UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41015 980 N Federal Hwy Suite 304 Boca Raton, FL 33432 (Address of Principal Executive Offices) (754) 231-1688 (Registrant's tel ...

[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 ...

Exhibit 99.1 VSee Health Reports Third Quarter 2024 Revenue Up 131% Year-over-Year SAN JOSE, Calif. -- November 15, 2024 -- VSee Health, Inc. (Nasdaq: VSEE), a provider of comprehensive telehealth services that customize workflow streams and enhance patient care, today provided a business update and reported financial results for the three and nine months ended September 30, 2024. Financial & Business Highlights · Revenue was $3.4 million for the third quarter of 2024, up 131% over the third quarter of 2023 ...

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)

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 June 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 or o ...

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 quarter ended March 31, 2024 ☐ 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 DIGITAL HEALTH ACQUISITION CORP. (Exact Name of Registrant as Specified in Its Charter) (State or other jurisdictio ...

```markdown [General Information](index=1&type=section&id=General%20Information) [Registrant Details and Status](index=1&type=section&id=Registrant%20Details%20and%20Status) DHAC is a Delaware-incorporated blank check company, classified as a non-accelerated filer, smaller reporting company, emerging growth company, and shell company, with its securities listed on Nasdaq - DHAC is classified as a non-accelerated filer, smaller reporting company, emerging growth company, and a shell company[5](index=5&type=chunk) Securities Registered on Nasdaq | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Units | DHACU | The Nasdaq Stock Market LLC | | Common Stock | DHAC | The Nasdaq Stock Market LLC | | Redeemable Warrants | DHACW | The Nasdaq Stock Market LLC | - As of **April 12, 2024**, there were **3,603,966 shares** of common stock, par value $0.0001 per share, issued and outstanding[6](index=6&type=chunk) [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Nature and Risks of Forward-Looking Statements](index=3&type=section&id=Nature%20and%20Risks%20of%20Forward-Looking%20Statements) Forward-looking statements in this report, based on current expectations, involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements relate to expectations, hopes, beliefs, intentions, or strategies regarding the future, including projections and forecasts of future events or circumstances[10](index=10&type=chunk) - Key areas of forward-looking statements include: - Ability to complete initial business combination - Success in retaining or recruiting officers, key employees, or directors following initial business combination - Officers and directors allocating time to other businesses and potential conflicts of interest - Potential ability to obtain additional financing to complete initial business combination - Pool of prospective target businesses - Ability of officers and directors to generate investment opportunities - Potential change in control if target businesses are acquired for stock - Potential liquidity and trading of securities - Lack of a market for securities - Use of proceeds not held in the trust account or available from interest income - Financial performance following IPO[12](index=12&type=chunk) - Forward-looking statements involve risks, uncertainties (some beyond control), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied[11](index=11&type=chunk) [PART I](index=4&type=section&id=PART%20I) [Business Overview](index=4&type=section&id=ITEM%201.%20BUSINESS) DHAC is a blank check company targeting technology and healthcare businesses, with its IPO completed in 2021 and business combination deadline extended to May 8, 2024 - **DHAC** is a **blank check company** formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar **Business Combination** with one or more businesses[14](index=14&type=chunk) - The company intends to focus on established, technology and healthcare focused businesses that have an aggregate enterprise value of approximately **$175 million to $500 million**[14](index=14&type=chunk)[23](index=23&type=chunk) - Key financial and operational milestones include: - **IPO** Consummation: **November 8, 2021** - Gross Proceeds from **IPO**: **$115,000,000** from **11,500,000 units** at **$10.00 per unit** - **Private Placement**: **557,000 units** sold to the **Sponsor** for **$5,570,000** - **Trust Account** Deposit: Approximately **$116,725,000** of net proceeds placed in a **Trust Account** - **Business Combination** Deadline: Currently extended to **May 8, 2024**[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) [Risk Factors](index=8&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, DHAC is not required to provide specific disclosures under this item - As a **smaller reporting company**, **DHAC** is not required to make disclosures under this Item[36](index=36&type=chunk) [Unresolved Staff Comments](index=8&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This item is not applicable to DHAC - Not applicable[37](index=37&type=chunk) [Cybersecurity](index=8&type=section&id=ITEM%201C.%20CYBERSECURITY) As a SPAC with no business operations, DHAC does not face significant cybersecurity risk and has not adopted a formal risk management program, with board oversight - **DHAC** is a **SPAC** with no business operations, focused on identifying, evaluating, and completing merger transactions[38](index=38&type=chunk) - The company does not consider that it faces significant cybersecurity risk and has not adopted any cybersecurity risk management program or formal processes for assessing cybersecurity risk[38](index=38&type=chunk) - The board of directors is generally responsible for the oversight of risks from cybersecurity threats, if any. No cybersecurity incidents have been encountered since the **IPO**[38](index=38&type=chunk) [Properties](index=8&type=section&id=ITEM%202.%20PROPERTIES) DHAC maintains adequate executive offices in Boca Raton, FL, provided by a sponsor affiliate for a monthly administrative fee of $10,000 - Executive offices are located at 980 N Federal Hwy 304, Boca Raton, FL 33432[39](index=39&type=chunk) - An affiliate of the **Sponsor** makes the office space available for a monthly administrative fee of **$10,000**[39](index=39&type=chunk) - The current office space is considered adequate for current operations[39](index=39&type=chunk) [Legal Proceedings](index=8&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) DHAC is not aware of any current legal proceedings or claims that could materially adversely affect its business or financial condition - The company may be subject to legal proceedings, investigations, and claims incidental to the conduct of its business from time to time[40](index=40&type=chunk) - **DHAC** is not aware of any other legal proceeding, investigation, or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on its business, financial condition, or results of operations[40](index=40&type=chunk) [Mine Safety Disclosures](index=8&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to DHAC - Not Applicable[41](index=41&type=chunk) [PART II](index=9&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=9&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) DHAC's securities trade on Nasdaq Capital Market after a 2023 transfer due to non-compliance, with no cash dividends paid or intended before a business combination - **DHAC**'s units, **common stock**, and warrants are currently trading on The **Nasdaq Capital Market** under the symbols 'DHACU,' 'DHAC,' and 'DHACW,' respectively[43](index=43&type=chunk) - On **October 30, 2023**, **DHAC**'s securities began trading on the **Nasdaq Capital Market** after approval of its application to transfer from the **Nasdaq Global Market** due to non-compliance with listing standards[44](index=44&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - As of **March 5, 2024**, there were **3,603,966 shares** of **common stock** issued and outstanding held by approximately 15 stockholders of record[45](index=45&type=chunk) - **DHAC** has not paid any cash dividends on its **common stock** to date and does not intend to pay cash dividends prior to the completion of an initial **Business Combination**[46](index=46&type=chunk) - Key financial events and trust account activities: - **IPO** Gross Proceeds: **$115,000,000** from **11,500,000 units** at **$10.00 per unit** (**November 8, 2021**) - **Private Placement** Gross Proceeds: **$5,570,000** from **557,000 units** at **$10.00 per unit** to the **Sponsor** (simultaneously with **IPO**) - **Trust Account** Deposit: Approximately **$116,725,000** of net proceeds from **IPO** and **private placement** placed in the **Trust Account** - Redemptions (**October 20, 2022**): **10,805,877 shares** redeemed, **$110,472,254** withdrawn from **Trust Account** - Redemptions (**November 6, 2023**): **579,157 shares** redeemed, leaving **114,966 shares** subject to redemption - **Trust Account** Deposits for Extensions: **$350,000** on **May 5, 2023**, and **$350,000** on **October 26, 2023**[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - In **February 2023**, **DHAC** issued **20,000 shares** of **common stock** in a legal settlement[49](index=49&type=chunk) [Reserved](index=10&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is intentionally left blank - Reserved[56](index=56&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=10&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) DHAC's financial condition and operations are reviewed, noting its blank check status, a **$4.4 million** net loss in 2023, and a going concern issue due to limited cash and the November 8, 2024, liquidation date - **DHAC** is a **blank check company** formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar **Business Combination** with one or more businesses or entities, focusing on technology and healthcare[57](index=57&type=chunk)[59](index=59&type=chunk) - Key financial and operational milestones include: - **IPO** Consummation: **November 8, 2021**, generating **$115,000,000** gross proceeds - **Private Placement**: Sale of **557,000 units** to the **Sponsor** for **$5,570,000** gross proceeds - **Trust Account** Deposit: **$116,725,000** deposited into the **Trust Account**[60](index=60&type=chunk)[61](index=61&type=chunk) - Stockholders approved amendments to extend the **SPAC** term, with the current deadline for completing a **Business Combination** being **May 8, 2024**, and potential for further extensions up to **November 8, 2024**[62](index=62&type=chunk)[77](index=77&type=chunk) - **DHAC** transferred its listing from The **Nasdaq Global Market** to The **Nasdaq Capital Market** on **October 30, 2023**, following non-compliance with **MVLS**, **MVPHS**, and total shareholders requirements[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - On **November 21, 2023**, **DHAC** entered into the **Third Amended and Restated Business Combination Agreement** with **VSee Lab, Inc.** and **iDoc Virtual Telehealth Solutions, Inc.**, contemplating mergers of subsidiaries into **VSee** and **iDoc**[71](index=71&type=chunk) - The **Business Combination** implies a **$53.9 million** post-closing equity value and a current combined equity value of **VSee** and **iDoc** at **$110 million**[72](index=72&type=chunk) Net Loss for the Years Ended December 31 | Year Ended December 31, | Net Loss ($) | | :---------------------- | :----------- | | 2023 | $(4,413,866) | | 2022 | $(3,242,501) | - Key expenses and income for 2023: - Key Expenses (**2023**): **General and administrative expenses** (**$2,593,765**), **default interest expense** related to **Bridge Notes** (**$1,579,927**), **interest expense** related to **Bridge Notes** (**$429,007**) - **Interest Income** (**2023**): **$358,767** from investments held in the **Trust Account**[94](index=94&type=chunk) - As of **December 31, 2023**, **DHAC** had **$1,863** in cash and a **working capital deficiency** of **$7,982,537**[96](index=96&type=chunk)[124](index=124&type=chunk) - The **liquidity condition**, mandatory liquidation, and subsequent dissolution on **November 8, 2024**, raise substantial doubt about the Company's ability to continue as a **going concern**[124](index=124&type=chunk)[303](index=303&type=chunk) - A liability of **$72,396** was booked for the 1% excise tax on shares redeemed during **2023**, as per the **Inflation Reduction Act of 2022**[346](index=346&type=chunk) [The Business Combination Agreement](index=14&type=section&id=The%20Business%20Combination%20Agreement) [Business Combination Related Financing Transactions](index=16&type=section&id=Business%20Combination%20Related%20Financing%20Transactions) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) [Common stock subject to possible redemption](index=28&type=section&id=Common%20stock%20subject%20to%20possible%20redemption) [Warrant Instruments (Accounting Treatment)](index=30&type=section&id=Warrant%20Instruments) [Financial Instruments (Accounting Treatment)](index=30&type=section&id=Financial%20Instruments) [Recent Accounting Standards](index=30&type=section&id=Recent%20Accounting%20Standards) [Inflation Reduction Act of 2022](index=30&type=section&id=Inflation%20Reduction%20Act%20of%202022) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, DHAC is not required to provide disclosures under this item - Not required for smaller reporting companies[134](index=134&type=chunk) [Financial Statements and Supplementary Data](index=30&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to the financial statements and supplementary data located after Item 15 of this report - This information appears following Item 15 of this Report and is included herein by reference[135](index=135&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=30&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[136](index=136&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) DHAC's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes - As of **December 31, 2023**, **DHAC**'s disclosure controls and procedures were effective[138](index=138&type=chunk) - Management determined that **DHAC** maintains effective **internal control over financial reporting** as of **December 31, 2023**, based on the **COSO Internal Control — Integrated Framework (2013)**[141](index=141&type=chunk) - There were no changes in **internal control over financial reporting** during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, **internal control over financial reporting**[143](index=143&type=chunk) [Other Information](index=33&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) There is no other information to report under this item - None[144](index=144&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=33&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to DHAC - Not applicable[145](index=145&type=chunk) [PART III](index=34&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=34&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) DHAC's board of five members, including independent directors, has three standing committees, and the company has adopted a code of ethics and is Section 16(a) compliant - The board of directors consists of **five directors**[156](index=156&type=chunk) - Key executive officers and board committees: - **Scott Wolf**: Chief Executive Officer, Corporate Secretary, and Chairman - **Daniel Sullivan**: Chief Financial Officer[149](index=149&type=chunk)[150](index=150&type=chunk) - **Kevin Lowdermilk**, **Frank Ciufo**, **George McNellage**, and **Scott Metzger** are independent directors[159](index=159&type=chunk) - Key executive officers and board committees: - **Audit Committee**: Chaired by **Kevin Lowdermilk**; members include **George McNellage** and **Frank Ciufo**. All are independent directors and financial experts - **Nominating Committee**: Chaired by **Scott Metzger**; members include **Kevin Lowdermilk** and **George McNellage**. All are independent directors - **Compensation Committee**: Chaired by **George McNellage**; members include **Kevin Lowdermilk** and **Frank Ciufo**. All are independent directors[161](index=161&type=chunk)[162](index=162&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) - **DHAC** has adopted a code of ethics that applies to all executive officers, directors, and employees[172](index=172&type=chunk) - All **Section 16(a)** filing requirements applicable to executive officers, directors, and greater than 10% beneficial owners were filed in a timely manner[174](index=174&type=chunk) [Executive Compensation](index=40&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) DHAC has not entered into employment agreements or paid cash compensation to executive officers, who are reimbursed for expenses, and the board adopted a clawback policy for incentive compensation - **DHAC** has not entered into any employment agreements with its executive officers[175](index=175&type=chunk) - No executive officer has received any cash compensation for services rendered to **DHAC**. Officers and directors are reimbursed for out-of-pocket expenses incurred in connection with company activities[176](index=176&type=chunk) - Prior to the consummation of an initial **Business Combination**, the **compensation committee** will primarily be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial **Business Combination**[171](index=171&type=chunk) - In **November 2023**, the Board of Directors adopted a **clawback policy** covering current and former executive officers for incentive compensation in the event of a material financial restatement[178](index=178&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=43&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details DHAC's common stock beneficial ownership as of April 12, 2024, with Digital Health Sponsor LLC as the largest owner (**76.60%**) and the executive officers and directors group owning **7.65%** - As of **April 12, 2024**, **DHAC** had **3,603,966 shares** of **common stock** issued and outstanding[180](index=180&type=chunk) Beneficial Ownership of Common Stock (April 12, 2024) | Name and Address of Beneficial Owner | Number of Shares of DHAC Common Stock Beneficially Owned (shares) | % of Class (%) | | :----------------------------------- | :-------------------------------------------------------- | :--------- | | Digital Health Sponsor LLC | 3,187,250 | 76.60 % | | SCS Capital Partners, LLC | 500,000 | 13.87 % | | Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B | 200,000 | 5.55 % | | Scott Wolf | 175,000 | 4.86 % | | Daniel Sullivan | 75,000 | 2.08 % | | All Directors and Executive Officers of DHAC as a Group (6 individuals) | 275,875 | 7.65 % | - **Digital Health Sponsor LLC**'s ownership consists of **2,073,250 founder shares**, **557,000 shares** of **DHAC Common Stock** underlying the **Private Placement Units**, and **557,000 redeemable warrants**[182](index=182&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=45&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) This item details various related-party transactions, including founder shares, working capital loans, and financing agreements, all subject to independent director or audit committee approval for fair terms - Key related-party transactions and agreements: - **Founder Shares**: Initial stockholders purchased **4,312,500 shares** for **$25,000**, later adjusted to **2,875,000 shares**. Subject to lock-up until **180 days** post-business combination or stock price conditions - **Working Capital Loans**: **Sponsor** and affiliates may loan funds for transaction costs. A **$350,000 loan** from the **Sponsor** (**Oct 2022**) and **$765,000 in loans** from **SCS Capital Partners LLC** (**Feb/Aug/May 2023**) are to be converted into **Series A Preferred Shares** at Closing - **Administrative Services Agreement**: **$10,000** per month paid to a **Sponsor** affiliate for office space and services[185](index=185&type=chunk)[188](index=188&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[220](index=220&type=chunk) - On **October 4, 2023**, **DHAC** defaulted on the **Bridge Note**, leading to a total amount due of **$2,523,744**, including a **125%** mandatory default penalty, a **10%** late fee, and **24%** default interest[101](index=101&type=chunk)[416](index=416&type=chunk) - Key related-party transactions and agreements: - **Exchange Note**: On **November 21, 2023**, certain **Bridge Note** amounts were exchanged for a **$2,523,744 Exchange Note**, bearing **8% interest**, convertible into **common stock** at **$10.00 per share** (subject to reset) - **Additional Bridge Notes**: On **November 21, 2023**, the **Bridge Investor** agreed to purchase additional promissory notes in the aggregate principal amount of **$166,667**, bearing **8% interest**, convertible at **$10.00 per share** (subject to reset). **$100,000** was funded as of **December 31, 2023** - **Quantum Financing**: On **November 21, 2023**, the **Quantum Investor** (**33%** owned by Lawrence Sands, manager of **Sponsor**) subscribed for a **$3,000,000 convertible promissory note** with a **7% original issue discount**, bearing **12% interest**, convertible at **$10.00 per share** or **85%** of the lowest daily **VWAP** (subject to reset) - **Equity Financing (ELOC)**: On **November 21, 2023**, **DHAC** entered into an **equity line of credit agreement** with an affiliate of the **Bridge Investor** for up to **$50,000,000** of **common stock** over a **36-month period** post-closing. A **$500,000 convertible note** will be issued as a **commitment fee**[109](index=109&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk)[116](index=116&type=chunk)[212](index=212&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - All ongoing and future related-party transactions require prior approval by a majority of uninterested independent directors or the **audit committee** to ensure terms are no less favorable than those available from unaffiliated third parties[223](index=223&type=chunk)[226](index=226&type=chunk) [Principal Accountant Fees and Services](index=55&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) WithumSmith+Brown, PC served as DHAC's independent registered public accounting firm, with audit fees of **$84,200** for 2023 and 2022, and all services pre-approved by the audit committee - **WithumSmith+Brown, PC** acts as **DHAC**'s independent registered public accounting firm[230](index=230&type=chunk) Audit Fees Paid to WithumSmith+Brown, PC | Year Ended December 31, | Audit Fees ($) | | :---------------------- | :--------- | | 2023 | $84,200 | | 2022 | $84,200 | - No audit-related fees, tax fees, or other fees were paid to **WithumSmith+Brown, PC** for the years ended **December 31, 2023** and **2022**[232](index=232&type=chunk)[233](index=233&type=chunk) - All auditing services and permitted non-audit services are pre-approved by the **audit committee** (or the board of directors prior to its formation)[234](index=234&type=chunk) [PART IV](index=57&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=57&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This item lists the financial statements and supplementary data, including Consolidated Balance Sheets and Statements of Operations, along with an index of exhibits filed as part of this Form 10-K - Key financial statements and exhibits: - **Financial Statements**: Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Deficit, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements (pages F-2 to F-39) - **Financial Statement Schedules**: None - **Exhibits**: Includes the **Third Amended and Restated Business Combination Agreement**, Amended and Restated Certificate of Incorporation, Warrant Agreement, various Securities Purchase Agreements, and other key documents[237](index=237&type=chunk)[239](index=239&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk)[248](index=248&type=chunk) [Financial Statements](index=64&type=section&id=Financial%20Statements) [Report of Independent Registered Public Accounting Firm](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) WithumSmith+Brown, PC issued an unqualified opinion on DHAC's consolidated financial statements for 2023 and 2022, but highlighted a 'going concern' uncertainty due to liquidity and the November 8, 2024, liquidation date - **WithumSmith+Brown, PC** issued an **unqualified opinion** on the consolidated financial statements of **Digital Health Acquisition Corp.** as of **December 31, 2023** and **2022**[249](index=249&type=chunk) - The accompanying consolidated financial statements have been prepared assuming the Company will continue as a **going concern**, but the **mandatory liquidation date** of **November 8, 2024**, and **liquidity condition** raise substantial doubt about this ability[250](index=250&type=chunk) - **WithumSmith+Brown, PC** has served as the Company's auditor since **2021**[254](index=254&type=chunk) [Consolidated Balance Sheets](index=66&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, DHAC reported total assets of **$1.37 million** (down from **$7.63 million** in 2022), total liabilities of **$12.35 million** (up from **$7.67 million**), and a stockholders' deficit of **$(12.27 million)** Total Assets | Year Ended December 31, | Amount ($) | | :---------------------- | :----------- | | 2023 | $1,370,500 | | 2022 | $7,634,367 | Investments Held in Trust Account | Year Ended December 31, | Amount ($) | | :---------------------- | :----------- | | 2023 | $1,368,637 | | 2022 | $7,527,369 | Total Liabilities | Year Ended December 31, | Amount ($) | | :---------------------- | :----------- | | 2023 | $12,354,400 | | 2022 | $7,665,614 | Stockholders' Deficit | Year Ended December 31, | Amount ($) | | :---------------------- | :------------ | | 2023 | $(12,265,857) | | 2022 | $(7,426,596) | - Key current liabilities as of **December 31, 2023**: - Key Current Liabilities (**Dec 31, 2023**): **Accounts payable and accrued expenses** (**$3,303,836**), **Exchange Note** (**$2,621,558**), **Promissory note – related party** (**$926,500**), **Deferred underwriting fee payable** (**$4,370,000**)[256](index=256&type=chunk) [Consolidated Statements of Operations](index=67&type=section&id=Consolidated%20Statements%20of%20Operations) DHAC reported a net loss of **$4.41 million** for 2023 (up from **$3.24 million** in 2022), primarily due to general and administrative expenses and default interest, resulting in a basic and diluted net loss per common share of **$(1.08)** Net Loss | Year Ended December 31, | Net Loss ($) | | :---------------------- | :----------- | | 2023 | $(4,413,866) | | 2022 | $(3,242,501) | Loss from Operations | Year Ended December 31, | Loss from Operations ($) | | :---------------------- | :------------------- | | 2023 | $(2,593,765) | | 2022 | $(3,594,967) | - Key expenses and interest income for 2023: - Key Expenses (**2023**): **Default interest expense – Bridge Note** (**$1,579,927**), **Interest expense – Bridge Note** (**$429,007**), **General and administrative expenses** (**$2,593,765**) - **Interest Earned on Trust Account**: **$358,767** in **2023** (down from **$922,644** in **2022**)[258](index=258&type=chunk) Basic and Diluted Net Loss Per Common Share | Year Ended December 31, | Per Share Amount ($) | | :---------------------- | :--------------- | | 2023 | $(1.08) | | 2022 | $(0.25) | [Consolidated Statements of Changes in Stockholders' Deficit](index=68&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Deficit) DHAC's total stockholders' deficit significantly increased from **$(7.43 million)** at December 31, 2022, to **$(12.27 million)** at December 31, 2023, primarily due to the net loss and accretion of common stock subject to redemption Total Stockholders' Deficit | Year Ended December 31, | Amount ($) | | :---------------------- | :------------ | | 2023 | $(12,265,857) | | 2022 | $(7,426,596) | - Key factors impacting stockholders' deficit in 2023: - **Net loss** for **2023**: **$(4,413,866)** - **Accretion of common stock subject to redemption value**: **$(682,671)** - **Issuance of 20,000 shares for legal settlement**: **$214,200** - **Issuance of 7,000 shares and warrants with Extension Note**: **$115,472** - **Excise tax payable attributable to redemption of common stock**: **$(72,396)**[260](index=260&type=chunk) [Consolidated Statements of Cash Flows](index=69&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For 2023, DHAC experienced a net cash decrease of **$105,135**, ending with **$1,863** in cash, with **$(962,042)** used in operations, **$6.52 million** provided by investing, and **$(5.66 million)** used in financing activities Net Change in Cash | Year Ended December 31, | Amount ($) | | :---------------------- | :----------- | | 2023 | $(105,135) | | 2022 | $(653,014) | Cash at End of Year | Year Ended December 31, | Amount ($) | | :---------------------- | :--------- | | 2023 | $1,863 | | 2022 | $106,998 | Cash Flows from Operating Activities | Year Ended December 31, | Amount ($) | | :---------------------- | :------------ | | 2023 | $(962,042) | | 2022 | $(1,391,213) | Cash Flows from Investing Activities | Year Ended December 31, | Amount ($) | | :---------------------- | :------------ | | 2023 | $6,517,499 | | 2022 | $110,122,253 | Cash Flows from Financing Activities | Year Ended December 31, | Amount ($) | | :---------------------- | :------------- | | 2023 | $(5,660,592) | | 2022 | $(109,384,054) | Redemption of Common Stock | Year Ended December 31, | Amount ($) | | :---------------------- | :------------- | | 2023 | $(6,796,063) | | 2022 | $(110,472,254) | [Notes to Consolidated Financial Statements](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Description of Organization and Business Operations](index=71&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) DHAC, a Delaware-incorporated blank check company formed in March 2021, completed its IPO in November 2021, extended its business combination deadline to May 8, 2024, and entered into a business combination agreement with VSee Lab and iDoc - **DHAC** was incorporated on **March 30, 2021**, as a Delaware corporation for the purpose of effecting a **Business Combination**[265](index=265&type=chunk) - Key IPO and Trust Account details: - **IPO**: Consummated on **November 8, 2021**, generating **$115,000,000** gross proceeds - **Private Placement**: Sale of **557,000 units** to the **Sponsor** for **$5,570,000** gross proceeds - **Trust Account**: **$116,725,000** placed in a **trust account**, invested in U.S. government securities or money market funds[268](index=268&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk) - The deadline for completing a **Business Combination** has been extended multiple times, with the current period ending **May 8, 2024**, and potential for further extensions up to **November 8, 2024**[277](index=277&type=chunk) - Key IPO and Trust Account details: - **October 20, 2022**: **10,805,877 shares** redeemed - **November 6, 2023**: **579,157 shares** redeemed, leaving **114,966 shares** subject to redemption[268](index=268&type=chunk)[279](index=279&type=chunk) - **DHAC** transferred its listing from The **Nasdaq Global Market** to The **Nasdaq Capital Market** on **October 30, 2023**, due to non-compliance with **MVLS**, **MVPHS**, and total shareholder requirements[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) - On **November 21, 2023**, **DHAC** entered into the **Third Amended and Restated Business Combination Agreement** with **VSee Lab, Inc.** and **iDoc Virtual Telehealth Solutions, Inc.**[288](index=288&type=chunk) [Summary of Significant Accounting Policies](index=77&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines DHAC's significant accounting policies, including U.S. GAAP, emerging growth company status, the 'going concern' issue, key accounting estimates for financial instruments, and accounting for common stock and warrants - The consolidated financial statements are presented in U.S. dollars and prepared in accordance with **U.S. GAAP**[298](index=298&type=chunk) - **DHAC** is an '**emerging growth company**' under the **JOBS Act** and has elected not to opt out of the **extended transition period** for complying with new or revised financial accounting standards[304](index=304&type=chunk)[305](index=305&type=chunk) - As of **December 31, 2023**, **DHAC** had a cash balance of **$1,863** and a **working capital deficit** of **$7,982,537**. The **mandatory liquidation date** of **November 8, 2024**, raises substantial doubt about the Company's ability to continue as a **going concern**[303](index=303&type=chunk) - Significant accounting estimates include assumptions used to **fair value measurements** the **PIPE Forward Contract**, **Extension Note Bifurcated Derivative**, **Bridge Note Bifurcated Derivative**, **Additional Bridge Note**, and **Exchange Note**[309](index=309&type=chunk) - **Common stock subject to possible redemption** is classified as temporary equity and measured at redemption value, with changes recognized immediately[313](index=313&type=chunk)[314](index=314&type=chunk) - **DHAC**'s **Public Warrants**, **Private Warrants**, **Bridge Warrants**, and **Extension Warrants** are classified as equity[330](index=330&type=chunk) - The **Exchange Note** and **Additional Bridge Note** are accounted for as liabilities under **ASC 480** due to their share-settled debt features[332](index=332&type=chunk)[333](index=333&type=chunk)[336](index=336&type=chunk) - **DHAC** booked a liability of **$72,396** for the 1% excise tax on shares redeemed during **2023**, as per the **Inflation Reduction Act of 2022**[346](index=346&type=chunk) [Initial Public Offering](index=88&type=section&id=NOTE%203.%20INITIAL%20PUBLIC%20OFFERING) On November 8, 2021, DHAC consummated its IPO, selling **11.5 million units** at **$10.00** per unit for **$115 million**, with each unit including one common share and one warrant exercisable at **$11.50** per share - The **Initial Public Offering** was consummated on **November 8, 2021**[347](index=347&type=chunk) - **DHAC** sold **11,500,000 units** at **$10.00 per unit**, generating gross proceeds of **$115,000,000**[347](index=347&type=chunk) - Each unit consists of one **common share** and one warrant, with each warrant exercisable for one **common share** at a price of **$11.50**[347](index=347&type=chunk) [Private Placement](index=88&type=section&id=NOTE%204.%20PRIVATE%20PLACEMENT) Simultaneously with the IPO, DHAC sold **557,000 Private Placement Units** to its Sponsor at **$10.00** per unit for **$5.57 million**, with proceeds placed in the Trust Account, and the Sponsor waived certain redemption rights - Simultaneously with the **IPO** closing, **DHAC** sold **557,000 Private Placement Units** to the **Sponsor** at **$10.00 per unit**, generating gross proceeds of **$5,570,000**[348](index=348&type=chunk) - The **private placement units** are identical to the units sold in the **Initial Public Offering** but are not redeemable[348](index=348&type=chunk) - The **Sponsor** and affiliates have agreed to waive their redemption rights with respect to their **founder shares** and **public shares**, and their rights to **liquidating distributions** from the **Trust Account** with respect to their **founder shares** if the Company fails to complete the initial **Business Combination** within the **Combination Period**[349](index=349&type=chunk) [Related Party Transactions](index=90&type=section&id=NOTE%205.%20RELATED%20PARTY%20TRANSACTIONS) This note details various financial arrangements and transactions between DHAC and its related parties, including founder shares, advances, promissory notes, and financing agreements, all intended to support the business combination - **2,875,000 founder shares** are outstanding after initial purchases and forfeitures[352](index=352&type=chunk) - Key related-party financial arrangements: - **Sponsor Note Payable**: **$602,720** borrowed for **IPO** expenses, repaid on **November 12, 2021** - **Advances from Related Party**: **$117,871** owed to the **Sponsor** as of **December 31, 2023** - **Promissory Note Related Party (Sponsor)**: **$350,000 loan** (**Oct 2022**) for term extension, to be converted into **Series A Preferred Shares** at Closing - **Promissory Note Related Party (SCS Capital Partners LLC)**: Aggregate **$765,000 in loans** (**Feb/Aug/May 2023**) to be converted into **Series A Preferred Shares** at Closing - **Promissory Note – M2B Funding Corp.**: **$165,000** principal (**Oct 2023**), paid in full for **$190,750** on **January 31, 2024**[353](index=353&type=chunk)[355](index=355&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk)[360](index=360&type=chunk)[510](index=510&type=chunk) - The **Bridge Notes** (**$2,222,222** aggregate principal) issued to the **Bridge Investor** (**Sponsor** investor) in **October 2022** defaulted on **October 4, 2023**, resulting in **$1,579,927** in **default interest**[362](index=362&type=chunk)[363](index=363&type=chunk)[416](index=416&type=chunk) - Key related-party financial arrangements: - **Exchange Note**: On **November 21, 2023**, certain **Bridge Note** amounts were exchanged for a **$2,523,744 Exchange Note**, bearing **8% interest**, convertible into **common stock** at **$10.00 per share** (subject to reset) - **Additional Bridge Notes**: On **November 21, 2023**, the **Bridge Investor** agreed to purchase additional promissory notes in the aggregate principal amount of **$166,667**, bearing **8% interest**, convertible at **$10.00 per share** (subject to reset). **$100,000** was funded as of **December 31, 2023** - **Quantum Financing**: On **November 21, 2023**, the **Quantum Investor** (**Sponsor** affiliate) subscribed for a **$3,000,000 convertible promissory note** with a **7% original issue discount**, bearing **12% interest**, convertible at **$10.00 per share** or **85%** of the lowest daily **VWAP** (subject to reset) - **Equity Financing**: On **November 21, 2023**, **DHAC** entered into an **equity line of credit agreement** with an affiliate of the **Bridge Investor** for up to **$50,000,000** of **common stock** over a **36-month period** post-closing[363](index=363&type=chunk)[364](index=364&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk)[420](index=420&type=chunk)[423](index=423&type=chunk)[438](index=438&type=chunk)[440](index=440&type=chunk) - **DHAC** pays an affiliate of the **Sponsor** **$10,000** per month for office space and administrative services[374](index=374&type=chunk) [Commitments](index=96&type=section&id=NOTE%206.%20COMMITMENTS) This note details DHAC's various commitments, including registration rights, a **$4.37 million** deferred underwriting commission, the business combination agreement with VSee and iDoc, and several related financing transactions involving convertible notes and warrants - Holders of **founder shares** and **private placement units** have **registration rights**[379](index=379&type=chunk) - A **deferred underwriting commission** of **$4,370,000** to **A.G.P.** will be converted into **4,370 shares** of **Series A Preferred Stock** at the closing of the **Business Combination**[381](index=381&type=chunk) - **DHAC** entered into the **Third Amended and Restated Business Combination Agreement** on **November 21, 2023**, with **VSee Lab, Inc.** and **iDoc Virtual Telehealth Solutions, Inc.**[382](index=382&type=chunk)[393](index=393&type=chunk) - Key business combination terms and financing: - The **Business Combination** implies a **$53.9 million** post-closing equity value and a current combined equity value of **VSee** and **iDoc** at **$110 million** - **VSee Merger Consideration**: **$60,500,000** (minus option grants and expenses), paid in Company **Common Stock** - **iDoc Merger Consideration**: **$49,500,000** (minus transaction expenses), paid in Company **Common Stock**[386](index=386&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk) - The **VSee Health, Inc. 2024 Equity Incentive Plan** will be adopted, with an initial aggregate share reserve equal to **15%** of the post-closing **DHAC Common Stock**[395](index=395&type=chunk) - The **PIPE financing agreement** was terminated on **July 11, 2023**, due to unmet closing conditions[405](index=405&type=chunk) - The **Backstop Agreement**, which provided for the **Sponsor** to purchase unsubscribed Additional PIPE Securities, was terminated on **July 11, 2023**, along with the **PIPE Financing**[410](index=410&type=chunk) - Key business combination terms and financing: - **Bridge Financing**: Original **Bridge Notes** (**$2,222,222** aggregate principal) issued to the **Bridge Investor** in **October 2022**. Defaulted on **October 4, 2023**, triggering penalties and **default interest** - **Exchange Note**: On **November 21, 2023**, certain **Bridge Note** amounts were exchanged for a **$2,523,744 Exchange Note**, bearing **8% interest**, convertible into **common stock** at **$10.00 per share** (subject to reset). Accounted for as a liability under **ASC 480** - **Additional Bridge Financing**: On **November 21, 2023**, the **Bridge Investor** agreed to purchase additional promissory notes in the aggregate principal amount of **$166,667**, bearing **8% interest**, convertible at **$10.00 per share** (subject to reset). **$100,000** was funded as of **December 31, 2023**. Accounted for as a liability under **ASC 480** - **Extension Financing**: A **$300,000 Extension Note** was issued to an institutional investor in **May 5, 2023**, with a **16.67% original issue discount** and **10% guaranteed interest**. It included **26,086 Extension Warrants** and **7,000 Extension Shares**. The **early repayment option** is **bifurcated as a derivative**. Net of discount, the note was **$233,774** as of **December 31, 2023** - **Quantum Financing**: On **November 21, 2023**, the **Quantum Investor** subscribed for a **$3,000,000 convertible promissory note** with a **7% original issue discount**, bearing **12% interest**, convertible at **$10.00 per share** or **85%** of the lowest daily **VWAP** (subject to reset). To be accounted for as a liability under **ASC 480** upon funding - **Equity Financing (ELOC)**: On **November 21, 2023**, **DHAC** entered into an **equity line of credit agreement** with an affiliate of the **Bridge Investor** for up to **$50,000,000** of **common stock** over a **36-month period** post-closing. A **$500,000 convertible note** will be issued as a **commitment fee**. Accounted for as a liability under **ASC 815**[411](index=411&type=chunk)[416](index=416&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk)[423](index=423&type=chunk)[424](index=424&type=chunk)[427](index=427&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk)[431](index=431&type=chunk)[433](index=433&type=chunk)[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk)[443](index=443&type=chunk) [Stockholders' Deficit](index=112&type=section&id=NOTE%207.%20STOCKHOLDERS%27%20DEFICIT) DHAC is authorized to issue **50 million** common shares, with **3.49 million** outstanding as of December 31, 2023, and its certificate of incorporation outlines liquidation procedures if a business combination is not completed within the extended period - **DHAC** is authorized to issue **50,000,000 common shares** with a par value of $0.0001 per share[445](index=445&type=chunk) - As of **December 31, 2023**, there were **3,489,000 shares** of **common stock** issued and outstanding (excluding **114,966 shares** subject to redemption)[445](index=445&type=chunk) - Holders of record of the Company's **common stock** are entitled to one vote for each share held on all matters to be voted on by stockholders[445](index=445&type=chunk) - If the Company does not consummate its initial **Business Combination** within **27 months** from the closing of this offering (as extended as of **December 31, 2023**), it will cease operations, redeem **public shares**, and dissolve[446](index=446&type=chunk) [Warrants](index=114&type=section&id=NOTE%208.%20WARRANTS) This note details the terms of various DHAC warrants, including IPO, Private Placement, Bridge, and Extension Warrants, all exercisable for common stock at **$11.50** per share with specific exercise periods and redemption conditions - There are **12,057,000 warrants** issued and outstanding as of **December 31, 2023** and **2022**, issued in connection with the **Initial Public Offering**[452](index=452&type=chunk) - Each warrant entitles the holder to purchase one **common share** at a price of **$11.50** per whole share, subject to adjustment[452](index=452&type=chunk) - Warrants become exercisable **30 days** after the completion of the initial **Business Combination** or **12 months** from the closing of the **Initial Public Offering**, and expire **five years** after the completion of the initial **Business Combination**[452](index=452&type=chunk) - The Company may call the warrants for redemption at **$0.01** per warrant if the **common stock** price equals or exceeds **$18.00** per share for **20 trading days** within a **30-day period**, and there is a current registration statement in effect[454](index=454&type=chunk)[457](index=457&type=chunk) - The **Private Placement Warrants** are identical to the warrants underlying the units in the **Initial Public Offering** but are not redeemable[454](index=454&type=chunk) - **173,913 Bridge Warrants** were issued on **October 6, 2022**, with an exercise price of **$11.50** per share, expiring **five years** from issuance[466](index=466&type=chunk) - **26,086 Extension Warrants** were issued on **May 5, 2023**, with an exercise price of **$11.50** per share, expiring **five years** from issuance[473](index=473&type=chunk) [Income Tax](index=123&type=section&id=NOTE%209.%20INCOME%20TAX) DHAC's net deferred tax assets were fully offset by a valuation allowance, resulting in zero net deferred tax assets, with an effective tax rate of **0.0%** in 2023 and **6.1%** in 2022, and **$1.82 million** in net operating loss carryovers - **DHAC**'s **net deferred tax assets** were offset with a full **valuation allowance**, resulting in zero **deferred tax assets**, net of allowance, as of **December 31, 2023** and **2022**[479](index=479&type=chunk) Effective Tax Rate | Year Ended December 31, | Effective Tax Rate (%) | | :---------------------- | :----------------- | | 2023 | 0.0 % | | 2022 | 6.1 % | - The **effective tax rate** differs from the **statutory tax rate** of **21.0%** due to the **valuation allowance** on the **deferred tax assets**[320](index=320&type=chunk)[484](index=484&type=chunk) - As of **December 31, 2023**, the Company has **$1,822,738** of **U.S. federal and state net operating loss carryovers** available to offset future taxable income[480](index=480&type=chunk) [Fair Value Measurements](index=124&type=section&id=NOTE%2010.%20FAIR%20VALUE%20MEASUREMENTS) This note details DHAC's fair value measurements for financial assets and liabilities, categorized into a three-tier hierarchy, with Trust Account investments as Level 1 and several liabilities (e.g., Extension Note, ELOC, Exchange Note) classified as Level 3 due to unobservable inputs - **Fair value** is classified into a **three-tier hierarchy**: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[337](index=337&type=chunk)[342](index=342&type=chunk) Investments Held in Trust Account (Fair Value) | Year Ended December 31, | Type | Level | Fair Value ($) | | :---------------------- | :--------------- | :---- | :----------- | | 2023 | Money Market Funds | 1 | $1,368,637 | | 2022 | Money Market Funds | 1 | $7,527,369 | Financial Liabilities at Fair Value (December 31, 2023) | Liability | Fair Value ($) | Level | | :---------------------------------- | :----------- | :---- | | Extension Note – Bifurcated Derivative | $22,872 | 3 | | ELOC | $203,720 | 3 | | Additional Bridge Note | $102,726 | 3 | | Exchange Note | $2,621,558 | 3 | - The **Bridge Note Bifurcated Derivative** was **derecognized** as of **November 21, 2023**, due to the **extinguishment** of the **Bridge Note**[490](index=490&type=chunk) - The **PIPE Forward Contract** was **derecognized** as of **July 11, 2023**, due to the termination of the **PIPE Financing**[495](index=495&type=chunk) - **Level 3 valuations** for derivatives and notes utilize models such as **Probability Weighted Expected Return Method (PWERM)**, **Discounted Cash Flow (DCF)**, and **Monte Carlo Model (MCM)**, relying on **unobservable inputs**[490](index=490&type=chunk)[492](index=492&type=chunk)[495](index=495&type=chunk)[497](index=497&type=chunk)[501](index=501&type=chunk)[503](index=503&type=chunk) [Subsequent Events](index=129&type=section&id=NOTE%2011.%20SUBSEQUENT%20EVENTS) This note discloses subsequent events after December 31, 2023, including the repayment of the M2B note, purchase of an Additional Bridge Note, extension of the business combination deadline to May 8, 2024, and amendments to the business combination agreement - The **promissory note** to **M2B Funding Corp.** was paid in full for **$190,750** on **January 31, 2024**[510](index=510&type=chunk) - The **Bridge Investor** purchased the second **Additional Bridge Note** in the principal amount of **$55,556** on **January 25, 2024**[511](index=511&type=chunk) - The **business combination deadline** was extended from **February 8, 2024**, to **May 8, 2024**, on **February 2, 2024**[512](index=512&type=chunk) - On **February 13, 2024**, amendments were made to the **Third Amended and Restated Business Combination Agreement** and certain **Conversion SPAs**, allowing specific **VSee and iDoc indebtedness** to be assumed by **DHAC** and converted into **DHAC common stock** following the closing[513](index=513&type=chunk)[514](index=514&type=chunk) ```