OneMedNet Corp 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40386 ONEMEDNET CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 86-2076743 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 6385 Old Shady Oak Road , Suite 250 Eden Prairie , Minnesota 55344 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (800) 918-7189 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, par value $0.0001 per share ONMD The Nasdaq Stock Market LLC Redeemable Warrants, each exercisable for one share of Common Stock at an exercise price of $11.50 per share ONMDW The Nasdaq Stock Market LLC Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of May 14 , 2025, there were 30,572,831 shares of common stock, par value $ 0.0001 per share, issued and outstanding. Table of Contents Page CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ii PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements 1 Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 1 Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024 2 Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended March 31, 2025 and 2024 3 Unaudited Condensed Consolidated Statements of Cash Flows for the three months March 31, 2025 and 2024 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings 22 Item 1A. Risk Factors 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 23 Signatures 24 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements that we make from time to time, including statements contained in this Quarterly Report on Form 10-Q (“Form 10-Q”) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q are forward-looking statements. The forward-looking statements in this Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. Forward-looking statements in this Form 10-Q include, without limitation, statements reflecting management’s expectations regarding future financial performance and operating expenditures (including our ability to continue as a going concern, to raise additional capital and to succeed in our future operations), expected growth, profitability and business outlook, liquidity, operating expenses, and enhancement of our internal control structure. Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, among other things, the unknown risks and uncertainties that we believe could cause actual results to differ from these forward looking statements as set forth under the heading, “Risk Factors” and elsewhere in this Form 10-Q and other documents we file with the SEC. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to: ● our projected financial position and estimated cash burn rate; ● our estimates regarding expenses, future revenues and capital requirements; ● our ability to continue as a going concern; ● our ability to raise substantial additional capital in sufficient amounts or on acceptable terms to fund our operations and our business plan; ● our ability to reverse the recent decline in our revenue and resume growing our revenue; ● our ability to obtain and maintain intellectual property protection for our current products and services; ● our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights; ● the possibility that a third party may claim we have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against these claims; ii ● our reliance on third-party suppliers; ● the success of competing products or services that are or become available; ● our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; ● the potential for us to incur substantial costs resulting from lawsuits against us and the potential for these lawsuits to cause us to limit our commercialization of our products and services; and ● changes in demand for our products and services as a result of geopolitical and/or macroeconomic conditions. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in our Form 10-K and in other documents we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to actual results or to changes in our expectations. You should read this Form 10-Q and the documents that we incorporate by reference in this Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements including those described in this Form 10-Q and in the “Risk Factors” section of our Form 10-K and other documents we file with the SEC. iii PART I—FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements ONEMEDNET CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) March 31, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 144 $ 172 Investment in crypto assets – Bitcoin 793 2,849 Accounts receivable, net 247 213 Prepaid expenses and other current assets 447 385 Total current assets 1,631 3,619 Property and equipment, net 101 108 Total assets $ 1,732 $ 3,727 Liabilities and stockholders’ deficit Current liabilities: Accounts payable and accrued expenses $ 6,870 $ 6,654 Deferred revenues 503 561 Loan extensions 2,992 2,992 PIPE Notes 1,601 1,734 Yorkville Note 594 1,718 Deferred underwriter fee payable 3,262 3,250 Loan – related party 2,332 2,319 Total current liabilities 18,154 19,228 Other long-term liabilities 128 449 Total liabilities 18,282 19,677 Commitments and contingencies (Note 12) - - Stockholders’ deficit: Preferred Stock, par value $ 0.0001 , 1,000,000 shares authorized at March 31, 2025 and December 31, 2024; no shares issued and outstanding at March 31, 2025 and December 31, 2024 - - Common Stock, par value $ 0.0001 ; 100,000,000 shares authorized, 30,760,576 shares issued and 30,572,831 shares outstanding at March 31, 2025; 28,175,172 shares issued and 27,987,427 shares outstanding as of December 31, 2024 2 2 Additional paid-in capital 87,448 86,146 Treasury stock, at cost, 187,745 shares at March 31, 2025 and December 31, 2024 ( 529 ) ( 529 ) Accumulated deficit ( 103,471 ) ( 101,569 ) Total stockholders’ deficit ( 16,550 ) ( 15,950 ) Total liabilities and stockholders’ deficit $ 1,732 $ 3,727 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 ONEMEDNET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) 2025 2024 Three Months Ended March 31, 2025 2024 Revenue Subscription revenue $ 58 $ 201 Web imaging revenue 79 47 Total revenue 137 248 Cost of revenue 361 317 Gross margin ( 224 ) ( 69 ) Operating expenses General and administrative 1,362 1,358 Sales and marketing 290 229 Research and development 348 445 Total operating expenses 2,000 2,032 Loss from operations ( 2,224 ) ( 2,101 ) Other (income) expense, net Interest expense 31 42 Change in fair value of warrants 3 ( 7 ) Change in fair value of PIPE Notes ( 133 ) ( 20 ) Change in fair value of Yorkville Note ( 30 ) - Change in fair value crypto assets – Bitcoin 662 - Realized gain on sale of crypto assets – Bitcoin ( 531 ) - Change in fair value of derivative liability ( 324 ) - Other (income) expense - ( 7 ) Total other (income) expense, net ( 322 ) 8 Net loss $ ( 1,902 ) $ ( 2,109 ) Earnings per share: Basic and diluted net loss per common share outstanding $ ( 0.06 ) $ ( 0.08 ) Basic and diluted weighted average number of common shares outstanding 34,103,724 24,922,490 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 ONEMEDNET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (In thousands, except share data) (Unaudited) Three Months Ended March 31, 2025 Shares Amount Shares Amount Capital Deficit Deficit Additional Total Common Stock Treasury Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Deficit Balances as of December 31, 2024 28,175,172 $ 2 ( 187,745 ) $ ( 529 ) $ 86,146 $ ( 101,569 ) $ ( 15,950 ) Issuance of common stock in connection with September 2024 private placement 1,473,696 - - - - - - Partial conversion of Yorkville Note 1,111,708 - - - 1,094 - 1,094 Stock-based compensation expense - - - - 208 - 208 Net loss - - - - - ( 1,902 ) ( 1,902 ) Balances as of March 31, 2025 30,760,576 $ 2 ( 187,745 ) $ ( 529 ) $ 87,448 $ ( 103,471 ) $ ( 16,550 ) Three Months Ended March 31, 2024 Additional Total Common Stock Treasury Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Deficit Balances as of December 31, 2023 23,572,232 $ 2 - $ - $ 77,996 $ ( 91,440 ) $ ( 13,442 ) Balances 23,572,232 $ 2 - $ - $ 77,996 $ ( 91,440 ) $ ( 13,442 ) Issuance of common stock to settle deferred underwriter fee payable 277,778 - - - 242 - 242 Stock-based compensation expense - - - - 137 - 137 Repurchase of common stock - - ( 187,745 ) ( 529 ) - - ( 529 ) Net loss - - - - - ( 2,109 ) ( 2,109 ) Balances as of March 31, 2024 23,850,010 $ 2 ( 187,745 ) $ ( 529 ) $ 78,375 $ ( 93,549 ) $ ( 15,701 ) Balances 23,850,010 $ 2 ( 187,745 ) $ ( 529 ) $ 78,375 $ ( 93,549 ) $ ( 15,701 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 ONEMEDNET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) 2025 2024 Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 1,902 ) $ ( 2,109 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 12 11 Stock-based compensation expense 208 137 Change in fair value of warrant liabilities 3 ( 7 ) Change in fair value of PIPE Notes ( 133 ) ( 20 ) Change in fair value of Yorkville Note ( 30 ) - Change in fair value of crypto assets – Bitcoin 662 - Change in fair value of derivative liability ( 324 ) - Realized gain on sale of crypto assets – Bitcoin ( 531 ) - Gain on forgiveness of CEBA loan - ( 15 ) Non-cash interest 25 38 Change in operating assets and liabilities: Accounts receivable ( 34 ) ( 101 ) Prepaid expenses and other current assets ( 62 ) ( 63 ) Accounts payable and accrued expenses 216 380 Deferred revenues ( 58 ) 202 Net cash used in operating activities ( 1,948 ) ( 1,547 ) Cash flows from investing activities: Purchases of property and equipment ( 5 ) ( 6 ) Sales of crypto assets – Bitcoin 1,925 - Net cash provided by (used in) investing activities 1,920 ( 6 ) Cash flows from financing activities: Proceeds from issuance of shareholder loans - 1,300 Proceeds from line of credit borrowings - 410 Repayment of CEBA loan - ( 30 ) Net cash provided by financing activities - 1,680 Net (decrease) increase in cash and cash equivalents ( 28 ) 127 Cash and cash equivalents at beginning of period 172 47 Cash and cash equivalents at end of period $ 144 $ 174 Supplemental disclosures of cash flow information Cash paid for interest $ 5 $ - Cash paid for taxes $ - $ 18 Supplemental disclosures of non-cash investing and financing activities: Issuance of common stock in exchange for partial conversion of Yorkville Note $ 1,094 $ - Issuance of common stock to settle deferred underwriter fee payable $ - $ 242 Common stock repurchase consideration in accounts payable and accrued expenses $ - $ 529 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 ONEMEDNET CORPORATION NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business Organization and description of business OneMedNet Corporation (the “Company”) is a healthcare software company with solutions focused on digital medical image management, exchange, and sharing. The Company was founded in Delaware on November 20, 2015. The Company has been solely focused on creating solutions that simplify digital medical image management, exchange, and sharing. The Company has one wholly owned subsidiary, OneMedNet Technologies (Canada) Inc., incorporated on October 16, 2015 under the provisions of the Business Corporations Act of British Columbia whose functional currency is the Canadian dollar. The Company’s headquarters location is Eden Prairie, Minnesota. On November 7, 2023, Data Knights Merger Sub, Inc. (“Merger Sub”) , a Delaware corporation and a wholly owned subsidiary of Data Knights Acquisition Corp. (“Data Knights”), a Delaware corporation, merged with and into OneMedNet Solutions Corporation (formerly named OneMedNet Corporation) (“Legacy ONMD”), with Legacy ONMD surviving as a wholly owned subsidiary of Data Knights (the “Business Combination”). Following the consummation of the Business Combination, Data Knights was renamed to “OneMedNet Corporation.” Basis of presentation and consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain notes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal, recurring adjustments that are necessary to present fairly the Company’s results for the interim periods presented. The results from operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future annual or interim period. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2024 in the Company’s Annual Report on Form 10-K, filed with the SEC on April 15, 2025 (the “Form 10-K”). The interim unaudited condensed consolidated financial statements include the consolidated accounts of the Company’s wholly owned subsidiary, OneMedNet Technologies (Canada) Inc. All significant intercompany transactions have been eliminated in consolidation. Liquidity and going concern The Company has incurred recurring net losses since its inception, including $ 1.9 million for the three months ended March 31, 2025. In addition, the Company had an accumulated deficit of $ 103.5 million as of March 31, 2025. The Company’s cash and Bitcoin balance of $ 0.1 million and $ 0.8 million, respectively, as of March 31, 2025 is not adequate to fund its operations through at least twelve months from the date these condensed consolidated financial statements were available for issuance. Therefore, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. To continue and expand its operations, the Company will be required to, and management plans to, raise additional working capital through an equity or debt offerings and ultimately hopes to attain profitable operations to fulfill its operating and capital requirements for at least 12 months from the date of the issuance of the condensed consolidated financial statements. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to continue receiving working capital cash payments and generating cash flow from operations. 5 Risks and uncertainties The Company is subject to risks common to companies in the markets it serves, including, but not limited to, global economic and financial market conditions, fluctuations in customer demand, acceptance of new products, development by its competitors of new technological innovations, dependence on key personnel, and protection of proprietary technology. In addition, the Company has invested in Bitcoin, which is a crypto asset. Crypto assets are loosely regulated and there is no central marketplace for currency exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Certain crypto asset exchanges have been closed due to fraud, failure or security breaches. Any of the Company’s crypto assets that reside on an exchange that shuts down may be lost. Several factors may affect the price of crypto assets, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of crypto assets, and the use of crypto assets as a form of payment. There is no assurance that crypto assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of crypto asset payments by mainstream retail merchants and commercial businesses will continue to grow. As crypto assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing the crypto asset industry. To the extent future regulatory actions or policies limit the ability to exchange crypto assets or utilize them for payments, the demand for crypto assets could be reduced. Furthermore, regulatory actions may limit the ability of end-users to convert crypto assets into fiat currency (e.g., U.S. dollars) or use crypto assets to pay for goods and services. Such regulatory actions or policies could result in a reduction of demand, and in turn, a decline in the underlying crypto asset unit prices. The effect of any future regulatory change on crypto assets in general is impossible to predict, but such change could be substantial and adverse to the Company and the value of the Company’s investments in crypto assets. Crypto assets are not insured or protected under the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Company (“SIPC”). Accordingly, with respect to its Bitcoin investment, the Company does not enjoy the protections of other assets covered by the FDIC or SIPC. 2. Summary of Significant Accounting Policies Except as described below, the accounting policies of the Company are set forth in Note 2 to the consolidated financial statements contained in the Form 10-K, and the accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies therein. Emerging growth company status The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (1) is no longer an emerging growth company or (2) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. Recently adopted accounting pronouncements Effective January 1, 2025, the Company retrospectively adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) on an interim basis, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items. ASU 2023-07 also requires public entities with a single reportable segment to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 280, Segment Reporting . 6 Accounting pronouncements not yet adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740) (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. ASU 2023-09 is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of adopting ASU 2023-09 on the presentation of its condensed consolidated financial statements and footnotes. In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities, at annual and interim reporting periods, to disclose in a tabular format additional information about specific expense categories in the notes to the consolidated financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the presentation of its condensed consolidated financial statements and footnotes. 3. Segment Information Operating segments are defined as components of an entity for which separate discrete financial information is made available and that is regularly evaluated by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company is a healthcare software company with solutions focused on digital medical image management, exchange, and sharing. The Company’s operations are organized and reported as a single reportable segment, which includes all activities related to digital medical image management, exchange, and sharing. The Company’s CODM, its chief executive officer, reviews operating results on an aggregate basis and manages the operations as a single operating segment. The CODM evaluates performance and allocates resources based on operating loss that also is reported on the statements of operations as operating loss, and cash used in operations which is reported on the statements of cash flows. Significant expenses reviewed by the CODM include those that are presented in the condensed consolidated statements of operations. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets. Substantially all long-lived assets are located in the United States. The table below provides the Company’s total revenue by geographic region based on the location of the customer (in thousands): Schedule of Revenue by Geographic Region 2025 2024 Three Months Ended March 31, 2025 2024 Americas $ 119 $ 177 Europe and Middle East 4 71 Asia Pacific 14 - Total $ 137 $ 248 4. Crypto Assets Held The Company’s crypto assets are comprised solely of Bitcoin. In accordance with ASC Topic 820, Fair Value Measurement , the Company measures the fair value of its Bitcoin based on the quoted end-of-day price on the measurement date for a single Bitcoin on an active trading platform, River.com. Management has determined that River.com, an active exchange market, represents a principal market for Bitcoin and the end-of-day quoted price is both readily available and representative of fair value (Level 1 inputs). The following table sets forth the units held, cost basis, and fair value of its investments in crypto assets, as shown on the condensed consolidated balance sheets as of March 31, 2025 (in thousands): Schedule of Crypto Assets Held Units Cost Basis Fair Value Crypto assets held: Bitcoin 10 $ 657 $ 793 Total 10 $ 657 $ 793 7 The following table presents a reconciliation of the fair values of the Company’s investments in crypto assets for the three months ended March 31, 2025 (in thousands): Schedule of Crypto Assets Reconciliation of Fair Values Bitcoin Balance, December 31, 2024 $ 2,849 Dispositions ( 1,394 ) Unrealized loss, net ( 662 ) Balance, March 31, 2025 $ 793 Dispositions are the result of sales of Bitcoin to support operational cash requirements. During the three months ended March 31, 2025, the Company had Bitcoin dispositions of $ 1.4 million, inclusive of realized gains of $ 0.5 million. The Company uses a first-in, first-out methodology to assign costs to Bitcoin for purposes of the Bitcoin held and realized gains and losses disclosure above. Bitcoin is included in current assets in the condensed 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. 5. Convertible Debt PIPE Notes On June 28, 2023, Data Knights and certain investors (the “Purchasers”) entered into a Securities Purchase Agreement pursuant to which Data Knights issued and sold to the Purchasers senior secured convertible notes (the “PIPE Notes”), which are convertible into shares of our common stock, par value $0.0001 per share (“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 PIPE Notes matured on the first anniversary of the issuance date, or November 7, 2024. The majority of the PIPE Notes holders have elected to convert their PIPE Notes into shares of Common Stock. As of March 31, 2025 the PIPE Notes have not been repaid or converted and remain outstanding. The Company elected the fair value option (“FVO”) of accounting for its PIPE Notes. The estimated fair value adjustment is presented as a single line item within other (income) expense, net in the accompanying condensed consolidated statements of operations under the caption change in fair value of PIPE Notes. As of March 31, 2025 and December 31, 2024, the fair value of the PIPE Notes was $ 1.6 million and $ 1.7 million, respectively, which is included in current liabilities on the condensed consolidated balance sheets. Shareholder Loans From January to June 2024, the Company received gross proceeds of $ 1.6 million in connection with shareholder loans with a related party investor which are convertible into 2,123,312 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 condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024. 8 Yorkville Note On June 17, 2024, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership managed by Yorkville Advisors Global, LP (“Yorkville”) (see Note 7). Upon entry into the SEPA, the Company issued Yorkville a $ 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. Upon the occurrence and during the continuation of an event of default (as defined in the Yorkville Note), the Yorkville Note will become immediately due and payable. The issuance of the Common Stock upon conversion of the note and otherwise under the SEPA is capped at 19.9 % of the outstanding Common Stock as of June 18, 2024. Further, the note and SEPA include a beneficial ownership blocker for Yorkville such that Yorkville may not be deemed the beneficial owner of more than 4.99 % of 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 6). 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 March 31, 2025 and 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 (income) expense, net in the accompanying condensed consolidated statements of operations under the caption change in fair value of Yorkville Note. On December 20, 2024, Yorkville provided notice specifying their request to convert $ 0.2 million of outstanding principal into 245,007 shares of 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, and the fair value of $ 0.3 million was recorded as an equity forward sale contract and included in additional paid-in-capital in stockholders’ deficit in the condensed consolidated balance sheets as it met the criteria for equity accounting under ASC 815. These shares were issued to Yorkville on January 22, 2025. On January 23, 2025, Yorkville provided notice specifying their request to convert $ 0.6 million of outstanding principal into 650,026 shares of Common Stock, which was based on the Variable Price of $ 0.9230 . These shares were issued to Yorkville on January 24, 2025, and reclassified to stockholders’ deficit at fair value of $ 0.9 million in the condensed consolidated balance sheet as of March 31, 2025. On January 27, 2025, Yorkville provided notice specifying their request to convert $ 0.2 million of outstanding principal into 216,675 shares of Common Stock, which was based on the Variable Price of $ 0.9230 . These shares were issued to Yorkville on January 28, 2025, and reclassified to stockholders’ deficit at fair value of $ 0.2 million in the condensed consolidated balance sheet as of March 31, 2025. As of March 31, 2025 and December 31, 2024, the fair value of the Yorkville Note was $ 0.6 million and $ 1.7 million, respectively, which is included in current liabilities on the condensed consolidated balance sheets. 9 6. Stockholders’ Deficit Common Stock On June 17, 2024, the Company and Yorkville entered into the SEPA. Under the SEPA, the Company has the right to sell to Yorkville up to $ 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 Stock. 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. The Company has not yet filed a registration statement with the SEC for the resale by Yorkville of the shares of Common Stock issued under the SEPA, which is deemed an event of default under the SEPA. As a result, the full unpaid principal and accrued interest amount of the Yorkville Note, plus a payment premium of 10 %, may become immediately due and payable at Yorkville’s election. As of March 31, 2025, 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 Common Stock. The fair value of the derivative liability related to the embedded put option was estimated at $ 0.1 million and $ 0.4 million as of March 31, 2025 and December 31, 2024, respectively. The derivative liability is classified in other long-term liabilities on the condensed consolidated balance sheets. The estimated remeasurement adjustment is presented as a single line item within other (income) expense, net in the accompanying condensed consolidated statements of operations under the caption change in fair value of derivative liability. The embedded forward option was deemed to have no value as there were no notices for the sale of Common Stock as of March 31, 2025 and December 31, 2024. 10 7. Net Loss per Share For the three months ended March 31, 2025 and 2024, the weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share is the same. In computing diluted net loss per share for the three months ended March 31, 2025 and 2024, the Company excluded the following potentially dilutive securities, as the effect would be anti-dilutive and reduce the net loss per share calculated for each period: Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss 2025 2024 Three Months Ended March 31, 2025 2024 Options to purchase Common Stock 147,000 147,000 Unvested restricted stock units 1,912,895 1,708,023 Warrants for Common Stock 12,364,114 12,181,019 Convertible debt 5,468,831 2,799,420 Deferred underwriter fees 3,174,999 3,174,999 Loan extensions 3,274,182 3,274,182 Total 26,342,021 23,284,643 8. Stock-Based Compensation The Company recorded stock-based compensation expense in the following categories on the accompanying condensed consolidated statements of operations for the periods presented (in thousands): Schedule of Stock-based Compensation Expense 2025 2024 Three Months Ended March 31, 2025 2024 Cost of revenue $ 3 $ 4 General and administrative 201 127 Sales and marketing 1 2 Research and development 3 4 Total stock-based compensation expense $ 208 $ 137 9. Stock Warrants The Company has the following warrants outstanding for the periods presented: Schedule of Warrants Outstanding March 31, 2025 December 31, 2024 As of March 31, 2025 December 31, 2024 Liability Classified Warrants Business Combination Warrants 585,275 585,275 PIPE Warrants 95,744 95,744 Subtotal 681,019 681,019 Equity Classified Warrants Public Warrants 11,500,000 11,500,000 Private Placement Warrants 2,199,939 2,199,939 Helena Termination Warrants 50,000 50,000 Subtotal 13,749,939 13,749,939 Grand Total 14,430,958 14,430,958 Warrants outstanding 14,430,958 14,430,958 11 10. Fair Value Measurements The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, inclusive of related party (in thousands): Schedule of Assets and Liabilities Measured at Fair Value Level 1 Level 2 Level 3 Total March 31, 2025 Level 1 Level 2 Level 3 Total Assets: Investment in crypto assets – Bitcoin $ 793 $ - $ - $ 793 Total assets, at fair value $ 793 $ - $ - $ 793 Liabilities: Business Combination Warrants $ - $ - $ 15 $ 15 PIPE Warrants - - 3 3 PIPE Notes - - 1,601 1,601 Yorkville Note - - 594 594 SEPA derivative liability - - 110 110 Total liabilities, at fair value $ - $ - $ 2,323 $ 2,323 Level 1 Level 2 Level 3 Total December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Investment in crypto assets – Bitcoin $ 2,849 $ - $ - $ 2,849 Total assets, at fair value $ 2,849 $ - $ - $ 2,849 Liabilities: Business Combination Warrants $ - $ - $ 12 $ 12 PIPE Warrants - - 3 3 PIPE Notes - - 1,734 1,734 Yorkville Note - - 1,718 1,718 SEPA derivative liability - - 434 434 Total liabilities, at fair value $ - $ - $ 3,901 $ 3,901 Business Combination Warrants and PIPE Warrants The following table presents the changes in the Business Combination Warrants and PIPE Warrants measured at fair value during the three months ended March 31, 2025 (in thousands): Schedule of Warrants and Notes Measured at Fair Value Business Combination Warrants PIPE Warrants Balance, December 31, 2024 $ 12 $ 3 Changes in fair value 3 - Balance, March 31, 2025 $ 15 $ 3 The Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at March 31, 2025 using the Black-Scholes option-pricing model with the following assumptions: Schedule of Fair Value Assumptions and Valuation PIPE Business Combination As of March 31, 2025 PIPE Business Combination Warrants Warrants Stock price $ 0.54 $ 0.54 Exercise price $ 10.00 $ 11.50 Expected volatility 77.6 % 77.6 % Weighted average risk-free rate 3.9 % 3.9 % Expected dividend yield - - Warrants measurement input - - Expected term (in years) 3.6 3.7 12 The Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at December 31, 2024 using the Black-Scholes option-pricing model with the following assumptions: PIPE Business Combination As of December 31, 2024 PIPE Business Combination Warrants Warrants Stock price $ 1.36 $ 1.36 Exercise price $ 10.00 $ 11.50 Expected volatility 48.3 % 48.3 % Weighted average risk-free rate 4.3 % 4.3 % Expected dividend yield - - Warrants measurement input - - Expected term (in years) 3.9 3.9 PIPE Notes and Yorkville Note The following table presents the changes in the PIPE Notes and Yorkville Note measured at fair value during the three months ended March 31, 2025 (in thousands): PIPE Notes Yorkville Note Balance, December 31, 2024 $ 1,734 $ 1,718 Conversions into Common Stock - ( 1,094 ) Changes in fair value ( 133 ) ( 30 ) Balance, March 31, 2025 $ 1,601 $ 594 The estimated fair values of the PIPE Notes and Yorkville Note are determined based on the aggregated, probability-weighted average of the outcomes of certain possible scenarios. The combined value of the probability-weighted average of those outcomes is then discounted back to each reporting period in which the convertible notes are outstanding, in each case, based on a risk-adjusted discount rate estimated based on the implied discount rate. The discount rate was held constant over the valuation periods given the fact pattern associated with the Company and the stage of development. SEPA Derivative Liability The following table presents the changes in the SEPA derivative liability measured at fair value during the three months ended March 31, 2025 (in thousands): Yorkville SEPA Balance, December 31, 2024 $ 434 Changes in fair value ( 324 ) Balance, March 31, 2025 $ 110 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: 2025 2024 As of March 31, December 31, 2025 2024 Expected draws (in thousands) $ 5,000 $ 5,000 Starting stock price $ 0.54 $ 1.36 Expected volatility 160.0 % 132.5 % Risk-free rate 4.0 % 4.2 % Derivative liability 4.0 % 4.2 % 13 11. Related Party Transactions PIPE Notes and Warrants Data Knights issued and sold PIPE Notes in connection with the Business Combination, which are convertible into shares of Common Stock. Total proceeds raised from the PIPE Notes were $ 1.5 million, of which $ 1.0 million was with related party investors. 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. Shareholder Loans In addition to the convertible shareholder loans described in Note 5, the Company also issued $ 0.7 million in non-convertible shareholder loans with related party investors during 2023 and 2024. These loans bear an interest rate of 8.0 % with a maturity date one year from issuance. The following table summarizes shareholder loans outstanding for the periods presented (in thousands): Schedule of Shareholder Loans Outstanding March 31, 2025 December 31, 2024 As of March 31, 2025 December 31, 2024 Shareholder loans – nonconvertible $ 654 $ 654 Shareholder loans – convertible 1,600 1,600 Accrued interest 78 65 Total loan – related party $ 2,332 $ 2,319 Loan Extensions The Company assumed Data Knights’ liabilities, which included existing loan extensions to related parties. The loan extensions were to be either repaid in cash or, at the option of the lender, exchanged for a fixed amount of Common Stock at a price of $ 10.00 per share upon the closing of a business combination or a similar event. At the closing of the Business Combination, all lenders provided notice to have their loans converted into shares upon the filing of a registration statement on Form S-1 with the SEC. As of March 31, 2025 and December 31, 2024, a registration statement has not yet been declared effective by the SEC, and a balance of $ 3.0 million remains outstanding on the Company’s condensed consolidated balance sheets. 12. 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 $ 2 thousand of rent expense, including common tenant costs and cancellation costs, during the three months ended March 31, 2025 and 2024, respectively. Litigation From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recognized, if and when it is probable that a liability has been incurred and the amount can be reasonably estimated. The Company was not subject to any material legal proceedings during the three months ended March 31, 2025 and 2024. 13. Subsequent Events The Company has evaluated subsequent events occurring through May 14, 2025, the date the condensed consolidated financial statements were issued, for events requiring recording or disclosure in the Company’s condensed consolidated financial statements. Between April and May 2025, the Company entered into securities purchase agreements with two related party investors, pursuant to which the Company agreed to issue and sell 1,904,762 shares of its Common Stock at a price of $ 0.42 per share. The Company received gross proceeds of approximately $ 0.8 million from these transactions. 14 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis are intended to help you understand our business, financial condition, results of operations, liquidity, and capital resources. You should read this discussion in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and in the Form 10-K. In addition to historical financial analysis, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Cautionary Note Regarding Forward Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, risks and uncertainties, including those set forth under “Risk Factors” included elsewhere (or incorporated by reference) in this Report and in the Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “OneMedNet”, “we”, “us”, “our,” and “the Company” are intended to mean the business and operations of OneMedNet Corporation and its consolidated subsidiary following the completion of the business combination on November 7, 2023 involving OneMedNet Solutions Corporation (formerly named OneMedNet Corporation) (“Legacy ONMD”), with Legacy ONMD surviving as a wholly owned subsidiary of Data Knights Acquisition Corp. (“Data Knights”) (the “Business Combination”). Company Overview We provide innovative solutions that unlock the significant value contained within the clinical image archives of healthcare providers. Employing our OneMedNet iRWD™ solution, which securely de-identifies, searches, and curates a data archive locally, bringing a wealth of internal and third-party research opportunities to providers. By leveraging our extensive federated provider network, together with our technology and in-house clinical expertise, OneMedNet is positioned to meet the most rigorous Real World Data life science requirements. Key Components of Consolidated Statements of Operations Revenue The Company generates revenue from two streams: (1) iRWD, which provides regulatory grade imaging and clinical data in the pharmaceutical, device manufacturing, contract research organizations, and AI markets and (2) BEAM, which is a medical imaging exchange platform between hospital/healthcare systems, imaging centers, physicians and patients. iRWD is sold on a fixed fee basis based on the number of data units and the cost per data unit committed to in the customer contract. Revenue is recognized when the data is delivered to the customer. BEAM revenue is subscription-based revenue that is recognized ratably over the subscription period committed to by the customer. The Company invoices its BEAM customers quarterly or annually in advance with the customer contracts automatically renewing unless the customer issues a cancellation notice. The Company excludes from revenue taxes collected from a customer that are assessed by a governmental authority and imposed on and concurrent with a specific revenue-producing transaction. The transaction price for the products is the invoiced amount. Advanced billings from contracts are deferred and recognized as revenue when earned. Deferred revenue consists of payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. The Company receives payments from customers based upon contractual billing schedules. Accounts receivable is recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts typically range from zero to 90 days, with typical terms of 30 days. Cost of Revenue Our cost of revenue is composed of our distinct performance obligations of hosting, labor, and data cost. 15 General and Administrative General and administrative functions include finance, legal, operations, human resources, and information technology support. These functions include costs for items such as salaries and benefits and other personnel-related costs, maintenance and supplies, professional fees for external legal, accounting, and other consulting services, and depreciation expense. Research and Development Costs incurred in the research and development of our products are expensed as incurred. Research and development costs include personnel, contracted services, materials, and indirect costs involved in the design and development of new products and services, as well as hosting expense. Sales and Marketing Our sales and marketing costs consist of labor and tradeshow costs. Interest Expense Interest expense consists of interest incurred on our outstanding debt facilities, including loans with related parties, deferred underwriter fees and insurance premiums paid in exchange for a note payable. Other (Income) Expenses, Net Other (income) expenses, net, primarily includes the change in fair value of PIPE Notes and change in fair value of Yorkville Note (as defined below) for which we have elected the fair value option of accounting. Convertible notes payable, which include the Yorkville Note and PIPE Notes issued to related parties, including accrued interest and contingently issuable warrants, contain embedded derivatives, including settlement of the contingent conversion features, which require bifurcation and separate accounting. Accordingly, we have elected to measure the entire contingently convertible debt instruments, including accrued interest, at fair value. These debt instruments were initially recorded at fair value as liabilities and are subsequently re-measured at fair value on our condensed consolidated balance sheet at the end of each reporting period and at settlement, as applicable. Other income or expenses, net, also includes changes in fair value of warrants which are treated as liability instruments measured at fair value for accounting purposes, initially recorded at fair value and subsequently re-measured to fair value on our condensed consolidated balance sheets at the end of each reporting period. The changes in the fair value of these debt and liability instruments are recorded in changes in fair value, included as a component of other (income) expenses, net, in the condensed consolidated statements of operations. Other (income) expenses, net, also includes change in fair value and realized gains of our Bitcoin holdings, as well as foreign exchange and tax expenses related to the Company’s operations and revenue outside of the United States. 16 Results of Operations Comparison of the three months ended March 31, 2025 and 2024 The following table sets forth our condensed consolidated statements of operations data for the periods presented: Three Months Ended March 31, Change 2025 2024 $ % Revenue Subscription revenue $ 58 $ 201 $ (143 ) -71 % Web imaging revenue 79 47 32 68 % Total revenue 137 248 (111 ) -45 % Cost of revenue 361 317 44 14 % Gross margin (224 ) (69 ) (155 ) 225 % Operating expenses General and administrative 1,362 1,358 4 0 % Sales and marketing 290 229 61 27 % Research and development 348 445 (97 ) -22 % Total operating expenses 2,000 2,032 (32 ) -2 % Loss from operations (2,224 ) (2,101 ) (123 ) 6 % Other (income) expense, net Interest expense 31 42 (11 ) -26 % Change in fair value of warrants 3 (7 ) 10 -143 % Change in fair value of PIPE Notes (133 ) (20 ) (113 ) 565 % Change in fair value of Yorkville Note (30 ) - (30 ) N/A Change in fair value of crypto assets – Bitcoin 662 - 662 N/A Realized gain on sale of crypto assets – Bitcoin (531 ) - (531 ) N/A Change in fair value of derivative liability (324 ) - (324 ) N/A Other (income) expense - (7 ) 7 -100 % Total other (income) expense, net (322 ) 8 (330 ) -4,125 % Net loss $ (1,902 ) $ (2,109 ) $ 207 -10 % Revenue Three Months Ended March 31, Change 2025 2024 $ % Subscription revenue (Beam) $ 58 $ 201 $ (143 ) -71 % Web imaging revenue (Real-World Data) 79 47 (30 ) 68 % Total $ 137 $ 248 $ (111 ) -45 % Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the three months ended March 31, 2025, overall revenue decreased by 45%. The primary driver for the decrease in subscription revenue was the planned discontinuation of the BEAM platform in 2025. As we move away from the BEAM platform to focus on iRWD sales, we have stopped renewals for most of our customers leading to a $0.1 million decrease for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The primary driver for the increase in web imaging revenue was due to our enhanced focus on iRWD sales leading to increased customer deliveries during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. 17 Cost of Revenue Three Months Ended March 31, 2025 2024 Cost of revenue 361 317 % of revenue 264 % 128 % For the three months ended March 31, 2025, our cost of revenue as a percentage of revenue increased by 136% compared to the prior year period. The increase is primarily driven by the planned transition away from the BEAM platform, which has resulted in lower subscription revenue without the benefit of cost savings until the platform is discontinued later in 2025. The increase is also driven by higher iRWD data and personnel costs to support anticipated iRWD sales growth. General and Administrative General and administrative expenses for the three months ended March 31, 2025, were generally consistent with the general and administrative expenses for the three months ended March 31, 2024. Sales and Marketing Our sales & marketing expense increased $61 thousand, or 27%, to $290 thousand for the three months ended March 31, 2025, from $229 thousand for the three months ended March 31, 2024. The increase is primarily due to an increase in personnel costs of $101 thousand resulting from increased headcount, which is partially offset by a $52 thousand decrease in consulting expenses. Research and development Our research and development expense decreased $97 thousand, or 22%, to $348 thousand for the three months ended March 31, 2025, from $445 thousand for the three months ended March 31, 2024. The decrease is primarily due to a decrease in personnel costs of $69 thousand and software and hosting expenses of $29 thousand. These decreases are driven by the focus on iRWD sales growth and less resources being allocated to research and development efforts. Interest Expense During the three months ended March 31, 2025 and 2024, interest expense was primarily comprised of interest expense on loans made by related parties (Management and Directors) and interest expense on the portion of deferred underwriter fees relating to the Business Combination that are payable in cash. Change in Fair Value of Warrants At the closing of the Business Combination in 2023, we issued warrants in connection with the PIPE financing and separately assumed certain private warrants from Data Knights. We determined that these warrants should be accounted for as liabilities, which are adjusted to fair value at the end of each reporting period. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock . Change in Fair Value of PIPE Notes At the closing of the Business Combination in 2023, we issued PIPE Notes that are convertible into shares of Common Stock and carried at fair value. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock . Change in Fair Value of Yorkville Note In June 2024, we issued the Yorkville Note which is convertible into shares of Common Stock and carried at fair value. The change in fair value is mainly due to the resulting fluctuations in the market price of shares of our Common Stock . 18 Change in Fair Value of Bitcoin The change in fair value of Bitcoin during the three months ended March 31, 2025 relates to the mark-to-market adjustment of Bitcoin, which we began strategically investing in using excess cash from our private placement transactions in the third quarter of 2024. As of March 31, 2024, we did not have any Bitcoin holdings. Realized Gain on Sale of Crypto Assets – Bitcoin The realized gain on sale of crypto assets – Bitcoin during the three months ended March 31, 2025 reflects the increase in the price of Bitcoin upon sale compared to its purchase price. As of March 31, 2024, we did not have any Bitcoin holdings. Change in Fair Value of Derivative Liability The change in fair value of derivative liability during the three months ended March 31, 2025 represents the remeasurement adjustment of the SEPA put option with Yorkville. The fair value is primarily driven by expected sales of our Common Stock to Yorkville and projections on the future path of the Company’s stock price during the commitment period. During the three months ended March 31, 2024, we did not have the SEPA arrangement which explains the change between the periods. Liquidity and Capital Resources As of March 31, 2025, our principal sources of liquidity were proceeds from related party investors and private placement transactions and cash received from customers. The following table shows net cash and cash equivalents used in operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities during the periods presented: Three Months Ended March 31, 2025 2024 Net cash provided by (used in) Operating activities $ (1,948 ) $ (1,547 ) Investing activities 1,920 (6 ) Financing activities - 1,680 Operating Activities Our net cash and cash equivalents used in operating activities consists of net loss adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation expense, changes in fair value of liability classified financial instruments, as well as changes in operating assets and liabilities. The primary changes in working capital items, such as the changes in accounts receivable and deferred revenue, result from the difference in timing of payments from our customers related to contract performance obligations. This may result in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the fulfillment of the performance obligation. During the three months ended March 31, 2025, we used $1.9 million of cash in operating activities, primarily resulting from our net loss of $1.9 million and non-cash charges of $0.1 million, offset by cash provided by changes in our operating assets and liabilities of $0.1 million. During the three months ended March 31, 2024, we used $1.5 million of cash in operating activities, primarily resulting from our net loss of $2.1 million, offset by non-cash charges of $0.1 million and cash provided by changes in our operating assets and liabilities of $0.4 million. 19 Investing Activities Our investing activities have consisted primarily of property and equipment purchases and Bitcoin purchases and sales. During the three months ended March 31, 2025, net cash provided by investing activities was $1.9 million, which primarily consisted of $1.9 million in sales of Bitcoin. During the three months ended March 31, 2024, net cash used in investing activities was $6 thousand, consisting of purchases of property and equipment. Financing Activities During the three months ended March 31, 2025, we did not engage in any financing activities. During the three months ended March 31, 2024, net cash provided by financing activities was $1.7 million, which primarily consisted of $1.3 million and $0.4 million of proceeds from shareholder loans and our revolving line of credit, respectively. Contractual Obligations and Commitments and Going Concern Outlook Currently, management does not believe that our cash and cash equivalents is sufficient to meet our foreseeable cash needs for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support the expansion of our infrastructure and workforce, interest expense and minimum contractual obligations. Management intends to raise cash for operations through debt and equity offerings. As a result of the Company’s recurring loss from operations and the need for additional financing to fund its operating and capital requirements there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, and the cost of any future acquisitions of technology or businesses. In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. The following table summarizes our current and long-term material cash requirements as of March 31, 2025: Payments due in: Total Less than 1 year 1-3 years Accounts payable & accrued expenses $ 6,870 $ 6,870 $ - Loan extensions 2,992 2,992 - Deferred underwriter fee payable 3,262 3,262 - Loan, related party 2,332 2,332 - PIPE Notes 1,601 1,601 - Yorkville Note 594 594 - $ 17,651 $ 17,651 $ - 20 Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements which have been prepared in accordance with GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenue, results of operations, and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our results of operations and the value of our assets cannot be determined with certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates. For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K, the notes to our audited financial statements appearing in the Form 10-K, and the notes to the financial statements appearing elsewhere in this Report. Except as described in this Report, there have been no material changes to these critical accounting policies and estimates through March 31, 2025 from those discussed in the Form 10-K. Recently Issued and Adopted Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements included elsewhere in this Report. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act), as of March 31, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures were ineffective because of material weaknesses in our internal controls over financial reporting which were not designed properly to ensure proper identification of non-routine transactions and ensure appropriate segregation of duties. Material Weaknesses As disclosed elsewhere in this Report, we completed the Business Combination on November 7, 2023. Prior to the Business Combination, Data Knights, our predecessor, was a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization or similar business combination with one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date, because Data Knights’ operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination. As a result, management is aware of material weaknesses in the Company’s internal control related to user access/segregation of duties, lack of a formalized control environment and oversight of controls over financial reporting, errors in accounting for non-routine transactions, and lack of record keeping. Due to the limited transactional volume currently experienced, combined with our financial limitations, we do not currently have an expanded accounting department that would allow us to better segregate duties. Over time, as we continue to grow and add accounting staff, we expect to continue to enhance our internal control structure, including appropriate segregation of duties. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 21 PART II – OTHER INFORMATION Item 1. Legal Proceedings. We may be subject from time to time to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief. We are not presently party to any legal proceedings that, in the opinion of management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Item 1A. Risk Factors. In addition to the other information set forth in this Report, you should carefully consider the factors discussed in the “Risk Factors” in the Form 10-K and our other public filings, which could materially affect our business, financial condition or future results. There have been no material changes from risk factors previously disclosed in “Risk Factors” in the Form 10-K and our other public filings. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. During the three months ended March 31, 2025, we did not have sales of unregistered securities not previously included in a Current Report on Form 8-K Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not applicable. Item 5. Other Information. During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. 22 Item 6. Exhibits. The following documents are included as exhibits to this Quarterly Report on Form 10-Q: Exhibit Number Description 3.1 Third Amended and Restated Certificate of Incorporation of OneMedNet Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K, filed with the SEC on November 13, 2023). 3.2 Amended and Restated Bylaws of OneMedNet Corporation (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 13, 2023). 31.1* Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1# Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2# Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Filed herewith. + Management or compensatory agreement or arrangement. # The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 14, 2025. OneMedNet Corporation By: /s/ Robert Golden Robert Golden Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer) 24