VSEE 10-K & 10-Q changes, risk factors and insider trading

In connection with the preparation of our financial statements for the fiscal year ended December 31, 2024, we identified material weaknesses in our internal control over financial reporting and clinical trial expenses. If we fail to maintain an efectiveeffective systemofsystem of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harmourharm our business and the trading price of our Common Stock and listed Warrants.

In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2024,2025, our management identified material weaknesses in our internal control over financial reporting related to the lack of sufficient number of personnel within the accounting function to adequately segregate duties, we did not have a designed and implemented effective Information Technology General Controls (“ITGC”) related to access controls to financial accounting system, we did not have a formalized control environment and oversite of controls over financial reporting, and we lack proper accounting for significant or non-recurring transactions.

We intend to continue to take steps to enhance our internal controls, including implementing additional internal procedures and utilizing well-established external consulting resources with experience and expertise in accounting principles generally accepted in the United States (“U.S. GAAP ”) and public company accounting and reporting requirements.

The following discussion and analysis provide information that VSee Health’s management believes is relevant to an assessment and understanding of the results of operations and financial performance of VSee Health, Inc. (“VSee Health” and for purposes of this section only, referred to as the “Company”, “we,” “us” and “our”). The discussion and analysis should be read together with VSee Health’s consolidated financial statements as of and for the yearyears ended December 31, 20242025 and 2023,2024, and the related respective notes thereto. This discussion may contain forward-looking statements based upon VSee Health’s current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under “Risk Factors” in this Annual Report and the section herein entitled “Cautionary Note Regardingon Forward-Looking Statements.”

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

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

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

Significant Accounting Policies and Critical Accounting Estimates

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

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 32 to our consolidatedConsolidated financialFinancial statementsStatements for the year ended December 31, 20242025, included elsewhere in this report. Our critical accounting policies and estimates are described below.

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

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

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

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

Performance obligations in the contract for telemedicine care are based on services provided via the use of hardware and software integration that includes multi-participant video conferencing, and electronic communication for 24 hours per day, seven days per week for the duration of the contract. The Company provides administrative support for the tele-physician services and coordinates the services of its clinicians’ network through administrative support, hardware support, and software support and provider coverage availability. The Company provides coverage availability of its physician services ranging from 12 to 2412-24 hours per day. Performance obligations in the contract for these services transferred to the customer are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from patient services and institutional services obligations. Performance obligations are met when the Company provides administrative, business, and medical records and reports related to their professional services rendered pursuant to the agreement in such format and upon such interval as hospitals may require. Revenue from telemedicine care services is included in telehealth fees in the consolidated financial statements.

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

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

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

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

Other income during the year ended December 31, 2024,2025, increaseddecreased $2,819,304,$7,867,460 or 21,079%280% as compared to the same period lastprior year. The increasedecrease was primarily driven by the gainloss on change in fair value of on the debt and derivative financial instruments of $6,176,097,$7,626,368, and an increase in the interest expense of $2,600,402, primarily due to the conversion of the total interest due on the Quantum note, new loan agreements entered into in the current year, and default interest incurred during the current year. The decline in other income was partially offset by the $2,513,234 initial fair valueimprovement in loss on the Quantum Note, loss on extinguishment of $645,979the related to note conversions and shares issued to vendors, $107,862 gain on forgivenessloan of debt$424,777 induring the current year, compared to the prior year, and $90,200 change in the far value on embedded derivative.year.

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzesanalyses its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At December 31, 2024,2025, the Company had cash of $326,115$5,266,286 and working capital deficit of $15,989,353.$7,879,201. The Company’s current cash on hand is insufficient to satisfy its operating cash needs for the 12 months following the filing of this Annual Report on Form 10-K. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the consolidated financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include raising additional working capital through public or private equity or debt financings or other sources,sources and may include collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

The following table presents selected captions from VSeethe Health’sCompany’s consolidated statements of cash flows for the years ended December 31, 20242025 and 20232024:

VSeeThe Health’sCompany’s principal sources of liquidity are cash totalingand $326,115cash equivalents, totalling $5,266,286 and $118,734$326,115 as of December 31, 20242025 and 2023,2024, respectively.

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

Cash used in operating activities was $632,595$3,445,733 for the year ended December 31, 2023.2025. ThisCash consistedused in operating activities consists of a net loss of $3,725,454,$14,361,478, adjusted for non-cash items of $(1,781,632),$7,390,284 and an$3,525,461 increase in net changes in operating assets and liabilities of $1,311,227. liabilities. The net changes in operating assets and liabilities were primarily driven by increases in accounts payable and accrueddeferred liabilitiesrevenue andprimarily due to related party, partially offset bydrove the increase in accountsoperating receivableassets and the decrease in deferred revenue.liabilities.

Cash used for investing activities for the year ended December 31, 2024,2025, was $26,144,$29,928, and was driven primarily by $55,267 for the purchase fixed assets and was slightly offset by $29,123 of cash acquired from the acquisition of iDoc. Cash used for investing activities for the year ended December 31, 2023 was $4,335 and was used to purchase fixed assets.

Cash provided by financing activities for the year ended December 31, 2024,2025, was $6,023,067,$8,415,832, primarily consisting of $2,700,000$1,759,371, $5,519,085 and $1,500,003 of proceeds from notes issued during the Quantum Note, $2,000,000period, proceeds from thepre Decemberfunded 2024warrants Convertibleand Note,issuance $1,323,362of fromcommon the recapitalization with DHAC,stock and offset by $335,750,$10,000, $180,397,$179,007, $47,800,$44, $38,200$25,000 and $52,680$148,576 for payment to shareholder, payments on factoring payables, payments due on acquisition purchase, payments on financing lease liabilities and repayment on the Extension Note, factoring payable, advances from a related party, note payable, and Additional Bridge Financing, respectively.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could materially affect our business, financial condition, or future operating results and cash flows. WeOther than as described below, we do not believe that there have been any material changes changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The risks described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other reports we file with the SEC are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, operating results and/or cash flows.

The following discussion and analysis provide information that VSee Health’s management believes is relevant to an assessment and understanding of the results of operations and financial of VSee Health, Inc. (“VSee Health” and for purposes of this section only, referred to as the “Company”, “we,” “us” and “our”). The discussion and analysis should be read together together with VSee Health’s consolidated financial statements as of and for the three and six months ended MarchJune 31,30, 2026,2026 and 2025, and the the related respective notes thereto. This discussion may contain forward-looking statements based upon VSee Health’s current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under “Risk Factors” in the Annual Report for the year ended December 31, 20252025, and the section herein entitled “Cautionary Note Regarding Forward-Looking Statements. Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been impacted by the restatement described in the Explanatory Note to this Annual Report and to our consolidated financial statements entitled “Restatement of Previously Issued Financial Statements. “Certain of the financial and other information provided in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been amended to give effect to such restatement adjustments.”

Prior to June 24, 2024, we were a blank check company incorporated in the State of Delaware organized for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On June 24, 2024, we completed the Business Combination pursuant to the Business Combination Agreement dated as of November 21, 2023, as amended by the first amendment dated February 13, 2024, and the second amendment dated April 17, 2024 (as amended, the “Business Combination Agreement”) that we entered into with VSee Lab and iDoc. Upon the completion of the Business Combination, we changed our name to “VSee Health, Inc.” and the business of VSee Lab and iDoc became our business. On May 31, 2026, the Company divested VSee Lab by selling 100% of its ownership interest to Milton Chen, the Company’s former co-Chief Executive Officer. Following the divestiture, VSee Lab became an independent standalone business and is no longer a subsidiary of VSee Health. Accordingly, VSee Lab has been classified as a discontinued operation for periods subsequent to the divestiture date, where applicable. (See Note 3 – Discontinued Operations). Mr. Chen also resigned as the Company’s co-Chief Executive Officer and Chairman of the Board of Directors in connection therewith.

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

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

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

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

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

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 2 to our Unaudited Condensed Consolidated Financial Statements for the three-month and six-month period ended MarchJune 31,30, 2026,2026 included elsewhere in this report. Our critical accounting policies are described below.

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

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

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

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

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

Total The total transaction price is based on the amount to which wethe Company areis entitled to basebased on the contracts with its customers. WeThe believeCompany believes the quoted transaction prices in the customer contracts represent the standalonestand-alone selling prices for each of the separate performance obligations which are distinct and priced separately within the contract. ConsiderationThe promised in our contracts includes both fixed and variable amounts. Our variable consideration is based on fixed unittransaction price for promisedeach services,service thoughprovided is independent and established in the totalcontract consideration is dependent upon the actual amounts of promised services used by the customers. If necessary, we estimate the total variable considerationand based on the duration informationof availableservice provided or for a rate for service provided. Fees are established based on the service transferred to management,the and updates such estimates each financial period when needed.client.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone stand-alone selling price (“SSP”). The determination of a SSP for each distinct performance obligation requires judgment. WhereThe applicable,Company believes wethe establishquoted transaction prices in the customer contracts represent the standalone selling prices basedfor on the observable priceseach of the goodseparate or service whenperformance we sellobligations that goodare ordistinct serviceand priced separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, we estimatewithin the standalone selling price using the expected cost plus a margin approach.contract.

5) Recognize revenue when or or as wethe satisfyCompany satisfies a performance obligation

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

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

We actThe Company acts as the principal in these arrangements because it controls the medical services before they are transferred to the patient. This control is evidenced by the ourCompany’s primary responsibility for fulfilling the service and its direct authority over the affiliated physicians, including including the right to direct their clinical activities and administrative protocols.

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

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

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

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

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

Performance obligations in the contract for telemedicine care are based on services provided via the use of hardware and software integration that includes multi-participant video conferencing, and electronic communication for 24 hours per day, seven days per week for the duration of the contract. WeThe Company provideprovides administrative support for the tele-physician services and coordinates the services of its clinicians’ network network through administrative support, hardware support, and software support and provider coverage availability. WeThe provideCompany provides coverage availability of its physician services ranging from 12-2412 to 24 hours per day. Performance obligations in the contract for these services transferred transferred to the customer are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from patient services and institutional services obligations. Performance obligations are met when wethe provideCompany provides administrative, business, and medical records and reports related to their professional services rendered pursuant to the agreement in such format and upon such interval as hospitals may require. Revenue from telemedicine care services is included in telehealth fees in the condensed consolidated financial financial statements.

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

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

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

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

We commenceThe Company commences revenue recognition on EEG professional interpretation services when wethe satisfyCompany satisfies its performance obligation to provide professional interpretation monthly.

See Note 14 16 - Fair Value Measurements of the financial statements for additional information on assets and liabilities measured at fair value.

Goodwill represents the excess of purchase price in a business combination over the fair value of the net identifiable assets acquired. We evaluate goodwill for impairment at the reporting unit level by assessing whether it is more likely than not that the fair value of a reporting unit exceeds itsit carrying value. If this assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired,impaired and no further impairment testing is required. Conversely, if the assessment concludes that it is more likely than not that the fair value of a reporting unit is less than itsit carrying value, a goodwill impairment test is performed to compare the fair value of the reporting unit to its carrying value. WeThe determineCompany determines fair value of the two reporting units using both income and market-based models. Our models contain significant assumptions and accounting estimates about discount rates, future cash flows, and terminal values that could materially affect our operating results or financial position if they were to change significantly in the future and could result in an impairment. We perform our goodwill impairment assessment whenever events or changes in facts or circumstances indicate that impairment may exist and during the fourth quarter each year. The cash flow estimates, estimates and discount rates incorporate management’s best estimates, using appropriate and customary assumptions and projections at the date of evaluation. During the year ended December 31, 2025, we determined there were triggering events that required us to perform a quantitative analysis. Based on the analysis, we concluded that the fair value of the Telehealth Services reporting unit was less than it’s carrying value. As a result, we recorded non-cash goodwill impairment charges of $56,675,210 on the consolidated statement of operations for the year ended December 31, 2025. For the three and six months ended MarchJune 31,30, 2026, wethe Company performed qualitative analysis by assessing that no adverse economic, industry, operational, or regulatory indicators were identified that would suggest impairment. Based on the qualitative assessment of relevant factors, wethe concludedCompany concludes that no impairment indicators exist and determined that there were no triggering events that required usthe Company to perform a quantitative analysis.

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

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

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

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

Three Months Ended MarchJune 31,30, 2026, and 2025 Results of Operations

The following table presents ourVSee Health’s results of operations for the three months ended MarchJune 31,30, 2026,2026 and 2025:

iDoc entersWe intogenerate revenue through management and administrative services contracts with hospitals and hospital systems to provide telehealth physician services, teleradiology services, and acute care patient services. ItWe also generatesgenerate revenue by directly billing insurance companies for care provided at hospitals and hospital systems. Revenue streams include telehealth fees, patient fees, teleradiology fees, and institutional fees. These contracts typically range from two to three years and are subject to automatic renewal.

Revenue was $3,160,185$1,561,884 and $3,441,177 for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $3,321,485$1,055,191 and $2,252,805 for the threecorresponding monthsperiods ended March 31, in 2025, arepresenting decrease increases of $161,300,$506,693, or 5%.48%, and $1,188,372, or 53%, respectively. The overallincreases declinewere wasprimarily driven primarily by lower services revenue growth in ourtelehealth VSee Lab business, partially offset by growth in iDoc’s Teleradiology service linefees and expandedpatient patient-fee billing.fees.