successor entity) or (c) the transfer of more than 50% of the Company’s voting securities to a

person or group.

November 2019, the Company entered into a Convertible Promissory Note (“Note”) agreement with a related party investor.

total amount of the Note is $ 1,500,000 .

The Note is unsecured and bears interest at a rate of four percent annually from the date of

issuance until the outstanding principal is paid or converted.

The Note matures on January 1, 2025.

The Note shall automatically convert

into the next offering of preferred stock upon closing of such next equity financing.

The number of shares of preferred stock to be issued

upon conversion shall be equal to the number obtained by dividing the outstanding principal and unpaid accrued interest owed on the date

of conversion, by the conversion price.

The conversion price is 100 percent of the lowest price per share paid for the next equity preferred

stock by other investors in the next equity financing.

In the event that prior to the conversion or repayment of amounts owed, the Company

completes a financing transaction in which the Company sells equity securities but such transaction does not qualify as next equity financing

(i.e., an “alternative financing”), then the principal and unpaid accrued interest may (upon written election of the purchaser

holding the Note) convert into the securities issued by the Company in the alternative financing.

The number of alternative financing

equity securities to be issued upon such conversion shall be equal to the number obtained by dividing the outstanding principal and unpaid

accrued interest owed by an amount equal to 100 percent multiplied by the lowest price per share at which the alternative financing equity

securities are sold and issued for cash in the alternative financing.

of December 31, 2022 there was $ 9.9 million outstanding principal balance on the Notes and $ 690,771 in accrued interest, all included

in long-term liabilities on the balance sheet.

There were no payments of principal or interest during 2022.

In connection with the $ 5,140,000

in convertible notes issued in 2022, 2,056,000 in warrants were issued.

November 2023, the Business Combination between Data Knights and the Company triggered the Notes’ conversion to common stock.

Approximately

$ 15.4 million of the total outstanding Notes plus accrued interest were converted at $ 2.50 per share of common stock.

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

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

December 31, 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.

See additional information on the accounting for the warrants in Note 12.

The Company also incurred legal fees

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”)

December 2020, the Company applied for and received a $ 44,673 USD CEBA loan.

The loan was provided by the Government of Canada to provide

capital to organizations to see them through the current challenges and better position them to return to providing services and creating

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 loan is unsecured.

The loan was interest free through December 31, 2023.

If the loan is paid back by January 18, 2024,

$ 14,742 of the loan will be forgiven.

If the loan is not paid back by January 18, 2023, the full $ 44,673 loan will be converted to loan

repayable over three years with a 5 % interest rate.

The loan was paid back prior January 18, 2024.

At December 31, 2023 the loans is

classified as Canada Emergency Business Loan Act under Current Liabilities on the Consolidated Balance Sheet.

Company accounted for the loan as debt in accordance with FASB Accounting Standards Codification 470 Debt and accrued interest in accordance

with the interest method under FASB ASC 835-30.

Shareholders’ Equity

A-2 Preferred Stock

Company’s previously issued and outstanding Series A-2 preferred stock included a $ 0.15 per share annual noncumulative dividend

when and if declared by the board of directors.

No dividends were declared in the years ended December 31, 2023 or December 31 2022.

The Series A-2 preferred stock also includes a liquidation preference of 1.25 times the original issue price plus any declared but unpaid

dividends upon the liquidation, dissolution, merger or sale of substantially all the assets of the Company and have a preference upon

liquidation over Series A-1 preferred stock and common stock.

Each share of Series A-2 preferred stock may be converted into equal shares

of common stock at the option of the holder at any time.

In addition, the Series A-2 preferred stock shares are automatically convertible

into common shares upon the sale of shares of common stock to the public at the then applicable conversion price in a firm commitment

underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting

in at least $ 20 million in proceeds, net of underwriting discounts and commissions.

Each share of Series A-2 preferred stock has voting

rights equal to the number of shares of common stock then issuable upon conversion of such share of preferred stock.

The Company is obligated

to redeem shares of Series A-2 Preferred Stock in the occurrence of a Deemed Liquidation Event unless a majority of the holders of Series

A-2 Preferred Stock and a majority of the Series A-1 Preferred Stock consent otherwise.

November 2023, the Business Combination between Data Knights and the Company triggered the Series A-2 Preferred Stock and Series A-1

Preferred Stock convert 1-1 to commons stock .

A-1 Preferred Stock

Company’s previously issued and outstanding Series A-1 preferred stock included a $ 0.15 per share annual noncumulative dividend

when and if declared by the board of directors.

No dividends were declared in the years ended December 31, 2023 or December 31 2022.

The Series A-1 preferred stock also includes a liquidation preference of 1.25 times the original issue price plus any declared but unpaid

dividends upon the liquidation, dissolution, merger or sale of substantially all the assets of the Company and have a preference upon

liquidation over common stock.

Each share of Series A-1 preferred stock may be converted into equal shares of common stock at the option

of the holder at any time.

In addition, the Series A-1 preferred stock shares are automatically convertible into common shares upon the

sale of shares of common stock to the public at the then applicable conversion price in a firm commitment underwritten public offering

pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $ 20 million in proceeds,

net of underwriting discounts and commissions.

Each share of Series A-1 preferred stock has voting rights equal to the number of shares

of common stock then issuable upon conversion of such share of preferred stock.

The Company is obligated to redeem shares of Series A-1

Preferred Stock in the occurrence of a Deemed Liquidation Event unless a majority of the holders of Series A-1 Preferred Stock consent

November 2023, the Business Combination between Data Knights and the Company triggered the Series A-2 Preferred Stock and Series A-1

Preferred Stock convert 1-1 to commons stock .

2023, in connection with services performed by the Board of Directors common shares of 100,000 ( 100,000 - 2022) were issued at $ 1.00 per

These were expensed as general and administrative expenses in the Statement of Operations.

table below summarizes the Common Stock activities during the year ended December 31, 2023.

Schedule of Common Stock Activities

Common Shares

Balances, December 31, 2022

Preferred Stock to Common Stock

Convertible Notes to Common Stock

Stock Options to Common Stock

Converting of Warrants to Common Stock

Private OneMedNet to ONMD Public Shares

( 2,257,326 )

Converting Data Knights Common Shares (A and B) to ONMD Public Shares

Issuance Public Shares

Balances, December 31, 2023

Stock Options

2020, the Company adopted a new equity incentive plan (the Plan), which provides for the granting of incentive and nonqualified stock

options to employees, directors, and consultants.

As of December 31, 2020, the Company has reserved 3,000,000 shares of common stock

under the Plan.

The Company believes that such awards better align the interests of its employees with those of its stockholders.

awards are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant;

those option awards generally vest with a range of one to four years of continuous service and have ten-year contractual terms.

is no public data available for the share price valuation, the Company considers the Fair Market Value of $ 1 to be on the conservative

side and similar to the exercise price.

Certain option awards provide for accelerated vesting if there is a change in control, as defined

The Plan also permits the granting of restricted stock and other stock-based awards.

Unexercised options are cancelled upon

termination of employment and become available under the Plan.

with respect to options outstanding is summarized as follows:

Schedule of Options Outstanding

Options Outstanding

Weighted- Average Exercise Price

Aggregate Intrinsic Value

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

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.

As of December 31,

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.

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

Granted - under the Plan

( 1,072,816 )

Outstanding as of December 31, 2023

Granted - under the Plan

Outstanding as of December 31, 2024

Options exercisable as of December 31, 2022

of December 31, 2022 and 2021, there were 1,031,000 and 947,184 common stock options outstanding with a weighted average remaining contractual

life of 7.11 years and 6.01 years, respectively.

of December 31, 2022 and 2021, there were 567,581 and 723,431 common stock options exercisable at a weighted average remaining contractual

life of 5.56 years and 5.27 years, respectively.

November 7, 2023, the Company issued shares of common stock for 692,153 vested options less an exercise price of $ 1.00 .

the Special Meeting held on October 17, 2023 ,

Data Knights shareholders considered and approved the OneMedNet Corporation 2022 Equity Incentive Plan (the “Plan”) and reserved

an amount of shares of common stock equal to 10% of the number of shares of common stock of OneMedNet following the Business Combination

for issuance thereunder .

The Plan was approved by the OneMedNet pre-Closing board of directors on October 17, 2023.

The Plan became effective

immediately upon the Closing of the Business Combination.

Scholes Assumptions

determination of the fair value of stock options using an option valuation model is affected by the Company’s stock price valuation,

as well as assumptions regarding a number of complex and subjective variables.

The volatility assumption is based on volatilities of

similar companies over a period of time equal to the expected term of the stock options.

The volatilities of similar companies are used

in conjunction with the Company’s historical volatility because of the lack of sufficient relevant history for the Company’s

common stock equal to the expected term.

The expected term of the employee stock options represents the weighted average period for which

the stock options are expected to remain outstanding.

The expected term assumption is estimated based primarily on the options’

vesting terms and remaining contractual life and employees’ expected exercise and post- vesting employment termination behavior.

The risk-free rate for periods within the contractual life of the option is based on the U.S.

Treasury yield curve in effect at the time

The dividend yield assumption is based on the expectation of no future dividend payouts by the Company.

fair value of the Company’s previous stock options was estimated assuming no expected dividends and the following weighted average

of Fair Value of Stock Options

Expected life in years

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

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:

of Stock Options Granted

For the year ended December 31,

Risk-free interest rate

Expected dividend yield

Expected term in years

Expected volatility

total expense recognized for share-based payments was $ 45,584 and $ 47,071 for the years ended December 31, 2022 and 2021, respectively.

These costs are included in the statements of operations.

As of December 31, 2022, there was $ 75,987 of unrecognized compensation costs

related to stock option grants which will be recognized over the next four years.

2023, the Company issued common stock to employees and extinguished all outstanding stock options.

The 612,720 shares outstanding were

recorded as stock expense in the Consolidated Statement of Operations.

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.

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 Restricted Stock Awards

Average Grant

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, 2023

Vested – issued

Vested – unissued

Unvested at December 31, 2024

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

of Stock-based Compensation Expense

For the year ended December 31,

Cost of revenue

General and administrative

Sales and marketing

Research and development

Total stock-based compensation expense

Stock Warrants

2021, there were 174,102 OneMedNet Corporation outstanding common stock warrants issued for service at a weighted average exercise price

In 2022 for the exercise price of $ 1.00 , the OneMedNet Corporation issued 145,746 warrants for 2021 service and 294,000 warrants

for 2022 service, 2,056,000 in warrants were issued attached to convertible notes.

The Company expensed $ 1,346,288 in 2022 in relation

to the issuance of the Warrants.

In 2023 for the exercise price of $ 1.00 , the OneMedNet issued 1,670,000 in warrants attached to convertible

OneMedNet Corporation converted 4,165,746 warrants outstanding to common stock at an exercise price of $ 1.00 and converted 174,102

warrants outstanding to common stock at an exercise price of $ 0.10 .

of December 31, 2023 and December 31, 2022, the Company had 11,500,000

of publicly traded warrants.

The warrants trade on the Nasdaq had closing price of $ .0149

at December 31, 2023 and December 31, 2022 respectively.

of December 31, 2023 and December 31, 2022, the Company had 681,019 and 585,275

of private warrants outstanding.

These warrants are classified as liability on the Consolidated Balance Sheet.

Changes in the

warrant liabilities are recorded in the Statement of Operations.

As of December 31, 2023 and December 31, 2022, the warrant

liabilities were $ 0.6

million and $ 0.4

respectively.

Fair Value Measures

fair value measurement accounting standards establish a framework for measuring fair value and expand disclosures about fair value measurements.

The standard does not require any new fair value measurements;

rather, it applies to other accounting pronouncements that require or

permit fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability

in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.

This pronouncement

also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable

inputs when measuring fair value.

valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

levels are defined as follows:

1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived

valuations in which all significant inputs are observable for substantially the full term of the asset or liability

3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

following table presents the Company’s financial assets measured and recorded at fair value on a recurring basis using the above

input categories as of December 31, 2023 and December 31, 2022 (in thousands):

Schedule of Financial Assets

The Company has the

following warrants outstanding for the periods presented:

of Warrants Outstanding

As of December 31,

Liability Classified Warrants

Business Combination Warrants

PIPE Warrants

Equity Classified Warrants

Public Warrants

Private Placement Warrants

Helena Termination Warrants

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.

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.

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.

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.

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

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 .

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

December 31, 2024

Total assets, at fair value

Business Combination Warrants

PIPE Warrants

Yorkville Note

SEPA derivative liability

Total liabilities, at fair value

December 31, 2023

Investments held in Trust

Private warrants

PIPE warrants

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 Warrants and Notes Measured at Fair Value

Business Combination Warrants

PIPE Warrants

Balance, December 31, 2023

Conversion to Common Stock

Changes in fair value

Balance, December 31, 2024

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:

of Fair Value Assumptions and Valuation

As of December 31, 2024

Business Combination

Exercise price

Expected volatility

Weighted average risk-free rate

Expected dividend yield

Warrants measurement input

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):

Yorkville Note

Balance, December 31, 2023

Conversion to Common Stock

Changes in fair value

Balance, December 31, 2024

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

Balance, December 31, 2023

Changes in fair value

Balance, December 31, 2024

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)

Starting stock price

Expected volatility

Risk-free rate

Derivative liability

Related Party Transactions

Knights closed its initial public offering in May 2021 and had 12 months to complete a business combination.

Alternatively, the Data

Knight could extend the period up to two times for an additional three months each time with an extension costing $ 1.2 million.

Knights received a total of $ 300,000 from members of the Company’s Management and Directors.

As of December 31, 2023 and December

31, 2022 the total extension loan including interest outstanding was $ 3.0 million and $ 2.5 million, respectively.

Convertible Notes and Warrants

November 2023, the Company entered into a Securities Purchase Agreement (SPA) in which the Company was required to sell senior secured

convertible notes and warrants to Directors of the Company.

The 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 Directors.

The senior secured convertible notes and warrants were issued through a private issuance

of a public entity (PIPE) transaction, which is a form of debt and equity offering under an exception in the securities law for qualifying

private placements by issuers of publicly traded securities.

The Company received a total of $ 1.5 million from the director in exchange

for senior convertible notes of $ 1.6 million (plus accrued interest of $ 0.1 million) and 95,745 warrants to acquire common stock.

senior secured notes are convertible to the conversion rate of $ 10.00 per share, and 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 on the last

trading day before the closing of the Business Combination), or the alternative conversion ratio 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 to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification

or similar transaction that proportionately decreases or increases the common stock.

warrants are classified as equity and the total proceeds received from the Directors are allocated based on the relative fair values

of the convertible notes and the warrants at the issued date.

The portion allocable to warrants is accounted for as paid-in capital.

The senior secured convertible notes are classified as long term debt in the Consolidated Balance Sheet.

The estimate fair value of the

senior secured convertible notes at December 31, 2023 was $ 1.2 million.

Commitments, Contingencies, and Concentrations Operating lease

Company has a month-to-month lease for a suite at a cost of $ 575 per month.

The Company incurred $ 7,695 and $ 7,694 of rent expense, including

common tenant costs and cancellation costs, during the years ended December 31, 2023 and 2022, respectively.

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.

Refer to Note 12 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.

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.

Subsequent Events

Company has evaluated subsequent events occurring through April 9, 2024, the date the financial statements were available for issuance,

for events requiring recording or disclosure in the Company’s financial statements.

2024, through to the date of this report, the Company issued 256,944

shares of Common Stock to EF Hutton LLC and Kingwood Capital Partners, LLC, respectively, as consideration for $ 3.0

million owed by the Company for underwriting commission due at the closing of the Business Combination.

2024, through to the date of this report, the Company bought back 187,745 shares of Common Stock from a convertible note holder.

2024, through to the date of this report, the Company received $ 1,000,000

from a majority shareholder for the purchase

of shares, and an additional $ 300,000

treated as a shareholder loan.

2024, through to the date of this report, the Company entered into a definitive securities purchase agreement with an institutional investor

providing up to $ 4.54 million in funding through a private placement for the issuance of senior convertible notes.

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 March 28, 2024, OneMedNet Corporation (the “Company”) entered into a definitive

securities purchase agreement (the “Securities Purchase Agreement”) with Helena Global Investment Opportunities 1 Ltd., an

affiliate of Helena Partners Inc., a Cayman-Islands based advisor and investor providing for up to USD$ 4.54 million in

funding through a private placement for the issuance of senior secured convertible notes (the “Notes”).

As previously

announced on Form 8-K, on March 27, 2024, Paul J.

Casey, Chief, Chief Executive Officer of the Company, notified the Company of his intention

to retire as Chief Executive Officer of the Company effective March 29, 2024.

Casey will continue to serve as a member of the Board

of Directors (the “Board”) of the Company.

In connection with Mr.

Casey’s service on the Advisory Board of the Company,

the Board approved a Stock Option Grant (the “Option Grant”) providing for the grant of 147,000 five-year options exercisable

at $ 1.00 per share adviser to Mr.

Also on March 27, 2024, Scott Holbrook, a member of the Board of the Company and a member of

the Company’s Audit Committee, notified the Company of his intention to retire from the Company’s Board effective March 29,

March 29, 2024, the Board (i) appointed Mr.

Aaron Green, to serve as Chief Executive Officer of the Company to fill the vacancy created

by the retirement of Paul Casey;

(ii) appointed Mr.

Aaron Green, to serve as a member of the Board to fill the vacancy created by the

retirement of Scott Holbrook;

and (iii) appointed Board member, Dr.

Thomas Kosasa, to serve on the Company’s Audit Committee, also

to fill the vacancy created by the retirement of Scott Holbrook.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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

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