OneMedNet (ONMD) - 2025 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section clarifies that the report contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially Overview of Forward-Looking Statements This section clarifies that the report contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements, which are predictions based on current expectations and projections about future events and financial trends[8] - Forward-looking statements are identifiable by terms such as 'anticipate,' 'believe,' 'continue,' 'could,' 'depends,' 'estimate,' 'expects,' 'intend,' 'may,' 'ongoing,' 'plan,' 'potential,' 'predict,' 'project,' 'should,' 'will,' 'would' or their negatives[8] Risks and Uncertainties The Company's operations involve numerous risks and uncertainties, many outside its control, which could materially affect its financial results and future prospects - Operations involve risks and uncertainties, many outside control, that could materially affect results[9] - Key risks include projected financial position, cash burn rate, ability to continue as a going concern, ability to raise additional capital, ability to reverse revenue decline, intellectual property protection, reliance on third-party suppliers, competition, personnel retention, potential lawsuits, and changes in demand due to geopolitical/macroeconomic conditions[10][14] Part I. Financial Information This section presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements This section presents OneMedNet Corporation's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and comprehensive explanatory notes Unaudited Condensed Consolidated Balance Sheets This table provides a snapshot of the Company's financial position at specific points in time, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (in thousands) | Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $144 | $172 | | Investment in crypto assets – Bitcoin | $793 | $2,849 | | Total current assets | $1,631 | $3,619 | | Total assets | $1,732 | $3,727 | | Total current liabilities | $18,154 | $19,228 | | Total liabilities | $18,282 | $19,677 | | Total stockholders' deficit | $(16,550) | $(15,950) | Unaudited Condensed Consolidated Statements of Operations This table details the Company's revenues, expenses, and net loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations (in thousands) | Item | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Subscription revenue | $58 | $201 | | Web imaging revenue | $79 | $47 | | Total revenue | $137 | $248 | | Cost of revenue | $361 | $317 | | Gross margin | $(224) | $(69) | | Total operating expenses | $2,000 | $2,032 | | Loss from operations | $(2,224) | $(2,101) | | Total other (income) expense, net | $(322) | $8 | | Net loss | $(1,902) | $(2,109) | | Basic and diluted net loss per common share outstanding | $(0.06) | $(0.08) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit This table outlines changes in the Company's equity components, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Deficit (in thousands, except share data) | Item | Balance as of Dec 31, 2024 (in thousands) | Issuance of common stock (private placement) (in thousands) | Partial conversion of Yorkville Note (in thousands) | Stock-based compensation expense (in thousands) | Net loss (in thousands) | Balance as of Mar 31, 2025 (in thousands) | | :-------------------------------- | :------------------------- | :----------------------------------- | :--------------------------------- | :------------------------------- | :--------- | :------------------------- | | Common Stock Shares | 28,175,172 | 1,473,696 | 1,111,708 | - | - | 30,760,576 | | Common Stock Amount | $2 | $- | $- | $- | $- | $2 | | Additional Paid-in Capital | $86,146 | $- | $1,094 | $208 | $- | $87,448 | | Accumulated Deficit | $(101,569) | $- | $- | $- | $(1,902) | $(103,471) | | Total Stockholders' Deficit | $(15,950) | $- | $1,094 | $208 | $(1,902) | $(16,550) | Changes in Stockholders' Deficit (in thousands, except share data) | Item | Balance as of Dec 31, 2023 (in thousands) | Issuance of common stock (underwriter fee) (in thousands) | Stock-based compensation expense (in thousands) | Repurchase of common stock (in thousands) | Net loss (in thousands) | Balance as of Mar 31, 2024 (in thousands) | | :-------------------------------- | :------------------------- | :----------------------------------------- | :------------------------------- | :------------------------- | :--------- | :------------------------- | | Common Stock Shares | 23,572,232 | 277,778 | - | - | - | 23,850,010 | | Common Stock Amount | $2 | $- | $- | $- | $- | $2 | | Additional Paid-in Capital | $77,996 | $242 | $137 | $- | $- | $78,375 | | Accumulated Deficit | $(91,440) | $- | $- | $- | $(2,109) | $(93,549) | | Total Stockholders' Deficit | $(13,442) | $242 | $137 | $(529) | $(2,109) | $(15,701) | Unaudited Condensed Consolidated Statements of Cash Flows This table summarizes the Company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,948) | $(1,547) | | Net cash provided by (used in) investing activities | $1,920 | $(6) | | Net cash provided by financing activities | $- | $1,680 | | Net (decrease) increase in cash and cash equivalents | $(28) | $127 | | Cash and cash equivalents at end of period | $144 | $174 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Description of Business This note describes OneMedNet Corporation's core business, financial performance, going concern status, and investment in crypto assets - OneMedNet Corporation is a healthcare software company focused on digital medical image management, exchange, and sharing, founded in Delaware on November 20, 2015[30] - The Company incurred a net loss of $1.9 million for the three months ended March 31, 2025, and had an accumulated deficit of $103.5 million, raising substantial doubt about its ability to continue as a going concern[35] - Management plans to raise additional working capital through equity or debt offerings to fund operations for at least 12 months[36] - The Company has invested in Bitcoin, a crypto asset, which is subject to high price volatility, regulatory risks, and is not insured by FDIC or SIPC[38][39][41] 2. Summary of Significant Accounting Policies This note outlines the significant accounting policies and recent accounting pronouncements relevant to the Company's financial reporting - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised accounting standards[43] - Effective January 1, 2025, the Company retrospectively adopted ASU 2023-07, Segment Reporting, requiring disclosures about reportable segments' significant expenses[44] - The Company is evaluating the impact of ASU 2023-09 (Improvements to Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Disaggregation of Income Statement Expenses, effective after Dec 15, 2026)[45][46] 3. Segment Information This note details the Company's operating segments and revenue distribution across different geographic regions - The Company operates and reports as a single reportable segment focused on digital medical image management, exchange, and sharing[47] Total Revenue by Geographic Region (in thousands) | Region | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------ | :-------------------------------- | :-------------------------------- | | Americas | $119 | $177 | | Europe and Middle East | $4 | $71 | | Asia Pacific | $14 | $- | | Total | $137 | $248 | 4. Crypto Assets Held This note provides details on the Company's investment in Bitcoin, including cost basis, fair value, and disposition activities Investment in Crypto Assets – Bitcoin (in thousands) | Item | Units | Cost Basis (in thousands) | Fair Value (in thousands) | | :---------- | :---- | :--------- | :--------- | | Bitcoin | 10 | $657 | $793 | Reconciliation of Fair Values of Bitcoin (in thousands) | Item | Bitcoin (in thousands) | | :-------------------------- | :------ | | Balance, December 31, 2024 | $2,849 | | Dispositions | $(1,394) | | Unrealized loss, net | $(662) | | Balance, March 31, 2025 | $793 | - Bitcoin dispositions of $1.4 million during Q1 2025, including $0.5 million in realized gains, were made to support operational cash requirements[50] 5. Convertible Debt This note details the Company's convertible debt instruments, including PIPE Notes, shareholder loans, and the Yorkville Note, and their fair value changes - PIPE Notes, convertible into common stock, had a fair value of $1.6 million as of March 31, 2025, down from $1.7 million at December 31, 2024[51][52] - Shareholder loans from a related party investor totaled $1.6 million, convertible into 2,123,312 shares of Common Stock at $0.7535 per share[53] - The Yorkville Note, issued for $1.35 million cash, is convertible into Common Stock. Events of default occurred due to failure to file Form 10-Q and a resale registration statement, potentially increasing the interest rate to 18% and making the principal immediately due[55] - Yorkville converted $0.2 million, $0.6 million, and $0.2 million of outstanding principal into 245,007, 650,026, and 216,675 shares of Common Stock, respectively, in late 2024 and early 2025[57][58][59] - The Yorkville Note's fair value decreased from $1.7 million at December 31, 2024, to $0.6 million at March 31, 2025[60] 6. Stockholders' Deficit This note describes the Company's Standby Equity Purchase Agreement (SEPA) with Yorkville and the related derivative liability - The Company has a Standby Equity Purchase Agreement (SEPA) with Yorkville, allowing it to sell up to $25.0 million of Common Stock over 24 months, subject to conditions including an effective resale shelf registration statement[61][62] - An event of default occurred under the SEPA due to the Company's failure to file a resale registration statement for Yorkville's shares by August 30, 2024[66] - The SEPA was accounted for as a liability under ASC 815, with the derivative liability related to the embedded put option estimated at $0.1 million as of March 31, 2025, down from $0.4 million at December 31, 2024[67] 7. Net Loss per Share This note lists potentially dilutive securities excluded from the calculation of diluted net loss per share Potentially Dilutive Securities Excluded from Diluted Net Loss per Share | Item | Three Months Ended March 31, 2025 (shares) | Three Months Ended March 31, 2024 (shares) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | 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 This note details the stock-based compensation expense recognized across various categories for the reported periods Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | 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 This note provides a breakdown of the Company's outstanding liability-classified and equity-classified stock warrants Warrants Outstanding | Type of Warrant | As of March 31, 2025 (warrants) | As of December 31, 2024 (warrants) | | :-------------------------- | :------------------- | :-------------------- | | Liability Classified Warrants | 681,019 | 681,019 | | Equity Classified Warrants | 13,749,939 | 13,749,939 | | Grand Total | 14,430,958 | 14,430,958 | 10. Fair Value Measurements This note presents the fair value measurements for the Company's crypto assets, warrants, convertible debt, and derivative liabilities Assets and Liabilities Measured at Fair Value (in thousands) | Item | March 31, 2025 (Total, in thousands) | December 31, 2024 (Total, in thousands) | | :-------------------------------- | :--------------------- | :------------------------ | | Investment in crypto assets – Bitcoin | $793 | $2,849 | | Business Combination Warrants | $15 | $12 | | PIPE Warrants | $3 | $3 | | PIPE Notes | $1,601 | $1,734 | | Yorkville Note | $594 | $1,718 | | SEPA derivative liability | $110 | $434 | | Total liabilities, at fair value | $2,323 | $3,901 | - Fair value of Business Combination Warrants increased from $12 thousand to $15 thousand, while PIPE Warrants remained at $3 thousand, from December 31, 2024, to March 31, 2025[72] - The fair value of PIPE Notes decreased by $133 thousand, and Yorkville Note decreased by $30 thousand due to conversions and changes in fair value during the three months ended March 31, 2025[74] - The SEPA derivative liability's fair value decreased by $324 thousand to $110 thousand as of March 31, 2025, primarily due to changes in expected stock price projections[75] 11. Related Party Transactions This note discloses transactions with related parties, including PIPE Notes, warrants, shareholder loans, and loan extensions - Related party investors contributed $1.0 million of the $1.5 million PIPE Notes and received 63,829 of the 95,744 PIPE Warrants[76] Shareholder Loans Outstanding (in thousands) | Loan Type | As of March 31, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :-------------------------- | :------------------- | :-------------------- | | 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 to related parties totaling $3.0 million remain outstanding as of March 31, 2025, pending the effectiveness of a registration statement for conversion into common stock[78] 12. Commitments and Contingencies This note outlines the Company's lease commitments and confirms the absence of material legal proceedings - The Company has a month-to-month lease for $530 per month, incurring $2 thousand in rent expense for the three months ended March 31, 2025 and 2024[79] - The Company was not subject to any material legal proceedings during the three months ended March 31, 2025 and 2024[80] 13. Subsequent Events This note reports on significant events that occurred after the balance sheet date, specifically equity sales to related party investors - Between April and May 2025, the Company issued and sold 1,904,762 shares of Common Stock to two related party investors for approximately $0.8 million in gross proceeds[82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, results of operations, liquidity, and capital resources for the three months ended March 31, 2025 Company Overview This section provides an overview of OneMedNet's business, focusing on its digital medical image management and exchange solutions - OneMedNet provides solutions for digital medical image management, exchange, and sharing, primarily through its iRWD™ solution for secure de-identification, search, and curation of clinical image archives[85] - The Company's revenue streams are iRWD (Real World Data) for regulatory-grade imaging and clinical data, and BEAM, a medical imaging exchange platform[86] Key Components of Consolidated Statements of Operations This section explains the recognition methods for iRWD and BEAM revenue, along with the components of cost of revenue and other income/expenses - iRWD revenue is recognized on a fixed-fee basis upon data delivery, while BEAM revenue is subscription-based and recognized ratably over the contract period[86] - Cost of revenue includes hosting, labor, and data costs[88] - Other (income) expenses, net, primarily includes changes in fair value of PIPE Notes, Yorkville Note, warrants, Bitcoin holdings, and SEPA derivative liability[94][95] Results of Operations This section analyzes the Company's financial performance, including revenue, cost of revenue, operating expenses, and net loss, for the reported periods Consolidated Statements of Operations Data (in thousands) | Item | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :------------------------------------ | :------------- | :------------- | :--------- | :--------- | | Total revenue | $137 | $248 | $(111) | -45% | | Cost of revenue | $361 | $317 | $44 | 14% | | Gross margin | $(224) | $(69) | $(155) | 225% | | Total operating expenses | $2,000 | $2,032 | $(32) | -2% | | Loss from operations | $(2,224) | $(2,101) | $(123) | 6% | | Total other (income) expense, net | $(322) | $8 | $(330) | -4,125% | | Net loss | $(1,902) | $(2,109) | $207 | -10% | - Total revenue decreased by 45% ($111 thousand) primarily due to a 71% decrease in subscription revenue from the planned discontinuation of the BEAM platform, partially offset by a 68% increase in web imaging revenue due to enhanced focus on iRWD sales[99] - Cost of revenue as a percentage of revenue increased by 136% (from 128% to 264%) due to lower subscription revenue from BEAM discontinuation and higher iRWD data/personnel costs[100] - Sales and marketing expense increased by 27% ($61 thousand) due to increased headcount, while research and development expense decreased by 22% ($97 thousand) due to reduced personnel and software/hosting costs as resources shifted to iRWD sales growth[102][103] - The Company recognized a $662 thousand change in fair value of crypto assets (Bitcoin) and a $531 thousand realized gain on sale of Bitcoin for the three months ended March 31, 2025, as it began investing in Bitcoin in Q3 2024[108][109] Liquidity and Capital Resources This section discusses the Company's sources and uses of cash, its ability to meet short-term obligations, and plans for future funding - Principal sources of liquidity as of March 31, 2025, were proceeds from related party investors, private placement transactions, and customer cash receipts[111] Net Cash Provided by (Used in) Activities (in thousands) | Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(1,948) | $(1,547) | | Investing activities | $1,920 | $(6) | | Financing activities | $- | $1,680 | - Net cash provided by investing activities was $1.9 million in Q1 2025, primarily from $1.9 million in Bitcoin sales, compared to $6 thousand used in Q1 2024[115] - The Company did not engage in financing activities in Q1 2025, whereas in Q1 2024, it received $1.7 million from shareholder loans and a revolving line of credit[116] - Management believes current cash and cash equivalents are insufficient for the next 12 months, raising substantial doubt about the Company's ability to continue as a going concern, and plans to raise additional funds through debt and equity offerings[117] Current and Long-Term Material Cash Requirements as of March 31, 2025 (in thousands) | Obligation | Total (in thousands) | Less than 1 year (in thousands) | | :-------------------------------- | :------ | :--------------- | | 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 | | Total | $17,651 | $17,651 | Critical Accounting Policies and Estimates This section highlights the Company's reliance on estimates and judgments in financial reporting and notes no material changes to policies - The Company's financial statements rely on estimates, assumptions, and judgments that can significantly impact reported revenue, results of operations, and balance sheet values[120] - No material changes to critical accounting policies and estimates were reported through March 31, 2025, compared to those discussed in the Form 10-K[121] Recently Issued and Adopted Accounting Pronouncements This section refers to Note 2 for details on recently issued accounting pronouncements and their potential impact on the Company - A description of recently issued accounting pronouncements that may potentially impact the Company's financial position and results of operations is disclosed in Note 2 to the condensed consolidated financial statements[122] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, OneMedNet Corporation is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[123] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of March 31, 2025, due to material weaknesses in internal controls over financial reporting - As of March 31, 2025, disclosure controls and procedures were ineffective due to material weaknesses in internal controls over financial reporting[124] - Material weaknesses include issues with user access/segregation of duties, lack of a formalized control environment, errors in accounting for non-routine transactions, and insufficient record keeping, partly due to the Business Combination and limited accounting staff[125] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025[126] Part II. Other Information This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings The Company is not currently party to any legal proceedings that would materially adversely affect its business or financial condition - The Company is not currently involved in any material legal proceedings that would adversely affect its business, operating results, financial condition, or cash flows[128] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Form 10-K and other public filings - No material changes to risk factors have occurred since those disclosed in the Form 10-K and other public filings[129] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not have any unregistered sales of equity securities not previously reported in a Form 8-K during the three months ended March 31, 2025 - No unregistered sales of equity securities not previously reported in a Form 8-K occurred during the three months ended March 31, 2025[130] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[130] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[131] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[132] Item 6. Exhibits This section lists the documents filed as exhibits to the Quarterly Report on Form 10-Q, including corporate governance documents and certifications - Exhibits include the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL Taxonomy Extension documents[133] Signatures This section contains the official signatures certifying the accuracy and completeness of the report Report Signatures The report was duly signed on behalf of OneMedNet Corporation by Robert Golden, Chief Financial Officer, on May 14, 2025 - The report was signed by Robert Golden, Chief Financial Officer, on behalf of OneMedNet Corporation on May 14, 2025[137][138]