OneMedNet Corp Income Taxes Disclosure

6. Income Taxes

 

The Company has operations in the United States and Canada. The components of income (loss) before the provision for income taxes are as follows (in thousands):

 

Schedule of Income by Geographical Location

		2025				2024
		Year Ended December 31,
		2025				2024
United States		$	(2,835	)		$	(10,046	)
Foreign			35				(81	)
Total loss before income taxes		$	(2,800	)		$	(10,127	)

 

 

The components of the income tax provision for the years ended December 31, 2025 and 2024 were as follows (in thousands):

Schedule of Components of Income Tax

		2025				2024
		As of December 31,
		2025				2024
Current federal		$	-			$	-
Current state			1				2
Current foreign			-				-
Total current tax provision (benefit)		$	1			$	2
Deferred federal			-				-
Deferred state			-				-
Deferred foreign			-				-
Total deferred tax provision (benefit)		$	-			$	-
Total income tax provision		$	1			$	2

 

For the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. The following table is a reconciliation of the U.S. federal statutory rate of 21.0% to the effective tax rate for the year ended December 31, 2025, in accordance with ASU 2023-09:

Schedule of Reconciliation Income Tax Expense

		December 31, 2025
		Amount (in thousands)				Percent
Tax provision at statutory rate		$	(588	)			21.0	%
State income taxes, net of federal benefit (1)			1				0.0	%
Foreign tax effects			(7	)			0.3	%
Effects of cross-border transactions			(12	)			0.4	%
Nontaxable or nondeductible items			(275	)			9.8	%
Stock-based compensation expense			85				(3.0	)%
Change in valuation allowance			731				(26.1	)%
Other, net			66				(2.4	)%
							(1.2	)%
							(1.5	)%
							(1.0	)%
Effective income tax rate		$	1				0.0	%

 

(1)

During the year ended December 31, 2025, state minimum taxes in California and Massachusetts comprised greater than 50% of the tax effect in this category.

 

The following table is a reconciliation of the U.S. federal statutory tax rate of 21.0% to the effective tax rate for the years ended December 31, 2024, prior to the adoption of ASU 2023-09:

 

		December 31, 2024
Tax provision at statutory rate			21.0	%
State income taxes, net of federal benefit			1.2	%
Stock-based compensation expense			(1.0	)%
Permanent differences - other			(1.2	)%
Change in fair value of convertible notes			(1.5	)%
SEPA commitment fee			(1.0	)%
Change in valuation allowance			(17.9	)%
Other, net			0.4	%
Effective income tax rate			0.0	%

 

The tax effects of temporary differences that give rise to significant components of the deferred tax assets and liabilities are as follows (in thousands):

Schedule of Deferred Income Taxes

		2025				2024
		As of December 31,
		2025				2024
Deferred tax assets
Net operating loss carryforwards		$	9,198			$	9,092
Capitalized research costs			582				584
Stock-based compensation expense			290				33
Reserves			170				-
Accrued expenses			34				-
Fixed assets			19				21
Other			49				4
Total gross deferred tax assets			10,342				9,734
Less: valuation allowance			(10,342	)			(9,551	)
Net deferred tax assets		$	-			$	183
Deferred tax liabilities
Other		$	-			$	(183	)
Total deferred tax liabilities		$	-			$	(183	)
Net deferred taxes		$	-			$	-

 

The Company has generated both federal and state net operating losses (NOL) of approximately $39.5 million and $16.7 million, respectively. The federal NOLs include $12.2 million which expire at various dates beginning in 2030 and $27.3 million which carry forward indefinitely. The state NOLs expire at various dates beginning in 2030.

 

Ownership changes, as defined in the Internal Revenue Code Section 382, could limit the amount of NOLs that can be utilized annually to offset future taxable income. Generally, an ownership change occurs when the ownership percentage of 5% or greater stockholders increases by more than 50% over a three-year period. The Company’s ability to utilize its federal and state tax attributes may be limited by ownership changes that have occurred in the past or may occur in the future. The Company has not yet conducted a formal study of whether, or to what extent, past changes in control of the Company impacts its ability to utilize NOL carryforwards because such NOL carryforwards cannot be utilized until the Company achieves profitability.

 

Management has evaluated the positive and negative evidence bearing upon the realizability of the Company’s net deferred tax assets, which are comprised primarily of net operating loss carryforwards and research costs capitalized for tax purposes. Management has considered the Company’s history of cumulative operating losses and estimated future tax losses and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax assets. As a result, the Company has recorded a full valuation allowance at December 31, 2025 and 2024. The valuation allowance increased by $0.8 million in 2025 primarily due to the current year net operating loss and capitalized research costs.

 

As of December 31, 2025 and 2024, the Company had no uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

 

The Company files federal, various state, and Canada tax returns. In the U.S., all tax years since inception remain open to examination by major tax jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the respective tax authorities if they have or will be used in a future period. In Canada, the Company is generally no longer subject to income tax examinations for the years before 2022. The Company is currently not under examination by any tax authority.

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted in the U.S. The OBBB includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (“TCJA”) and restoration of favorable tax treatment for certain business provisions including the expensing of domestic research and development expenditures. The OBBB did not have a material impact on the Company’s consolidated financial statements or footnotes.

 

The Company did not make any income tax payments (net of refunds received) that are required to be disclosed under ASU 2023-09.