VSee Health disclosed in a July 24 regulatory filing that it has reached a comprehensive settlement with its noteholder ADI Funding LLC and M2B Funding Corp., resolving a dispute that began in mid-June when ADI alleged the company had defaulted on a secured promissory note.
The settlement, dated July 21, 2026, addresses all outstanding claims related to a $271,739.13 secured note issued on June 8, 2026. ADI had previously asserted an event of default, claiming VSee Health failed to file a resale registration statement, failed to file a Form 8-K related to an equity line of credit with M2B, and failed to issue transfer agent instructions for commitment shares, all by a June 11 deadline.
Under the terms of the settlement agreement, VSee Health committed to several financial obligations. The company must repay the existing note within ninety days, or immediately upon receiving proceeds from any financing transaction. Fifty percent of gross proceeds from any new financing will be applied toward repayment until the note is satisfied in full, with the equity line of credit arrangement directing one hundred percent of its proceeds to ADI until repayment is complete.
The company also agreed to pay ADI $50,000 in cash within three business days, with a $500 per day late charge if the payment is delayed. Additionally, VSee Health will issue two new convertible promissory notes: a $50,000 note to ADI and a $125,000 note to M2B. Both notes mature in six months, carry no interest before maturity, and can be prepaid without penalty. If unpaid at maturity, interest accrues at eighteen percent per annum retroactive to the issuance date. The holders may convert outstanding balances into common stock at seventy-five percent of the lowest volume-weighted average price during the twenty trading days preceding conversion.
Beyond the cash and notes, VSee Health will issue one million restricted shares of common stock, split equally between ADI and M2B, each with piggyback registration rights.
The settlement agreement contains acceleration provisions triggered by several events of default, including failure to make timely payments, failure to issue the settlement shares or notes, or breach of any material covenant. Upon default, all obligations accelerate, unpaid notes accrue interest at eighteen percent, conversion rights become immediately exercisable, and ADI’s original rights under the transaction documents are reinstated.
The mutual release of liability is conditioned upon the company completing the $50,000 cash payment, issuing the settlement notes and shares, and filing the Form 8-K disclosing the agreement. The settlement notes and shares were issued in transactions exempt from registration under Section 4(a)(2) of the Securities Act.
This resolution follows a period of active capital structure management at VSee Health. The company recently terminated a standby equity purchase agreement and reduced the maximum ratio of a proposed reverse stock split from 250-for-1 to 80-for-1, moves it characterized as efforts to minimize shareholder dilution while maintaining financial flexibility.