團結起來 各州
證券 交易委員會
華盛頓， D.C. 20549
表格
(標記 一個)
| 季度 報告根據1934年證券交易法第13條或15(d)條提交 |
截至季度期末的報告
或
| 過渡 根據1934年證券交易法第13或15(d)節的報告 |
過渡期從到
委員會
文件編號
(註冊人名稱，按照其章程中的規定)
(州 或其他管轄區的 公司註冊 或者組織) |
(美國國稅局 僱主 識別 號) | |
| (地址 主要執行辦公室的地址) | (郵政編碼 ) |
註冊人的
電話號碼，包括區號：
根據該法第12(b)條註冊的證券：
| 每個類別的標題 | 交易 標的 | 註冊的每個交易所名稱 | ||
請用勾號表示註冊人：(1) 在前12個月內（或註冊人被要求提交這些報告的較短期間）是否已提交證券交易法1934年第13條或第15(d)條所要求的所有報告，以及(2) 是否在過去90天內受到此類提交要求的約束。 是 ☐
請通過勾選來指示登記人是否在過去12個月內（或登記人被要求提交此類文件的較短期間內）電子提交了根據規則
405的要求需要提交的每個互動數據文件（根據本章第232.405條）。
請勾選以下選項，指明掛牌者是否為大型快速申報掛牌者、快速申報掛牌者、非快速申報掛牌者、較小型的報告公司或新興成長型公司。關於Exchange Act第1202條中「大型快速申報掛牌者」、「快速申報掛牌者」、「較小型報告公司」和「新興成長型公司」的定義，請參閱。
| 大型 加速提交者 | ☐ | 加速 提交者 | ☐ |
| ☒ | 小型 報告公司 | ||
| 新興 增長公司 |
如為新興成長企業，則應打勾選項表示申報人已選擇不使用交易所法第13(a)條所提供的任何新或修訂財務會計準則延長過渡期遵守。
請用勾選標記指示註冊人是否爲空殼公司（根據交易法第120億2條的定義）。 是
☐ 否
截至2024年12月17日，已有 股普通股，面值$ 每股，已發行且在外流通。
目錄
| 頁 | ||
| 關於前瞻性聲明的警告說明 | ii | |
| 部分 I. | 基本報表信息 | 1 |
| 項目 1. | 簡明綜合基本報表 | 1 |
| 截至2024年9月30日和2023年12月31日的未經審計的合併資產負債表 | 1 | |
| 未經審計的合併運營基本報表，截止至2024年和2023年9月30日的三個月和九個月 | 2 | |
| 未經審計的臨時股權和股東赤字的基本報表，截止至2024年和2023年9月30日的三個月和九個月 | 3 | |
| 未經審計的現金流基本報表，截止至2024年和2023年9月30日的九個月 | 4 | |
| 基本報表未經審核簡明合併財務報表註腳 | 5 | |
| 項目 2. | 管理層對 財務狀況 和 經營成果 的討論與分析 | 16 |
| 項目 3. | 關於市場風險的定量和定性披露 | 24 |
| 項目 4. | 控制項和程序 | 24 |
| 第二部分 II. | 其他信息 | 25 |
| 項目 1. | 法律程序 | 25 |
| 項目 1A. | 風險因素 | 25 |
| 項目 2. | 未註冊的股權證券銷售及資金用途 | 25 |
| 項目 3. | 高級證券的默認情況 | 25 |
| 項目 4. | 礦山安全披露 | 25 |
| 項目 5. | 其他資訊 | 25 |
| 項目 6. | 展品 | 25 |
| 簽名 | 26 | |
| i |
關於前瞻性聲明的警示
某些 我們不時做出的陳述，包括本季度報告（表格10-Q）中包含的陳述，構成1995年《私人證券訴訟改革法案》所定義的「前瞻性陳述」和1933年《證券法》修正案的第27A節（「證券法」）以及1934年《證券交易法》修正案的第21E節（「交易所法」）。本表格10-Q中包含的除歷史事實陳述以外的所有陳述均爲前瞻性陳述。本表格10-Q中的前瞻性陳述僅是預測。我們在很大程度上基於我們對可能影響我們業務、財務狀況和經營結果的未來事件和財務趨勢的當前期望和預測來制定這些前瞻性陳述。在某些情況下，您可以通過以下術語識別這些前瞻性陳述：「預期」、「相信」、「繼續」、「可能」、「依賴」、「估計」、「期望」、「打算」、「可能」、「正在進行」、「計劃」、「潛在」、「預測」、「項目」、「應該」、「將會」、「會」或這些術語的否定形式或其他類似表述，儘管並非所有前瞻性陳述都包含這些詞。我們根據當前的期望和對可能影響我們財務狀況、經營結果、策略、短期和長期業務運營及目標和財務需求的趨勢的預測來制定這些前瞻性陳述。
我們的 運營涉及風險和不確定性，其中許多超出了我們的控制範圍，任何一項或多項組合都可能 對我們的運營結果產生重大影響，以及前瞻性聲明是否最終證明正確。我們在一定程度上基於 當前的預期和關於未來事件和趨勢的預測，這些因素可能影響我們的財務狀況、運營結果、業務策略、短期和開多的業務運營及目標，以及財務需求。此表格10-Q中的前瞻性聲明包括但不限於，反映管理層對未來財務表現和營業費用（包括我們持續作爲經營主體的能力、籌集額外資本的能力以及在未來運營中取得成功的能力）的預期、預期增長、盈利能力和業務前景，以及營業費用。
前瞻性 聲明僅是當前的預測，受已知和未知的風險、不確定性以及其他可能導致我們的 實際結果、活動水平、績效或成就與這些聲明所預期的有實質性差異的因素的影響。 這些因素包括，但不限於，我們認爲可能導致實際結果與 這些前瞻性聲明有所不同的未知風險和不確定性，這些風險和不確定性在「風險因素」標題下以及我們向證券交易委員會（SEC）提交的其他文件中有所列舉。新的風險和不確定性會不時出現，因此我們無法預測所有可能影響前瞻性聲明的風險和不確定性，包括但不限於，相關的風險和不確定性：
| ● | 我們的 預測財務狀況和預計現金消耗率； | |
| ● | 我們的 費用、未來營業收入和資本需求的估計； | |
| ● | 我們 繼續作爲一家持續經營企業的能力； | |
| ● | 我們 在足夠金額或可接受條款下籌集大量額外資本以資助我們的運營和業務 計劃的能力； | |
| ● | 我們 能夠逆轉近期營業收入下降的趨勢並恢復營業收入的增長； | |
| ● | 我們 能夠獲得並維持對我們當前產品和服務的知識產權保護； | |
| ● | 我們 能夠保護我們的知識產權，且可能會因訴訟而產生大量費用，以執行或保護我們的知識產權； | |
| ● | 存在 第三方可能聲稱我們侵犯、濫用或以其他方式違反他們的知識產權，且我們可能會承擔大量費用並需要投入大量時間來應對這些指控； | |
| ● | 我們對第三方供應商的依賴; | |
| ● | 競爭產品或服務的成功，這些產品或服務正在推出或將推出; | |
| ● | 我們擴展組織以適應潛在增長的能力，以及我們留住和吸引關鍵人員的能力; 和 | |
| ● | 我們可能因訴訟而產生重大費用的潛在性，以及這些訴訟可能導致我們限制產品和服務的商業化。 |
這些 前瞻性聲明受到多種風險、不確定性和假設的影響，包括我們在10-K/A表格和向SEC提交的其他文件中所描述的「風險因素」。此外，我們在一個競爭激烈且快速變化的環境中運營。新的風險不時出現。我們的管理層無法預測所有風險，也無法評估所有因素對我們業務的影響，或者任何因素或因素組合可能導致實際結果與我們可能做出的任何前瞻性聲明中所包含的結果在實質上有所不同的程度。鑑於這些風險、不確定性和假設，本表格10-Q中討論的前瞻性事件和情況可能不會發生，實際結果可能會與預期或隱含在前瞻性聲明中的結果有實質性和不利的差異。
您 不應依賴前瞻性陳述來預測未來事件。儘管我們相信前瞻性陳述中反映的期望是合理的，但我們無法保證在前瞻性陳述中反映的未來結果、活動水平、表現或事件及情況將實現或發生。此外，除法律要求外，我們和其他任何人均不對前瞻性陳述的準確性和完整性承擔責任。我們沒有義務在本10-Q表格日期之後因任何原因更新任何前瞻性陳述，以使這些陳述與實際結果或我們的期望變化相符。
您 應該閱讀本表格10-Q及我們在本表格10-Q中引用的文件，並理解我們的實際 未來結果、活動水平、表現以及事件和情況可能與我們的預期有重大不同。因此，由於已知和未知的許多風險和不確定性，我們的實際結果或表現可能與這些前瞻性聲明所表達或暗示的內容，包括在本表格10-Q和我們的表格10-K/A的「風險因素」部分以及其他文件中所描述的內容，有重大不同。
| ii |
部分 I—財務信息
項目 1. 精簡合併基本報表
ONEMEDNET CORPORATION
簡明合併資產負債表
(以千爲單位，除分享和每分享數據外)
（未經審計）
| 2024年9月30日 | 2023年12月31日 | |||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 比特幣 | ||||||||
| 應收賬款，淨額 | ||||||||
| 預付費用及其他流動資產 | ||||||||
| 總流動資產 | ||||||||
| 物業和設備，淨值 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債和股東赤字 | ||||||||
| 流動負債： | ||||||||
| 應付賬款和應計費用 | $ | $ | ||||||
| 遞延收入 | ||||||||
| 貸款延期 | ||||||||
| PIPE票據 | ||||||||
| 約克維爾票據 | ||||||||
| 應付的延遲承銷商費用 | ||||||||
| 貸款 – 關聯方 | ||||||||
| 總流動負債 | ||||||||
| 其他長期負債 | ||||||||
| 總負債 | ||||||||
| 承諾和或有事項（註釋13） | ||||||||
| 股東權益不足： | ||||||||
| 優先股，面值$, 截至2024年9月30日和2023年12月31日授權的股份； 截至2024年9月30日和2023年12月31日已發行和流通的股份 | ||||||||
| 普通股，面值$; 授權股份， 已發行股份和 截至2024年9月30日的流通股數量， 截至2023年12月31日的已發行流通股數量 | ||||||||
| 額外支付的資本 | ||||||||
| 庫存股，按成本計算， 和 截至2024年9月30日和2023年12月31日的股票數量分別爲 | ( | ) | ||||||
| 累計負債 | ( | ) | ( | ) | ||||
| 股東總負債 | ( | ) | ( | ) | ||||
| 總負債和股東虧損 | $ | $ | ||||||
附帶的註釋是這些未經審計的簡明合併基本報表的一個組成部分。
| 1 |
ONEMEDNET 公司
簡明 合併經營報表
(以千爲單位，除分享和每分享數據外)
（未經審計）
| 截至三個月 9月30日 | 九個月結束 9月30日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 營業收入 | ||||||||||||||||
| 訂閱營業收入 | $ | $ | $ | $ | ||||||||||||
| 網絡成像營業收入 | ||||||||||||||||
| 總營業收入 | ||||||||||||||||
| 成本收入 | ||||||||||||||||
| 毛利率 | ( | ) | ( | ) | ( | ) | ||||||||||
| 營業費用 | ||||||||||||||||
| 一般和管理費用 | ||||||||||||||||
| 銷售和市場營銷 | ||||||||||||||||
| 研究與開發 | ||||||||||||||||
| 營業費用總額 | ||||||||||||||||
| 營業虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收益（費用），淨額 | ||||||||||||||||
| 利息費用 | ||||||||||||||||
| 期權公允價值的變動 | ||||||||||||||||
| PIPE票據的公允價值變動 | ( | ) | ( | ) | ||||||||||||
| Yorkville票據的公允價值變動 | ( | ) | ||||||||||||||
| 衍生負債公允價值變化 | ( | ) | ||||||||||||||
| 比特幣的公允價值變動 | ||||||||||||||||
| 可轉換票據的公允價值變動 | ||||||||||||||||
| 股票Warrants費用 |
| |||||||||||||||
| 其他費用 | ||||||||||||||||
| 總其他費用（收入），淨額 | ( | ) | ||||||||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股收益： | ||||||||||||||||
| 每股普通股基本和稀釋淨虧損 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 每股普通股的基本和稀釋加權平均數 | ||||||||||||||||
附帶的註釋是這些未經審計的簡明合併基本報表的一個組成部分。
| 2 |
ONEMEDNET CORPORATION
簡化的 臨時權益變動的合併財務報表和
股東赤字
(以千爲單位，除股票數據外)
（未經審計）
截至2024年9月30日的三個月和九個月
| 其他 | 總計 | ||||||||||||||||||||||||||||||
| 普通股 | 庫存股 | 實收資本 | 累計 | Stockholders’ | |||||||||||||||||||||||||||
| Shares | 金額 | Shares | 金額 | 資本 | Deficit | Deficit | |||||||||||||||||||||||||
| 截至2023年12月31日的餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| 發行普通股以償還應付的延期承銷費用 | - | ||||||||||||||||||||||||||||||
| 基於股票的薪酬費用 | - | - | |||||||||||||||||||||||||||||
| 普通股回購 | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| 淨虧損 | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| 截至2024年3月31日的餘額 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 受限股票單位的歸屬 | - | ||||||||||||||||||||||||||||||
| 基於股票的薪酬費用 | - | - | |||||||||||||||||||||||||||||
| 淨虧損 | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| 截至2024年6月30日的餘額 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| 與私募有關的普通股和預先融資Warrants的發行，扣除發行成本 | - | ||||||||||||||||||||||||||||||
| 發行普通股以支付Yorkville承諾費用 | - | ||||||||||||||||||||||||||||||
| 基於股票的薪酬費用 | - | - | |||||||||||||||||||||||||||||
| 淨虧損 | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| 截至2024年9月30日的餘額 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
Three and Nine Months Ended September 30, 2023
| Total | ||||||||||||||||||||||||||||||||||||||||
| Series A-2 | Series A-1 | Temporary | Additional | Total | ||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Equity | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||
| Balances as of December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Issuance of OMN warrants in conjunction with convertible promissory notes | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of OMN warrants in conjunction with convertible promissory notes | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances as of June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Issuance of common stock in exchange for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of OMN warrants in conjunction with convertible promissory notes | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of Legacy ONMD Series A-2 Preferred Stock | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balances as of September 30, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
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)
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Stock warrant expense | ||||||||
| Change in fair value of warrant liabilities | ||||||||
| Change in fair value of PIPE Notes | ( | ) | ||||||
| Change in fair value of Yorkville Note | ||||||||
| Change in fair value of Bitcoin | ||||||||
| Realized loss on sale of Bitcoin | ||||||||
| Gain on forgiveness of CEBA loan | ( | ) | ||||||
| Non-cash interest | ||||||||
| Change in fair value of convertible promissory notes | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenues | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of Bitcoin | ( | ) | ||||||
| Sales of Bitcoin | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from private placements, net of issuance costs | ||||||||
| Proceeds from issuance of shareholder loans | ||||||||
| Proceeds from issuance of Yorkville Note, net of issuance costs | ||||||||
| Proceeds from line of credit borrowings | ||||||||
| Repayment of shareholder loan | ( | ) | ||||||
| Repayment of line of credit borrowings | ( | ) | ||||||
| Repayment for common stock repurchase | ( | ) | ||||||
| Repayment of deferred underwriter fees | ( | ) | ||||||
| Repayment of CEBA loan | ( | ) | ||||||
| Proceeds from issuance of convertible promissory notes | ||||||||
| Proceeds from issuance of Series A-2 preferred stock | ||||||||
| Business Combination costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Issuance of common stock to settle deferred underwriter fee payable | $ | $ | ||||||
| Consideration for repurchase of common stock included in accounts payable and accrued expenses | $ | ( | ) | $ | ||||
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 and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future annual or interim period.
The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the related notes for the year ended December 31, 2023 in the Company’s Annual Report on Form 10-K, as amended, filed with the SEC on November 5, 2024 (the “Form 10-K/A”).
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 $
To continue in existence and expand its operations, the Company will be required to, and management plans to, raise additional working capital through an equity or debt offering and ultimately 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.
Segment information
The Company operates in one operating segment and, accordingly, no segment disclosures have been presented herein.
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/A, and the accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies therein.
Treasury stock
The Company records the repurchase of its common stock, par value $ per share (“Common Stock”) at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity (deficit). Treasury stock is included in authorized and issued shares but excluded from outstanding shares.
Derivative financial instruments
The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the condensed consolidated statement of operations as a component of other expense (income), net. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities will be classified in the condensed consolidated balance sheets as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
Crypto assets
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which provides an update to existing crypto asset guidance and requires an entity to measure certain crypto assets at fair value. In addition, this guidance requires disclosures related to crypto assets once it is adopted. As of January 1, 2024, the Company has adopted ASU 2023-08.
The Company reflects crypto assets held at fair value on the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the activity from remeasurement of crypto assets at fair value on the condensed consolidated statements of operations, and the required expanded disclosures in Note 3, Crypto Assets Held. The adoption of ASU 2023-08 resulted in no cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2024.
Crypto assets are generally valued using prices as reported on reputable and liquid exchanges and may involve using an average of bid and ask quotes using closing prices provided by such exchanges as of the date and time of determination. The time used is 4:00 pm EST.
The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. Certain warrants participate in distributions of the Company. The pre-funded warrants associated with the July and September 2024 private placements (see Note 7) are considered outstanding shares in the basic earnings per share calculation given their nominal exercise price. The net loss attributable to common stockholders is not allocated to the warrant holders as the warrant holders do not have a contractual obligation to share in losses. Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of Common Stock and common stock equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities, including outstanding warrants to purchase Common Stock and outstanding stock options under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding to the Company’s net loss position.
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.
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 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to provide enhancements to segment disclosures, even for entities with only one reportable segment. In particular, the standard will require disclosures of information related to significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss. The standard will also require disclosure of all other segment items by reportable segment and a description of its composition. Finally, the standard will require disclosure of the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the standard on the presentation of its condensed consolidated financial statements and footnotes.
| 6 |
3. 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 Bitcoin held, as shown on the condensed consolidated balance sheet as of September 30, 2024 (in thousands):
| Units | Cost Basis | Fair Value | ||||||||||
| Crypto assets held: | ||||||||||||
| Bitcoin | $ | $ | ||||||||||
| Total | $ | $ | ||||||||||
The following table presents a reconciliation of the fair values of the Company’s Bitcoin for the nine months ended September 30, 2024 (in thousands):
| Bitcoin | ||||
| Balance, December 31, 2023 | $ | |||
| Additions | ||||
| Dispositions | ( | ) | ||
| Unrealized loss, net | ( | ) | ||
| Balance, September 30, 2024 | $ | |||
Additions
are the result of the Company acquiring Bitcoin with liquid assets from private placements, while dispositions are the
result of sales of Bitcoin. During the three and nine months ended September 30, 2024, the Company had Bitcoin dispositions of $
4. Convertible Debt
Convertible Promissory Notes
From
2019 to 2023, the Company issued various convertible promissory notes to related and unrelated party investors, which were convertible
into equity securities of Legacy ONMD upon a next equity financing transaction (the “Convertible Promissory Notes”). The
Convertible Promissory Notes bore interest at a rate of either
The Convertible Promissory Notes were issued for general working capital purposes. The Company elected the fair value option (“FVO”) of accounting under ASC 825, Financial Instruments, for its Convertible Promissory Notes. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value adjustment is presented as a single line item within other expense (income), net in the accompanying condensed consolidated statements of operations under the caption change in fair value of convertible promissory notes.
In November 2023, all Convertible Promissory Notes were converted pursuant to their provision in connection with the Business Combination between Data Knights and Legacy ONMD and were no longer outstanding as of December 31, 2023. See the Form 10-K/A for all other details relating to the Convertible Promissory Notes issued prior to December 31, 2023.
PIPE Notes
On
June 28, 2023,
The
Company elected the FVO of accounting for its PIPE Notes. The estimated fair value adjustment is presented as a single line item
within other expense (income), net in the accompanying condensed consolidated statements of operations under the caption change in
fair value of PIPE Notes. As of September 30, 2024 and December 31, 2023, the fair value of the PIPE Notes was $
Shareholder Loans
From
January to June 2024, the Company received gross proceeds of $
| 7 |
Helena Notes
On
March 28, 2024, the Company entered into a definitive securities purchase agreement (the “Helena SPA”) with Helena Global
Investment Opportunities 1 Ltd. (“Helena”), an affiliate of Helena Partners Inc., a Cayman Islands-based advisor and investor
providing for up to $
Pursuant
to the Helena Termination Agreement, the Company agreed to issue to Helena a warrant to purchase
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 $
The
Company elected the FVO of accounting for the Yorkville Note. The estimated fair value adjustment is presented as a single line item
within other expense (income), net in the accompanying condensed consolidated statements of operations under the caption change in fair
value of Yorkville Note. As of September 30, 2024, the fair value of the Yorkville Note was $
5. Line of Credit
In
March 2024, the Company obtained a line of credit of $
| 8 |
6. Canadian Emergency Business Account (“CEBA”)
During
December 2020, the Company applied for and received a $
7. Stockholders’ Deficit
Common Stock
In
connection with the Business Combination, Data Knights entered into an agreement with their underwriters (“EF Hutton”) whereby
EF Hutton agreed to waive the related merger underwriting fees that were payable at closing ($
In
February 2024, the Company entered into a stock repurchase agreement with a former holder of Convertible Promissory Notes pursuant to
which the Company repurchased shares of Common Stock in exchange for cash of $
Standby Equity Purchase Agreement
On
June 17, 2024, the Company and Yorkville entered into the SEPA. Under the SEPA, the Company has the right to sell to Yorkville up to
$
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”).
| 9 |
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 $
As
consideration for Yorkville’s commitment to purchase the shares of Common Stock pursuant to the SEPA, the Company paid Yorkville
a $
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 and as a result, a payment of $
The
SEPA was accounted for as a liability under ASC 815 as it includes an embedded put option and an embedded forward option. The put option
is recognized at inception and the forward option is recognized upon issuance of notice for the sale of the Company’s Common Stock.
The fair value of the derivative liability related to the embedded put option was estimated at $
Private Placements
July 2024 Financings
On
July 23, 2024, the Company entered into a securities purchase agreement with a certain institutional investor, pursuant to which the
Company agreed to issue and sell shares of its
Common Stock at a price of $per share and pre-funded
warrants exercisable for
On July 25, 2024, the Company entered into a securities purchase agreement with a certain institutional investor, pursuant to which the Company agreed to issue and sell shares of its Common Stock at a price of $ per share.
The
Company received net proceeds of approximately $
September 2024 Financing
On
September 24, 2024, the Company entered into a securities purchase agreement with a certain
institutional investor, pursuant to which the Company agreed to issue and sell to the investor
shares of its Common Stock at a price of $
per share, warrants exercisable for
As of September 30, 2024, the Company had not yet issued the shares of Common Stock in order to keep the investor’s ownership percentage below a defined threshold. The net proceeds of $1.7 million was recorded akin to an equity forward sale contract and was included in additional paid-in-capital in stockholders’ deficit in the condensed consolidated balance sheets as it met the criteria for equity accounting under ASC 815.
Preferred Stock
As of September 30, 2024 and December 31, 2023, shares of Preferred Stock were issued or outstanding. All shares of Legacy ONMD Series A-2 Preferred Stock and Series A-1 Preferred Stock were converted into Common Stock in connection with the Business Combination. See the Form 10-K/A for all other details relating to the Series A-2 Preferred Stock and Series A-1 Preferred Stock issued prior to December 31, 2023.
For the nine months ended September 30, 2024 and 2023, 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 nine months ended September 30, 2024 and 2023, 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:
Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Options to purchase Common Stock | ||||||||
| Unvested restricted stock units and awards | ||||||||
| Warrants for Common Stock | ||||||||
| Series A-1 preferred stock | ||||||||
| Series A-2 preferred stock | ||||||||
| Convertible promissory notes | ||||||||
| Total | ||||||||
| 10 |
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cost of revenue | $ | $ | ||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Research and development | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cost of revenue | $ | $ | ||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Research and development | ||||||||
| Total stock-based compensation expense | $ | $ | ||||||
Equity incentive plan – summary
During 2023, the Company adopted the OneMedNet Corporation 2022 Equity Incentive Plan (the “2022 Plan”) and reserved an amount of shares of The 2022 Plan became effective immediately upon the closing of the Business Combination and replaced the Legacy ONMD equity incentive plan.
Equity incentive plan – stock options
For the three months ended September 30, 2024 and 2023, the Company recorded stock-based compensation expense of $ and $ million, respectively, on its outstanding stock options.
For the nine months ended September 30, 2024 and 2023, the Company recorded stock-based compensation expense of $ thousand and $ million, respectively, on its outstanding stock options.
Equity incentive plan – restricted stock units (“RSU”)
For the three months ended September 30, 2024 and 2023, the Company recorded stock-based compensation expense of $ million and $ million, respectively, on its outstanding restricted stock units.
For the nine months ended September 30, 2024 and 2023, the Company recorded stock-based compensation expense of $ million and $ million, respectively, on its outstanding restricted stock units.
10. Stock Warrants
The Company has the following warrants outstanding for the periods presented:
| As of | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Liability Classified Warrants | ||||||||
| Business Combination Warrants | ||||||||
| PIPE Warrants | ||||||||
| Subtotal | ||||||||
| Equity Classified Warrants | ||||||||
| Public Warrants | ||||||||
| Private Placement Warrants | ||||||||
| Subtotal | ||||||||
| Grand Total | ||||||||
| 11 |
Private Placement Warrants
As described in Note 7, the Company issued the July 2024 Pre-Funded Warrants, the September 2024 Pre-Funded Warrants and the September 2024 Warrants in connection with the July and September 2024 private placements (together, the “Private Placement Warrants”). The Private Placement Warrants are classified as equity in accordance with ASC Subtopic 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”).
Convertible Promissory Notes Warrants
As
described in Note 4, the Company issued Convertible Promissory Notes Warrants in 2022 and 2023. The Convertible Promissory Notes
Warrants are classified as equity in accordance with ASC 815-40. The Company determined that the fair value of the combined
instrument (inclusive of the Convertible Promissory Notes) significantly exceeded the proceeds received; therefore, the Company
concluded that the Convertible Promissory Notes Warrants are most accurately portrayed as an issuance cost related to the
Convertible Promissory Notes. This resulted in an expense of $
In
connection with the closing of the Business Combination on November 7, 2023, all Convertible Promissory Notes Warrants were cashless
exercised into shares of Legacy ONMD common stock and exchanged based on the appropriate conversion ratio for the Common Stock less an
exercise price of $
PIPE Warrants
In
conjunction with the issuance of the PIPE Notes described in Note 4, Data Knights also issued and sold to each of the Purchasers
Business Combination Warrants
In
connection with the closing of the Business Combination on November 7, 2023, the Company assumed
11. 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):
| September 30, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Bitcoin | $ | $ | $ | $ | ||||||||||||
| Total assets, at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Business Combination Warrants | $ | $ | $ | $ | ||||||||||||
| PIPE Warrants | ||||||||||||||||
| PIPE Notes | ||||||||||||||||
| Yorkville Note | ||||||||||||||||
| SEPA derivative liability | ||||||||||||||||
| Total liabilities, at fair value | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Business Combination Warrants | $ | $ | $ | $ | ||||||||||||
| PIPE Warrants | ||||||||||||||||
| PIPE Notes | ||||||||||||||||
| Total liabilities, at fair value | $ | $ | $ | $ | ||||||||||||
| 12 |
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 nine months ended September 30, 2024 (in thousands):
| Business Combination Warrants | PIPE Warrants | |||||||
| Balance, December 31, 2023 | $ | $ | ||||||
| Changes in fair value | ( | ) | ||||||
| Balance, September 30, 2024 | $ | $ | ||||||
The Company remeasured the fair value of the Business Combination Warrants and PIPE Warrants at September 30, 2024 using the Black-Scholes option-pricing model with the following assumptions:
| As of September 30, 2024 | ||||||||
| PIPE | Business Combination | |||||||
| Warrants | Warrants | |||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Weighted average risk-free rate | % | % | ||||||
| Expected dividend yield | ||||||||
| Expected term (in years) | ||||||||
PIPE Notes and Yorkville Note
| PIPE Notes | Yorkville Note | |||||||
| Balance, December 31, 2023 | $ | $ | ||||||
| Additions | ||||||||
| Changes in fair value | ( | ) | ||||||
| Balance, September 30, 2024 | $ | $ | ||||||
The estimated fair values of the PIPE Notes and Yorkville Note are determined based on the aggregated, probability-weighted average of the outcomes of certain possible 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
| Yorkville SEPA | ||||
| Balance, December 31, 2023 | $ | |||
| Additions | ||||
| Changes in fair value | ( | ) | ||
| Balance, September 30, 2024 | $ | |||
The estimated fair value of the SEPA derivative liability was determined using a scenario-based valuation model based on the aggregated amount of draws expected to be made over the 24-month commitment period. The derivative value of such draws was then discounted back to each reporting period in which the put option was outstanding, in each case, based on a risk-adjusted discount rate based on the implied discount rate. As of September 30, 2024, the derivative liability was determined to have no value.
12. 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 $
| 13 |
In
connection with the issuance of the PIPE Notes, the Company also issued a total of
Convertible Promissory Notes and Warrants
As
described in Note 4, the Company issued various Convertible Promissory Notes to related party investors. Total gross proceeds raised
from Convertible Promissory Notes with related parties were $
Shareholder Loans
In
addition to the convertible shareholder loans described in Note 4, the Company also received gross proceeds of $
| As of | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Shareholder loans – nonconvertible | $ | $ | ||||||
| Shareholder loans – convertible | ||||||||
| Accrued interest | ||||||||
| Total loan – related party | $ | $ | ||||||
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 $ 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 September 30, 2024
and December 31, 2023, a registration statement has not yet been declared effective by the SEC, and a balance of $
13. Commitments and Contingencies
Lease Agreement
The
Company has a month-to-month lease for a suite at a cost of $
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 nine months ended September 30, 2024 and 2023.
14. Subsequent Events
The Company has evaluated subsequent events occurring through December 17, 2024, the date the condensed consolidated financial statements were issued, for events requiring recording or disclosure in the Company’s condensed consolidated financial statements.
| 14 |
Yorkville Letter
On October 8, 2024, Yorkville sent the Company a letter notifying the Company that it had breached a registration rights agreement with Yorkville by failing to file a Registration Statement on Form S-1 on the timeline set forth in the registration rights agreement (the “Yorkville Letter”). The Yorkville Letter asserted that this breach was an event of default and an amortization event under the prepaid advance in connection with the SEPA. The Yorkville Letter also asserted that the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024 was an event of default under the Yorkville Promissory Note. The Company subsequently engaged in discussions with Yorkville regarding the Yorkville Letter, which discussions are ongoing.
Pursuant
to the Yorkville Promissory Note, upon the occurrence of an amortization event, the Company is required to pay all principal and accrued
interest on the Yorkville Promissory Note, plus a
Board Turnover
As previously announced on a Current Report on Form 8-K filed with the SEC on October 8, 2024, on October 1, 2024, Paul J. Casey and Erkan Akyuz resigned from the Board of Directors of the Company (the “Board”), effective immediately. Also on October 1, 2024, the Board appointed Jair Clarke and Sherry Coonse McCraw to the Board to fill the vacancies created by Mr. Casey and Mr. Akyuz, respectively. In connection with Ms. Coonse McCraw and Mr. Clarke’s service on the Board, the Board approved an RSU grant providing for the grant of RSUs to each director for one full year of service (prorated for 2024). The RSUs will vest at the end of December 2024.
| 15 |
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/A.
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/A. 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 Business Combination.
Company Overview
OneMedNet Corporation 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.
Business Combination
On November 7, 2023, we held the closing of the Business Combination whereby Merger Sub merged with and into Legacy ONMD, with Legacy ONMD continuing as the surviving entity, which resulted in all of the issued and outstanding capital stock of Legacy ONMD being exchanged for shares of Common Stock upon the terms set forth in the agreement and plan of merger, dated April 25, 2022 (the “Merger Agreement”), by and among Data Knights, Merger Sub, Legacy ONMD, Data Knights, LLC, a Delaware limited liability company (the “Sponsor”), and Paul Casey, in his capacity as representative of the stockholders of Legacy ONMD. The Business Combination and other transactions that closed on November 7, 2023, pursuant to the Merger Agreement, led to Data Knights changing its name to “OneMedNet Corporation” and the business of the Company became the business of Legacy ONMD.
Pursuant to the terms of the Merger Agreement, the total consideration for the Business Combination and related transactions (the “Merger Consideration”) was approximately $200 million. In connection with the special meeting of stockholders of Data Knights, certain public holders holding 1,600,741 shares of Data Knights common stock exercised their right to redeem such shares for a pro rata portion of the funds held by Continental Stock Transfer & Trust Company, as trustee in the trust account established in connection with Data Knights’ initial public offering. Effective November 7, 2023, Data Knights’ units ceased trading, and effective November 8, 2023, the Common Stock began trading on the Nasdaq Global Market under the symbol “ONMD” and the Public Warrants began trading on the Nasdaq Global Market under the symbol “ONMDW.” The Common Stock and Public Warrants were transferred from The Nasdaq Global Market to The Nasdaq Capital Market at the opening of business on August 19, 2024, and continue to trade under the symbols “ONMD” and “ONMDW,” respectively.
As a result of the Business Combination, holders of Data Knights common stock automatically received Common Stock of OneMedNet, and holders of Data Knights warrants automatically received warrants of OneMedNet with substantively identical terms. At the closing of the Business Combination, all shares of Data Knights owned by the Sponsor (consisting of shares of Data Knights common stock and shares of Data Knights Class B common stock), automatically converted into an equal number of shares of OneMedNet’s Common Stock, and the private placement warrants held by the Sponsor automatically converted into warrants to purchase one share of OneMedNet Common Stock with substantively identical terms.
| 16 |
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, human resources, operations, 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 shareholder loans.
Other (Income) Expenses, Net
Other (income) expenses, net, primarily includes the changes in fair value of convertible debt and change in fair value of PIPE Notes for which we have elected the fair value option of accounting. Convertible notes payable, which include convertible promissory notes, PIPE Notes issued to related parties and the Yorkville Note, 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 loan extensions, deferred underwriting fees, Bitcoin and 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.
At the closing of the Business Combination, convertible promissory notes were converted into Common Stock immediately prior to the Closing and were no longer outstanding as of the closing date.
Other (income) expenses, net, also includes foreign exchange and tax expenses related to the Company’s operations and revenue outside of the United States.
| 17 |
Results of Operations
Comparison of the three months ended September 30, 2024 and 2023
The following table sets forth our condensed consolidated statements of operations data for the periods presented:
Three Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | $ | % | |||||||||||||
| Revenue | ||||||||||||||||
| Subscription revenue | $ | 102 | $ | 256 | $ | (154 | ) | -60 | % | |||||||
| Web imaging revenue | 40 | 70 | (30 | ) | -43 | % | ||||||||||
| Total revenue | 142 | 326 | (184 | ) | -56 | % | ||||||||||
| Cost of revenue | 226 | 293 | (67 | ) | -23 | % | ||||||||||
| Gross margin | (84 | ) | 33 | (117 | ) | -355 | % | |||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 1,865 | 1,312 | 553 | 42 | % | |||||||||||
| Sales and marketing | 140 | 243 | (103 | ) | -42 | % | ||||||||||
| Research and development | 298 | 405 | (107 | ) | -26 | % | ||||||||||
| Total operating expenses | 2,303 | 1,960 | 343 | 18 | % | |||||||||||
| Loss from operations | (2,387 | ) | (1,927 | ) | (460 | ) | 24 | % | ||||||||
| Other expense (income), net | ||||||||||||||||
| Interest expense | 36 | - | 36 | N/A | ||||||||||||
| Change in fair value of warrants | 6 | - | 6 | N/A | ||||||||||||
| Change in fair value of PIPE Notes | (77 | ) | - | (77 | ) | N/A | ||||||||||
| Change in fair value of Yorkville Note | (262 | ) | - | (262 | ) | N/A | ||||||||||
| Change in fair value of derivative liability | (160 | ) | - | (160 | ) | N/A | ||||||||||
| Change in fair value of Bitcoin | 124 | - | 124 | N/A | ||||||||||||
| Change in fair value of convertible promissory notes | - | 7,621 | (7,621 | ) | -100 | % | ||||||||||
| Stock warrant expense | - | 4,285 | (4,285 | ) | -100 | % | ||||||||||
| Other expense | 4 | 7 | (3 | ) | -43 | % | ||||||||||
| Total other expense, net | (329 | ) | 11,913 | (12,242 | ) | -103 | % | |||||||||
| Net loss | $ | (2,058 | ) | $ | (13,840 | ) | $ | 11,782 | -85 | % | ||||||
Revenue
Three Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | $ | % | |||||||||||||
| Subscription revenue (Beam) | $ | 102 | $ | 256 | $ | (154 | ) | -60 | % | |||||||
| Web imaging revenue (Real-World Data) | 40 | 70 | (30 | ) | -43 | % | ||||||||||
| Total | $ | 142 | $ | 326 | $ | (184 | ) | -56 | % | |||||||
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, 2024, overall revenue decreased by 56% compared to the prior year period. The primary driver for the subscription revenue decrease was because of the planned discontinuation of this 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 decreased revenue for the three months ended September 30, 2024. The primary driver for the web imaging revenue decrease was due to lower deliveries during the three months ended September 30, 2024.
Cost of Revenue
Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cost of revenue | 226 | 293 | ||||||
| % of revenue | 159 | % | 90 | % | ||||
| 18 |
For the three months ended September 30, 2024, our cost of revenue as a percentage of revenue increased by 69% compared to the prior year period. The increase is primarily driven by lower overall revenues and higher iRWD consulting costs as we transition away from the BEAM platform to focus on our iRWD product.
General and Administrative
Our general and administrative expense increased $0.6 million, or 42%, to $1.9 million for the three months ended September 30, 2024 from $1.3 million for the three months ended September 30, 2023. The increase is primarily due to an increase in professional fees of $1.0 million from being a public company (e.g. higher legal, audit and consulting fees) and salaries and benefits of $0.1 million, which are partially offset by a decrease in stock compensation expense of $0.6 million and other miscellaneous office expenses of $35 thousand.
Sales and Marketing
Our sales & marketing expense decreased $0.1 million, or 42%, to $0.1 million for the three months ended September 30, 2024 from $0.2 million for the three months ended September 30, 2023. The decrease is primarily due to a decrease in consulting expenses of $76 thousand and salaries and benefits of $58 thousand, which are partially offset by increases in software expenses of $17 thousand and dues and subscriptions of $16 thousand.
Research and development
Our research and development expense decreased $0.1 million, or 26%, to $0.3 million for the three months ended September 30, 2024 from $0.4 million for the three months ended September 30, 2023. The decrease is primarily due to a decrease in professional fees of $56 thousand and software and hosting expenses of $20 thousand.
Interest Expense
During the three months ended September 30, 2024, interest expense was primarily comprised of interest expense on loans made from related parties (Management and Directors) and interest expense on the remaining $0.4 million of deferred underwriter fees payable that is payable in cash. During the three months ended September 30, 2023, we did not incur any interest expense.
Change in Fair Value of Warrants
The change in fair value of Warrants during the three months ended September 30, 2024 was due to the closing of the Business Combination and the resulting fluctuations in the market price of shares of Common Stock.
Change in Fair Value of PIPE Notes
The change in fair value of PIPE Notes during the three months ended September 30, 2024 was due to the closing of the Business Combination and the resulting fluctuations in the market price of shares of Common Stock.
Change in Fair Value of Yorkville Note
The change in fair value of Yorkville Note during the three months ended September 30, 2024 was due to the Yorkville Note issued in June 2024 and the resulting fluctuations of the market price of shares of Common Stock.
Change in Fair Value of Derivative Liability
The change in fair value of derivative liability during the three months ended September 30, 2024 relates to the mark-to-market adjustment of the SEPA put option derivative liability, which was determined to have no value as of September 30, 2024.
Change in Fair Value of Bitcoin
The change in fair value of Bitcoin during the three months ended September 30, 2024 relates to the mark-to-market adjustment of Bitcoin, which we began strategically investing in using excess cash from our private placement transactions. During the three months ended September 30, 2023, we did not have any Bitcoin holdings.
Change in Fair Value of Convertible Promissory Notes
The change in fair value of convertible promissory notes was due to the closing of the Business Combination and the resulting fluctuations of the market price of shares of Common Stock. The Legacy ONMD Convertible Promissory Notes were converted at the closing of the Business Combination and were no longer outstanding during the three months ended September 30, 2024.
Stock Warrant Expense
During the three months ended September 30, 2024, we did not incur any stock warrant expense. Stock warrant expense during the three months ended September 30, 2023 was due to the Convertible Promissory Notes Warrants, which was most accurately portrayed as an issuance cost related to the Convertible Promissory Notes.
| 19 |
Comparison of the nine months ended September 30, 2024 and 2023
The following tables set forth our condensed consolidated statements of operations data for the periods presented:
Nine Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | $ | % | |||||||||||||
| Revenue | ||||||||||||||||
| Subscription revenue | $ | 443 | $ | 595 | $ | (152 | ) | -26 | % | |||||||
| Web imaging revenue | 174 | 86 | 88 | 102 | % | |||||||||||
| Total revenue | 617 | 681 | (64 | ) | -9 | % | ||||||||||
| Cost of revenue | 872 | 812 | 60 | 7 | % | |||||||||||
| Gross margin | (255 | ) | (131 | ) | (124 | ) | 95 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 4,934 | 2,475 | 2,459 | 99 | % | |||||||||||
| Sales and marketing | 623 | 813 | (190 | ) | -23 | % | ||||||||||
| Research and development | 1,127 | 1,566 | (439 | ) | -28 | % | ||||||||||
| Total operating expenses | 6,684 | 4,854 | 1,830 | 38 | % | |||||||||||
| Loss from operations | (6,939 | ) | (4,985 | ) | (1,954 | ) | 39 | % | ||||||||
| Other expense (income), net | ||||||||||||||||
| Interest expense | 120 | - | 120 | N/A | ||||||||||||
| Change in fair value of warrants | 5 | - | 5 | N/A | ||||||||||||
| Change in fair value of PIPE Notes | (44 | ) | - | (44 | ) | N/A | ||||||||||
| Change in fair value of Yorkville Note | 561 | - | 561 | N/A | ||||||||||||
| Change in fair value of Bitcoin | 124 | - | 124 | N/A | ||||||||||||
| Change in fair value of convertible promissory notes | - | 17,872 | (17,872 | ) | -100 | % | ||||||||||
| Stock warrant expense | 33 | 8,385 | (8,352 | ) | -100 | % | ||||||||||
| Other expense | 17 | 42 | (25 | ) | -60 | % | ||||||||||
| Total other expense, net | 816 | 26,299 | (25,483 | ) | -97 | % | ||||||||||
| Net loss | $ | (7,755 | ) | $ | (31,284 | ) | $ | 23,529 | -75 | % | ||||||
Revenue
Nine Months Ended September 30, | Change | |||||||||||||||
| 2024 | 2023 | $ | % | |||||||||||||
| Subscription revenue (Beam) | $ | 443 | $ | 595 | $ | (152 | ) | -26 | % | |||||||
| Web imaging revenue (Real-World Data) | 174 | 86 | 88 | 102 | % | |||||||||||
| Total | $ | 617 | $ | 681 | $ | (64 | ) | -9 | % | |||||||
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, 2024, overall revenue decreased by 9%. The primary driver for the decrease in subscription revenue was because of the planned discontinuation of this 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 an immaterial increase for the nine months ended September 30, 2024. The primary driver for the web imaging revenue increase was due to our enhanced focus on iRWD sales leading to increased customer deliveries during the nine months ended September 30, 2024.
| 20 |
Cost of Revenue
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cost of revenue | 872 | 812 | ||||||
| % of revenue | 141 | % | 119 | % | ||||
For the nine months ended September 30, 2024, our cost of revenue as a percentage of revenue increased by 22%. The increase is primarily driven by the decrease in BEAM revenue due to our planned discontinuation of the platform in 2025. In addition, due to our enhanced focus on the iRWD product, we have incurred increased iRWD data and consulting costs during the nine months ended September 30, 2024.
General and Administrative
Our general and administrative expense increased $2.5 million, or 99%, to $4.9 million for the nine months ended September 30, 2024 from $2.5 million for the nine months ended September 30, 2023. The increase is primarily due to an increase in professional fees of $2.3 million from being a public company (e.g. higher legal, audit and consulting fees), a commitment fee of $0.5 million from the SEPA, salaries and benefits of $0.2 million, and bad debt expense of $0.1 million, which are partially offset by a decrease in stock compensation expense of $0.6 million.
Sales and Marketing
Our sales & marketing expense decreased $0.2 million, or 23%, to $0.6 million for the nine months ended September 30, 2024 from $0.8 million for the nine months ended September 30, 2023. The decrease is primarily due to a decrease in salaries and benefits of $0.3 million, which is partially offset by an increase in trade shows of $0.1 million.
Research and development
Our research and development expense decreased $0.4 million, or 28%, to $1.1 million for the nine months ended September 30, 2024 from $1.5 million for the nine months ended September 30, 2023. The decrease is primarily due to a decrease in stock compensation expense $0.4 million.
Interest Expense
During the nine months ended September 30, 2024, interest expense was primarily comprised of interest expense on loans made from related parties (Management and Directors) and interest expense on the remaining $0.4 million of deferred underwriter fees payable that is payable in cash. During the nine months ended September 30, 2023, we did not incur any interest expense.
Change in Fair Value of Warrants
The change in fair value of Warrants during the nine months ended September 30, 2024 was due to the closing of the Business Combination and the resulting fluctuations in the market price of shares of Common Stock.
Change in Fair Value of PIPE Notes
The change in fair value of PIPE Notes during the nine months ended September 30, 2024 was due to the closing of the Business Combination and the resulting fluctuations in the market price of shares of Common Stock.
Change in Fair Value of Yorkville Note
The change in fair value of Yorkville Note during the nine months ended September 30, 2024 was due to the Yorkville Note issued in June 2024 and the resulting fluctuations of the market price of shares of Common Stock.
Change in Fair Value of Bitcoin
The change in fair value of Bitcoin during the nine months ended September 30, 2024 relates to the mark-to-market adjustment of Bitcoin, which we began strategically investing in using excess cash from our private placement transactions. During the nine months ended September 30, 2023, we did not have any Bitcoin holdings.
Change in Fair Value of Convertible Promissory Notes
The change in fair value of convertible promissory notes was due to the closing of the Business Combination and the resulting fluctuations of the market price of shares of Common Stock. The Legacy ONMD Convertible Promissory Notes were converted at the closing of the Business Combination and were no longer outstanding during the nine months ended September 30, 2024.
Stock Warrant Expense
Stock warrant expense during the nine months ended September 30, 2024 was due to the Helena Termination Warrants, which was considered a cost to terminate the Helena SPA.
Stock warrant expense during the nine months ended September 30, 2023 was due to the Convertible Promissory Notes Warrants, which was most accurately portrayed as an issuance cost related to the Convertible Promissory Notes.
| 21 |
Liquidity and Capital Resources
As of September 30, 2024, 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:
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by (used in) | ||||||||
| Operating activities | $ | (5,007 | ) | $ | (3,066 | ) | ||
| Investing activities | (2,296 | ) | (28 | ) | ||||
| Financing activities | 9,190 | 3,435 | ||||||
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 financial instruments, and 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.
Net cash used in operating activities was $5.0 million during the nine months ended September 30, 2024. Net cash used in operating activities was due to our net loss of $7.8 million, which is offset by non-cash items of $1.2 million, primarily consisting of stock-based compensation of $0.4 million, change in fair value of Yorkville Note of $0.6 million, change in fair value of Bitcoin of $0.1 million, non-cash interest expense of $0.1 million, and cash from operating assets and liabilities of $1.5 million due to the timing of cash payments to vendors and cash receipts from customers.
By comparison, the Company’s net cash used in operating activities was $3.1 million during the nine months ended September 30, 2023. Net cash used in operating activities for the nine months ended September 30, 2023 was due to our net loss of $31.3 million, which is offset by non-cash items of $27.7 million, primarily consisting of the change in fair value of convertible debt of $17.9 million, stock warrant expense of $8.4 million and stock-based compensation expense of $1.4 million, and cash from operating assets and liabilities of $0.5 million due to the timing of cash payments to vendors and cash receipts from customers.
| 22 |
Investing Activities
Our investing activities have consisted primarily of property and equipment purchases and Bitcoin holdings.
Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2024 consisted of a $2.8 million investment in Bitcoin and $28 thousand of purchased property and equipment, which are partially offset by a $0.5 million sale of Bitcoin.
Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2023 consisted of $28 thousand of purchased property and equipment.
Financing Activities
Net cash provided by financing activities was $9.2 million for the nine months ended September 30, 2024, which primarily consisted of $6.3 million of net proceeds received from three private placement transactions, $2.0 million of proceeds received from related party loans (net of $0.2 million of repayments) and $1.4 million of proceeds received from the issuance of the Yorkville Note. These increases are partially offset by repayments of $0.1 million to settle a portion of our deferred underwriter fees payable and repurchases of Common Stock.
By comparison, the Company’s net cash provided by financing activities was $3.4 million for the nine months ended September 30, 2023, which primarily consisted of $3.9 million of proceeds from the issuance of convertible promissory notes, and $0.7 million of proceeds received from related party loans, offset by $1.2 million of Business Combination costs paid.
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 September 30, 2024:
| Payments due in: | ||||||||||||
| Total | Less than 1 year | 1-3 years | ||||||||||
| Accounts payable & accrued expenses | $ | 6,161 | $ | 6,161 | $ | - | ||||||
| Loan extensions | 2,992 | 2,992 | - | |||||||||
| Deferred underwriter fee payable | 3,237 | 3,237 | - | |||||||||
| Loan, related party | 2,306 | 2,306 | - | |||||||||
| PIPE Notes | 1,593 | 1,593 | - | |||||||||
| Yorkville Note | 1,911 | 1,911 | - | |||||||||
| $ | 18,200 | $ | 18,200 | $ | - | |||||||
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.
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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/A, the notes to our audited financial statements appearing in the Form 10-K/A, 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, 2024 from those discussed in the Form 10-K/A.
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 September 30, 2024. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2024, our disclosure controls and procedures were not effective 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. During September 2024, changes were made to accounting personnel to enhance our financial reporting structure, which we expect to alleviate reporting pressures, including reporting of non-routine transactions. In addition, the new personnel has focused on creating central filing repositories to manage accounting records and other company documents.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
我們 可能不時面臨各種索賠、訴訟和其他法律及行政程序，這些都是在日常業務過程中產生的。部分索賠、訴訟和其他程序可能涉及高度複雜的問題，這些問題存在顯著的不確定性， 可能導致損害賠償、罰款、處罰、非金錢制裁或救濟。我們目前不是任何法律程序的當事方， 在管理層看來，如果對我們作出不利裁定，將單獨或合併對我們的業務、經營成果、財務狀況或現金流產生重大不利影響。
項目 1A. 風險因素。
除了本報告中列出的其他信息外，您還應該仔細考慮在Form 10-K/A中的「風險因素」中討論的因素，以及我們其他的公開文件，這些因素可能會對我們的業務、財務控件或未來結果產生重大影響。除下面所述外，來自Form 10-K/A和我們其他公開文件中「風險因素」之前披露的風險因素沒有重大變化。
比特幣的價值歷史上經歷了大幅波動。因爲我們目前沒有對比特幣的投資進行對沖，也不打算在可預見的未來這麼做，所以我們直接暴露在比特幣的價格波動和相關風險之中。
雖然 比特幣的價格主要根據數據來確定 來自 各大交易所、場外交易市場和衍生品平台，但歷史上，比特幣價格一直波動很大，並受到多種因素的影響。這些因素包括但不限於，比特幣的全球採用率和使用率的增長，比特幣網絡軟件協議的維護和發展，消費人群的變化以及公衆的品味，欺詐或不合法的行爲者，實際或感知的稀缺性，以及政治、經濟、監管或其他條件。此外，定價可能是由於對比特幣未來增值或我們股價的投機，而使價格更加波動。
Currently, we do not use a formula or specific methodology to determine whether or when we will sell Bitcoin that we hold, or the number of Bitcoins we will sell. Rather, decisions to hold or sell Bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time. Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us. At this time, we do not anticipate engaging in any hedging activities related to our holding of Bitcoin; this would expose us to substantial decreases in the price of Bitcoin.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended September 30, 2024, 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 September 30, 2024, no director or officer of the Company
Item 6. Exhibits.
The following documents are included as exhibits to this Quarterly Report on Form 10-Q:
* 隨附提交。
+ 管理或補償協議或安排。
# 本報告附錄32.1和32.2中提供的認證視爲附隨此季度報告的10-Q表格，不會被視爲根據1934年《證券交易法》第18條的規定「提交」，除非註冊人明確引用它。
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簽名
根據1934年證券交易法的要求，註冊人已正式授權以下籤署人於2024年12月17日代表其簽署本報告。
| OneMedNet 公司 | ||
| 作者： | /s/ 羅伯特·戈爾登 | |
| 羅伯特 戈爾登 | ||
臨時財務長 (正式授權的高級職員及信安金融和會計主管) | ||
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