DocGo Inc. 10-Q

Item 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30 , 202 3 (Unaudited) and December 31, 20 2 2 2 Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 202 3 and 20 2 2 3 Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 202 3 and 202 2 4 Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 202 3 and 202 2 5 - 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 - 34 1 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2023 December 31, 2022 Unaudited Audited ASSETS Current assets: Cash and cash equivalents $ 109,159,519 $ 157,335,323 Accounts receivable, net of allowance of $ 4,204,532 and $ 7,818,702 as of June 30, 2023 and December 31, 2022, respectively 118,498,751 102,995,397 Assets held for sale — 4,480,344 Prepaid expenses and other current assets 6,786,787 6,269,841 Total current assets 234,445,057 271,080,905 Property and equipment, net 21,937,494 21,258,175 Intangibles, net 38,050,268 22,969,246 Goodwill 47,820,840 38,900,413 Restricted cash 14,601,243 6,773,751 Operating lease right-of-use assets 9,288,582 9,074,277 Finance lease right-of-use assets 8,963,759 9,039,663 Equity method investment 392,118 597,977 Deferred tax assets 11,247,764 9,957,967 Other assets 3,538,920 3,625,254 Total assets $ 390,286,045 $ 393,277,628 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 6,690,956 $ 21,582,866 Accrued liabilities 34,787,144 31,573,031 Notes payable, current 696,308 664,913 Due to seller 17,896,030 26,244,133 Contingent consideration 26,489,294 10,555,540 Operating lease liability, current 2,479,340 2,325,024 Liabilities held for sale — 4,480,344 Finance lease liability, current 2,717,546 2,732,639 Total current liabilities 91,756,618 100,158,490 Notes payable, non-current 1,580,516 1,236,601 Operating lease liability, non-current 7,162,046 7,040,982 Finance lease liability, non-current 5,926,286 5,914,164 Total liabilities 106,425,466 114,350,237 Commitments and Contingencies STOCKHOLDERS’ EQUITY: Common stock ($ 0.0001 par value; 500,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 103,762,092 and 102,411,162 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 10,376 10,241 Additional paid-in-capital 312,101,281 301,451,435 Accumulated deficit ( 33,729,702 ) ( 28,972,216 ) Accumulated other comprehensive income 1,390,642 741,206 Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries 279,772,597 273,230,666 Noncontrolling interests 4,087,982 5,696,725 Total stockholders’ equity 283,860,579 278,927,391 Total liabilities and stockholders’ equity $ 390,286,045 $ 393,277,628 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements 2 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue, net $ 125,486,760 $ 109,519,304 $ 238,489,463 $ 227,410,856 Expenses: Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) 83,617,876 70,176,462 164,844,374 148,164,035 Operating expenses: General and administrative 30,797,237 24,637,618 60,017,554 48,498,234 Depreciation and amortization 3,831,061 2,037,771 7,480,390 4,238,792 Legal and regulatory 2,404,856 3,061,276 6,043,177 4,409,259 Technology and development 2,574,389 1,148,320 4,437,968 2,290,153 Sales, advertising and marketing 685,387 1,000,100 992,633 2,258,061 Total expenses 123,910,806 102,061,547 243,816,096 209,858,534 Income (loss) from operations 1,575,954 7,457,757 ( 5,326,633 ) 17,552,322 Other income (expenses): Interest income (expense), net 521,872 98,276 1,331,044 ( 37,330 ) Gain on remeasurement of warrant liabilities — 3,027,766 — 2,969,017 (Loss) gain on initial equity method investments ( 90,573 ) 89,810 ( 205,859 ) 6,469 Gain on remeasurement of finance leases — 1,388,273 — 1,388,273 (Loss) gain on disposal of fixed assets ( 98,630 ) — ( 153,469 ) — Other (expense) income ( 920,058 ) 15,640 ( 705,178 ) 11,387 Total other (expense) income ( 587,389 ) 4,619,765 266,538 4,337,816 Net income (loss) before income tax benefit (expense) 988,565 12,077,522 ( 5,060,095 ) 21,890,138 Income tax benefit (provision) 355,054 ( 321,660 ) 2,484,924 ( 761,839 ) Net income (loss) 1,343,619 11,755,862 ( 2,575,171 ) 21,128,299 Net income (loss) attributable to noncontrolling interests 3,354,886 ( 979,791 ) 2,901,766 ( 2,237,048 ) Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries ( 2,011,267 ) 12,735,653 ( 5,476,937 ) 23,365,347 Other comprehensive (loss) income Foreign currency translation adjustment 405,778 10,434 649,436 4,571 Total comprehensive (loss) income $ ( 1,605,489 ) $ 12,746,087 $ ( 4,827,501 ) $ 23,369,918 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic $ ( 0.02 ) $ 0.13 $ ( 0.05 ) $ 0.23 Weighted-average shares outstanding - Basic 103,585,661 99,303,948 103,085,257 100,372,146 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted $ ( 0.02 ) $ 0.11 $ ( 0.05 ) $ 0.20 Weighted-average shares outstanding - Diluted 103,585,661 115,279,676 103,085,257 116,347,874 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements 3 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Common Stock Additional Paid-in- Capital Accumulated Deficit Accumulated Other Comprehensive Loss Noncontrolling Interests Total Stockholders’ Equity Shares Amount Balance - December 31, 2021 100,133,953 $ 10,013 $ 283,161,216 $ ( 63,556,714 ) $ ( 32,501 ) $ 7,475,010 $ 227,057,024 Exercise of stock options 195,152 195 374,149 — — — 374,344 Stock based compensation — — 1,422,937 — — — 1,422,937 Equity cost — — ( 19,570 ) — — — ( 19,570 ) UK Ltd. restricted stock (Note 4) — — — — — — Noncontrolling interest contribution — — — — — 2,063,000 2,063,000 Foreign currency translation — — — — ( 5,863 ) — ( 5,863 ) Net loss attributable to noncontrolling interests — — — — — ( 1,257,257 ) ( 1,257,257 ) Net income attributable to stockholders of DocGo Inc. and Subsidiaries — — — 10,629,694 — — 10,629,694 Balance - March 31, 2022 100,329,105 10,208 284,938,732 $ ( 52,927,020 ) ( 38,364 ) 8,280,753 $ 240,264,309 Common stock repurchased ( 70,000 ) ( 70 ) ( 497,829 ) — — — ( 497,899 ) Exercise of stock options 417,927 418 778,648 — — — 779,066 Stock based compensation — — 1,999,619 — — — 1,999,619 UK Ltd. restricted stock (Note 4) 8,258 8 82,297 — — — 82,305 Net loss attributable to Noncontrolling interests — — — — — ( 979,791 ) ( 979,791 ) Foreign currency translation — — — — 10,434 — 10,434 Net income attributable to stockholders of DocGo Inc. and Subsidiaries — — — 12,735,653 — — 12,735,653 Balance - June 30, 2022 100,685,290 $ 10,564 $ 287,301,467 $ ( 40,191,367 ) $ ( 27,930 ) $ 7,300,962 $ 254,393,696 Common Stock Additional Paid-in- Capital Accumulated Deficit Accumulated Other Comprehensive Income Noncontrolling Interests Total Stockholders’ Equity Shares Amount Balance - December 31, 2022 102,411,162 $ 10,241 $ 301,451,435 $ ( 28,972,216 ) $ 741,206 $ 5,696,725 $ 278,927,391 Equity cost — — — — — — — Noncontrolling interest contribution — — — — — — — Common stock repurchased — — — — — — — Exercise of stock options 96,101 10 249,705 — — — 249,715 UK Ltd. restricted stock (Note 4) — — 167,175 — — — 167,175 Stock based compensation 424,911 42 8,181,549 — — — 8,181,591 Ambulnz Health liquidation — — — 70,284 — — 70,284 Net loss attributable to noncontrolling interests — — — — — ( 453,120 ) ( 453,120 ) Foreign currency translation — — — — 243,658 — 243,658 Net loss attributable to stockholders of DocGo Inc. and Subsidiaries — — — ( 3,465,670 ) — — ( 3,465,670 ) Balance - March 31, 2023 102,932,174 $ 10,293 $ 310,049,864 $ ( 32,367,602 ) $ 984,864 $ 5,243,605 $ 283,921,024 Acquisition of CRMS 117,330 12 1,000,000 — — — 1,000,012 Acquisition of FMC NA 360,145 36 ( 1,432,963 ) 649,167 — ( 3,213,956 ) ( 3,997,716 ) Acquisition of Healthworx — — — — — ( 1,296,553 ) ( 1,296,553 ) Exercise of stock options 260,410 26 706,379 — — — 706,405 Stock based compensation, net of tax settled in shares 92,033 9 1,778,001 — — — 1,778,010 Net income attributable to noncontrolling interests — — — — — 3,354,886 3,354,886 Foreign currency translation — — — — 405,778 — 405,778 Net loss attributable to stockholders of DocGo Inc. and Subsidiaries — — — ( 2,011,267 ) — — ( 2,011,267 ) Balance - June 30, 2023 103,762,092 $ 10,376 $ 312,101,281 $ ( 33,729,702 ) $ 1,390,642 $ 4,087,982 $ 283,860,579 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements 4 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 2,575,171 ) $ 21,128,299 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation of property and equipment 3,072,647 1,441,438 Amortization of intangible assets 2,780,580 1,279,078 Amortization of finance lease right-of-use assets 1,627,163 1,518,276 Loss on disposal of assets 153,469 — Deferred tax asset ( 1,289,797 ) — Loss (gain) on equity method investment 205,859 ( 30,290 ) Bad debt expense 976,690 1,818,792 Stock based compensation 11,801,138 3,504,861 Gain on remeasurement of finance leases — ( 1,388,273 ) Loss on liquidation of business 70,284 — Gain on remeasurement of warrant liabilities — ( 2,969,017 ) Changes in operating assets and liabilities: Accounts receivable ( 15,407,684 ) 4,310,990 Prepaid expenses and other current assets ( 223,468 ) ( 3,173,647 ) Other assets 86,334 2,128,320 Accounts payable ( 14,901,225 ) ( 2,927,492 ) Accrued liabilities 1,198,399 3,545,642 Net cash (used in) provided by operating activities ( 12,424,782 ) 30,186,977 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ( 3,559,656 ) ( 941,655 ) Acquisition of intangibles ( 1,931,602 ) ( 1,016,430 ) Acquisition of businesses ( 20,203,464 ) — Proceeds from disposal of property and equipment 277,238 — Net cash used in investing activities ( 25,417,484 ) ( 1,958,085 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from revolving credit line — 1,000,000 Repayments of notes payable ( 247,707 ) ( 287,998 ) Due to seller ( 2,556,188 ) ( 877,088 ) Noncontrolling interest contributions — 2,063,000 Proceeds from exercise of stock options 1,123,295 1,153,410 Common stock repurchased — ( 497,899 ) Equity costs — ( 19,570 ) Payments on obligations under finance lease ( 1,510,522 ) ( 1,411,565 ) Net cash (used in) provided by financing activities ( 3,191,122 ) 1,122,290 Effect of exchange rate changes on cash and cash equivalents 685,076 4,571 Net (decrease) increase in cash and restricted cash ( 40,348,312 ) 29,355,753 Cash and restricted cash at beginning of period 164,109,074 179,105,730 Cash and restricted cash at end of period $ 123,760,762 $ 208,461,483 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements 5 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Six Months Ended June 30, 2023 2022 Supplemental disclosure of cash and non-cash transactions: Cash paid for interest $ 126,770 $ 129,363 Cash paid for interest on finance lease liabilities $ 259,051 $ 222,649 Cash paid for income taxes $ 4,223,810 $ 761,839 Right-of-use assets obtained in exchange for lease liabilities $ 1,538,961 $ 2,192,946 Fixed assets acquired in exchange for notes payable $ 623,017 $ — Acquisition of remaining Ambulnz-FMC North America, LLC. through Due to seller and issuance of stock $ 7,000,000 $ — Acquisition of Cardiac RMS, LLC $ 1,000,000 $ — Reconciliation of cash and restricted cash Cash $ 109,159,519 $ 198,138,395 Restricted cash 14,601,243 10,323,088 Total cash and restricted cash shown in statement of cash flows $ 123,760,762 $ 208,461,483 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements 6 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Organization and Business Operations The Business On November 5, 2021 (the “Closing Date”), DocGo Inc., a Delaware corporation (formerly known as Motion Acquisition Corp prior to the Closing Date, “Motion” and after the Closing Date, “DocGo”), consummated the previously announced business combination (the “Closing”) pursuant to that certain Agreement and Plan of Merger dated March 8, 2021 (the “Merger Agreement”), by and among Motion Acquisition Corp., a Delaware corporation (“Motion”), Motion Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of Motion (“Merger Sub”), and Ambulnz, Inc., a Delaware corporation (“Ambulnz”). In connection with the Closing, the registrant changed its name from Motion Acquisition Corp. to DocGo Inc. As contemplated by the Merger Agreement and as described in Motion’s definitive proxy statement/consent solicitation/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 14, 2021 , Merger Sub was merged with and into Ambulnz, with Ambulnz continuing as the surviving corporation (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). As a result of the Merger, Ambulnz is a wholly-owned subsidiary of DocGo and each share of Series A preferred stock of Ambulnz, no par value (“Ambulnz Preferred Stock”), Class A common stock of Ambulnz, no par value (“Ambulnz Class A Common Stock”), and Class B common stock of Ambulnz, no par value (“Ambulnz Class B Common Stock,” together with Ambulnz Class A Common Stock, “Ambulnz Common Stock”) was cancelled and converted into the right to receive a portion of merger consideration issuable as common stock of DocGo, par value $ 0.0001 (“Common Stock”), pursuant to the terms and conditions set forth in the Merger Agreement. In connection with the Business Combination, DocGo raised $ 158.0 million of net proceeds. This amount was comprised of $ 43.4 million of cash held in Motion’s trust account from its initial public offering, net of DocGo’s transaction costs and underwriters’ fees of $ 9.6 million, and $ 114.6 million of cash in connection with the concurrent PIPE private placement of shares of common stock to certain investors at a price of $ 10.00 per share (the "PIPE Financing"), net of $ 10.4 million in transaction costs in connection with the PIPE Financing. These transaction costs consisted of banking, legal, and other professional fees, which were recorded as a reduction to additional paid-in capital. The Business DocGo Inc. and its subsidiaries (collectively, the “Company”) is a healthcare transportation and mobile health services company that uses proprietary dispatch and communication technology to provide quality healthcare transportation and healthcare services in major metropolitan cities in the United States (“U.S.”) and the United Kingdom (“U.K.”). Mobile Health performs in-person care directly to patients in the comfort of their homes, workplaces and other non-traditional locations. Ambulnz, LLC was originally formed in Delaware on June 17, 2015, as a limited liability company. On November 1, 2017, with an effective date of January 1, 2017, Ambulnz, LLC converted its legal structure from a limited liability company to a C-corporation and changed its name to Ambulnz, Inc. Ambulnz. Inc. is the sole owner of Ambulnz Holdings, LLC (“Holdings”) which was formed in the state of Delaware on August 5, 2015, as a limited liability company. Holdings is the owner of multiple operating entities incorporated in various states in the U.S. as well as within England and Wales, United Kingdom. The Company derives revenue primarily from two operating segments: Mobile Health Services and Transportation Services. Mobile Health Services include services performed at homes, offices and other temporary or fixed locations, and event services which include on-site healthcare support at sporting events and concerts. There is also an emphasis on providing total care management solutions to large population groups, which include healthcare services as well as ancillary services, such as shelter. Transportation Services encompasses both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from Transportation Services is derived from the transportation of patients based on billings to third party payors and healthcare facilities. 7 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. The Consolidated Balance Sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP. The unaudited Condensed Consolidated Financial Statements include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated upon consolidation. Noncontrolling interests (“NCI”) on the unaudited Condensed Consolidated Financial Statements represent a portion of consolidated joint ventures and a variable interest entity in which the Company does not have direct equity ownership. Accounts and transactions between consolidated entities have been eliminated. Certain amounts in the prior years’ consolidated statements of changes in stockholders’ equity and statements of cash flows have been reclassified to conform to the current year presentation. Pursuant to the Business Combination, the merger between Motion and Ambulnz was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, Motion was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Ambulnz stock for the net assets of Motion, accompanied by a recapitalization. The net assets of Motion are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Ambulnz. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio ( 645.1452 to 1) established in the Business Combination. Further, Ambulnz was determined to be the accounting acquirer in the transaction, as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”), Topic 805, Business Combinations, (“ASC 805”) and was accounted for using the acquisition method of accounting. Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of DocGo Inc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in these unaudited Condensed Consolidated Financial Statements. The Company holds a variable interest in Mobile Medical Healthcare P.C. (“MD1”, formerly known as "MD1 Medical Care P.C.") which contracts with physicians and other health professionals in order to provide services to the Company. MD1 is considered a variable interest entity (“VIE”) since it does not have sufficient equity to finance its activities without additional subordinated financial support. An enterprise having a controlling financial interest in a VIE must consolidate the VIE if it has both power and benefits—that is, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities of MD1 and funds and absorbs all losses of the VIE and appropriately consolidates MD1. Net income for the VIE was $ 120,217 for the six months ended June 30, 2023. The VIE’s total assets, all of which were current assets apart from a fixed asset amounting to $ 5,237 , amounted to $ 773,458 as of June 30, 2023. Total liabilities, all of which were current for the VIE, was $ 361,516 as of June 30, 2023. The VIE’s total stockholders’ equity was $ 411,941 as of June 30, 2023. 8 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Foreign Currency The Company’s functional currency is the U.S. dollar. The functional currency of our foreign operation is the respective local currency. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date, except for equity accounts which are translated at historical rates. The unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment for the six months ended June 30, 2023 was $ 649,436 . For the same period of 2022, it was not material to the financial statements. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in its financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue recognition related to the allowance for doubtful accounts, stock based compensation, calculations related to the incremental borrowing rate for the Company’s lease agreements, estimates related to ongoing lease terms, software development costs, impairment of long-lived assets, goodwill and indefinite-lived intangible assets, business combinations, reserve for losses within the Company’s insurance deductibles, income taxes, and deferred income tax. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations could be adversely affected. Self Insurance Reserves The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers’ compensation, general liability and auto liability. Concentration of Credit Risk and Off-Balance Sheet Risk The Company is potentially subject to concentration of credit risk with respect to its cash, cash equivalents and restricted cash, which the Company attempts to minimize by maintaining cash, cash equivalents and restricted cash with institutions of sound financial quality. At times, cash balances may exceed limits federally insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held. The Company has no financial instruments with off-balance sheet risk of loss. Major Customers The Company had one customer that accounted for approximately 36 % of sales and 36 % of net accounts receivable for the three months ended June 30, 2023 and one customer that accounted for approximately 41 % of sales and 36 % of net accounts receivable for the six months ended June 30, 2023. The Company had one customer that accounted for approximately 29 % of sales and 15 % of net accounts receivable and another customer that accounted for 14 % of sales and 12 % of net accounts receivables for the three months ended June 30, 2022. The Company had one customer that accounted for 30 % of sales and 15 % of net accounts receivable, and another customer that accounted for 17 % of sales and 12 % of net accounts receivable for the six months ended June 30, 2022. 9 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Major Vendor The Company had one vendor that accounted for approximately 13 % and 16 % of total cost for the three months ended June 30, 2023 and 2022, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided from this vendor are available from alternative sources. The Company had one vendor that accounted for approximately 11 % and 12 % of total cost for the six months ended June 30, 2023 and 2022, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided from this vendor are available from alternative sources. Emerging Growth Company 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 of 2002, 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth 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 an election to opt out is irrevocable. The Company 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, 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. This may make comparison of the 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. Reclassifications Certain reclassifications of amounts previously reported have been made to the accompanying unaudited Condensed Consolidated Financial Statements to maintain consistency between periods presented. The reclassifications had no impact on previously reported net income or retained earnings. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. The Company maintains most of its cash and cash equivalents with financial institutions in the U.S. The accounts at financial institutions in the U.S. are insured by the Federal Deposit Insurance Corporation (“FDIC”) and are in excess of FDIC limits. The Company had cash balances of approximately $ 5,336,308 and $ 8,125,966 with foreign financial institutions on June 30, 2023 and December 31, 2022, respectively. Restricted Cash and Insurance Reserves Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash in the unaudited Condensed Consolidated Balance Sheets. Restricted cash is classified as either a current or non-current asset depending on the restriction period. The Company is required to pledge or otherwise restrict a portion of cash and cash 10 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) equivalents as collateral for its line of credit, transportation equipment leases and a standby letter of credit as required by its insurance carrier (see Notes 9 and 14). The Company utilizes a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for the potential liabilities for certain risks, including workers’ compensation, automobile liability, general liability and professional liability. Liabilities associated with the risks that are retained by the Company within its high deductible limits are not discounted and are estimated, in part, by considering claims experience, exposure and severity factors and other actuarial assumptions. The Company has commercial insurance in place for catastrophic claims above its deductible limits. ARM Insurance, Inc. a Vermont-based wholly-owned captive insurance subsidiary of the Company, charges the operating subsidiaries premiums to insure the retained workers’ compensation, automobile liability, general liability and professional liability exposures. Pursuant to Vermont insurance regulations, ARM Insurance, Inc. maintains certain levels of cash and cash equivalents related to its self-insurance exposures. The Company also maintains certain cash balances related to its insurance programs, which are held in a self-depleting trust and restricted as to withdrawal or use by the Company other than to pay or settle self-insured claims and costs. These amounts are reflected in “Restricted cash” in the accompanying unaudited Condensed Consolidated Balance Sheets. Fair Value of Financial Instruments ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2023 and December 31, 2022. For certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, accounts payable and accrued expenses, and due to seller, the carrying amounts approximate their fair values as it is short term in nature. The notes payable are presented at their carrying value, which based on borrowing rates currently available to the Company for loans with similar terms, approximates its fair values. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Future changes in fair value of the contingent financial milestone consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and Condensed Consolidated Balance Sheets in the period of the change. During the year ended December 31, 2022, the Company recorded $ 4,000,000 in Contingent consideration in connection with the Ryan Brothers Atkinson, LLC business acquisition, to be paid based on the completion of certain performance obligations over a 24-month period. In relation to the acquisition of Exceptional Medical Transportation, LLC (“Exceptional”), the Company also agreed to pay up to $ 2,000,000 upon meeting certain performance conditions within two years of the Closing Date. The estimated Contingent consideration amount for Exceptional was $ 1,080,000 as of December 31, 2022. 11 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) During the year ended December 31, 2022, the Company also recorded $ 2,475,540 estimated Contingent consideration in relation to the Location Medical Services, LLC ("LMS") acquisition to be paid upon LMS meeting certain performance conditions in 2023. The outstanding balance as of June 30, 2023 increased to $ 2,587,104 as a result of foreign exchange fluctuations. For Government Medical Services, LLC ("GMS"), an amount of $ 3,000,000 was recorded in Contingent consideration to be paid upon GMS meeting certain performance conditions within a year of the Closing Date. For Cardiac RMS, LLC ("CRMS"), an amount of 15,822,190 was recorded in Contingent consideration to be paid out over 36 months for the remaining 49 % equity of CRMS, based on CRMS' attainment of full-year EBITDA targets (see Note 4). Accounts Receivable The Company contracts with hospitals, healthcare facilities, businesses, state and local government entities, and insurance providers to transport patients and to provide Mobile Health services at specified rates. Accounts receivable consist of billings for transportation and healthcare services provided to patients. Billings typically are either paid or settled on the patient’s behalf by health insurance providers, managed care organizations, treatment facilities, government sponsored programs, businesses, or patients directly. Accounts receivable are net of insurance provider contractual allowances, which are estimated at the time of billing based on contractual terms or other arrangements. Accounts receivable are periodically evaluated for collectability based on past credit history with payors and their current financial condition. Changes in the estimated collectability of accounts receivable are recorded in the results of operations for the period in which the estimate is revised. Accounts receivable deemed uncollectible are offset against the allowance for uncollectible accounts. The Company generally does not require collateral for accounts receivable . Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is recorded in operating expenses in the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: Estimated Useful Life Buildings 39 years Office equipment and furniture 3 years Vehicles 5 - 8 years Medical equipment 5 years Leasehold improvements Shorter of useful life of asset or lease term Expenditures for repairs and maintenance are expensed as incurred. Expenditures that improve an asset or extend its estimated useful life are capitalized. Software Development Costs Costs incurred during the preliminary project stage, maintenance costs and routine updates and enhancements of products are expensed as incurred. The Company capitalizes software development costs intended for internal use in accordance with ASC 350-40, Internal-Use Software . Costs incurred in developing the application of its software and costs incurred to upgrade or enhance product functionalities are capitalized when it is probable that the expenses would result in future economic benefits to the Company and the functionalities and enhancements are used for their intended purpose. Capitalized software costs are amortized over its useful life. Estimated useful life of software development activities are reviewed annually or whenever events or changes in circumstances indicate that intangible assets may be impaired and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades or enhancements to the existing functionality. 12 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Business Combinations The Company accounts for its business combinations under the provisions of ASC 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including NCI, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: (1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or (2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings. For transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company capitalizes acquisition-related costs and fees associated with asset acquisitions and immediately expenses acquisition-related costs and fees associated with business combinations. The estimated fair value of net assets to be acquired, including the allocation of the fair value to identifiable assets and liabilities, is determined using established valuation techniques. Management uses assumptions based on historical knowledge of the business and projected financial information of the target. These assumptions may vary based on future events, perceptions of different market participants and other factors outside the control of management, and such variations may be significant to estimated values. Impairment of Long-Lived Assets The Company evaluates the recoverability of the recorded amount of long-lived assets, primarily property and equipment and finite-lived intangible assets, whenever events or changes in circumstance indicate that the recorded amount of an asset may not be fully recoverable. An impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If an asset is determined to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Assets targeted for disposal are reported at the lower of the carrying amount or fair value less cost to sell. In 2022, the Company reassigned all the assets at Ambulnz Health, LLC (“Health”) to Assets held for sale as a result of an assignment for the benefit of creditors (“ABC”) transaction. The Company also recognized a non-cash charge of $ 2,921,958 for its Goodwill impairment for the year ended December 31, 2022 in the Consolidated Statements of Operations. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the total purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually on December 31 or more frequently if events or changes in circumstances indicate that it is more likely than not to be impaired. These events include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization, as indicated by its publicly quoted share price, below its net book value. Line of Credit The costs associated with the Company’s line of credit are deferred and recognized over the term of the line of credit as interest expense. Related Party Transactions The Company defines related parties as affiliates of the Company, entities for which investments are accounted for by the equity method, trusts for the benefit of employees, principal owners (beneficial owners of more than 10 % of the voting 13 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) interest), management, and members of immediate families of principal owners or management, other parties with which the Company may deal with if one party controls or can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Related party transactions are recorded within operating expenses in the Company’s unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. For details regarding the related party transactions that occurred during the periods ended June 30, 2023 and 2022, refer to Note 16. Revenue Recognition On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), as amended. To determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when (or as) the relevant performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer. The Company generates revenues from the provision of (1) ambulance and medical transportation services (“Transportation Services”) and (2) Mobile Health services. The customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations immediately. The Company has utilized the “right to invoice” expedient which allows an entity to recognize revenue in the amount of consideration to which the entity has the right to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company estimates contractual allowances at the time of billing based on contractual terms, historical collections, or other arrangements. All transaction prices are fixed and determinable, which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections by each payor. Nature of Our Services Revenue is primarily derived from: i. Transportation Services : These services encompass both emergency response and non-emergency transport services. Non-emergency transport services include ambulance transports and wheelchair transports. Net revenue from transportation services is derived from the transportation of patients based on billings to third party payors and healthcare facilities. ii. Mobile Health Services : These services include services performed at home and offices, COVID-19 testing and vaccinations, and event services which include on-site healthcare support at sporting events and concerts. There is also an emphasis on providing total care management solutions to large population groups, which include healthcare services as well as other services, such as shelter. The Company concluded that Transportation Services and any related support activities are a single performance obligation under ASC 606. The transaction price is determined by the fixed rate usage-based fees or fixed fees which are agreed upon in the Company’s executed contracts. For Mobile Health, the performance of the services and any related support activities are a single performance obligation under ASC 606. Mobile Health services are typically billed based on a fixed rate (i.e., time and materials separately or combined) fee structure taking into consideration staff and materials utilized. As the performance associated with such services is known and quantifiable at the end of a period in which the services occurred (i.e., monthly or quarterly), revenues are typically recognized in the respective period performed. The typical billing cycle for Transportation Services and Mobile Health services is same day to 5 days with payments generally due within 30 days. For large municipal customers in the Mobile Health segment, invoices are generally produced on a monthly basis, in arrears, and are generally due within 30-60 days of when they are submitted to the customer. For Transportation Services, the Company estimates the amount unbilled at month end and recognizes such amounts as revenue, based on available data and customer history. The Company’s Transportation Services and Mobile Health services each represent a 14 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) single performance obligation. Therefore, allocation is not necessary as the transaction price (fees) for the services provided is standard and explicitly stated in the contractual fee schedule and/or invoice. The Company monitors and evaluates all contracts on a case-by-case basis to determine if multiple performance obligations are present in a contractual arrangement. For Transportation Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations at the same time. For Transportation Services, where the customer pays fixed rate usage-based fees, the actual usage in the period represents the best measure of progress. Generally, for Mobile Health services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, therefore the Company satisfies performance obligations at the same time. For certain Mobile Health services that have a fixed fee arrangement, and the services are provided over time, revenue is recognized over time as the services are provided to the customer. In the following table, revenue is disaggregated as follows: Revenue Breakdown Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Primary Geographical Markets United States $ 112,603,145 $ 106,314,813 $ 211,512,665 $ 221,368,244 United Kingdom 12,883,615 3,204,491 26,976,798 6,042,612 Total revenue $ 125,486,760 $ 109,519,304 $ 238,489,463 $ 227,410,856 Major Segments/Service Lines Transportation Services $ 45,422,151 $ 22,175,233 $ 85,478,096 $ 49,987,743 Mobile Health 80,064,609 87,344,071 153,011,367 177,423,113 Total revenue $ 125,486,760 $ 109,519,304 $ 238,489,463 $ 227,410,856 Stock Based Compensation The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in operating expenses in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. Earnings per Share Earnings per share represents the net income attributable to stockholders divided by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock of the Company during the reporting periods. Potential dilutive common stock equivalents consist of the incremental common stock issuable upon exercise of warrants and the incremental shares issuable upon conversion of stock options. In reporting periods in which the Company has a net loss, the effect is considered anti-dilutive and excluded from the diluted earnings per share calculation. 15 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net (loss) income attributable to stockholders of DocGo Inc. and Subsidiaries: ( 2,011,267 ) 12,735,653 ( 5,476,937 ) 23,365,347 Weighted-average shares - basic 103,585,661 99,303,948 103,085,257 100,372,146 Effect of dilutive options 1,190,120 15,975,728 1,190,120 15,975,728 Weighted-average shares - dilutive 103,585,661 115,279,676 103,085,257 116,347,874 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic ( 0.02 ) 0.13 ( 0.05 ) 0.23 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted ( 0.02 ) 0.11 ( 0.05 ) 0.20 Anti-dilutive employee share-based awards excluded 9,181,239 — 9,181,239 — Equity Method Investment On October 26, 2021, the Company acquired a 50 % interest in RND Health Services Inc. (“RND”) for $ 655,876 . The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee but does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of RND are recorded in “(Loss)/gain on initial equity method investments” on the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s judgment regarding its level of influence over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions. On November 1, 2021, the Company acquired a 20 % interest in National Providers Association, LLC (“NPA”) for $ 30,000 . The Company uses the equity method to account for investments in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, but does not exercise control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of NPA are recorded in “Gain (loss) on equity method investment” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s judgment regarding its level of influence over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions. Effective December 21, 2021, three members withdrew from NPA resulting in the remaining two members obtaining the remaining ownership percentage. As of December 31, 2022 and June 30, 2023, DocGo owned 50 % of NPA. Under the equity method, the Company’s investment is initially measured at cost and subsequently increased or decreased to recognize the Company’s share of income and losses of the investee, capital contributions and distributions and impairment losses. The Company performs a qualitative assessment annually and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Leases The Company categorizes leases at its inception as either operating or finance leases based on the criteria in FASB ASC 842, Leases , (“ASC 842”). The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, and has established a Right-of-Use (“ROU”) Asset and a current and non-current lease liability for each lease arrangement identified. The lease liability is recorded at the present value of future lease payments discounted using the discount rate that approximates the Company’s incremental borrowing rate for the lease established at the commencement date, and the ROU asset is measured as the lease liability plus any initial direct costs, less any lease incentives received before commencement. The Company recognizes a single lease cost, so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis. The Company has lease arrangements for vehicles, equipment, and facilities. These leases typically have original terms not exceeding 10 years and, in some cases contain multi-year renewal options, none of which are reasonably certain of exercise. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected 16 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) to combine and account for lease and non-lease components as a single lease component. The Company has incorporated residual value obligations in leases for which there is such occurrences. Regarding short-term leases, ASC 842-10-25-2 permits an entity to make a policy election not to apply the recognition requirements of ASC 842 to short-term leases. The Company has elected not to apply the ASC 842 recognition criteria to any leases that qualify as Short-Term Leases. Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. Recently Issued Accounting Standards Not Yet Adopted In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) , that eliminates accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40 Receivables—Troubled Debt Restructurings by Creditors , while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. ASU 2022-02 also requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost . This ASU only affects entities that already adopted ASU 2016-13, which is effective for fiscal years beginning after December 15, 2022. The Company expects that this ASU should not have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements. 3. Property and Equipment, net Property and equipment, net, as of June 30, 2023 and December 31, 2022 are as follows: June 30, 2023 December 31, 2022 Transportation equipment $ 22,693,944 $ 20,773,862 Medical equipment 6,445,051 5,177,520 Office equipment and furniture 3,152,504 2,686,065 Leasehold improvements 636,304 579,658 Buildings 527,283 527,283 Land 37,800 37,800 $ 33,492,886 $ 29,782,188 Less: Accumulated depreciation ( 11,555,392 ) ( 8,524,013 ) Property and equipment, net $ 21,937,494 $ 21,258,175 The Company recorded depreciation expense of $ 1,590,037 and $ 729,560 for the three months ended June 30, 2023 and 2022, respectively. The Company recorded depreciation expense of $ 3,072,647 and $ 1,441,438 for six months ended June 30, 2023 and 2022, respectively. 17 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. Acquisition of Businesses Government Medical Services, LLC On July 6, 2022, Holdings acquired 100 % of the outstanding shares of common stock of GMS, a provider of medical services. The aggregate purchase price consisted of $ 20,338,789 in cash consideration. Holdings also agreed to pay GMS an additional $ 3,000,000 upon GMS meeting certain performance conditions within a year of the Closing Date. Acquisition costs are included in general and administrative expenses and totaled $ 1,001,883 for the twelve months ended December 31, 2022. Exceptional Medical Transportation, LLC On July 13, 2022, Holdings acquired 100 % of the outstanding shares of common stock of Exceptional in exchange for $ 13,708,333 consisting of $ 7,708,333 in cash at closing and $ 6,000,000 payable over a 24-month period. Holdings also agreed to pay an estimated $ 1,080,000 Contingent consideration upon Exceptional meeting certain performance conditions in 2023. Exceptional is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $ 56,571 for the twelve months ended December 31, 2022. Ryan Brothers Fort Atkinson, LLC On August 9, 2022, Holdings acquired 100 % of the outstanding shares of common stock of Ryan Brothers Fort Atkinson, LLC (“RB”) in exchange for $ 11,422,252 consisting of $ 7,422,252 in cash at closing and $ 4,000,000 of estimated Contingent consideration to be paid out over 24 months based on performance of certain obligations. RB is in the business of providing medical transportation services. Acquisition costs are included in general and administrative expenses and totaled $ 230,175 for the twelve months ended December 31, 2022. Community Ambulance Services LTD On October 12, 2022, Holdings through its indirect wholly owned subsidiary, Ambulnz U.K. Ltd., acquired Community Ambulance Service Ltd (“CAS”), a company located in United Kingdom, in exchange for approximately $ 5,541,269 in cash. The net assets acquired through the CAS acquisition was $ 7,134,881 mainly from the vehicles with high fair market value, which directly lead to a Gain on bargain purchase of $ 1,593,612 . CAS is engaged in providing emergency and non-emergency transport services, including high dependency, urgent care, mental health and blue light transport services and diagnostics testing. We expect this acquisition to help us to increase our presence in that market, while giving us improved access to municipal contracts. Acquisition costs are included in general and administrative expenses totaling $ 171,779  for the twelve months ended December 31, 2022. Location Medical Services, LLC On December 9, 2022, Holdings through its indirect wholly owned subsidiary, Ambulnz U.K. Ltd., closed acquiring 100 % of the outstanding shares of common stock of LMS. The aggregate purchase price consisted of $ 302,450 in cash consideration. The Company also agreed to pay LMS an additional $ 11,279,201 deferred consideration and an estimated $ 2,475,540 Contingent consideration upon LMS meeting certain performance conditions in 2023. The Company paid $ 11,279,201 of deferred consideration to LMS during the six months ended June 30, 2023. Acquisition costs are included in general and administrative expenses and totaled $ 4,200 for the twelve months ended December 31, 2022. Cardiac RMS, LLC On March 31, 2023, Holdings acquired 51 % of the outstanding shares of common stock of Cardiac RMS, LLC (“CRMS”) in exchange for $ 10,000,000 closing consideration, consisting of $ 9,000,000 in cash and $ 1,000,000 worth of shares of DocGo common stock issued in a private placement transaction. A further probable consideration of $ 15,822,190 is to be paid out over 36 months for the remaining 49 % equity of CRMS, based on CRMS’ attainment of full-year EBITDA targets. CRMS LLC provides cardiac implantable electronic device “CIED” remote monitoring and virtual care management services. Acquisition costs included in general and administrative expenses totaled $ 229,937 for the six months ended June 30, 2023. Ambulnz-FMC North America LLC 18 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On April 1, 2023, the Company acquired the remaining outstanding shares of Ambulnz-FMC North America LLC common stock from its joint venture with Ambulnz Holdings, LLC, in exchange for $ 4,000,000 in cash and $ 3,000,000 in stock. Ambulnz-FMC North America LLC is a prominent healthcare company that focuses on providing vital products and services for patients suffering from kidney diseases and renal failure. Acquisition costs are included in general and administrative expenses totaling approximately $ 35,560 for the three and six months ended June 30, 2023, respectively. Healthworx LLC On May 10, 2023, the Company acquired the remaining outstanding shares of common stock from its joint venture with Rapid Reliable Testing, in exchange for $ 1,385,156 in cash. The following table presents the preliminary allocation of the assets acquired and liabilities assumed: Ambulnz-FMC North America LLC Cardiac RMS LLC Location Medical Services Community Ambulance Service Ryan Brothers Exceptional Medical Transport Government Medical Services Total Consideration: Cash Consideration $ 4,000,000 $ 9,000,000 $ 302,450 $ 5,541,269 $ 7,422,252 $ 6,375,000 $ 20,338,789 $ 52,979,760 Stock Consideration 3,000,000 1,000,000 — — — — — 4,000,000 Due to Seller — — 11,279,201 — — 6,000,000 — 17,279,201 Amounts held under an escrow account — — — — — 1,333,333 — 1,333,333 Contingent Liability — 15,822,190 2,475,540 — 4,000,000 1,080,000 3,000,000 26,377,730 Total consideration $ 7,000,000 $ 25,822,190 $ 14,057,191 $ 5,541,269 $ 11,422,252 $ 14,788,333 $ 23,338,789 $ 101,970,024 Recognized amounts of identifiable assets acquired and liabilities assumed Cash $ — $ 1,574,604 $ 5,404,660 $ 892,218 $ 620,548 $ 299,050 $ 1,005,453 $ 9,796,533 Accounts receivable — 2,033,533 623,635 7,002,325 5,844,494 3,785,490 3,975,160 23,264,637 Other current assets — 293,478 134,216 1,167,326 136,157 — 30,734 1,761,911 Property, plant and equipment — — 519,391 4,548,956 2,125,134 2,450,900 4,092 9,648,473 Intangible assets — 15,930,000 2,419,600 — 387,550 125,000 10,305,000 29,167,150 Total identifiable assets acquired — 19,831,615 9,101,502 13,610,825 9,113,883 6,660,440 15,320,439 73,638,704 Accounts payable — 28,978 40,447 2,036,714 44,911 — 137,239 2,288,289 Due to Seller — 2,448,460 — — 5,844,494 4,084,540 — 12,377,494 Other current liabilities — 174,177 1,012,992 4,439,230 286,792 — 562,809 6,476,000 Total liabilities assumed — 2,651,615 1,053,439 6,475,944 6,176,197 4,084,540 700,048 21,141,783 Noncontrolling interests 2,567,037 — — — — — — 2,567,037 Goodwill — 8,642,190 6,009,128 ( 1,593,612 ) 8,484,566 12,212,433 8,718,398 42,473,103 Additional paid-in-capital 4,432,963 — — — — — — 4,432,963 Total purchase price $ 7,000,000 $ 25,822,190 $ 14,057,191 $ 5,541,269 $ 11,422,252 $ 14,788,333 $ 23,338,789 $ 101,970,024 19 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. ABC Transaction and Held for Sale During the fiscal year 2022, the Company started discussions regarding the potential liquidation process of Health through an assignment for the benefit of creditors (“ABC”), with a targeted timeline for the transaction to be fully closed in December 2022. The conversation involved operations, human resources, external legal counsel, and Amb, LLC (a California limited liability company, the “Assignee”). Due to operational processes, the filing was extended and finalized on February 3, 2023. An ABC is a liquidation process governed by state law (California law in this instance) that is an alternative to a bankruptcy case under federal law. Prior to commencing the ABC, Health ceased business operations and all of its employees were terminated and treated in accordance with California law. In the ABC, all of Health’s assets were transferred to the Assignee who acts as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee is responsible for liquidating the assets. Similar to a bankruptcy case, there is a claims process. Creditors of Health will receive notice of the ABC and a proof of claim form and are required to submit a proof of claim in order to participate in distribution of net liquidation proceeds by the Assignee. As of December 31, 2022, Health met the criteria to be classified as held for sale. As the entity has met this criteria, the Company is required to record the respective assets and liabilities at the lower of carrying value or fair value less any costs to sell, and present the related assets and liabilities as separate line items in the Consolidated Balance Sheets. The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in the Company’s Consolidated Balance Sheets as of December 31, 2022: 20 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Pre ABC Adjustment 2022 Adjustments December 31, 1Q23 Adjustments June 30, 2022 2023 ASSETS Current assets: Cash and cash equivalents $ ( 190,312 ) $ 190,312 $ — $ — $ — Accounts receivable, net 1,219,927 ( 1,219,927 ) — — — Prepaid expenses and other current assets 22,850 ( 22,850 ) — — — Total current assets 1,052,465 ( 1,052,465 ) — — — Property and equipment, net 1,107,279 ( 1,107,279 ) — — — Intangibles, net 30,697 ( 30,697 ) — — — Goodwill 5,085,689 ( 5,085,689 ) — — — Operating lease right-of-use assets 29,753 ( 29,753 ) — — — Assets held for sale — 4,480,344 4,480,344 ( 4,480,344 ) — Other assets 18,053,495 ( 96,419 ) 17,957,076 ( 17,957,076 ) — Total assets $ 25,359,378 $ ( 2,921,958 ) $ 22,437,420 $ ( 22,437,420 ) $ — LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 196,122 $ ( 196,122 ) $ — $ — $ — Accrued liabilities 63,655,442 ( 4,250,603 ) 59,404,839 ( 59,404,839 ) — Operating lease liability, current 33,619 ( 33,619 ) — — — Liabilities held for sale — 4,480,344 4,480,344 ( 4,480,344 ) — Total current liabilities 63,885,183 — 63,885,183 ( 63,885,183 ) — Total liabilities $ 63,885,183 $ — $ 63,885,183 $ ( 63,885,183 ) $ — STOCKHOLDERS’ EQUITY: Accumulated deficit $ ( 38,525,805 ) $ ( 2,921,958 ) $ ( 41,447,763 ) $ 41,447,763 $ — Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries ( 38,525,805 ) ( 2,921,958 ) ( 41,447,763 ) 41,447,763 — Noncontrolling interests — — — — — Total stockholders’ equity $ ( 38,525,805 ) $ ( 2,921,958 ) $ ( 41,447,763 ) $ 41,447,763 $ — Total liabilities and stockholders’ equity $ 25,359,378 $ ( 2,921,958 ) $ 22,437,420 $ ( 22,437,420 ) $ — The Intercompany receivables and Intercompany payables are eliminated in the Company’s Consolidated Balance Sheets. 6. Goodwill In connection with the ABC transaction, the Company evaluated its Goodwill balances as of December 31, 2022 and determined that there was an impairment of Goodwill related to its Health reporting unit. The impairment was primarily due to the ABC filing. 21 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) As a result of this impairment, the Company recognized a non-cash charge of $ 2,921,958 in the year ended December 31, 2022 in the Consolidated Statements of Operations. The charge was recorded as part of Other income in the Company’s Consolidated Statements of Operations and has no impact on its cash flow, liquidity, or compliance with debt covenants. Additionally, the Company recorded Goodwill in connection with its acquisitions, the total Goodwill acquired in 2022 was $ 35,299,136 . The Company also updated the carrying value of the Goodwill in its unaudited Condensed Consolidated Balance Sheets to reflect the additional Goodwill and the impairment charge. The carrying value of Goodwill amounts $ 47,820,840 , the changes in the carrying value of Goodwill for the period ended June 30, 2023 are as noted in the tables below: Carrying Value Balance at December 31, 2022 $ 38,900,413 Goodwill acquired during the period 8,642,190 CTA 278,237 Balance at June 30, 2023 $ 47,820,840 7. Intangibles Intangible assets consist of the following as of June 30, 2023 and December 31, 2022: June 30, 2023 Estimated Useful Life (Years) Gross Carrying Amount Additions Accumulated Amortization Net Carrying Amount Patents 15 years $ 62,823 $ 18,265 $ ( 12,800 ) $ 68,288 Computer software 5 years 247,828 — ( 231,731 ) 16,097 Operating licenses Indefinite 8,799,004 600,000 — 9,399,004 Internally developed software 4 - 5 years 8,284,058 1,208,506 ( 7,977,777 ) 1,514,787 Material Contracts Indefinite 62,550 — — 62,550 Customer Relationship 9 years 12,397,954 15,924,323 ( 1,744,211 ) 26,578,066 Trademark 8 years 326,646 14,721 ( 24,891 ) 316,476 Non-compete Agreement 5 years — 100,000 ( 5,000 ) 95,000 $ 30,180,863 $ 17,865,815 $ ( 9,996,410 ) $ 38,050,268 December 31, 2022 Estimated Useful Life (Years) Gross Carrying Amount Additions Accumulated Amortization Net Carrying Amount Patents 15 years $ 48,668 $ 14,155 $ ( 10,116 ) $ 52,707 Computer software 5 years 294,147 ( 46,319 ) ( 224,886 ) 22,942 Operating licenses Indefinite 8,375,514 423,490 — 8,799,004 Internally developed software 4 - 5 years 6,013,513 2,270,545 ( 6,378,911 ) 1,905,147 Material contracts Indefinite — 62,550 — 62,550 Customer relationship 8 - 9 years — 12,397,954 ( 594,301 ) 11,803,653 Trademark 8 years — 326,646 ( 3,403 ) 323,243 $ 14,731,842 $ 15,449,021 $ ( 7,211,617 ) $ 22,969,246 22 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Company recorded amortization expense of $ 1,414,944 and $ 645,715 for the three months ended June 30, 2023 and 2022, respectively. The Company recorded amortization expense of $ 2,780,580 and $ 1,279,078 for the six months ended June 30, 2023 and 2022, respectively. Future amortization expense at June 30, 2023 for the next five years and in the aggregate are as follows: Amortization Expense 2023, remaining $ 1,958,683 2024 3,865,944 2025 3,816,044 2026 3,247,559 2027 3,246,843 Thereafter 12,453,641 Total $ 28,588,714 8. Accrued Liabilities Accrued liabilities consist of the following as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Accrued subcontractors $ 10,829,445 $ 8,101,150 Accrued workers compensation and insurance liabilities 10,330,099 3,766,469 Accrued general expenses 6,296,541 11,436,462 Accrued payroll 3,752,317 4,245,838 Accrued bonus 1,120,425 1,500,717 Accrued legal fees 1,048,393 344,417 Other current liabilities 634,526 706,528 Accrued lab fees 396,255 584,203 Accrued fuel and maintenance 314,894 253,243 Credit card payable 46,320 78,838 FICA/Medicare liability 17,929 555,166 Total accrued liabilities $ 34,787,144 $ 31,573,031 9. Line of Credit On November 1, 2022, the Company entered into a revolving loan and security agreement with two banks, with one bank as the administrative agent (the “Lenders”), with a maximum revolving advance amount of $ 90,000,000 . The revolving facility includes the ability for the Company to request an increase to the commitment by an additional up to $ 50,000,000 , though no Lender (nor the Lenders collectively) are obligated to increase their respective commitments. Borrowings under the revolving facility bear interest at a per annum rate equal to, (i) at the Company’s option, the (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. The initial applicable margins are 1.25 % for an adjusted term SOFR loan and 0.25 % for a base rate loan and will be updated based on the consolidated net leverage ratio reported in the compliance certificate. The revolving facility matures on the five-year anniversary of the closing date, November 1, 2027. The revolving facility is secured by a first-priority lien on substantially all of the Company’s present and future personal assets and intangible assets. The revolving facility is subject to certain financial covenants such as a net leverage ratio and interest 23 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) coverage ratio, as defined in the agreement. The Company has not made any draws under the facility and as of June 30, 2023, there is no amount outstanding. 10. Notes Payable The Company has various loans with finance companies with monthly installments aggregating $ 69,469 , inclusive of interest ranging from 2.5 % through 10.1 %. The notes mature at various times through 2028 and are secured by transportation equipment. The following table summarizes the Company’s notes payable: June 30, 2023 December 31, 2022 Equipment and financing loans payable, between 2.5 % and 10.1 % interest and maturing between January 2023 and May 2028 $ 2,276,824 $ 1,901,514 Loan received pursuant to the Payroll Protection Program Term Note — — Total notes payable 2,276,824 1,901,514 Less: current portion of notes payable $ 696,308 $ 664,913 Total non-current portion of notes payable $ 1,580,516 $ 1,236,601 Interest expense was $ 32,375 and $ 20,949 for the three months period ended June 30, 2023 and 2022, respectively. Interest expense was $ 61,409 and $ 43,508 for the six months period ended June 30, 2023 and 2022, respectively. Future minimum annual maturities of notes payable as of June 30, 2023 are as follows: Notes Payable 2023, remaining $ 322,096 2024 571,001 2025 563,779 2026 492,111 2027 273,629 Thereafter 54,208 Total maturities $ 2,276,824 Current portion of notes payable ( 696,308 ) Long-term portion of notes payable $ 1,580,516 11. Business Segment Information The Company conducts business in three operating segments, Transportation Services, Mobile Health Services and Corporate. In accordance with ASC 280, Segment Reporting , operating segments are components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, the Company’s Chief Executive Officer, in deciding how to allocate resources and assessing performance. Prior to 2023, the Company reported in two segments, because the Company’s entities have two main revenue streams. Beginning with the first quarter of 2023, the Company is now reporting in three operating segments, adding a Corporate segment to allow for analysis of shared services and personnel that support both the Transportation Services and Mobile Health Services segments. Previously, these costs had been allocated almost entirely to the Transportation Services segment. All of the Company’s revenues and costs of goods sold continue to be reported within the Transportation Services and Mobile Health Services segments. The Corporate segment contains operating expenses such as information technology costs, certain insurance costs and the compensation costs of senior and executive leadership. The segment reporting for the prior-year period has been adjusted to conform to the new methodology, for the purposes of allowing a clearer analysis of year-over-year performance. The Company’s chief operating decision maker evaluates the Company’s financial information and resources and assesses the performance of these resources by revenue stream and by operating income or loss performance. 24 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its Transportation Services, Mobile Health Services and Corporate segments based primarily on results of operations. Operating results for the business segments of the Company are as follows: Transportation Services Mobile Health Services Corporate Total Three Months Ended June 30, 2023 Revenues $ 45,422,151 $ 80,064,609 $ — $ 125,486,760 Income (loss) from operations ( 537,625 ) 18,217,665 ( 16,104,086 ) 1,575,954 Total assets 121,884,046 142,049,757 126,352,242 390,286,045 Depreciation and amortization expense 1,940,635 1,201,771 688,655 3,831,061 Stock compensation 215,912 182,889 2,952,321 3,351,122 Long-lived assets 66,188,807 48,454,044 11,418,092 126,060,943 Capital expenditures 3,268,147 806,681 720,659 4,795,487 Three Months Ended June 30, 2022 Revenues $ 22,175,233 $ 87,344,071 $ — $ 109,519,304 Income (loss) from operations ( 5,398,799 ) 30,234,461 ( 17,377,905 ) 7,457,757 Total assets 67,477,663 55,936,426 208,441,299 331,855,388 Depreciation and amortization expense 1,124,521 217,389 695,861 2,037,771 Stock compensation 506,775 223,893 1,268,951 1,999,619 Long-lived assets 36,437,097 4,232,044 2,691,150 43,360,291 Capital expenditures 1,157,537 23,513,762 542,628 25,213,927 25 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Transportation Services Mobile Health Services Corporate Total Six Months Ended June 30, 2023 Revenues $ 85,478,096 $ 153,011,367 $ — $ 238,489,463 Income (loss) from operations 433,522 31,159,245 ( 36,919,400 ) ( 5,326,633 ) Total assets 121,884,046 142,049,757 126,352,242 390,286,045 Depreciation and amortization expense 3,803,939 1,918,310 1,758,141.00 7,480,390 Stock compensation 475,605 299,822 11,025,711 11,801,138 Long-lived assets 66,188,807 48,454,044 11,418,092 126,060,943 Capital Expenditures 13,632,633 26,539,244 2,467,347 42,639,224 Six Months Ended June 30, 2022 Revenues $ 49,987,743 $ 177,423,113 $ — $ 227,410,856 Income (loss) from operations ( 7,879,188 ) 53,578,388 ( 28,146,878 ) 17,552,322 Total assets 67,477,663 55,936,426 208,441,299 331,855,388 Depreciation and amortization expense 2,439,121 430,645 1,369,026 4,238,792 Stock compensation 892,876 268,966 2,260,714 3,422,556 Long-lived assets 36,437,097 4,232,044 2,691,150 43,360,291 Capital Expenditures 2,100,320 23,605,840 1,220,515 26,926,675 Long-lived assets include property and equipment, goodwill, intangible assets, operating lease right-of-use assets and finance lease right-of-use assets. Geographic Information The table below shows long-lived assets by geographic location. June 30, 2023 June 30, 2022 Primary Geographical Markets United States 106,605,989 41,246,102 United Kingdom 19,454,954 2,114,189 Total Long-Lived Assets 126,060,943 43,360,291 Revenues by geographic location are included in Note 2. 26 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 12. Equity Share Repurchase Program On May 24, 2022, the Board of Directors authorized a share repurchase program to purchase up to $ 40 million of the Company’s common stock (the “Program”). During the second and fourth quarter of 2022, the Company repurchased 536,839 shares of its common stock for $ 3,731,712 . These shares were subsequently cancelled. There were no shares repurchased during the three and six months ended June 30, 2023. The Program does not oblige the Company to acquire any specific number of shares and will expire on November 24, 2023. Under the Program, shares may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated share repurchases, block trades and other methods. The timing, manner, price and amount of any common stock repurchases under the Program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. 13. Stock Based Compensation Stock Options The Company’s stock options generally vest on various terms based on continuous services over periods ranging from three to five years . The stock options are subject to time vesting requirements through 2032 and are nontransferable. Stock options granted have a maximum contractual term of 10 years. On June 30, 2023, approximately 3.0 million employee stock options had vested. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Before the Company’s shares of stock were publicly traded, management took the average of several publicly traded companies that were representative of the Company’s size and industry in order to estimate its expected stock volatility. The expected term of the options represented the period of time the instruments are expected to be outstanding. The Company based the risk-free interest rate on the rate payable on the U.S. Treasury securities corresponding to the expected term of the awards at the date of grant. Expected dividend yield was zero based on the fact that the Company had not historically paid and does not intend to pay a dividend in the foreseeable future. The following assumptions were used to compute the fair value of the stock option grants during the period ended June 30, 2023 and 2022: Period Ended June 30, 2023 2022 Risk-free interest rate 4.14 % 0.71 % Expected term (in years) 6.25 4 Volatility 56 % 60 % Dividend yield 0 % 0 % 27 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table summarizes the Company’s stock option activity under the Plan for the period ended June 30, 2023: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Balance as of, December 31, 2022 11,571,308 $ 7.11 9.05 $ 39,389,063 Granted/ Vested during the year 312,730 8.61 — — Exercised during the year ( 356,511 ) 2.74 — — Cancelled during the year ( 275,135 ) 7.82 — — Balance as of June 30, 2023 11,252,392 7.28 8.62 46,592,930 Options vested and exercisable at June 30, 2023 3,005,069 $ 6.36 7.89 9,093,754 The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s common stock price and the exercise price of the stock options. The weighted average grant date fair value per share for stock option grants during the periods ended June 30, 2023 and December 31, 2022 was $ 8.61 and $ 7.04 , respectively. On June 30, 2023 and December 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $ 30,583,415 and $ 41,666,564 , respectively, which the Company expects to recognize over a weighted-average period of approximately 3.73 years. Restricted Stock Units The fair value of restricted stock units (“RSUs”) is determined on the date of grant. The Company records compensation expense in the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one to four years . Activity under RSUs was as follows: RSUs Weighted- Average Grant Date Fair Value Per RSU Balance as of, December 31, 2022 305,587 $ 8.35 Granted 101,358 7.64 Vested during the year ( 136,258 ) 8.02 Forfeited — — Balance as of, June 30, 2023 270,687 8.25 Vested and unissued at June 30, 2023 192,500 8.25 Non-vested at June 30, 2023 270,687 8.25 The total grant-date fair value of RSUs granted during the period ended June 30, 2023 was $ 774,218 . The Company recorded stock-based compensation expense related to RSUs of $ 663,748 and $ 1,093,423 for the three and six months ended June 30, 2023, respectively, As of June 30, 2023, the Company had $ 2,232,968 in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.8 years. 28 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 14. Leases Operating Leases The Company is obligated to make rental payments under non-cancellable operating leases for office, dispatch station space, and transportation equipment, expiring at various dates through 2032. Under the terms of the leases, the Company is also obligated for its proportionate share of real estate taxes, insurance and maintenance costs of the property. The Company is required to hold certain funds in restricted cash and cash equivalents accounts under some of these agreements. Certain leases for property and transportation equipment contain options to purchase, extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the right-of-use (ROU) asset and lease obligations for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain and whether the optional period and payments should be included in the calculation of the associated ROU asset and lease obligation. In making such judgment, the Company considers all relevant economic factors that would require whether to exercise or not exercise the option. The Company’s lease agreements generally do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates, which were used to discount its real estate lease liabilities. The Company used estimated borrowing rates of 6 % on January 1, 2019, for all leases that commenced prior to that date, for office spaces and transportation equipment. Lease Costs The table below comprise lease expenses for the periods ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, Components of total lease cost: 2023 2022 2023 2022 Operating lease expense $ 865,987 $ 428,728 $ 1,622,232 $ 891,353 Short-term lease expense 368,030 273,601 704,348 528,697 Total lease cost $ 1,234,017 $ 702,329 $ 2,326,580 $ 1,420,050 Lease Position as of June 30, 2023 Right-of-use lease assets and lease liabilities for the Company’s operating leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows: June 30, 2023 December 31, 2022 Assets Lease right-of-use assets $ 9,288,582 $ 9,074,277 Total lease assets $ 9,288,582 $ 9,074,277 Liabilities Current liabilities: Lease liability - current portion $ 2,479,340 $ 2,325,024 Noncurrent liabilities: Lease liability, net of current portion 7,162,046 7,040,982 Total lease liability $ 9,641,386 $ 9,366,006 29 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of June 30, 2023: Weighted average remaining lease term (in years) - operating leases 4.53 Weighted average discount rate - operating leases 5.81 % Undiscounted Cash Flows Future minimum lease payments under the operating leases at June 30, 2023 are as follows: Operating Leases 2023, remaining $ 1,543,710 2024 2,769,206 2025 2,751,071 2026 1,997,054 2027 1,770,143 Total future minimum lease payments 10,831,184 Less effects of discounting ( 1,189,798 ) Present value of future minimum lease payments $ 9,641,386 Operating lease expense was approximately $ 865,987 and $ 428,728 for the three months ended June 30, 2023 and 2022, respectively. Operating lease expense was approximately $ 1,622,232 and $ 891,353 for the six months ended June 30, 2023 and 2022, respectively. For the three months ended June 30, 2023, the Company made $ 865,987 of fixed cash payments related to operating leases and $ 766,492 related to finance leases. For the three months ended June 30, 2022, the Company made $ 428,728 of fixed cash payments related to operating leases and $ 851,307 related to finance leases. For the six months ended June 30, 2023, the Company made $ 1,622,232 of fixed cash payments related to operating leases and $ 1,510,523 related to finance leases. For the six months ended June 30, 2022, the Company made $ 891,353 of fixed cash payments related to operating leases and $ 1,473,882 related to finance leases. Finance Leases The Company leases vehicles under a non-cancelable finance lease agreements with a liability of $ 8,643,832 and $ 8,646,803 as of June 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $ 9,553,571 and $ 7,096,966 as of June 30, 2023 and December 31, 2022, respectively. Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $ 826,180 and $ 662,495 for the three months ended June 30, 2023 and 2022, respectively. Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $ 1,627,263 and $ 1,518,276 for the six months ended June 30, 2023 and 2022, respectively. 30 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Gain on lease remeasurement In June 2022, the Company reassessed its finance lease estimates relating to vehicle mileage and residual value. As a result, the Company determined to purchase the vehicles at the end of the leases which resulted in a gain of $ 1.4 million recorded as gains from lease accounting on the unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income. Lease Payments The table below presents lease payments for the periods ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, Components of total lease payment: 2023 2022 2023 2022 Finance lease payment $ 766,492 $ 851,307 $ 1,510,522 $ 1,473,882 Short-term lease payment — — — — Total lease payments $ 766,492 $ 851,307 $ 1,510,522 $ 1,473,882 Lease Position as of June 30, 2023 Right-of-use lease assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows: June 30, 2023 December 31, 2022 Assets Lease right-of-use assets $ 8,963,759 $ 9,039,663 Total lease assets $ 8,963,759 $ 9,039,663 Liabilities Current liabilities: Lease liability - current portion $ 2,717,546 $ 2,732,639 Noncurrent liabilities: Lease liability, net of current portion 5,926,286 5,914,164 Total lease liability $ 8,643,832 $ 8,646,803 Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s finance leases as of June 30, 2023: Weighted average remaining lease term (in years) - finance leases 3.57 Weighted average discount rate - finance leases 5.95 % 31 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Undiscounted Cash Flows Future minimum lease payments under the finance leases at June 30, 2023 are as follows: Finance Leases 2023, remaining $ 1,695,729 2024 2,840,410 2025 2,561,843 2026 1,779,618 2027 664,614 Total future minimum lease payments 9,542,214 Less effects of discounting ( 898,382 ) Present value of future minimum lease payments $ 8,643,832 15. Other (expense)/income The Company recognized $( 587,389 ) and $ 4,619,765 of Other (expenses)/income for the three months ended June 30, 2023 and June 30, 2022, respectively. The Company recognized $ 266,538 and $ 4,337,816 of Other income for the six months ended June 30, 2023 and June 30, 2022, respectively, as follows: Three Months Ended Six Months Ended June 30, June 30, Other (expense) income: 2023 2022 2023 2022 Interest income (expense), net $ 521,872 $ 98,276 $ 1,331,044 $ ( 37,330 ) Gain on remeasurement of warrant liabilities — 3,027,766 — 2,969,017 (Loss)/gain on initial equity method investments ( 90,573 ) 89,810 ( 205,859 ) 6,469 Loss on disposal of fixed assets ( 98,630 ) — ( 153,469 ) — Gain on remeasurement of finance leases — 1,388,273 — 1,388,273 ABC Litigation ( 1,000,000 ) — ( 1,000,000 ) — Other income 79,942 15,640 294,822 11,387 Total other (expense) income $ ( 587,389 ) $ 4,619,765 $ 266,538 $ 4,337,816 For the three months ended June 30, 2023, the Company recognized other income of $ 79,942 , net of $ 6,410 from realized foreign exchange gain offset by rental income of $ 0 . For the three months ended June 30, 2022, the Company recognized other income of $ 15,640 , net of $ 1,145 from realized foreign exchange gain offset by rental income of $ 14,495 . For the six months ended June 30, 2023, the Company recognized other income of $ 294,822 , net of $ 5,773 from realized foreign exchange gain offset by rental income of $ 8,496 . For the six months ended June 30, 2022, the Company recognized other income of $ 11,387 , net of $ 19,660 from realized foreign exchange loss offset by rental income of $ 31,047 . 32 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 16. Related Party Transactions Historically, the Company has been involved in transactions with various related parties. Ely D. Tendler Strategic & Legal Services PLLC provides legal services for the Company. Ely D. Tendler Strategic & Legal Services PLLC is owned by the General Counsel and Director of the Company, and therefore is a related party. The Company made legal payments to Ely D. Tendler Strategic & Legal Services PLLC totaling $ 126,600 and $ 234,255 for the three months ended June 30, 2023 and 2022, respectively, and $ 470,270 and $ 443,408 for the six months ended June 30, 2023 and 2022, respectively. Included in accounts payable were $ 80,000 and $ 86,555 due to related parties as of June 30, 2023 and December 31, 2022, respectively. 17. Income Taxes As a result of the Company’s history of net operating losses (“NOL”), the Company had historically provided for a full valuation allowance against its deferred tax assets for assets that were not more-likely-than-not to be realized. The Company’s income tax benefit (provision) for the three months ended June 30, 2023 and 2022 were $ 355,054 and $( 321,660 ), respectively, and $ 2,484,924 and $( 761,839 ) for the six months ended June 30, 2023 and 2022, respectively. In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, and best estimates of non-taxable and non-deductible income and expense items. 18. 401(K) Plan The Company has established a 401(k) plan in January 2022 that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code. All U.S. employees that complete two months of service with the Company are eligible to participate in the plan. The Company did not make any employer contributions to this plan as of June 30, 2023. 19. Legal Proceedings From time to time, the Company may be involved as a defendant in legal actions that arise in the normal course of business. In the opinion of management, the Company has adequate legal defense on all legal actions, and the results of any such proceedings would not materially impact the Consolidated Financial statements of the Company. The Company provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. In accordance with such guidance, the Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the Consolidated Financial statements. As of June 30, 2023 and December 31, 2022, the Company recorded a liability of $ 1,000,000 , which represents an amount for an agreed settlement of various class-based claims, both actual and potential, under California state law, as described in detail below Stephanie Zamora, Jascha Dlugatch, et al. v. Ambulnz Health, LLC, et al. was filed in the Los Angeles Superior Court on October 11, 2018, and the complaint alleged wage and hour violations pursuant to California’s Private Attorneys’ General Act of 2004 (“PAGA”). On February 24, 2020, this case was consolidated with Jascha Dlugatch, et. Al. v. Ambulnz Health, LLC (the “Consolidated Complaint”), another lawsuit filed in the Los Angeles Superior Court. On May 6, 2021, the parties attended mediation and settled the claims pled in the Consolidated Complaint on a class-wide and PAGA basis in exchange for a proposed $ 1,000,000 payment by the defendant parties, inclusive of administrative costs and fees. On September 9, 2022, the Court preliminarily approved the proposed settlement , which was paid in July 2023. 20. Risk and Uncertainties COVID-19 Risks, Impacts and Uncertainties The spread of COVID-19 and the related shutdowns and restrictions had a mixed impact on the Company’s business. In the ambulance transportation business, which predominantly comprises of non-emergency medical transportation, the Company initially saw a decline in volumes from historical and expected levels, as elective surgeries and other procedures were postponed. In some of the Company’s larger markets, such as New York and California, there were declines in trip 33 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) volume. In addition, the Company experienced lost revenues associated with sporting, concerts and other events, as those events were cancelled or had a significantly restricted (or entirely eliminated) the number of permitted attendees. Ambulance transports and event-related revenues have both since recovered to pre-COVID levels or higher. There were two areas in which the Company initially experienced positive business impacts from COVID-19. In April and May 2020, the Company participated in an emergency project with Federal Emergency Management Agency (“FEMA”) in the New York City area. This engagement resulted in incremental transportation revenue. In addition, in response to the need for widespread COVID-19 testing, emergency medical technicians (“EMT”) and paramedics, the Company formed a new subsidiary, Rapid Reliable Testing, LLC (“RRT”), with the goal of performing COVID-19 tests at nursing homes, municipal sites, businesses, schools and other venues. RRT is part of the Mobile Health segment. As COVID-19 testing activity slowed to account for a minor portion of the Company’s revenues, RRT expanded its services beyond COVID-19 testing to a wide variety of tests, vaccinations and other procedures. The Company’s current business plan assumes increased demand for mobile health services, a demand that was accelerated by the pandemic, but which is also being driven by longer-term secular factors, such as the increasing desire on the part of patients to receive treatments outside of traditional settings, such as doctor’s offices and hospitals. 21. Subsequent Events In July 2023, the Company paid the settlement for the Stephanie Zamora, Jascha Dlugatch, et al. v. Ambulnz Health, LLC, et al . case for the amount of $ 1,000,000 . 34 Table of Contents