DocGo Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk We are exposed to certain market risks, including those relating to changes in interest rates and foreign currency exchange rates. We do not enter into instruments for trading or speculative purposes. Interest Rate Risk We are subject to interest rate risk relating to our cash equivalents and borrowings under our Revolving Facility, which bear interest at a per annum rate equal to (i) at our option, (x) the base rate or (y) the adjusted term SOFR rate, plus (ii) the 58 Table of Contents applicable margin. The applicable margins are based on the Company’s consolidated net leverage ratio, adjusted on a quarterly basis. As of December 31, 2023, there was a $25,000,000 outstanding balance on the Revolving Facility. The Company drew down an additional $15,000,000 on February 8, 2024 under the Revolving Facility. On February 27, 2024, the Company paid the $40,000,000 Revolving Facility balance. On March 4, 2024, the Company drew down $15,000,000 and made an additional $15,000,000 draw on March 18, 2024 . As of September 30, 2024, the outstanding balance of the Revolving Facility was $30,000,000 and the unused portion of the Revolving Facility was $60,000,000. While the applicable interest rate is set for a specific term when amounts are drawn down under the terms of the Revolving Facility, any subsequent draws on the Revolving Facility may be subject to a higher or lower interest rate, depending upon, among other things, the then-prevailing SOFR rate. We have not utilized interest rate hedging or other strategies in an attempt to mitigate our interest rate risk. A hypothetical 10% change in interest rates during the nine months ended September 30, 2024 would have had a neutral net impact on our unaudited Condensed Consolidated Financial Statements, as changes in amounts paid for interest expense would have offset changes in interest income earned on cash balances. Foreign Exchange Risk We operate our business primarily within the U.S. and currently execute a majority of our transactions in U.S. dollars. However, we are exposed to limited foreign exchange risk as a result of our U.K. operations. The foreign exchange gain (loss) for the three months ended September 30, 2024 and 2023 were $934,774 and $(582,471), respectively, and $828,613 and $66,965 for the nine months ended September 30, 2024 and 2023, respectively. We have not utilized hedging strategies with respect to such foreign exchange exposure. This limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements. A hypothetical 10% change in the applicable foreign exchange rate would have resulted in a change in total revenues of approximately 0.9% and 0.6% for the three and nine months ended September 30, 2024, respectively, and a change in total assets of approximately 0.3% for the nine months ended September 30, 2024. Concentrations of Risk and Significant Clients Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and accounts receivable. Although we deposit our cash with multiple financial institutions in the United States and in foreign countries, our deposits, at times, may exceed federally insured limits. We do not believe we are exposed to significant credit risk due to the financial strength of the depository institutions in which the funds are held. With respect to accounts receivable, the Company had one customer that accounted for approximately 41% of revenues and 34% of net accounts receivable and another customer that accounted for 21% of revenues and 44% of net accounts receivable for the three months ended September 30, 2024. The Company had one customer that accounted for approximately 36% of revenues and 34% of net accounts receivable and another customer that accounted for 31% of revenues and 44% of net accounts receivable for the nine months ended September 30, 2024. The Company had one customer that accounted for approximately 33% of revenues and 36% of net accounts receivable and another customer that accounted for 32% of revenues and 28% of net accounts receivable for the three months ended September 30, 2023. One customer accounted for approximately 37% of revenues and 28% of net accounts receivable and another customer accounted for approximately 17% of revenues and 36% of net accounts receivable for the nine months ended September 30, 2023. We perform ongoing evaluations of customers’ financial condition, creditworthiness and payment performance. Based on these evaluations, we consider whether or not the accounts receivable exposure to any specific customer is within an acceptable range for that customer.