OneMedNet (ONMD) - 2023 Q3 - Quarterly Report

Financial Performance - Revenue for the nine months ended September 30, 2023, was $680,918, down from $888,970 for the same period in 2022, a decrease of 23.4%[15] - Gross profit for the nine months ended September 30, 2023, was a loss of $131,284, an improvement from a loss of $217,315 in 2022[15] - Operating loss increased to $4,411,406 for the nine months ended September 30, 2023, compared to a loss of $3,754,436 in the same period of 2022[15] - Net loss for the nine months ended September 30, 2023, was $4,957,647, compared to a net loss of $4,057,060 in 2022, reflecting an increase of 22.2%[15] - The company reported a diluted earnings per share of $(0.29) for the nine months ended September 30, 2023, compared to $(0.44) in 2022[15] - Total other income (expense), net, increased by $243,617 or 44.6% from $302,624 for the period ended September 30, 2022, to $546,241 for the nine months ended September 30, 2023[125] - The company reported a net loss of $4,957,647 for the nine months ended September 30, 2023, representing an increase of $900,587 or 18.2% from a net loss of $4,057,060 for the same period in 2022[126] Assets and Liabilities - Total assets increased to $2,937,944 as of September 30, 2023, compared to $1,374,028 as of December 31, 2022, representing a growth of 114%[12] - Cash and cash equivalents increased to $611,822 as of September 30, 2023, from $270,859 at the beginning of the period[19] - Total current liabilities rose to $14,278,386 as of September 30, 2023, compared to $9,808,435 as of December 31, 2022, an increase of 45%[12] - Stockholders' equity (deficit) decreased to $(14,738,338) as of September 30, 2023, from $(10,669,323) as of December 31, 2022[12] - The company reported an accumulated deficit of $36,834,868 as of September 30, 2023, with negative cash flows from operating activities[30] - The company’s accumulated deficit increased to $36,834,868 as of September 30, 2023, from $31,877,221 as of December 31, 2022[127] Cash Flow - Cash flows from operating activities resulted in a net outflow of $(4,712,547) for the nine months ended September 30, 2023, compared to $(4,209,013) in the same period of 2022[19] - The company’s net cash used in operating activities was $4,712,547 for the nine months ended September 30, 2023[129] - The company’s financing activities provided net cash of $5,082,310 for the nine months ended September 30, 2023, primarily from the issuance of convertible promissory notes[129] Mergers and Acquisitions - The merger with OneMedNet Solutions Corporation was completed on November 7, 2023, following shareholder approval on October 17, 2023[24] - The Business Combination was accounted for as a reverse recapitalization, with OneMedNet as the accounting acquirer[25] - The Company raised $1.5 million through PIPE financing, issuing senior secured convertible notes convertible at $10.00 per share or 92.5% of the lowest trading price in the preceding ten days[26] - The Company received net cash of $3,481.53 from the Business Combination and assumed various liabilities totaling $4,675,575[28] - The Company completed a merger with Data Knights Acquisition Corp on November 7, 2023, issuing 20,000,000 shares of common stock to former shareholders of OneMedNet Corporation[87] - The PIPE financing agreement was for an aggregate original principal amount of $1,595,744.70, with a purchase price of $1.5 million, which closed contemporaneously with the Business Combination[94] Research and Development - Research and development expenses increased by $422,787 or 37.3% to $1,133,149 for the nine months ended September 30, 2023, compared to $710,362 at year-end December 31, 2022[124] - The company expects to incur significant operating costs impacting future profitability, including research and development expenses and selling and distribution expenses as it scales operations[119] Market and Competition - OneMedNet has established a federated network of over 95 healthcare facilities, generating regulatory-grade imaging from more than 200 customers[100] - The global Real World Evidence solutions market was valued at $37.2 billion in 2020 and is projected to grow at a CAGR of 7.6% from 2021 to 2028[104] - The pharmaceutical, biotechnology, and medical device companies segment is expected to reach $2,025.7 million by 2028, growing at a CAGR of 15.5% from $739.7 million in 2021[106] - Competition in the Real World Data market is intense, with numerous providers affecting customer acquisition and pricing strategies[107] Operational Plans - Management plans to raise additional working capital through equity or debt offerings to continue operations and research and development[31] - The Company plans to expand into Africa and Asia, with expectations for completion in 2023, although no assurance of the timetable is provided[111] - The Company aims to leverage its extensive provider network and proprietary technology to enhance its market position in the Real World Data sector[113] Internal Controls and Compliance - The company conducted an evaluation of its disclosure controls and procedures as of September 30, 2023, concluding they were effective at a reasonable assurance level[145] - There were no changes in internal control over financial reporting during the fiscal quarter ended September 30, 2023, that materially affected the company's internal control[146] - The management does not expect that disclosure controls or internal controls will prevent all errors and fraud, acknowledging inherent limitations in control systems[147] Legal and Regulatory - As of the report date, there are no legal claims currently pending or threatened against the company that would likely have a material adverse effect on its financial position[150] - There have been no material changes in risk factors from those disclosed in the previous Annual Report for the year ended December 31, 2022[151] - The company reported no unregistered sales of equity securities during the fiscal quarter[152] - The company has not experienced any defaults upon senior securities during the reporting period[153] Miscellaneous - The company has a CEBA loan of $44,330, which is interest-free until December 31, 2023, with potential forgiveness of $14,776 if repaid by that date[44] - The company has incurred depreciation and amortization expenses of $19,529 for the period ended September 30, 2023[43] - The total expense recognized for share-based payments was $20,132 for the period ending September 30, 2023, and $45,584 for the year ended December 31, 2022[59] - The company has a month-to-month lease for a suite at a cost of $575 per month, incurring rent expenses of $5,666 for the period ended September 30, 2023[64] - The company has $2,059,975 of SPAC-related expenses recorded as receivable to be received at the close of the merger[65] - The company has outstanding principal balances on convertible promissory notes of $13,865,000 as of September 30, 2023, compared to $9,990,000 as of December 31, 2022[72] - The company generated federal and state net operating losses (NOL) of approximately $21 million and $23 million, respectively, which will begin to expire in 2030[82] - The company recognized a full valuation allowance against net deferred tax assets due to uncertainty in realizing related benefits[81] - The company established allowances of $102,700 for accounts receivable as of December 31, 2022, indicating a focus on credit risk management[66] - The company issued 1,550,000 warrants attached to convertible notes during the period ending September 30, 2023, with a weighted average remaining contractual life of 4.74 years[61] - As of September 30, 2023, there were 4,219,848 stock options outstanding with a weighted average exercise price of $0.96 and an intrinsic value of $4,063,156[63] - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[158] - The report was signed by Paul Casey, Chief Executive Officer, on November 20, 2023[164]