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 September 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 jurisdic ...

Financial Performance - Total revenues for Q2 2025 reached $3,390,119, a significant increase from $1,711,566 in Q2 2024, representing a growth of 98.1%[17] - Subscription fees decreased to $880,327 in Q2 2025 from $1,037,426 in Q2 2024, a decline of 15.1%[17] - Net loss for Q2 2025 was $2,613,283, compared to a net loss of $666,102 in Q2 2024, indicating a worsening of 292.5%[17] - Gross margin for Q2 2025 was $1,588,492, up from $776,996 in Q2 2024, reflecting an increase of 104.5%[17] - Operating expenses for Q2 2025 totaled $3,843,232, compared to $1,709,519 in Q2 2024, an increase of 125.5%[17] - The company reported a basic and diluted loss per common share of $0.16 for Q2 2025, compared to $0.12 for Q2 2024[17] - For the six months ended June 30, 2025, the net loss was $6,572,723 compared to a net loss of $571,352 for the same period in 2024[23] Assets and Liabilities - Total current assets decreased to $2,559,505 as of June 30, 2025, down from $3,020,967 as of December 31, 2024, a decline of 15.3%[15] - Total liabilities increased to $23,946,345 as of June 30, 2025, compared to $20,010,976 as of December 31, 2024, an increase of 19.7%[15] - Cash and cash equivalents decreased to $291,595 as of June 30, 2025, from $326,115 as of December 31, 2024, a decrease of 10.6%[15] - The accumulated deficit increased to $(74,276,596) as of June 30, 2025, compared to $(67,703,873) as of December 31, 2024, an increase of 9.3%[15] Business Combinations and Acquisitions - The company completed a business combination with VSee Lab and iDoc on June 24, 2024, resulting in a reverse recapitalization and a name change to VSee Health, Inc.[26] - The Company acquired iDoc on June 24, 2024, and won new contracts with larger hospitals, indicating positive revenue growth from its robust pipeline[31] - The fair value of shares issued in the iDoc acquisition was $68,907,052, indicating significant investment in growth[24] - The acquisition of iDoc Telehealth Solutions, Inc. on June 24, 2024, involved a total consideration of $68.9 million, with goodwill of approximately $61.6 million reflecting anticipated synergies[107][110] Liquidity and Financing - The company has entered into an equity line of credit agreement for up to $50 million over a 36-month period to improve liquidity[26] - Management has raised substantial doubt about the company's ability to continue as a going concern due to persistent operating losses and a deteriorating liquidity position[28] - The company has undertaken measures to address liquidity concerns, but there is no assurance of success within the next year[30] - The Company is negotiating additional financing to support working capital needs and growth initiatives[31] Revenue Recognition - Revenue from subscription services is recognized over time as customers receive and consume services, with each module being a distinct performance obligation[56] - The Company recognizes revenue from telemedicine services when performance obligations are met, with payments primarily received from Medicare, Medicaid, and commercial insurance providers[65][67] - Revenue from professional services is recognized either over time or at a point in time, depending on the nature of the service provided[60] Stock-Based Compensation and Expenses - The company reported stock-based compensation of $764,036 for the six months ended June 30, 2025[23] - The company recognized stock-based compensation of $474,251 for the six months ended June 30, 2024, after an adjustment of $442,262[36] - The company recorded amortization expenses of $552,500 for the three months ended June 30, 2025, compared to $0 for the same period in 2024[99] Notes and Debt - The Company issued a March 2025 Convertible Note with a principal amount of $108,696, receiving initial proceeds of $100,000 after an 8% original issue discount[132] - The March 2025 Convertible Note matures on December 20, 2025, with an interest rate of 18% per annum, increasing to 28% upon an event of default[134] - The fair value of the March 2025 Convertible Note was recognized at $238,020, resulting in a loss of $138,020 upon initial recognition[137] - The Company issued a senior unsecured note for $500,000 as a commitment fee under the ELOC Agreement, which was converted into 50,000 shares of common stock in December 2024, with a fair value of $79,500 prior to conversion[198] Impairment and Adjustments - The company recorded non-cash goodwill impairment charges of $56,675,210 for the year ended December 31, 2024, due to the fair value of the Telehealth Services reporting unit being less than its carrying value[95] - The Company recorded a $1,590,596 adjustment to accounts receivable acquired from iDoc, reflecting amounts not expected to be collected[34] - The Company identified $654,316 in transaction expenses that were understated in net liabilities assumed from DHAC as of the Business Combination date[32] Lease Obligations - The company has future minimum lease payments totaling $404,460, with the remaining six months of 2025 accounting for $64,740[114] - The weighted average remaining lease term as of June 30, 2025, was 3.1 years, with a weighted average discount rate of 19.3%[117] - Total finance lease cash payments made during the six months ended June 30, 2025, were $25,000, compared to $0 for the three months ended June 30, 2025[120]

[PART I — FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20Financial%20Information) This section details VSee Health, Inc.'s unaudited condensed consolidated financial statements, management's analysis, market risk, and internal controls [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section provides VSee Health, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' deficit, cash flows, and comprehensive explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' deficit as of March 31, 2025, and December 31, 2024 | ASSETS (Unaudited) | March 31, 2025 | December 31, 2024 | | :------------------- | :------------- | :---------------- | | Cash | $410,122 | $326,115 | | Total current assets | $3,079,853 | $3,020,967 | | Total assets | $19,395,686 | $19,992,488 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Total current liabilities | $21,982,860 | $19,010,320 | | Total liabilities | $22,892,683 | $20,010,976 | | Total stockholders' deficit | $(3,496,997) | $(18,488) | - The company's total assets decreased from **$19,992,488** as of December 31, 2024, to **$19,395,686** as of March 31, 2025. Total liabilities increased significantly from **$20,010,976** to **$22,892,683**, leading to a substantial increase in stockholders' deficit from **$(18,488)** to **$(3,496,997)**[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income or loss for the three months ended March 31, 2025, and 2024 | (UNAUDITED) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 (Restated) | | :-------------------------------- | :---------------------------------------- | :--------------------------------------------------- | | Total revenues | $3,321,485 | $1,620,995 | | Cost of revenues | $1,461,514 | $386,253 | | Gross margin | $1,859,971 | $1,234,742 | | Total operating expenses | $3,691,289 | $1,130,682 | | Net operating profit (loss) income | $(1,831,318) | $104,060 | | Total other income (expense), net | $(2,114,617) | $(9,310) | | Net (loss) income | $(3,959,440) | $94,750 | | Net (loss) income attributable to stockholders | $(3,959,440) | $62,770 | | Basic (loss) income per common share | $(0.24) | $0.01 | - Total revenues increased by **105%** to **$3,321,485** for Q1 2025 compared to **$1,620,995** for Q1 2024. However, the company reported a net loss of **$(3,959,440)** for Q1 2025, a significant decline from a net income of **$94,750** in Q1 2024, primarily due to increased operating expenses and other expenses, including a substantial change in fair value of financial instruments[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) This statement outlines changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit, for the period ended March 31, 2025 | Stockholders' Deficit | Balance - December 31, 2024 | Net loss for the period ending March 31, 2025 | Balance - March 31, 2025 | | :-------------------- | :-------------------------- | :-------------------------------------------- | :----------------------- | | Common Stock Amount | $1,630 | $13 | $1,643 | | Additional Paid-In Capital | $67,683,754 | $480,918 | $68,164,672 | | Accumulated Deficit | $(67,703,873) | $(3,959,440) | $(71,663,313) | | Total Stockholders' Deficit | $(18,488) | $(3,959,440) | $(3,496,997) | - The total stockholders' deficit significantly increased from **$(18,488)** at December 31, 2024, to **$(3,496,997)** at March 31, 2025, primarily driven by a net loss of **$(3,959,440)** for the three months ended March 31, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 | CASH FLOWS (UNAUDITED) | For Three Months Ended March 31, 2025 | For Three Months Ended March 31, 2024 (Restated) | | :----------------------- | :------------------------------------ | :----------------------------------------------- | | Net cash (used in) provided by operating activities | $(440,493) | $579,286 | | Net cash used in investing activities | $(11,873) | $(8,740) | | Net cash provided by financing activities | $536,373 | $0 | | NET CHANGE IN CASH | $84,007 | $570,546 | | CASH, END OF PERIOD | $410,122 | $689,280 | - The company experienced a shift from positive operating cash flow of **$579,286** in Q1 2024 to negative operating cash flow of **$(440,493)** in Q1 2025. Net cash provided by financing activities significantly increased to **$536,373** in Q1 2025, primarily from notes issued and common stock issuance, offsetting the operating cash burn[21](index=21&type=chunk) [Note 1 Organization and Description of Business](index=10&type=section&id=Note%201%20Organization%20and%20Description%20of%20Business) This note describes VSee Health, Inc.'s business as a telehealth software company, its recent business combination, and management's assessment of its going concern ability - VSee Health, Inc. (formerly Digital Health Acquisition Corp.) is a telehealth software company providing a scalable, API-driven platform for virtual healthcare delivery, integrating secure video with medical device data and EMRs[22](index=22&type=chunk) - On June 24, 2024, the Company completed a business combination with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc., with VSee Lab identified as the accounting acquirer. The acquisition of iDoc was treated as a business combination[23](index=23&type=chunk)[24](index=24&type=chunk) - Management has identified substantial doubt about the Company's ability to continue as a going concern due to persistent operating losses and deteriorating liquidity. Measures to address this include new contracts (e.g., iDoc acquisition), negotiations for additional financing, and an existing equity line of credit (ELOC) for up to **$50 million**[25](index=25&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk) [Note 2 Restatement of Previously Issued Financial Statements](index=11&type=section&id=Note%202%20Restatement%20of%20Previously%20Issued%20Financial%20Statements) This note explains the restatement of VSee Lab's financial statements due to errors in accrued expenses and revenue recognition cutoff for March 31, 2024 - The Company restated VSee Lab's condensed consolidated financial statements as of March 31, 2024, due to errors in recognizing and measuring accrued expenses and improper revenue transaction cutoff[29](index=29&type=chunk) - Key errors included failure to accrue **$821,291** for sales and use taxes (affecting liabilities and accumulated deficit) and incorrect cutoff of a **$125,000** technical engineering revenue transaction, which was subsequently recognized in Q1 2024[31](index=31&type=chunk) Impact of Restatement on VSee Lab, Inc. Financial Statements (March 31, 2024) | Line Item | As Reported | Adjustment | As Restated | | :------------------------------------------ | :---------- | :--------- | :---------- | | Accounts Payable and Accrued Liabilities | $1,819,512 | $821,292 | $2,640,804 | | Total Liabilities | $4,814,257 | $821,292 | $5,635,549 | | Accumulated Deficit | $(9,117,796) | $(821,292) | $(9,939,088) | | Total Stockholders' Deficit | $(3,383,478) | $(821,292) | $(4,204,770) | | Revenues, technical engineering fees | $162,950 | $125,000 | $287,950 | | Total revenue | $1,495,995 | $125,000 | $1,620,995 | | Net (loss) income attributable to shareholders | $(2,811) | $65,581 | $62,770 | [Note 3 Summary of Significant Accounting Policies](index=12&type=section&id=Note%203%20Summary%20of%20Significant%20Accounting%20Policies) This note details the accounting principles used, including consolidation, segment reporting, revenue recognition, goodwill, and intangible assets - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP, including VSee Health, Inc. and its **100%** wholly-owned subsidiaries VSee Lab and iDoc, and their subsidiaries. Historical data prior to June 24, 2024, reflects VSee Lab's operations[32](index=32&type=chunk)[33](index=33&type=chunk) - The Company operates in two consolidated operating segments: Healthcare Technology (VSee Lab) and Telehealth Services (iDoc), with management evaluating performance and allocating resources based on these segments[36](index=36&type=chunk)[37](index=37&type=chunk) - Revenue is recognized following ASC 606, based on a five-step model, for subscription fees, professional services, technical engineering fees, patient fees, and institutional fees. Patient fees involve third-party payors (Medicare, Medicaid, Commercial Insurance) and are presented net of estimated contractual adjustments and credit losses[42](index=42&type=chunk)[43](index=43&type=chunk)[57](index=57&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Goodwill is evaluated for impairment annually or when triggering events occur. A non-cash goodwill impairment charge of **$56,675,210** was recorded in 2024 for the Telehealth Services reporting unit. No impairment indicators were identified for Q1 2025[88](index=88&type=chunk) - Intangible assets, primarily developed technology (**$10 million**) and customer relationships (**$2.1 million**) from the iDoc acquisition, are amortized over **5** and **10 years**, respectively. Amortization expense for Q1 2025 was **$552,500**[90](index=90&type=chunk) [Note 4 Business Combination](index=23&type=section&id=Note%204%20Business%20Combination) This note describes the June 2024 business combination with VSee Lab and iDoc, including the acquisition accounting and purchase price allocation - On June 24, 2024, VSee Health, Inc. completed a business combination with VSee Lab and iDoc. The transaction was accounted for as a reverse recapitalization with VSee Lab as the accounting acquirer, and iDoc's acquisition was treated as a business combination[97](index=97&type=chunk) - The acquisition of iDoc, a provider of tele-intensive acute and neurocritical care services, enhanced the Company's platform by integrating clinical capabilities and expanding telehealth offerings[98](index=98&type=chunk) - The aggregate consideration for the iDoc acquisition was **$68.9 million**, consisting of **5,542,500** common shares and **300** Series A preferred shares (convertible into **150,000** common shares)[99](index=99&type=chunk) - The purchase price allocation included **$10 million** for developed technology and **$2.1 million** for customer relationships, resulting in goodwill of approximately **$61.6 million**. A goodwill impairment charge of **$56.7 million** was recorded in December 2024[100](index=100&type=chunk) [Note 5 Leases](index=23&type=section&id=Note%205%20Leases) This note provides details on the company's operating and finance leases, including right-of-use assets, liabilities, and associated expenses Operating Lease Right-of-Use Assets (Net) | | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Office lease | $433,173 | $433,173 | | Less: Accumulated amortization | $(74,112) | $(53,588) | | Right-of-use assets, net | $359,061 | $379,585 | Operating Lease Liabilities | | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Office lease | $325,396 | $342,174 | | Less: current portion | $(76,892) | $(72,836) | | Long term portion | $248,504 | $269,338 | - Operating lease expense for the three months ended March 31, 2025, was **$35,635**. The weighted average remaining lease term for operating leases is **3.3 years** with a weighted average discount rate of **18%**[105](index=105&type=chunk)[106](index=106&type=chunk) Finance Lease Right-of-Use Assets (Net) | | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Equipment lease | $736,624 | $736,624 | | Less: Accumulated amortization | $(286,619) | $(200,633) | | Leased equipment, net | $450,005 | $535,991 | - Finance lease liabilities were reclassified to current liabilities due to a revised forbearance agreement, with total finance lease expense of **$100,970** for Q1 2025. The weighted average remaining lease term is **1.3 years** with a discount rate of **19.3%**[107](index=107&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Note 6 Accounts Payable and Accrued Liabilities](index=27&type=section&id=Note%206%20Accounts%20Payable%20and%20Accrued%20Liabilities) This note breaks down the components of accounts payable and accrued liabilities, highlighting changes between reporting periods Components of Accounts Payable and Accrued Liabilities | Component | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Accounts payable | $4,208,106 | $4,283,397 | | Accrued compensation and benefits | $2,330,203 | $2,176,070 | | Accrued interest | $536,057 | $558,358 | | Accrued sales and use tax | $1,067,461 | $999,547 | | Accrued financing lease | $482,830 | $446,890 | | Other accrued liabilities | $833,388 | $879,397 | | **Total** | **$9,458,045** | **$9,343,659** | - Total accounts payable and accrued liabilities increased from **$9,343,659** at December 31, 2024, to **$9,458,045** at March 31, 2025, primarily driven by increases in accrued compensation and benefits and accrued sales and use tax[113](index=113&type=chunk) [Note 7 Factoring Payable](index=27&type=section&id=Note%207%20Factoring%20Payable) This note explains the factoring payable liabilities assumed from the iDoc acquisition, detailing the outstanding balances - As a result of the iDoc acquisition, the Company assumed factoring payable liabilities. These agreements involve selling future receipts for a net purchase price, with weekly collections authorized to the factoring purchaser[114](index=114&type=chunk) Factoring Payable Balances | Factoring Agreement | March 31, 2025 | December 31, 2024 | | :------------------ | :------------- | :---------------- | | June 21, 2023 | $51,300 | $59,527 | | June 28, 2023 | $24,480 | $34,315 | | October 13, 2023 | $74,600 | $85,166 | | **Total** | **$150,380** | **$179,007** | [Note 8 Line of Credit and Notes Payable, net of discount](index=29&type=section&id=Note%208%20Line%20of%20Credit%20and%20Notes%20Payable%2C%20net%20of%20discount) This note provides a comprehensive overview of the company's debt instruments, including new notes issued, fair value adjustments, and default statuses Summary of Notes Payable and Line of Credit | Note Payable | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | 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 | $33,000 | $33,000 | | Note payable issued November 29, 2023 | $64,000 | $64,000 | | Note payable issued March 20, 2025 (Convertible) | $238,020 | - | | Note payable issued March 20, 2025 (Promissory) | $418,603 | - | | Total notes payable and line of credit | $2,591,206 | $1,934,583 | | Less: Current portion | $(1,090,606) | $(433,983) | | Less: Fair value adjustment for debt | $(906,659) | $(906,659) | | Total notes payable, net of current portion | $593,941 | $593,941 | - The Company issued new March 2025 Convertible Note (**$238,020** fair value) and March 2025 Promissory Note (**$418,603** outstanding balance) during Q1 2025, significantly increasing total notes payable. Several existing notes are in default, leading to their classification as current liabilities[116](index=116&type=chunk)[117](index=117&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[132](index=132&type=chunk) - The Exchange Note's fair value increased from **$1,499,000** at December 31, 2024, to **$2,462,897** at March 31, 2025, with a change in fair value of **$953,739** recognized in Q1 2025. The Quantum Convertible Note's fair value also increased from **$3,248,000** to **$3,691,806**, with a **$96,194** change in fair value recognized[145](index=145&type=chunk)[161](index=161&type=chunk) - The ELOC Purchase Agreement, classified as a liability and measured at fair value, had a fair value of **$44,953** at March 31, 2025, down from **$80,000** at December 31, 2024, resulting in a **$35,047** gain on change in fair value. The floor price was modified to **$1.25** in March 2025[164](index=164&type=chunk)[168](index=168&type=chunk)[171](index=171&type=chunk) - The September 2024 Convertible Note's fair value increased from **$2,094,000** to **$2,572,734**, with a **$459,290** change in fair value recognized in Q1 2025. The note is convertible at **$2.00** per share and secured by company assets[177](index=177&type=chunk)[179](index=179&type=chunk)[183](index=183&type=chunk) [Note 9 Related Party](index=41&type=section&id=Note%209%20Related%20Party) This note discloses transactions and balances with related parties, including former CEOs and Sponsor affiliates - Related party transactions include promissory notes from the former CEO, Milton Chen, to VSee Lab, totaling **$323,000** in principal, which are currently in default and accruing interest at **26%**[187](index=187&type=chunk) - iDoc had a related party balance due from its former CEO, Imoigele Aisiku, of **$292,156** as of March 31, 2025, which is unsecured and non-interest-bearing. A **$336,000** note receivable from Mr. Aisiku was written off in 2024[187](index=187&type=chunk) - DHAC assumed several related party loans from its Sponsor and affiliates, which were converted into Series A Preferred Shares at the Business Combination closing. As of March 31, 2025, **$51,900** of advances due to the Sponsor remain payable[188](index=188&type=chunk)[189](index=189&type=chunk)[194](index=194&type=chunk) - SCS Capital Partners LLC, a Sponsor affiliate, owns approximately **40.74%** of the Quantum Investor, which holds the **$3,000,000** Quantum Convertible Note[189](index=189&type=chunk) [Note 10 Commitments, Contingencies, and Concentration Risk](index=44&type=section&id=Note%2010%20Commitments%2C%20Contingencies%2C%20and%20Concentration%20Risk) This note outlines the company's legal proceedings, unpaid commitments, customer concentration, and sales and use tax exposure - The Company is involved in a pending lawsuit for alleged breach of contract and unjust enrichment, with plaintiffs seeking payment under promissory notes and the Encompass Acquisition Agreement. The Company has filed a counterclaim[192](index=192&type=chunk) - Unpaid commitments include **$179,900** for Telepresence Robots and maintenance services, and **$582,677** for a reseller agreement to generate international market revenue, both due upon invoicing or revenue generation[193](index=193&type=chunk)[200](index=200&type=chunk) - The Company has significant customer concentration, with **two customers** representing **58%** of total accounts receivable as of March 31, 2025, and **one customer** accounting for **26%** of total revenue for Q1 2025[202](index=202&type=chunk)[203](index=203&type=chunk) - A liability of **$1,067,461** for estimated sales and use tax exposure was recorded as of March 31, 2025, with an expense of **$67,913** recognized in Q1 2025[205](index=205&type=chunk) [Note 11 Income Taxes](index=48&type=section&id=Note%2011%20Income%20Taxes) This note presents the company's income (loss) before taxes and explains the effective tax rate for the reporting periods Income (Loss) Before Income Taxes | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 (Restated) | | :------------ | :---------------------------------------- | :--------------------------------------------------- | | United States | $(3,945,935) | $94,750 | | Total | $(3,945,935) | $94,750 | - The Company recorded an income tax expense of **$13,505** for Q1 2025, compared to **$0** in Q1 2024. The effective tax rate for Q1 2025 was **(0.35%)**, varying from the statutory federal rate of **21.0%** due to state income taxes, adjustments for expenses, changes in fair value of financial instruments, stock compensation, and valuation allowance changes[206](index=206&type=chunk) [Note 12 Equity](index=49&type=section&id=Note%2012%20Equity) This note details the company's Series A Preferred Stock, common stock, equity incentive plan, and stock-based compensation - The Company has **6,158** shares of Series A Preferred Stock outstanding, which are convertible into common stock, have cumulative participating dividends, and liquidation preferences. They are not subject to liability or derivative treatment[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[215](index=215&type=chunk) - As of March 31, 2025, there were **16,422,190** shares of common stock outstanding, with **125,000** shares issued during Q1 2025. Common stockholders have one vote per share, dividend rights (subject to preferred stock), and liquidation rights after debt and preferred stock payments[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The 2024 Equity Incentive Plan reserved **2,544,021** shares for issuance. Stock-based compensation expense of **$400,297** was recognized for Q1 2025, with approximately **$373,977** in unrecognized compensation cost related to unvested options[221](index=221&type=chunk)[223](index=223&type=chunk) - A common stock issuance obligation to employees, contingent on the Business Combination, was valued at **$61,430** as of March 31, 2025, and is classified as a liability, with a net stock-based compensation expense reversal of **$8,191** in Q1 2025[224](index=224&type=chunk) [NOTE 13 Warrants](index=50&type=section&id=NOTE%2013%20Warrants) This note provides information on the company's outstanding warrants, including their types, exercise prices, and remaining lives - The Company has **12,997,740** warrants outstanding as of March 31, 2025, including Public, Private, Bridge, Extension, and September 2024 Warrants. All are classified as equity instruments[226](index=226&type=chunk) Warrants Outstanding and Weighted Average Data (March 31, 2025) | Warrant Type | Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | | :------------------- | :---------- | :------------------------------ | :-------------------------------------- | | Public Warrants | 11,500,000 | $11.50 | 4.23 | | Private Warrants | 557,000 | $11.50 | 4.23 | | Bridge Warrants | 173,913 | $11.50 | 2.51 | | Extension Warrants | 26,086 | $11.50 | 3.10 | | September 2024 Warrants | 740,741 | $2.25 | 4.50 | | **Total** | **12,997,740** | **$9.65** | **3.71** | - Public, Private, Bridge, and Extension Warrants generally have an exercise price of **$11.50** and expire **five years** from issuance. The September 2024 Warrants have an exercise price of **$2.25** and expire on September 30, 2029, subject to antidilution adjustments[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) [Note 14 Reportable Segments](index=52&type=section&id=Note%2014%20Reportable%20Segments) This note presents financial data for the company's two reportable segments: Healthcare Technology and Telehealth Services - Subsequent to the June 2024 Business Combination, the Company has two reportable segments: Healthcare Technology (VSee Lab) and Telehealth Services (iDoc). The Co-CEOs act as the chief operating decision makers (CODM)[232](index=232&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - The Technology segment generated **$2,123,871** in total revenues for Q1 2025, with a gross margin of **$1,049,747**. The Telehealth segment generated **$1,197,614** in total revenues, with a gross margin of **$810,224**[239](index=239&type=chunk) Segment Revenues and Gross Margin (Q1 2025) | For three months ended March 31, 2025 | Technology | Telehealth | Total | | :------------------------------------ | :--------- | :--------- | :---- | | Total revenues | $2,123,871 | $1,197,614 | $3,321,485 | | Cost of revenues | $1,074,124 | $387,390 | $1,461,514 | | Segment gross margin | $1,049,747 | $810,224 | $1,859,971 | Segment Assets (March 31, 2025 vs. December 31, 2024) | Total Assets | 2025 | 2024 | | :------------- | :----------- | :----------- | | Technology | $1,541,470 | $1,503,995 | | Telehealth | $17,712,598 | $18,271,724 | | Non-operating corporate | $141,618 | $216,769 | | **Total** | **$19,395,686** | **$19,992,488** | [Note 15 Fair Value Measurements](index=56&type=section&id=Note%2015%20Fair%20Value%20Measurements) This note details the fair value measurements of financial liabilities, including valuation methodologies and key unobservable inputs Fair Value of Financial Liabilities (March 31, 2025) | Liabilities | Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :----------- | :------ | :------ | :---------- | | Exchange Note | $2,462,897 | $— | $— | $2,462,897 | | Equity line of credit | $44,953 | $— | $— | $44,953 | | Quantum Convertible Note, related party | $3,691,806 | $— | $— | $3,691,806 | | September 2024 Convertible Note | $2,572,734 | $— | $— | $2,572,734 | | Common stock issuance obligation | $61,430 | $61,430 | $— | $— | | March 2025 Convertible Note | $238,020 | $— | $— | $238,020 | - Most financial liabilities measured at fair value, including the Exchange Note, ELOC, Quantum Convertible Note, September 2024 Convertible Note, and March 2025 Convertible Note, are classified as **Level 3** due to the use of unobservable inputs in valuation models (e.g., Monte Carlo model, probability-weighted scenario model)[245](index=245&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk) Key Inputs for Level 3 Fair Value Measurements (March 31, 2025) | Input | Quantum Convertible Note | Exchange Note | ELOC Purchase Agreement | September 2024 Convertible Note | March 2025 Convertible Note | | :-------------------- | :----------------------- | :------------ | :---------------------- | :------------------------------ | :-------------------------- | | Risk-free interest rate | 3.92% | 4.05% | 3.89% | 4.03% | 4.06% | | Expected term (years) | 1.25 | 0.73 | 2.25 | 1.00 | 0.72 | | Volatility | 118.85% | -% | 114.04% | 112.73% | 115.61% | | Stock price | $1.20 | $- | $1.20 | $1.20 | $1.20 | | Debt discount rate | 13.90% | -% | N/A | 13.90% | N/A | - The total fair value of Level 3 financial liabilities increased from **$6,990,621** at December 31, 2024, to **$9,071,840** at March 31, 2025, primarily due to initial recognition of the March 2025 Convertible Note and significant losses on changes in fair value for the Quantum Convertible Note and Exchange Note[257](index=257&type=chunk) [Note 16 Subsequent Events](index=61&type=section&id=Note%2016%20Subsequent%20Events) This note discloses significant events occurring after March 31, 2025, including new debt issuances and note amendments - Post-March 31, 2025, the Company issued the ELOC Commitment Fee Note (**$500,000** principal) and amended the Quantum Convertible Note to extend its maturity to June 30, 2026, with guaranteed interest[258](index=258&type=chunk)[259](index=259&type=chunk) - The Bridge Investor converted **$32,408** of Additional Bridge Notes into **14,199** common shares on August 2, 2025, and **$500,000** of the Exchange Note into **213,759** common shares on August 8, 2025[260](index=260&type=chunk)[261](index=261&type=chunk) - On August 28, 2025, the Quantum Convertible Note was amended to provide an additional **$380,000** in cash proceeds and an equivalent increase to the principal balance. The March 2025 Convertible Note will receive an equity kicker of **500,000** restricted common shares[262](index=262&type=chunk) - On September 5, 2025, the Company entered a Master Business Loan Agreement (MBLA) for up to **$2,500,001** with Change Capital Holdings I, LLC, receiving an initial advance of **$525,000**. The MBLA Note is secured by a junior lien on all company assets and personally guaranteed by Co-CEOs Imo Aisiku, Milton Chen, and CFO Jerry Leonard[263](index=263&type=chunk) - On October 9, 2025, the Company issued a secured, non-convertible October 2025 Note for **$133,333** (purchase price **$120,000**) to an institutional investor, bearing **5%** interest and secured by all company assets. This note was consented to and subordinated by other creditors[264](index=264&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of VSee Health's financial performance and condition for the three months ended March 31, 2025 [Overview](index=63&type=section&id=Overview) This section introduces VSee Health, Inc.'s business transformation, its telehealth platform, iDoc's services, and its status as an emerging growth company - VSee Health, Inc. completed a business combination on June 24, 2024, with VSee Lab and iDoc, transforming from a blank check company into a telehealth software platform and high acuity patient care solution provider[267](index=267&type=chunk) - VSee Lab offers a scalable, API-driven technology platform for virtual healthcare delivery, featuring end-to-end encrypted video, integration with medical devices and EMRs, and customizable 'no-code' or 'low-code' solutions for clinicians[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - iDoc, a wholly-owned subsidiary, provides elite physician services in intensive care units, specializing in neuro-critical care and general tele-critical care, serving hospitals, LTAC facilities, and correctional facilities[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The Company is an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of certain exemptions from reporting requirements and an extended transition period for new accounting standards[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) [Performance Factors](index=65&type=section&id=Performance%20Factors) This section discusses key drivers of future performance, including telehealth market growth, industry relationships, and product innovation - Future performance depends on the rapid transformation of the telehealth market, which is characterized by strong growth potential and major customers seeking new capabilities[277](index=277&type=chunk) - The Company aims to expand its market share by leveraging industry relationships with government, hospital systems, and insurance providers, as telehealth is still in its early stages of utilization[278](index=278&type=chunk) - Innovation and new product offerings are critical for long-term success, addressing current limitations in telehealth technology such as non-healthcare-specific tools, poor device integration, and complex backend software[280](index=280&type=chunk)[281](index=281&type=chunk) [Critical Accounting Estimates](index=67&type=section&id=Critical%20Accounting%20Estimates) This section highlights significant management judgments and estimates in financial reporting, particularly for revenue recognition and goodwill impairment - The preparation of financial statements requires significant management estimates and judgments, particularly for revenue recognition (ASC 606), goodwill impairment, impairment of long-lived assets, and income taxes (ASC 740-10)[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk)[322](index=322&type=chunk) - Revenue recognition involves a five-step process, including identifying contracts, performance obligations (e.g., subscription services, professional services, patient fees, telehealth fees, institutional fees), determining transaction price (fixed and variable), allocating price, and recognizing revenue as obligations are satisfied[285](index=285&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[299](index=299&type=chunk)[302](index=302&type=chunk)[309](index=309&type=chunk)[312](index=312&type=chunk) - Goodwill is tested for impairment annually or when triggering events occur. A **$56.7 million** non-cash impairment charge was recorded in 2024 for the Telehealth Services reporting unit, but no impairment indicators were found in Q1 2025[318](index=318&type=chunk) [Financial Statement Components](index=75&type=section&id=Financial%20Statement%20Components) This section provides a detailed analysis of revenue, cost of goods sold, operating expenses, other income/expense, and net loss for the reporting periods Results of Operations (Q1 2025 vs. Q1 2024) | Metric | March 31, 2025 | March 31, 2024 (Restated) | Change ($) | Change (%) | | :------------------------ | :------------- | :------------------------ | :----------- | :--------- | | Revenue | $3,321,485 | $1,620,995 | $1,700,490 | 105% | | Cost of revenues | $1,461,514 | $386,253 | $1,075,261 | 278% | | Gross margin | $1,859,971 | $1,234,742 | $625,229 | 51% | | Operating expenses | $3,691,289 | $1,130,682 | $2,560,607 | 226% | | Other income (expense) | $(2,114,617) | $(9,310) | $(2,105,307) | 22613% | | Net loss before taxes | $(3,945,935) | $94,750 | $(4,040,685) | 4265% | | Net loss | $(3,959,440) | $94,750 | $(4,054,190) | 4279% | - Revenue increased by **105%** to **$3.32 million** in Q1 2025, primarily driven by the iDoc acquisition (**$1.19 million**), a new HHS contract (**$716,090**), and higher physician services usage (**$43,374**). This was partially offset by a decline in recurring subscriptions and the Stand Together Aimee project[326](index=326&type=chunk) - Cost of goods sold surged by **278%** to **$1.46 million**, mainly due to the iDoc acquisition (**36%** increase in compensation), higher headcount for the HHS project (**21%** increase in compensation), and increased procurement of medical devices for HHS (**34%** increase)[328](index=328&type=chunk) - Operating expenses increased by **226%** to **$3.69 million**, driven by an **864%** rise in general and administrative expenses (iDoc acquisition, amortization, bad debt, insurance, professional fees from DHAC recapitalization) and an **86%** increase in compensation-related expenses (iDoc acquisition, stock-based compensation)[330](index=330&type=chunk) - Other income (expense) increased by **22613%** to **$(2.11) million**, primarily due to a **$1.26 million** loss on change in fair value of debt and derivative financial instruments and a **$697,221** increase in interest expense from new loan agreements[331](index=331&type=chunk) - The net loss for Q1 2025 was **$(3.96) million**, a **4279%** increase from Q1 2024, mainly due to the iDoc acquisition and DHAC recapitalization, partially offset by a **$1.93 million** gain on change in fair value of debt and derivative financial instruments[332](index=332&type=chunk) [Cash Flows](index=79&type=section&id=Cash%20Flows) This section analyzes the company's cash flows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Cash Flow Summary (Q1 2025 vs. Q1 2024) | Cash Flow Activity | March 31, 2025 | March 31, 2024 (Restated) | | :-------------------------------- | :------------- | :------------------------ | | Net cash used in operating activities | $(440,493) | $579,286 | | Net cash used in investing activities | $(11,873) | $(8,740) | | Net cash provided by financing activities | $536,373 | $0 | | Change in cash | $84,007 | $570,546 | - Cash used in operating activities was **$(440,493)** in Q1 2025, a significant decrease from **$579,286** provided in Q1 2024, driven by a net loss of **$(3,959,440)** partially offset by non-cash adjustments[335](index=335&type=chunk)[336](index=336&type=chunk) - Cash provided by financing activities was **$536,373** in Q1 2025, primarily from **$600,000** in proceeds from new notes issued, partially offset by payments to shareholders, factoring payables, and finance lease liabilities[338](index=338&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, VSee Health, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[339](index=339&type=chunk) [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses - Disclosure controls and procedures were deemed **ineffective** as of March 31, 2025[340](index=340&type=chunk) - Material weaknesses identified include insufficient accounting personnel for segregation of duties, ineffective IT General Controls (access controls), lack of formalized control environment, and inadequate accounting for significant or non-recurring transactions[341](index=341&type=chunk) - These material weaknesses contributed to the inability to timely file the Quarterly Report on Form 10-Q and are not expected to be remediated until additional funding supports the accounting department[341](index=341&type=chunk)[342](index=342&type=chunk) - Subsequent to quarter-end, the Company has enhanced processes for applying accounting requirements, including improved access to accounting literature and increased communication among personnel and third-party professionals[346](index=346&type=chunk) [PART II — OTHER INFORMATION](index=82&type=section&id=Part%20II%20Other%20Information) This section covers VSee Health, Inc.'s legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) The Company is subject to various claims and lawsuits in the ordinary course of business, with management believing no material adverse effect - The Company is involved in legal proceedings, claims, and government investigations in the ordinary course of business[190](index=190&type=chunk)[348](index=348&type=chunk) - Management believes the resolution of the sole pending matter will not have a material adverse effect on the Company's business, results of operations, cash flows, or financial condition[191](index=191&type=chunk)[348](index=348&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) The Company refers readers to the risk factors discussed in its Annual Report on Form 10-K, as there have been no material changes - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have occurred[349](index=349&type=chunk) - Readers should consider the risk factors from the Annual Report, as well as potential additional risks not currently known or deemed immaterial, which could adversely affect the business[349](index=349&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities to report for the fiscal quarter ended March 31, 2025, that have not been previously disclosed - No unregistered securities were issued during the fiscal quarter ended March 31, 2025, that have not been previously reported[350](index=350&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[351](index=351&type=chunk) [Item 4. Mine Safety Disclosures](index=82&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[352](index=352&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[353](index=353&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The report includes exhibits such as the Second Amended and Restated Certificate of Incorporation, Certificate of Designation of Series A Convertible Preferred Stock, Amended and Restated Bylaws, and various amendments to equity purchase and securities purchase agreements[355](index=355&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a) and 18 U.S.C. § 1350) are filed herewith[355](index=355&type=chunk) - XBRL (eXtensible Business Reporting Language) taxonomy extension documents are also included[355](index=355&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) For the fiscal year ended December 31, 2024 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 (I.R.S. Employer Identification Number) 980 N Federal Hwy Suite 304 Bo ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) VSee Health reported strong Q3 and 9M 2024 revenue growth from acquisitions and expanded services, with management highlighting post-merger integration [Business & Financial Highlights](index=1&type=section&id=Business%20%26%20Financial%20Highlights) VSee Health reported significant revenue growth in Q3 and the first nine months of 2024, driven by strategic acquisitions and expanded service offerings. The company also announced several key partnerships and new product launches aimed at enhancing patient care and expanding market reach Business & Financial Highlights | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Change (%) | 9M 2024 (USD) | 9M 2023 (USD) | Change (%) | | :---------------------- | :------------ | :------------ | :--------- | :------------ | :------------ | :--------- | | Revenue | $3.4 million | $1.5 million | 131% | $6.6 million | $4.3 million | 51% | - Contracted with Seven Corners Correctional Health to provide specialty care to inmates in 24 federal prisons[4](index=4&type=chunk) - Expanded telehealth and billing services to major healthcare clients, including nonprofit, hospital, and Fortune 20 corporate clients, through a partnership with SkywardRx[4](index=4&type=chunk) - Partnered with Ava Robotics to develop a VSee Health-powered robot for remote personalized care in hospital ICUs[4](index=4&type=chunk) - Launched Aimee, a virtual healthcare, labs, and prescription drug service providing low-cost access to quality healthcare for insured and uninsured patients[4](index=4&type=chunk) - Introduced a sea ambulance telehealth initiative using Starlink satellite technology for US veterans and remote residents[4](index=4&type=chunk) - Launched a GLP-1 telehealth program to address obesity and chronic diseases, integrating medication, personalized care, and behavioral interventions[4](index=4&type=chunk) - Partnered with BabyLiveAdvice to launch a virtual maternal care model addressing maternal care disparities in underserved communities[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted Q3 2024 as a transformative period, marking the first full quarter post-merger of VSee Lab and iDoc Virtual Telehealth Solutions. The integration has strengthened the company's position in delivering scalable, tailored telehealth solutions, addressing critical healthcare challenges, and expanding access in underserved communities while optimizing workflows for enterprise clients - Q3 2024 marks a transformative moment, completing the first full quarter post-merger of VSee Lab and iDoc Virtual Telehealth Solutions[5](index=5&type=chunk) - The combined company is uniquely positioned to address critical challenges in healthcare, including expanding access in underserved communities and optimizing workflows for enterprise-level clients[5](index=5&type=chunk) - The company's ability to combine fast customization, enterprise scalability, and robust security differentiates it in the telehealth market[5](index=5&type=chunk) - Strategic initiatives and partnerships launched this quarter exemplify commitment to delivering scalable solutions that improve lives and create long-term stakeholder value[5](index=5&type=chunk) [Financial Results Overview](index=1&type=section&id=Financial%20Results%20Overview) VSee Health reported strong Q3 and 9M 2024 revenue growth from the iDoc acquisition, offset by significant net losses from a goodwill impairment [Third Quarter 2024 Financial Results](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Results) VSee Health reported a significant increase in Q3 2024 revenue, primarily driven by the iDoc acquisition and growth in technical and professional services. However, the quarter saw a substantial net loss due to a one-time goodwill impairment charge Third Quarter 2024 Key Financials | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Change (YoY) | | :----------------- | :------------ | :------------ | :----------- | | Revenue | $3.4 million | $1.5 million | 131% | | Operating Expenses | $59.5 million | $1.2 million | 4670% | | Net Loss | $51.8 million | $0.1 million | 51700% | - **Revenue increase** was primarily driven by **$1.1 million from the iDoc acquisition**, a **267% increase in technical and engineering fees**, and a **40% increase in professional and other fees**; subscription revenue also increased by **9%**[7](index=7&type=chunk) - **Operating expenses increased by $58.2 million**, mainly due to a **one-time goodwill impairment charge of $55.0 million**, higher general and administrative expenses (including amortization and iDoc acquisition-related costs), and transaction expenses[8](index=8&type=chunk) - **Net loss** was primarily driven by the **$55.0 million goodwill impairment charge** and a **$0.7 million loss on extinguishment**, partially offset by a **$5.7 million gain on the change in fair value of debt and derivative financial instruments**[9](index=9&type=chunk) [Nine Month 2024 Financial Results](index=2&type=section&id=Nine%20Month%202024%20Financial%20Results) For the nine months ended September 30, 2024, VSee Health experienced substantial revenue growth, largely due to the iDoc acquisition and increased service fees. Similar to the quarterly results, the period was marked by a significant net loss, primarily attributable to a one-time goodwill impairment charge Nine Month 2024 Key Financials | Metric | 9M 2024 (USD) | 9M 2023 (USD) | Change (YoY) | | :----------------- | :------------ | :------------ | :----------- | | Revenue | $6.6 million | $4.3 million | 51% | | Operating Expenses | $63.0 million | $4.3 million | 1365% | | Net Loss | $52.1 million | $1.0 million | 5110% | - **Revenue increase** was primarily driven by the **iDoc acquisition**, a **161% increase in technical and engineering fees**, and a **50% increase in professional and other fees**; these increases were partially offset by a **2% decline in subscription revenue** due to enterprise customer churn[10](index=10&type=chunk) - **Operating expenses increased by $58.6 million to $63.0 million**, mainly due to a **one-time goodwill impairment charge of $55.0 million**, higher general and administrative expenses (including amortization and iDoc acquisition-related costs), and transaction expenses[11](index=11&type=chunk) - **Net loss** was primarily driven by the **$55.0 million goodwill impairment charge**, a **$1.6 million initial fair value loss on the Quantum Note**, and a **$0.7 million loss on extinguishment**, partially offset by a **$6.3 million gain on the change in fair value of debt and derivative financial instruments**[12](index=12&type=chunk) [Cash Position](index=2&type=section&id=Cash%20Position) As of September 30, 2024, VSee Health reported a cash balance of $2.3 million Cash Position | Metric | As of Sep 30, 2024 (USD) | | :----- | :----------------------- | | Cash | $2.3 million | [Pro Forma Financial Information](index=2&type=section&id=Pro%20Forma%20Financial%20Information) Pro forma financials, assuming early 2023 iDoc acquisition, show increased Q3 2024 revenue and reduced net loss per share for both periods [Pro Forma Summary](index=3&type=section&id=Pro%20Forma%20Summary) Pro forma financial results, assuming the iDoc acquisition was completed at the beginning of 2023, show a slight increase in Q3 2024 revenue and a reduction in net loss per share for both the third quarter and nine-month periods compared to the prior year Pro Forma Financial Information | Metric | Q3 2024 (USD) | Q3 2023 (USD) | 9M 2024 (USD) | 9M 2023 (USD) | | :---------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenues | $3.4 million | $3.1 million | $9.2 million | $9.4 million | | Net Loss | $(0.4) million | $(1.3) million | $(2.4) million | $(3.4) million | | Weighted Average Shares | 15.1 million | 14.8 million | 14.8 million | 14.6 million | | Net Loss Per Share | $(0.02) | $(0.09) | $(0.16) | $(0.24) | - **Proforma total revenues for Q3 2024 were $3.4 million**, up from **$3.1 million in Q3 2023**[15](index=15&type=chunk) - **Proforma total revenues for the nine months ended September 30, 2024, were $9.2 million**, slightly down from **$9.4 million for the same period in 2023**[15](index=15&type=chunk) - **Proforma net loss for Q3 2024 was $0.4 million (or $(0.02) per share)**, an improvement from a **net loss of $1.3 million (or $(0.09) per share) in Q3 2023**[16](index=16&type=chunk) - **Proforma net loss for the nine months ended September 30, 2024, was $2.4 million (or $(0.16) per share)**, an improvement from a **net loss of $3.4 million (or $(0.24) per share) for the same period in 2023**[16](index=16&type=chunk) [Company Overview](index=3&type=section&id=Company%20Overview) VSee Health provides an AI telehealth platform for rapid enterprise deployment, offering customizable, secure, and HIPAA-compliant solutions globally [About VSee Health](index=3&type=section&id=About%20VSee%20Health) VSee Health provides an AI telehealth platform designed for rapid enterprise deployment, offering customizable, HIPAA-compliant, and secure telehealth solutions. The company has a global presence, serving diverse clients including government agencies and major corporations, and is committed to improving healthcare access and reducing physician burnout - **VSee Health's AI telehealth platform** enables rapid ideation-to-market deployment for enterprises[18](index=18&type=chunk) - The platform handles over **1.5 million HIPAA-compliant video encounters monthly** and offers customizable, secure, and scalable telehealth building blocks[18](index=18&type=chunk) - Services have been deployed in **over 50 countries**, with clients including NASA Space Station, US Department of Health and Human Services, McKesson, Magellan, DaVita, GE, and the entire country of Qatar[18](index=18&type=chunk) - The company provides tailored solutions for critical shortage areas like critical care and teleradiology, aiming to empower high-quality healthcare access and reduce physician burnout and workforce shortages[19](index=19&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents VSee Health's condensed consolidated balance sheets, statements of operations, and cash flows, detailing financial position, performance, and liquidity [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of VSee Health's financial position as of September 30, 2024, compared to December 31, 2023, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Selected Items) | Metric | Sep 30, 2024 (Unaudited) (USD) | Dec 31, 2023 (USD) | | :-------------------------- | :----------------------- | :----------- | | Total Current Assets | $7,107,513 | $827,134 | | Total Assets | $25,029,730 | $830,791 | | Total Current Liabilities | $19,206,202 | $4,243,438 | | Total Liabilities | $20,270,718 | $4,243,438 | | Total Stockholders' Equity | $4,759,012 | $(3,412,647) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations present VSee Health's revenues, costs, and expenses, leading to net loss for the three and nine months ended September 30, 2024, and 2023 Condensed Consolidated Statements of Operations (Selected Items) | Metric | Q3 2024 (USD) | Q3 2023 (USD) | 9M 2024 (USD) | 9M 2023 (USD) | | :-------------------------------------- | :------------- | :------------ | :------------- | :------------ | | Total Revenues | $3,354,437 | $1,451,471 | $6,561,998 | $4,337,962 | | Gross Margin | $2,413,049 | $973,072 | $4,747,717 | $2,809,954 | | Total Operating Expenses | $59,479,147 | $1,247,428 | $62,958,678 | $4,332,582 | | Net Operating Loss | $(57,066,098) | $(274,356) | $(58,210,961) | $(1,522,628) | | Net Loss | $(51,751,525) | $(98,581) | $(52,084,317) | $(983,181) | | Basic and Diluted Loss Per Common Share | $(3.43) | $(0.01) | $(6.24) | $(0.10) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows detail the cash generated from or used in operating, investing, and financing activities for the nine months ended September 30, 2024, and 2023, showing a significant increase in cash and cash equivalents by the end of the period Condensed Consolidated Statements of Cash Flows (Selected Items) | Metric | 9M 2024 (USD) | 9M 2023 (USD) | | :-------------------------------------- | :------------- | :------------ | | Net Cash Used in Operating Activities | $(2,815,248) | $(523,436) | | Net Cash Used in Investing Activities | $(21,384) | $(2,690) | | Net Cash Provided by Financing Activities | $5,045,235 | $455,000 | | Net Change in Cash and Cash Equivalents | $2,208,603 | $(71,126) | | Cash and Cash Equivalents, End of Period | $2,327,337 | $159,538 | - Non-cash investing and financing activities included **net liabilities acquired in reverse merger of $(18,704,806)** and **fair value of shares issued in iDoc acquisition of $68,907,052**[25](index=25&type=chunk)[26](index=26&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section includes disclosures on forward-looking statements, cautioning readers about inherent risks, and provides investor relations contact details [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding VSee Health's future performance and ability to improve healthcare access and provider efficiencies. These statements are subject to known and unknown risks and uncertainties, and readers are cautioned not to place undue reliance on them. The company does not undertake to update any forward-looking statements - Statements not of historical fact are forward-looking and involve known and unknown risks and uncertainties[20](index=20&type=chunk) - Readers should not place undue reliance on forward-looking statements, which speak only as of their date[20](index=20&type=chunk) - VSee Health undertakes no obligation to publicly update or revise any forward-looking statements[20](index=20&type=chunk) [Contacts](index=8&type=section&id=Contacts) Contact information for investor relations is provided - Investor Relations Contact: Dave Gentry, RedChip Companies, Inc., 1-407-644-4256, VSEE@redchip.com[26](index=26&type=chunk)

Table of Contents 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 September 30, 2024 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 ...

Core Insights - Counterpart Health, Inc. has appointed Dr. David Tsay as Chief Medical Officer to enhance its clinical strategy and product development for its AI-powered physician enablement platform, Counterpart Assistant [1][4] - Dr. Tsay brings over two decades of experience in health technology and clinical innovation, having previously held leadership roles at Cue Health and Apple [2] - Counterpart Health aims to improve value-based care, particularly in chronic disease management, leveraging advanced AI technology to enhance patient outcomes and reduce healthcare costs [5] Company Overview - Counterpart Health is a subsidiary of Clover Health Investments, Corp., focusing on AI-driven solutions for physician enablement [1][5] - The flagship product, Counterpart Assistant, was developed to improve clinical outcomes and plan performance for Medicare members, and is now being extended to a broader audience [5] - Clover Health has demonstrated the technology's effectiveness in improving medication adherence and early management of chronic conditions like Diabetes and Chronic Kidney Disease [5] Leadership Insights - Dr. Tsay's expertise in clinical innovation and health technology is expected to significantly contribute to Counterpart's growth and expansion into value-based healthcare networks [4] - His previous experience includes leading digital transformation initiatives at New York-Presbyterian, focusing on AI and automation in healthcare [2][4] - Dr. Tsay expressed enthusiasm for Counterpart's mission to enhance the quality of care through innovative technology [4]

[Business Update & Management Commentary](index=1&type=section&id=1.%20Business%20Update%20%26%20Management%20Commentary) VSee Health completed its de-SPAC transaction, becoming publicly traded, and expanded its market reach and service offerings through strategic partnerships and new product launches, with management emphasizing accelerated growth [Business Highlights](index=1&type=section&id=1.1%20Business%20Highlights) VSee Health successfully completed its de-SPAC transaction, becoming publicly traded, and expanded its service capabilities and market reach through strategic partnerships, new product launches, and significant client contracts in the second quarter of 2024 - Successfully completed de-SPAC transaction, merging VSee Lab and iDoc Telehealth into Digital Health Acquisition Corp., now publicly traded as **VSee Health**, enhancing acute care and tele-intensivist services[2](index=2&type=chunk) - Partnered with Ava Robotics for the development of a **VSee Health-powered Ava robot** to extend provider reach and offer personalized remote care in hospital intensive care units[2](index=2&type=chunk) - Launched **Aimee**, an innovative virtual healthcare, labs, and prescription drug service providing low-cost access to quality healthcare for patients regardless of insurance status[2](index=2&type=chunk) - Contracted with **Seven Corners Correctional Health**, operator of 24 federal prisons, to offer accessible, quality specialty care to the inmate population[2](index=2&type=chunk) - Expanded telehealth and billing services to major healthcare clients through a partnership with **SkywardRx**, including nonprofit, hospital, and Fortune 20 corporate clients[2](index=2&type=chunk) - Secured a virtual care purchasing agreement with **Premier, Inc.**, expanding market reach and penetration in key healthcare markets[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=1.2%20Management%20Commentary) Management emphasized the company's commitment to innovative virtual care B2B solutions, highlighting the significance of becoming publicly traded and the merger for accelerating growth, technology investment, and customer acquisition - Co-CEO Imo Aisiku highlighted the successful transition from a SPAC to an operating company, emphasizing the public listing as a significant milestone for market access and leveraging strengths for expanded partnerships and service offerings, aiming to accelerate **growth and technology investment**[3](index=3&type=chunk) - Co-CEO Milton Chen noted VSee Health's growing recognition as a trusted brand due to robust telemedicine solutions, citing success in the Federal Bureau of Prisons and the launch of Aimee to develop community healthcare hubs, anticipating additional **revenue opportunities in 2025 and beyond**[3](index=3&type=chunk) [GAAP Financial Results](index=1&type=section&id=2.%20GAAP%20Financial%20Results) VSee Health saw revenue growth in Q2 and H1 2024, with increased operating expenses largely offset by tax benefits, resulting in reduced net losses [Second Quarter 2024 Financial Results](index=1&type=section&id=2.1%20Second%20Quarter%202024%20Financial%20Results) VSee Health reported a 33% increase in revenue for Q2 2024, driven by professional and technical fees, while operating expenses rose significantly due to business combination-related transaction costs, with net loss decreasing by 16% primarily due to a tax benefit [Revenue (Q2 2024)](index=1&type=section&id=2.1.1%20Revenue%20(Q2%202024)) Q2 2024 Revenue Performance | Metric | Q2 2024 (USD) | Q2 2023 (USD) | Change (%) | | :--------------------------- | :------------ | :------------ | :--------- | | Total Revenue | $1,700,000 | $1,300,000 | 33% | | Professional & Other Fees | | | 93% | | Technical & Engineering Fees | | | 290% | | Subscription Revenue | | | Slight Inc.| - Revenue increased by **33% year-over-year**, primarily driven by a **93% increase in professional and other fees** due to higher hardware purchases from new customers, and a **290% increase in technical and engineering fees** from a higher volume of engineering, customizations, and integration services[4](index=4&type=chunk) [Operating Expenses (Q2 2024)](index=2&type=section&id=2.1.2%20Operating%20Expenses%20(Q2%202024)) - Operating expenses for Q2 2024 increased by **69%** compared to the prior-year quarter, mainly due to higher transaction expenses (legal, professional, advisory, consulting fees) related to the business combination[5](index=5&type=chunk) - The increase was also driven by higher general and administrative expenses due to increased reseller fees, partially offset by lower software costs from reduced headcounts and lower compensation and related benefits[5](index=5&type=chunk) [Net Loss (Q2 2024)](index=2&type=section&id=2.1.3%20Net%20Loss%20(Q2%202024)) Q2 2024 Net Loss Performance | Metric | Q2 2024 (USD) | Q2 2023 (USD) | Change (%) | | :--------------- | :------------ | :------------ | :--------- | | Net Loss | $(0.3) million | $(0.4) million | (16%) | | Net Loss per Share | $(0.06) | $(0.09) | (33%) | - The **16% decrease in net loss** was primarily driven by a tax benefit related to valuation allowance changes from the business combination and higher revenue, partially offset by increased operating expenses[6](index=6&type=chunk) [Six Month 2024 Financial Results](index=2&type=section&id=2.2%20Six%20Month%202024%20Financial%20Results) For the first half of 2024, VSee Health's revenue grew by 11%, primarily from professional and technical fees and the iDoc acquisition, despite a decline in subscription revenue, with net loss significantly decreasing by 62% due to a substantial income tax benefit [Revenue (H1 2024)](index=2&type=section&id=2.2.1%20Revenue%20(H1%202024)) H1 2024 Revenue Performance | Metric | H1 2024 (USD) | H1 2023 (USD) | Change (%) | | :--------------------------- | :------------ | :------------ | :--------- | | Total Revenue | $3,200,000 | $2,900,000 | 11% | | Professional & Other Fees | | | 57% | | Technical & Engineering Fees | | | 57% | | Subscription Revenue | | | (6%) | - Revenue for the first half of 2024 increased by **11% year-over-year**, driven by **57% increases in both professional and other fees** (due to higher hardware purchases) and **technical and engineering fees** (due to a higher volume of services), as well as higher fees from the iDoc acquisition[7](index=7&type=chunk) - Subscription revenue declined by **6%** due to churned enterprise customers in 2024 with little to no clinic usage, as some clients gradually shifted back to face-to-face consultations[7](index=7&type=chunk) [Operating Expenses (H1 2024)](index=2&type=section&id=2.2.2%20Operating%20Expenses%20(H1%202024)) - Operating expenses for the first half of 2024 increased by **13% year-over-year**, primarily due to higher transaction expenses related to the business combination (legal, professional, advisory, consulting fees)[8](index=8&type=chunk) - General and administrative expenses also increased due to the iDoc acquisition and higher reseller fees, partially offset by lower software and business service costs from reduced headcounts and lower compensation and related benefits[8](index=8&type=chunk) [Net Loss (H1 2024)](index=2&type=section&id=2.2.3%20Net%20Loss%20(H1%202024)) H1 2024 Net Loss Performance | Metric | H1 2024 (USD) | H1 2023 (USD) | Change (%) | | :--------------- | :------------ | :------------ | :--------- | | Net Loss | $(0.3) million | $(0.9) million | (62%) | | Net Loss per Share | $(0.07) | $(0.19) | (63%) | - The **62% decrease in net loss** was driven by an income tax benefit primarily related to valuation allowance changes from the business combination and higher revenue, partially offset by increased operating expenses[9](index=9&type=chunk) [Cash and Cash Equivalents](index=2&type=section&id=2.2.4%20Cash%20and%20Cash%20Equivalents) Cash and Cash Equivalents as of June 30, 2024 | Metric | Amount (USD) | | :--------------------- | :----------- | | Cash and Cash Equivalents | $1.1 million | [Pro Forma Financial Results](index=2&type=section&id=3.%20Pro%20Forma%20Financial%20Results) Pro forma results indicate slight revenue decreases for Q2 and H1 2024, with Q2 net loss increasing and H1 net loss remaining stable [Unaudited Pro Forma Financial Information](index=2&type=section&id=3.1%20Unaudited%20Pro%20Forma%20Financial%20Information) The unaudited pro forma financial information, combining VSee Health and iDoc operations as if the acquisition occurred at the beginning of 2023, shows a slight decrease in total revenues for both Q2 and H1 2024 compared to the prior year, and an increased net loss for Q2 2024, while H1 2024 net loss remained relatively stable Pro Forma Financial Summary | Metric | Q2 2024 (USD) | Q2 2023 (USD) | H1 2024 (USD) | H1 2023 (USD) | | :-------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenue | $2,701,485 | $2,769,241 | $5,837,245 | $6,314,200 | | Net Loss | $(1,791,264) | $(1,030,910) | $(2,002,771) | $(2,106,741) | | Net Loss per Share | $(0.12) | $(0.07) | $(0.14) | $(0.14) | - Pro forma total revenues decreased slightly to **$2.7 million in Q2 2024** from **$2.8 million in Q2 2023**, and to **$5.8 million in H1 2024** from **$6.3 million in H1 2023**[10](index=10&type=chunk) - Pro forma net loss for Q2 2024 increased to **$1.8 million ($0.12 per share)** from **$1.0 million ($0.07 per share) in Q2 2023**, while H1 2024 net loss was **$2.0 million ($0.14 per share)** compared to **$2.1 million ($0.14 per share) in H1 2023**[10](index=10&type=chunk) [Company Information](index=3&type=section&id=4.%20Company%20Information) VSee Health provides a SaaS telehealth platform for specialized care, with a disclaimer on forward-looking statements due to inherent risks and uncertainties [About VSee Health](index=3&type=section&id=4.1%20About%20VSee%20Health) VSee Health operates as a SaaS platform enabling clinicians and enterprises to rapidly create and integrate telehealth workflows, focusing on patient disease state telemedicine and turnkey billing services, incorporating iDoc Telehealth Solutions for intensive, critical, and neuro care with 24/7 specialist support - VSee Health is a **software-as-a-service (SaaS) platform** designed to allow clinicians and enterprises to customize telehealth workflows without programming, enabling rapid mobile app creation or system integration into existing hospital operations[12](index=12&type=chunk) - The platform focuses on patient disease state telemedicine and turnkey billing services, integrating **iDoc Telehealth Solutions** for intensive care, critical care, and neuro solutions, providing **24/7/365 care coordination** by neurointensivists, neurologists, and tele-radiologists[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=4.2%20Forward-Looking%20Statements) This section serves as a disclaimer regarding forward-looking statements, indicating that future performance may differ materially from historical results due to known and unknown risks and uncertainties, advising readers not to place undue reliance on these statements - The news release contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual performance to differ materially from expectations[14](index=14&type=chunk) - Readers should not place undue reliance on forward-looking statements, and VSee Health undertakes no obligation to publicly update or revise them[14](index=14&type=chunk) - More information on risk factors is available in VSee Health's periodic and current SEC filings[14](index=14&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=5.%20Condensed%20Consolidated%20Financial%20Statements) Condensed consolidated financial statements reflect significant balance sheet changes post-business combination, showing increased assets and equity, alongside revenue growth and reduced net losses in operations due to tax benefits [Condensed Consolidated Balance Sheets](index=3&type=section&id=5.1%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets as of June 30, 2024, and December 31, 2023, reflect significant changes following the business combination, including a substantial increase in total assets, primarily driven by goodwill and intangible assets, and a corresponding rise in total liabilities and stockholders' equity Key Balance Sheet Figures | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :-------------------------- | :------------------------ | :---------------- | | Cash | $1,105,971 | $118,734 | | Accounts Receivable, net | $2,513,855 | $628,480 | | Total Current Assets | $5,166,549 | $827,134 | | Intangible Assets | $12,100,000 | — | | Goodwill | $59,900,694 | — | | Total Assets | $78,987,750 | $830,791 | | Total Current Liabilities | $22,879,867 | $4,243,438 | | Total Liabilities | $24,177,194 | $4,243,438 | | Total Stockholders' Equity | $54,810,556 | $(3,412,647) | - Total assets significantly increased from **$830,791** as of December 31, 2023, to **$78,987,750** as of June 30, 2024, largely due to the recognition of **$12.1 million in intangible assets** and **$59.9 million in goodwill** following the business combination[15](index=15&type=chunk) - Total liabilities rose from **$4,243,438** to **$24,177,194**, with current liabilities increasing from **$4,243,438** to **$22,879,867**, reflecting various new notes and payables[16](index=16&type=chunk) - Stockholders' equity shifted from a deficit of **$(3,412,647)** to a positive **$54,810,556**, driven by increased common stock and additional paid-in capital, despite an accumulated deficit[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=5.2%20Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations for the three and six months ended June 30, 2024, show revenue growth driven by professional and technical services, alongside increased operating expenses due to transaction costs, with net loss decreasing significantly for both periods, primarily due to a substantial income tax benefit Key Income Statement Figures (Q2 & H1 2024 vs 2023) | Metric | Q2 2024 (USD) | Q2 2023 (USD) | H1 2024 (USD) | H1 2023 (USD) | | :-------------------------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenue | $1,711,566 | $1,290,223 | $3,207,561 | $2,886,491 | | Gross Margin | $1,224,926 | $815,936 | $2,334,668 | $1,836,882 | | Total Operating Expenses | $2,408,268 | $1,427,063 | $3,479,531 | $3,085,154 | | Net Operating Loss | $(1,183,342) | $(611,127) | $(1,144,863) | $(1,248,272) | | Benefit from Income Tax | $2,241,208 | $174,395 | $2,241,208 | $357,238 | | Net Loss | $(361,961) | $(428,581) | $(332,792) | $(884,600) | | Basic and Diluted Loss per Common Share | $(0.06) | $(0.09) | $(0.07) | $(0.19) | - Total revenue increased by **33% in Q2 2024** and **11% in H1 2024**, driven by growth in professional services and technical engineering fees, partially offset by a decline in subscription fees for H1[18](index=18&type=chunk) - Operating expenses significantly increased by **69% in Q2 2024** and **13% in H1 2024**, primarily due to transaction expenses related to the business combination[18](index=18&type=chunk) - Net loss decreased by **16% in Q2 2024** and **62% in H1 2024**, largely attributable to a substantial income tax benefit related to valuation allowance changes from the business combination[18](index=18&type=chunk)

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents VSee Health, Inc.'s unaudited condensed consolidated financial statements for periods ended June 30, 2024, and December 31, 2023, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes on organization, accounting policies, and the iDoc business combination [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a significant increase in total assets and liabilities from December 31, 2023, to June 30, 2024, primarily due to the iDoc acquisition and related financing activities, with stockholders' equity also seeing a substantial increase Total Assets, Liabilities, and Equity | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | |:---|:---|:---|\n| Total Assets | $78,987,750 | $830,791 |\n| Total Liabilities | $24,177,194 | $4,243,438 |\n| Total Stockholders' Equity (Deficit) | $54,810,556 | $(3,412,647) | - Cash increased significantly from **$118,734** at December 31, 2023, to **$1,105,971** at June 30, 2024[15](index=15&type=chunk) - Goodwill of **$59,900,694** and Intangible assets of **$12,100,000** were recorded as of June 30, 2024, which were not present at December 31, 2023, indicating a major business combination[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations show increased revenue for both the three and six months ended June 30, 2024, compared to the prior year, but also higher operating expenses and other expenses, leading to a net loss Key Operating and Loss Metrics | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---|\n| Total Revenue | $1,711,566 | $1,290,223 | $3,207,561 | $2,886,491 |\n| Gross Margin | $1,224,926 | $815,936 | $2,334,668 | $1,836,882 |\n| Total Operating Expenses | $2,408,268 | $1,427,063 | $3,479,531 | $3,085,154 |\n| Net Operating Loss | $(1,183,342) | $(611,127) | $(1,144,863) | $(1,248,272) |\n| Net Loss | $(361,961) | $(428,581) | $(332,792) | $(884,600) |\n| Basic and Diluted Loss Per Common Share | $(0.06) | $(0.09) | $(0.07) | $(0.19) | - Total revenue increased by **33%** for the three months ended June 30, 2024, and by **11%** for the six months ended June 30, 2024, compared to the respective prior periods[16](index=16&type=chunk) - Net loss decreased for both periods, from **$(428,581)** to **$(361,961)** for the three months and from **$(884,600)** to **$(332,792)** for the six months, primarily due to a significant benefit from income tax in 2024[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) The statements of stockholders' equity (deficit) reflect a substantial increase in total equity from a deficit of $(3,412,647) at December 31, 2023, to $54,810,556 at June 30, 2024, driven by the business combination and related share issuances Stockholders' Equity and Share Data | Metric | December 31, 2023 | June 30, 2024 | |:---|:---|:---|\n| Total Stockholders' Equity (Deficit) | $(3,412,647) | $54,810,556 |\n| Common Shares Outstanding | 4,639,643 | 14,806,820 |\n| Additional Paid-In Capital | $6,027,153 | $64,582,130 |\n| Accumulated Deficit | $(9,114,985) | $(9,773,056) | - The increase in equity is largely due to shares issued as consideration for the iDoc acquisition and conversion of debt, including **4,950,000 shares** to iDoc shareholders and **592,500 shares** for iDoc debt conversion[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows show a significant net increase in cash and cash equivalents for the six months ended June 30, 2024, primarily due to cash provided by financing activities, despite cash used in operating and investing activities Cash Flow Summary | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|\n| Net Cash Used in Operating Activities | $(2,594,214) | $(474,643) |\n| Net Cash Used in Investing Activities | $(16,390) | $(2,690) |\n| Net Cash Provided by Financing Activities | $3,597,841 | $320,000 |\n| Net Change in Cash and Cash Equivalents | $987,237 | $(157,333) |\n| Cash and Cash Equivalents, End of Period | $1,105,971 | $73,331 | - Financing activities provided **$3,597,841** in cash for the six months ended June 30, 2024, including proceeds from the Quantum Convertible Note (**$2,700,000**) and reverse recapitalization with DHAC (**$1,323,362**)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies, business combinations, financial instruments, and other significant events impacting VSee Health's financial position and performance, including the reverse recapitalization with DHAC, the acquisition of iDoc, and the accounting for various debt and equity instruments - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include VSee Health, Inc. and its 100% wholly-owned subsidiaries, VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc., along with Encompass Healthcare Billing, LLC and This American Doc, Inc. (TAD)[35](index=35&type=chunk)[36](index=36&type=chunk) - The Company is an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of certain exemptions from reporting requirements and extended transition periods for new accounting standards[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The Company has two consolidated operating segments: Healthcare Technology ('Technology') and Telehealth Services ('Telehealth'), with VSee Lab in Technology and iDoc in Telehealth[42](index=42&type=chunk) [Note 1 Organization and Description of Business](index=13&type=section&id=Note%201%20Organization%20and%20Description%20of%20Business) VSee Health, Inc. (formerly Digital Health Acquisition Corp. or DHAC) is a telehealth software platform solution that completed a business combination on June 24, 2024, involving DHAC, VSee Lab, Inc., and iDoc Virtual Telehealth Solutions, Inc., accounted for as a reverse recapitalization with VSee Lab as the accounting acquirer - VSee Health, Inc. operates a highly scalable, integrated, API-driven technology platform for virtual healthcare delivery, offering end-to-end encrypted video streaming and integration with medical device data and EMRs[22](index=22&type=chunk) - The Business Combination on June 24, 2024, resulted in DHAC changing its name to VSee Health, Inc., and was accounted for as a reverse recapitalization with VSee Lab as the accounting acquirer[23](index=23&type=chunk)[31](index=31&type=chunk) - Immediately following the Closing, approximately **14,692,820 shares** of Common Stock were outstanding, including shares issued to DHAC founders, DHAC stockholders, VSee Lab stockholders, iDoc stockholders, and certain lenders[29](index=29&type=chunk) [Note 2 Summary of Significant Accounting Policies](index=17&type=section&id=Note%202%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies, including the basis of presentation, consolidation, emerging growth company status, segment reporting, use of estimates, income taxes, revenue recognition, and fair value measurements, highlighting the company's adoption of U.S. GAAP and specific ASC topics [Basis of Presentation and Consolidation](index

Part I. Financial Information This section presents the company's unaudited interim financial statements and management's discussion and analysis [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents DHAC's unaudited condensed consolidated financial statements and comprehensive explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and stockholders' deficit Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2024 (Unaudited) | December 31, 2023 | | :-------------------------------- | :-------------------------- | :------------------ | | Total Assets | $1,387,214 | $1,370,500 | | Investments held in Trust Account | $1,386,490 | $1,368,637 | | Total Liabilities | $13,338,931 | $12,354,400 | | Stockholders' Deficit | $(13,233,674) | $(12,265,857) | - Total assets increased slightly, primarily due to growth in investments held in the Trust Account. Total liabilities saw a notable increase, driven by accounts payable, advances from related parties, and various notes (Exchange Note, Additional Bridge Notes). The stockholders' deficit worsened over the quarter due to ongoing losses[12](index=12&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | General and administrative costs | $674,262 | $707,592 | | Loss from operations | $(674,262) | $(707,592) | | Total other expense | $(293,555) | $(1,187,050) | | Net loss | $(967,817) | $(1,894,642) | | Basic and diluted net loss per share | $(0.27) | $(0.45) | - The net loss significantly decreased from **$(1,894,642)** in Q1 2023 to **$(967,817)** in Q1 2024, primarily due to a substantial reduction in 'Total other expense.' This reduction was largely driven by the absence of a large negative change in the fair value of the PIPE Forward Contract Derivative, which was **$(1,163,950)** in Q1 2023 and $0 in Q1 2024[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Deficit) This section outlines changes in the company's equity, primarily reflecting net loss, over the reporting period Condensed Consolidated Statements of Changes in Stockholders' Deficit Highlights | Metric | December 31, 2023 (Audited) | March 31, 2024 (Unaudited) | | :-------------------------- | :-------------------------- | :------------------------- | | Total Stockholders' Deficit | $(12,265,857) | $(13,233,674) | | Net loss for the period | $(967,817) | N/A | - The total stockholders' deficit increased by **$967,817** from December 31, 2023, to March 31, 2024, directly reflecting the net loss incurred during the three-month period[16](index=16&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(335,318) | $(340,667) | | Net cash provided by financing activities | $334,179 | $250,000 | | Net Change in Cash | $(1,139) | $(90,667) | | Cash – End of period | $724 | $16,331 | - Net cash used in operating activities remained relatively stable year-over-year. Cash provided by financing activities increased in Q1 2024, primarily due to advances from related parties and proceeds from Additional Bridge Notes, partially offset by the repayment of the M2B Note. The company ended the period with a minimal cash balance of **$724**[20](index=20&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements [NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS](index=8&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) This note describes the company's formation, IPO, business combination focus, and Nasdaq listing status - Digital Health Acquisition Corp. (DHAC) is a blank check company incorporated in March 2021, formed to effect a business combination. Its Initial Public Offering (IPO) closed on November 8, 2021, raising **$115 million**, with **$116.725 million** placed in a Trust Account[22](index=22&type=chunk)[25](index=25&type=chunk)[28](index=28&type=chunk) - The company has extended its deadline to consummate a business combination multiple times, most recently to **August 8, 2024**. In connection with these extensions, significant shares were redeemed: **10,805,877 shares** in October 2022 and **579,157 shares** in November 2023[29](index=29&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk) - DHAC is pursuing a business combination with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc. The company's securities were transferred from Nasdaq Global to Nasdaq Capital Market on October 30, 2023, due to non-compliance with listing standards (MVLS, MVPHS, and total shareholders)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=16&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting principles, going concern assessment, critical estimates, and financial instrument classifications - The financial statements are prepared in accordance with U.S. GAAP for interim financial information. Management has identified substantial doubt about the company's ability to continue as a going concern due to its liquidity condition and mandatory liquidation date of November 8, 2024[51](index=51&type=chunk)[55](index=55&type=chunk) - DHAC is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[56](index=56&type=chunk)[57](index=57&type=chunk) - Key accounting estimates involve the fair valuation of complex financial instruments, including the PIPE Forward Contract, Extension Note Bifurcated Derivative, Bridge Note Bifurcated Derivative, Additional Bridge Note, and Exchange Note. Common stock subject to possible redemption is classified as temporary equity[60](index=60&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk) - The company's effective tax rate was **0.0%** for the three months ended March 31, 2024 and 2023, due to a full valuation allowance on deferred tax assets. A liability of **$72,396** was booked for the 1% excise tax under the Inflation Reduction Act of 2022 on shares redeemed[69](index=69&type=chunk)[92](index=92&type=chunk) - Warrants (Public, Private, Bridge, Extension) are classified as equity. The Exchange Note and Additional Bridge Note are accounted for as share-settled debt liabilities under ASC 480, re-measured at fair value each period. The PIPE financing agreement and early redemption provisions of Bridge and Extension Notes are treated as bifurcated derivatives[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [NOTE 3. INITIAL PUBLIC OFFERING](index=26&type=section&id=NOTE%203.%20INITIAL%20PUBLIC%20OFFERING) This note details the company's Initial Public Offering, including gross proceeds and unit composition - On November 8, 2021, DHAC consummated its IPO, selling 11,500,000 units at **$10.00 per unit**, generating gross proceeds of **$115,000,000**[94](index=94&type=chunk) - Each unit consisted of one common share and one warrant, with each warrant exercisable for one common share at **$11.50**, becoming exercisable 30 days after the business combination or 12 months from IPO, and expiring five years after the business combination[94](index=94&type=chunk) [NOTE 4. PRIVATE PLACEMENT](index=26&type=section&id=NOTE%204.%20PRIVATE%20PLACEMENT) This note describes the private placement of units to the Sponsor and related agreements - Simultaneously with the IPO, the Sponsor purchased 557,000 private placement units at **$10.00 per unit**, totaling **$5,570,000** in gross proceeds[95](index=95&type=chunk) - These private placement units are identical to the IPO units but are not redeemable. The proceeds were added to the Trust Account[95](index=95&type=chunk) - The Sponsor and related parties have agreed to waive their redemption rights and vote in favor of the initial Business Combination[96](index=96&type=chunk) [NOTE 5. RELATED PARTY TRANSACTIONS](index=26&type=section&id=NOTE%205.%20RELATED%20PARTY%20TRANSACTIONS) This note details financial transactions and agreements with the Sponsor and its affiliates - The Sponsor and certain directors initially purchased 4,312,500 founder shares, which were reduced to 2,875,000 after forfeitures[97](index=97&type=chunk) - DHAC owed the Sponsor and Sponsor affiliates **$592,800** as of March 31, 2024, an increase from **$117,871** at December 31, 2023, for advances[98](index=98&type=chunk) - Various promissory notes exist with related parties: a **$350,000** note to the Sponsor and a **$565,000** interest-free loan from SCS Capital Partners LLC (a Sponsor affiliate), both convertible into Series A Preferred Shares at closing. A **$200,000** loan from SCS Capital Partners LLC (**10% interest**) was used for a term extension fee[100](index=100&type=chunk)[101](index=101&type=chunk) - The M2B Note (**$165,000** principal, **10% interest**) from an affiliate of the Sponsor, which defaulted, was paid in full for **$190,750** on January 31, 2024[102](index=102&type=chunk)[103](index=103&type=chunk) - Other financing arrangements, including Bridge Financing, Loan Conversions, Quantum Financing, and Equity Financing, involve the Sponsor or its affiliates. DHAC also pays a monthly administrative fee of **$10,000** to an affiliate of the Sponsor[104](index=104&type=chunk)[111](index=111&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [NOTE 6. COMMITMENTS](index=34&type=section&id=NOTE%206.%20COMMITMENTS) This note outlines the company's contractual obligations, business combination agreement, and financing arrangements - The deferred underwriting commission of **$4,370,000** to A.G.P. will be paid by conversion into **4,370 shares** of Series A Preferred Stock upon the closing of the Business Combination[129](index=129&type=chunk)[130](index=130&type=chunk) - The Third Amended and Restated Business Combination Agreement with VSee and iDoc, amended on **April 17, 2024**, extends the termination date to **June 30, 2024**. The combined equity value of VSee and iDoc is **$110 million**, with consideration paid in DHAC common stock[133](index=133&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - The PIPE financing was terminated on **July 11, 2023**, as closing conditions were not met[153](index=153&type=chunk) - The Bridge Notes defaulted on **October 4, 2023**, leading to **$1,579,927** in default interest. The amounts due were exchanged for a **$2,523,744** senior secured convertible promissory note (Exchange Note), bearing **8% interest** and convertible at **$10.00/share** (subject to reset). The Exchange Note is classified as a liability under ASC 480 and its fair value was **$2,814,359** as of March 31, 2024[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Additional Bridge Notes totaling **$166,667** principal (**$150,000** subscription) were purchased by the Bridge Investor, bearing **8% interest** and convertible at **$10.00/share** (subject to reset). These are also classified as liabilities under ASC 480, with a fair value of **$156,564** as of March 31, 2024[108](index=108&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[175](index=175&type=chunk) - The Extension Note, a **$300,000** promissory note with **10% interest**, had its maturity date extended to **June 30, 2024**. Its contingent early repayment option is bifurcated as a derivative[176](index=176&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) - The Quantum Financing involves a **$3,000,000** convertible promissory note from the Quantum Investor (a related party), bearing **12% interest** and convertible at **$10.00/share** or **85% of lowest VWAP** (subject to reset). This note is not yet funded but will be accounted for as a liability under ASC 480 upon funding[185](index=185&type=chunk)[186](index=186&type=chunk) - An Equity Purchase Agreement (ELOC) with an affiliate of the Bridge Investor allows DHAC to sell up to **$50,000,000** of common stock over **36 months**. This contract is classified as a liability under ASC 815, with a fair value of **$189,764** as of March 31, 2024[187](index=187&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) [NOTE 7. STOCKHOLDERS' DEFICIT](index=52&type=section&id=NOTE%207.%20STOCKHOLDERS%27%20DEFICIT) This note details the authorized and outstanding common shares, along with redemption rights - DHAC is authorized to issue **50,000,000 common shares**. As of March 31, 2024, **3,489,000 shares** were issued and outstanding, excluding **114,966 shares** subject to redemption[191](index=191&type=chunk) - Public stockholders have redemption rights in connection with a business combination or charter amendments. Insiders have waived their rights to liquidating distributions from the Trust Account with respect to their founder shares[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [NOTE 8. WARRANTS](index=54&type=section&id=NOTE%208.%20WARRANTS) This note describes various warrants, their exercise terms, and potential redemption conditions - As of March 31, 2024, there are **12,057,000 IPO warrants** outstanding, each exercisable for one common share at **$11.50**, becoming exercisable 30 days after business combination or 12 months from IPO, and expiring five years after the business combination[196](index=196&type=chunk)[197](index=197&type=chunk) - The company may call warrants for redemption at **$0.01 per warrant** if the common stock price equals or exceeds **$18.00** for 20 trading days within a 30-day period, provided a current registration statement is in effect[198](index=198&type=chunk)[201](index=201&type=chunk) - Bridge Warrants (**173,913 issued**) and Extension Warrants (**26,086 issued**) have an exercise price of **$11.50 per share** and a five-year term. Their exercise price and number of shares are subject to adjustment for certain corporate events or equity issuances below $9.20[207](index=207&type=chunk)[213](index=213&type=chunk)[204](index=204&type=chunk)[214](index=214&type=chunk)[219](index=219&type=chunk) [NOTE 9. FAIR VALUE MEASUREMENTS](index=62&type=section&id=NOTE%209.%20FAIR%20VALUE%20MEASUREMENTS) This note explains the classification and valuation methodologies for the company's financial instruments - Assets held in the Trust Account, totaling **$1,386,490** as of March 31, 2024, are classified as Level 1 fair value measurements (money market funds primarily invested in U.S. Treasury securities)[221](index=221&type=chunk) Level 3 Financial Liabilities at Fair Value (March 31, 2024) | Liability | Fair Value (March 31, 2024) | | :-------------------------------- | :-------------------------- | | Extension Note – Bifurcated Derivative | $22,868 | | ELOC | $189,764 | | Additional Bridge Note | $156,564 | | Exchange Note | $2,814,359 | - These Level 3 liabilities are valued using models like Discounted Cash Flow (for Extension Note Bifurcated Derivative) and Monte Carlo (for Additional Bridge Note, Exchange Note, and ELOC), incorporating unobservable inputs such as bond rates, expected term, volatility, stock price, debt discount rate, and probabilities of business combination completion[225](index=225&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk)[232](index=232&type=chunk) Change in Fair Value of Level 3 Derivatives (Q1 2024) | Derivative | Fair Value (Dec 31, 2023) | Initial Value (Jan 25, 2024) | Change in Valuation Inputs/Assumptions | Fair Value (Mar 31, 2024) | | :-------------------------------- | :-------------------------- | :--------------------------- | :------------------------------------- | :-------------------------- | | Extension Note – Bifurcated Derivative | $22,872 | — | $(4) | $22,868 | | Exchange Note | $2,621,558 | — | $192,801 | $2,814,359 | | Additional Bridge Note | $102,726 | $51,705 | $2,133 | $156,564 | | ELOC | $203,720 | — | $(13,956) | $189,764 | [NOTE 10. SUBSEQUENT EVENTS](index=68&type=section&id=NOTE%2010.%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the reporting period - On **April 17, 2024**, the Bridge Letter Agreement and the Third Amended and Restated Business Combination Agreement were amended to extend the termination/closing date to **June 30, 2024**[237](index=237&type=chunk)[238](index=238&type=chunk) - The maturity date of the Extension Note was also extended to **June 30, 2024**, on **April 17, 2024**[238](index=238&type=chunk) - On **May 1, 2024**, the term of DHAC was further extended from **May 8, 2024**, to **August 8, 2024**[238](index=238&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=69&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses DHAC's financial condition, operational results, and liquidity, focusing on the business combination - DHAC is a blank check company with no operating revenues, primarily focused on completing a business combination with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc[241](index=241&type=chunk)[256](index=256&type=chunk)[275](index=275&type=chunk) - The company's securities were transferred to the Nasdaq Capital Market on October 30, 2023, following non-compliance with Nasdaq Global listing rules[254](index=254&type=chunk) Net Loss Comparison (Q1 2024 vs. Q1 2023) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------- | :-------------------------------- | :-------------------------------- | | Net Loss | $(967,817) | $(1,894,642) | - As of March 31, 2024, DHAC had a cash balance of **$724** and a working capital deficit of **$8,968,207**, leading management to conclude there is substantial doubt about the company's ability to continue as a going concern[279](index=279&type=chunk)[305](index=305&type=chunk) - The business combination deadline has been extended to **August 8, 2024**[245](index=245&type=chunk) [Overview](index=69&type=section&id=Overview) This section summarizes DHAC's formation, IPO, and business combination objectives - DHAC, a Delaware blank check company formed on March 30, 2021, aims to complete a business combination in technology and healthcare[241](index=241&type=chunk) - The IPO on November 8, 2021, generated **$115,000,000 gross proceeds**, and a private placement added **$5,570,000 gross proceeds**, with **$116,725,000** deposited into the Trust Account[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - The SPAC term has been extended to **August 8, 2024**, with **11,385,034 shares redeemed** in October 2022 and November 2023 during prior extension votes[245](index=245&type=chunk) [NASDAQ Listing Rules Compliance](index=71&type=section&id=NASDAQ%20Listing%20Rules%20Compliance) This section details the company's Nasdaq listing compliance and transfer to the Nasdaq Capital Market - DHAC received multiple non-compliance letters from Nasdaq Global in 2023 for failing to meet minimum Market Value of Listed Securities (**$50M**), Market Value of Publicly Held Shares (**$15M**), and **400 total shareholders** requirements[249](index=249&type=chunk)[250](index=250&type=chunk)[252](index=252&type=chunk) - Following an appeal, DHAC's application to transfer its securities to the Nasdaq Capital Market was approved, effective October 30, 2023[253](index=253&type=chunk)[254](index=254&type=chunk) [The Business Combination Agreement](index=72&type=section&id=The%20Business%20Combination%20Agreement) This section outlines the key terms and amendments of the business combination agreement with VSee and iDoc - DHAC entered into the Third Amended and Restated Business Combination Agreement with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc., which was further amended on February 13, 2024, and April 17, 2024, extending the termination date to **June 30, 2024**[256](index=256&type=chunk) - The Business Combination involves the merger of VSee and iDoc into DHAC subsidiaries, with DHAC to be renamed VSee Health, Inc. The combined equity value of VSee and iDoc is **$110 million**[256](index=256&type=chunk)[257](index=257&type=chunk) - Merger consideration for VSee and iDoc stockholders will be 100% DHAC common stock, subject to deductions for transaction expenses and indemnity escrow[258](index=258&type=chunk)[260](index=260&type=chunk) [Business Combination Related Financing Transactions](index=74&type=section&id=Business%20Combination%20Related%20Financing%20Transactions) This section describes financing arrangements supporting the business combination, including notes and equity agreements - The original Bridge Notes (**$2,222,222 aggregate principal**) defaulted in October 2023, leading to **$1,579,927 in default interest**. The amounts due were exchanged for a **$2,523,744 Exchange Note** (**8% interest**, convertible at **$10.00/share**, subject to reset)[261](index=261&type=chunk)[263](index=263&type=chunk)[283](index=283&type=chunk)[291](index=291&type=chunk) - Additional Bridge Notes (**$166,667 aggregate principal**, **$150,000 subscription**) were purchased by the Bridge Investor, bearing **8% interest** and convertible at **$10.00/share** (subject to reset). **$150,000** has been funded as of March 31, 2024[262](index=262&type=chunk)[290](index=290&type=chunk) - Quantum Financing involves a **$3,000,000 convertible promissory note** from the Quantum Investor (a related party), bearing **12% interest** and convertible at **$10.00/share** or **85% of lowest VWAP** (subject to reset). This note is not yet funded[267](index=267&type=chunk)[268](index=268&type=chunk)[292](index=292&type=chunk) - A.G.P. Financing converts **$4,370,000 of deferred underwriting fees** into **4,370 Series A Preferred Shares** of the Combined Company[269](index=269&type=chunk)[295](index=295&type=chunk) - Various Loan Conversions will convert indebtedness owed by DHAC, VSee, and iDoc to related parties into Series A Preferred Stock or common stock of the Combined Company[272](index=272&type=chunk)[296](index=296&type=chunk) - Equity Financing (ELOC) provides for the sale of up to **$50,000,000 of common stock** to an affiliate of the Bridge Investor over a **36-month period** post-closing[273](index=273&type=chunk)[297](index=297&type=chunk) - Extension Financing includes a **$300,000 promissory note** (Extension Note) with **10% guaranteed interest**, due **June 30, 2024**, along with warrants and commitment shares[274](index=274&type=chunk)[288](index=288&type=chunk) [Results of Operations](index=78&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on net loss and key expense drivers - For the three months ended March 31, 2024, DHAC reported a net loss of **$967,817**, a significant improvement from the **$1,894,642** net loss in the same period of 2023[276](index=276&type=chunk)[278](index=278&type=chunk) - The reduction in net loss was primarily due to lower general and administrative expenses (**$674,262** in Q1 2024 vs. **$707,592** in Q1 2023) and the absence of a large negative change in the fair value of the PIPE forward contract derivative (which was **$(1,163,950)** in Q1 2023)[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - Interest earned on investments held in the Trust Account decreased from **$75,280** in Q1 2023 to **$17,853** in Q1 2024[277](index=277&type=chunk)[278](index=278&type=chunk) [Liquidity and Capital Resources](index=80&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, and ability to meet financial obligations - As of March 31, 2024, DHAC had a cash balance of **$724** and a working capital deficit of **$8,968,207**[279](index=279&type=chunk)[305](index=305&type=chunk) - Management has determined that the company's liquidity condition and mandatory liquidation date of **August 8, 2024**, raise substantial doubt about its ability to continue as a going concern[305](index=305&type=chunk) - Liquidity has been supported by Sponsor contributions, IPO proceeds, and various financing agreements, including Bridge Notes, Additional Bridge Notes, Exchange Note, Extension Note, and related party advances[280](index=280&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) Cash Flow Summary (Q1 2024) | Metric | Amount | | :-------------------------------- | :------- | | Net cash used in operating activities | $(335,318) | | Net cash provided by financing activities | $334,179 | [Critical Accounting Estimates](index=86&type=section&id=Critical%20Accounting%20Estimates) This section highlights management's significant judgments and estimates in preparing the financial statements - Management's financial reporting relies on significant judgments and estimates, particularly for fair valuing complex financial instruments[306](index=306&type=chunk) - The most significant estimates involve the fair value of the PIPE Forward Contract, Extension Note Bifurcated Derivative, Bridge Note Bifurcated Derivative, Additional Bridge Note, and Exchange Note, which are inherently uncertain[306](index=306&type=chunk) [Warrant Instruments](index=86&type=section&id=Warrant%20Instruments) This section explains the accounting classification of various warrant instruments - Warrants are classified as either equity or liability based on ASC 480 and ASC 815 guidance[307](index=307&type=chunk) - Public, Private, Bridge, and Extension Warrants are considered freestanding instruments and meet the criteria for equity classification under ASC 815, thus recorded in equity[308](index=308&type=chunk) [Financial Instruments](index=86&type=section&id=Financial%20Instruments) This section details the accounting treatment for complex financial instruments and derivatives - The company evaluates financial instruments for liability classification under ASC 480 or derivative treatment under ASC 815[309](index=309&type=chunk) - Derivative instruments, such as the PIPE financing agreement and early redemption provisions of the Bridge Note and Extension Note, are recorded at fair value with changes reported in the statements of operations[310](index=310&type=chunk) - The Exchange Note and Additional Bridge Note are classified as share-settled debt liabilities under ASC 480 and are re-measured at fair value each reporting period[313](index=313&type=chunk) [Recent Accounting Standards](index=88&type=section&id=Recent%20Accounting%20Standards) This section addresses the anticipated impact of recently issued accounting pronouncements - Management does not anticipate any material impact on the condensed consolidated financial statements from recently issued, but not yet effective, accounting pronouncements[314](index=314&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=89&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Digital Health Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - Disclosure under this item is not required for smaller reporting companies[316](index=316&type=chunk) [Item 4. Controls and Procedures](index=89&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's Certifying Officers concluded that disclosure controls and procedures were effective as of March 31, 2024 - The Certifying Officers concluded that disclosure controls and procedures were effective as of March 31, 2024[317](index=317&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[319](index=319&type=chunk) - Disclosure controls and procedures provide reasonable, not absolute, assurance that objectives are met[318](index=318&type=chunk) Part II. Other Information This section provides other material information not included in the financial statements [Item 1. Legal Proceedings](index=90&type=section&id=Item%201.%20Legal%20Proceedings) This section reports on any legal actions or disputes involving the company - No legal proceedings to report[322](index=322&type=chunk) [Item 1A. Risk Factors](index=90&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, DHAC is not required to make disclosures under this item, with no material changes to previously reported risks - Disclosure under this item is not required for smaller reporting companies[323](index=323&type=chunk) - No material changes to the risk factors disclosed in the Annual Report on Form 10-K filed April 12, 2024[323](index=323&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Offerings](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20from%20Registered%20Offerings) This section details unregistered equity sales and the application of proceeds from registered offerings - No unregistered sales of equity securities to report for this fiscal quarter that have not been previously included in a report[324](index=324&type=chunk) - The Initial Public Offering on November 8, 2021, generated **$115,000,000 gross proceeds**[325](index=325&type=chunk) - A private placement with the Sponsor generated **$5,570,000 gross proceeds**[326](index=326&type=chunk) - After deducting offering costs of **$6,877,164**, an aggregate of **$116,725,000** from the IPO and private placement was placed in the Trust Account[328](index=328&type=chunk)[329](index=329&type=chunk) [Item 3. Defaults Upon Senior Securities](index=91&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports on any defaults related to the company's senior debt or preferred stock - No defaults upon senior securities[330](index=330&type=chunk) [Item 4. Mine Safety Disclosures](index=91&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section provides disclosures related to mine safety, if applicable to the company's operations - No mine safety disclosures[331](index=331&type=chunk) [Item 5. Other Information](index=91&type=section&id=Item%205.%20Other%20Information) This section includes any other material information not covered elsewhere in the report - No other information to report[332](index=332&type=chunk) [Item 6. Exhibits](index=92&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the quarterly report - Exhibits include amendments to the Business Combination Agreement (February 13, 2024, and April 17, 2024), side letters to registration rights agreements, amended and restated conversion securities purchase agreements, and certifications (31.1, 31.2, 32.1, 32.2)[335](index=335&type=chunk) Part III. Signatures This section contains the required certifications and signatures from the company's executive officers - The report was signed by Scott Wolf (Chairman and Chief Executive Officer) and Daniel Sullivan (Chief Financial Officer) on **May 14, 2024**[340](index=340&type=chunk)