Overview

Arogo Capital Corp. is a blank check company formed in June 2021 to acquire or merge with another company. The company raised $103.5 million in an IPO in December 2021 by selling 10.35 million units at $10 per unit. It also raised an additional $4.7 million in a private placement. The cash is held in a trust account to use for the future acquisition.

As of December 31, 2023, Arogo has not yet completed an acquisition or conducted any operations other than formation activities and the IPO. It has earned interest income on the cash held in trust and incurred some operating expenses.

In 2023, Arogo had net income of $1.5 million, mostly from $3.1 million of interest income. In 2022 it had a net loss of $0.7 million. The difference was due to higher interest income in 2023.

Proposed and Terminated Business Combination

In April 2022, Arogo announced a plan to merge with Eon Reality, a virtual and augmented reality company. But in November 2023, Arogo terminated the agreement due to breaches by Eon Reality.

Arogo continues to search for an acquisition target before the December 2024 deadline. If it does not complete a deal by then, it will liquidate and return cash to shareholders.

Share Redemptions and Extensions

Arogo shareholders have redeemed a significant number of shares in connection with deadline extensions:

• In March 2023, 5.3 million shares were redeemed for $54.7 million
• In September 2023, another 3.3 million shares were redeemed for $35.4 million
  

This left only 1.76 million shares outstanding.

To fund the redemptions and extend the deadline, Arogo’s sponsor has made required monthly $191,666 and $40,000 payments into the trust account.

Trust Account and Cash

As of December 31, 2023, Arogo had:

• $19.2 million remaining in the trust account
• $79,000 of cash outside the trust account

Arogo intends to use the cash to search for and complete an acquisition. If needed, the sponsor may provide loans to cover working capital needs.

Liquidity Concerns

If an acquisition is not completed by the December 2024 deadline, Arogo will likely liquidate and dissolve. This raises substantial doubt about Arogo’s ability to continue as a going concern.

Revenue and Expenses

As Arogo has not started operations, it currently generates no revenue. Expenses include:

• Formation and operating costs: $1.2 million in 2023
• Franchise tax: $200,000 per year
• Income tax expense: $300,000 in 2023

Once an acquisition is completed, Arogo will begin generating operating revenue and expenses.

Critical Accounting Policies

Arogo’s most critical accounting policies relate to:

• Use of estimates
• Net income per share
• Accounting for redeemable common stock

Outlook

Arogo continues to search for an acquisition target to complete by the December 2024 deadline. If a deal is not completed, the company will likely liquidate.

The outcome depends on Arogo’s ability to identify and complete a suitable acquisition within the specified timeframe.