VSee Health, Inc. Announces \$336,000 Unsecured Convertible Note Financing with Labrys
Key Highlights
- VSee Health, Inc. (Nasdaq: VSEE) entered into a Securities Purchase Agreement with Labrys, an institutional investor, on June 30, 2026.
- The Company issued an unsecured convertible promissory note for a principal amount of \$336,000, with the Company receiving an actual purchase price of \$300,000.
- This note is convertible into shares of VSee Health’s common stock at a significant discount to market price and contains terms that may be highly dilutive to existing shareholders.
- The shares underlying the note are not registered under the Securities Act and are issued pursuant to exemptions for private placements.
- Failure to obtain shareholder approval for share issuance exceeding 6,000,000 shares within 180 days of the issue date constitutes an Event of Default, triggering a potentially severe financial penalty.
- The Company is subject to stringent covenants restricting use of proceeds, changes to the business, and additional financings.
Details of the Convertible Note Financing
On June 30, 2026, VSee Health, Inc. entered into a financing arrangement with Labrys Capital, a well-known institutional investor in the micro-cap space. Under the Securities Purchase Agreement (Labrys SPA), VSee issued an unsecured convertible promissory note (the “Labrys Note“) with a principal amount of \$336,000. The Company received net proceeds of \$300,000 after accounting for fees and discounts.
The note is unsecured and can be converted, at Labrys’ option, into shares of VSee Health’s common stock at any time. The conversion price is set at 75% of the lowest closing bid price of the common stock on Nasdaq during the 10 trading days immediately prior to conversion. This means Labrys will receive shares at a deep discount to market, resulting in significant dilution to existing shareholders.
Shareholder Approval Requirement and Dilution Risk
A critical term for shareholders is the “Exchange Cap“: VSee cannot issue more than 6,000,000 shares of common stock upon conversion of the note unless it obtains shareholder approval pursuant to Nasdaq Rule 5635(d). The Company is required to call a special shareholder meeting to approve this increase. If such approval is not obtained within 180 days, or if more than 6,000,000 shares are otherwise issued, an Event of Default will occur.
In the event of default (including, but not limited to, failure to obtain shareholder approval, material adverse events, or breach of covenants), the outstanding amount of the note becomes immediately due and payable at a 150% premium of the principal and accrued interest, plus costs and legal fees. This is a potentially severe financial penalty that could have a material adverse impact on VSee Health’s financial position and share value.
Other Terms and Covenants
- Use of Proceeds: The Company must use the proceeds strictly for business development and general working capital—not for repayment of insiders, loans to affiliates, or prohibited transactions.
- Restriction on Corporate Actions: VSee cannot change the nature of its business, sell or acquire material assets, or enter into additional financings without Labrys’ consent until the note is repaid or fully converted.
- Listing Requirement: The Company must maintain its listing on Nasdaq or an equivalent market. Suspension, delisting, or trading halts constitute Events of Default.
- Most Favored Nation Clause: If VSee grants better terms to another investor in a future financing, Labrys is entitled to those terms.
- Public Information and Disclosure: The Company must comply with all SEC reporting requirements and avoid providing material non-public information to the investor unless simultaneously disclosed to the market.
- No Off-Balance Sheet Arrangements: The Company represents it has no undisclosed off-balance sheet entities or relationships.
- Solvency and Financial Health: The Company asserts it is solvent after giving effect to this financing, but failure to remain so would trigger default.
Events of Default – High Investor Risk and Potential Price Impact
The agreement contains a lengthy list of Events of Default (EOD), any of which could result in Labrys demanding immediate payment of a 50% penalty above principal and accrued interest. These include, but are not limited to:
- Failure to pay principal, interest, or amortization payments when due
- Failure to issue conversion shares promptly
- Failure to maintain sufficient share reserves or listing status
- Failure to obtain shareholder approval for additional share issuances
- Breach of representations, warranties, or covenants
- Delisting, trading halts, or suspension on Nasdaq
- Bankruptcy or insolvency events
Each of these Events of Default could have a severe negative impact on VSee Health’s share price and financial position.
Potentially Price-Sensitive Issues for Shareholders
- Massive Potential Dilution: The conversion price formula (75% of lowest bid) could result in a large number of new shares being issued to Labrys at prices well below market, diluting existing shareholders significantly.
- Event of Default Triggers: Failure to obtain shareholder approval for additional shares, or any breach of the agreement, triggers a 50% penalty and immediate payment obligation, which could jeopardize the company’s financial health.
- Solvency and Listing Risk: Any indication that VSee Health is at risk of delisting or financial instability would likely have a material, negative impact on the share price.
- “Toxic” Nature of Financing: The terms (deep discount, “death spiral” conversion, high default penalties, and MFN clause) are generally viewed as highly unfavorable to common shareholders and could be perceived as a sign of financial distress.
Conclusion
This financing provides VSee Health, Inc. with short-term working capital but introduces significant risk to existing shareholders, including substantial dilution, potential for default and financial penalties, and negative price pressure due to the deep-discount conversion feature. Shareholders should closely monitor the Company’s ability to secure shareholder approval, maintain Nasdaq compliance, and avoid triggering an Event of Default.
Disclaimer: This communication is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult their financial advisors before making investment decisions. The information herein is based on publicly available documents filed by VSee Health, Inc. and may be subject to change or amendment.
