Docgo Inc. quarterly report, Q3 FY2021

Business context and reporting period

DocGo Inc.’s Form 10-Q covers the quarter ended September 30, 2021. The financial statements are those of Motion Acquisition Corp., a pre-combination blank-check company—not DocGo/Ambulnz’s operating business. The merger closed on November 5, 2021, after the reporting period, and Motion changed its name to DocGo Inc.

Financial results and position

Quarterly net income included $891,332 of non-operating income from a decrease in the fair value of warrant liabilities and $1,480 of trust-account interest. Nine-month non-operating income was $468,274, including a $445,670 warrant-liability fair-value gain and $22,604 of trust-account interest. These warrant remeasurements are non-cash and drove the difference between operating expenses and reported net results. Operating margins are not meaningful because the SPAC had no revenue.

At September 30, 2021, cash was $59,319, versus $878,653 at December 31, 2020; working capital was negative by approximately $47,000. Total assets were $115.3 million, largely comprising $115.0 million in the trust account. Current liabilities were $334,182 and total liabilities were $12.95 million, including $8.595 million of warrant liabilities and $4.025 million of deferred underwriting commissions. There was no conventional funded debt or working-capital loan outstanding. Nine-month investing cash flow was $42,199, and cash declined by $819,334.

Changes, transaction, and outlook

• Compared with December 31, 2020, operating cash fell substantially and accounts payable rose to $161,067 from $11,658. Warrant liabilities declined to $8.595 million from $9.041 million, principally reflecting fair-value changes. The filing does not provide a comparable 2020 third-quarter operating period; its 2020 results cover only inception through September 30.
• The company revised prior-period presentation to classify all redeemable public shares as temporary equity. This reclassified equity amounts but did not affect previously reported total assets, liabilities, cash flows, or net income (loss).
• The November 5 merger made Ambulnz a wholly owned subsidiary. A concurrent PIPE raised $125 million gross, subject to closing. The filing says trust funds were used for the business combination and redemptions, but does not give the redemption amount or a clear post-closing cash balance here.
• Management said cash on hand was sufficient through closing and expected post-combination liquidity needs to be funded by cash on hand and operating cash generation. No quantified financial guidance was provided.

Risks, contingencies, and controls

Management noted that COVID-19 could negatively affect the healthcare industry and the target company, but the specific impact was not readily determinable; the statements include no related adjustment. The company also had an approximately $3.0 million M&A advisory fee payable from the trust upon merger closing. Management reported effective disclosure controls as of September 30, 2021 and no material quarterly change in internal control over financial reporting. The reported warrant-liability values depend on fair-value estimates and market prices.

Important facts for investors to verify

• Review the post-merger filings for DocGo/Ambulnz operating results, cash, debt, and liquidity; these quarter-end statements do not include the operating business.
• Confirm merger-related redemptions, transaction expenses, net PIPE proceeds, and cash remaining after closing.
• Assess the quality of reported earnings: third-quarter net income and much of the year-to-date non-operating income came from warrant-liability fair-value changes, not revenue or operations.
• Review the revised redeemable-share accounting and the warrant terms, including potential dilution and redemption provisions.
• Evaluate the actual and continuing effects of COVID-19 and other risks disclosed in the company’s subsequent filings.