[10-Q] VSEE HEALTH, INC. Quarterly Earnings Report

Rhea-AI Filing Summary

VSee Health (VSEE) filed its quarterly report detailing higher revenue and ongoing losses with a going concern warning. For the three months ended June 30, 2025, revenue was $3,390,119, up from $1,711,566 a year ago, driven by professional services, technical engineering, patient fees, and telehealth fees. Gross margin was $1,588,492.

The company reported a net loss of $2,613,283 for the quarter versus $666,102 in the prior year period, and a six‑month net loss of $6,572,723 versus $571,352. Operating expenses rose to $3,843,232 in the quarter. Cash was $291,595 at June 30, 2025. Current liabilities were $23,058,308, and total liabilities exceeded assets, resulting in a stockholders’ deficit of $5,736,304.

Management states that liquidity conditions and historical operating losses raise substantial doubt about the company’s ability to continue as a going concern. The company recorded deferred revenue of $1,170,101 and an allowance for credit losses of $2,639,917. VSee maintains two segments (Healthcare Technology and Telehealth Services) and disclosed March and May 2025 convertible and promissory notes. Previous 2024 quarterly results were restated.

Positive

• None.

Negative

• Going concern warning: management cites substantial doubt about continuing operations.
• Liquidity strain: cash $291,595 vs current liabilities $23,058,308; stockholders’ deficit $5,736,304.

Insights

Equity & Credit Analyst

Revenue grew, but losses, low cash, and going concern dominate.

VSee Health reported quarterly revenue of $3,390,119, roughly doubling year over year, with gross margin of $1,588,492. However, operating expenses of $3,843,232 kept the company in loss-making territory, resulting in a quarterly net loss of $2,613,283 and a six‑month net loss of $6,572,723.

Liquidity is tight: cash was $291,595 against current liabilities of $23,058,308, and total liabilities exceed assets, creating a stockholders’ deficit of $5,736,304. Management explicitly notes substantial doubt about continuing as a going concern.

The quarter also includes multiple financing instruments (March and May 2025 convertible and promissory notes) and a credit loss allowance of $2,639,917. The impact depends on execution and future financing access; subsequent filings may detail any changes in obligations or cash levels.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to          

Commission File Number: 001-41015

VSee Health, Inc.

(Exact name of registrant as specified in its charter)

Delaware		86-2970927
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

980 N Federal Hwy

Suite 304

Boca Raton, FL 33432

(Address of Principal Executive Offices)

(754) 231-1688

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading symbol		Name of Exchange on which registered
Common Stock, par value $0.0001 per share		VSEE		The Nasdaq Stock Market LLC
Warrants, which entitles the holder to purchase one (1) share of common stock at a price of $11.50 per whole share		VSEEW		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No ☒

As of October 13, 2025, there were 17,022,690 of the registrant’s common stock outstanding.

TABLE OF CONTENTS

		Page
Part I	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2025 and 2024 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	61
Item 4.	Controls and Procedures	61
Part II	Other Information
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
Exhibit Index		63
Signatures		64

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As used in this Quarterly Report on Form 10-Q, unless otherwise indicated, VSee Health, Inc., together with its consolidated subsidiaries, is hereinafter referred to as “VSee Health,” the “Registrant,” “us,” “we,” “our” or the “Company.”

Cautionary Note on Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements appear in a number of places in this Form 10-Q including, without limitation, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of our management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed by us with the Securities and Exchange Commission (“SEC”).

These and other factors could cause actual results to differ from those implied by the forward-looking statements. Forward-looking statements are not guarantees of performance and speak only as of the date hereof. The forward-looking statements are based on the current and reasonable expectations of our management but are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statements. There can be no assurance that future developments will be those that have been anticipated or that we will achieve or realize these plans, intentions or expectations.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this filing, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

VSEE HEALTH, INC.

(FKA DIGITAL HEALTH ACQUISITION CORP.)

CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30, 2025				December 31, 2024
		(Unaudited)
ASSETS
Current assets
Cash		$	291,595			$	326,115
Accounts receivable, net of allowance for credit losses of $2,639,917 and $2,393,033 as of June 30, 2025, and December 31, 2024, respectively			1,616,751				1,716,370
Due from related party			241,122				531,656
Prepaids and other current assets			410,037				446,826
Total current assets			2,559,505				3,020,967
Right-of-use assets, net			337,770				379,585
Intangible assets, net			9,890,002				10,995,000
Goodwill			4,916,694				4,916,694
Fixed assets, net			506,070				680,242
Total assets		$	18,210,041			$	19,992,488
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities		$	9,620,889			$	9,343,659
Deferred revenue			1,170,101				417,815
Due to related party			51,900				51,900
Operating lease liabilities			81,132				72,836
Finance lease liabilities			234,673				328,833
Factoring payable			143,220				179,007
Encompass Purchase Liability			263,874				263,918
Equity Line of Credit			59,843				80,000
Quantum convertible note, related party at fair value			3,580,612				3,248,000
September 2024 Convertible Note, at fair value			2,918,875				2,094,000
Loan payable, related party			471,651				471,651
Line of credit			456,097				456,097
Notes payable, net of discount			1,460,422				433,983
Exchange Note, at Fair Value			2,485,636				1,499,000
Common stock issuance obligation			59,383				69,621
Total current liabilities			23,058,308				19,010,320
Notes payable, less current portion, net of discount			593,941				593,941
Operating lease liabilities, less current portion			226,718				269,338
Deferred revenue, net of current portion			-				69,999
Deferred tax liabilities, net			67,378				67,378
Total liabilities			23,946,345				20,010,976
Commitments, Contingencies, and Concentration Risk (Note 10)
STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 6,158 and 0 shares issued and outstanding as of June 30, 2025, and December 31, 2024, respectively			1				1
Common stock, $0.0001 par value; 100,000,000 shares authorized; 16,422,690 and 16,297,190 shares issued and outstanding as of June 30, 2025, and December 31, 2024, respectively			1,643				1,630
Additional paid-in capital			68,538,648				67,683,754
Accumulated deficit			(74,276,596	)			(67,703,873	)
Total stockholders’ deficit			(5,736,304	)			(18,488	)
Total liabilities and stockholders’ deficit		$	18,210,041			$	19,992,488

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VSEE HEALTH, INC.

(FKA DIGITAL HEALTH ACQUISITION CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025, AND 2024 (UNAUDITED)

		For the Three Months Ended								For the Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
						(Restated)								(Restated)
Revenues
Subscription fees		$	880,327			$	1,037,426			$	1,707,672			$	2,042,628
Professional services and other fees			1,024,477				421,632				1,921,157				749,475
Technical engineering fees			430,124				189,939				829,970				477,889
Patient fees			475,772				31,520				1,187,036				31,520
Telehealth fees			579,419				30,569				1,063,269				30,569
Institutional fees			-				480				2,500				480
Total revenues			3,390,119				1,711,566				6,711,604				3,332,561
Cost of revenues			1,801,627				934,570				3,263,141				1,320,823
Gross margin			1,588,492				776,996				3,448,463				2,011,738
Operating expenses
Compensation and related benefits			1,670,460				912,743				3,329,458				1,806,320
General and administrative			2,172,772				568,469				4,205,063				779,236
Transaction expenses			-				228,307				-				254,645
Total operating expenses			3,843,232				1,709,519				7,534,521				2,840,201
											-				-
Net operating (loss) profit			(2,254,740	)			(932,523	)			(4,086,058	)			(828,463	)
Other income (expense)
Interest expense			(240,579	)			(341,835	)			(971,244	)			(351,145	)
Other income, net			167,470				2				183,009				2
Change in fair value of financial instruments			(154,825	)			548,100				(1,416,296	)			548,100
Loss on extinguishment of loan			(126,125	)			-				(126,125	)			-
Loss on issuance of financial instruments			-				(1,618,234	)			(138,020	)			(1,618,234	)
Total other (expense), net			(354,059	)			(1,411,967	)			(2,468,676	)			(1,421,277	)
Loss before (provision for) benefit from income taxes			(2,608,799	)			(2,344,490	)			(6,554,734	)			(2,249,740	)
(Provision for) benefit from income taxes			(4,484	)			1,678,388				(17,989	)			1,678,388
Net loss			(2,613,283	)			(666,102	)			(6,572,723	)			(571,352	)
Net loss attributable to non-controlling interest			-				31,980				-				-
Net loss income attributable to stockholders		$	(2,613,283	)		$	(634,122	)		$	(6,572,723	)		$	(571,352	)
Basic and diluted loss per common share		$	(0.16	)		$	(0.12	)		$	(0.40	)		$	(0.11	)
Weighted average number of common shares outstanding, basic			16,422,651				5,302,490				16,368,254				4,971,066

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VSEE HEALTH, INC.

(FKA DIGITAL HEALTH ACQUISITION CORP.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(all amounts in USD, except number of shares and per share data)

		Series A Preferred Stock								Series A-1 Preferred Stock								Common Stock								Additional Paid-				Accumulated				Non- controlling				Total Stockholder's
		Shares				Amount				Shares				Amount				Shares				Amount				In Capital				Deficit				Interest				Deficit
Balance - December 31, 2024			6,158			$	1				-			$	-				16,297,190			$	1,630			$	67,683,754			$	(67,703,873	)		$	-			$	(18,488	)
Net loss for the three months ended March 31, 2025			-				-				-				-				-				-				-				(3,959,440	)			-				(3,959,440	)
Payment to shareholder			-				-				-				-				-				-				(10,000	)			-				-				(10,000	)
Issuance during the period			-				-				-				-				125,000				13				90,621				-				-				90,634
Share based compensation							-								-				-				-				400,297				-				-				400,297
Balance - March 31, 2025			6,158			$	1				-			$	-				16,422,190			$	1,643			$	68,164,672			$	(71,663,313	)		$	-			$	(3,496,997	)
Net loss for the three months ended June 30, 2025			-				-				-				-				-				-				-				(2,613,283	)			-				(2,613,283	)
Issuance during the period			-				-				-				-				500				-				-				-				-				-
Share based compensation			-				-				-				-				-				-				373,977				-				-				373,977
Balance - June 30, 2025			6,158			$	1				-			$	-				16,422,690			$	1,643			$	68,538,649			$	(74,276,596	)		$	-			$	(5,736,303	)

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		Series A Preferred Stock								Common Stock								Additional Paid-In				Accumulated				Non-controlling				Total Stockholders’
		Shares				Amount				Shares				Amount				Capital				Deficit				Interest				Deficit
Balance, December 31, 2023 (Restated)			—			$	—				4,639,643			$	464			$	6,027,153			$	(10,001,858	)		$	(325,279	)		$	(4,299,520	)
Net income			—				—				—				—				—				62,770				31,980				94,750
Non-controlling interest			—				—				—				—				—				—				—				—
Balance, March 31, 2024 (Restated)			-			$	—				4,639,643			$	464			$	6,027,153			$	(9,939,088	)		$	(293,299	)		$	(4,204,770	)
Shares issued to non-controlling interest holders in TAD to obtain 100% interest in subsidiary			—				—				354,441				36				(325,315	)			—				325,279				-
Escrow shares released from stock payable			—				—				239,424				24				127,686				—				—				127,710
Shares issued as conversion of debt of VSee debt holders			—				—				12,846				1				155,564				—				—				155,565
Reverse recapitalization			—				—				3,603,966				360				(17,957,293	)			—				—				(17,956,933	)
Shares issued as consideration to iDoc shareholders			—				—				4,950,000				495				67,450,680				—				—				67,451,175
Shares issued as conversion of iDoc debt as part of the consideration in the acquisition			—				—				592,500				59				1,184,941				—				—				1,185,000
Preferred shares issued as conversion of iDoc debt as part of the consideration in the acquisition			300				—				—				—				300,000				—				—				300,000
Shares issued as conversion of VSee debt with Dominion in connection with the Exchange agreement			—				—				300,000				30				599,970				—				—				600,000
Preferred shares issued as conversion of VSee debt as contemplated by the business combination transaction			220				—				—				—				220,000				—				—				220,000
Preferred shares issued as conversion of DHAC sponsor debt as contemplated by the business combination transaction			1,268				—				—				—				1,268,000				—				—				1,268,000
Preferred shares issued as conversion of Underwriting Fee as contemplated by the business combination transaction			4,370				1				—				—				4,369,999				—				—				4,370,000
Shares issued to settled iDoc debt holders			—				—				114,000				12				227,988				—				—				228,000
Stock based compensation			—				—				—				—				26,321				—				—				26,321
Net loss			—				—				—				—				—				(634,122	)			(31,980	)			(666,102	)
Balance, June 30, 2024 (Restated)			6,158			$	1				14,806,820			$	1,481			$	63,675,694			$	(10,573,210	)		$	-			$	53,103,966

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VSEE HEALTH, INC.

(FKA DIGITAL HEALTH ACQUISITION CORP.)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2025

		For Six Months Ended
		June 30,
		2025				2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,572,723	)		$	(571,352	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on issuance of financial instrument			138,020				1,618,234
Original issue discount and interest accrued on Quantum Convertible Note			—				304,932
Change in fair value of financial instruments			1,416,296				(548,100	)
Loss on extinguishment of loan			126,125				—
Deferred Tax assets and liabilities			—				(1,679,404	)
Amortization of discount on note payable			—				7,000
Allowance for expected credit losses			246,884				21,428
Depreciation and amortization			1,294,636				2,091
Stock-based compensation			764,036				474,251
Amortization of right-of-use assets			41,815				3,540
Changes in operating assets and liabilities:
Accounts receivable			(147,264	)			191,774
Due from related party			290,534				—
Prepaids and other current assets			36,787				(16,208	)
Accounts payable and accrued liabilities			951,797				(2,318,197	)
Deferred revenue			682,287				120,968
Due to related party			—				(210,697	)
Operating lease liabilities			(34,324	)			—
Right-of-use liabilities			—				5,526
Net cash used in operating activities		$	(765,094	)		$	(2,594,214	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired from Business Combination- iDoc			—				29,123
Purchases of fixed assets			(15,466	)			(45,513	)
Net cash used in investing activities		$	(15,466	)		$	(16,390	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Quantum Convertible Note			—				2,700,000
Proceeds from reverse recapitalization with DHAC			—				1,323,362
Repayment on Encompass Purchase liability			(44	)			(1,030	)
Repayment on advances of related party			—				(47,800	)
Repayment on Extension Note			—				(365,750	)
Payment to shareholder			(10,000	)			—
Proceeds from issuance of common stock			90,634				—
Proceeds from notes issued during the period			726,237				—
Payments on factoring payable			(35,787	)			(10,941	)
Payments on finance lease liability			(25,000	)			—
Net cash provided by financing activities		$	746,040			$	3,597,841
NET CHANGE IN CASH			(34,520	)			987,237
Cash, Beginning of Period			326,115				118,734
CASH, END OF PERIOD		$	291,595			$	1,105,971
Supplemental disclosure of cash flow information:
Cash paid for interest expense		$	135,205			$	—
Cash paid for taxes		$	—			$	2,772
Non-cash investing and financing activities:
Net liabilities acquired in reverse merger		$	—			$	(18,704,806	)
Shares issued to DHAC Sponsor group for debt settled		$	—			$	1,268,000
Shares issued to A.G.P. Underwriter		$	—			$	4,370,000
Shares issued to VSee debt holders		$	—			$	1,310,710
Fair value of shares issued in iDoc acquisition		$	—			$	68,907,052
Acquisition of non-controlling interest in TAD		$	—			$	325,279

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VSEE HEALTH, INC.

(FKA DIGITAL HEALTH ACQUISITION CORP.)

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(all amounts in USD, except number of shares and per share data)

Note 1 Organization and Description of Business

VSee Health, Inc., (formerly known as Digital Health Acquisition Corp., a Delaware Corporation) (the “Company”, “we”, “our”, “Vsee Health” or “us”) is a Delaware-based telehealth software company that provides a scalable, application programming interface-driven platform for virtual healthcare delivery. The platform integrates secure video streaming with medical device data, electronic medical records, and other sensitive health information, offering customizable and white-labeled solutions for healthcare providers, employers, and hospital systems.

On June 24, 2024, the Company completed a business combination (the “Business Combination”) with VSee Lab, Inc. (“Vsee Lab”) and iDoc Virtual Telehealth Solutions, Inc (“iDoc”). As part of the transaction, Digital Health Acquisition Corp. changed its name to VSee Health, Inc. The transaction was accounted for as a reverse recapitalization, with VSee Lab, Inc. identified as the accounting acquirer. Various equity and debt instruments were converted into common and preferred shares, and the Company entered into an equity line of credit agreement for up to $50 million over a 36-month period.

For financial reporting purposes, historical financial data prior to June 24, 2024, reflects the operations of VSee Lab, Inc. The acquisition of iDoc Virtual Telehealth Solutions, Inc. was treated as a business combination under Accounting Standards Codification 805, Business Combinations, with the excess purchase consideration recorded as goodwill. Refer to Note 4 for additional details.

Going Concern

As disclosed in the prior year’s consolidated financial statements, there were significant doubts about the Company’s ability to continue as a going concern due to persistent operating losses during the past two years, and a deteriorating liquidity position from the Company generating negative operating cash.

Management has undertaken a series of measures to address these concerns, which include:

● Revenue Enhancement Strategies: The Company including the acquisition of iDoc on June 24, 2024 (See Note 4 - Business Combination) won new contracts with larger hospitals and entered new markets, demonstrating the Company’s ability to generate positive revenue growth from its robust pipeline. During the third quarter, service commenced to a client in the new market, driving positive future revenue growth.

● Additional Financing: The Company is in negotiations with an investor for additional financing, which is expected to support its working capital needs and fund its growth initiatives.

● ELOC Financing: The Company has an equity line of credit purchase agreement (“ELOC Agreement) dated November 21, 2023, with the right to issue and sell to the investor listed therein, from time to time, and the investor shall purchase from the Company, up to the lesser of (i) $50,000,000 in the aggregate gross purchase price of newly issued shares of the Company’s common stock. Per the ELOC Agreement, the aggregate number of shares issued in connection with the ELOC Agreement may not exceed 19.9% of the number of issued and outstanding shares. The investor shall have the right but not the obligation to purchase shares at the floor price if the VWAP on the date of notice is less than the floor price ($1.25).

Management has determined that the liquidity condition and historical operating losses raises substantial doubt about its ability to continue as a going concern for a period of time of least one year after the date that the accompanying condensed consolidated financial statements are issued.

There is no assurance that the Company’s plans to alleviate such concerns will be successful or successful within one year after the date the condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Note 2 Restatement of Previously Issued Financial Statements

Restatement of VSee Lab, Inc. Condensed Consolidated Financial Statements as of June 30, 2024

During the preparation of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Company identified certain errors with the recognition and measurement of certain assets and liabilities in the condensed consolidated balance sheet of VSee Lab as of June 30, 2024 and the proper recognition and certain transaction in the condensed consolidated statement of operations for the three and six months ended June 30, 2024. The Company determined that the previously issued condensed consolidated financial statements of VSee Lab (on a standalone basis, prior to the closing of the Business Combination) are materially misstated and should no longer be relied upon. The identified errors impacting the previously issued VSee Lab standalone condensed consolidated financial statements include:

● The failure to identify and accrue for sales and use taxes in relation to its revenue-generating transactions to taxable customers. As a result of correcting this error, the Company recorded an accrual of $880,711 in the condensed consolidated balance sheet as of June 30, 2024. Of this amount, $761,873 related to periods prior to the year ended December 31, 2024. The remaining $118,838 has been recorded during the six months ended June 30, 2024. For the three months ended June 30, 2024, the Company recorded a $59,419 adjustment to general and administrative expenses, and for the six months ended June 30, 2024, the Company recorded a $118,838 adjustment to general and administrative expenses to reflect the effect of the restatement in condensed consolidated statements of operations for the periods then ended.

● The incorrect cutoff of a revenue transaction with a customer as of December 31, 2023. Correcting this error did not have an impact on the condensed consolidated balance sheet as of June 30, 2024. As the related contract was completed during March 2024, the Company recognized all deferred revenue from prior periods related to the arrangement in this period. This resulted in an increase of $125,000 in revenue (specific to the technical engineering fees line item) during the six months ended June 30, 2024.

● The incorrect recognition of accrued expenses of DHAC as of the Business Combination date (June 24, 2024). The Company identified a total of $654,316 in transaction expenses and professional services expenses which were recognized in the consolidated financial statements of the Company subsequent to the Business Combination date, but related to the period prior to the Business Combination, and therefore should have been accrued by DHAC as of that date. As a result, the net liabilities of DHAC assumed by the Company in the reverse merger transaction as of the Business Combination date were understated by $654,316. In correcting this error, the Company recorded an adjustment of $654,316 to increase the net liabilities of DHAC assumed as recorded in additional paid-in capital. Of the $654,316 in identified accrual items, $452,500 were paid during the quarter ended June 30, 2024, while the remaining $201,816 was recorded as an increase in accounts payable and accrued liabilities in the condensed consolidated balance sheet as of June 30, 2024. Further, the correction of this error resulted in recording an adjustment to decrease transaction expenses by $452,500 for the three and six months ended June 30, 2024.

● The incorrect recognition of accrued expenses of iDoc as of the Business Combination date (June 24, 2024). The Company identified a total of $300,000 in transaction expenses which were recognized in the consolidated financial statements of the Company subsequent to the Business Combination date, but related to the period prior to the Business Combination, and therefore should have been accrued by iDoc and included in the opening balance sheet of iDoc as of that date. As a result, the net assets of iDoc that were acquired by the Company as of the Business Combination date were overstated by $300,000 and the goodwill balance that was recorded in connection with this acquisition was understated by $300,000. In correcting this error, the Company recorded an adjustment of $300,000 to increase the goodwill balance in the condensed consolidated balance sheet as of June 30, 2024. As the $300,000 item was paid by the Company during the quarter ended June 30, 2024, there was no adjustment to accounts payable and accrued liabilities required. Further, the correction of this error resulted in recording an adjustment to decrease transaction expenses by $300,000 for the three and six months ended June 30, 2024.

● The incorrect recognition of certain compensation-related obligations of iDoc as of the Business Combination date. The Company identified a total of $167,040 in cash compensation which was owed to employees of iDoc as of the Business Combination, and therefore should have been accrued by iDoc and included in the opening balance sheet of iDoc as of that date. As a result, the net assets of iDoc that were acquired by the Company as of the Business Combination date were overstated by $167,040 and the goodwill balance that was recorded in connection with this acquisition was understated by $167,040. In correcting this error, the Company recorded an adjustment of $167,040 to increase the goodwill balance and the accounts payable and accrued liabilities balance in the condensed consolidated balance sheet as of June 30, 2024. No compensation amounts that should have been accrued were paid during the quarter ended June 30, 2024. In addition, the Company identified an obligation to issue 51,192 shares of common stock to employees of iDoc as of the Business Combination, which the Company agreed to replace, but was not obligated to do so. As such, the Company recognized $619,935 in stock-based compensation expense related to the replacement awards as of June 24, 2024. Further, the Company determined the common stock issuance obligation should be classified as a liability and remeasured based on its fair value at each reporting date. At June 30, 2024, the common stock issuance obligation was remeasured to $447,930, resulting in an adjustment to decrease the stock-based compensation expense by $172,005 for the three and six months ended June 30, 2024.

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● The incorrect recognition of a commitment fee incurred in relation to the ELOC Agreement as a deferred expense and an accrued liability as of June 30, 2024. The commitment fee was payable in the form of a convertible note which was issued during July 2024, however, the Company determined that the fee was not earned by the counterparty or payable by the Company until July 2024 and as such should not have been recognized as of June 30, 2024. Additionally, the Company determined that the commitment fee should have been expensed when incurred, as the related ELOC Agreement is classified as a liability in the Company’s consolidated balance sheets. In correcting this error, the Company recorded an adjustment of $500,000 to decrease prepaids and other current assets and to decrease the ELOC Note balance recorded in current liabilities in the condensed consolidated balance sheets as of June 30, 2024. The correction of this error did not have an impact on the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

● The incorrect recognition of accrued interest related to certain convertible note obligations that were recorded at fair value in the Company’s financial statements. The Company identified that it was accruing interest on these obligations (included in accounts payable and accrued liabilities) and also including accrued interest in the fair value estimate of the respective convertible note obligations (as part of the remeasurement of each instrument at fair value at each reporting date). In correcting this error, the Company recorded an adjustment to decrease accrued interest and to decrease the accumulated deficit by $7,860 in the condensed consolidated balance sheet as of June 30, 2024. Further, the correction of this error resulted in recording an adjustment to decrease interest expense by $7,860 for the three and six months ended June 30, 2024.

● The incorrect recognition of grant date fair value for certain options issued as of June 24, 2024. The Company determined that it utilized an incorrect expected term assumption in the valuation of the stock options granted on this date, which upon correction also resulted in an adjustment to other inputs (risk-free rate, volatility) that were related to the expected term assumption. The changes to these fair value measurement inputs results in a change in the grant date fair value of stock options that were fully vested at issuance from $5,034,046 to $5,728,784, and a change to the grant date fair value of stock options subject to future vesting from $1,394,222 to $1,601,190. In correcting this error, the Company recorded an adjustment to decrease additional paid-in capital and decrease the accumulated deficit by $5,668 in the condensed consolidated balance sheet as of June 30, 2024. Further, the correction of this error resulted in recording an adjustment to decrease compensation and related benefits by $5,668 for the three and six months ended June 30, 2024.

● The incorrect recognition and measurement of accounts receivable balances acquired from iDoc as of the Business Combination date. The Company identified an additional $1,590,596 adjustment that should have been reflected as a reduction in the acquired accounts receivable balance as of the Business Combination date, reflecting amounts that were not expected to be collected as of the acquisition date. The adjustment to the acquired accounts receivable balance results in an increase in the recorded goodwill balance of $1,590,596 as of the acquisition date and June 30, 2024. The correction of this error did not have an impact on the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

● The incorrect recognition of certain income tax-related balances as of the Business Combination date. The Company identified an aggregate $26,183 increase in federal and state income taxes payable (included in accounts payable and accrued liabilities) and a decrease in deferred tax liability of $392,609 for iDoc as of the Business Combination. The correction of these amounts resulted in a $366,426 decrease in the goodwill balance recognized as of the Business Combination date. Additionally, the Company identified a $78,827 decrease in state income taxes payable of DHAC as of the Business Combination date. As a result, the net liabilities of DHAC assumed by the Company in the reverse merger transaction were overstated by $78,827. In correcting this error, the Company recorded an adjustment of $78,827 to decrease the net liabilities of DHAC assumed as recorded in additional paid-in capital.

● The incorrect recognition and measurement of income tax-related balances as of and for the period ended June 30, 2024, as a result of the aggregate income tax effect of the restatement adjustments described above. In order to properly recognize the income tax effect, the Company recorded a $495,442 increase in income taxes payable and a $67,378 increase in deferred tax liability as of June 30, 2024, and a $562,820 decrease in the benefit from income tax for the three and six months ended June 30, 2024.

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The following tables summarize the effect of the restatement on each financial statement line item in the VSee Lab condensed consolidated financial statements for the quarter ended June 30, 2024. While not presented below, the Company’s condensed consolidated statement of changes in stockholders’ equity (deficit) has also been restated to reflect the cumulative adjustments to the condensed consolidated balance sheet and condensed consolidated statement of operations as described above:

Consolidated Balance Sheet as of June 30,2024		As Reported				Adjustment				As Restated
Accounts receivable		$	2,513,855			$	(1,590,596	)		$	923,259
Prepaids and other current assets			760,789				(500,000	)			260,789
Total current assets			5,166,549				(2,090,596	)			3,075,953
Goodwill			59,900,694				1,691,210				61,591,904
Total assets			78,987,750				(399,386	)			78,588,364
Accounts payable and accrued liabilities			6,752,985				1,291,896				8,044,881
ELOC Note			500,000				(500,000	)			-
Common stock issuance obligation			-				447,930				447,930
Total current liabilities			22,879,867				1,239,826				24,119,693
Deferred tax liability			-				67,378				67,378
Total liabilities			24,177,194				1,307,204				25,484,398
Additional paid-in-capital			64,582,130				(906,436	)			63,675,694
Accumulated deficit			(9,773,056	)			(800,154	)			(10,573,210	)
Total stockholders’ equity (deficit)			54,810,556				(1,706,590	)			53,103,966
Total liabilities and stockholders’ equity (deficit)		$	78,987,750			$	(399,386	)		$	78,588,364

Consolidated Statement of Operations for the three months ended June 30, 2024		As Reported				Adjustment				As Restated
Cost of revenues		$	486,640			$	447,930			$	934,570
Gross margin			1,224,926				(447,930	)			776,996
Compensation and related benefits			918,411				(5,668	)			912,743
General and administrative expenses			509,050				59,419				568,469
Transaction expenses			980,807				(752,500	)			228,307
Total operating expenses			2,408,268				(698,749	)			1,709,519
Net operating (loss) profit			(1,183,342	)			250,819				(932,523	)
Interest expense			(349,695	)			7,860				(341,835	)
Total other income (expense), net			(1,419,827	)			7,860				(1,411,967	)
(Loss) income before income taxes			(2,603,169	)			258,679				(2,344,490	)
(Provision for) benefit from income tax			2,241,208				(562,820	)			1,678,388
Net loss			(361,961	)			(304,141	)			(666,102	)
Net loss attributable to stockholders			(329,981	)			(304,141	)			(634,122	)
Basic and diluted net loss per share		$	(0.06	)		$	(0.06	)		$	(0.12	)

Consolidated Statement of Operations for the six months ended June 30, 2024		As Reported				Adjustment				As Restated
Revenues, technical engineering fees		$	352,889			$	125,000			$	477,889
Total Revenue			3,207,561				125,000				3,332,561
Cost of revenues			872,893				447,930				1,320,823
Gross margin			2,334,668				(322,930	)			2,011,738
Compensation and related benefits			1,811,988				(5,668	)			1,806,320
General and administrative expenses			660,398				118,838				779,236
Transaction expenses			1,007,145				(752,500	)			254,645
Total operating expenses			3,479,531				(639,330	)			2,840,201
Net operating (loss) profit			(1,144,863	)			316,400				(828,463	)
Interest expense			(359,005	)			7,860				(351,145	)
Total other income (expense), net			(1,429,137	)			7,860				(1,421,277	)
(Loss) income before income taxes			(2,574,000	)			324,260				(2,249,740	)
(Provision for) benefit from income tax			2,241,208				(562,820	)			1,678,388
Net loss			(332,792	)			(238,560	)			(571,352	)
Net loss attributable to stockholders			(332,792	)			(238,560	)			(571,352	)
Basic and diluted net loss per share		$	(0.07	)		$	(0.04	)		$	(0.11	)

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Consolidated Statement of Cash Flows for the six months ended June 30, 2024		As Reported				Adjustment				As Restated
Net loss		$	(332,792	)		$	(238,560	)		$	(571,352	)
Stock-based compensation			31,989				442,262				474,251
Deferred tax asset and liabilities			(2,336,506	)			657,102				(1,679,404	)
Accounts receivable			216,774				(25,000	)			191,774
Accounts payable and accrued liabilities			(1,582,393	)			(735,804	)			(2,318,197	)
Deferred revenue		$	220,968			$	(100,000	)		$	120,968

Note 3 Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. For periods prior to the Business Combination as disclosed in Note 1 above, the reported share and per share amounts have been retroactively converted by the applicable exchange ratio. See Note 12 - Equity for additional information.

The condensed consolidated financial statements include the accounts of VSee Health, Inc. and its subsidiaries, VSee Lab and iDoc, which are both 100% wholly-owned subsidiaries of the Company. In addition, the consolidation includes Encompass Healthcare Billing, LLC, a 100% wholly-owned subsidiary of iDoc and This American Doc, Inc. (“TAD”) now a wholly-owned subsidiary of VSee Lab. All intercompany amounts are eliminated upon consolidation. Prior to June 24, 2024, the condensed consolidated financial statements included the accounts of VSee Lab, Inc. and its 53.8% partially owned subsidiary, TAD.

The accompanying condensed consolidated financial statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2025, and December 31, 2024, its results of operations, changes in stockholders’ equity (deficit), and statements of cash flows for the three and six months ended June 30, 2025, and 2024, in conformity with U.S. GAAP. The interim results for the three and six months ended June 30, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future interim periods. These financial statements should be read in conjunction with the audited condensed consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “December 31, 2024, Condensed Consolidated Financial Statements”), as filed with the SEC. The significant accounting policies and estimates used in preparing these Condensed Consolidated Financial Statements were applied on a basis consistent with those reflected in December 31, 2024, Condensed Consolidated Financial Statements. Certain reclassifications have been made to the amounts in prior periods to conform to the current period’s presentation primarily consisting of the breakout of revenue by category and the retroactive application of the recapitalization.

Segments

The Company determined its reporting units in accordance with ASC 280, Segment Reporting (“ASC 280”). Management evaluates a reporting unit by first identifying operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

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Management has determined that the Company has two consolidated operating segments. The Company’s reporting segment reflects the manner in which its chief operating decision makers, which is currently shared between the Co-Chief Executive Officers, Milton Chen and Imo Aisiku, review results and allocate resources. The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

The Company’s reporting segments are Healthcare Technology (“Technology”) and Telehealth Services (“Telehealth”). VSee Lab is included in Technology, while iDoc is included in Telehealth.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts stated in the condensed consolidated financial statements and accompanying notes. These judgments, estimates, and assumptions are used for, but not limited to, the determination of estimated provision for contractual adjustments from third-party payors in the recognition of patient fee contracts, revenue, cost of revenues, goodwill and intangible asset impairment analysis, allowance for credit losses, the fair value of the ELOC Agreement, the Exchange Note, the Additional Bridge Note, the Quantum Convertible Note, and the September 2024 Convertible Note (each note as defined in Note 8 Line of Credit and Notes Payable, Net of Discount), stock-based compensation, incremental borrowing rate determination, useful life of intangibles, reserve for income tax uncertainties and other contingencies, and valuation of deferred tax asset.

The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and best estimates and judgments routinely require adjustment. Actual results could differ from those estimates.

Income Taxes

The Company applies ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax basis and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, which establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services.

The Company derives revenue from business services associated with direct tele-physician provider patient fee services, telehealth services, professional services and technical engineering services, subscription services and institutional services provided to our clients.

The Company determines revenue recognition in accordance with ASC 606, through the following five steps:

1) Identify the contract with a customer

The Company considers the terms and conditions of its contracts and the Company’s customary business practices in identifying its contracts under ASC 606. The Company determines it has a contract with a customer when the contract has been approved by both parties, it can identify each party’s rights regarding the services to be transferred and the payment terms for the services, it has determined the customer to have the ability and intent to pay, and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s payment history or, in the case of a new customer, credit and financial information pertaining to the customer.

Contractual terms for subscription services are typically 12 months. Contracts are cancellable with a 30-day notice period and customers are billed in annual, quarterly, or monthly installments in advance of the service period of the subscription. The Company is not required to refund any prorated prepayment fees invoiced to cover services that were provided.

The Company also has service contracts with hospitals or hospital systems, physician practice groups, and other users. These customer contracts typically range from two to three years, with an automatic renewal process. The Company either invoices these customers for the monthly fixed fee in advance or at the end of the month, depending on the contract terms. The contracts typically contain cancellation clauses with advance notice; therefore, the Company does not believe that it has any material outstanding commitment for future revenues beyond one year from the end of a reporting period.

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2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. The Company’s contracts typically contain cancellation clauses with advance notice; therefore, the Company does not believe that they have any material outstanding commitments for future revenues beyond one year from the end of a reporting period.

3) Determine the transaction price

The Company believes the quoted transaction prices in the customer contracts represent the stand- alone selling prices for each of the separate performance obligations which are distinct and priced separately within the contract. The transaction price for each service provided is independent and established in the contract and based on the duration of service provided or for a rate for service provided. Fees are established based on the service transferred to the client.

4) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative stand-alone selling price (“SSP”). The determination of a SSP for each distinct performance obligation requires judgment. The Company believes the quoted transaction prices in the customer contracts represent the stand alone selling prices for each of the separate performance obligations that are distinct and priced separately within the contract.

5) Recognize revenue when or as the Company satisfies a performance obligation

Revenue is recognized when or as control of the promised goods or service is transferred to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

Subscription Service Contracts and Performance Obligation

The Company recognizes subscription revenue over time as customers receive and consume services. Each module is a distinct performance obligation, delivered consistently each month. Revenue begins when access is provided and is recognized using a time-based output method.

Upfront non-refundable fees are deferred and amortized over the subscription term, as they do not represent separate performance obligations. Deferred revenue consists of the unamortized balance of nonrefundable upfront fees which are classified as current or non-current based on the timing company expects to recognize revenue.

Modules are distinct and not interdependent, allowing standalone benefit. Pricing is fixed per user and based on the most likely amount expected to be collected. Implementation fees are typically paid upfront.

Professional Services and Technical Engineering Fees and Performance Obligation

Performance obligations under contracts for professional services may include maintenance, hardware, clinician fees, and technical engineering services. These services are generally distinct in the context of the contract and are accounted for as separate performance obligations.

For technical engineering services, performance obligations are typically satisfied over time based on the specified quantity of professional service hours provided to the customer. For maintenance, hardware, and clinician fees, revenue is recognized either over time or at a point in time or when control transfers to the customer. Maintenance and clinician fees are generally recognized over time as services are rendered, while hardware revenue is recognized at a point in time when control transfers to the customer.

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Patient Fees Services and Performance Obligation

Patient Fee Services

Patient fees represent a series of distinct services because performance obligations are met when the Company’s physicians provide professional medical services to patients at the client site. The patient benefits from professional services when care is rendered by the Company’s medical professionals. Revenue recognition commences when the Company satisfies its performance obligation to provide professional medical services to patients.

Patient Fee Contracts Involving Third-Party Payors

The Company receives payments from patients, third-party payors, and others for patient fee services. Third-party payors reimburse based on contracted rates or billed charges, which are generally lower than billed amounts. The transaction price is based on standard charges, adjusted for third-party payor agreements and implicit price concessions for uninsured patients.

Revenue is presented net of estimated contractual adjustments, service credits, and expected credit losses. These adjustments reflect the difference between billed amounts and expected consideration, based on historical collection experience, market conditions, and other factors. The Company monitors receivables and records estimated allowances to account for these differences. Actual results may differ materially from estimates.

All telemedicine contracts for patient reimbursement fees are directly billed to payors by the Company. The Company earns patient fees by providing high acuity patient care solutions. Performance obligations are met when the Company’s physicians provide professional medical services to patients at the client site, which is deemed a transfer of goods and services to respective patients. Revenue is determined based on telemedicine billing code(s) associated with the professional service rendered.

The Company earns primarily from reimbursement from the following third-party payors:

Medicare

The Company’s affiliated provider network is reimbursed by the Medicare Part B and Part C programs for certain of the telemedicine services it provides to Medicare beneficiaries. Medicare coverage for telemedicine services is treated distinctly from other types of professional medical services and is limited by federal statute and subject to specific conditions of participation and payment pursuant to Medicare regulations, policies and guidelines, including the location of the patient, the type of service, and the modality for delivering the telemedicine service, among others.

Medicaid

Medicaid programs are funded jointly by the federal government and the states and are administered by states (or the state’s designated managed care or other similar organizations) under approved plans. Our affiliated provider network is reimbursed by certain State Medicaid programs for certain of the telemedicine services it provides to Medicaid beneficiaries. Medicaid coverage for telemedicine services varies by state and is subject to specific conditions of participation and payment.

Commercial Insurance Providers

The Company is reimbursed by commercial insurance carriers. The basis for payment to the commercial insurance providers is consistent with Medicare reimbursement fee structure guidelines and the Company is in-network or out-of-network with the commercial insurance carriers based on state and insurer requirements.

Telehealth Fees Service Contracts and Performance Obligation

Contract For Telemedicine Care Services

Performance obligations for telemedicine care are based on services delivered through hardware and software integration, including multi-participant video conferencing and electronic communication available 24 hours per day, seven days per week for the duration of the contract. The Company provides administrative, hardware, software support, and physician coverage ranging from 12 to 24 hours per day. Revenue from telemedicine care services is included in telehealth fees in the condensed consolidated financial statements.

Revenue is recognized when the Company provides administrative, business, and medical records and reports as required. Variable consideration is estimated using the expected value or most likely amount method, based on legal enforceability, performance, and available information. Management estimates revenue based on expected customer life or performance period.

Revenue recognition begins when tele-physician service hours are provided. Start-up nonrefundable payments for training, hardware/software setup, and integration are recognized upon completion of implementation. These start-up services are separable and recognized over time using the input method.

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Institutional Fees Service Contracts and Performance Obligation

Contract For Electroencephalogram (“EEG”) Professional Interpretation Services

Performance obligations are based on the number of EEG interpretations provided monthly, which are distinct and separately identifiable within the contract. The Company’s physicians use EEG telemedicine equipment supplied by the Company to deliver these services. Revenue is recognized monthly based on the number of interpretations performed and contractual rates and is included in institutional fees in the condensed consolidated financial statements.

Most contracts, including those with the Company’s top customers, involve fixed monthly fees covering telemedicine consultations, EEG interpretation, platform software, and hardware. These fees include predetermined physician coverage hours and agreed-upon rates for interpretation and software services. The Company also provides equipment, training, maintenance, and support for service delivery.

The Company commences revenue recognition on EEG professional interpretation services when the Company satisfies its performance obligation to provide professional interpretation monthly.

Net Loss Per Common Share

The Company computes income (loss) per common share, in accordance with ASC Topic 260, Earnings Per Share, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. No potential dilutive common shares are included in the computation of any diluted per share amount when a loss is reported. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding.

		Three months Ended June 30,				Three months Ended June 30,				Six months Ended June 30,				Six months Ended June 30,
		2025				2024				2025				2024
						(Restated)								(Restated)
Net loss		$	(2,613,283	)			(634,122	)		$	(6,572,723	)			(571,352	)
Weighted average shares outstanding – basic and diluted			16,422,651				5,302,490				16,368,254				4,971,066
Net loss per share – basic and diluted		$	(0.16	)			(0.12	)		$	(0.40	)			(0.11	)
Excluded securities:(1)
Public Warrants			11,500,000				11,500,000				11,500,000				11,500,000
Private Warrants			557,000				557,000				557,000				557,000
Bridge Warrants			173,913				173,913				173,913				173,913
Extension Warrants			26,086				26,086				26,086				26,086
September 2024 Warrants			740,741				-				740,741				-
Quantum Convertible Note, related party (2)			1,862,466				1,502,466				1,862,466				1,502,466
Additional Bridge Notes (2)			-				86,692				-				86,692
Exchange Note (2)			827,330				1,324,125				827,330				1,324,125
September 2024 Convertible Note (3)			1,258,733				-				1,258,733				-
Series A Preferred stock common stock equivalents (4)			3,079,000				3,079,000				3,079,000				3,079,000
Stock options granted			803,646				803,646				803,646				803,646
Common stock issuance obligation			51,192				51,192				51,192				51,192
March 2025 Convertible Note (5)			61,718				-				34,974				-
May 2025 Convertible Note (6)			67,617				-				33,808				-

(1) The Company’s dilutive shares have not been included in the computation of diluted net loss per share for the six months ended June 30, 2025, as the result would be anti-dilutive.

(2) Includes the interest amount thereon and assumes the floor conversion price of $2.00.

(3) Includes the principal and interest amount thereon and calculated based on the initial fixed conversion price of $2.00.

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(4) Assumes the maximum conversion thereon at the floor conversion price of $2.00.

(5) Includes the interest amount thereon and assumes the floor conversion price of $2.00.

(6) Includes the interest amount thereon and assumes the closing price as of the reporting date.

Cash

The Company considers all highly liquid investments with maturities of three months or less at the time of acquisition to be cash equivalents. The Company had no cash equivalents as of June 30, 2025, and December 31, 2024, respectively.

Accounts Receivable and Credit losses

The Company carries its accounts receivable at net realizable value. The Company maintains an allowance for credit losses for the estimated losses resulting from the inability of the Company’s clients to pay their invoices. Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. As a result of the acquisition of iDoc and at the closing of the Business Combination on June 24, 2024, the Company assumed the allowance for credit losses of $1,696,553.

As of June 30, 2025, and December 31, 2024, respectively, the allowance for credit losses was $2,639,917 and $2,393,033, respectively. For the three months ended June 30, 2025, and 2024, the Company recognized $125,964 and $12,227 of credit loss expense within general and administrative expense on the condensed consolidated statements of operations. For the six months ended June 30, 2025, and 2024, the Company recognized $246,884 and $21,428 of credit loss expense within general and administrative expense on the condensed consolidated statements of operations.

The following table presents the Company’s allowance for credit losses at June 30, 2025, and December 31, 2024:

		June 30,				December 31,
		2025				2024
Beginning allowance for credit losses		$	2,393,033			$	32,457
Add: Allowance for credit losses, due to acquisition			-				1,696,553
Add: Provision for credit losses			246,884				514,282
Less: Accounts receivable write-off included in allowance for credit losses above			-				149,741
Ending allowance for credit losses		$	2,639,917			$	2,393,033

Leases

The Company accounts for leases under ASC 842, Leases. Based on this standard, the Company determines if an agreement is a lease at inception. Operating leases are included in right-of-use assets and operating lease liabilities, less current portion on the Company’s condensed consolidated balance sheets. Finance leases are included in fixed assets and finance lease liabilities on the Company’s condensed consolidated balance sheets. Operating and finance lease right-of-use assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. As we do not have any outstanding public debt, we estimated the incremental borrowing rate based on our estimated credit rating and available market information. The incremental borrowing rate is subsequently reassessed upon a modification to the lease agreement.

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As permitted under ASC 842, the Company has made an accounting policy election not to apply the recognition provisions of ASC 842 to short-term leases (leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short-term leases on a straight-line basis over the lease term.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, based on the terms of the awards. The Company estimates the fair value of share options using the Black-Scholes option-pricing model, utilizing assumptions related to the contractual term of the instruments, estimated volatility of the price of the Common Stock, and current interest rates. The Company accounts for forfeitures as they occur.

Deferred Revenue

The timing of revenue recognition, billing, and cash collections results in billed accounts receivable and deferred revenue, primarily attributable to the unamortized balance of nonrefundable upfront fees related to subscription services, which are classified as current and non-current based on the timing of when the Company expects to recognize revenue on the condensed consolidated balance sheets. Accounts receivable are recognized in the period in which the Company’s right to the consideration is unconditional. Contract liabilities consist of billing in excess of revenue recognized primarily related to deferred revenue.

As of June 30, 2025 and December 31, 2024, the Company had $1,170,101 and $417,815 respectively, of contract liabilities (current portion) associated with customer deposits for subscription, professional, and technical engineering services, which were reported in deferred revenue on the condensed consolidated balance sheets. As of June 30, 2025 and December 31, 2024, the non-current portion of deferred revenue was $0 and $69,999, respectively.

Fair Value of Financial Instruments

“Fair value” is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.

The carrying amounts are reflected in the accompanying balance sheets for cash, due from related party, and accounts payable approximate fair value due to their short-term nature. The three levels of the fair value hierarchy under ASC 820 are as follows:

● “Level 1”, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

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● “Level 2”, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

● “Level 3”, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment.

See Note 15 for additional information on assets and liabilities measured at fair value.

Warrant Instruments

The Company classifies warrants as equity or liability instruments based on their terms and guidance under ASC 480 (Distinguishing Liabilities from Equity) and ASC 815 (Derivatives and Hedging). This assessment considers whether warrants are freestanding financial instruments, meet liability definitions, and qualify for equity classification.

The evaluation is performed at issuance and each quarter-end. Warrants meeting equity criteria are recorded in additional paid-in capital. Those not meeting equity criteria are recorded at fair value initially and remeasured each reporting period.

The Company has determined that its Public warrants, private warrants, Bridge Warrants, September 2024 Warrants and Extension Warrants are freestanding and meet equity classification under ASC 815 (Derivatives and Hedging) and are therefore classified in equity.

Fixed Assets

Fixed assets are recorded at historical cost, less accumulated depreciation. The Company expenses fixed assets purchased that are less than $1,000. Depreciation is calculated on the straight-line method over the estimated useful lives of the respective assets. Repair and maintenance costs are charged to expenses as incurred.

Goodwill

Goodwill represents the excess of purchase price in a business combination over the fair value of the net identifiable assets acquired. We evaluate goodwill for impairment at the reporting unit level by assessing whether it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If this assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired and no further impairment testing is required. Conversely, if the assessment concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a goodwill impairment test is performed to compare the fair value of the reporting unit to its carrying value. The Company determines fair value of the two reporting units using both income and market-based models. Our models contain significant assumptions and accounting estimates about discount rates, future cash flows, and terminal values that could materially affect our operating results or financial position if they were to change significantly in the future and could result in an impairment. We perform our goodwill impairment assessment whenever events or changes in facts or circumstances indicate that impairment may exist and during the fourth quarter each year. The cash flow estimates and discount rates incorporate management’s best estimates, using appropriate and customary assumptions and projections at the date of evaluation. During the year ended December 31, 2024, the Company determined there were triggering events that required the Company to perform a quantitative analysis. Based on the analysis, the Company concluded the fair value of the Telehealth Services reporting unit was less than it’s carrying value. As a result, the Company recorded non-cash goodwill impairment charges of $56,675,210 on the consolidated statement of operations for the year ended December 31, 2024. For the three and six months ended June 30, 2025, the Company performed qualitative analysis by assessing that no adverse economic, industry, operational, or regulatory indicators were identified that would suggest impairment. Based on the qualitative assessment of relevant factors, the Company concludes that no impairment indicators exist determined that there were no triggering events that required the Company to perform a quantitative analysis.

Intangible Assets

Intangible assets are presented at their historical costs, net of amortization. Historical cost of intangible assets acquired in a business combination represents the fair value at acquisition. The fair value at acquisition is determined based on the appraised value of the asset. Intangible assets are comprised of developed technology and customer list (See Note 4 – Business Combination). Developed technology and customer relationships are amortized using the straight-line method over the five-year and ten-year estimated useful lives of the assets, respectively. Identifiable intangible assets subject to amortization consist of the following:

		Estimated useful life		June 30, 2025				December 31, 2024
Customer relationships		10 years		$	2,115,000			$	2,100,000
Developed technology		5 years			10,000,000				10,000,000
					12,115,000				12,100,000
Less: Accumulated amortization					(2,224,998	)			(1,105,000	)
Intangible assets, net				$	9,890,002			$	10,995,000

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Expected amortization expense is as follows:

Year ending December 31, 2025 (Remaining six months)		$	1,105,002
Year ending December 31, 2026			2,210,000
Year ending December 31, 2027			2,210,000
Year ending December 31, 2028			2,210,000
Year ending December 31, 2029, and thereafter			2,155,000
Total		$	9,890,002

For the three months ended June 30, 2025 and June 30, 2024, the Company recorded amortization expense of $552,500 and $0, respectively, within general and administrative expenses in the condensed consolidated statements of operations. For the six months ended June 30, 2025 and June 30, 2024, the Company recorded amortization expense of $1,149,998 and $0, respectively, within general and administrative expenses in the condensed consolidated statements of operations.

Original Issue Discount on Debt

When the Company issues notes payable with a face value higher than the proceeds it receives, it records the difference as a debt discount and amortizes the discount as interest expense over the life of the underlying note payable.

Loss Contingencies and Litigation

The Company records reserves for loss contingencies if (a) information available prior to issuance of the condensed consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the condensed consolidated financial statements and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a material loss will occur, the Company does not record and reserve for a loss contingency but describes the contingency within a note and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made.

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Effective 

ASU 2023-09: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 will become effective for annual periods beginning after December 15, 2024. The Company is still reviewing the impact of ASU 2023-09.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

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ASU 2024-03: In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures in the condensed consolidated financial statements.

The Company continues to evaluate the impact of new accounting pronouncements, including enhanced disclosure requirements, on its business processes, controls and systems.

Note 4 Business Combination

Acquisition of iDoc Telehealth Solutions, Inc.

On June 24, 2024, VSee Health, Inc. (formerly Digital Health Acquisition Corp.) completed the Business Combination with VSee Lab and iDoc, a provider of tele-intensive acute and neurocritical care services. The overall transaction was accounted for as a reverse recapitalization between DHAC and VSee Lab, with VSee Lab identified as the accounting acquirer. Separately, the acquisition of iDoc was treated as a business combination under Accounting Standards Codification 805, with VSee Lab as the accounting acquirer and iDoc as the acquiree.

The acquisition enhanced the Company’s platform by integrating iDoc’s clinical capabilities in managing critically ill patients with complex neurological, cardiac, and pulmonary conditions. The transaction supported the Company’s strategy to expand its telehealth offerings in a rapidly evolving market.

At closing of the Business Combination, the Company issued 5,542,500 shares of common stock and 300 shares of Series A preferred stock, convertible into 150,000 shares of common stock at a floor conversion price of $2.

This represents a total of 5,692,500 shares of common stock (on an as-converted basis), with an aggregate consideration of $68.9 million, based on a closing price of $12.11 per share.

The purchase price was allocated to assets including developed technology ($10 million), customer relationships ($2.1 million), and other tangible and intangible assets. Liabilities assumed totaled $8.3 million. The resulting goodwill of approximately $61.6 million reflects anticipated synergies and platform expansion opportunities. A goodwill impairment charge of $56.7 million was recorded in December 2024. Goodwill is not deductible for tax purposes. 

Note 5 Leases

Operating Leases

Operating lease right-of-use assets are summarized below.

		June 30, 2025				December 31, 2024
						(Restated)
Office lease		$	433,173			$	433,173
Less: Accumulated amortization			(95,403	)			(53,588	)
Right-of-use assets, net		$	337,770			$	379,585

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Operating lease liabilities are summarized below:

		June 30, 2025				December 31, 2024
						(Restated)
Office lease		$	307,850			$	342,174
Less: current portion			(81,132	)			(72,836	)
Long term portion		$	226,718			$	269,338

As of June 30, 2025, and December 31, 2024, $132,359 and $96,589, respectively, of the Company’s operating lease liabilities are included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Future minimum rent payments under the operating lease are as follows:

		Total
Year ending December 31, 2025 (Remaining six months)		$	64,740
Year ending December 31, 2026			131,440
Year ending December 31, 2027			125,400
Year ending December 31, 2028			82,880
Total future minimum lease payments			404,460
Less: Imputed interest			(96,610	)
Present value of payments		$	307,850

Expenses incurred with respect to the Company’s operating leases during the three and six months ended June 30, 2025, which are included in general and administrative expenses on the condensed consolidated statements of operations are set forth below.

		For Three Months Ended
		June 30, 2025				June 30, 2024
Operating lease expense:
Operating lease expense		$	39,946				3,733
Total operating lease expense		$	39,946			$	3,733

		For Six Months Ended
		June 30, 2025				June 30, 2024
Operating lease expense:
Operating lease expense		$	75,581				3,733
Total operating lease expense		$	75,581			$	3,733

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The weighted average remaining lease term and the weighted average discount rate on the operating leases are set forth below.

		June 30, 2025				December 31, 2024
						(Restated)
Weighted average remaining lease term			3.1 years				3.6 years
Weighted average discount rate			19.3	%			17.9	%

Finance Leases

On November 1, 2023, iDoc entered into a forbearance agreement with a maturity date of January 10, 2024. On December 13, 2024, the Company revised the forbearance agreement with a maturity date of June 2025. Subsequently, on August 27, 2025, the Company revised the forbearance agreement. The repayment in full is expected to be made by November 2025. 30, 2025. Accordingly, the entirety of the finance lease has been reclassified to finance lease liabilities within current liabilities on the consolidated balance sheets as of June 30, 2025, and December 31, 2024.

		June 30, 2025				December 31, 2024
						(Restated)
Equipment lease		$	736,624			$	736,624
Less: Accumulated amortization			(372,604	)			(200,633	)
Leased equipment, net		$	364,020			$	535,991

Finance lease liabilities are summarized below:

		June 30, 2025				December 31, 2024
						(Restated)
Equipment lease		$	234,673			$	328,833
Less: Current portion			(234,673	)			(328,833	)
Long term portion		$	—			$	—

Future minimum payments under the finance lease are as follows:

		Total
Year ending December 31, 2025 (Remaining six months)		$	258,363
Total future minimum lease payments			258,363
Less imputed interest			(23,690	)
Present value of payments		$	234,673

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Total finance lease cash payments made during the three and six months ended June 30, 2025, were $0 and $25,000 respectively. As such, as of June 30, 2025, and December 31, 2024, $543,770 and $446,890, respectively, of the Company’s financing lease liabilities are included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Expenses incurred with respect to the Company’s finance leases during the three and six months ended June 30, 2025, which are included in the condensed consolidated statements of operations are set forth below.

		For the Three Months Ended
		June 30, 2025				June 30, 2024
Finance lease amortization		$	85,986			$	3,540
Finance lease interest			12,734				559
Total finance lease expense		$	98,720			$	4,099

		For the Six Months Ended
		June 30, 2025				June 30, 2024
Finance lease amortization		$	171,971			$	3,540
Finance lease interest			27,718				559
Total finance lease expense		$	199,689			$	4,099

The weighted average remaining lease term and the weighted average discount rate on the finance leases are set forth below.

		June 30, 2025				December 31, 2024
Weighted average remaining lease term (years)*			1.1				1.6
Weighted average discount rate			19.3	%			19.3	%

* The finance leases of the Company mature on June 30, 2026. However, as of June 30, 2025, and December 31, 2024, entire finance lease liability has been classified as current on the condensed consolidated balance sheet pursuant to the forbearance agreement entered into by the Company with the bank.

Note 6 Accounts Payable and Accrued Liabilities

The components of accounts payable and accrued liabilities are summarized as follows:

		June 30, 2025				December 31, 2024
Accounts payable		$	4,402,224			$	4,283,397
Accrued compensation and benefits			2,090,240				2,176,070
Accrued interest			536,796				558,358
Accrued sales and use tax			1,157,346				999,547
Accrued financing lease			543,770				446,890
Other accrued liabilities			890,513				879,397
		$	9,620,889			$	9,343,659

Note 7 Factoring Payable

As a result of the acquisition of iDoc and at the closing of the Business Combination on June 24, 2024, the Company assumed the following factoring payable liabilities from iDoc (See Note 4 – Business Combination). Except as specifically set forth below, the factoring purchase agreements are not collateralized by a general security agreement over iDoc’s personal property and interests. No interest rate is associated with these factoring purchase transactions and no time during which the amount sold must be collected because the weekly amount is subject to adjustment based on future receipts generated by iDoc or the Company after the closing of the Business Combination.

1. A Future Receipts Sale Agreement, which iDoc entered on June 21, 2023, pursuant to which iDoc sold $299,000 total dollar amount of future receipts for a net purchase price of $207,639 and under which iDoc authorized the factoring purchaser to collect $7,475 weekly. The factoring payable under the June 21, 2023, Future Receipt Sale Agreement was $51,300 and $59,527 on June 30, 2025, and December 31, 2024, respectively.

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2. A Future Receipts Sale Agreement, which iDoc entered on June 28, 2023, pursuant to which iDoc sold $140,000 total dollar amount of future receipts for a net purchase price of $100,000 and under which iDoc authorized the factoring purchaser to collect $5,000 weekly. The factoring payable under the June 28, 2023, Future Receipt Sale Agreement was $17,320 and $34,315 on June 30, 2025, and December 31, 2024, respectively.

3. A Future Receipts Sale Agreement, which iDoc entered on October 13, 2023, pursuant to which iDoc sold $186,250 total dollar amount of future receipts for a net purchase price of $125,000 and under which iDoc authorized the factoring purchaser to collect $1,552 weekly. Furthermore, the agreement was not collateralized by a general security agreement over iDoc’s accounts, including, without limitation, all deposit accounts, accounts receivable, and other receivables, chattel paper, documents, equipment, general intangibles, instruments, and inventory. The factoring payable under the October 13, 2023, Future Receipt Sale Agreement was $74,600 and $85,166 on June 30, 2025, and December 31, 2024, respectively.

Note 8 Line of Credit and Notes Payable

The following is a summary of the notes payable as of June 30, 2025, and December 31, 2024:

Notes Payable		June 30, 2025				December 31, 2024
						(Restated)
Note payable issued November 29, 2021		$	336,983			$	336,983
Note payable issued December 1, 2021			1,500,600				1,500,600
Note payable issued August 18, 2023			64,000				64,000
Note payable issued November 29, 2023			33,000				33,000
Total notes payable and line of credit			1,934,583				1,934,583
Less: Current portion			(433,983	)			(433,983	)
Less: Fair value adjustment for debt			(906,659	)			(906,659	)
Total notes payable, net of current portion		$	593,941			$	593,941

Required principal payments under the Company’s notes payable are as follows:

Year Ending December 31, 2025 (Remaining six months)		$	438,550
Year Ending December 31, 2026			26,534
Year Ending December 31, 2027			37,720
Year Ending December 31, 2028			39,008
Year ending December 31, 2029			40,646
Thereafter			1,352,125
Total		$	1,934,583

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Description of Notes Payable

As a result of the acquisition of iDoc and at the closing of the Business Combination on June 24, 2024, the Company assumed the following outstanding notes payable liabilities from iDoc (See Note 4 – Business Combination).

(1) On November 29, 2021, the iDoc issued a $654,044 promissory note to a bank, collateralized by all the assets of iDoc. Interest was payable monthly at the annual fixed rate of 4.284%. On November 1, 2023, iDoc entered into a forbearance agreement with a maturity date of January 10, 2024, and increased the effective interest rate to 3% above the Wall Street Journal prime rate (7.5% at June 30, 2025) (See Note 10 - Commitments, Contingencies, and Concentration Risk). iDoc is required to pay the loan in 36 payments of $19,409. As of each of June 30, 2025, and December 31, 2025, the outstanding balance on the promissory note was $336,983. For the three and six months ended June 30, 2025, the Company recorded $10,559 and $19,985 in interest related to the promissory note. For three and six months ended June 30, 2024, $637 were recorded in interest related to the promissory note. The accrued interest balance, which was included within accrued liabilities on the condensed consolidated balance sheets, as of June 30, 2025 and December 31, 2024, was $32,078 and $43,961. The note is currently in default.

(2) On December 1, 2021, iDoc issued a promissory note to a bank in the amount of $500,000. On February 25, 2022, iDoc received an extension of $1,000,600 on the promissory note. The promissory note is collateralized by all the assets of iDoc and the private property of iDoc’s then Chief Executive Officer. Interest is accrued monthly at the annual fixed rate of 3.75%. The promissory note matures on December 19, 2051. As of each of June 30, 2025, and December 31, 2024, there was an outstanding balance of $1,500,600 on the promissory note. Commencing on January 1, 2024, iDoc is required to make monthly installment payments, including principal and interest, of $7,682. The Company recorded $14,029 and $27,905 in interest related to the promissory note for the three and six months ended June 30, 2025. For three and six months ended June 30, 2024, $0 were recorded in interest related to the promissory note. The accrued interest balance, which were included within accrued liabilities on the condensed consolidated balance sheets, as of June 30, 2025, and December 31, 2024, were $172,026 and $144,121. The note is currently in default, and as such, the company has classified the note in full in current liabilities.

(3) On August 3, 2023, iDoc issued a 10.00% original issue discount promissory note to an accredited investor with a principal balance of $33,000. Notes payable issued with a face value higher than the proceeds it receives is recognized as a debt discount and is amortized as interest expense over the life of the underlying note payable. The promissory note matured on November 1, 2023, and is collateralized by all the assets of iDoc. Interest is accrued monthly at the annual fixed rate of 8.00%, with principal and interest due upon maturity. Upon an event of default, the interest rate on the note increases to the greater of 26% per annum or the maximum rate allowed by the laws governing this agreement. The Company recognized total interest expense of $2,145 and $4,290 for the three and six months ended June 30, 2025. For three and six months ended June 30, 2024, $0 was recorded in interest related to the promissory note. The accrued interest balance, which is included within accrued liabilities on the condensed consolidated balance sheets, as of June 30, 2025, and December 31, 2024, were $13,065 and $0. As of each of June 30, 2025, and December 31, 2024, the outstanding balance of the promissory note was $33,000. The note is currently in default, and as such, the company has classified the note in full in current liabilities.

(4) On August 18, 2023, iDoc issued a 8.5% original issue discount promissory note to an accredited investor with a principal balance of $64,000. Notes payable issued with a face value higher than the proceeds it receives are recognized as a debt discount and are amortized as interest expense over the life of the underlying note payable. The promissory note matured on November 16, 2023, and is collateralized by all the assets of iDoc. Interest is accrued monthly at the annual fixed rate of 8.00%, with principal and interest due upon maturity. Upon an event of default, the interest rate on the note increases to the greater of 26% per annum or the maximum rate allowed by the laws governing this agreement. As of each of June 30, 2025, and December 31, 2024, the promissory note net of unamortized debt discount was $64,000. The Company recognized $4,160 and $8,320 interest at default interest for the three and six months ended June 30, 2025. For three and six months ended June 30, 2024, $0 was recorded in interest related to the promissory note. The Company had $26,240 and $17,920 in accrued interest as of June 30, 2025. The note is currently in default, and as such, the company has classified the note in full in current liabilities.

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Furthermore, on January 12, 2023, VSee Lab issued a 10.00% original issue discount promissory note to an accredited investor with a principal balance of $220,000. Notes payable issued with a face value higher than the proceeds it receives are recognized as a debt discount and is amortized as interest expense over the life of the underlying note payable. The promissory note matured on July 15, 2023. Interest accrued monthly at the annual fixed rate of 12.00%, with principal and interest due upon maturity. On November 21, 2023, VSee Lab, DHAC and the investor entered into a Loan Conversion Asecurities purchase agremeent pursuant to which $220,000 of the promissory note principal balance was converted into Series A Preferred Stock of the Company at the closing of the Business Combination. The Company paid off the promissory note by issuing 220 shares of Series A Preferred Stocks to the investor at the closing of the Business Combination. As of each of June 30, 2025, and December 31, 2024, there is no balance outstanding for the promissory note.

March 2025 Convertible Note

On March 20, 2025, the Company entered into a Convertible Note Purchase Agreement (the “March 2025 SPA”) with an accredited institutional investor, pursuant to which the Company issued and sold a senior secured convertible promissory note in the principal amount of $108,696 (the “March 2025 Convertible Note”). The Company received $100,000 in initial proceeds, reflecting an 8% original issue discount. The March 2025 Convertible Note matures on December 20, 2025, and provides for a minimum interest amount guaranteed for the first six months, with interest accruing at 18% per annum and payable monthly in cash or common stock at the holder’s discretion. Interest in excess of the minimum amount (if applicable) will accrue at a rate of 18% per annum, increasing to 28% per annum upon the occurrence of an event of default. The minimum interest amount is payable in 9 equal installments of $1,630 per month beginning on April 20, 2025.

The March 2025 Convertible Note is convertible into shares of the Company’s common stock at any time after three months from issuance (or earlier upon prepayment) by the holder, at a conversion price equal to the greater of (i) $2.00 per share or (ii) the lower of (a) the lowest average historical Nasdaq Official Closing Price (NOCP) for the five trading days immediately preceding the closing, or (b) the NOCP on the day prior to closing, subject to reverse stock split adjustment and most-favored nation protections. In addition, prior to a Qualified Financing, (as defined in the March 2025 Convertible Note), the holder may elect to convert at a price equal to the lower of the then-current conversion price or 75% of the effective price per share at which the Company issues common stock, options, or convertible securities to new investors in the Qualified Financing. The conversion price is subject to standard antidilution adjustments, including adjustments for stock splits, dividends, mergers, asset sales, volume resets, defaults, and down-round events. Conversion is subject to beneficial ownership and exchange cap limitations.

The March 2025 Convertible Note is prepayable at any time (unless an event of default has occurred) at 110% of the outstanding balance and is mandatorily prepayable upon the occurrence of a Qualified Financing (gross proceeds ≥ $2,000,000), with the redemption amount paid from the financing proceeds. The note is also mandatorily prepayable upon a change of control at 120% of the outstanding balance. The note can be accelerated upon an event of default either automatically or at the option of the note holder, depending on the nature of the event. Upon an uncured event of default, the holder may accelerate the note and require payment of 115% of the outstanding principal and accrued interest (Mandatory Default Amount), plus $5,000 in liquidated damages, and may convert the Mandatory Default Amount at a more favorable “Alternative Conversion Price,” defined as the lower of the conversion price then in effect or the lowest VWAP during the ten trading days prior to the default.

The March 2025 Convertible Note is secured by substantially all of the Company’s assets, and includes certain covenants which restrict the Company’s ability to incur additional indebtedness, grant liens, pay dividends, or dispose of assets without the lender’s consent.

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In connection with the March 2025 SPA and March 2025 Convertible Note, the Company also issued 25,000 shares of common stock to the investor as additional consideration for entering into the agreement, which were classified in stockholders’ equity (deficit) upon issuance.

After analyzing the terms of the March 2025 Convertible Note and its embedded features, the Company elected to account for the March 2025 Convertible Note at fair value under the allowable fair value option election. As such, the Company initially recognized the March 2025 Convertible Note at its fair value of $238,020 and will subsequently measure the note at fair value with changes in fair value recorded in current period earnings. The original discount of $8,696 was recognized in the condensed consolidated statements of operations as the March 2025 Convertible Note is recognized at fair value on a recurring basis. The Company recognized a loss of $138,020 on initial recognition of the March 2025 Convertible Note as the fair value of the March 2025 Convertible Note exceeded the proceeds of $100,000, received on issuance.

As of June 30, 2025, and December 31, 2024, the March 2025 Convertible Note’s fair value was $194,791 and $0 (see Note 15 Fair Value Measurements), respectively.

March 2025 Promissory Note

On March 20, 2025, the Company entered into Amendment No. 1 to the Securities Purchase Agreement, originally dated as of September 30, 2024 (the “Purchase Agreement”), pursuant to which the Company issued and sold a senior secured convertible promissory note in the principal amount of $555,556 (the “March 2025 Promissory Note”). The Company received $500,000 in initial proceeds, reflecting an original issue discount (OID) of approximately 10%. This transaction was completed as part of the second closing under the terms of the Purchase Agreement.

The March 2025 Promissory Note matures on November 1, 2025, and provides for a minimum interest amount equal to 5% of the initial principal, fully earned and accrued on the original issue date, with interest accruing at 5% per annum and payable monthly in cash. Interest in excess of the minimum amount will accrue at a rate of 5% per annum, increasing to 24% per annum upon the occurrence of an event of default. The minimum interest amount is payable in 8 equal installments of $2,315 per month beginning on April 20, 2025.

The March 2025 Promissory Note is prepayable at any time (unless an event of default has occurred) with advance notice and is mandatorily prepayable upon the occurrence of a subsequent offering, with the redemption amount paid from the financing proceeds. The note can be accelerated upon an event of default either automatically or at the option of the note holder, depending on the nature of the event. Upon an uncured event of default, the Holder may accelerate the note and require immediate payment of all outstanding principal and accrued interest.

If any payment due under the March 2025 Promissory Note is not paid when due, the Company shall pay a late fee equal to ten percent (10%) of such payment, due and payable immediately upon such failure.

The March 2025 Promissory Note is secured by substantially all of the Company’s assets and includes certain covenants which restrict the Company’s ability to enter into certain agreements or transactions without the lender’s consent.

In connection with the second closing under the Purchase Agreement and the March 2025 Convertible Note, the Company also issued 100,000 shares of Common Stock to the investor as additional consideration for entering into the agreement, which were classified in stockholders’ equity (deficit) upon issuance.

The Company identified certain embedded features within the March 2025 Promissory Note that would require bifurcation. However, the value of such embedded derivatives was de minimis and, accordingly, the March 2025 Promissory Note is accounted for at amortized cost using the effective interest method. The proceeds from the issuance of the March 2025 Promissory Note were allocated between the March 2025 Promissory Note and the common shares on a relative fair value basis. The amount allocated to the March 2025 Promissory Note was $409,366 and to the common shares was $90,634. As of June 30, 2025, and December 31, 2024, the outstanding balance on the March 2025 Promissory Note is $488,652 and $0, respectively. The interest expense recognized for the six months ended June 30, 2025, and June 30, 2024, is $79,286 and $0, respectively. The interest expense recognized for the three months ended June 30, 2025, and June 30, 2024, is $70,049 and $0, respectively.

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April 2025 Promissory Note

On April 15, 2025, the Company issued an unsecured promissory note to FWE CAPITAL LLC (the “April 2025 Promissory Note”), with a principal balance of $70,000. The April 2025 Promissory Note bears interest at a fixed rate of 12.00% per annum for the six-month term, equivalent to 2% of the principal balance per month ($1,400 per month), with interest payments due on the 15th day of each month, beginning May 15, 2025. Principal and all outstanding interest are due and payable on October 15, 2025 (the “Maturity Date”).

Upon an event of default, the interest rate increases to the greater of 24% per annum or the maximum rate allowed by law. If any payment is not made within six calendar days of its due date, a late charge equal to 5% of the overdue amount is assessed. The April 2025 Promissory Note may be prepaid in whole or in part at any time upon five business days’ notice to the lender, without penalty or premium. The April 2025 Promissory Note is unsecured.

On May 30, 2025, the Company issued a convertible promissory note (“May 2025 Convertible Note”) with a principal amount of $216,871. The issuance of the May 2025 Convertible Promissory Note resulted in the modification of the previously outstanding April 2025 Promissory Note.

The May 2025 Convertible Note states that the amount due and owing under the original April 2025 Promissory Note is consolidated with the new May 2025 Convertible Note under the terms and conditions set forth therein; and hence, this consolidation leads to a modification of the original debt arrangement. The modification involved changes to the terms and cash flows of the debt. The present value of the cash flows under the new May 2025 Convertible Note differed by more than 10% from the present value of the remaining cash flows under the original April 2025 Promissory Note, exceeding the 10 percent threshold prescribed by ASC 470-50. As a result, the modification was accounted for as an extinguishment of the original April 2025 Promissory Note.

In accordance with ASC 470-50, the original April 2025 Promissory Note was derecognized, and the new May 2025 Convertible Note was recognized at its fair value. Any gain or loss resulting from the extinguishment was recognized in earnings for the period.

The Company recognized the May 2025 Convertible Note at fair value at $342,996 and recognized a loss of $126,125 on derecognition of the original April 2025 Promissory Note.

For details refer the note on May 2025 Convertible Note below.

May 2025 Convertible Note

On May 30, 2025, the Company issued the May 2025 Convertible Note, which is one of a series of duly authorized and validly issued promissory notes of the Company, issued and sold by the Company pursuant to the September 2024 Securities Purchase Agreement, dated as of September 30, 2024. The principal amount of the May 2025 Convertible Note is $216,871. The May 2025 Convertible Note combines the outstanding amount due under the April 2025 Promissory Note, totaling $70,431, with an additional $146,440 of new funding to issue a single Convertible Promissory Note in the principal amount of $216,871. The note matures on November 1, 2025, and accrues interest at 5% per annum, payable monthly in cash. The note provides for a minimum interest amount equal to 5% of the initial principal, fully earned and accrued on the original issue date, and payable monthly and any remaining amount upon repayment. Upon an event of default, the interest rate increases to 24% per annum or the maximum rate permitted by law.

The May 2025 Convertible Note is convertible into shares of the Company’s common stock at any time while outstanding, at a conversion price equal to the lowest trading price of the Company’s common stock at any time after the original issue date.

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The note is prepayable at any time (unless an event of default has occurred) with advance notice, and is mandatorily prepayable upon the occurrence of a subsequent offering, with the redemption amount paid from the financing proceeds. Before any prepayment can be made, the holder has the option to convert the Note into common stock at a conversion price equal to the lowest Trading Price of a share of the Company’s common stock at any time after the Original Issue Date, with respect to the prepayment amount. The note can be accelerated upon an event of default either automatically or at the option of the note holder, depending on the nature of the event. Upon an uncured event of default, the Holder may accelerate the note and require immediate payment of all outstanding principal and accrued interest.

If any payment due under the May 2025 Convertible Note is not paid when due, the Company shall pay a late fee equal to ten percent (10%) of such payment, due and payable immediately upon such failure.

The May 2025 Convertible Note states that the amount due and owing under the previously outstanding April 2025 Promissory Note is consolidated with the new May 2025 Convertible Note under the terms and conditions set forth therein; this consolidation led to a modification and extinguishment of the original April 2025 Promissory Note, as disclosed separately. Refer to the note above, related to the April 2025 Promissory Note for details.

The Company elected to account for the May 2025 Convertible Note at fair value under the allowable fair value option election. As such, the Company initially recognized the May 2025 Convertible Note at its fair value of $342,996 and will subsequently measure the note at fair value with changes in fair value recorded in current period earnings. The Company expensed off the related issuance costs as the note was fair valued.

As of June 30, 2025, the May 2025 Convertible Note’s fair value was $342,996.

Line of credit

On November 29, 2021, iDoc received a revolving line of credit from the same bank that issued the $500,000 promissory note as described in the above “Description of Notes Payable” section. The line of credit is collateralized by iDoc’s assets. Interest was payable monthly at 1.25% above the Wall Street Journal prime rate (7.5% at June 30, 2025). On November 1, 2023, iDoc entered into a forbearance agreement with a maturity date of January 10, 2024, and increased the effective interest rate to 3% above the Wall Street Journal Prime Rate (7.5% at June 30, 2025) (See Note 10 - Commitments, Contingencies, and Concentration Risk).

On December 13, 2024, the Company revised the forbearance agreement. Under the revised forbearance, the Company agreed to monthly payments of $25,000 beginning January 2025 to May 2025, and a payment in full of $1,541,106 on June 16, 2025.

On August 27, 2025, the Company revised the forbearance agreement. The repayment in full is expected to be made by November 2025. As of June 30, 2025, and December 31, 2024, the Company has accrued the obligation in line of credit and note payable, net of discount, right-of-use liability - finance, and accrued interest is included in accounts payable and accrued liabilities.

As a result of the acquisition of iDoc and at the closing of the Business Combination on June 24, 2024, the Company assumed the revolving line of credit. As of June 30, 2025, and December 31, 2024, the Company had an outstanding balance of $456,097 on the line of credit. The Company recorded $14,291 and $27,049 in interest related to the line of credit for the three  and six months ended June 30, 2025. For three and six months ended June 30, 2024, no interest related to the line of credit had been recorded. The accrued interest balance, which is included within accrued liabilities on the condensed consolidated balance sheets, as of June 30, 2025, and December 31, 2024, were $36,108 and $52,190.

Loan Conversions

On November 21, 2023, DHAC, VSee Lab, and/or iDoc, as applicable, entered into Securities Purchase Agreements (the “Conversion SPAs”), certain of which were further amended and restated on February 13, 2024 (the “A&R Loan Conversion SPAs”) with various lenders of each of DHAC, VSee and iDoc, pursuant to which certain indebtedness owed by DHAC, VSee Lab and iDoc would be converted into shares of Series A Preferred Stock pursuant to the Conversion SPAs or shares of common stock of the Company pursuant to the A&R Loan Conversion SPAs at the closing of the Business Combination as further described and set forth below.

● On November 21, 2023, DHAC and VSee Lab entered into a Conversion SPA with Whacky Ventures LLC (“Whacky”), pursuant to which certain loans incurred by VSee Lab to Whacky in the aggregate amount of $220,000 was converted into shares of Series A Preferred Stock to be issued to the investor at the closing. As a result of the closing of the Business Combination, 220 shares of Series A Preferred Stock of the Company were issued to Whacky on June 24, 2024, and such promissory note owned thereof was paid off.

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● On November 1, 2023, DHAC and iDoc, entered into a Conversion SPA with Mark E. Munro Charitable Remainder Unitrust (“Munro Trust”) , pursuant to which certain loans incurred by iDoc to Munro Trust in the aggregate amount of $300,000 was converted into shares of Series A Preferred Stock to be issued to the investor at the closing. As a result of the closing of the Business Combination, 300 shares of Series A Preferred Stock were issued to Munro Trust on June 24, 2024, and such promissory note owned thereof was paid off.

● On November 21, 2023, and as further amended and restated on February 13, 2024, DHAC, VSee Lab and the Bridge Investor, entered into an A&R Loan Conversion SPA, pursuant to which certain loans incurred by VSee Lab to the Bridge Investor in the aggregate amount of $600,000 was converted into shares of VSee Health common stock to be issued to the Bridge Investor at the Closing. As a result of the closing of the Business Combination, 300,000 shares of common stock were issued to the Bridge Investor on June 24, 2024, and such promissory note owned thereof was paid off.

● On November 21, 2023, and as further amended and restated on February 13, 2024, DHAC, iDoc and Tidewater Ventures, LLC (“Tidewater”), entered into an A&R Loan Conversion SPA, pursuant to which certain loans incurred by iDoc to Tidewater in the aggregate amount of $585,000 were converted into shares of VSee Health common stock to be issued to the Tidewater at the closing. As a result of the closing of the Business Combination, 292,500 shares of common stock were issued to Tidewater on June 24, 2024, and such promissory note owned thereof was paid off.

● On November 21, 2023, and as further amended and restated on February 13,2024, DHAC, iDoc and the Bridge Investor, entered into an A&R Loan Conversion SPA, pursuant to which certain loans incurred by iDoc to the Bridge Investor in the aggregate amount of $600,000 was converted into shares of VSee Health common stock to be issued to the Bridge Investor at the closing. As a result of the closing of the Business Combination, 300,000 shares of common stock were issued to the investor on June 24, 2024, and such promissory note owned thereof was paid off.

Exchange Note

In connection with a securities purchase agreement by and among DHAC, VSee Lab, iDoc and an investor (the “Bridge Investor”) dated October 5, 2022 (the “Original Bridge SPA”), DHAC, VSee Lab, and iDoc each issued to the Bridge Investor a 10% original issue discount senior secured convertible notes (collectively the “Original Bridge Notes” and individually, the “DHAC Bridge Notes,” “VSee Bridge Notes” and “iDoc Bridge Notes” when referring to Original Bridge Notes issued to DHAC, VSee Lab, and iDoc, respectively) in an aggregate principal amount of approximately $2,222,222. On November 21, 2023, DHAC, VSee Lab, iDoc and the Bridge Investor entered into an Exchange Agreement. Pursuant to the Exchange Agreement, the Bridge Investor agreed to exchange all amounts currently due and owing under (i) the DHAC Bridge Note, (ii) the VSee Bridge Note other than the principal amount of $600,000 thereof, and (iii) the iDoc Bridge Note other than the principal amount of $600,000 thereof for a senior secured convertible promissory note with an aggregate principle value of $2,523,744 (the “Exchange Note”). As such, the Company issued and sold the Exchange Note to the Bridge Investor in connection with the closing of the Business Combination on June 24, 2024. The transactions contemplated by the Exchange Agreement and the Exchange Note is hereby referred as the “Exchange Financing.”

The Exchange Note bears interest at a rate of 8% per annum and is convertible into shares of common stock of VSee Health at a fixed conversion price of $10 per share. The conversion price of the Exchange Note is subject to reset if the Company’s common stock trades below $10.00 on the 10th business day after the conversion shares are registered or may otherwise be freely resold, and every 90th day thereafter, to a price equal to the greater of (x) 95% of the average lowest VWAP of the Company’s common stock in the 10th trading dates prior to the measurement date and (y) $2.0. Amounts repaid may not be reborrowed. The Bridge Investor may set off and deduct the amounts due under the Exchange Note pursuant to and in accordance with the terms of the Exchange Agreement. The Exchange Note is also guaranteed by each of the Company, VSee Lab and iDoc and is fully secured by collateral of the Company and its subsidiaries including, without limitation, the intellectual property, trademark, and patent rights.

The monetary amount of the obligation is a fixed monetary amount known at inception as represented by the Amortization of Principal Schedule in the Exchange Note (each, an “Amortization Payment”). As a result, the Exchange Note represents a debt instrument that the Company must or may settle by issuing a variable number of its equity shares as each Amortization Payment shall, at the option of the Company, be made in whole or in part, in immediately available Dollars equal to the sum of the Amortization Payments provided for in the Exchange Note or, subject to the Company complying with the equity conditions provided for in the Exchange Note on the date of such Amortization Payment, in common stock issued at 95% of the lowest VWAP in the prior ten (10) trading days prior to such Amortization Payment (the “Amortization Conversion Price”) but in no event will common stock be used to make such Amortization Payment if the Amortization Conversion Price is less than $2.00.

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The Exchange Note represents share-settled debt that requires or may require the Company to settle the debt instrument by delivering a variable number of shares with a then-current fair value equal to the principal amount of the note plus accrued and unpaid interest. As a result, the Exchange Note is required to be accounted for as a liability under ASC 480. As required under ASC 480, the liability will be re-measured at fair value at each reporting period with the changes in the fair value of the liability recognized in earnings.

For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the Exchange Note due to the reverse merger with DHAC on June 24, 2024.

As a result of the Business Combination, the fair value of the Exchange Note on June 24, 2024, was $6,155,925 in accordance with ASC 480.

On August 8, 2024, $566,740 outstanding principal on the Exchange Note was converted into 213,759 shares of Common Stock, at a conversion price based on a 5% discount to the prior trading day VWAP. The Company accounted for the conversion under the debt extinguishment model and recognized a loss on extinguishment of $98,050, reflecting the difference between the carrying value of the Exchange Note being converted (recorded at fair value) and the fair value of the shares of common stock issued upon conversion (which was $664,790).

On November 26, 2024, $500,000 of outstanding principal with accrued interest expense of $11,693 on the Exchange Note was converted into 255,847 shares of common stock. The portion of the Exchange Note converted on this date had a fair value of $512,693.

As of June 30, 2025, and December 31, 2024, the Exchange Note’s fair value was $2,485,636 and $1,499,000. The Company recognized an interest expense of $30,475 (of which $10,158 was paid during the three months ended June 30, 2025), and $60,950 (of which $30,475 was paid during the six months ended June 30, 2025), for the three and six months ended June 30, 2025, and a change in fair value of $2,422 and $956,161 for the three and six months ended June 30, 2025. No interest expense and change in fair value had been recognized for the three and six months ended June 30, 2024. (See Note 15 – Fair Value Measurements).

Additional Bridge Financing

On November 21, 2023, DHAC, VSee Lab and iDoc entered into an amendment to the Original Bridge SPA (the “Bridge Amendment”), pursuant to which the Bridge Investor agreed to purchase additional promissory note in the aggregate principal amount of $166,667 (with an aggregate subscription amount of $150,000) from DHAC with (1) a $111,111 note purchased on November 21, 2023, which will mature on May 21, 2025 and (2) a $55,556 note (which was purchased on January 25, 2024 and will mature on July 25, 2025) (the “Additional Bridge Notes”). The Additional Bridge Notes bear guaranteed interest at a rate of 8% per annum and are convertible into shares of the Company’s common stock, at an initial fixed conversion price of $10.00 per share. The conversion price of the Additional Bridge Notes is subject to reset if the Company’s common stock trades below $10.00 on the 10th business day after the conversion shares are registered or may otherwise be freely resold, and every 90th day thereafter, to a price equal to the greater of (x) 95% of the average lowest VWAP of the Company’s common stock in the 10 trading dates prior to the measurement date and (y) $2.00. In addition, optional prepayment of the Additional Bridge Notes requires the payment of 110% of the outstanding obligations, including the guaranteed minimum interest. If an event of default occurs, the Additional Bridge Notes would bear interest at a rate of 24% per annum and require the payment of 125% of the outstanding obligations, including the guaranteed minimum interest. As of March 31, 2025, $150,000 pursuant to the Additional Bridge Notes has been funded to the Company. The transactions contemplated by the Bridge Amendment and the Additional Bridge Notes are hereby referred as the “Additional Bridge Financing.”

The monetary amount of the obligation is a fixed monetary amount known at inception as represented by the Amortization of Principal Schedule in the Additional Bridge Notes (each, an “Amortization Payment”). As a result, the Additional Bridge Note represents a debt instrument that the Company must or may settle by issuing a variable number of its equity shares as each Amortization Payment shall, at the option of the Company, be made in whole or in part, in immediately available Dollars equal to the sum of the Amortization Payment provided for in in the Additional Bridge Notes, or, subject to the Company complying with the equity conditions listed in the Additional Bridge Notes on the date of such Amortization Payment, in common stock issued at 95% of the lowest VWAP in the prior ten (10) trading days prior to such Amortization Payment (the “Amortization Conversion Price”) but in no event shall common stock be used to make such Amortization Payment if the Amortization Conversion Price is less than $2.00.

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The Additional Bridge Note represents share-settled debt that requires or may require the Company to settle the debt instrument by delivering a variable number of shares with a then-current fair value equal to the principal amount of the note plus accrued and unpaid interest. As a result, the Additional Bridge Notes are required to be accounted for as a liability under ASC 480. As required under ASC 480, the liability will be re-measured at fair value at each reporting period with the changes in the fair value of the liability recognized in earnings.

For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the Additional Bridge Notes due to the reverse merger with DHAC on June 24, 2024.

As a result of the Business Combination, the fair value of the Additional Bridge Notes on June 24, 2024, was $466,646 in accordance with ASC 480.

On August 2, 2024, holders of the Additional Bridge Notes converted an aggregate $41,417 of outstanding principal into 14,199 shares of common stock, at a conversion price based on a 5% discount to the prior trading day VWAP. The Company accounted for the conversion under the debt extinguishment model and recognized a loss on extinguishment of $18,928, reflecting the difference between the carrying value of the Additional Bridge Notes being converted (recorded at fair value) and the fair value of the shares of common stock issued upon conversion (which was $60,346).

On November 26, 2024, the remaining $92,593 of outstanding principal on the Additional Bridge Notes were converted into 46,565 shares of common stock and the Additional Bridge Notes were settled in full. The Additional Bridge Notes converted on this date had a fair value of $99,535.

Extension Note

On May 5, 2023, DHAC entered into a securities purchase agreement (the “Extension Purchase Agreement”) with an institutional investor (the “Holder”). Pursuant to the Extension Purchase Agreement, the Company issued the holder a 16.67% original issue discount promissory note, in favor of the Holder, in the aggregate principal amount of $300,000 (the “Extension Note”). The Extension Note bears guaranteed interest at a rate of 10% per annum and was due and payable on May 5, 2024. On April 17, 2024, the Company and the investor entered into a letter agreement (the “Extension Letter Agreement”), which amended the maturity date of the Extension Note to March 31, 2025, and clarified certain definitions and transaction terms in both the Extension Purchase Agreement and the Extension Note. The Extension Note is also guaranteed by each of VSee Lab and iDoc and was subordinated to the security interests granted to the Bridge Investor. In connection with the Extension Purchase Agreement, on May 5, 2023, DHAC also issued to the holder (i) warrants with an exercise period of five years to purchase up to 26,086 shares of the common stock at an exercise price of $11.50 per share (the “Extension Warrants”), and (ii) 7,000 shares of DHAC common stock as commitment shares (the “Extension Shares”).

For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed certain Extension Note due to the reverse merger with DHAC on June 24, 2024. The Extension Note was paid off in full by the Company in June 2024 and was no longer outstanding as of June 30, 2025.

The Company reviewed the Extension Warrants and Extension Shares issued in connection with the Extension Purchase Agreement under ASC 815 and concluded that the Extension Warrants are not in scope of ASC 480 and are not subject to the Derivative guidance under ASC 815. The Extension Warrants and the Extension Shares should be recorded as equity. As such the principal value of the Extension Note was allocated using the relative fair value basis of all three instruments. As the Extension Warrants were issued with various instruments the purchase price needs to be allocated using the relative fair value method (i.e., warrant at its fair value and the common stock at its fair value, the promissory note at its principal value allocated using the relative fair value of the proceeds received and applied proportionally to the equity classified stock, warrants and promissory note).

The Company reviewed the contingent early repayment option granted in the Extension Note under ASC 815 and concluded that as a result of the significant discount granted in the note the contingent repayment provision is therefore considered an embedded derivative that should be bifurcated from the debt host. Accordingly, in accordance with ASC 470-20, the Company allocated the Extension Note proceeds between the Extension Note and the Bifurcated Derivative, using the residual method by allocating the principal first to fair value of the embedded derivative and then to the debt. Accordingly, the fair value of the embedded derivative at June 24, 2024, was $33,000 and $335,750 was allocated to the principal balance of the note with $30,000 of accrued interest for a total of $365,750. On June 30, 2024, the Company paid the Extension Note in full in the amount of $365,750 and derecognized the embedded derivative recognizing a change in the fair value of the derivative of $33,000.

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Quantum Financing Purchase Agreement

On November 21, 2023, DHAC entered into a convertible note purchase agreement (the “Quantum Purchase Agreement”), pursuant to which an institutional and accredited investor (the “Quantum Investor”) subscribed for and purchased, and DHAC would issue and sell to the Quantum Investor, at the closing of the Business Combination, a 7% original issue discount convertible promissory note (the “Quantum Convertible Note”) in the aggregate principal amount of $3,000,000.

The Quantum Convertible Note was issued and sold to the Quantum Investor subsequent to the closing of the Business Combination on June 25, 2024. The Quantum Convertible Note was further amended on July 3, 2024, whereby the maturity date of the Quantum Convertible Note was changed from June 25, 2025, to June 30, 2026, and that eighteen months of interest will be guaranteed regardless of early pay or redemption. Furthermore, the Quantum Convertible Note bears an interest at rate of 12% per annum and are convertible into shares of the Company’s Common Stock at (1) a fixed conversion price of $10.00 per share; or (2) 85% of the lowest daily VWAP (as defined in the Quantum Convertible Note) during the seven (7) consecutive trading days immediately preceding the date of conversion or other date of determination. The conversion price of the Quantum Convertible Note is subject to reset if the average of the daily VWAPs for the three (3) trading days prior to the 30-day anniversary of the Quantum Convertible Note issuance date (the “Average Price”) is less than $10.00, to a price equal to the Average Price but in no event less than $2.00. In addition, the Company at its option can redeem early a portion or all amounts outstanding under the Quantum Convertible Note if the Company provides the Quantum Convertible Note holder a notice at least ten (10) trading days prior to such redemption and on the notice day the VWAP of the Company’s Common Stock is less than $10.00. If an event of default occurs, the Quantum Convertible Note would bear interest at a rate of 18% per annum.

On June 25, 2024, $2,700,000 net of originally issued discount of $210,000 and legal fees of $90,000 pursuant to the Quantum Convertible Note has been funded to the Company. The Quantum Convertible Note represents share-settled debt that requires or may require the Company to settle the debt instrument by delivering a variable number of shares with a then-current fair value equal to the principal amount of the note plus accrued and unpaid interest. As a result, the Quantum Convertible Note was accounted for as a liability under ASC 480 upon funding of the note. As required under ASC 480, the liability will be re-measured at fair value at each reporting period with the changes in the fair value of the liability recognized in earnings. The original issue discount of $210,000 and direct cost of $90,000 was recognized as interest expense.

On July 3, 2024, the Company and the Quantum Investor agreed to modify certain terms of the Quantum Convertible Note. The modifications included the extension of the maturity date from June 25, 2025, to June 30, 2026, and an interest guarantee whereby the Quantum Investor would receive 18 months of interest regardless of any early repayment or redemption of the Quantum Convertible Note. The Company concluded that these changes represented a modification for accounting purposes as the change in the present value of the cash flows was less than 10% and the change in the estimated fair value of the embedded conversion right was less than 10% of the carrying value. As such, the Company accounted for the change in fair value related to the modification of terms as part of the change in fair value of the Quantum Convertible Note during the three and six months ended June 30, 2025.

As of June 30, 2025, and December 31, 2024, the Quantum Convertible Note’s fair value were $3,580,612 and $3,248,000 respectively. The Company recognized interest expense of $0 and $540,000 for the three and six months ended June 30, 2025, and a change in fair value of $111,194 and $207,388 for the three and six months ended June 30, 2025. No interest expense or fair value change were recognized for the three and six months ended June 30, 2024 (See Note 15 Fair Value Measurements).

ELOC / Equity Financing

On November 21, 2023, DHAC entered into the ELOC Agreement with the Bridge Investor pursuant to which DHAC may sell and issue to the Bridge Investor, and the Bridge Investor is obligated to purchase from DHAC, up to $50,000,000 of its newly issued shares of the Company’s common stock, from time to time over a 36 month period (the “Equity Purchase Commitment Period”) beginning from the sixth (6th) trading day following the closing of the Business Combination transaction (the “Equity Purchase Effective Day”), provided that certain conditions are met. The Company also agreed to file a resale registration statement to register shares of common stock to be purchased under the ELOC Agreement with the SEC within 45 days following the Equity Purchase Effective Day and shall use commercially reasonable efforts to have such registration statement declared effective by the SEC within 30 days of such filing. During the Equity Purchase Commitment Period, the Company may suspend the use of the resale registration statement to (i) delay the disclosure of material nonpublic information concerning the Company in good faith or (ii) amend the registration statement concerning material information, by providing written notice to the investor. Such suspension cannot be longer than 90 consecutive days (or 120 days in any calendar year). The investor has agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s common stock. The deferred charge will be allocated and amortized over the ELOC Agreement once it is drawn upon.

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For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the ELOC Agreement due to the reverse merger with DHAC and iDoc on June 24, 2024.

The Company has analyzed the ELOC Agreement and determined that the contract should be recorded as a liability under ASC 815 and measured at fair value. As a result of the ASC 815 liability classification, the Company is required to re-measure the liability at fair value at each reporting period until the liability is settled.

The Company has determined that the fair value of the ELOC Agreement is based upon management’s expected usage of the facility. The contract provides no scenario in which the Company may exercise the contract at above market rates (i.e., sell shares at a price above which the shares are currently trading in the active market except that when the Company’s per share stock price drops below $2, the Bridge Investor has the discretion to decide whether to purchase the Company’s common stock under the ELOC Agreement at a floor price of $2 per share). Furthermore, the choice to exercise the ELOC Agreement is solely at the discretion of the Company (i.e., does not obligate the Company in any manner). Additionally, the ELOC Agreement does not impose a fee or fine if the Company chooses not to exercise the contract.

As a result of the Business Combination, the fair value of the ELOC Agreement on June 24, 2024, was $694,512 in accordance with ASC 815.

During the year ended December 31, 2024, pursuant to the ELOC Agreement and the Company’s purchase notices thereof, the Bridge Investor purchased an aggregate of 380,000 shares of common stock for $760,000 in total proceeds. The Company did not issue any shares during the period ended June 30, 2025. The maximum remaining availability under the ELOC Agreement was $49,240,000 as of June 30, 2025, and December 31, 2024.

On March 20, 2025, the Company entered into Amendment No. 1 to the ELOC Agreement, originally dated November 21, 2023, which modifies the floor price to $1.25 and related terms of the ELOC Agreement. In accordance with ASC 815, the amendment requires remeasurement of the ELOC Agreement derivative liability at fair value as of the amendment date. Any resulting change in fair value is recognized in earnings for the period.

The ELOC Agreement continues to be treated as a liability measured at fair value, with ongoing remeasurement at each reporting date until settlement. The amendment does not introduce any new obligations or penalties for non-usage.

The fair value of the equity contract was $59,843 and $80,000 as of June 30, 2025, and December 31, 2024, resulting in a change in fair value of the ELOC of $14,890 and $20,157 during the three and six months ended June 30, 2025. There were no fair value change for the three and six months ended June 30, 2024. (See Note 15 Fair Value Measurements).

ELOC Commitment Fee Note

Pursuant to the ELOC Agreement, DHAC agreed to issue to the investor, as a commitment fee for this equity purchase transaction, a senior unsecured note in a principal amount of $500,000 that is payable only in shares of the Company’s common stock at an initial price of $10 per share (the “ELOC Commitment Fee Note”) after the closing of the Business Combination.

On July 2, 2024, the Company issued to the Bridge Investor the “ELOC Commitment Fee Note”. The original maturity date of the ELOC Commitment Fee Note was September 22, 2024. The conversion right is exercisable by the Bridge Investor at any time after issuance and includes certain standard antidilution adjustments. Upon the occurrence of an event of default, the Bridge Investor may require repayment in cash or in shares at its discretion, in an amount representing the greater of the outstanding principal balance and any accrued unpaid fees, or the value of the conversion shares issuable multiplied by the highest closing price for the Company’s common stock during the period from the event of default to conversion.

The Company elected to account for the ELOC Commitment Fee Note at fair value under the fair value option and estimated its fair value to be $595,000 at issuance. As the related ELOC Agreement is classified as a liability, the Company expensed the issuance cost based on its $595,000 fair value, which is included in loss on issuance of financial statements in the consolidated statement of operations for the year ended December 31, 2024.

On September 30, 2024, the Company and the Bridge Investor mutually agreed to extend the maturity date of the ELOC Commitment Fee Note from September 23, 2024, to December 31, 2024. The Company accounted for the extension of the maturity date as an extinguishment.

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In December 2024, the Bridge Investor fully converted this note into 50,000 shares of common stock. The fair value of the ELOC Commitment Fee Note was $79,500 just prior to conversion. The Company recorded a total gain on change in fair value of $510,500 for the ELOC Commitment Fee Note for the year ended December 31, 2024.

September 2024 Security Purchase Agreement

On September 30, 2024, the Company entered into a securities purchase agreement (the “September 2024 SPA”) with an accredited and institutional investor, pursuant to which the Company issued and sold to the investor promissory notes for an aggregate principal amount of $2,222,222 (the “September 2024 Convertible Note”). The Company received $2,000,000 in initial proceeds from the September 2024 Convertible Note, reflecting a 10% original issue discount. The September 2024 Convertible Note will mature on March 30, 2026, and provides for a minimum interest amount at 15% of the initial principal amount of the note through maturity, or $333,333. Interest in excess of the minimum interest amount (if applicable) will accrue at a rate of 10% per annum. The interest rate on the September 2024 Convertible Note will increase to 24% per annum upon the occurrence of an event of default. The minimum interest amount is payable in 18 equal installments of $18,519 per month beginning on November 1, 2024. Repayments of principal will be paid in 12 equal installments of $185,185 per month beginning on May 1, 2025. Any repayments of principal that are not funded through draws on the ELOC Agreement are subject to a 5% cash payment fee.

The September 2024 Convertible Note is convertible into shares of the Company’s common stock at any time at an initial fixed conversion price of $2.00 per share, subject to certain beneficial ownership and exchange cap considerations. The conversion price includes standard antidilution adjustments as well as adjustment in the event the Company sells or issues shares of common stock at a price less than the conversion price (a down-round event). The September 2024 Convertible Note is prepayable at any time (unless an event of default has occurred) based on the outstanding principal, accrued interest and any remaining minimum interest amount payable through the remainder of the term of the note. The September 2024 Convertible Note is mandatorily prepayable upon the occurrence of certain events (such as the issuance of stock or incurrence of debt) and can be accelerated upon an event of default either automatically or at the option of the note holder, depending on the nature of the event.

The September 2024 Convertible Note is secured by substantially all of the Company’s assets and includes certain covenants which restrict the Company’s ability to enter into certain agreements or transactions without the lender’s consent.

In connection with the September 2024 SPA and Convertible Note, the Company also issued a warrant to the investor to purchase up to 740,741 shares of the Company’s common stock. The warrant exercise price is $2.25 per share (exercisable on a cash or cashless basis) and will expire on September 30, 2029. The exercise price includes standard antidilution adjustments as well as adjustment in the event the Company sells or issues shares of common stock at a price less than the exercise price (a down-round event). The Company assessed the warrant as a freestanding financial instrument and determined it did not include any provisions which would require liability classification under ASC 480, and that it met the requirements to be considered indexed to the Company’s own stock and the additional equity classification requirements under ASC 815-40. As such, the Company classified the warrant in stockholders’ equity (deficit) upon its issuance. In addition, upon execution of September 2024 SPA, the Company issued 100,000 shares of common stock to the investor as additional consideration for entering into the September 2024 SPA and related agreements, which were also classified in stockholders’ equity (deficit) upon issuance.

During the year ended December 31, 2024, the Company incurred approximately $95,000 of issuance costs in connection with the September 2024 SPA transaction.

After analyzing the terms of the September 2024 Convertible Note and its embedded features, the Company elected to account for the September 2024 Convertible Note at fair value under the allowable fair value option election. As such, the Company initially recognized the September 2024 Convertible Note at its fair value and will subsequently measure the note at fair value with changes in fair value recorded in current period earnings (or other comprehensive income, if specific to Company credit risk). The Company initially recorded the September 2024 Convertible Note at its estimated issuance date fair value of $2,000,000, based on the initial proceeds received. As the proceeds were allocated in full to the September 2024 Convertible Note recorded at fair value, there were no proceeds remaining to allocate to the equity-classified warrants or shares issued under the terms of the September 2024 SPA, on a residual basis. In addition, the Company allocated the issuance costs incurred to the September 2024 Convertible Note, and as such expensed the $95,000 in issuance costs incurred.

As of June 30, 2025, and December 31, 2024, the September Note’s fair value was $2,918,875 and $2,094,000 respectively. The Company recognized interest expense of $58,333 (of which $19,444 was paid during the three months ended June 30, 2025), and $116,667 (of which $58,333 was paid during the six months ended June 30, 2025), and recognized a total change in fair value of $307,252 and $766,541 for the three and six months ended June 30, 2025. No interest expense or fair value change were recognized for the three and six months ended June 30, 2024. (See Note 15 Fair Value Measurements).

Encompass Purchase Liability

As a result of the acquisition of iDoc and at the closing of the Business Combination on June 24, 2024, the Company assumed the principal balance on an acquisition purchase. On January 1, 2022, iDoc acquired 100% of Encompass Healthcare Billing, LLC. (“Encompass”) with a stock purchase agreement to acquire the equity interests of Encompass, according to the acquisition agreement (“Encompass Acquisition Agreement”). Per the Encompass Acquisition Agreement, iDoc acquired all the outstanding shares of Encompass for a cash payment of $300,000, due upon the closing of the Business Combination. On January 9, 2023, iDoc agreed to an additional obligation of $45,000, which was accounted for as interest expense and reflected in the accrued liabilities as of December 31, 2024. As of June 30, 2025, and December 31, 2024, the value of purchase liability related to the Encompass Acquisition Agreement was $263,874.

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Note 9 Related Party

Related Party Transactions by VSee Labs

Notwithstanding the legal form of the business combination pursuant to the Business Combination Agreement, since the Business Combination was accounted for as a reverse recapitalization between VSee Lab and DHAC, and VSee lab as the accounting acquirer and iDoc as the accounting acquiree and the historical comparative financial information prior to June 24, 2024 as presented in this quarterly report is that of VSee Lab, the following related party transactions incurred by VSee Lab were reported hereby.

(1) During the year ended December 31, 2022, employees subscribed $127,710 of cash for shares in VSee Lab representing 597,000 common stock shares in VSee Lab. As a result of the closing of the Business Combination, the shares were issued to the subscribing employees for total 239,424 shares of common stock in VSee Health, Inc. and as such the payable was reclassified to equity in additional paid in capital as share were issued. In addition, $210,796 of the related party payable was eliminated at consolidation between iDoc and VSee Lab. The balance due to the related party as of June 30, 2025, and December 31, 2024, was $0 and $51,900, respectively.

(2) During the year ended December 31, 2022, VSee Lab received a loan of $110,000 from the then CEO, Milton Chen, for advanced cash and paid operating expenses incurred by VSee Lab. On March 29, 2023, VSee Lab revised the terms of the loan to a 10.00% original issue discount promissory note with a principal balance of $121,000 from Mr. Milton Chen for advanced cash and paid operating expenses on behalf of VSee Lab. Notes payable issued with a face value higher than the proceeds received are recognized as a debt discount and is amortized as interest expense via effective interest method over the life of the underlying note payable. The promissory note matured on June 27, 2023. Interest is accrued monthly at the annual fixed rate of 12.00%, with principal and interest due upon maturity. The note has a default interest rate of 26% from the default date. As of June 30, 2025 and December 31, 2024, the related party promissory note net of unamortized debt discount was $121,000. The Company (as the successor of VSee Lab for accounting purposes) recognized $7,843 and $15,601 in interest expense for the three months ended and six months ended June 30, 2025. The Company (as the successor of VSee Lab for accounting purposes) had $64,991, and $49,390 in accrued interest as of June 30, 2025 and December 31, 2024, respectively, which is included within accounts payable and accrued liabilities on the condensed consolidated balance sheets.

(3) On March 29, 2023, VSee Lab received a 10.00% original issue discount promissory note with a principal balance of $132,000 from the then CEO, Milton Chen, for advanced cash and paid operating expenses on behalf of VSee Lab. Notes payable issued with a face value higher than the proceeds received are recognized as a debt discount and amortized via effective interest method as interest expense over the life of the underlying note payable. The promissory note matured on June 27, 2023. Interest is accrued monthly at the annual fixed rate of 12.00%, with principal and interest due upon maturity. The note has a default interest rate of 26% from the default date. As of June 30, 2025, and December 31, 2024, the related party promissory note net of unamortized debt discount was $132,000. The Company (as the successor of VSee Lab for accounting purposes) recognized $8,556 and $17,019 in interest expense for the three months ended and six months ended June 30, 2025. The Company (as the successor of VSee Lab for accounting purposes) had $72,459, and $55,440 in accrued interest as of June 30, 2025 and December 31, 2024, respectively, which is included within accounts payable and accrued liabilities on the condensed consolidated balance sheets.

(4) On December 26, 2023, VSee Lab received a 10.00% original issue discount promissory note with a principal balance of $77,000 from the then CEO, Milton Chen, for advanced cash and paid operating expenses on behalf of the Company. Notes payable issued with a face value higher than the proceeds received are recognized as a debt discount and amortized via effective interest method as interest expense over the life of the underlying note payable. The promissory note matured on March 28, 2024. Interest is accrued monthly at the annual fixed rate of 12.00%, with principal and interest due upon maturity. The note has a default interest rate of 26% from the default date. As of June 30, 2025 and December 31, 2024, the related party promissory note was $70,000. The Company (as the successor of VSee Lab for accounting purposes) recognized $4,991 and $9,928 in interest expense for the three months ended and six months ended June 30, 2025. The Company (as the successor of VSee Lab for accounting purposes) had $27,253, and $17,325 in accrued interest as of June 30, 2025 and December 31, 2024, respectively, which is included within accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Related Party Transactions by iDoc

For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the following related party transactions incurred by iDoc due to acquisition of iDoc on June 24, 2024 (See Note 4 – Business Combination).

(1) A related party balance due from the then CEO of iDoc, Imoigele Aisiku, for cash transferred through a company controlled by him. The balance due from the related party on June 30, 2025 and December 31, 2024 were $241,122 and $531,656 respectively.. The transactions and amounts are unsecured and non-interest-bearing and are not necessarily what third parties would agree to.

(2) A note receivable that was issued and sold on September 1, 2022, from iDoc to the then CEO of iDoc, Imoigele Aisiku, with a principal balance of $336,000. During the year ended December 31, 2024, the related party note receivable was written off by the Company and no further balance remaining outstanding. The Company recognized a $245,500 loss upon the write-off of the related party note receivable balance, which was included in the provision for credit losses for the year ended December 31, 2024.

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(3) iDoc issued a promissory note on May 15, 2023, with a principal balance of $200,000 from a board member (“Holder”). The note bears no interest and matures on May 15, 2026. iDoc shall use the funds solely for the purchase of telepresence robots. The Holder has security rights to eight (8) telepresence robots, from the 13^th to 20^th, that iDoc deployed. iDoc is required to make payments to the Holder based on eighty percent (80%) of the monthly revenue generated on the eight telepresence robots from the twelfth through the twentieth deployment of the telepresence robots. As of June 30, 2025, and December 31, 2024, the related party promissory note was $141,651, including a fair value adjustment of $58,349. The loan is included in the Related Party Loan Payable disclosure on the condensed consolidated balance sheets. No interest is recognized for the six months ending June 30, 2025.

(4) On March 28, 2024, iDoc issued and sold a secured convertible promissory note in the principal amount of $224,000 (the “Note”) to Mr. David L. Wickersham who became a member of the Company’s board of directors on July 17, 2024. Interest is accrued at $2,000 per month. The Note was fully satisfied and paid off by the issuance of 114,000 shares of the Company common stock to Mr. Wickersham on the maturity date of June 30, 2025.

Related Party Transactions by DHAC

For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the following related party transactions incurred by DHAC due to the reverse merger with DHAC on June 24, 2024 (See Note 12 – Equity).

(1) On October 24, 2022, DHAC issued and sold an unsecured promissory note in the aggregate principal amount of $350,000 to Digital Health Sponsor, LLC, the sponsor of DHAC (“Sponsor”) On November 21, 2023, DHAC entered into a Conversion SPA with the Sponsor, pursuant to which the loans in aggregate amount of $350,000 would be converted into Series A Preferred Shares at the Closing of the Business Combination. The Company paid off this promissory note by issuing 350 shares of Series A Preferred Stocks to the Sponsor at the Closing.

(2) On February 2, 2023, SCS Capital Partners LLC, a Sponsor affiliate issued a $250,000 interest-free loan to DHAC for Nasdaq fee payment and litigation expense, and on August 17, 2023, such loan was amended and restated to include an additional $315,000 interest-free loan to DHAC for operating expenses, making the aggregate principal amount to be $565,000. On May 5, 2023, SCS Capital Partners, LLC issued another $200,000 loan to DHAC for operating expenses. The related note bears interest of 10% and would mature on May 5, 2024. On November 21, 2023, DHAC entered into a Conversion SPA with SCS Capital Partners LLC, pursuant to which the loans in aggregate amount of $765,000 will be converted into Series A Preferred Shares at the Closing of the Business Combination. The Company paid off this promissory note by issuing 765 shares of Series A Preferred Stocks to SCS Capital Partners LLC at the Closing.

(3) SCS, LLC, as the administrator of DHAC, incurred monthly office management and other operating expenses since the inception of DHAC. As of November 21, 2023, a total of $153,000 office expense was incurred. On November 21, 2023, DHAC entered into a Conversion SPA with SCS, LLC, pursuant to which the outstanding office expenses in aggregate amount of $153,000 will be converted into Series A Preferred Shares at the Closing of the Business Combination. The Company paid off this outstanding office expense by issuing 153 shares of Series A Preferred Stocks to SCS, LLC at the Closing.

(4) On November 21, 2023, DHAC entered into a convertible note purchase agreement, pursuant to which an institutional and accredited investor, the Quantum Investor, subscribed for and purchased, and the Company issued and sold to the Quantum Investor, after the Closing of the Business Combination on June 25, 2024 and as further amended on July 3, 2024, a 7% original issue discount convertible promissory note, the Quantum Convertible Note, in the aggregate principal amount of $3,000,000. SCS Capital Partners LLC, a Sponsor affiliate, owns approximately 40.74% of the Quantum Investor. As of June 30, 2025, and December 31, 2024, the full principal amount of the Quantum Convertible Note plus interest accrued thereof remains due and payable.

(5) On June 21, 2024, we entered into a Consulting Services Agreement with SCS, LLC (“SCS”), who is an affiliate of our Sponsor, pursuant to which we shall pay SCS $12,500 per month for business consulting services and $2,500 per month for access to remote office space in Boca Raton, Florida. In addition, the Consulting Services Agreement calls for the issuance of $25,000 worth of shares of common stock at issuance and an additional $25,000 worth of common stock on or about each of the Company’s filings on Form 10-K or Form 10-Q. The agreement shall continue for twelve (12) months and shall automatically continue on a six-month term basis thereafter unless terminated by either party. During the year ended December 31, 2024, the Company made cash payments totaling $90,000 to SCS, representing consulting service provided to the Company. In addition, the Company issued 2,500 shares of common stock to SCS with a fair value of $25,000 and recognized total consulting expense of $62,500 related to the stock-based compensation for the year ended December 31, 2024. The Company has accrued the remaining $37,500 payable to SCS related to the future common stock issuances.

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(6) On June 24, 2024, DHAC owed the Sponsor and certain Sponsor affiliates $504,659 in advance to cover working capital needs, which were non-interest bearing due on demand. On June 25, 2024, $47,800 of such advances were repaid in cash. On November 8, 2024, the Sponsor affiliate, SCS and the Company executed a securities purchase agreement whereby certain working capital funds advanced by SCS in the aggregate amount of $405,000 as of December 31, 2024 were converted into 202,500 shares of Common Stock. The Company determined that the partial settlement of the working capital advances represented a troubled debt restructuring, as the Company determined it was experiencing financial difficulties and the lender granted a concession through the exchange for shares of Common Stock. Under the troubled debt restructuring accounting, the Company reduced the carrying amount of the working capital funds advances by the fair value of the shares of Common Stock issued ($261,225) and then compared the future undiscounted cash flows associated with the working capital advances to the carrying value. The Company determined an additional $143,775 reduction in the carrying value was necessary to equate it to the future undiscounted cash flows, representing a gain on restructuring. As SCS is a related party to the Company, the restructuring gain was treated as a capital transaction and recorded to additional paid in capital along with the fair value of the shares of common stock issued in the settlement. As of June 30, 2025, and December 31, 2024, $51,900 of advances due to the Sponsor and certain Sponsor affiliates remain due and payable. The Sponsor has no further obligation to fund working capital needs.

(7) On December 13, 2024, the Company issued 50,000 shares to Dominion Capital to settle the ELOC Commitment Fee Note upon conversion. After the transfer of the shares, Dominion Capital owned a total of 600,000 shares of the Company as of December 31, 2024.

Note 10 Commitments, Contingencies, and Concentration Risk

Litigation

We are currently involved in, and may in the future be involved in, legal proceedings, claims, and government investigations in the ordinary course of business. These include proceedings, claims, and investigations relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, consumer rights, personal injury, and property rights.

Depending on the nature of the proceeding, claim, or investigation, we may be subject to settlement awards, monetary damage awards, fines, penalties, or injunctive orders. Furthermore, the outcome of these matters could materially adversely affect the Company’s business, results of operations, and financial condition. The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and subject to significant judgment to determine the likelihood and amount of loss related to such matters. While it is not possible to determine the outcomes, the Company believes based on its current knowledge that the resolution of the sole pending matter will not, either individually or in the aggregate, have a material adverse effect on the business, results of operations, cash flows or financial condition.

On July 25, 2024, the Company was notified of a lawsuit filed against it. The plaintiffs’ claims arose out of an alleged breach of contract and unjust enrichment. The plaintiffs are seeking payment under the promissory notes, payments related to the breach of the Encompass Acquisition Agreement, prejudgment and post judgment interest, and reasonable attorneys’ fees. In response to this lawsuit, the Company, through its attorney, denied all allegations of breach of contract and unjust enrichment, and filed a counterclaim seeking breach of contract on the part of plaintiffs for failure to pay amounts owed to Encompass for services it rendered to plaintiffs, and breach of contract for failure to pay a corporate credit card bill, promissory estoppel, and unjust enrichment. The lawsuit is currently pending in federal court before the US District Court for the District of Colorado. The parties began engaging in settlement discussions shortly after the complaint was served and are still actively engaged in such discussions.

Contingencies

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. Litigation and contingency accruals are based on the Company’s assessment, including advice of legal counsel, regarding the expected outcome of litigation or other dispute resolution proceedings. If the Company determines that an unfavorable outcome is probable and can be reasonably assessed, it establishes the necessary accruals.

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For accounting purposes, it was treated that the Company (as the successor of VSee Lab for accounting purposes) acquired and assumed the following commitments by iDoc due to the reverse merger with DHAC and iDoc on June 24, 2024 (See Note 4 – Business Combination).

(1) iDoc entered into a purchase agreement with a vendor to purchase twenty (20) Telepresence Robots, receive maintenance services, and access user-related Ava Telepresence applications and the Ava Cloud Service for a total purchase commitment of $711,900. As of June 30, 2025, and December 31, 2024, the Company (as the successor of VSee Lab for accounting purposes) had an unpaid commitment of $179,900 and $179,900, respectively on this agreement. The commitment is not reflected in the condensed consolidated financial statements as it is due and payable upon invoicing from the vendor for delivery and servicing installation of the Telepresence Robots and software applications.

(2) iDoc has a promissory note with a principal balance of $200,000 with a related party (See - Note 8 Related Party Transactions by iDoc sub-point (3)). The related party has security rights to eight (8) telepresence robots, from the 13th to 20th , that iDoc deployed. iDoc is required to make payments to the holder based on eighty percent (80%) of the monthly revenue generated on the eight telepresence robots from the thirteenth through the twentieth deployment of the telepresence robots. The monthly revenue generated on the eight telepresence robots deployed by iDoc would be used to pay off principal balance of the note. Once the principal balance is paid off, iDoc will continue making payments through the deployment of 125 telepresence robots by iDoc.

(3) On May 12, 2023, iDoc entered in a partnership agreement with an accredited investor to agree and collaborate in the development of telepresence robots for telehealth solutions. The investor pledged to pay $352,000 directly to the vendor. In consideration thereof, the investor is entitled to 80% of the monthly revenue generated from the first eleven telepresence robots deployed by iDoc under the partnership agreement. Payments will continue until the last remaining robot is being paid for by customers and will remain as full payments for the length of time that a minimum of eleven robots are deployed. After the number reduces below eleven deployed robots, the amount will pro rate down but will remain in the same ratio as 80% of the monthly revenue generated.

(4) On November 1, 2023, the iDoc entered a forbearance agreement related to the promissory note and line of credit issued by a bank on November 29, 2021, and its finance leases. (See Note 8 – Line of Credit and Notes Payable). Pursuant to the forbearance agreement, effective November 1, 2023, the interest rate on the promissory note and the line of credit is payable monthly at 3% above the Wall Street Journal prime rate (7.5% at June 30, 2025). In consideration of the bank forbearing on its right to collect the amount due and owing until January 10, 2024, iDoc agreed to make respective payments of $20,000 on November 13, 2023, and $80,000 on November 30, 2023. iDoc defaulted on the forbearance at the end of December 2023. Upon default of the forbearance agreement, the lender has the right to take appropriate action to collect the amounts owed. The bank’s forbearance obligation shall terminate immediately, irrevocably, and without notice in the event of the borrower’s default under any provision of this agreement. This litigation was resolved by Agreed Judgment signed by the Court on June 24, 2024, under the judgment iDoc was ordered to pay a total principal amount of $1,499,409 prejudgment interest of $72,049 through May 13, 2024, and a daily interest rate of $416 thereafter. On August 27, 2025, the Company revised the forbearance agreement. The repayment in full is expected to be made by November 2025. As of June 30, 2025, the Company has accrued the obligation in Line of credit and note payable, net of discount, Right - of - use liability - financing, and accrued interest is included in accounts payable and accrued liabilities.

(5) VSee Lab has a reseller agreement with a vendor to generate revenue opportunities in the international market. As of June 30, 2025, and December 31, 2024, the Company (as the successor of VSee Lab for accounting purposes) has an unpaid commitment of $413,731 and $82,677, respectively, on this reseller agreement. The commitment is not reflected in the condensed consolidated financial statements as the commitment is due and payable once revenues are generated under the reseller agreement. VSee Lab entered into the reseller agreement to generate market share in the international market, and payments are based on revenues generated by the reseller.

VSee Health, Inc. Incentive Plan

DHAC approved and adopted the VSee Health, Inc. 2024 Equity Incentive Plan (the “2024 Plan”) to be effective as of one day prior to the closing Business Combination. The Incentive Plan provides for an initial share reserve equal to 15% of the number of shares of Company common stock outstanding (including shares of Company common stock issuable upon conversion of the outstanding Series A Preferred Stock) following the closing after giving effect to the Business Combination. As such, on June 24, 2024, the Company reserved 2,544,021 shares of its common stock for issuance under the 2024 Plan.

Indemnities

The Company generally indemnifies its customers for the services it provides under its contracts and other specified liabilities, which may subject the Company to indemnity claims, liabilities, and related litigation. As of June 30, 2025, and December 31, 2024, the Company was unaware of any material asserted or unasserted claims concerning these indemnity obligations.

Concentrations of Credit Risk

Financial instruments potentially subject the Company to credit risk concentrations consisting of cash and trade accounts receivables. The Company maintains all its cash in commercial depository accounts, insured by the Federal Deposit Insurance Corporation. At times, cash deposits may exceed federally insured limits. Any loss incurred or lack of access to such funds could have an adverse impact on the Company’s financial condition, results of operations, and cash flows.

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Major Customer Concentration

The Company has two customers whose accounts receivable represented 35% of the Company’s total accounts receivable and whose accounts receivable in aggregate accounted for approximately 8% of the Company’s total revenue as of June 30, 2025. The Company has five customers whose accounts receivable represented 79% of the Company’s total accounts receivable and whose accounts receivable in aggregate accounted for approximately 10% of the Company’s total revenue as of June 30, 2024.

The Company has one customer whose revenue accounted for approximately 29% of the Company’s total revenue for the three months ended June 30, 2025.  The Company has one customer whose revenue accounted for approximately 28% of the Company’s total revenue for the six months ended June 30, 2025.  The Company has one customer whose revenue accounted for approximately 12% of the Company’s total revenue for the three months ended June 30, 2024. The Company has one customer whose revenue accounted for approximately 12% of the Company’s total revenue for the six months ended June 30, 2024. 

Major Vendor Concentration

The Company had one vendor whose accounts payable and accrued liabilities represented 20% of the Company’s total accounts payable and accrued liabilities as of June 30, 2025. The Company had one vendor whose accounts payable and accrued liabilities represented 27% of the Company’s total accounts payable and accrued liabilities as of June 30, 2024. 

Other Matters

The Company continues to analyze potential sales tax exposure using a state-by-state assessment. In accordance with ASC 450, Contingencies, the Company estimated and recorded a liability of $1,157,346 and $999,548 as of June 30, 2025, and December 31, 2024, respectively, within accounts payable and accrued liabilities on the consolidated balance sheets. The Company recorded a sales tax expense of $89,885 and $157,798 during the three and six months ended June 30, 2025, respectively. No sales tax expense was recorded during the three and six months ended June 30, 2024.

Note 11 Income Taxes

The components of our loss before income taxes were as follows:

		For the six months ended
		June 30, 2025				June 30, 2024
United States		$	(6,544,734	)		$	(2,249,740	)
Total		$	(6,544,734	)		$	(2,249,740	)

		For the three months ended
		June 30, 2025				June 30, 2024
United States		$	(2,608,799	)		$	(2,344,490	)
Total		$	(2,608,799	)		$	(2,344,490	)

For the six months ended June 30, 2025, and June 30, 2024, the Company recorded income tax expense of $17,989 and $1,678,388, respectively, for continuing operations. The effective tax rate of (0.27%) and 74.6% applied to income for six months ended June 30, 2025, and June 30, 2024, respectively, varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and adjustments for meals, entertainment and penalties, changes in fair value of financial instruments, stock compensation expenses and changes to valuation allowance.

For the three months ended June 30, 2025, and June 30, 2024, the Company recorded income tax expense of $4,484 and $1,678,388, respectively, for continuing operations. The effective tax rate of (0.17%) and 71.59% applied to income for three months ended June 30, 2025, and June 30, 2024, respectively, varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and adjustments for meals, entertainment and penalties, changes in fair value of financial instruments, stock compensation expenses and changes to valuation allowance.

The Company evaluates and updates the estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of the Company’s actual earnings compared to annual projections, the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The quarterly income tax provision is generally comprised of tax expense on income or benefit on loss at the most recent estimated annual effective tax rate. The tax effect of discrete items is recognized in the period in which they occur at the applicable statutory rate.

The Company does not have any uncertain income tax positions as at June 30, 2025, and December 31, 2024.

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Note 12 Equity

Preferred Stock

The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.0001. The Company has designated 6,500 of such shares as Series A Preferred Stock and 6,158 shares for Series A Preferred Stock were issued and outstanding as of June 30, 2025, and December 31, 2024.

Series A Preferred Stock

The Series A Preferred has the following rights and privileges:

Voting – Series A preferred stockholders are permitted to vote with the same voting rights as common stockholders in any actions to be taken by the stockholders of the Company, including any action with respect to the election of directors to the Board of Directors of the Company. With respect to any vote with the class of Common Stock, each Preferred Share shall entitle the holder thereof to cast that number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible (subject to the ownership limitations specified 4.99%) using the record date for determining the stockholders of the Company eligible to vote on such matters as the date as of which the Conversion Price is calculated.

Dividends – Series A preferred stockholders shall be entitled to receive cumulative participating dividends when and if declared. Dividends are prior and in preference to any declaration or payment of any dividend to the common stockholders of the Company.

Liquidation – In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”), before any amount shall be paid to the holders of any of shares of Junior Stock, but junior with respect to any Senior Preferred Stock then outstanding, an amount per Preferred Share equal to the amount per share such Holder would receive if such Holder converted such Preferred Share into Common Stock immediately prior to the date of such payment.

Conversion – Series A preferred stock is convertible into common stock at the option of the holder, at any time after the earlier of (i) twelve months from the Initial Issuance Date (June 24, 2024) or (ii) the date on which no shares of Series A preferred stock remain outstanding, at the initial rate of $10.00 per share, with an alternate optional conversion, with respect to any Alternate Conversion that price which shall be the lowest of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, and (ii) the greater of (x) the Floor Price and (y) 90% of the price computed as the quotient of (I) the sum of the VWAP of the Common Stock for each of the three (3) Trading Days with the lowest VWAP of the Common Stock during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, divided by (II) three (3) (such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such Alternate Conversion Measuring Period.

Redemption – The Company shall have the right to redeem all, or any portion, of the Series A preferred stock then outstanding at a price equal to 100% of the stated value ($1,000 per share) of the shares being redeemed. The Company’s right to redeem the Series A preferred stock is one-time in nature and such exercise shall be irrevocable. The preferred stock are not mandatorily redeemable.

The Company reviewed the Series A Preferred Stock under ASC 480 and ASC 815 and concluded that Series A Preferred Stock did not include any elements that would preclude them from equity treatment and therefore are not subject to the liability treatment under ASC 480 or derivative guidance under ASC 815.

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. As of June 30, 2025, and December 31, 2024, there were 16,422,690 and 16,297,190 shares of common stock outstanding. The Company issued 500 and 125,000 shares of common stock during the three and six months ended June 30, 2025, respectively. As of June 30, 2025, and December 31, 2024, there were 16,422,690 and 16,297,190 shares of Common Stock outstanding.

Stock Options

In June 2024, the DHAC board of directors and stockholders approved the 2024 Plan. There are currently 2,544,021 shares of common stock reserved for issuance under the 2024 Plan. At the closing of the Business Combination on June 24, 2024, the Company granted 803,646 stock options with an exercise price equal to $12.11 pursuant to the 2024 Plan to the individuals, in the amounts, and on the terms set forth in the Business Combination Agreement.

The 2024 Plan provides for the grant of stock options, including options that are intended to qualify as “incentive stock options” under Section 422 of the Code, as well as non-qualified stock options. Each award is set forth in a separate agreement with the person who received the award which indicates the type, terms and conditions of the award. 

As of June 30, 2025, there was no unrecognized compensation cost. The value of the fully vested options which were included as part of the recapitalization were valued at $5,728,784 on June 24, 2024, grant date and closing of the business combination. Stock-based compensation expense of $373,977 was recognized for the three months ended June 30, 2025, within compensation and related benefits on the consolidated statements of operations, and no stock-based compensation expense was recognized during the three months ended June 30, 2024.

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Common Stock Issuance Obligation

In connection with the Business Combination on June 24, 2024, the Company agreed to assume an obligation by iDoc to issue 51,192 shares of common stock (contingent on the Business Combination) to certain employees. In accordance with ASC 718, the Company determined that it was not obligated to replace the awards, and as such, recognized the fair value of the award at the Business Combination date as additional stock-based compensation (included in cost of revenues). The grant date fair value was estimated to be $619,935 (see Note 15 Fair Value Measurements). The Company also determined that it should classify this award as a liability under ASC 718 and remeasure the award at its then current fair value each reporting date. As of June 30, 2025, and December 31, 2024, the common stock issuance obligation was adjusted to $59,383 and $69,621, respectively. The net stock-based compensation expense reversed was $10,238 and $172,005 for the six months ended June 30, 2025, and June 30, 2024, respectively. The net stock-based compensation expense reversed was $2,047 and $172,005 for the three months ended June 30, 2025, and June 30, 2024, respectively.

As of June 30, 2025, and December 31, 2024, no shares of common stock have been issued under the common stock issuance obligation arrangements.

NOTE 13 Warrants

DHAC Assumed Warrants

The Company has analyzed the public warrants, private warrants, Bridge Warrants (as defined below), September 2024 Warrants and the Extension Warrants and determined they are considered to be freestanding instruments and do not exhibit any of the characteristics in ASC 480 and therefore are not classified as liabilities under ASC 480. The warrants meet all of the requirements for equity classification under ASC 815 and therefore are classified in equity. Below is a summary of the warrants issued and outstanding:

		Public				Private				Bridge				Extension				September 2024 Warrants				Total
Outstanding, December 31, 2024			11,500,000				557,000				173,913				26,086				740,741				12,997,740
Issued			—				—				—				—				—				—
Exercised			—				—				—				—				—				—
Outstanding, June 30, 2025			11,500,000				557,000				173,913				26,086				740,741				12,997,740
Exercisable, June 30, 2025			11,500,000				557,000				173,913				26,086				740,741				12,997,740
Weighted Average Exercise Price		$	11.5			$	11.5			$	11.5			$	11.5			$	2.25			$	9.65
Weighted Average Remaining Life in Years			3.98				3.98				2.26				2.85				4.25				3.46

Public and Private Warrants

The “fair market value” for this purpose will mean the average reported last sale price of the shares of common stock for the 5 trading days ending on the trading day prior to the date of exercise. The warrants will expire on the fifth anniversary of the completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The private warrants are identical to the warrants underlying the units in the Initial Public Offering. The Company may call the warrants for redemption, in whole and not in part, at a price of $0.01 per warrant,

	●	at any time after the warrants become exercisable;
	●	upon not less than 30 days’ prior written notice of redemption to each warrant holder;
	●	if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and
	●	if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.

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The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices. If (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial business combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the board of directors, and in the case of any such issuance to the Company’s Sponsor, initial stockholders or their affiliates, without taking into account any founders’ shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial business combination on the date of the consummation of the initial business combination (net of redemptions), and (z) the Market Value is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company issue the additional shares of common stock or equity-linked securities and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the Market Value. The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to the Company, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of common stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the shares of common stock outstanding.

No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round up to the nearest whole number the number of shares of common stock to be issued to the warrant holder.

Bridge Warrants

In connection with the Business Combination, the Company assumed 173,913 warrants to the Bridge Investor (the “Bridge Warrants”) issued on October 6, 2022. Each Bridge Warrant entitles the holder to purchase one share of common stock at $11.50 and expires five years from issuance. If no effective registration statement is available, Bridge Warrants may be exercised on a cashless basis. The exercise price and share count are subject to adjustment for corporate actions and certain issuances. Holders do not have shareholder rights until exercise.

Extension Warrants

In connection with the Business Combination, the Company assumed 26,086 Extension Warrants issued on May 5, 2023. Each Extension Warrant allows the holder to purchase one share of common stock at $11.50 and expires five years from issuance. If no effective registration statement is available, warrants may be exercised on a cashless basis. The exercise price and share count are subject to adjustment for corporate actions and certain issuances. Holders do not have shareholder rights until exercise.

September 2024 Warrants

On September 30, 2024, the Company issued 740,741 warrants to an institutional investor under a securities purchase agreement (the “September 2024 Warrants”). Each September 2024 Warrant is exercisable for one share of common stock at $2.25 per share for five years, subject to standard and down-round antidilution adjustments. The September 2024 Warrants were classified in stockholders’ equity under ASC 480 and ASC 815-40. The Company will reserve sufficient shares for potential exercises and adjust terms for corporate actions or dilutive issuances. Holders do not have shareholder rights until exercise.

NOTE 14 Reportable segments

Subsequent to the Business Combination in June 2024 (see Note 4 - Business Combination), the Company has two reportable segments: Technology and Telehealth. These two reportable segments align with the two legacy operating entities (VSee Lab and iDoc) which merged together upon the closing of the Business Combination. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by a chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. As of June 30, 2025, the Company’s CODM role was shared between the two Co-CEOs.

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The CODM reviews gross margin and income (loss) from operations from our reportable segments to evaluate budgets and forecasts, assess actual performance and allocate resources. The CODM review focuses on month to month and quarter to quarter changes in these profit measures in order to identify potential future liquidity issues, evaluate performance and need for potential cost reductions and identify potential vendor sourcing changes. The CODM also reviews the operating segment’s assets, which mainly includes review of the accounts receivable accounts. 

Our reportable segments are described below. The Company has no inter-segment revenues. 

Telehealth Services – The Company’s proprietary technology platform and modular software solution empower users to plug and play telehealth services with end-to-end encrypted video streaming integrated with medical device data, electronic medical records, and other sensitive data, with multiple other interactive functionalities that enable teamwork that the Company believes are not available from any other system worldwide.  

Healthcare Technology - The Company’s core platform is a highly scalable, integrated, application program interface (“API”) driven technology platform, for virtual healthcare delivery, with multiple real-time integrations spanning the healthcare ecosystem. The platform’s APIs power external connectivity and deep integration with a wide range of payors, electronic medical records, third-party applications, and other interfaces with employers, hospital systems, and health systems, which we believe uniquely positions us as a long-term partner meeting the unique needs of the rapidly changing healthcare industry. The Company will also be able to white label our solutions, so they fit into the plans and strategies of our clients, all on a platform that is high-performance and highly scalable.

The accounting policies of our reportable segments are the same as those described in the “Summary of Significant Accounting Policies” for the Company. In addition, the Company currently operates in one primary geographic area (the United States) and as such, the disclosures below are attributable to that geographic area.

Revenue and costs are generally directly attributed to our segments, based on the historical separation of these two operating segments (as prior separate operating entities). In addition, the Company incurs certain costs at the corporate level, which generally include legal, finance and accounting and consulting, investor relations and insurance costs, as well as certain executive compensation costs. These costs recorded at the corporate level are not allocated to the operating segments and are reflected as the “Unallocated corporate overhead expenses” in the summary tables below.

Summary information regarding the Company’s operating segments along with the reconciliation of the Company’s consolidated segment operating income to consolidated earnings before income taxes is as follows for the six months ended June 30, 2025, and June 30, 2024:

For the six months ended June 30, 2025		Technology				Telehealth				Total
Revenues:
Subscription fees			1,707,672				-				1,707,672
Professional services and other fees			1,921,157				-				1,921,157
Technical engineering fees			829,970				-				829,970
Patient fees			-				1,187,036				1,187,036
Telehealth fees			-				1,063,269				1,063,269
Institutional fees			-				2,500				2,500
Total revenues		$	4,458,800			$	2,252,805			$	6,711,604
Cost of revenues			2,435,618				827,523				3,263,141
Segment gross margin		$	2,023,181			$	1,425,282			$	3,448,463
Less (1):
Compensation and related benefits			1,614,141				776,425				2,390,566
General and administrative expenses			493,009				1,948,858				2,441,867
Segment operating income (loss)		$	(83,969	)		$	(1,300,001	)		$	(1,383,970	)
Reconciliation to income (loss) before income taxes:
Unallocated corporate overhead expenses											(2,702,088	)
Interest expense											(971,244	)
Other income, net											183,009
Change in fair value of financial instruments											(1,416,296	)
Loss on extinguishment of loan											(126,125	)
Loss on issuance of financial instrument											(138,020	)
Loss before (provision for) benefit from income taxes										$	(6,554,734	)

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For the six months ended June 30, 2024		Technology				Telehealth				Total
Revenues:
Subscription fees			2,042,628				-				2,042,628
Professional services and other fees			749,475				-				749,475
Technical engineering fees			477,889				-				477,889
Patient fees			-				31,520				31,520
Telehealth fees			-				30,569				30,569
Institutional fees			-				480				480
Total revenues		$	3,269,992			$	62,569			$	3,332,561
Cost of revenues			847,562				473,261				1,320,823
Segment gross margin		$	2,422,430			$	(410,692	)		$	2,011,738
Less (1):
Compensation and related benefits			1,778,946				27,375				1,806,320
General and administrative expenses			899,644				27,765				927,409
Segment operating income (loss)			(256,159	)			(456,832	)			(721,991	)
Reconciliation to income (loss) before income taxes:
Unallocated corporate overhead expenses											(106,472	)
Interest expense											(351,145	)
Other income											2
Change in fair value of financial instruments											548,100
Initial in fair value on financial instruments											(1,618,234	)
Loss from operations before income taxes										$	(2,249,740	)

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

The summary information regarding the reportable segment total assets at June 30, 2025, and December 31, 2024, are as follows:

		June 30, 2025				December 31, 2024
Total assets
Technology			1,016,971				1,503,995
Telehealth			17,138,696				18,271,724
Non-operating corporate			54,374				216,769
Total		$	18,210,041			$	19,992,488

		June 30, 2025				December 31, 2024
Total Goodwill
Technology			—				—
Telehealth			4,916,694				4,916,694
Non-operating corporate			—				—
Total		$	4,916,694			$	4,916,694

Some additional summary information regarding the reportable segment depreciation and amortization, capital expenditures and interest expense at June 30, 2025, and 2024 are as follows:

		June 30, 2025				June 30, 2024
Depreciation and Amortization
Technology			4,888				1,716
Telehealth			1,289,749				375
Total		$	1,294,636			$	2,091

		June 30, 2025				June 30, 2024
Capital Expenditures
Technology			15,466				10,363
Telehealth			-				35,150
Total		$	15,466			$	45,513

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		June 30, 2025				June 30, 2024
Interest Expense
Technology			21,155				47,205
Telehealth			112,170				3,941
Non-Operating corporate			837,919				299,999
Total		$	971,244			$	351,145

NOTE 15 Fair Value Measurements

The following tables present fair value information as of June 30, 2025, and December 31, 2024, the date of the Business Combination. The Company’s financial liabilities that were accounted for at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

June 30, 2025		Fair Value				(Level 1)				(Level 2)				(Level 3)
Liabilities:
Exchange Note		$	2,485,636			$	—			$	—			$	2,485,636
Equity line of credit		$	59,843			$	—			$	—			$	59,843
Quantum Convertible Note, related party		$	3,580,612			$	—			$	—			$	3,580,612
September 2024 Convertible Note		$	2,918,875			$	—			$	—			$	2,918,875
Common stock issuance obligation		$	59,383			$	59,383			$	—			$	-
March 2025 Convertible Note		$	194,791			$	—			$	—			$	194,791
May 2025 Convertible Note		$	342,996			$	—			$	—			$	342,996

December 31, 2024		Fair Value				(Level 1)				(Level 2)				(Level 3)
Liabilities:
Exchange Note		$	1,499,000			$	—			$	—			$	1,499,000
Equity line of credit		$	80,000			$	—			$	—			$	80,000
Quantum Convertible Note, related party		$	3,248,000			$	—			$	—			$	3,248,000
September 2024 Convertible Note		$	2,094,000			$	—			$	—			$	2,094,000
Common stock issuance obligation		$	69,621			$	69,621			$	—			$	-

Measurement

Quantum Convertible Note

The Company established the initial fair value for the Quantum Convertible Note as of June 25, 2024, which was the date the Quantum Convertible Note was funded. As of June 30, 2025 and December 31, 2024, the fair value was remeasured. As such, the Company used the Monte Carlo model (“MCM”) that fair values the debt. The MCM was used to value the Quantum Convertible Note for the initial periods and subsequent measurement periods. The initial value in excess of proceeds on June 25, 2024, was recognized in the statement of operations under loss on issuance of financial instruments. The change in fair value between December 31, 2024, and June 30, 2025, was recognized in the statement of operations under change in fair value of financial instruments.

The Quantum Convertible Note was classified within Level 3 of the fair value hierarchy at June 30, 2025 and December 31, 2024, due to the use of unobservable inputs. The key inputs into the MCM model for the Quantum Convertible Note were as follows at June 30, 2025, and at December 31, 2024:

		June 30, 2025				December 31, 2024
Risk-free interest rate			3.88	%			4.20	%
Expected term (years)			1.00				1.50
Volatility			111.33	%			138.00	%
Stock price		$	1.16			$	1.36
Debt discount rate			13.65	%			9.30	%

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Exchange Note

The Company established the initial fair value for the Exchange Note as of June 24, 2024, the date the Business combination closed. As of June 30, 2025 and December 31, 2024, the fair value was remeasured. The Company uses the MCM that fair values the early termination/repayment features of the debt. The MCM was used to value the Exchange Note for the initial periods and subsequent measurement periods up to December 31, 2024. For June 30, 2025, the Company has determined the fair value under a default scenario, wherein the expected payout is primarily based on the assumption that settlement will occur on the contractual maturity date. The change in fair value between December 31, 2024, and June 30, 2025, was recognized in the statement of operations under change in fair value of financial instruments.

The Exchange Note was classified within Level 3 of the fair value hierarchy at June 30, 2025 and December 31, 2024, due to the use of unobservable inputs. The key inputs into the valuation models for the Exchange Note were as follows at June 30, 2025, and December 31, 2024:

		June 30, 2025				December 31, 2024
Risk-free interest rate			4.21	%			4.08	%
Expected term (years)			0.48				0.98
Volatility*			-	%			156.00	%
Stock price*		$	-			$	1.36
Debt discount rate*			-	%			42.50	%

* These assumptions are not used for valuation of Exchange Note as of June 30, 2025.

ELOC/Purchase Agreement

The Company established the initial fair value for the ELOC Agreement as of June 24, 2024, the date the Business combination closed. As of June 30, 2025 and December 31, 2024, the fair value was remeasured. As such, the Company used the MCM that fair values the early termination/repayment features of the debt. The MCM was used to value the ELOC Agreement for the initial periods and subsequent measurement periods. The change in fair value between December 31, 2024, and June 30, 2025, was recognized in the statement of operations under change in fair value of financial instruments.

The ELOC Agreement was classified within Level 3 of the fair value hierarchy at June 30, 2025 and December 31, 2024, due to the use of unobservable inputs. The key inputs into the MCM model for the ELOC Agreement were as follows at June 30, 2025, and at December 31, 2024:

		June 30, 2025				December 31, 2024
Risk-free interest rate			3.65	%			4.26	%
Expected term (years)			2.01				2.51
Volatility			111.87	%			124.00	%
Stock price		$	1.16			$	1.36

September 2024 Convertible Note

The Company established the initial fair value for the September 2024 Convertible Note as of September 30, 2024, which was the date the note was funded. As of June 30, 2025, and December 31, 2024, the fair value was remeasured. For December 31, 2024, the Company used a probability-weighted scenario model that accounts for three scenarios, (a) repayment in accordance with terms of the note through maturity, (b) the occurrence of a change in control, and (c) the occurrence of event of default. Under the repayment at maturity scenario, the Company considers the potential settlement value of the September 2024 Convertible Note based on the defined repayment schedule. On each repayment date, the analysis considers whether the holder would exercise its conversion option in relation to the principal to be repaid, in the event that the value obtained upon conversion would exceed the value of the cash payable per the repayment schedule. Under a default scenario, the Company estimates that the lender would recover approximately 44% of the principal outstanding. Due to the arm’s-length nature of the transaction, the note is calibrated at issuance using a discount percentage, such that the value of the note is equal to the proceeds received from the investor, and the additional instruments issued (warrants and shares of common stock) were considered equity sweeteners). For June 30, 2025, the Company has determined the fair value under a default scenario, wherein the expected payout is primarily based on the assumption that settlement will occur on the contractual maturity date.

The change in fair value between December 31, 2024, and June 30, 2025, was recognized in the condensed consolidated statements of operations under change in fair value of financial instruments.

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The September 2024 Convertible Note was classified within Level 3 of the fair value hierarchy at June 30, 2025 and December 31, 2024, due to the use of unobservable inputs. The key inputs into the valuation models for the September 2024 Convertible Note were as follows at June 30, 2025, and December 31, 2024:

		June 30, 2025				December 31, 2024
Risk-free interest rate			4.13	%			4.27	%
Expected term (years)			0.75				4.75
Volatility			104.29	%			113.00	%
Stock price*		$	-			$	1.36
Market discount rate*			-	%			8.22	%

* These assumptions are not used for valuation of Exchange Note as of June 30, 2025.

Common Stock Issuance Obligation

The Company established the initial fair value for the common stock issuance obligation to certain employees of the historical iDoc entity as of June 24, 2024, the date the Business Combination closed (See discussion in Note 2, Restatement of Previously Issued Financial Statements). As of June 30, 2025, and December 31, 2024, the fair value was remeasured. As the obligation is to issue shares of the Company’s common stock, the Company estimated the fair value of the obligation based on the shares of common stock expected to be issued and the closing price of the Company’s common stock on the date of the fair value measurement. As the key inputs into this fair value estimate are observable, the Company classified the common stock issuance obligation within Level 1 of the fair value hierarchy as of June 30, 2025, and December 31, 2024. The change in fair value between December 31, 2024, and June 30, 2025, was recognized as compensation expense within cost of revenues in the condensed consolidated statement of operations.

March 2025 Convertible Note

The Company established the initial fair value for the March 2025 Convertible Note as of March 20, 2025, which was the date the March 2025 Convertible was funded. As of June 30, 2025, the fair value was remeasured. As such, the Company used the Monte Carlo model (“MCM”) that fair values the debt. The MCM was used to value the March 2025 Convertible Note for the initial periods and subsequent measurement periods. The change in fair value between March 20, 2025, and June 30, 2025, was recognized in the condensed consolidated statement of operations under change in fair value of financial instruments.

The March 2025 Convertible Note was classified within Level 3 of the fair value hierarchy as of March 20, 2025, and June 30, 2025, due to the use of unobservable inputs. The key inputs into the MCM model for the March 2025 Convertible Note were as follows at June 30, 2025, and at March 20, 2025:

		June 30, 2025				March 20, 2025
Risk-free interest rate			4.21	%			4.06	%
Expected term (years)			0.47				0.72
Volatility			105.21	%			115.61	%
Stock price		$	1.16			$	1.20

May 2025 Convertible Note

The Company established the initial fair value for the May 2025 Convertible Note as of May 30, 2025, which was the date the May 2025 Convertible was funded. As of June 30, 2025, the fair value was remeasured. As such, the Company used the Monte Carlo model (“MCM”) that fair values the debt. The MCM was used to value the May 2025 Convertible Note for the initial periods and subsequent measurement periods.

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The May 2025 Convertible Note was classified within Level 3 of the fair value hierarchy as of May 30, 2025, and June 30, 2025, due to the use of unobservable inputs. The key inputs into the MCM model for the March 2025 Convertible Note were as follows at June 30, 2025, and at May 30, 2025:

		June 30, 2025				May 30, 2025
Risk-free interest rate			4.27	%			4.27	%
Expected term (years)			0.34				0.34
Volatility			102.79	%			102.79	%
Stock price		$	1.24			$	1.24

Level 3 Changes in Fair Value

The change in the fair value of the Level 3 financial liabilities for the period from December 31, 2024, through June 30, 2025, is summarized as follows:

Level 3 Changes in Fair Value of Derivatives for the period from December 31, 2024, through June 30, 2025:

		Quantum												September				Common Stock				March 2025				May 2025
		Convertible Note				Exchange Note				ELOC				Convertible Note				Issuance Obligation				Convertible Note				Convertible Note				Total
Fair value as of December 31, 2024			3,248,000				1,499,000				80,000				2,094,000				69,621				—				—				6,990,621
Initial fair value at issuance			—				—				—				—				—				238,020				342,996				581,016
(Gain) Loss on change in fair value			332,612				986,636				(20,157	)			824,875				(10,238	)			(43,229	)			—				2,070,499
Fair value as of June 30, 2025			3,580,612				2,485,636				59,843				2,918,875				59,383				194,791				342,996				9,642,136

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers to or from the various levels for the six months ended June 31, 2025, and December 31,2024.

Note 16 Subsequent Events

The Company evaluated subsequent events from the date of the condensed consolidated balance sheets as of June 30, 2025 through the date of the release of the condensed consolidated financial statements.

On July 2, 2025, the Company issued the ELOC Commitment Fee Note in a principal amount of $500,000 that is payable only in shares of the Company’s common stock at an initial price of $10 per share.

On July 3, 2025, the Company and the Quantum Investor entered into an amendment to the Quantum Note (“Amended Quantum Note”) to change the maturity date from June 25, 2025, to June 30, 2026, and to provide that eighteen months of interest will be guaranteed regardless of early pay or redemption.

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On August 2, 2025, the Bridge Investor converted (1) $4,630 principal amount under the $55,556 Additional Bridge Note issued and sold to the Bridge Investor on January 25, 2024, and (2) $27,778 principal amount under the $111,111 Additional Bridge Note issued and sold to the Bridge Investor on November 21, 2023, for an aggregate of 14,199 shares of the Company common stock.

On August 5, 2025, the board approved stock grants totalling 227,500 shares of common stock to vendors as consideration for services rendered and payable.

On August 8, 2025, the Bridge Investor converted $500,000 principal amount under the Exchange Note issued and sold to the Bridge Investor on June 24, 2024, for 213,759 shares of the Company’s Common Stock.

On September 5, 2025, the Company entered into a Master Business Loan Agreement (the “MBLA”) with Change Capital Holdings I, LLC (“Change Capital”), whereby Change Capital agreed to, for a period of up to three years, make advances to the Company (each, an “Advance”) in the aggregate amount of $2,500,001, upon the Company’s request and satisfaction of certain conditions. On September 5, 2025, Change Capital made an initial Advance of $525,000 (the “Initial Advance”). Each additional Advance may not individually exceed $250,000 and may only be made at most every 90 days. The MBLA contains customary representations, warranties, and covenants for a transaction of this nature. During the term of the MBLA, the Company is prohibited from: (i) incurring any indebtedness (other than ordinary course trade debt), and (ii) paying any dividends or making distributions on the Company’s equity interests. The MBLA provides for certain events of default that are typical for a transaction of this type, including, among other things, failure to make payment, default with respect to any other indebtedness of the Company, and any change in ownership of 50% or more of the equity interests of the Company. In connection with the Initial Advance, the Company issued a commercial promissory note to Change Capital (the “Initial MBLA Note”), which the Company is required to repay in 12 weekly payments of $7,500 each followed by 40 weekly payments of $15,862.50 each (for an aggregate total of $724,500). The MBLA Note may be prepaid at any time by payment of an amount equal to the Initial Advance plus 3.167% of the Initial Advance for each month from the date of the advance to the date of payment (subject to a minimum of 20%). Upon an event of default under the MBLA, payment under the Initial MBLA Note may be accelerated and a default fee equal to 10% of the outstanding balance will become due. The Initial MBLA Note, and any future notes issued pursuant to the MBLA, is secured by a junior lien on all assets of the Company and the validity and performance of which are guaranteed personally by Imo Aisiku (the Company’s Co-CEO), Milton Chen (the Company’s Co-CEO), and Jerry Leonard (the Company’s CFO). Mr. Aisiku also entered into a pledge agreement in favor of Change Capital whereby he pledged, as security for the payment and performance of all obligation so the Company under the MBLA, all shares of common stock and other equity interests held by Mr. Aisiku in the Company.

On October 9, 2025, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with an accredited institutional investor (the “Note Investor”) pursuant to which the Company issued to the Investor a secured note in the aggregate principal amount of $133,333 (the “October 2025 Note”) for a purchase price of $120,000. The October 2025 Note bears interest at the rate of 5% per annum, matures on May 8, 2026, and is secured by all assets of the Company. The October 2025 Note is not convertible and provides for certain events of default that are typical for a transaction of this type, including, among other things, any breach of the representations or warranties made by the Company or its subsidiaries. In connection with any event of default that results in the acceleration of payment of the October 2025 Note, the interest rate on the October 2025 Note will accrue at a rate equal to the lesser of 24% per annum or the maximum rate permitted under applicable law. For as long as the October 2025 Note remains outstanding, the Note Purchase Agreement: (1) prohibits the Company from entering into an variable rate transaction, (2) requires that the Company provide the Note Investor with any more favorable terms granted to any future purchaser or holder of the Company’s debt or securities and (3) prohibits any exchange transaction involving the Company’s debt or securities. In connection with the Note Purchase Agreement, on October 9, 2025, the Company entered into an amendment agreement with certain of its creditors whereby the October 2025 Note was consented to and subordinated to the outstanding debt.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VSEE HEALTH

The following discussion and analysis provide information that VSee Health’s management believes is relevant to an assessment and understanding of the results of operations and financial of VSee Health, Inc. (“VSee Health” and for purposes of this section only, referred to as the “Company”, “we,” “us” and “our”). The discussion and analysis should be read together with VSee Health’s consolidated financial statements as of and for the three months ended June 30, 2025 and 2024, and the related respective notes thereto. This discussion may contain forward-looking statements based upon VSee Health’s current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under “Risk Factors” in the Annual Report for the year ended December 31, 2024 and the section herein entitled “Cautionary Note Regarding Forward-Looking Statements. Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been impacted by the restatement described in the Explanatory Note to this Annual Report and in Note 2 to our consolidated financial statements entitled “Restatement of Previously Issued Financial Statements. “Certain of the financial and other information provided in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been amended to give effect to such restatement adjustments.”

Overview

Prior to June 24, 2024, we were a blank check company incorporated in the State of Delaware organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On June 24, 2024, we completed the Business Combination pursuant to the Business Combination Agreement dated as of November 21, 2023, as amended by the first amendment dated February 13, 2024 and the second amendment dated April 17, 2024 (as amended, the “Business Combination Agreement”) that we entered into with VSee Lab and iDoc. Upon the completion of the Business Combination, we changed our name to “VSee Health, Inc.” and the business of VSee Lab and iDoc became our business.

Our wholly-owned subsidiary VSee Lab is a telehealth software platform. VSee Lab’s proprietary technology platform and modular software solution empower users to plug and play telehealth services with end-to-end encrypted video streaming integrated with medical device data, electronic medical records, and other sensitive data, with multiple other interactive functionalities that enable teamwork that VSee Lab believes are not available from any other system worldwide. Our company’s core platform is a highly scalable, integrated, application program interface (“API”) driven technology platform, for virtual healthcare delivery, with multiple real-time integrations spanning the healthcare ecosystem. Our platform’s APIs power external connectivity and deep integration with a wide range of payors, electronic medical records, third party applications, and other interfaces with employers, hospital systems, and health systems, which we believe uniquely positions us as a long-term partner meeting the unique needs of the rapidly changing, healthcare industry. Our company will also be able to white label our solutions so they fit into the plans and strategies of our clients, all on a platform that is high-performance and highly scalable.

We put telehealth software tools in the hands of clinicians to enable them to make changes without programming so that they can achieve the best patient outcomes. We provide our clients with capabilities specifically built to enable them to collaborate with their clinical and non-clinical colleagues, securely coordinate patient care, conduct virtual patient visits including remote physical exam and remote patient monitoring, and an analytical dashboard to manage their entire telehealth operations from patient satisfaction score to patient wait time to staffing allocations. We empower clinicians to create the workflow they want without waiting for IT; where today, most clinicians feel helpless given that IT departments often cannot give clinicians what they want.

Through VSee Lab, we offer a set of telehealth software building blocks, data connectors, and workflow templates that can be rapidly configured into the client’s workflows. Our offerings allow clinicians without programming experience to configure our building blocks into their existing workflow without requiring programmers - i.e. - no code. In addition, our building blocks allow programmers to increase their productivity with simple coding to piece together our building blocks - i.e. - low code. At the core of our platform is a comprehensive set of software building blocks for telehealth that include on-demand visits, scheduling appointments, in-take forms, signature for consent and compliance, team coordination, unified communication, remote exam and remote patient monitoring, payments including insurance processing, clinical notes, and administrative control panels and analytics. These set of building blocks can connect to electronic medical record systems such as EPIC and Cerner via HL7, FHIR, and SFTP. Lastly, we provide a set of templates to make creating telehealth workflow fast and easy. The entire telehealth platform sits on a scalable server architecture and is HIPAA compliant and SOC2 externally audited. VSee Lab is also GDPR compliant and supports single-sign-on (SSO) and multi-factor-authentication (MFA).

The Company’s wholly-owned subsidiary iDoc is a high acuity patient care solution providing elite physician services in intensive care units of our major hospital systems and other customers. iDoc delivers neuro-critical care through a proprietary technology platform. iDoc serves a diverse range of customers from large hospital systems to small/micro hospitals, long-term acute care (LTAC) facilities, correctional facilities and others. In addition to the specialization of neuro critical care, iDoc provides general tele-critical care services, and specialty e-consults to large organizations such as correctional facilities. iDoc has an experienced team of board-certified intensivists, neurointensivists, neurologists, and advanced practice providers that treat and coordinate care for acutely ill patients 24/7 in the Neurointensive Care Unit (“NICU”) and Intensive Care Unit (“ICU”) for stroke, brain trauma, spinal cord, and all other neurological conditions. Our Neurocritical care experts will also help develop multidisciplinary plans of care to optimally treat neurological conditions in relation to their overall medical needs. Our Neuro Critical care service delivery will focus on physicians and provider services in Teleneurocritical care, epileptology, and teleneurology. In addition to standard interventions, our Neurocritical care experts will offer specific care including monitoring intracranial pressure, cerebral hemodynamics, advanced multimodal neuro monitoring (brain oximetry, cerebral microdialysis and continuous electroencephalography).

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We strive to be the solutions provider of access to the shortage of intensivists across the care continuum utilizing sophisticated telehealth solutions to bridge the care gap. In a post Covid, physician burnout health care system, we aim to provide a solution to physician burnout and to a lack of patient access to quality intensive care. By using the sophisticated leading telehealth software and hardware devices, we provide access to highly skilled physicians in the highest acuity in patient setting, the ICU. We provide elite physician services in the Intensive care units of major hospital systems and other customers. Our core service delivers general critical care, neurology, EEG reading, and neuro critical care through a custom internal virtual health care technology platform. We also serves a diverse range of customers from large hospital systems to small/micro hospitals, to long-term acute care (LTAC) facilities to the federal prison system and others. We connect critically ill patients to high quality Neurointensivists, general and cardiac intensivists and specialty specific e-consultations and helps to improve outcomes for patients as well as improved productivity and physician burnout while reduced costs for health systems. We have developed a unique quality control program in collaboration with each hospital by development of a hospital specific reporting dashboard to monitor and achieve high quality critical care quality. In addition, current workflows and protocols are evaluated to adjust to incorporate critical care. Continuous process improvement and readjustment of target metrics with the ICU team to maximize patient safety and improve outcomes.

Implications of Being an Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The Jobs Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company is also a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. The Company may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. The Company may take advantage of certain of the scaled disclosures available to smaller reporting companies.

Performance Factors

We believe that our future performance will depend on many factors, including the following:

The Rapid Transformation of the Telehealth Market

The Telehealth market today is one characterized by rapid transformation, with major customers and hospital systems looking to build or add capabilities and major legacy competitors looking to shore up historical limitations. We believe that the rapid transformation of the telehealth market indicates strong future growth of the market, and our current offerings provide an attractive value proposition to health systems, medical groups, and individual medical practitioners, driving higher market share. We plan to continue to harness our scale to further grow the value proposition of our platform for all stakeholders.

Ability to Expand Within the Market and Attract New Customers

Telehealth is still in its total infancy stages in terms of utilization, scope, and services. Most of the growth is expected within hospital systems, definition, and segmentation structure, and we believe our software platform and services have significant potential. We plan to leverage our industry relationships with government, hospital systems and insurance providers to increase our customer base.

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Innovation and New Product Offerings

Despite the rapid advancements in technology, growth in virtual healthcare delivery, and improvement in decision support algorithms and machine learning tools, Telehealth Technology Solutions have not fully penetrated medicine and hospital systems to become the standard methodology of care and represent less than 1% of total healthcare spending according to Grandview Research. Major reasons for Telehealth solutions not capturing its full potential include:

● Many of the existing video and hardware and software used in telehealth are repurposed businesses that are not healthcare specific.

● Remote monitoring/diagnostic devices do not readily integrate into telehealth systems limiting doctors real time metrics to enable diagnostics and assessment.

● Backend software coordination is not optimized for telehealth use and connectivity, resulting in significant greater complexity and costs for implementation.

● The software and code foundations of the early telemedicine companies have major functionality limitations and arduous implementation and incremental coding/connectivity requirements adding significant cost and reducing functionality.

We believe our technology solutions meet the performance and compliance standards in healthcare, increase the sharing of patient history, files and scheduling are integrated into the video view for doctors, create sophisticated video engagement between patients, staff and doctors and seamlessly integrate patients’ records to provide more comprehensive telehealth care. We believe our ability to invest in new technology and develop new features, modules, and solutions will be critical to our long-term success.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of consolidated financial statements also requires we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, balance sheet, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our balance sheet and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 2 to our Unaudited Condensed Consolidated Financial Statements for the three-month and six-month period ended June 30, 2025 included elsewhere in this report. Our critical accounting policies are described below.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. The core principle of ASC 606 is to recognize revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services.

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The Company determines revenue recognition in accordance with ASC 606 through the following five steps:

1) Identify the contract with a customer

The Company considers the terms and conditions of its contracts and the Company’s customary business practices in identifying its contracts under ASC 606. The Company determines it has a contract with a customer when the contract has been approved by both parties, it can identify each party’s rights regarding the goods and services to be transferred and the payment terms for the goods and services, it has determined the customer to have the ability and intent to pay, and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s payment history or, in the case of a new customer, credit and financial information pertaining to the customer.

Contractual terms for subscription services are typically 12 months. Contracts are generally cancellable with a 30-day notice period, and customers are billed in annual, quarterly, or monthly installments in advance of the service period of the subscription. The Company is not required to refund any prorated prepayment fees invoiced to cover services that were provided.

The Company also has service contracts with hospitals or hospital systems, physician practice groups, and other users. These customer contracts typically range from two to three years, with an automatic renewal process. The Company either invoices these customers for the monthly fixed fee in advance or at the end of the month, depending on the contract terms. The contracts typically contain cancellation clauses with advance notice, and revenue for goods and services transferred prior to cancellation is not refundable or creditable.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract.

3) Determine the transaction price

Total transaction price is based on the amount to which the Company is entitled to base on the contracts with its customers. The Company believes the quoted transaction prices in the customer contracts represent the standalone selling prices for each of the separate performance obligations which are distinct and priced separately within the contract.  Consideration promised in the Company’s contracts includes both fixed and variable amounts. The Company’s variable consideration is based on fixed unit price for promised services, though the total consideration is dependent upon the actual amounts of promised services used by the customers. If necessary, the Company estimates the total variable consideration based on the information available to management, and updates such estimates each financial period when needed.

4) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The determination of a SSP for each distinct performance obligation requires judgment. Where applicable, the Company establishes standalone selling prices based on the observable prices of the good or service when the Company sells that good or service separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, the Company estimates the standalone selling price using the expected cost plus a margin approach.

5) Recognize revenue when or as the Company satisfies a performance obligation

Revenue is recognized when or as control of the promised goods or service are transferred to the customer in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

The Company derives revenue from business services associated with direct tele-physician provider patient fee services, telehealth services, subscription services and institutional services provided to our clients.

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Subscription Service Contracts and Performance Obligation

Subscriptions Services

Subscriptions represent a series of distinct goods or services because the performance obligations are satisfied over time as customers simultaneously receive and consume the benefits related to the services the Company performs. In the case of module specific subscriptions, a consistent level of service is provided during each monthly period of subscription to the Company’s platform. The Company commences revenue recognition when the customer is provided with platform subscription for the initial monthly period and revenue is recognized over time as a consistent level of subscription service during the subsequent period is delivered. The Company’s obligation for its integrated subscriptions is to stand-ready throughout the subscription period; therefore, the Company considers an output method of time to measure progress toward satisfaction of its obligations with revenue commencing upon the beginning of the subscription period. Deferred revenue consists of the unamortized balance of nonrefundable upfront fees which are classified as current and non-current based on the timing of when the Company expects to recognize revenue.

The Company treats each subscription to a specific module as a distinct performance obligation because each module is capable of being distinct as the customer can benefit from the subscription to each module on its own and each subscription can be sold standalone.

Furthermore, the subscriptions to individual modules are distinct in the context of the contract as (1) the Company is not integrating the services with other services promised in the contract into a bundle of services that represent a combined output, (2) the subscriptions to specific modules do not significantly modify or customize the subscription to another module, and (3) the specific modules are not highly interdependent or highly interrelated. The subscription to each module is treated as a series of distinct performance obligations because it is distinct and substantially the same, satisfied over time, and has the same measure of progress.

The transaction price is determined based on the consideration the Company expects to be entitled to in exchange for transferring services to the customer. Under the contracts, the clients pay a fixed rate per user per subscription service. Prior to the start of a contract, clients generally make upfront nonrefundable payments to the Company when contracting for implementation services.

Professional Services and Technical Engineering Fees and Performance Obligation

Performance obligations under contracts for professional services may include maintenance, hardware, clinician fees, and technical engineering services. These services are generally distinct in the context of the contract and are accounted for as separate performance obligations.

For technical engineering services, performance obligations are typically satisfied over time based on the specified quantity of professional service hours provided to the customer. For maintenance, hardware, and clinician fees, revenue is recognized either over time or at a point in time or when control transfers to the customer. Maintenance and clinician fees are generally recognized over time as services are rendered, while hardware revenue is recognized at a point in time when control transfers to the customer.

The Company evaluates the nature of each professional services arrangement to determine the appropriate timing of revenue recognition, ensuring that revenue is recognized in a manner that faithfully depicts the transfer of goods or services to the customer.

Patient Fees Services and Performance Obligation

Patient Fee Services

Patient fees represent a series of distinct services because the performance obligations are met when the Company’s physicians provide professional medical services to patients at the client site as this is deemed as transfer of goods and services to respective patients. The patient benefits from the professional services when care is rendered by the Company’s medical professionals. The Company commences revenue recognition on patient services when the Company satisfies its performance obligation to provide professional medical services to patients.

Patient Fee Contracts Involving Third-Party Payors

The Company receives payments from patients, third-party payors and others for patient fee services. Third-party payors pay the Company based on contracted rates or the entities’ billed charges. Payments received from third-party payors are generally less than billed charges. The Company determines the transaction price on patient fees based on standard charges for services provided, reduced by adjustments provided to third-party payors, and implicit price concessions provided to uninsured patients. The Company monitors its revenue and receivables from third-party payors and records an estimated contractual allowance to properly account for the differences between billed and collected amounts.

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Revenue from third-party payors is presented net of an estimated provision for contractual adjustments. Patient revenues are net of service credits and service adjustments, and allowance for doubtful accounts receivable. These adjustments and implicit price concessions represent the difference between the amount billed and the estimated consideration the Company expects to receive, based on historical collection experience, market conditions and other factors. Although the Company believes that its approach to estimates and judgments as described herein is reasonable, actual results could differ, from estimated amounts and such difference could be material.

All of the Company’s telemedicine contracts for patient reimbursement fees are directly billed to the payors by the Company. The Company earns patient fees by providing high acuity patient care solutions. For patient fees, performance obligations are met when the Company’s physicians provide professional medical services to patients at the client site as this is deemed as transfer of goods and services to respective patients. The patient benefits from the professional services when care is rendered by the Company’s medical professionals. The revenue is determined based on the telemedicine billing code(s) associated with the respective professional service rendered to patients. The Company earns primarily from reimbursement from the following third-party payors:

Medicare

The Company’s affiliated provider network is reimbursed by the Medicare Part B and Part C programs for certain of the telemedicine services it provides to Medicare beneficiaries. Medicare coverage for telemedicine services is treated distinctly from other types of professional medical services and is limited by federal statute and subject to specific conditions of participation and payment pursuant to Medicare regulations, policies and guidelines, including the location of the patient, the type of service, and the modality for delivering the telemedicine service, among others.

Medicaid

Medicaid programs are funded jointly by the federal government and the states and are administered by states (or the state’s designated managed care or other similar organizations) under approved plans. The Company’s affiliated provider network is reimbursed by certain State Medicaid programs for certain of the telemedicine services it provides to Medicaid beneficiaries. Medicaid coverage for telemedicine services varies by state and is subject to specific conditions of participation and payment.

Commercial Insurance Providers

The Company is reimbursed by commercial insurance carriers. The basis for payment to the commercial insurance providers is consistent with Medicare reimbursement fee structure guidelines, and the Company is in-network or out-of-network with the commercial insurance carriers based on state and insurer requirements.

Telehealth Fees Service Contracts and Performance Obligation

Contract For Telemedicine Care Services

Performance obligations in the contract for telemedicine care are based on services provided via the use of hardware and software integration that includes multi-participant video conferencing, and electronic communication for 24 hours per day, seven days per week for the duration of the contract. The Company provides administrative support for the tele-physician services and coordinates the services of its clinicians’ network through administrative support, hardware support, and software support and provider coverage availability. The Company provides coverage availability of its physician services ranging from 12-24 hours per day. Performance obligations in the contract for these services transferred to the customer are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from patient services and institutional services obligations. Performance obligations are met when the Company provides administrative, business, and medical records and reports related to their professional services rendered pursuant to the agreement in such format and upon such interval as hospitals may require. Revenue from telemedicine care services is included in telehealth fees in the condensed consolidated financial statements.

The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration, using the expected value or the most likely amount method, whichever is expected to better predict the amount. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on assessments of legal enforceability, performance, and all information that is reasonably available to the Company. The determination of the amount of revenue the Company can recognize each accounting period requires management to make estimates and judgments on the estimated expected customer life or expected performance period.

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The Company commences revenue recognition when the Company satisfies its performance obligation to provide the contractual tele-physician hours services monthly. Prior to the commencement of services, customers generally make initial start-up nonrefundable payments to the Company when contracting for Company training, hardware and software installation and integration, which includes a onetime setup of software security, API interfaces, and compatibility between hospital existing equipment and hardware and software. The Company recognizes revenue upon completion of the implementation when the performance obligation of equipment setup and initial training is completed. The start-up fees do not significantly modify or customize the other goods in the contract. As the start-up service primarily covers initial administrative services for which the Company’s clients can cancel future services upon completion, management considers it to be separable from the ongoing business services, and the Company records start-up fees as revenue when the start-up service is completed over time, using the input method to measure progress each financial period.

Institutional Fees Service Contracts and Performance Obligation

Contract For Electroencephalogram (“EEG”) Professional Interpretation Services

Performance obligations in the contract for EEG professional interpretation services are based on the number of professional services EEG interpretation provides monthly. The performance obligation in the contract for these services transferred to the customer is distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To facilitate the delivery of the EEG professional interpretation services, the Company’s physicians use EEG telemedicine equipment provided by the Company. The performance obligation is satisfied based on the number of EEG professional interpretations performed by the Company’s physicians. The number of professional interpretations is traced monthly by both parties and used to determine the revenue earned based on established contractual rates and is included in institutional fees in the condensed consolidated financial statements.

Under most of the Company’s contracts, including contracts with its two top customers, the customer pays fixed monthly fees for telemedicine consultation services, EEG professional interpretation services, platform software services, and hardware fees. The fixed monthly fee provides for a predetermined number of daily, monthly, or annual physician hours of coverage and agreed upon rates for interpretation and software services. To facilitate the delivery of the consultation services, the facilities use telemedicine equipment and the Company’s virtual healthcare platform, which is provided and installed by the Company. The Company also provides the hospitals with user training, maintenance and support services for the telemedicine equipment used to perform the consultation services.

The Company commences revenue recognition on EEG professional interpretation services when the Company satisfies its performance obligation to provide professional interpretation monthly.

Fair Value of Financial Instruments

“Fair value” is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.

See Note 15 Fair Value Measurements of the financial statements for additional information on assets and liabilities measured at fair value.

Goodwill

Goodwill represents the excess of purchase price in a business combination over the fair value of the net identifiable assets acquired. We evaluate goodwill for impairment at the reporting unit level by assessing whether it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If this assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired and no further impairment testing is required. Conversely, if the assessment concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a goodwill impairment test is performed to compare the fair value of the reporting unit to its carrying value. The Company determines fair value of the two reporting units using both income and market-based models. Our models contain significant assumptions and accounting estimates about discount rates, future cash flows, and terminal values that could materially affect our operating results or financial position if they were to change significantly in the future and could result in an impairment. We perform our goodwill impairment assessment whenever events or changes in facts or circumstances indicate that impairment may exist and during the fourth quarter each year. The cash flow estimates and discount rates incorporate management’s best estimates, using appropriate and customary assumptions and projections at the date of evaluation. During the year ended December 31, 2024, the Company determined there were triggering events that required the Company to perform a quantitative analysis. Based on the analysis, the Company concluded the fair value of the Telehealth Services reporting unit was less than it’s carrying value. As a result, the Company recorded non-cash goodwill impairment charges of $56,675,210 on the consolidated statement of operations for the year ended December 31, 2024. For the three and six months ended June 30, 2025, the Company performed qualitative analysis by assessing that no adverse economic, industry, operational, or regulatory indicators were identified that would suggest impairment. Based on the qualitative assessment of relevant factors, the Company concludes that no impairment indicators exist determined that there were no triggering events that required the Company to perform a quantitative analysis.

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Impairment of Long-lived and Intangible Assets Other than Goodwill

In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets, including fixed assets, right-of-use assets and intangible assets, for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on the appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax basis and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.

The Company applies ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Financial Statement Components

Three Months Ended June 30, 2025 and 2024 Results of Operations

The following table presents VSee Health’s results of operations for the three months ended June 30, 2025 and 2024:

		For the three months ended June 30,
		2025				2024				Change				%
Revenue		$	3,390,119			$	1,711,566			$	1,678,553				98	%
Cost of revenues			1,801,627				934,570				867,057				93	%
Gross margin			1,588,492				776,996				811,496				104	%
Operating expenses			3,843,232				1,709,519				2,133,713				125	%
Other income (expense)			354,059				1,411,967				1,057,908				75	%
Net loss before taxes			(2,608,799	)			(2,344,790	)			264,309				11	%
Income tax benefit			(4,484	)			1,678,388				1,682,872				100	%
Net loss		$	(2,613,283	)		$	(666,102	)		$	1,947,181				292	%

Six Months Ended June 30, 2025 and 2024 Results of Operations

The following table presents VSee Health’s results of operations for the six months ended June 30, 2025 and 2024:

		For the six months ended June 30,
		2025				2024				Change				%
Revenue		$	6,711,604			$	3,332,561			$	3,379,043				101	%
Cost of revenues			3,263,141				1,320,823				1,942,318				147	%
Gross margin			3,448,463				2,011,738				1,436,725				71	%
Operating expenses			7,534,521				2,840,201				4,694,320				165	%
Other income (expense)			(2,468,676	)			(1,421,277	)			(1,047,399	)			74	%
Net loss before taxes			(6,554,734	)			(2,249,740	)			4,304,994				191	%
Income tax benefit			(17,989	)			1,678,388				(1,696,377	)			101	%
Net loss		$	(6,572,723	)		$	(571,352	)		$	(6,001,371	)			1050	%

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Revenue

Through our wholly-owned subsidiary VSee Lab, the Company generates revenue from subscription services to its software platform. Subscriptions represent a series of distinct goods or services because the performance obligations are satisfied over time as customers simultaneously receive and consume the benefits related to the services as VSee Lab performs. Through our wholly-owned subsidiary iDoc, the Company establishes management and administrative services contracts with hospitals or hospital systems to provide telehealth physician services to acute patients of the hospitals or hospital systems. iDoc also generate revenue by directly billing the insurance companies for care provided at hospitals or hospital systems. iDoc’s contracts typically range in length from two to three years, with an automatic renewal process.

Revenue was $3,390,119 for the three months ended June 30, 2025, compared to $1,711,566 for the three months ended June 30, 2024, an increase of $1,678,553 or 98%. The increase was driven by higher iDoc revenue of $992,622, or 1,586% from the acquisition of iDoc during the 2nd quarter of 2024, primarily from higher telehealth and patient fees of $548,850 and $444,252, respectively. The increase was also driven by $602,845, or 143% higher, in professional services and other fees, primarily from higher medical device sales and professional service fees associated with servicing the new (“HHS”) contract. The increase was also driven by $240,185, or 126%, from technical engineering fees, primarily related to servicing the HHS contract. These increases were slightly offset by $157,099 or 15% of lower subscription revenue from a decline in recurring enterprise-level subscriptions.

Revenue was $6,711,604 for the six months ended June 30, 2025, compared to $3,332,561 for the six months ended June 30, 2024, an increase of $3,379,043 or 101%. The increase was driven by higher iDoc revenue of $2,190,236, representing a 3,501% increase from the acquisition of iDoc during the 2nd quarter of 2024, primarily due to higher patient and telehealth fees of $1,155,515 and $ 1,032,700, respectively. The increase was also driven by $1,171,682 or 156% higher, in professional services and other fees, primarily from higher medical device sales and professional service fees associated with servicing the new (“HHS”) contract. The increase was also driven by $352,081 or 74%, from technical engineering fees, primarily related to servicing the HHS contract. These increases were slightly offset by $334,956 or 18% of lower subscription revenue from a decline in recurring enterprise-level subscriptions.

Cost of Goods Sold

VSee Lab’s cost of revenues consists primarily of expenses related to cloud hosting, personnel-related expenses for VSee’s customer success team, costs for third-party software services and contractors, and other services. iDoc’s cost of goods sold is primarily comprised of personnel-related expenses for our employee and consulting physicians and other medical providers, and the costs for third-party software services and hardware used in connection with delivery of high acuity patient care solution when providing elite physician services in the intensive care units of our major hospital systems and other customers.

The cost of goods sold for the three months ended June 30, 2025, increased by $867,057, or 93%, compared to June 30, 2024. The increase was also primarily driven by $504,704 or 79%, higher compensation expenses mainly resulting from additional headcount allocations to support the HHS contract. Higher procurement of medical devices for the HHS project also increased the cost of goods sold by $281,130 or 391%. There was an increase in software and hosting expenses of $64,015, or 29%, primarily driven by the deployment of MFA and FedRAMP-compliant cloud infrastructure, the deployment of the GovCloud Production environment, and the expansion of the Dev environment to support the HHS contract. The increase was also driven by $9,208 of other costs.

The cost of goods sold for the six months ended June 30, 2025, increased by $1,942,318, or 147%, compared to the same period in 2024. The increase was also primarily driven by $1,148,434, or 146%, higher compensation expenses, mainly resulting from additional headcount allocations to support the HHS contract, which drove $800,271 of higher expenses and $348,163 in higher costs from the iDoc acquisition in June of last year. Higher procurement of medical devices for the HHS project also drove the increase by $655,588 or 623%. There was an increase in software and hosting expenses of $127,391, or 30%, primarily driven by the deployment of MFA and FedRAMP-compliant cloud infrastructure, the deployment of the GovCloud Production environment, and the expansion of the Dev environment to support the HHS contract. The increase was also driven by $10,905 of other costs.

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Operating Expenses

VSee Lab’s operating expenses include all operating costs not included in the cost of revenues. These costs consist of general and administrative expenses composed primarily of all payroll and payroll-related expenses, professional fees, and other costs related to the administration of its business. iDoc’s operating expenses include all operating costs not included in cost of revenues. These costs consist of compensation, general and administrative expenses composed primarily of all payroll and payroll- related expenses, professional fees, insurance, software costs, occupancy expenses related to iDoc’s operations, including utilities, depreciation and amortization, and other costs related to the administration of its business.

Operating expenses for the three months ending June 30, 2025, increased by $2,133,713 or 125% compared to the same period last year. The growth was driven by higher general and administrative expenses of $1,604,303, an increase of 282%, mainly due to higher expenses of $934,901 or 100% from the acquisition of iDoc, primarily related to amortization and depreciation expenses of $644,848, bad debt expenses of $125,964, and insurance-related expenses of $84,987. Additionally, expenses increased by $765,797 or 100% from the recapitalization with DHAC, mainly for professional and advisory service fees, slightly offset by a decrease of $96,394 in expenses from the VSee Lab business. The rise in operating expenses was also driven by $757,717 or 83% higher compensation-related expenses, mainly from the acquisition of iDoc and the recapitalization with DHAC, and an increase of $373,977 from higher stock-based compensation in the VSee Lab business. These increases were partly offset by the absence of transaction expenses incurred during the current quarter, resulting in a reduction of $228,307, or 100%, compared to the same period in the previous year. 

Operating expenses for the six months ending June 30, 2025, increased by $4,694,320 or 165% compared to the same period last year. The growth was driven by higher general and administrative expenses of $3,425,827, an increase of 440%, mainly due to higher expenses of $1,884,327 or 100% from the acquisition of iDoc, primarily related to amortization and depreciation expenses of $1,289,724, bad debt expenses of $246,883, and insurance-related expenses of $169,359. Additionally, expenses increased by $1,647,071, or 100%, from the recapitalization with DHAC, primarily due to professional and advisory service fees, which were slightly offset by a decrease of $105,577 in expenses from the VSee Lab business. The rise in operating expenses was also driven by $1,523,138 or 84% higher compensation-related expenses, $913,669 from the acquisition of iDoc and recapitalization with DHAC, and $609,470 of compensation in the VSee Lab business, mainly from stock based compensation. These increases were partly offset by the absence of transaction expenses incurred during the current quarter, resulting in a reduction of $254,645 or 100%, compared to the same period last year. 

Other Income (Expense)

Other expense during the three months ended June 30, 2025, decreased $1,057,908 or 75%. The decrease was primarily driven by the $1,618,234 initial fair value loss on the Quantum Note in the prior period, compared to none during the current period. The decrease was driven by $101,256, representing a 30% reduction in interest expenses. The decline was also driven by $167,468 in other income, primarily resulting from the United States Employee Retention Credit (ERC) received by the iDoc business. These decreases were offset by the loss on change in fair value of the debt and derivative financial instruments of $702,925, and loss on the extinguishment of the loan of $126,125 during the current period, compared to none during the prior period last year.

Other expense during the six months ended June 30, 2025, increased $1,047,399 or 74%. The increase was primarily driven by the loss on change in fair value of the debt and derivative financial instruments of $1,964,396, an increase in the interest expense of $620,099, primarily due to the conversion of the total interest due on the Quantum note, and new loan agreements entered into in 2025, and loss on the extinguishment of the loan of $126,125 during the current period, compared to none during the prior period last year. These increases in other expenses were reduced by the $1,618,234 initial fair value loss on the Quantum Note for the previous period, compared to none during the current period, and $183,007 of other income, primarily driven by the United States Employee Retention Credit (ERC) received by the iDoc business.

Net Loss

Net loss for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, increased by $1,947,181 or 292%. The increase in the Company’s net loss was driven by higher operating and corporate expenses resulting from the recapitalization with DHAC and the acquisition of iDoc in 2024, resulting, and was offset by the $915,309 net impact from the changes in fair value of the debt and derivative financial instruments and the year over year favorable changes in issuance of financial instruments.

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Net loss for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, increased by $6,001,371, or 1050%. The increase in the Company’s net loss was driven by higher operating expenses resulting from the recapitalization with DHAC and the acquisition of iDoc in 2024, and by $1,047,399, or 74% increase in other expenses, from higher interest expenses, and the unfavourable net impact from the changes in fair value of the debt and derivative financial instruments and the year over year changes in issuance of financial instruments.

Cash Flows

The following table presents selected captions from VSee Health’s consolidated statements of cash flows for the six months ended June 30, 2025 and 2024:

		For the six months ended June 30,
		2025				2024
Net cash used in operating activities		$	(765,094	)		$	(2,594,214	)
Net cash used in from investing activities		$	(15,466	)		$	(16,390	)
Net cash provided by financing activities		$	746,040			$	3,597,841
Change in cash		$	(34,520	)		$	987,237

VSee Health’s principal sources of liquidity are cash and cash equivalents, totalling $291,595 and $1,105,971 as of June 30, 2025 and 2024, respectively.

VSee Health’s future capital requirements will depend on many factors, including our growth rate, contract renewal activity, number of subscription renewals, the continuing market acceptance of telehealth, and debt funding.

Cash Used in Operating Activities

Cash used in operating activities was $765,094 for the six months ended June 30, 2025. Cash used in operating activities consists of a net loss of $6,572,723, adjusted for non-cash items of $4,027,812 and $1,779,817 increase in net changes in operating assets and liabilities. The increases in accounts payable and deferred revenue primarily drove the increase in operating assets and liabilities.

Cash used in operating activities was $2,594,214 for the six months ended June 30, 2024. The change in operating activities presents changes for VSee Lab for the six months ending June 30, 2024, and changes for iDoc and DHAC from the Business Combination date of June 24, 2024, to the end of the quarter, June 30, 2024. Cash used in operating activities consists of a net loss of $571,352, adjusted for non-cash items of $203,972, driven primarily by fair value changes, and a $2,226,834 decrease in net changes in operating assets and liabilities. The decrease in net changes in operating assets was primarily driven by the decreases in accounts payable and accrued liabilities and due to related party, and slightly offset by the reduction in accounts receivable and the increase in deferred revenue.

Cash Used in Investing Activities

Cash used for investing activities for the six months ended June 30, 2025, was $15,466, and was driven by the purchase of fixed assets.

Cash used for investing activities for the six months ended June 30, 2024, was $16,390, driven primarily by $45,513 for the purchase fixed assets and was slightly offset by $29,123 of cash acquired from the acquisition of iDoc.

Cash Provided by Financing Activities

Cash provided by financing activities for the six months ended June 30, 2025, was $746,040, primarily consisting of $816,871 proceeds from the M2B, Ascent and FWE Capital notes and offset by $10,000, $35,787, $44 and $25,000 of payments to shareholder, for factoring payables, due on acquisition purchase and finance lease liability.

Cash provided by financing activities for the six months ended June 30, 2024, was $3,597,841, primarily consisting of $2,700,000 proceeds from the Quantum Note, $1,323,362 cash from the recapitalization with DHAC, and offset by $365,750, $47,800, $10,941 and $1,030 for repayment on the Extension Note, advances from a related party, factoring payable and due on acquisition purchase, respectively.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2025, our disclosure controls and procedures were not effective.

Management concluded that material weaknesses in internal control over financial reporting existed relating to the lack of sufficient number of personnel within the accounting function to adequately segregate duties, we did not have a designed and implemented effective Information Technology General Controls (“ITGC”) related to access controls to financial accounting system, we did not have a formalized control environment and oversite of controls over financial reporting, and we lack proper accounting for significant or non-recurring transactions. Such material weaknesses contributed to our inability to timely file this Quarterly Report on Form 10-Q. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We lack the resources to employ additional personnel to help mitigate these material weaknesses and we foresee that these material weaknesses will not be remediated until we receive additional funding to support our accounting department.

We cannot assure you that these or other measures will fully remediate the material weakness in a timely manner. Notwithstanding the identified material weakness, our management believes that the consolidated financial statements included in this report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Subsequent to the quarter end, in light of the material weakness as described above, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements on a timely basis. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding application and financial reporting. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time subject to claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in  “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which could materially affect our business, financial condition, or future operating results and cash flows. We do not believe that there have been any material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The risks described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, operating results and/or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

For this fiscal quarter ended June 30, 2025, there were no unregistered securities to report which have not been previously included in a Quarterly Report on Form 10-Q, Annual Report on Form 10-K, or a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the six months ended June 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K).

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Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit No.		Description
3.1		Second Amended and Restated Certificate of Incorporation of VSee Health, Inc. (incorporated by reference to Exhibit 3.1 filed with the Form 8-K filed by the Registrant on June 28, 2024).
3.2		Certificate of Designation of Series A Convertible Preferred Stock of VSee Health, Inc. (incorporated by reference to Exhibit 3.2 filed with the Form 8-K filed by the Registrant on June 28, 2024).
3.3		Amended and Restated Bylaws of VSee Health, Inc. (incorporated by reference to Exhibit 3.3 filed with the Form 8-K filed by the Registrant on June 28, 2024).
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Filed herewith (furnished herewith with respect to Exhibit 32.1)

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VSEE HEALTH, INC.
Date: October 15, 2025	By:	/s/ Imoigele Aisiku
	Name:	Imoigele Aisiku
	Title:	Co-Chief Executive Officer and Chairman of the Board
		(Principal Executive Officer)
Date: October 15, 2025	By:	/s/ Jerry Leonard
	Name:	Jerry Leonard
	Title:	Chief Financial Officer and Secretary
		(Principal Financial and Accounting Officer)

64

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FAQ

What were VSEE’s Q2 2025 revenues and net loss?

For the three months ended June 30, 2025, revenue was $3,390,119 and net loss was $2,613,283.

How did VSEE’s six-month 2025 results compare year over year?

For the six months ended June 30, 2025, revenue was $6,711,604 and net loss was $6,572,723, versus $3,332,561 and $571,352 in 2024 (restated).

What is VSEE’s cash and debt position as of June 30, 2025?

Cash was $291,595; current liabilities were $23,058,308. The company reported a stockholders’ deficit of $5,736,304.

Did VSEE include a going concern disclosure?

Yes. Management states that liquidity conditions and historical operating losses raise substantial doubt about continuing as a going concern.

What segments does VSEE report?

VSEE reports two segments: Healthcare Technology (VSee Lab) and Telehealth Services (iDoc).

Were prior periods restated?

Yes. The June 30, 2024 quarter was restated, including adjustments to revenue, cost of revenues, and other line items.

What were notable balances affecting collections?

The allowance for credit losses was $2,639,917 as of June 30, 2025.