MGRX.NASDAQMangoceuticals, INC
10-K: Mangoceuticals, Inc. Files 10-K, Details Financials and Operational Strategy
Sentiment:
Annual Results
Mangoceuticals, Inc.'s 10-K filing outlines their business model, financial results, and future plans, including challenges with Nasdaq compliance and reliance on related-party transactions.
Capital raiseThe company states that it will need additional funding to support its operations in the future.The company anticipates such funding being raised through the offering of debt or equity.The company may also seek to acquire additional businesses or assets in the future, which may require it to raise funding.
Worse than expected
Summary
- Mangoceuticals, Inc., a Texas-based company, filed its annual report on Form 10-K for the fiscal year ended December 31, 2023.
- The company focuses on men's wellness, offering products for erectile dysfunction (Mango ED) and hair growth (Mango GROW) through a telehealth platform.
- Mango ED contains Tadalafil or Sildenafil, Oxytocin, and L-Arginine, while Mango GROW includes Minoxidil, Finasteride, Vitamin D3, and Biotin.
- These products are compounded and sold under an exemption from FDA approval, which carries inherent risks.
- The company's related-party pharmacy, Epiq Scripts, is licensed in 47 states and the District of Columbia, limiting product sales to those regions.
- Mangoceuticals reported a net loss of $9.2 million for 2023 and an accumulated deficit of $11.2 million.
- The company's revenue for 2023 was $731,493, with a cost of revenue of $154,900.
- The company is not currently in compliance with Nasdaq listing requirements, including minimum bid price and stockholders' equity.
- The company is evaluating options to regain compliance, including a potential reverse stock split.
- The company has a marketing agreement with Marius Pharmaceuticals to sell Kyzatrex oral testosterone undecanoate softgel capsules.
- The company is subject to various risks, including the need for additional funding, competition, regulatory compliance, and potential product liability claims.
Sentiment
Score: 4
Explanation: The document presents a mixed picture. While the company is actively developing and marketing products, it faces significant financial challenges, regulatory hurdles, and competitive pressures. The lack of profitability and Nasdaq compliance issues are concerning, leading to a below-average sentiment score.
Positives
- The company has developed and is marketing unique compounded products for ED and hair growth.
- The company has a marketing agreement with Marius Pharmaceuticals to sell Kyzatrex oral testosterone undecanoate softgel capsules.
- The company has a telehealth platform that connects consumers with medical providers and a pharmacy for fulfillment.
- The company is using a variety of marketing channels to attract customers.
- The company is offering subscription plans for recurring revenue.
Negatives
- The company has a limited operating history and has generated only limited revenues to date.
- The company has experienced recurring net losses since inception.
- The company is not in compliance with Nasdaq listing requirements, including minimum bid price and stockholders' equity.
- The company is significantly reliant on related party transactions and relationships.
- The company's products are not FDA-approved and are sold under a compounding exemption, which carries inherent risks.
- The company faces intense competition from larger pharmaceutical companies and other online direct-to-consumer telemedicine companies.
- The company is subject to various risks, including the need for additional funding, competition, regulatory compliance, and potential product liability claims.
Risks
- The company needs additional funding to support its operations and may not be able to obtain it on favorable terms.
- The company's products are not FDA-approved and may have potential safety risks.
- The company is heavily reliant on related party transactions, which may present conflicts of interest.
- The company faces intense competition from larger companies with greater resources.
- The company is subject to complex healthcare laws and regulations, which may change.
- The company may face product liability claims, recalls, and litigation.
- The company's stock price is volatile and may decline substantially.
- The company may be delisted from Nasdaq if it does not regain compliance with listing requirements.
- The company's reliance on third-party providers for telehealth and pharmacy services creates operational risks.
- The company's business may be disrupted by epidemics, pandemics, or other catastrophic events.
Future Outlook
The company plans to continue marketing its current products, develop new products, and explore strategic acquisitions, while also seeking to regain compliance with Nasdaq listing requirements. The company anticipates the need for additional funding to support its operations.
Management Comments
- The company believes that its sublingual delivery system offers a significant difference from traditional oral formulations.
- The company aims to brand itself as a lifestyle company marketed to men seeking enhanced sexual vitality, performance, and overall mood and confidence.
- The company intends to utilize a marketing strategy focused on analytics and data.
Industry Context
The company operates in the growing men's wellness telemedicine market, competing with both established pharmaceutical companies and other online direct-to-consumer telemedicine companies. The market for ED drugs is projected to grow, while the hair loss prevention market is also expected to expand. The company is attempting to position its products as premium offerings in this market.
Comparison to Industry Standards
- The company competes with Hims & Hers Health, Inc. and Roman in the men's wellness space.
- The company competes with Pfizer (Viagra) and Lilly ICOS LLC (Cialis) in the ED market.
- The company competes with Merck & Co. (Propecia) and Johnson & Johnson (Rogaine) in the hair loss market.
- The company's pricing is positioned slightly above average compared to other direct-to-consumer companies selling compounded hair loss and ED medications.
- The company's products are designed to be taken sublingually, which is a different route of administration than most competitors.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| President and Secretary | Jonathan Arango | 2024-03-28 | Resignation |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Committee Membership | The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. | The Board of Directors has determined that each of Ms. DAlessio, Mr. Hamilton and Dr. Meyers meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act. | |
| Compensation Recovery Policy | The Board of Directors of the Company approved the adoption of a Policy for the Recovery of Erroneously Awarded Incentive Based Compensation (the Clawback Policy), with an effective date of October 2, 2023, in order to comply with the final clawback rules adopted by the Securities and Exchange Commission under Section 10D and Rule 10D-1 of the Securities Exchange Act of 1934, as amended (Rule 10D-1), and the listing standards, as set forth in the Nasdaq Listing Rule 5608 (the Final Clawback Rules). | 2023-10-02 | The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive officers as defined in Rule 10D-1 (Covered Officers) of the Company in the event that the Company is required to prepare an accounting restatement, in accordance with the Final Clawback Rules. |
| 2022 Equity Incentive Plan Amendment | The stockholders of the Company approved a First Amendment to the Mangoceuticals, Inc. 2022 Equity Incentive Plan (First Amendment and the Mangoceuticals, Inc. 2022 Equity Incentive Plan, as amended by the First Amendment, the 2022 Plan). The First Amendment increased the number of shares of common stock available for awards under the Incentive Plan, such that currently, subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common stock, or a reorganization or reclassification of the Companys common stock, the aggregate number of shares of common stock which may be issued pursuant to awards under the 2022 Plan is currently the sum of (i) 10,000,000 , and (ii) an automatic increase on April 1st of each year for a period of nine years commencing on April 1, 2024 and ending on (and including) April 1, 2032, in an amount equal to the lesser of (x) ten percent (10%) of the total shares of common stock of the Company outstanding on the last day of the immediately preceding fiscal year; and (y) 2,000,000 shares of common stock; provided, however, that the Board may act prior to April 1st of a given year to provide that the increase for such year will be a lesser number of shares of common stock. | 2024-03-25 | The First Amendment increased the number of shares of common stock available for awards under the Incentive Plan. |
Legal Proceedings
- The company is not currently a party to any material legal proceeding.
Related Party Transactions
- The company has entered into a Master Services Agreement and Statement of Work with Epiq Scripts, LLC, a related party, 51% owned and controlled by Jacob D. Cohen, our Chairman and Chief Executive Officer, for pharmacy and compounding services.
- The company has entered into consulting agreements with PHX Global, LLC, which is owned by Peter Casey Jensen, who was a member of the Board of Directors of American International.
- The company has entered into consulting agreements with four consultants who are also employees of Epiq Scripts.
- The company has entered into a consulting agreement with Luca Consulting, LLC.
- The company has entered into a consulting agreement with G&P General Consulting.
- The company has entered into a consulting agreement with First Level Capital.
- The company has borrowed funds from Ronin Equity Partners and Cohen Enterprises, Inc., which are owned and controlled by Jacob D. Cohen.
Stakeholder Impact
- Shareholders face the risk of dilution from future equity offerings and potential delisting from Nasdaq.
- Employees may be affected by changes in compensation and benefits.
- Customers may be impacted by product quality issues or changes in service.
- Suppliers and creditors may be affected by the company's financial instability.
Next Steps
- The company intends to monitor the closing bid price of its common stock and may consider implementing available options to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
- The company is currently evaluating various courses of action to regain compliance and is hopeful that it can regain compliance with Nasdaqs minimum stockholders equity standard within the compliance period.
- The company plans to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand its operations organically or through acquisitions as funding and opportunities arise.
- The company plans to continue to make additional and ongoing technology enhancements to its platform, further develop, market and advertise additional mens health and wellness related products on its telemedicine platform, and identify strategic acquisitions that complement its vision.
Key Dates
| Date | Description |
|---|---|
| 2021-10-07 | Mangoceuticals, Inc. was formed as a Texas corporation. |
| 2022-01 | Epiq Scripts, LLC was formed. |
| 2022-06-16 | Control of Mangoceuticals, Inc. was sold to Cohen Enterprises. |
| 2022-08-30 | Effective date of the Master Services Agreement between Mangoceuticals, Inc. and Epiq Scripts, LLC. |
| 2022-11 | Mangoceuticals, Inc. launched its website. |
| 2023-02-15 | 51% of Epiq Scripts was transferred to Jacob D. Cohen. |
| 2023-03-20 | Mangoceuticals, Inc. entered into an Underwriting Agreement with Boustead Securities, LLC. |
| 2023-03-23 | Mangoceuticals, Inc. consummated its initial public offering (IPO). |
| 2023-12-15 | Mangoceuticals, Inc. entered into an Underwriting Agreement with Boustead Securities, LLC for a follow-on offering. |
| 2023-12-19 | Mangoceuticals, Inc. closed its follow-on offering. |
| 2024-01-18 | Underwriters exercised their over-allotment option in full to purchase additional shares of common stock. |
| 2024-01-22 | Sale of additional shares of common stock closed. |
| 2024-03-25 | Stockholders approved an amendment to the Companys Second Amended and Restated Certificate of Incorporation to effect a reverse stock split. |
| 2024-03-28 | Jonathan Arango resigned as a member of the Board of Directors and as President and Secretary of the Company. |
| 2024-03-28 | The Company submitted for filing to the Secretary of State of Texas, a Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock of Mangoceuticals, Inc. |
| 2024-04-01 | As of this date, the registrant had 23,619,500 shares of its Common Stock outstanding. |
Keywords
telehealth, erectile dysfunction, hair growth, compounding pharmacy, FDA, related party, Nasdaq, stock split, Marius Pharmaceuticals, Kyzatrex, Minoxidil, Finasteride, Tadalafil, Sildenafil, Oxytocin, L-Arginine
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