OneMedNet Corp: Form 10-Q for the period ended Sep 30, 2025

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 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.

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, gain on troubled debt restructuring and foreign exchange and tax expenses related to the Company’s operations and revenue outside of the United States. Gain on troubled debt restructuring includes the gains on account of restructuring of loans from lenders and gains on account of concluded negotiations with vendors for reduction in outstanding liabilities.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table sets forth our condensed consolidated statements of operations data for the periods presented:

Revenue

Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the three months ended September 30, 2025, overall revenue increased by 25% compared to the prior year period. The 100% decrease in subscription revenue was due to the decommissioning of the BEAM platform on May 31, 2025, resulting in no revenue during the three months ended September 30, 2025, as compared to $0.1 million for the three months ended September 30, 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 September 30, 2025, as compared to the three months September 30, 2024.

Cost of Revenue

For the three months ended September 30, 2025, our cost of revenue as a percentage of revenue increased by 66% compared to the prior year period. The increase is primarily driven by the transition away from the BEAM platform, which was decommissioned in May 2025, resulting in no subscription revenue for the three months ended September 30, 2025. The increase is also driven by higher iRWD data and personnel costs to support iRWD sales growth.

General and Administrative

Our general and administrative expenses decreased $0.4 million, or 24%, to $1.4 million for the three months ended September 30, 2025, from $1.8 million for the three months ended September 30, 2024. The decrease is primarily due to a $0.4 million decrease in professional fees, which is attributable to higher accounting and audit fees that were required to file our Form 10-K during the three months ended September 30, 2024.

Sales and Marketing

Our sales and marketing expenses increased $0.2 million, or 117%, to $0.3 million for the three months ended September 30, 2025, from $0.1 million for the three months ended September 30, 2024. The increase is primarily due to an increase in personnel costs of $0.2 million which is driven by increased headcount to support iRWD sales growth.

Research and Development

Research and development expenses for the three months ended September 30, 2025, were generally consistent with research and development expenses for the three months ended September 30, 2024.

Interest Expense

Our interest expense decreased $30 thousand, or 83%, to $6 thousand for the three months ended September 30, 2025, from $36 thousand during the three months ended September 30, 2024. The decrease is primarily due to lower interest expense on (i) loans made by related parties (Management and Directors) which got converted into shares of our Common Stock in June 2025 (see Note 6), (ii) the portion of deferred underwriter fees relating to the Business Combination that was payable in cash which got settled in June 2025 (see Note 7) and (iii) our line of credit borrowing which was not outstanding during the three months ended September 30, 2025.

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 decrease in fair value of warrants for the three months ended September 30, 2025 was 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 was mainly due to the resulting fluctuations in the market price of shares of our Common Stock. In June 2025, all outstanding principal and accrued interest got converted into shares of our Common Stock. As such, there was no balance outstanding during the three months ended September 30, 2025 and, therefore, no mark-to-market adjustment was required.

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 decrease in fair value of Yorkville Note is mainly due to the resulting fluctuations in the market price of shares of our Common Stock. In June 2025, the Yorkville Note matured, and the outstanding principal balance was either converted into shares of our Common Stock or repaid in cash. As such, there was no balance outstanding during the three months ended September 30, 2025, and, therefore, no mark-to-market adjustment was required.

Change in Fair Value of Crypto Assets – Bitcoin

In July 2024, we began strategically investing in Bitcoin as part of our treasury strategy. The change in fair value of crypto assets – Bitcoin reflects the movement in the market price of Bitcoin.

Realized (Gain) Loss on Sale of Crypto Assets – Bitcoin

The realized (gain) loss on sale of crypto assets – Bitcoin reflects the change in the market price of Bitcoin upon sale compared to its purchase price.

Change in Fair Value of Derivative Liability

The change in fair value of derivative liability 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 September 30, 2025, we had reasonable expectations of making draws on the SEPA facility to fund operations as needed based on our cash position at the end of the period. As such, the change in fair value of $0.4 million is driven by expected draws on the facility during the remaining commitment period.

During the three months ended September 30, 2024, we received gross cash proceeds of $6.3 million in connection with private placements with institutional investors. As such, we did not expect to draw on the SEPA and the liability was adjusted to a fair value of $0 leading to a change in fair value of $(0.2) million during the three months ended September 30, 2024.

Gain on Troubled Debt Restructurings

Gain on troubled debt restructuring during the three months ended September 30, 2025 was due to settlement agreements with two vendors related to $1.9 million of outstanding balances payable, which we agreed to settle for an aggregate reduced fee of $50 thousand. As such, we recorded a gain on troubled debt restructuring of $1.9 million. During the three months ended September 30, 2024, we did not have any such settlements.

Loss on Extinguishment of Debt

Loss on extinguishment of debt during the three months ended September 30, 2025 relates to an amended promissory note agreement with a former lender to the Company with a $0.3 million stock repurchase commitment outstanding. The loss of $46 thousand represents the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt. During the three months ended September 30, 2024, we did not have any debt extinguishments.

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table sets forth our condensed consolidated statements of operations data for the periods presented:

Revenue

Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the nine months ended September 30, 2025, overall revenue decreased by 24% compared to the prior year period. The primary driver for the decrease in subscription revenue was due to the planned decommissioning of the BEAM platform, which occurred on May 31, 2025. When we made the decision to move away from the BEAM platform to focus on iRWD sales, we stopped renewals for our customers leading to a $0.3 million decrease for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 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 nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

Cost of Revenue

For the nine months ended September 30, 2025, our cost of revenue as a percentage of revenue increased by 101% compared to the prior year period. The increase is primarily driven by the transition away from the BEAM platform, which was decommissioned in May 2025. This has resulted in lower subscription revenue without the benefit of cost savings for the entire comparative period. The increase is also driven by higher iRWD data and personnel costs to support iRWD sales growth.

General and Administrative

Our general and administrative expenses decreased $0.9 million, or 18%, to $4.0 million for the nine months ended September 30, 2025, from $4.9 million for the nine months ended September 30, 2024. The decrease is primarily due to a decrease in professional fees of $0.4 million and a decrease resulting from a one-time commitment fee of $0.5 million paid to Yorkville for the SEPA. The decrease in professional fees is attributable to higher accounting and audit fees required to file our amended Form 10-K for fiscal years 2023 and 2022, which was not applicable for the nine months ended September 30, 2025.

Sales and Marketing

Our sales and marketing expense increased $0.2 million, or 36%, to $0.8 million for the nine months ended September 30, 2025, from $0.6 million for the nine months ended September 30, 2024. The increase is primarily due to an increase in personnel costs of $0.4 million which is driven by increased headcount to support iRWD sales growth, partially offset by a decrease of $0.1 million in consulting expenses as we bring more sales and marketing resources in-house.

Research and Development

Research and development expenses for the nine months ended September 30, 2025, were generally consistent with research and development expenses for the nine months ended September 30, 2024.

Interest Expense

Our interest expense decreased $61 thousand, or 51%, to $59 thousand for the nine months ended September 30, 2025, from $120 thousand during the nine months ended September 30, 2024. The decrease is primarily due to lower interest expense on (i) loans made by related parties (Management and Directors) which got converted into shares of our Common Stock in June 2025 (see Note 6), (ii) the portion of deferred underwriter fees relating to the Business Combination that was payable in cash which got settled in June 2025 (see Note 7) and (iii) our line of credit borrowing which was not outstanding during the nine months ended September 30, 2025.

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 increase in fair value of warrants for the nine months ended September 30, 2025, compared to the prior period, was 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. During the nine months ended September 30, 2025, all holders of PIPE Notes provided notice to convert all outstanding principal and accrued interest outstanding into shares of our Common Stock. As such, the decrease in fair value of PIPE Notes during the nine months ended September 30, 2025 represents the final mark-to-market adjustment prior to conversion of the PIPE Notes.

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. During the nine months ended September 30, 2025, the Yorkville Note matured, and the outstanding principal balance was either converted into shares of our Common Stock or repaid in cash. As such, the decrease in fair value of Yorkville Note during the nine months ended September 30, 2025 represents the final mark-to-market adjustments prior to maturity of the Yorkville Note.

Change in Fair Value of Crypto Assets – Bitcoin

In July 2024, we began strategically investing in Bitcoin as part of our treasury strategy. The change in fair value of crypto assets – Bitcoin reflects the movement in the market price of Bitcoin.

Realized (Gain) Loss on Sale of Crypto Assets – Bitcoin

The realized (gain) loss on sale of crypto assets – Bitcoin reflects the increase or decrease in the market price of Bitcoin upon sale compared to its purchase price.

Change in Fair Value of Derivative Liability

The change in fair value of derivative liability 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 nine months ended September 30, 2025, we had reasonable expectations of making draws on the SEPA facility to fund operations as needed based on our cash position at the end of the period. The change in fair value was mainly due to the resulting fluctuations in the market price of shares of our Common Stock.

During the nine months ended September 30, 2024, we received gross cash proceeds of $6.3 million in connection with private placements with institutional investors. As such, we did not expect to draw on the SEPA and the liability was ascribed a fair value of $0 leading to no change in fair value during the three months ended September 30, 2024.

Gain on Troubled Debt Restructurings

Gain on troubled debt restructuring during the nine months ended September 30, 2025 was primarily driven by our settlement of deferred underwriter fees which resulted in a gain of $2.8 million (see Note 7) and restructured trade payables with five separate vendors leading to an additional gain of $2.8 million (see Note 5). During the nine months ended September 30, 2024, we did not restructure any of our debt or trade payables.

Loss on Extinguishment of Debt

Loss on extinguishment of debt during the nine months ended September 30, 2025 relates to an amended promissory note agreement with a former lender to the Company with a $0.3 million stock repurchase commitment outstanding. The loss of $46 thousand represents the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt. During the nine months ended September 30, 2024, we did not have any debt extinguishments.

Liquidity and Capital Resources

As of September 30, 2025, our principal sources of liquidity were proceeds from related party investors, private placement transactions, investments in Bitcoin 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:

Operating Activities

Our net cash and cash equivalents used in operating activities consists of net income (loss) adjusted for certain non-cash items, including depreciation and amortization, stock-based compensation expense, changes in fair value of 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 nine months ended September 30, 2025, we used $5.8 million of cash in operating activities, primarily resulting from non-cash charges of $6.3 million, offset by cash provided by changes in our operating assets and liabilities of $0.1 million and our net income of $0.4 million.

During the nine months ended September 30, 2024, we used $5.0 million of cash in operating activities, primarily resulting from our net loss of $7.8 million, offset by non-cash charges of $1.3 million and cash provided by changes in our operating assets and liabilities of $1.5 million.

Investing Activities

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

During the nine months ended September 30, 2025, net cash provided by investing activities was $2.4 million, which primarily consisted of Bitcoin activity comprised of $4.8 million in sales, offset by $2.4 million of purchases.

During the nine months ended September 30, 2024, net cash used in investing activities was $2.3 million, which primarily consisted of Bitcoin activity comprised of $2.8 million in purchases, offset by $0.5 million in sales.

Financing Activities

During the nine months ended September 30, 2025, net cash provided by financing activities was $3.4 million, which consisted of $2.5 million and $1.7 million of proceeds from a private placement and related party investments, respectively, offset by $0.8 million of repayments on outstanding debt facilities.

During the nine months ended September 30, 2024, net cash provided by financing activities was $9.2 million, which primarily consisted of $6.3 million of proceeds from private placements, $1.8 million of net proceeds from shareholder loans and $1.4 million of net proceeds under the Yorkville Note, partially offset by $0.2 million of payments for deferred underwriter fees and common stock repurchase.

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 material cash requirements as of September 30, 2025:

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 September 30, 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.

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.

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 September 30, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 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

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. Management has begun taking remediation steps to address the material weakness, including the hiring of a full-time controller in July 2025 and adding additional review procedures over our financial records. This remediation is an ongoing process and there can be no assurance that it will effectively address the material weakness.

Changes in Internal Control Over Financial Reporting

Except as described above, there were no other changes in our internal control over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.