| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation The accompanying unaudited Condensed Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable
rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information
and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant
to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with
the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31,
2021. The Condensed Consolidated Balance Sheet as of December 31, 2021 included
herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required
by U.S. GAAP. The Condensed Consolidated Financial Statements
include the accounts and operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated
upon consolidation. Noncontrolling interests (“NCI”) on the Condensed Consolidated Financial Statements represent a portion
of consolidated joint ventures and a variable interest entity in which the Company does not have direct equity ownership. Accounts and
transactions between consolidated entities have been eliminated. Certain amounts in the prior years’ consolidated statements of
changes in stockholders’ equity and statements of cash flows have been reclassified to conform to the current year presentation. Pursuant
to the Business Combination, the merger between Motion and Ambulnz, Inc. was accounted for as a reverse recapitalization in accordance
with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, Motion was treated as the “acquired”
company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent
of Ambulnz, Inc. stock for the net assets of Motion, accompanied by a recapitalization. The net assets of Motion are stated at historical
cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the
Reverse Recapitalization are those of Ambulnz, Inc. 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, Inc. was determined to be the accounting acquirer in the transaction,
as such, the acquisition is considered a business combination under Accounting Standards Codification (“ASC”), Topic 805,
Business Combinations, (“ASC 805”) and was accounted for using the acquisition method of accounting. Principles
of Consolidation The accompanying Condensed
Consolidated Financial Statements include the accounts of DocGo Inc. and its subsidiaries. All significant intercompany transactions
and balances have been eliminated in these Condensed Consolidated Financial Statements. The Company holds a variable interest in 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, it has (1) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance (power)
and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits
from the VIE that potentially could be significant to the VIE (benefits). The Company has the power and rights to control all activities
of MD1 and funds and absorbs all losses of the VIE and appropriately consolidates MD1. Net
loss for the VIE was $85,379 as of March 31, 2022. The VIE’s total assets, all of which were current, amounted to $509,769 on March
31, 2022. Total liabilities, all of which were current for the VIE, was $1,020,254 on March 31, 2022. The VIE’s total stockholders’
deficit was $510,485 on March 31, 2022. Foreign
Currency The Company’s functional currency is the U.S. dollar. The functional
currency of our foreign operation is the respective local currency. Assets and liabilities of foreign operations denominated in local
currencies are translated at the spot rate in effect at the applicable reporting date, except for equity accounts which are translated
at historical rates. The Condensed 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 is not material to the financial
statements. Use
of Estimates The
preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities and expenses and the disclosure of contingent assets and liabilities in its financial statements and the reported amounts
of expenses during the reporting period. The most significant estimates in the Company’s financial statements relate to revenue
recognition related to the allowance for doubtful accounts, stock based compensation, calculations related to the incremental borrowing
rate for the Company’s lease agreements, estimates related to ongoing lease terms, software development costs, impairment of long-lived
assets, goodwill and indefinite-lived intangible assets, business combinations, reserve for losses within the Company’s insurance
deductibles, income taxes, and deferred income tax. These estimates and assumptions are based on current facts, historical experience
and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual
results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates
and actual results, the Company’s future results of operations will be affected. 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 has one customer that accounted for approximately 34% of sales and 22% of net accounts receivable, and another customer that
accounted for 19% of sales and 17% of net accounts receivable for the period ended March 31, 2022. As of the period ended March 31, 2021,
one customer accounted for approximately 26% of sales and 13% of net accounts receivable, and another customer that accounted for 10%
of sales and 3% of net accounts receivable. The Company expects to maintain its relationships with these customers. Emerging
Growth Company The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with
the requirements that apply to non- emerging growth companies but any such an election to opt out is irrevocable. The Company has elected
not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another
public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period, difficult or impossible because of the potential differences in accounting standards used. Reclassifications Certain reclassifications of amounts previously reported have been
made to the accompanying 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 United States. The accounts at financial institutions in the United
States are insured by the Federal Deposit Insurance Corporation (“FDIC”) and are in excess of FDIC limits. The Company had
cash balances of approximately $1,029,825 and $803,000 with foreign financial institutions on March 31, 2022 and December 31, 2021,
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 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 8 and 13). 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 Condensed Consolidated Balance Sheets. Fair
Value of Financial Instruments ASC
820, Fair Value Measurements 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
March 31, 2022 and December 31, 2021. 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. 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. The billings will either be 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 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:
Asset
Category 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 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 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. For the
periods ending March 31, 2022 and December 31, 2021, management determined that there was no impairment loss required to be recognized
for the carrying value of long-lived assets. Goodwill
and Indefinite-Lived Intangible Assets Goodwill
represents the excess of the purchase price of an acquired business over the fair value of amounts assigned to assets acquired and liabilities
assumed. Goodwill and indefinite-lived intangible assets, consisting primarily of operating licenses, are not amortized, but are evaluated
for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may
not be recoverable. In assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company makes assumptions
regarding the estimated future cash flows, including forecasted revenue growth, projected gross margin and the discount rate to determine
the fair value of these assets. If these estimates or their related assumptions change in the future, the Company may be required to
record impairment charges against these assets in the reporting period in which the impairment is determined. The
Company tests goodwill for impairment at the reporting unit level, which is one level below the operating segment. The Company has the
option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the one-step
quantitative assessment. If as a result of the qualitative assessment, it is more-likely-than-not that the fair value of a reporting
unit is less than its carrying amount, a quantitative impairment test will be required. Otherwise, no further testing will be required.
If a quantitative impairment test is performed, the Company compares the fair values of the applicable reporting units with their aggregate
carrying values, including goodwill. Estimating the fair value of the reporting units requires significant judgment by management. If
the carrying amount of a reporting unit exceeds the fair value of the reporting unit, goodwill impairment is recognized. Any
excess in carrying value over the estimated fair value is recorded as impairment loss and charged to the results of operations in the
period such determination is made. For the periods ended March 31, 2022 and 2021, management determined that there was no impairment
loss required to be recognized in the carrying value of goodwill or other intangible assets. The Company selected December 31 as
its annual testing date. 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. Derivative
Financial Instruments The
Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates
its financial instruments to determine if such instruments contain features that qualify as embedded derivatives. 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, and members
of immediate families of principal owners or management, other parties with which the Company may deal with if one party controls or
can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented
from fully pursuing its own separate interests. Related party transactions are recorded within operating expenses in
the Company’s Condensed Consolidated Statement of Operations and Comprehensive Income. For details regarding the related party transactions
that occurred during the periods ended March 31, 2022 and 2021, refer to Note 15. Revenue
Recognition On
January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers To
determine revenue recognition for contractual arrangements that the Company determines are within the scope of ASC 606, the Company performs
the following five steps: (1) identify each contract with a customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when
(or as) the relevant performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable
that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company provides to the customer. The
Company generates revenues from the provision of (1) ambulance and medical transportation services (“Transportation Services”)
and (2) Mobile Health services. The customer simultaneously receives and consumes the benefits provided by the Company as the performance
obligations are fulfilled, therefore the Company satisfies performance obligations immediately. The Company has utilized the “right
to invoice” expedient which allows an entity to recognize revenue in the amount of consideration to which the entity has the right
to invoice when the amount that the Company has the right to invoice corresponds directly to the value transferred to the customer. Revenues
are recorded net of an estimated contractual allowances for claims subject to contracts with responsible paying entities. The Company
estimates contractual allowances at the time of billing based on contractual terms, historical collections, or other arrangements. All
transaction prices are fixed and determinable which includes a fixed base rate, fixed mileage rate and an evaluation of historical collections
by each payer. Nature
of Our Services Revenue
is primarily derived from:
i. Transportation
Services
ii. Mobile
Health Services The
Company concluded that Transportation Services and any related support activities are a single performance obligation under ASC 606.
The transaction price is determined by the fixed rate usage-based fees or fixed fees which are agreed upon in the Company’s executed
contracts. For Mobile Health, the performance of the services and any related support activities are a single performance obligation
under ASC 606. Mobile Health services are typically billed based on a fixed rate (i.e., time and materials separately or combined) fee
structure taking into consideration staff and materials utilized. As
the performance associated with such services is known and quantifiable at the end of a period in which the services occurred (i.e.,
monthly or quarterly), revenues are typically recognized in the respective period performed. The typical billing cycle for Transportation
Services and Mobile Health services is same day to 5 days with payments generally due within 30 days. For Transportation Services, the
Company estimates the amount of revenues 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 evaluate all contracts on a case-by-case basis to determine if multiple performance
obligations are present in a contractual arrangement. For
Transportation Services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations
are fulfilled, therefore the Company satisfies performance obligations at the same time. For Transportation Services, where the customer
pays fixed rate usage-based fees, the actual usage in the period represents the best measure of progress. Generally, for Mobile Health
services, the customer simultaneously receives and consumes the benefits provided by the Company as the performance obligations are fulfilled,
therefore the Company satisfies performance obligations at the same time. For certain Mobile Health services that have a fixed fee arrangement,
and the services are provided over time, revenue is recognized over time as the services are provided to the customer. In
the following table, revenue is disaggregated by as follows:
Three
Months Ended
2022 2021
Primary Geographical Markets
United
States $ 115,053,431 $ 47,681,374
United
Kingdom 2,838,121 2,007,482
Total
revenue $ 117,891,552 $ 49,688,856
Major
Segments/Service Lines
Transportation
Services $ 27,812,510 $ 19,124,020
Mobile
Health 90,079,042 30,564,836
Total
revenue $ 117,891,552 $ 49,688,856 Stock
Based Compensation The Company expenses stock-based compensation over the requisite service
period based on the estimated grant-date fair value of the awards. The Company estimates the fair value of stock option grants using the
Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s
best estimates and involve inherent uncertainties and the application of management’s judgment. The Company accounts for forfeitures
as they occur. All stock-based compensation costs are recorded in operating expenses in the 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 of the Company during the reporting periods. Potential dilutive common stock equivalents consist
of the incremental common shares 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. On March 31, 2021, the Company excluded from its calculation 25,555,492 shares because their inclusion would have
been anti-dilutive. Equity
Method Investment On October 26, 2021, the Company acquired a 50% interest in RND Health
Services Inc. (“RND”) for $655,876. The Company uses the equity method to account for investments in which the Company has
the ability to exercise significant influence over the operating and financial policies of the investee but does not exercise control.
The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment” on
the condensed consolidated balance sheets. Changes in value of RND are recorded in “Loss from equity method investment” on
the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company’s judgment regarding its level of influence
over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors,
and participation in policy-making decisions. On November 1, 2021, the Company acquired a 20% interest in National
Providers Association, LLC (“NPA”) for $30,000. The Company uses the equity method to account for investments in which the
Company has the ability to exercise significant influence over the operating and financial policies of the investee but does not exercise
control. The Company’s carrying value in the equity method investee is reflected in the caption “Equity method investment”
on the condensed consolidated balance sheets. Changes in value of NPA are recorded in “Loss from equity method investment”
on the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company’s judgment regarding its level of influence
over the equity method investee includes considering key factors, such as ownership interest, representation on the board of directors,
and participation in policy-making decisions. Effective December 21, 2021, three members withdrew from NPA resulting in the remaining
two members obtaining the remaining ownership percentage. On December 31, 2021, and March 31, 2022, DocGo owned 50% of NPA. Under
the equity method, the Company’s investment is initially measured at cost and subsequently increased or decreased to recognize
the Company’s share of income and losses of the investee, capital contributions and distributions and impairment losses. The Company
performs a qualitative assessment annually and recognizes an impairment if there are sufficient indicators that the fair value of the
investment is less than carrying value. Leases The
Company categorizes leases at its inception as either operating or finance leases based on the criteria in FASB ASC 842, Leases 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 ex |
