S-1/A: OneMedNet Faces Going Concern Doubts Amidst Revenue Decline and Nasdaq Delisting Threats, Pursues Extensive Capital Raises

OneMedNet Corporation, a healthcare software company, reported continued significant net losses and a substantial accumulated deficit, leading its auditors to express substantial doubt about its ability to continue as a going concern, while simultaneously facing multiple Nasdaq listing compliance issues and pursuing significant equity and debt financing.

Summary

• OneMedNet Corporation, a healthcare software company specializing in digital medical image management and Real World Data (iRWD), has incurred recurring net losses since its inception, including $1.9 million for the three months ended March 31, 2025, and $10.1 million for the year ended December 31, 2024.
• As of March 31, 2025, the company had an accumulated deficit of $103.5 million, with cash and cash equivalents of $144 thousand and Bitcoin holdings of $793 thousand, which management believes are insufficient to meet foreseeable cash needs for the next 12 months.
• The company is actively pursuing additional working capital through equity and debt offerings to fund its operations and capital requirements.
• Total revenue decreased by 45% to $137 thousand for the three months ended March 31, 2025, compared to $248 thousand in the prior-year period, primarily due to a 71% decrease in subscription revenue from the planned discontinuation of its BEAM platform.
• Web imaging (iRWD) revenue increased by 68% to $79 thousand for the three months ended March 31, 2025, reflecting an enhanced focus on this service line.
• Gross margin for the three months ended March 31, 2025, was negative $224 thousand, a significant increase in loss from negative $69 thousand in the prior-year period, driven by lower subscription revenue without immediate cost savings from the BEAM platform transition.
• The company received notices from Nasdaq on March 12, 2025, for non-compliance with minimum market value of listed securities ($35 million), minimum stockholders' equity ($2.5 million), and minimum net income ($500 thousand) requirements, with a compliance period until September 8, 2025.
• A separate Nasdaq notice was received on April 10, 2025, for non-compliance with the $1.00 minimum bid price requirement, with a compliance period until October 7, 2025.
• In the second quarter of 2025, the company settled or converted approximately $11.0 million of current liabilities, representing a 60% reduction in total liabilities outstanding as of March 31, 2025, including $2.76 million of deferred underwriter fees and $3.3 million in shareholder loans converted to common stock.
• The company is undertaking a primary offering of up to 12,085,275 shares of common stock upon the exercise of warrants, which could generate up to approximately $139 million in proceeds, and a secondary offering of up to 28,152,560 shares by selling shareholders, from which the company will not receive proceeds.
• Recent private placements include $2.5 million from the Sixsmith Private Placement, $500,000 from the Kosasa Investment, and $700,000 from the Yu Investment, all at a purchase price of $0.42 per share.
• The company strategically invested $2.8 million and $0.4 million of net proceeds from July and September 2024 private placements, respectively, into Bitcoin, a highly volatile asset.
• As of June 23, 2025, the closing price of the company's Common Stock was $0.34 per share, significantly below the $11.50 exercise price of Public and Private Placement Warrants, making their exercise unlikely under current market conditions.
• The outstanding Common Stock being offered for resale in this prospectus represents approximately 59.6% of the company's outstanding shares as of June 23, 2025, adjusted for recent share issuances, indicating substantial potential dilution.
• The company has identified material weaknesses in its internal control over financial reporting related to user access/segregation of duties, lack of formalized control environment, accounting for non-routine transactions, and record keeping.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by recurring losses, a substantial accumulated deficit, and a 'going concern' warning from auditors. Multiple Nasdaq listing deficiencies indicate a high risk of delisting. While there are efforts to raise capital and a strategic focus on a growing market (iRWD), the current financial state, significant dilution, and reliance on future capital raises present a highly negative outlook for investors.

Positives

• Web imaging (iRWD) revenue increased by 68% for the three months ended March 31, 2025, and 104% for the year ended December 31, 2024, demonstrating growth in its strategic focus area.
• The company successfully settled or converted approximately $11.0 million of current liabilities in the second quarter of 2025, reducing total liabilities by 60% as of March 31, 2025, which includes settling $2.76 million of deferred underwriter fees and converting $3.3 million in shareholder loans.
• Recent private placements, including the Sixsmith, Kosasa, and Yu investments, have raised approximately $3.7 million in gross proceeds, providing additional working capital.
• The company has a Standby Equity Purchase Agreement (SEPA) with Yorkville for up to $25.0 million in shares, providing a potential source of future capital.
• OneMedNet has established a significant network of over 1,400 healthcare sites, covering more than 31 million patient records, positioning it as a leader in regulatory-grade imaging Real World Data (iRWD).
• The company's iRWD offering aligns with increasing demand and regulatory support for Real World Data and Real World Evidence (RWE) in the life sciences industry, including FDA guidelines for regulatory approvals.
• The company's expertise in AI/ML technology, data privacy/security, and clinical data curation provides a competitive advantage in the evolving RWD/RWE market.

Negatives

• The company has a history of recurring net losses since inception, with a net loss of $1.9 million for Q1 2025 and an accumulated deficit of $103.5 million as of March 31, 2025.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern due to recurring operating losses and insufficient cash to fund operations for the next 12 months.
• Total revenue decreased by 45% for the three months ended March 31, 2025, primarily driven by a 71% decrease in subscription revenue due to the planned discontinuation of the BEAM platform.
• Gross margin worsened significantly, becoming negative $224 thousand for Q1 2025, compared to negative $69 thousand in Q1 2024, as costs of revenue increased while overall revenue declined.
• The company is not in compliance with multiple Nasdaq listing requirements, including minimum market value of listed securities ($35 million), minimum stockholders' equity ($2.5 million), minimum net income ($500 thousand), and the $1.00 minimum bid price, raising significant delisting risk.
• The current market price of the common stock ($0.34 as of June 23, 2025) is significantly below the $11.50 exercise price of Public and Private Placement Warrants, making it unlikely that the company will receive the expected $139 million from their exercise.
• The offering of securities for resale represents a substantial percentage (59.6%) of outstanding common stock, creating significant potential for further dilution and downward pressure on the stock price.
• The company has identified material weaknesses in its internal control over financial reporting, which could lead to inaccurate financial reporting and adversely affect business operations and investor confidence.
• Holding Bitcoin exposes the company to high price volatility, regulatory uncertainty, and risks of loss due to security breaches or exchange failures, as Bitcoin is not FDIC or SIPC insured.
• General and administrative expenses increased significantly in 2024 due to increased public company reporting obligations and regulatory requirements.

Risks

• The common stock may be subject to extreme volatility, influenced by factors such as technical developments, customer relationships, operating results, competitor success, changes in laws, litigation, and general economic conditions.
• Inability to maintain listing on the Nasdaq Capital Market or any other stock exchange could adversely affect stock price, liquidity, and ability to obtain financing.
• Principal stockholders will continue to have significant influence over Board elections and corporate actions, potentially delaying or preventing acquisitions.
• The company could be subject to securities class action litigation, resulting in substantial costs and diversion of management attention.
• If securities or industry analysts do not publish research or publish inaccurate/unfavorable research, the market price and trading volume could decline.
• The company does not expect to pay dividends in the foreseeable future, requiring investors to rely on price appreciation for return on investment, which may not occur.
• Future sales of substantial amounts of common stock or convertible securities by the company or existing stockholders could adversely affect the market price due to dilution or perception of sales.
• Holders of Private Placement Warrants have no rights as common stock holders until exercise, and the securities offered represent a substantial percentage of outstanding common stock, potentially causing significant price decline.
• As an emerging growth company, reduced reporting requirements may make the common stock less attractive to investors, potentially leading to a less active trading market and more volatile share price.
• Anti-takeover provisions in corporate documents and Delaware law could impair or delay takeover attempts, limiting stockholder opportunity for a premium.
• The company has a history of operating losses and may never achieve profitability, with substantial doubt about its ability to continue as a going concern.
• Difficulties in managing business growth could negatively impact operations, including challenges in implementing administrative and operational improvements.
• Inability to successfully execute business objectives and growth strategies, such as expanding globally, adding customers, or protecting intellectual property, could materially adversely affect operating results.
• The Real World Data and Real World Evidence market is highly competitive, and the company may not succeed in competing or maintaining confidence among partners and customers.
• Inability to attract and retain key employees and qualified personnel could harm the company's ability to compete.
• A material breach in security of information systems, cyber-attacks, or other disruptions could adversely affect the company, expose it to liability, and damage its business and reputation.
• Failure to adequately protect or expand intellectual property related to current or future products could harm business prospects.
• Failure to comply with extensive legal and regulatory requirements affecting the healthcare industry could result in increased costs, penalties, and loss of business.
• Collection, use, and disclosure of personal information are subject to privacy and security regulations, and non-compliance could result in significant liability or reputational harm.
• Operations could be damaged or adversely affected by natural disasters and other catastrophic events, with insurance coverage potentially inadequate.
• Changes to United States trade policy, particularly related to the Canadian workforce, may negatively affect business if platform access in the U.S. is restricted.
• Ability to utilize net operating loss and tax credit carryforwards may be subject to limitations due to ownership changes or future regulatory changes.
• Risks related to holding Bitcoin include high volatility, legal/commercial/regulatory/technical uncertainty, lack of transparency in trading venues, emergence of other digital assets, illiquidity, security breaches, and potential reclassification as a security.
• Management has limited experience in operating a public company, potentially leading to increased time devoted to regulatory oversight and higher operating costs.
• Significant increased expenses and administrative burdens as a public company could adversely affect business, financial condition, and results of operations.
• Material weaknesses in internal control over financial reporting could lead to inaccurate or untimely financial reporting, restatements, and loss of investor confidence.
• The business model is capital-intensive, and inability to raise additional capital on attractive terms could materially and adversely affect operations and prospects, with equity issuances being dilutive to stockholders.
• The company may redeem unexpired Public Warrants prior to their exercise at a time disadvantageous to holders, potentially forcing exercise or sale at a nominal price.

Future Outlook

The company expects to continue incurring significant losses in the development, marketing, sale, and delivery of its services for the foreseeable future. Its ability to continue as a going concern is dependent on generating cash flows from operations and obtaining additional financing through equity and debt offerings. The company aims to increase its global reach in the Real World Evidence solutions market, innovate its commercial approach by expanding its sales network and focusing on target markets (Imaging AI, medical device, pharmaceutical companies), and enhance its service offering by continually expanding and improving its product portfolio into high-growth, high-demand Real World Data and Real World Evidence solutions.

Management Comments

• Management believes the company has demonstrated its quality and responsiveness in clinical imaging and curation of Real World Data based on success in compiling one of the largest networks of imaging centers in the United States.
• Management believes the company has a unique opportunity to positively impact millions of lives while improving customer business productivity by enabling life science companies to bring safer and more effective patient care to market sooner.
• Management believes the company unleashes the power of research-grade image-centric iRWD that is curated to meet every cohort requirement and stand up to the rigors of prospective clinical trials.
• Management believes the company has been a leader in extracting, securing, and transferring medical data for over 10 years, requiring specialized expertise in compliance, privacy, clinical processes, radiology interpretation, and AI/ML technology.
• Management believes the company is a leader in the field of regulatory-grade imaging RWD curators.
• Management does not believe that current cash and cash equivalents are sufficient to meet foreseeable cash needs for at least the next 12 months and intends to raise cash through debt and equity offerings.

Industry Context

The company operates in the rapidly evolving and highly competitive Real World Data (RWD) and Real World Evidence (RWE) market within the healthcare industry, specifically focusing on clinical imaging. This market is experiencing significant growth, with the global RWE solutions market estimated at $2.6 billion in 2023 (projected 8.4% CAGR to 2030) and the global RWD market at $7.51 billion in 2024 (projected 9.1% CAGR to 2031). Key drivers include rising demand for enhanced RWE capabilities, a shift from volume to value-based care, advancements in data analytics, and increasing government initiatives, such as the FDA's Real World Evidence Program, which supports the use of RWD/RWE for regulatory decisions. Artificial intelligence (AI) is playing an increasingly crucial role in enhancing data anomaly detection, standardization, quality checking, and generating insights from RWD, transforming drug development and patient treatment. The industry is moving towards patient-centric and outcome-focused models, where RWE provides crucial insights beyond traditional clinical trials, especially for post-market surveillance and identifying unmet medical needs.

Comparison to Industry Standards

• The company claims to have compiled one of the largest networks of imaging centers (hospitals, imaging centers, clinics) throughout the United States, covering more than 31 million patient records, which it believes demonstrates its quality and responsiveness in clinical imaging and RWD curation.
• OneMedNet states it works with hospitals and life science companies globally, including in Ireland, United Kingdom, The Netherlands, Denmark, Germany, Canada, and South Korea, indicating international reach.
• The company asserts it was the 'first RWD solution for life science companies' with the launch of its iRWD platform in 2019, leveraging its existing BEAM platform and provider network.
• OneMedNet believes its iRWD offering provides 'regulatory-grade' image-centric data that strictly matches life science partners' case selection protocols, paving the way for Real World Evidence, and that its data is 'fully de-identified' using a multi-step quality control process.
• The company highlights its specialized expertise in compliance (HIPAA, GDPR, 21 CFR Part 11), advanced privacy & security, clinical patient conditions, radiology interpretation, and AI/ML technology, which it believes deters many organizations from attempting similar ventures.
• The document references a 2016 Tufts Center for the Study of Drug Development analysis on the cost of bringing a drug to market ($2.87 billion) and a 2018 study on drug development timelines (12.8-17.2 years), implying that OneMedNet's solutions aim to address these industry challenges by accelerating insights.
• The company cites FDA's increasing reliance on Real World Evidence, including specific examples like the July 2021 approval of Astella Pharma Inc.'s tacrolimus and the December 2021 approval of Orencia, to validate the growing importance and regulatory acceptance of RWE, which OneMedNet's services facilitate.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not presently party to any legal proceedings that, in the opinion of management, if determined adversely, would individually or taken together have a material adverse effect on its business, operating results, financial condition, or cash flows.

Related Party Transactions

• PIPE Notes: $1.0 million of the total $1.5 million PIPE Notes were with related party investors, including Aaron Green (CEO), Dr. Jeffrey Yu (Chairman), and Dr. Thomas Kosasa (Director). These notes were convertible into common stock.
• PIPE Warrants: 63,829 of the total 95,745 PIPE Warrants were issued to the same related party investors as additional consideration for their investment in PIPE Notes.
• Convertible Promissory Notes: From 2019 to 2023, $12.3 million (out of $14.2 million total) in Convertible Promissory Notes were issued to related party investors. These notes, along with 2,976,000 Convertible Promissory Note Warrants, converted into common stock upon the Business Combination.
• Shareholder Loans (2023): $954 thousand in shareholder loans were entered into with Dr. Jeffrey Yu and Dr. Thomas Kosasa. A $0.5 million loan was converted into a PIPE Note in November 2023.
• Shareholder Loans (2024): The company received $2.0 million in gross proceeds from shareholder loans with Dr. Jeffrey Yu and Dr. Thomas Kosasa. Of this, $1.6 million is convertible into 2,123,312 shares of common stock at $0.7535 per share, and $0.4 million is non-convertible. $0.2 million of non-convertible loans were repaid to Dr. Yu.
• Loan Extensions: The company assumed $3.0 million in existing loan extensions to related parties from Data Knights, which are outstanding as of March 31, 2025, and are to be exchanged for common stock at $10.00 per share upon the filing of a registration statement.
• Kosasa Investment (June 2025): Dr. Thomas Kosasa, a director, invested $500,000 for 1,190,476 shares of common stock at $0.42 per share.
• Yu Investment (June 2025): Dr. Jeffrey Yu, Chief Medical Officer and Chairman, invested $700,000 for 1,666,666 shares of common stock at $0.42 per share.
• Loan Conversions (June 2025): Dr. Thomas Kosasa and Dr. Jeffrey Yu converted an aggregate of approximately $3.3 million of outstanding principal and accrued interest under certain shareholder loans and business combination extension loans into 4,693,296 shares of common stock at a conversion price of $0.71 per share.
• Kosasa Convertible Loan Conversions (June 2025): Dr. Thomas Kosasa converted approximately $1.6 million of outstanding principal under convertible shareholder loans into 2,123,424 shares of common stock at a conversion price of $0.7535 per share.

Stakeholder Impact

• Shareholders: Face significant dilution risk from the large number of shares being registered for primary issuance and secondary resale (totaling over 59% of outstanding shares). Existing public shareholders may experience a negative return due to the current stock price being significantly below the initial IPO price, while private investors may still profit due to lower purchase prices. The 'going concern' warning and Nasdaq delisting threats pose substantial risk to investment value and liquidity.
• Employees: The company's ability to continue as a going concern directly impacts job security. Stock-based compensation plans are in place, but their value is tied to the volatile stock price. Executive turnover has occurred, with new appointments to key roles.
• Customers: The planned discontinuation of the BEAM platform may disrupt services for existing subscription customers. The focus on iRWD aims to enhance offerings for pharmaceutical, medical device, and AI markets, potentially improving service quality and data access for these clients.
• Suppliers/Creditors: The company's financial instability and 'going concern' doubt could affect its ability to meet payment obligations. The recent settlement of $11.0 million in liabilities, including deferred underwriter fees, is positive for certain creditors, but overall liquidity remains a concern.
• Regulatory Authorities: The company is actively addressing Nasdaq listing deficiencies and has identified material weaknesses in internal controls, indicating increased scrutiny and compliance efforts. Its adherence to regulations like HIPAA and FDA 21 CFR Part 11 is critical for its business model in the healthcare industry.

Next Steps

• Regain compliance with Nasdaq's minimum market value of listed securities requirement by September 8, 2025.
• Regain compliance with Nasdaq's $1.00 minimum bid price requirement by October 7, 2025, potentially through a reverse stock split if necessary.
• Continue efforts to raise additional working capital through equity and debt offerings.
• Remediate identified material weaknesses in internal control over financial reporting.
• Continue planned discontinuation of the BEAM platform.
• Continue enhanced focus on iRWD sales growth and customer deliveries.
• Maintain effectiveness of resale registration statements for shares issued under SEPA and other agreements.

Key Dates

Recommendation

Keywords

Healthcare Software, Medical Imaging, Real World Data, Real World Evidence, iRWD, BEAM, SEC Filing, S-1/A, Nasdaq Listing, Going Concern, Capital Raise, Dilution, Bitcoin Holdings, Corporate Governance, Risk Management, Financial Performance, Biotechnology, Pharmaceutical, Medical Devices, AI in Healthcare, Clinical Trials, Data Privacy, HIPAA, Cybersecurity