VSee Health Enters Settlement to Resolve ADI and M2B Debt

What Happened

• VSee Health, Inc. (VSEE) announced on July 21, 2026 that it entered a Settlement Agreement with ADI Funding LLC (“ADI”) and M2B Funding Corp. (“M2B”) to resolve disputes arising from a June 8, 2026 secured promissory note (the Existing Note, $271,739.13 principal) and related transaction documents. ADI had alleged an Event of Default on June 11, 2026.
• Under the Settlement Agreement the Company agreed to repay the Existing Note within 90 days of the settlement (or earlier upon receiving financing proceeds), apply a portion of future financing proceeds to repayment, pay ADI $50,000 in cash within three business days, and issue new promissory notes and restricted common shares to ADI and M2B.

Key Details

• Existing indebtedness: $271,739.13 (secured promissory note dated June 8, 2026).
• Immediate cash: $50,000 payable to ADI within 3 business days; late charge $500 per day if unpaid (no cure period).
• Settlement Notes: ADI to receive a $50,000 promissory note and M2B a $125,000 promissory note (each maturing in 6 months, no interest until maturity, 18% retroactive interest if unpaid at maturity). Both notes allow conversion into common stock at 75% of the lowest VWAP during the 20 trading days before conversion.
• Settlement Shares: ADI and M2B each to receive 500,000 restricted shares with piggyback registration rights (1,000,000 shares total).
• Proceeds allocation: 50% of gross proceeds from future financings go to repaying the Existing Note (except the equity line of credit (ELOC), which must pay 100% to ADI). Mutual release is conditioned on payment/issuance of the cash, notes, shares and filing this Form 8-K.
• Events of Default under the Settlement accelerate all obligations, trigger 18% interest, allow immediate conversion, and reinstate ADI’s rights under the original transaction documents. Full Settlement Notes and Agreement exhibits will be filed in the Company’s 10-Q for the quarter ended Sept 30, 2026.

Why It Matters

• Credit and cash impact: The agreement forces near-term cash outlays ($50,000 immediately) and prioritizes repayment from future financings, which may constrain the company’s ability to use fresh proceeds for other purposes.
• Potential dilution: The settlement could immediately add 1,000,000 restricted shares and allows conversion of notes into common stock at a significant discount (75% of the lowest recent VWAP), potentially increasing share dilution if conversions occur.
• Default risk: The Settlement contains strict default triggers (including timely issuance of notes/shares and filing this 8-K). Failure to comply would accelerate obligations, raise interest to 18%, and restore ADI’s prior remedies.
• What to watch: investors should monitor cash balances, any announced financing transactions (and how proceeds are allocated), the Company’s 10-Q for the full note and agreement exhibits, and any future stock issuance or conversions.