DocGo Inc. 10-Q

Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2023 ( U n a u d i t e d ) and December 31, 2022 2 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022 3 Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 4 Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 6 Notes to Unaudited Condensed Consolidated Financial Statements 8 1 Table of Contents DocGo Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2023 December 31, 2022 Unaudited Audited ASSETS Current assets: Cash and cash equivalents $ 52,922,517 $ 157,335,323 Accounts receivable, net of allowance of $ 4,778,401 and $ 7,818,702 as of September 30, 2023 and December 31, 2022, respectively 207,324,368 102,995,397 Assets held for sale — 4,480,344 Prepaid expenses and other current assets 6,899,412 6,269,841 Total current assets 267,146,297 271,080,905 Property and equipment, net 21,852,663 21,258,175 Intangibles, net 38,586,498 22,969,246 Goodwill 47,594,304 38,900,413 Restricted cash 14,333,421 6,773,751 Operating lease right-of-use assets 9,420,525 9,074,277 Finance lease right-of-use assets 8,566,308 9,039,663 Equity method investments 447,125 597,977 Deferred tax assets 8,908,731 9,957,967 Other assets 2,928,270 3,625,254 Total assets $ 419,784,142 $ 393,277,628 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 8,951,261 $ 21,582,866 Accrued liabilities 58,883,665 31,573,031 Notes payable, current 696,053 664,913 Due to seller 12,995,455 26,244,133 Contingent consideration 26,238,486 10,555,540 Operating lease liability, current 2,561,165 2,325,024 Liabilities held for sale — 4,480,344 Finance lease liability, current 2,733,332 2,732,639 Total current liabilities 113,059,417 100,158,490 Notes payable, non-current 2,044,938 1,236,601 Operating lease liability, non-current 7,196,596 7,040,982 Finance lease liability, non-current 5,930,776 5,914,164 Total liabilities 128,231,727 114,350,237 Commitments and contingencies Stockholders’ equity: Common stock ($ 0.0001 par value; 500,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 103,874,539 and 102,411,162 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 10,387 10,241 Additional paid-in-capital 315,745,338 301,451,435 Accumulated deficit ( 28,964,781 ) ( 28,972,216 ) Accumulated other comprehensive income 808,171 741,206 Total stockholders’ equity attributable to DocGo Inc. and Subsidiaries 287,599,115 273,230,666 Noncontrolling interests 3,953,300 5,696,725 Total stockholders’ equity 291,552,415 278,927,391 Total liabilities and stockholders’ equity $ 419,784,142 $ 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 INCOME Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues, net $ 186,552,910 $ 104,319,894 $ 425,042,373 $ 331,730,750 Expenses: Cost of revenues (exclusive of depreciation and amortization, which is shown separately below) 131,502,046 71,254,838 296,346,420 219,418,873 Operating expenses: General and administrative 33,619,962 22,186,036 93,637,516 70,684,270 Depreciation and amortization 4,336,267 3,014,864 11,816,657 7,253,656 Legal and regulatory 3,545,820 2,200,964 9,588,997 6,610,223 Technology and development 3,235,301 1,373,146 7,673,269 3,663,299 Sales, advertising and marketing 1,605,559 90,856 2,598,192 2,348,917 Total expenses 177,844,955 100,120,704 421,661,051 309,979,238 Income from operations 8,707,955 4,199,190 3,381,322 21,751,512 Other income (expenses): Interest income, net 346,376 334,221 1,677,420 296,891 (Loss) gain on remeasurement of warrant liabilities — ( 1,831,947 ) — 1,137,070 Change in fair value of contingent liability 159,974 — 159,974 — (Loss) gain on equity method investments ( 95,503 ) 93,371 ( 301,362 ) 99,840 Gain on remeasurement of finance leases 4,834 — 4,834 1,388,273 (Loss) gain on disposal of fixed assets ( 9,983 ) 42,667 ( 163,452 ) 42,667 Other income (expense) 43,353 30,900 ( 661,825 ) 42,288 Total other income (expense) 449,051 ( 1,330,788 ) 715,589 3,007,029 Net income before income tax provision 9,157,006 2,868,402 4,096,911 24,758,541 Income tax (provision) ( 4,526,767 ) ( 401,916 ) ( 2,041,843 ) ( 1,163,755 ) Net income 4,630,239 2,466,486 2,055,068 23,594,786 Net (loss) income attributable to noncontrolling interests ( 134,682 ) ( 687,944 ) 2,767,084 ( 2,924,992 ) Net income attributable to stockholders of DocGo Inc. and Subsidiaries 4,764,921 3,154,430 ( 712,016 ) 26,519,778 Other comprehensive income Foreign currency translation adjustment ( 582,471 ) 248,283 66,965 252,854 Total comprehensive income $ 4,182,450 $ 3,402,713 $ ( 645,051 ) $ 26,772,632 Net income per share attributable to DocGo Inc. and Subsidiaries - Basic $ 0.05 $ 0.03 $ ( 0.01 ) $ 0.26 Weighted-average shares outstanding - Basic 103,874,845 98,960,538 103,351,345 100,725,697 Net income per share attributable to DocGo Inc. and Subsidiaries - Diluted $ 0.05 $ 0.03 $ ( 0.01 ) $ 0.24 Weighted-average shares outstanding - Diluted 104,993,729 107,403,135 103,351,345 109,168,293 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 ) 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 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 Exercise of stock options 378,941 38 728,465 — — — 728,503 Cashless exercise of options 354,276 35 ( 354 ) — — — ( 319 ) Stock-based compensation — — 1,015,660 — — — 1,015,660 UK Ltd. restricted stock — — 95,543 — — — 95,543 Share warrants conversion 1,406,371 141 12,381,432 — — — 12,381,573 Net loss attributable to noncontrolling interests — — — — — ( 687,944 ) ( 687,944 ) Foreign currency translation — — — — ( 248,283 ) — ( 248,283 ) Net income attributable to stockholders of DocGo Inc. and Subsidiaries — — — 3,154,430 — — 3,154,430 Balance - September 30, 2022 102,824,878 $ 10,778 $ 301,522,213 $ ( 37,036,937 ) $ ( 276,213 ) $ 6,613,018 $ 270,832,859 4 Table of Contents 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 Exercise of stock options 96,101 10 249,705 — — — 249,715 UK Ltd. restricted stock — — 167,175 — — — 167,175 Stock-based compensation 424,911 42 8,181,549 — — — 8,181,591 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 334,791 33 3,827,314 — — — 3,827,347 Shares withheld for taxes ( 242,758 ) ( 24 ) ( 2,049,313 ) — — — ( 2,049,337 ) 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 Exercise of stock options 88,837 8 425,995 — — — 426,003 Cashless exercise of options 6,374 1 ( 1 ) — — — — Stock-based compensation 30,650 3 3,335,707 — — — 3,335,710 Shares withheld for taxes ( 13,414 ) ( 1 ) ( 117,644 ) — — — ( 117,645 ) Net loss attributable to noncontrolling interests — — — — — ( 134,682 ) ( 134,682 ) Foreign currency translation — — — — ( 582,471 ) — ( 582,471 ) Net income attributable to stockholders of DocGo Inc. and Subsidiaries — — — 4,764,921 — — 4,764,921 Balance - September 30, 2023 103,874,539 $ 10,387 $ 315,745,338 $ ( 28,964,781 ) $ 808,171 $ 3,953,300 $ 291,552,415 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 5 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,055,068 $ 23,594,786 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation of property and equipment 4,697,717 2,592,244 Amortization of intangible assets 4,295,958 2,269,423 Amortization of finance lease right-of-use assets 2,822,982 2,391,989 Loss (gain) on disposal of assets 163,452 ( 42,667 ) Deferred tax asset 1,049,236 — Loss (gain) on equity method investments 301,362 ( 99,840 ) Bad debt expense ( 311,441 ) 2,702,979 Stock-based compensation 15,161,847 4,616,056 Gain on remeasurement of finance leases ( 4,834 ) ( 1,388,273 ) Loss on liquidation of business 70,284 — Gain on remeasurement of warrant liabilities — ( 1,137,070 ) Change in fair value of contingent consideration ( 159,974 ) — Changes in operating assets and liabilities: Accounts receivable ( 103,483,997 ) 2,894,650 Prepaid expenses and other current assets ( 336,093 ) ( 282,668 ) Other assets 696,984 882,432 Accounts payable ( 12,640,920 ) ( 3,983,383 ) Accrued liabilities 27,319,258 2,596,887 Net cash (used in) provided by operating activities ( 58,303,111 ) 37,607,545 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ( 4,360,807 ) ( 1,994,161 ) Acquisition of intangibles ( 2,478,808 ) ( 1,956,434 ) Acquisition of businesses ( 20,203,464 ) ( 33,843,373 ) Equity method investments ( 150,510 ) — Proceeds from disposal of property and equipment 274,210 — Net cash (used in) investing activities ( 26,919,379 ) ( 37,793,968 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from revolving credit line — 1,000,000 Repayments of notes payable ( 529,583 ) ( 585,711 ) Due to seller ( 8,417,936 ) ( 1,007,800 ) Noncontrolling interest contributions — 2,063,000 Proceeds from exercise of stock options 1,549,298 1,880,568 Payments for taxes related to shares withheld for employee taxes ( 2,166,982 ) — Common stock repurchased — ( 497,759 ) Equity costs — ( 19,570 ) Payments on obligations under finance lease ( 2,293,330 ) ( 2,146,857 ) Net cash (used in) provided by financing activities ( 11,858,533 ) 685,871 Effect of exchange rate changes on cash and cash equivalents 227,887 ( 252,854 ) Net (decrease) increase in cash and restricted cash ( 96,853,136 ) 246,594 Cash and restricted cash at beginning of period 164,109,074 179,105,730 Cash and restricted cash at end of period $ 67,255,938 $ 179,352,324 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 6 Table of Contents DocGo Inc. and Subsidiaries UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Nine Months Ended September 30, 2023 2022 Supplemental disclosure of cash and non-cash transactions: Cash paid for interest $ 179,430 $ 102,203 Cash paid for interest on finance lease liabilities $ 394,443 $ 434,580 Cash paid for income taxes $ 4,223,810 $ 917,445 Right-of-use assets obtained in exchange for lease liabilities $ 2,407,938 $ 4,094,731 Fixed assets acquired in exchange for notes payable $ 1,369,060 $ 819,231 Acquisition of remaining FMC NA through due to seller and issuance of stock $ 7,000,000 $ — Acquisition of CRMS through issuance of stock $ 1,000,000 $ — Receivable exchanged for trade credits $ 1,500,000 $ — Reconciliation of cash and restricted cash Cash $ 52,922,517 $ 169,598,749 Restricted cash 14,333,421 9,753,575 Total cash and restricted cash shown in statement of cash flows $ 67,255,938 $ 179,352,324 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 7 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Organization and Business Operations Background On November 5, 2021 (the “Closing Date”), DocGo Inc., a Delaware corporation, then known as Motion Acquisition Corp. (collectively with its subsidiaries, the “Company”), consummated a business combination pursuant to that certain Agreement and Plan of Merger, dated March 8, 2021 (the “Merger Agreement”), by and among the Company, Motion Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of the Company (“Merger Sub”), and Ambulnz, Inc., a Delaware corporation (“Ambulnz”). The transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.” In connection with the closing of the Business Combination (the “Closing”), the Company changed its name from Motion Acquisition Corp. to DocGo Inc. As contemplated by the Merger Agreement and as described in the Company’s definitive proxy statement/consent solicitation/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on October 14, 2021, Merger Sub merged with and into Ambulnz, with Ambulnz continuing as the surviving corporation (the “Merger”). As a result of the Merger, Ambulnz became a wholly owned subsidiary of the Company 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,” and together with Ambulnz Class A Common Stock, “Ambulnz Common Stock”) was cancelled and converted into the right to receive a portion of the merger consideration issuable as common stock of the Company, par value $ 0.0001 (“Common Stock”), pursuant to the terms and conditions set forth in the Merger Agreement. In connection with the Business Combination, the Company raised $ 158,000,000 of net proceeds. This amount consisted of (i) $ 43,400,000 of cash held in the Company’s trust account established in connection with its initial public offering, net of the Company’s transaction costs and underwriters’ fees of $ 9,600,000 , and (ii) $ 114,600,000 of cash from the sale of shares of Common Stock to certain investors at a price of $ 10.00 per share in a private placement that closed concurrently with the Business Combination (the “PIPE Financing”), net of $ 10,400,000 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 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.”). Ambulnz was originally formed in Delaware on June 17, 2015 as Ambulnz, LLC, a limited liability company. On November 1, 2017, with an effective date of January 1, 2017, Ambulnz converted its legal structure from a limited liability company to a C-corporation and changed its name to Ambulnz, Inc. Ambulnz 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, U.K. The Company derives revenue from two operating segments: Mobile Health Services and Transportation Services. Mobile Health Services include services performed at homes and offices, COVID-19 testing and vaccinations, and event services such as 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. 8 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 U.S. (“U.S. GAAP”) and applicable rules and regulations of the 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. Principles of Consolidation The unaudited Condensed Consolidated Financial Statements include the accounts and operations of DocGo Inc. and its 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. 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. The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, the Company 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 the Company, accompanied by a recapitalization. The net assets of the Company 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, and 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. The Company holds a variable interest in Mobile Medical Healthcare P.C., formerly known as MD1 Medical Care P.C. (“MD1”), 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, if it has (1) the power to direct the activities of the 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 MD1 and therefore appropriately consolidates MD1 as a VIE. Net income for MD1 was $ 16,839 for the nine months ended September 30, 2023. MD1’s total assets, all of which were current assets apart from other assets amounting to $ 15,248 , amounted to $ 635,777 as of September 30, 2023. Total liabilities, all of which were current for MD1, were $ 469,066 as of September 30, 2023. MD1’s total stockholders’ equity was $ 166,711 as of September 30, 2023. Foreign Currency The Company’s functional currency is the U.S. dollar. The functional currency of our foreign operation is the British pound. 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 9 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Consolidated Statements of Operations and Comprehensive Income are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment for the three months ended September 30, 2023 and 2022 were $( 582,471 ) and $ 248,283 , respectively, and $ 66,965 and $ 252,854 for the nine months ended September 30, 2023 and 2022, respectively. 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 33 % of sales and 36 % of net accounts receivable and another customer that accounted for 32 % of sales and 28 % of net accounts receivable for the three months ended September 30, 2023. One customer accounted for approximately 37 % of sales and 28 % of net accounts receivable and another customer accounted for approximately 17 % of sales and 36 % of net accounts receivable for the nine months ended September 30, 2023. The Company had one customer that accounted for approximately 35 % of sales and 35 % of net accounts receivable for the three months ended September 30, 2022. The Company had one customer that accounted for 33 % of sales and 35 % of net accounts receivable, and another customer that accounted for 11 % of sales and 0.1 % of net accounts receivable for the nine months ended September 30, 2022. Major Vendor The Company had one vendor that accounted for approximately 20 % and 13 % of total cost for the three months ended September 30, 2023 and 2022, respectively. The Company expects to maintain this relationship with the vendor and believes the services provided by this vendor are available from alternative sources. 10 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Company ha d one vendor that accounted for approximately 13 % and 11 % of total cost for the nine months ended September 30, 2023 and 2022, respectively. The Company expects to maintain thi s relationship with the vendor and believes the services provided by 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. The Company will remain an emerging growth company until the earliest of: (i) the end of the fiscal year in which the Company has total annual gross revenue of $1.235 billion; (ii) the last day of the Company’s fiscal year following the fifth anniversary of the Company’s initial offering, or December 31, 2025; (iii) the date on which the Company issues more than $1.0 billion in non-convertible debt during the preceding three-year period; or (iv) the end of the fiscal year in which the market value of the Common Stock held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter. 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 election to opt out is irrevocable. The Company has elected not to opt out of the extended transition period, which means that when a financial accounting 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 that 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 Company’s accounts at financial institutions in the U.S. are insured by the FDIC and are in excess of FDIC insured limits. The Company had cash balances of approximately $ 5,434,110 and $ 8,125,966 with foreign financial institutions on September 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 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). 11 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 September 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 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 acquisition by Holdings of Ryan Bros. Fort Atkinson, LLC (“Ryan Brothers”), to be paid based on the completion of certain performance obligations over a 24-month period. The Company recorded a change in fair value of contingent consideration in the amount of $ 159,974 for the three and nine months ended September 30, 2023. As of September 30, 2023, there was a remaining contingent liability balance of $ 3,840,026 (see Note 4). In connection with the acquisition of Exceptional Medical Transportation, LLC (“Exceptional”), the Company also agreed to pay up to $ 2,000,000 in contingent consideration upon meeting certain performance conditions within two years of the closing date of such acquisition. The estimated contingent consideration amount for Exceptional was $ 1,080,000 as of December 31, 2022 and September 30, 2023 (see Note 4). 12 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 connection with the acquisition by Holdings of Location Medical Services, LLC (“LMS”) to be paid upon LMS meeting certain performance conditions in 2023. The outstanding balance as of September 30, 2023 increased to $ 2,496,270 as a result of foreign exchange fluctuations (see Note 4). In connection with the acquisition by Holdings of Government Medical Services, LLC (“GMS”), the Company recorded an amount of $ 3,000,000 in contingent consideration to be paid upon GMS meeting certain performance conditions within a year of the closing date of such acquisition. As of September 30, 2023, there was a remaining contingent liability balance of $ 3,000,000 (see Note 4). In connection with the acquisition by Holdings of Cardiac RMS, LLC (“CRMS”), the Company recorded $ 15,822,190 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. As of September 30, 2023, there was a remaining contingent liability balance of $ 15,822,190 (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 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. 13 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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. 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”). 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 and indefinite-lived intangible assets are not amortized but are 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. 14 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 interest), management, members of immediate families of principal owners or management, and 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 Income. For details regarding the related party transactions that occurred during the three and nine months ended September 30, 2023 and 2022, see Note 16. Revenue Recognition On January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”). 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) Transportation Services and (2) Mobile Health Services. Since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, 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 homes and offices, COVID-19 testing and vaccinations, and event services such as 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. 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 Services, 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 five days with payments generally due within 30 days. For large municipal customers in the Mobile Health Services 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 15 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 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, since the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled, 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. For Mobile Health Services, the customer also generally 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 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Primary Geographical Markets United States $ 174,076,595 $ 101,337,899 $ 385,589,261 $ 322,706,143 United Kingdom 12,476,315 2,981,995 39,453,112 9,024,607 Total revenue $ 186,552,910 $ 104,319,894 $ 425,042,373 $ 331,730,750 Major Segments/Service Lines Transportation Services $ 47,212,443 $ 27,670,109 $ 132,690,538 $ 77,657,852 Mobile Health Services 139,340,467 76,649,785 292,351,835 254,072,898 Total revenue $ 186,552,910 $ 104,319,894 $ 425,042,373 $ 331,730,750 Stock-Based Compensation The Company accounts for stock-based compensation using the provisions of ASC 718, Stock-Based Compensation , which requires the recognition of the fair value of 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 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 during the reporting periods. Potential dilutive Common Stock equivalents consist of the incremental shares of 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. 16 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to stockholders of DocGo Inc. and Subsidiaries: 4,764,921 3,154,430 ( 712,016 ) 26,519,778 Weighted-average shares - basic 103,874,845 98,960,538 103,351,345 100,725,697 Effect of dilutive options 1,118,884 8,442,597 1,118,884 8,442,597 Weighted-average shares - dilutive 104,993,729 107,403,135 103,351,345 109,168,293 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Basic 0.05 0.03 ( 0.01 ) 0.26 Net (loss) income per share attributable to DocGo Inc. and Subsidiaries - Diluted 0.05 0.03 ( 0.01 ) 0.24 Anti-dilutive employee share-based awards excluded 10,191,301 — 10,191,301 — Equity Method Investment 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 judgment regarding its level of influence over an equity method investee includes considering key factors, such as ownership interest, representation on the board of directors, and participation in policy-making decisions. 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. On October 26, 2021, the Company acquired a 50 % interest in RND Health Services Inc. (“RND”) for $ 655,876 . During the three months ended September 30, 2023, the Company made an additional investment amounting to $ 150,509 . The Company’s carrying value in RND, an equity method investee, is reflected in the caption “Equity method investments” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of RND are recorded in “(Loss) gain on equity method investments” on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. On November 1, 2021, the Company acquired a 20 % interest in National Providers Association, LLC (“NPA”) for $ 30,000 . 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 September 30, 2023, the Company owned 50 % of NPA. The Company’s carrying value in NPA, an equity method investee, is reflected in the caption “Equity method investments” in the unaudited Condensed Consolidated Balance Sheets. Changes in value of NPA are recorded in “(Loss) gain on equity method investments” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Leases The Company categorizes leases at its inception as either operating or finance leases based on the criteria in 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 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 right-of-use 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 to combine and account for lease and non-lease components as a single lease component. The Company has incorporated 17 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 Adopted In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments – Credit Losses Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which 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 . ASU 2022-02 only affects entities that have already adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which is effective for fiscal years beginning after December 15, 2022. The Company adopted ASU 2022-02 on January 1, 2023, which did 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 September 30, 2023 and December 31, 2022 are as follows: September 30, 2023 December 31, 2022 Transportation equipment $ 23,327,391 $ 20,773,862 Medical equipment 6,864,138 5,177,520 Office equipment and furniture 3,507,597 2,686,065 Leasehold improvements 656,662 579,658 Buildings 527,283 527,283 Land 37,800 37,800 $ 34,920,871 $ 29,782,188 Less: Accumulated depreciation ( 13,068,208 ) ( 8,524,013 ) Property and equipment, net $ 21,852,663 $ 21,258,175 During the nine months ended September 30, 2023, the Company disposed of assets with a cost of $ 591,184 and accumulated depreciation of $ 154,443 for proceeds of $ 274,210 . The Company recorded a loss on disposal of assets of $ 163,452 . 18 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Company recorded depreciation expense of $ 1,625,070 and $ 1,150,806 for the three months ended September 30, 2023 and 2022, respectively. The Company recorded depreciation expense of $ 4,697,717 and $ 2,592,244 for the nine months ended September 30, 2023 and 2022, respectively. 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 of the acquisition, or July 6, 2023. Acquisition costs are included in general and administrative expenses and totaled $ 1,001,883 for the twelve months ended December 31, 2022. As of September 30, 2023, there was a remaining contingent liability balance of $ 3,000,000 . Exceptional Medical Transportation, LLC On July 13, 2022, Holdings acquired 100 % of the outstanding shares of common stock of Exceptional, a provider of medical transportation services, in exchange for an aggregate purchase price of $ 13,708,333 , consisting of $ 7,708,333 in cash at closing and $ 6,000,000 payable over a 24-month period following the closing date of the acquisition. The Company also agreed to pay up to $ 2,000,000 in contingent consideration upon meeting certain performance conditions within two years of the closing date of such acquisition. The estimated contingent consideration amount payable for Exceptional was $ 1,080,000 as of December 31, 2022 and September 30, 2023. Acquisition costs are included in general and administrative expenses and totaled $ 56,571 for the twelve months ended December 31, 2022. The Company paid $ 3,000,000 of the $ 6,000,000 remaining purchase price payable as of September 30, 2023. Ryan Bros. Fort Atkinson, LLC On August 9, 2022, Holdings acquired 100 % of the outstanding shares of common stock of Ryan Brothers, a provider of medical transportation services, in exchange for an aggregate purchase price of $ 11,422,252 , consisting of $ 7,422,252 in cash at closing and an estimated $ 4,000,000 in contingent consideration to be paid out over 24 months, commencing on August 1, 2022, based on performance of certain obligations. Acquisition costs are included in general and administrative expenses and totaled $ 230,175 for the twelve months ended December 31, 2022. The remaining contingent consideration amounted to $ 3,840,026 as of September 30, 2023. Community Ambulance Services Ltd. On October 12, 2022, Holdings, through its indirect wholly owned subsidiary Ambulnz U.K. Ltd. (“UK Ltd.”), acquired Community Ambulance Service Ltd (“CAS”), a provider of emergency and non-emergency transport services, including high dependency, urgent care, mental health and blue light transport services, and diagnostics testing in the U.K. The aggregate purchase price consisted of 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 amounting to $ 1,593,612 . The Company expects this acquisition to help increase the Company’s presence in the U.K. market and help provide improved access to municipal contracts. Acquisition costs are included in general and administrative expenses and amounted to $ 171,779  for the twelve months ended December 31, 2022. Location Medical Services, LLC On December 9, 2022, Holdings, through UK Ltd., acquired 100 % of the outstanding shares of common stock of LMS. The aggregate purchase price consisted of $ 302,450 in cash consideration. Holdings also agreed to pay LMS an additional $ 11,279,201 in deferred consideration and an estimated $ 2,475,540 in contingent consideration upon LMS meeting certain performance conditions in 2023. The Company paid $ 11,279,201 of deferred consideration to LMS during the nine months ended September 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 19 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) On March 31, 2023, Holdings acquired 51 % of the outstanding shares of common stock of CRMS, a provider of cardiac implantable electronic device remote monitoring and virtual care management services. The closing consideration of $ 10,000,000 consisted of $ 9,000,000 in cash and $ 1,000,000 worth of shares of Common Stock issued in a private placement transaction. A further probable consideration of $ 15,822,190 is to be paid out over 36 months following the closing of the transaction for the remaining 49 % equity of CRMS, based on CRMS’ attainment of full-year EBITDA targets. $ 5,000,000 of such further probable consideration is to be paid in cash and the remaining $ 10,822,190 is to be paid in shares of Common Stock. Acquisition costs are included in general and administrative expenses and totaled $ 229,937 for the nine months ended September 30, 2023. Ambulnz-FMC North America LLC On April 1, 2023, the Company acquired the remaining outstanding shares of common stock of Ambulnz-FMC North America LLC (“FMC NA”), a prominent healthcare company that focuses on providing vital products and services for patients suffering from kidney diseases and renal failure, from its joint venture with Holdings in exchange for $ 4,000,000 in cash and $ 3,000,000 in Common Stock. Acquisition costs are included in general and administrative expenses totaling approximately $ 35,560 for the nine months ended September 30, 2023. Healthworx LLC On May 10, 2023, the Company acquired the remaining outstanding shares of common stock of Healthworx LLC (“Healthworx”), a provider of management, administration and support services to Service Providers focused on medical testing and diagnostic screening, from its joint venture with Rapid Reliable Testing, LLC (“RRT”) in exchange for $ 1,385,156 in cash. 20 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table presents the preliminary allocation of the assets acquired and liabilities assumed at each acquisition date: FMC NA CRMS LMS CAS Ryan Brothers Exceptional GMS 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 5. ABC and Held for Sale During the fiscal year 2022, the Company started discussions regarding the potential liquidation process of Health through an 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. 21 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 acted as a fiduciary for creditors and in a capacity equivalent to that of a bankruptcy trustee. The Assignee was responsible for liquidating the assets. Similar to a bankruptcy case, there was a claims process. Creditors of Health received notice of the ABC and a proof of claim form and were 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 such, the Company is required to record Health’s 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 Condensed 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 Sheet as of December 31, 2022 and September 30, 2023: 22 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Pre ABC Adjustment 2022 Adjustments December 31, YTD 2023 Adjustments September 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 Sheet. 6. Goodwill In connection with the ABC, 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. 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. 23 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Additionally, the Company recorded an aggregate of $ 35,299,136 in goodwill in connection with its acquisitions in the year ended December 31, 2022. The Company also updated the carrying value of the goodwill in its unaudited Condensed Consolidated Balance Sheets to reflect the additional goodwill. The carrying value of goodwill amounted to $ 47,594,304 as of September 30, 2023. The changes in the carrying value of goodwill for the period ended September 30, 2023 are as noted in the table below: Carrying Value Balance as of December 31, 2022 $ 38,900,413 Goodwill acquired during the period 8,642,190 Currency translation adjustment 51,701 Balance as of September 30, 2023 $ 47,594,304 24 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7. Intangibles Intangible assets consisted of the following as of September 30, 2023 and December 31, 2022: September 30, 2023 Estimated Useful Life (Years) Gross Carrying Amount Additions Accumulated Amortization Net Carrying Amount Patents 15 years $ 62,823 $ 20,461 $ ( 14,195 ) $ 69,089 Computer software 5 years 247,828 — ( 233,928 ) 13,900 Operating licenses Indefinite 8,799,004 600,000 — 9,399,004 Internally developed software 4 - 5 years 8,284,058 1,838,085 ( 8,680,204 ) 1,441,939 Material contracts Indefinite 62,550 — — 62,550 Customer relationships 9 years 12,397,954 15,847,527 ( 2,530,535 ) 25,714,946 Trademark 8 years 326,646 2,735 ( 34,311 ) 295,070 Non-compete agreements 5 years — 100,000 ( 10,000 ) 90,000 Trade credits 5 years — 1,500,000 — 1,500,000 $ 30,180,863 $ 19,908,808 $ ( 11,503,173 ) $ 38,586,498 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 relationships 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 The intangible assets include an immaterial foreign currency translation adjustment in the amount of $ 4,402 . Intangible asset balances are translated into U.S. dollars using exchange rates in effect at period end, and adjustments related to foreign currency translation are included in other comprehensive income. The Company recorded amortization expense of $ 1,515,378 and $ 990,345 for the three months ended September 30, 2023 and 2022, respectively. The Company recorded amortization expense of $ 4,295,958 and $ 2,269,423 for the nine months ended September 30, 2023 and 2022, respectively. 25 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Future amortization expense at September 30, 2023 for the next five years and in the aggregate are as follows: Amortization Expense 2023, remaining $ 986,093 2024 3,896,784 2025 3,846,769 2026 3,236,605 2027 3,235,890 Thereafter 12,422,803 Total $ 27,624,944 Trade Credit Agreement During 2022, the Company provided mobile health services to one of its customers for an aggregate of $ 5,000,000 . In June 2023, the Company entered into a Trade Credit Agreement with this customer whereby the customer was expected to provide the Company with $ 5,000,000 in trade credit on future vendor advertising expenditures. In July 2023, the customer paid $ 3,500,000 in cash to partially settle the outstanding amount owed to the Company. The fair value of the trade credits amounted to $ 1,500,000 , which was the remaining amount owed to the Company. As of September 30, 2023, the trade credits have been reclassified from accounts receivable to intangible assets, net on the Condensed Consolidated Balance Sheets. These trade credits are amortized to amortization expense under a usage-model as the credits are used to purchase advertising services. The Company had a remaining balance of $ 1,500,000 in trade credits as of September 30, 2023. 26 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. Accrued Liabilities Accrued liabilities consisted of the following as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 Accrued subcontractors $ 24,121,473 $ 8,101,150 Accrued general expenses 13,595,062 11,436,462 Accrued workers' compensation and other insurance liabilities 10,786,533 3,766,469 Accrued payroll 5,707,651 4,245,838 Accrued bonus 1,893,172 1,500,717 Accrued fuel and maintenance 902,789 253,243 Other current liabilities 798,826 706,528 Accrued legal fees 550,921 344,417 Accrued lab fees 463,008 584,203 Credit card payable 34,941 78,838 FICA/Medicare liability 29,289 555,166 Total accrued liabilities $ 58,883,665 $ 31,573,031 9. Line of Credit On November 1, 2022, the Company entered into a credit agreement with two banks, with one bank in the capacity as a lender and the administrative agent (collectively with the other lender, the “Lenders”). The Credit Agreement provides for a revolving credit facility in the initial aggregate principal amount of $ 90,000,000 (the “Revolving Facility”). The Revolving Facility includes the ability for the Company to request an increase to the commitment by an additional amount of up to $ 50,000,000 , though no Lender (nor the Lenders collectively) is obligated to increase its respective commitments. Borrowings under the Revolving Facility bear interest at a per annum rate equal to: (i) at the Company’s option, (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 Company's consolidated net leverage ratio. 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 coverage ratio, as defined in the Credit Agreement. As of September 30, 2023, the Company had not made any draws under the Revolving Facility, and there were no amounts outstanding. On October 19, 2023, the Company drew down $ 25,000,000 under the Revolving Facility. 27 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10. Notes Payable The Company has various loans with finance companies with monthly installments aggregating $ 83,823 , inclusive of interest ranging from 2.5 % through 11.3 %. The loan notes mature at various times through 2028 and are secured by transportation equipment. The following table summarizes the Company’s notes payable: September 30, 2023 December 31, 2022 Equipment and financing loans payable, between 2.5 % and 11.3 % interest and maturing between June 2023 and August 2028 $ 2,740,991 $ 1,901,514 Loan received pursuant to the Payroll Protection Program Term Note — — Total notes payable 2,740,991 1,901,514 Less: current portion of notes payable $ 696,053 $ 664,913 Total non-current portion of notes payable $ 2,044,938 $ 1,236,601 Interest expense was $ 48,794 and $ 26,296 for the three month periods ended September 30, 2023 and 2022, respectively. Interest expense was $ 110,203 and $ 69,804 for the nine month periods ended September 30, 2023 and 2022, respectively. Future minimum annual maturities of notes payable as of September 30, 2023 are as follows: Notes Payable 2023, remaining $ 180,213 2024 672,684 2025 678,695 2026 623,935 2027 428,872 Thereafter 156,592 Total maturities $ 2,740,991 Current portion of notes payable ( 696,053 ) Long-term portion of notes payable $ 2,044,938 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 began 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 Executive Officer 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. 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. 28 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Operating results for the business segments of the Company are as follows: Transportation Services Mobile Health Services Corporate Total Three Months Ended September 30, 2023 Revenues $ 47,212,443 $ 139,340,467 $ — $ 186,552,910 Income (loss) from operations 503,687 21,109,619 ( 12,905,351 ) 8,707,955 Total assets 129,796,548 225,084,373 64,903,221 419,784,142 Depreciation and amortization expense 2,333,426 1,193,187 809,654 4,336,267 Stock compensation 136,472 274,108 2,950,130 3,360,710 Long-lived assets 66,160,925 48,554,087 11,305,286 126,020,298 Capital expenditures 3,016,381 1,692,902 783,422 5,492,705 Three Months Ended September 30, 2022 Revenues $ 27,670,109 $ 76,649,785 $ — $ 104,319,894 Income (loss) from operations ( 3,858,715 ) 17,962,484 ( 9,904,579 ) 4,199,190 Total assets 102,061,123 84,096,109 169,762,978 355,920,210 Depreciation and amortization expense 1,688,219 550,034 776,611 3,014,864 Stock compensation 152,163 80,351 878,689 1,111,203 Long-lived assets 66,116,505 21,431,704 2,817,517 90,365,726 Capital expenditures 4,839,972 11,504,148 1,009,414 17,353,534 29 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Transportation Services Mobile Health Services Corporate Total Nine Months Ended September 30, 2023 Revenues $ 132,690,538 $ 292,351,835 $ — $ 425,042,373 Income (loss) from operations 853,164 52,081,169 ( 49,553,011 ) 3,381,322 Total assets 129,796,548 225,084,373 64,903,221 419,784,142 Depreciation and amortization expense 6,137,364 3,111,497 2,567,796 11,816,657 Stock compensation 612,077 573,930 13,975,840 15,161,847 Long-lived assets 66,160,925 48,554,087 11,305,286 126,020,298 Capital expenditures 16,460,730 28,109,057 3,159,172 47,728,959 Nine Months Ended September 30, 2022 Revenues $ 77,657,852 $ 254,072,898 $ — $ 331,730,750 Income (loss) from operations ( 11,737,903 ) 71,540,872 ( 38,051,457 ) 21,751,512 Total assets 102,061,123 84,096,109 169,762,978 355,920,210 Depreciation and amortization expense 4,127,322 980,677 2,145,657 7,253,656 Stock compensation 827,946 486,231 3,219,582 4,533,759 Long-lived assets 66,116,505 21,431,704 2,817,517 90,365,726 Capital expenditures 3,317,127 10,884,649 5,908,513 20,110,289 Long-lived assets include property and equipment, goodwill, intangible assets, operating lease right-of-use assets and finance lease right-of-use assets. 30 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Geographic Information The table below shows long-lived assets by geographic location. September 30, 2023 September 30, 2022 Primary Geographical Markets United States 107,033,650 87,161,204 United Kingdom 18,986,648 3,204,522 Total Long-Lived Assets 126,020,298 90,365,726 Revenues by geographic location are included in Note 2. 12. Equity Share Repurchase Program On May 24, 2022, the Company’s Board of Directors (the “Board of Directors”) authorized a share repurchase program to purchase up to $ 40,000,000 of 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 nine months ended September 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, 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 2033 and are nontransferable. Stock options granted have a maximum contractual term of 10 years. As of September 30, 2023, approximately 2.9 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 consummation of the Business Combination, 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 were 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 nine months ended September 30, 2023 and 2022: Nine Months Ended September 30, 2023 2022 Risk-free interest rate 4.10 - 4.87 0.07 - 2.80 Expected term (in years) 6.25 4 Volatility 52 % - 62 % 60 % - 64 % Dividend yield 0 % 31 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 Company’s 2021 Stock Incentive Plan for the nine months ended September 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 1,115,874 8.92 — — Exercised during the year ( 493,984 ) 3.63 — — Cancelled during the year ( 551,665 ) 7.66 — — Balance as of September 30, 2023 11,641,533 7.42 8.47 49,268,644 Options vested and exercisable as of September 30, 2023 2,937,143 $ 6.36 7.65 3,060,026 The aggregate intrinsic value in the above table is calculated as the difference between the fair value of the 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 nine months ended September 30, 2023 and the year ended December 31, 2022 was $ 8.92 and $ 7.04 , respectively. On September 30, 2023 and December 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $ 30,994,529 and $ 41,666,564 , respectively, which the Company expects to recognize over a weighted-average period of approximately 1.85 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 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 during the nine months ended September 30, 2023 was as follows: RSUs Weighted- Average Grant Date Fair Value Per RSU Balance as of December 31, 2022 305,587 $ 8.35 Granted 253,796 8.39 Vested ( 156,276 ) 8.90 Forfeited — — Balance as of September 30, 2023 403,107 8.16 Vested and unissued as of September 30, 2023 212,518 8.25 Non-vested as of September 30, 2023 403,107 8.16 The total grant-date fair value of RSUs granted during the nine months ended September 30, 2023 was $ 2,130,040 . The Company recorded stock-based compensation expense related to RSUs of $ 25,000 and $ 1,416,338 for the three and nine months ended September 30, 2023, respectively, As of September 30, 2023, the Company had $ 3,290,875 in unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.3 years. 32 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 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 right-of-use 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 Cost The table below comprises operating lease expenses for the periods ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, Components of total lease cost: 2023 2022 2023 2022 Operating lease expense $ 697,050 $ 626,188 $ 2,319,282 $ 1,517,541 Short-term lease expense 452,538 334,619 1,156,886 863,316 Total lease cost - operating leases $ 1,149,588 $ 960,807 $ 3,476,168 $ 2,380,857 Lease Position as of September 30, 2023 Right-of-use assets and lease liabilities for the Company’s operating leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows: September 30, 2023 December 31, 2022 Assets Lease right-of-use assets $ 9,420,525 $ 9,074,277 Total lease assets $ 9,420,525 $ 9,074,277 Liabilities Current liabilities: Lease liability - current portion $ 2,561,165 $ 2,325,024 Noncurrent liabilities: Lease liability, net of current portion 7,196,596 7,040,982 Total lease liability $ 9,757,761 $ 9,366,006 33 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 September 30, 2023: Weighted average remaining lease term (in years) - operating leases 4.36 Weighted average discount rate - operating leases 5.76 % Undiscounted Cash Flows Future minimum lease payments under the operating leases as of September 30, 2023 are as follows: Operating Leases 2023, remaining $ 813,120 2024 2,987,762 2025 2,982,487 2026 2,183,265 2027 1,090,802 Thereafter 862,023 Total future minimum lease payments 10,919,459 Less effects of discounting ( 1,161,698 ) Present value of future minimum lease payments $ 9,757,761 Operating lease expense was approximately $ 697,050 and $ 960,807 for the three months ended September 30, 2023 and 2022, respectively. Operating lease expense was approximately $ 2,319,282 and $ 2,380,857 for the nine months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023, the Company made $ 697,050 of fixed cash payments related to operating leases and $ 782,808 related to finance leases. For the three months ended September 30, 2022, the Company made $ 626,188 of fixed cash payments related to operating leases and $ 672,975 related to finance leases. For the nine months ended September 30, 2023, the Company made $ 2,319,282 of fixed cash payments related to operating leases and $ 2,293,330 related to finance leases. For the nine months ended September 30, 2022, the Company made $ 1,517,541 of fixed cash payments related to operating leases and $ 2,146,587 related to finance leases. Finance Leases The Company leases vehicles under non-cancelable finance lease agreements with a liability of $ 8,664,108 and $ 8,646,803 as of September 30, 2023 and December 31, 2022, respectively. This includes accumulated depreciation expense of $ 10,701,206 and $ 7,096,966 as of September 30, 2023 and December 31, 2022, respectively. Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $ 1,195,719 and $ 873,713 for the three months ended September 30, 2023 and 2022, respectively. Depreciation expense for the vehicles under non-cancelable lease agreements amounted to $ 2,822,982 and $ 2,391,989 for the nine months ended September 30, 2023 and 2022, respectively. 34 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 $ 1,400,000 recorded as gains from lease accounting on the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income during the three months ended June 30, 2022. Lease Cost The table below presents lease payments for the periods ended September 30, 2023 and 2022: Three Months Ended September 30, Nine Months Ended September 30, Components of total lease cost: 2023 2022 2023 2022 Finance lease payment $ 782,808 $ 672,975 $ 2,293,330 $ 2,146,857 Short-term lease payment — — — — Total lease payments $ 782,808 $ 672,975 $ 2,293,330 $ 2,146,857 Lease Position as of September 30, 2023 Right-of-use assets and lease liabilities for the Company’s finance leases were recorded in the unaudited Condensed Consolidated Balance Sheets as follows: September 30, 2023 December 31, 2022 Assets Lease right-of-use assets $ 8,566,308 $ 9,039,663 Total lease assets $ 8,566,308 $ 9,039,663 Liabilities Current liabilities: Lease liability - current portion $ 2,733,332 $ 2,732,639 Noncurrent liabilities: Lease liability, net of current portion 5,930,776 5,914,164 Total lease liability $ 8,664,108 $ 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 September 30, 2023: Weighted average remaining lease term (in years) - finance leases 3.58 Weighted average discount rate - finance leases 5.96 % 35 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 as of September 30, 2023 are as follows: Finance Leases 2023, remaining $ 867,050 2024 3,018,851 2025 2,740,288 2026 1,969,492 2027 850,883 Thereafter 114,107 Total future minimum lease payments 9,560,671 Less effects of discounting ( 896,563 ) Present value of future minimum lease payments $ 8,664,108 15. Other Income (Expense) The Company recognized $ 449,051 and $( 1,330,788 ) of other income (expense) for the three months ended September 30, 2023 and September 30, 2022, respectively, as set forth in the table below. The Company recognized $ 715,589 and $ 3,007,029 of other income for the nine months ended September 30, 2023 and September 30, 2022, respectively, as follows: Three Months Ended Nine Months Ended September 30, September 30, Other Income (Expense) 2023 2022 2023 2022 Interest income (expense), net $ 346,376 $ 334,221 $ 1,677,420 $ 296,891 (Loss) gain on remeasurement of warrant liabilities — ( 1,831,947 ) — 1,137,070 Change in fair value of contingent liability 159,974 — 159,974 — (Loss) gain on equity method investments ( 95,503 ) 93,371 ( 301,362 ) 99,840 Gain on remeasurement of finance leases 4,834 — 4,834 1,388,273 (Loss) gain on disposal of fixed assets ( 9,983 ) 42,667 ( 163,452 ) 42,667 ABC litigation — — ( 1,000,000 ) — Other income 43,353 30,900 338,175 42,288 Total other income (expense) $ 449,051 $ ( 1,330,788 ) $ 715,589 $ 3,007,029 For the three months ended September 30, 2023, the Company recognized other income of $ 43,353 , inclusive of $ 924 from realized foreign exchange gain and rental income of $ 26 . For the three months ended September 30, 2022, the Company recognized other income of $ 30,900 , inclusive of $ 777 from realized foreign exchange gain and rental income of $ 30,123 . 36 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the nine months ended September 30, 2023, the Company recognized other income of $ 338,175 , inclusive of $ 6,697 from realized foreign exchange gain and rental income of $ 8,522 . For the nine months ended September 30, 2022, the Company recognized other income of $ 42,288 , net of $( 18,883 ) from realized foreign exchange loss offset by rental income of $ 61,171 . 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 Ely D. Tendler, the General Counsel and Secretary and a Director of the Company, and therefore is a related party. The Company made legal payments to Ely D. Tendler Strategic & Legal Services PLLC totaling $ 204,700 and $ 261,185 for the three months ended September 30, 2023 and 2022, respectively, and $ 674,970 and $ 704,593 for the nine months ended September 30, 2023 and 2022, respectively. Included in accounts payable were $ 78,800 and $ 86,555 due to related parties as of September 30, 2023 and December 31, 2022, respectively. 17. Income Taxes As a result of the Company’s history of net operating losses, 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 (provision) for the three months ended September 30, 2023 and 2022 were $( 4,526,767 ) and $( 401,916 ), respectively, and $( 2,041,843 ) and $( 1,163,755 ) for the nine months ended September 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 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 September 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 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 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 Los Angeles Superior Court preliminarily approved the proposed settlement, which was paid in July 2023. 37 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 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 the volume of transports completed by the Company (“trips”). In addition, the Company experienced lost revenues associated with sporting, concerts and other events, as those events were cancelled or 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 (“EMTs”) and paramedics, the Company formed a new subsidiary, 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 Services 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. Demand for such services was accelerated by the pandemic, but 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 Transition Services Agreement On October 11, 2023, the Company and Anthony Capone, who resigned as Chief Executive Officer of the Company on September 15, 2023, entered into a separation and transition services agreement (the “Transition Agreement”). Pursuant to the Transition Agreement, Mr. Capone will continue to serve as a consultant to the Company until March 15, 2024 (such period, the “Consulting Period”) to advise on matters relating to business continuity and processes and transition his institutional knowledge with respect to operational and other departmental functions. As compensation for his services during the Consulting Period, and subject to his compliance with the Transition Agreement, including the execution and non-revocation of a general release of claims in favor of the Company, Mr. Capone will receive a monthly consulting fee of $ 45,000 and subsidized premiums for continued group health plan coverage for the duration of the Consulting Period. Mr. Capone will not receive new equity awards or incentive compensation under the Company’s equity incentive compensation program during the Consulting Period. The Transition Agreement further acknowledges and affirms that Mr. Capone will be bound by and comply with certain restrictive covenants. Line of Credit On October 19, 2023, the Company made a draw of $ 25,000,000 under its Revolving Facility. Letter of Credit On October 20, 2023, the Company obtained an unconditional and irrevocable letter of credit from a financial institution in the amount of $ 1,080,000 . The letter of credit expires on the one-year anniversary of the closing date, or October 20, 2024, and is renewed automatically for successive one-year periods, unless earlier terminated by the institution. Legal Proceedings On October 27, 2023, Joe Naclerio, individually and purportedly on behalf of all others similarly situated, filed a putative class action complaint for violation of federal securities laws in the U.S. District Court for the Southern District of New York against the Company, its Chairman, current and former Chief Executive Officers, and current and former Chief 38 Table of Contents DocGo Inc. and Subsidiaries NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Financial Officers. The complaint alleges that the Company violated various securities laws, and seeks class certification, damages, interest, attorneys’ fees, and other relief. Due to the early stage of this proceeding, the Company cannot reasonably estimate the potential range of loss, if any. The Company disputes the allegations of wrongdoing and intends to defend itself vigorously in this matter. 39 Table of Contents