OneMedNet Corp

Previous wording

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 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 loan extensions, deferred underwriting fees 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.

Current wording

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 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.

Previous wording

Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the three months ended March 31, 2024, overall revenue increased by 24%. The primary driver for the subscription revenue increase was delivery of revenue to a significant customer. The primary driver for the increase in web imaging revenue was revenue deliveries pushed to the first quarter of 2024.

Current wording

Our revenue is comprised of sales made from our subscription revenue (BEAM) and from our web imaging (iRWD). For the three months ended June 30, 2024, overall revenue increased by 31% 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 June 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 three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024, we were able to reduce our cost of revenue as a percentage of revenue by 17%. The decrease is primarily driven by lower iRWD consulting costs during the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2024, our cost of revenue as a percentage of revenue increased by 12% compared to the prior year period. The increase is primarily driven by lower subscription revenues and higher iRWD consulting costs as we transition away from the BEAM platform to focus on our iRWD product.

Previous wording

Our sales & marketing expense decreased $30 thousand, or 12%, to $229 thousand for the three months ended March 31, 2024 from $259 thousand for the three months ended March 31, 2023. The decrease is primarily due to a decrease in salaries and benefits of $84 thousand, which is partially offset by increases in trade shows, dues and subscriptions and consultants, which collectively increased by $54 thousand.

Current wording

Our sales & marketing expense decreased $58 thousand, or 19%, to $253 thousand for the three months ended June 30, 2024 from $311 thousand for the three months ended June 30, 2023. The decrease is primarily due to a decrease in salaries and benefits of $122 thousand and consulting fees of $26 thousand, which are partially offset by increases in trade shows of $56 thousand, dues and subscriptions of $16 thousand, and software of $17 thousand.

Previous wording

During the three months ended March 31, 2024, interest expense was primarily comprised of interest expense on loans made from related parties (Management and Directors) and interest expense on $0.5 million of deferred underwriter fees payable in cash. During the three months ended March 31, 2023, we did not incur any interest expense.

Current wording

During the three months ended June 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 $0.5 million of deferred underwriter fees payable. During the three months ended June 30, 2023, we did not incur any interest expense.

Previous wording

The change in fair value of convertible debt was due to the closing of the Business Combination and the resulting fluctuations of the market price of shares of Common Stock*.*The Convertible Promissory Notes were no longer outstanding during the three months ended March 31, 2024.

Current wording

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 June 30, 2024.

Previous wording

Our general and administrative expense increased $0.8 million, or 152%, to $1.4 million for the three months ended March 31, 2024 from $0.5 million for the three months ended March 31, 2023. The increase is primarily due to an increase in professional fees of $0.6 million from being a public company, employee salaries and benefits of $0.1 million and bad debt expense of $0.1 million.

Current wording

Our general and administrative expense increased $1.9 million, or 164%, to $3.1 million for the six months ended June 30, 2024 from $1.2 million for the six months ended June 30, 2023. The increase is primarily due to an increase in professional fees of $1.3 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 $0.1 million, and bad debt expense of $0.1 million, which are partially offset by a decrease in other miscellaneous office expenses of $0.1 million.

Previous wording

Our research and development expense decreased $0.1 million, or 24%, to $0.5 million for the three months ended March 31, 2024 from $0.6 million for the three months ended March 31, 2023. The decrease is primarily due to a decrease in stock compensation expense of $0.2 million, which is partially offset by an increase in salaries and benefits of $0.1 million.

Current wording

Our research and development expense decreased $0.3 million, or 29%, to $0.8 million for the six months ended June 30, 2024 from $1.2 million for the six months ended June 30, 2023. The decrease is primarily due to a decrease in stock compensation expense of $0.4 million, which is partially offset by an increase in salaries and benefits of $0.1 million.

Previous wording

The following table reconciles U.S. GAAP net loss to Adjusted EBITDA during the periods presented (in thousands):

Current wording

The following table reconciles U.S. GAAP net loss to Adjusted EBITDA during the three months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Net cash used in operating activities was $1.5 million during the three months ended March 31, 2024. Net cash used in operating activities was due to our net loss of $2.1 million, which is offset by non-cash items of $0.1 million, primarily consisting of stock-based compensation, and cash from operating assets and liabilities of $0.4 million due to the timing of cash payments to vendors and cash receipts from customers.

Current wording

Net cash used in operating activities was $3.1 million during the six months ended June 30, 2024. Net cash used in operating activities was due to our net loss of $5.7 million, which is offset by non-cash items of $1.4 million, primarily consisting of stock-based compensation of $0.2 million, change in fair value of Yorkville Note of $0.8 million, change in fair value of derivative liability of $0.2 million, non-cash interest expense of $0.1 million, and cash from operating assets and liabilities of $1.3 million due to the timing of cash payments to vendors and cash receipts from customers.

Previous wording

By comparison, the Company’s net cash used in operating activities was $1.0 million during the three months ended March 31, 2023. Net cash used in operating activities for the three months ended March 31, 2023 was due to our net loss of $7.8 million, which is offset by non-cash items of $6.7 million, primarily consisting of the change in fair value of convertible debt of $4.4 million, stock warrant expense of $1.9 million and stock-based compensation expense of $0.4 million, and cash from operating assets and liabilities of $0.1 million due to the timing of cash payments to vendors and cash receipts from customers.

Current wording

By comparison, the Company’s net cash used in operating activities was $2.0 million during the six months ended June 30, 2023. Net cash used in operating activities for the six months ended June 30, 2023 was due to our net loss of $17.4 million, which is offset by non-cash items of $15.0 million, primarily consisting of the change in fair value of convertible debt of $10.3 million, stock warrant expense of $4.1 million and stock-based compensation expense of $0.6 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.

Previous wording

Net cash and cash equivalents used in investing activities during the three months ended March 31, 2024 consisted of $6 thousand of purchased property and equipment.

Current wording

Net cash and cash equivalents used in investing activities during the six months ended June 30, 2024 and 2023 consisted of $7 thousand of purchased property and equipment.

Previous wording

Net cash provided by financing activities was $1.7 million for the three months ended March 31, 2024, which primarily consisted of $1.3 million and $0.4 million of proceeds from related party loans and our revolving line of credit, respectively.

Current wording

Net cash provided by financing activities was $3.7 million for the six months ended June 30, 2024, which primarily consisted of $1.9 million of proceeds received from related party loans, $1.4 million of proceeds received from the issuance of Yorkville Note, and $0.5 million of proceeds from our revolving line of credit.

Previous wording

By comparison, the Company’s net cash provided by financing activities was $0.9 million for the three months ended March 31, 2023, which primarily consisted of $1.1 million proceeds from the issuance of convertible promissory notes payable offset by $0.2 million of Business Combination costs paid.

Current wording

By comparison, the Company’s net cash provided by financing activities was $2.0 million for the six months ended June 30, 2023, which primarily consisted of $2.1 million of proceeds from the issuance of convertible promissory notes, and $0.6 million of proceeds received from related party loans, offset by $0.7 million of Business Combination costs paid.