UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2023
Commission
File Number: 001-41615
Mangoceuticals, Inc.
(Exact name of registrant as specified in its charter)
(Address of principal offices) (Zip Code)
Registrant’s
telephone number, including area code: (214)242-9619
Securities
registered pursuant to section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Securities
registered pursuant to section 12(g) of the Act:
None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act: ☐ Yes ☒ No
Indicate
by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒ Yes ☐ No
Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
On
June 30, 2023, the last day of the registrant’s most recently completed second quarter, the aggregate market value of the Common
Stock held by non-affiliates of the registrant was approximately $13,431,285, based upon the closing price of the registrant’s
Common Stock on the Nasdaq Capital Market of $1.83 on June 30, 2023. For purposes of this response, the registrant has assumed that its
directors, executive officers and beneficial owners of 5% or more of its Common Stock are deemed affiliates of the registrant.
As
of April 1, 2024, the registrant had 23,619,500
shares of its Common Stock, $0.0001 par value, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE
OF CONTENTS
Cautionary Statement Regarding Forward-Looking Statements 1
Glossary of Industry Terms 2
PART I 3
Item 1. Business. 3
Item 1A. Risk Factors. 31
Item 1B. Unresolved Staff Comments. 67
Item 1C. Cybersecurity. 67
Item 2. Properties. 68
Item 3. Legal Proceedings. 68
Item 4. Mine Safety Disclosures. 68
Item 6. [Reserved] 70
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 78
Item 8. Financial Statements and Supplementary Data. 79
Item 9A. Controls and Procedures. 81
Item 9B. Other Information. 82
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 85
PART III 86
Item 10. Directors, Executive Officers and Corporate Governance. 86
Item 11. Executive Compensation. 96
Item 14. Principal Accountant Fees and Services. 118
Item 15. Exhibits and Financial Statement Schedules. 119
Table of Contents
Cautionary
Statement Regarding Forward-Looking Statements
This
Annual Report on Form 10-K (this “Report”) contains forward-looking statements, including within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the Securities Act of 1934, as amended, and the Private Securities Litigation
Reform Act of 1995, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but
rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as
“anticipate,” “expects,” “intends,” “plans,” “believes,”
“seeks” and “estimates” and variations of these words and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are
outside of the Company’s control which could cause actual results to differ materially from the results expressed or implied in
the forward-looking statements, including, but not limited to:
● our ability to build and maintain our brand;
● shipping, production or manufacturing delays;
● our ability to increase sales;
● our dependency on third-parties to prescribe and compound our products;
● our ability to protect intellectual property rights;
● our ability to adequately support future growth;
● other risk factors included under “Risk Factors” below.
Table of Contents
These
statements are not guarantees of future performance or results. Forward-looking statements are based on information available at the
time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels
of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking
statements in this Report. These factors include those set forth below under “Item 1A. Risk Factors”, below.
In
addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date of this Annual Report on Form 10-K. While we believe that such information
provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain,
and investors are cautioned not to unduly rely on these statements.
You
should read the matters described in “Item 1A. Risk Factors” and the other cautionary statements made in this Report, and
incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report.
We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors
are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to
update or revise these forward-looking statements, even though our situation may change in the future.
Glossary
of Industry Terms
The
following are abbreviations, acronyms and definitions of certain terms used in this document, which are commonly used in our industry:
“cGMP”
means current good manufacturing practice regulations promulgated by the FDA under the authority of the FFDCA. These regulations, which
have the force of law, require that manufacturers, processors, and packagers of drugs, medical devices, some food, and blood take proactive
steps to ensure that their products are safe, pure, and effective.
“FFDCA”
means the Federal Food, Drug and Cosmetic Act, which is a set of U.S. laws passed by Congress in 1938 giving authority to the FDA to
oversee the safety of food, drugs, medical devices, and cosmetics.
“HIPAA”
means the Health Insurance Portability and Accountability Act of 1996, which has the goal of making it easier for people to keep health
insurance, protect the confidentiality and security of healthcare information and help the healthcare industry control administrative
costs.
“HITECH”
means the Health Information Technology for Economic and Clinical Health Act.
“IU”
means International Unit, which is a unit of measurement for the effect, not mass of a substance; the variance is based on the biological
activity or effect, for the purpose of easier comparison across similar forms of substances. IUs are used to measure the activity of
many vitamins, hormones, enzymes, and drugs.
“Individually
identifiable health information” is defined by HIPPA to mean information that is a subset of health information, including demographic
information collected from an individual, and: (1) is created or received by a health care provider, health plan, employer, or health
care clearinghouse; and (2) relates to the past, present, or future physical or mental health or condition of an individual; the provision
of health care to an individual; or the past, present, or future payment for the provision of health care to an individual; and (a) that
identifies the individual; or (b) with respect to which there is reasonable basis to believe the information can be used to identify
the individual.
“Mg”
means milligrams.
“NCPDP”
means the National Council for Prescription Drug Programs, which is an American National Standards Institute accredited, standards development
organization providing healthcare solutions.
“NPI”
means National Provider Identifier, which is a Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification
Standard. The NPI is a unique identification number for covered health care providers.
“PII”
means personal identifiable information.
“TSBP”
means The Texas State Board of Pharmacy, which is the state agency responsible for the licensing/registration of Texas pharmacists, pharmacy
technicians, and pharmacies; for establishing regulations for pharmacy practice; and for disciplining licensees and registrants.
“URAC”
means the Utilization Review Accreditation Commission, which is a review accreditation commission which offers health organizations an
opportunity to have trained reviewers examine their operations and publicly ensure they are delivering care in a manner consistent with
national standards.
Table of Contents
PART
I
Item
1. Business.
Introduction
The
information included in this Report on Form 10-K should be read in conjunction with the consolidated financial statements and related
notes in “Item 8. Financial Statements and Supplemental Data” of this Report.
Our
logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service
marks that are the property of others. Solely for convenience, trademarks, tradenames, and service marks referred to in this Report may
appear without the ®, TM and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate
in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if
any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their
rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with,
or endorsement or sponsorship of us by, any other companies.
The
market data and certain other statistical information used throughout this Report are based on independent industry publications, reports
by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research,
surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do
not guarantee the accuracy or completeness of such information; and we have not commissioned any of the market or survey data that is
presented in this Report. We are responsible for all the disclosures contained in this Report, and we believe these industry publications
and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information
presented in this Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to
risks and uncertainties, and are subject to change based on various factors, including those discussed under the section entitled “Item 1A. Risk Factors”. These and other factors could cause our future performance to differ materially from our assumptions and estimates.
Some market and other data included herein, as well as the data of competitors as they relate to Mangoceuticals, Inc., is also based
on our good faith estimates.
Unless
the context requires otherwise, references to the “Company,” “we,” “us,” “our,”,
“MangoRx” and “Mangoceuticals” in this Report refer specifically to Mangoceuticals, Inc., and its
consolidated subsidiaries.
In
addition, unless the context otherwise requires and for the purposes of this report only:
● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
● “Securities Act” refers to the Securities Act of 1933, as amended.
All
dollar amounts in this Report are in U.S. dollars unless otherwise stated.
Table of Contents
Available
Information
We
file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC
like us at https://www.sec.gov and can also be accessed free of charge on the “Investors” section of our website under
the heading “SEC Filings”. Copies of documents filed by us with the SEC (including exhibits) are also available from us without
charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover
page of this Report. Our website address is www.mangoceuticals.com. Our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act
of 1934 will be available through our website free of charge as soon as reasonably practical after we electronically file such material
with, or furnish it to, the SEC. The information on, or that may be accessed through, our website is not incorporated by reference into
this Report and should not be considered a part of this Report.
Organizational
History
We
are a Texas corporation formed on October 7, 2021. Our address is 15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248. Our telephone
number is (214) 242-9619. Our website is www.MangoRX.com.
On
March 23, 2023, we consummated our initial public offering (the “IPO”) of 1,250,000 shares of common stock at a price to
the public of $4.00 per share, pursuant to that certain Underwriting Agreement, dated March 20, 2023 (the “Underwriting Agreement”),
between the Company and Boustead Securities, LLC, as representative (“Boustead”) of several underwriters named in the Underwriting
Agreement. The Company received gross proceeds of approximately $5 million, before deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company upon the sale of the shares. In connection with the IPO, the Company also granted
Boustead a 45-day option to purchase up to an additional 187,500 shares of its common stock, which expired unexercised.
At
the same time, and as part of the same registration statement, but pursuant to a separate prospectus (the “Resale Prospectus”)
the Company registered the sale of 4,765,000 shares of common stock, including 2,000,000 shares of common stock issuable upon the exercise
of outstanding warrants to purchase shares of common stock with an exercise price of $1.00 per share, of which warrants to purchase 975,500
shares of common stock remain outstanding, and unexercised, as of the date of this Report.
As
additional consideration in connection with the IPO, we granted Boustead, the representative of the underwriters named in the Underwriting
Agreement for the IPO, warrants to purchase 87,500 shares of common stock with an exercise price of $5.00 per share, which are exercisable
beginning six months after the effective date of the registration statement filed in connection with the IPO (March 20, 2023) and expire
five years after such effectiveness date.
On
December 15, 2023, we entered into another underwriting agreement (the “Underwriting Agreement”) with Boustead, as representative
of the underwriters named on Schedule 1 thereto (the “Underwriters”), relating to a public offering of 4,000,000 shares of
the Company’s common stock to the Underwriters at a purchase price to the public of $0.30 per share and also granted to the Underwriters
a 45-day option to purchase up to 600,000 additional shares of its common stock, solely to cover over-allotments, if any, at the public
offering price less the underwriting discounts (the “Follow On Offering”).
The
Follow On Offering closed on December 19, 2023. As a result, the Company sold 4,000,000 shares of its common stock for total gross proceeds
of $1.2 million.
The
net proceeds to the Company from the Offering, after deducting the underwriting discounts and commissions and offering expenses, were
approximately $1.0 million. The Company used the net proceeds from the Offering to finance the marketing and operational expenses associated
with the planned marketing of its Mango ED and GROW hair growth products, to hire additional personnel to build organizational talent,
to develop and maintain software, and for working capital and other general corporate purposes.
We
and our directors, executive officers, and shareholders holding 5% or more of our outstanding common stock previously agreed, in connection
with our IPO, subject to certain exceptions and without the approval of Boustead, not to offer, issue, sell, contract to sell, encumber,
grant any option for the sale of or otherwise dispose of any of our securities until March 20, 2024, and any directors or officers who
did not enter into a lock-up agreement in connection with our IPO entered into a lock-up agreement in connection with the Follow On Offering,
agreeing to not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our
securities for a period of 90 days after December 14, 2023.
Table of Contents
On
December 19, 2023, pursuant to the Underwriting Agreement, the Company issued a common stock purchase warrant to Boustead for the purchase
of 280,000 shares of common stock at an exercise price of $0.38, subject to adjustments. The warrant is exercisable at any time and from
time to time, in whole or in part, until December 14, 2029, and may be exercised on a cashless basis.
On
January 18, 2024, the Underwriters notified the Company that they were exercising their over-allotment option in full to purchase an
additional 600,000 shares of common stock, which sale closed on January 22, 2024. The net proceeds to the Company from the sale of the
600,000 shares of common stock, after deducting underwriting discounts and expenses, was approximately $160,000. Inclusive of the full
exercise of the over-allotment option, a total of 4,600,000 shares of common stock were issued and sold in the Offering.
On
January 22, 2024, pursuant to the Underwriting Agreement, the Company also issued a common stock purchase warrant to Boustead for the
purchase of 42,000 shares of common stock at an exercise price of $0.375, subject to adjustments. The warrant is exercisable at any time
and from time to time, in whole or in part, until December 14, 2028, and may be exercised on a cashless basis.
Overview
We
connect consumers to licensed healthcare professionals through our website at www.MangoRX.com, for the provision of care via telehealth
on our customer portal. We also provide access for customers to a licensed pharmacy for online fulfillment and distribution of certain
medications that may be prescribed as part of telehealth consultations, including our Mango ED and Mango GROW products.
We
have identified men’s wellness telemedicine services and products as a growing sector in recent years and especially related to
the areas of erectile dysfunction (“ED”) and hair growth products.
Mango
ED
We
have developed, and are commercially marketing and selling, a new brand of ED product under the brand name “Mango.” This
product is produced at a compounding pharmacy and is available to patients on the determination of a prescribing physician that the compounded
drug is necessary for the individual patient. This product currently includes the following three ingredients: either Tadalafil (the
active ingredient in Cialis) or Sildenafil (the active ingredient in Viagra) and Oxytocin, all of which are used in FDA approved drugs,
as well as L-Arginine, an amino acid that is available as a dietary supplement. However, the fact that Tadalafil and Oxytocin are used
in FDA approved drugs, and L-arginine is available as a dietary supplement, does not mean that these ingredients will prove safe when
combined into a single formulation to treat ED. We currently offer two dosage levels of our Mango ED product and anticipate doctors prescribing
a dosage based on the needs and medical history of the patient. Our Mango ED product currently includes the following amounts of the
three ingredients: (1) either Sildenafil (50 milligrams (mg)) or Tadalafil (10 (mg)), Oxytocin (100 International units (IU)) and L-Arginine
(50mg); and (2) either Sildenafil (100 milligrams (mg)) or Tadalafil (20mg), Oxytocin (100IU) and L-Arginine (50mg). Our Mango ED product
has not been, and will not be, approved by the U.S. Food and Drug Administration (“FDA”) and instead we produce and sell
our products, including our Mango ED product, under an exemption provided by Section 503A of the Federal Food, Drug and Cosmetic Act
(“FFDCA Act”), as discussed below. Additionally, because our Mango ED product is being specially compounded for the customer
by a pharmacist with a physician’s prescription and because the ingredients for our Mango ED product are publicly disclosed, this
product formula can be replicated by other companies.
Table of Contents
We
are not aware of any clinical studies involving (i) administration of Tadalafil or Sildenafil sublingually at the doses we provide patients,
or (ii) compounding of Tadalafil or Sildenafil, Oxytocin, and L-arginine to treat ED, similar to our Mango ED products. We are, however,
aware of other companies that are currently selling oral disintegrating tablets for ED, including those using a combination of Tadalafil
(the active ingredient in Cialis) and Sildenafil (the active ingredient in Viagra). We believe that the potential safety risks associated
with our Mango ED products are comparable to the safety risks associated with oral formulations of Tadalafil and Sildenafil approved
by the FDA for the treatment of ED. We do not expect significant safety risks associated with L-arginine, as the FDA has recognized in
its regulations that L-arginine may be safely added as a nutrient to foods. Clinical studies of intranasal Oxytocin have also found that
Oxytocin is generally safe and well-tolerated. Notwithstanding the above, because our ED product has not been, and will not be, approved
by the FDA, our product has not had the benefit of the FDA’s clinical trial protocol which seeks to prevent the possibility of
serious patient injury and death. If this were to occur, we could be subject to litigation and governmental action, which could result
in costly litigation, significant fines, judgments or penalties.
Launch
of Mango Hair Growth Product - ‘GROW’ by MangoRx
We
have developed, since November 16, 2022 are marketing, and selling, a new brand of hair growth product under the brand name ‘GROW’
by MangoRx (“Mango GROW”). This product is produced at our related party compounding pharmacy and is available to patients
on the determination of a prescribing physician that the compounded drug is necessary for the individual patient. Mango GROW currently
includes the following four ingredients – (1) Minoxidil (the active ingredient in Rogaine®) and (2) Finasteride (the active
ingredient in Propecia), each of which is used in FDA approved drugs, as well as (3) Vitamin D3 and (4) Biotin, which are available as
dietary supplements. However, the fact that Minoxidil and Finasteride are used in FDA approved drugs, and that Vitamin D3 and Biotin,
are available as a dietary supplement, does not mean that these ingredients will prove safe when combined into a single formulation to
attempt to treat hair growth. Mango GROW is encapsulated in convenient chewable, mint-flavored RDT’s.
We
currently offer one dosage level of our Mango GROW product and anticipate doctors prescribing Mango GROW based on the needs and medical
history of the patient. Our Mango GROW product currently includes the following amounts of the four ingredients discussed above: (1)
Minoxidil (2.5mg), (2) Finasteride (1mg), (3) Vitamin D3 (2000IU), and (4) Biotin (1mg). Our Mango GROW product has not been, and will
not be, approved by the FDA and instead we produce and sell our Mango GROW product and plan to produce and sell future pharmaceutical
products, under an exemption provided by Section 503A of the FFDCA.
We
are not aware of any clinical studies involving the administration of Minoxidil and Finasteride sublingually at the dose we provide patients,
or the compounding of Minoxidil, Finasteride, Vitamin D3, and Biotin, to treat hair growth, as is contemplated by our Mango GROW product.
We are, however, aware of other companies that are currently selling oral tablets for hair growth, including those using a combination
of Minoxidil and Finasteride. Additionally, because our Mango GROW product is being specially compounded for the customer by a pharmacist
with a physician’s prescription and because the ingredients for our Mango GROW product are publicly disclosed, this product formula
can be replicated by other companies.
Additional
Information Regarding Mango ED and Mango GROW
Because
our Mango ED and Mango GROW products have not been, and will not be, approved by the FDA, our products have not had the benefit of the
FDA’s clinical trial protocol which seeks to prevent the possibility of serious patient injury and death. If this were to occur,
we could be subject to litigation and governmental action, which could result in costly litigation, significant fines, judgments or penalties.
We
currently anticipate using funding we may raise in the near term to finance marketing and general operational expenses associated with
the sale of our Mango ED and Mango GROW products. We launched our website in mid-November 2022. To date, we have sold only a small amount
of products and generated only minimal revenues.
Table of Contents
Mango
ED and Mango GROW have been formulated as rapid dissolving tablets (RDT) using a sublingual (applied under the tongue) delivery system
to bypass the stomach and liver. It is a generally established principle that sublingual drug absorption through the oral mucosa is generally
faster than drug absorption through the gastrointestinal tract. This is because sublingual drugs that are absorbed through the oral mucosa
directly enter the systemic circulation, bypassing the gastrointestinal tract and first-pass metabolism in the liver (see H. Zhang et
al., Oral mucosal drug delivery: clinical pharmacokinetics and therapeutic applications, 41 Clin
Pharmacokinet 661, 662 (2002). Though the active ingredients that comprise our Mango ED product are meant to treat ED –
an issue that according to a 2018 study published in The Journal of Sexual Medicine has been estimated to affect over one-third
of today’s men’s population (with prevalence increasing with age) – we are also aiming to brand ourselves as a lifestyle
company marketed to men seeking enhanced sexual vitality, performance, and overall mood and confidence, together with our Mango GROW
product.
Our
Mango products are sold exclusively online via our website at www.MangoRX.com.
Our
Contracted Telehealth Provider
In
many states, including Texas where our principal business office is located, the corporate practice of medicine doctrine prohibits corporations
from practicing medicine and from employing physicians to provide professional medical services. Many states that recognize this doctrine
also prohibit physicians from agreeing to share the fees they receive for professional services with unlicensed entities or individuals,
a practice that is commonly known as “fee splitting.” The requirements for compliance with any applicable corporate practice
of medicine and fee splitting restrictions vary among the states. In Texas, for example, there is no statute that expressly prohibits
fee splitting, but the corporate practice of medicine doctrine has been interpreted to prohibit physicians from ceding control over their
fee structures to corporate entities or giving a substantial portion of the fees received to corporate entities.
In
order to comply with corporate practice of medicine and fee splitting restrictions, we do not employ or directly contract with individual
physicians or physician groups, nor do we control their medical decision-making or charges. Rather, on August 1, 2022, we entered into
a Physician Services Agreement (the “Physicians Agreement”) with BrighterMD, LLC doing business as Doctegrity (“Doctegrity”),
as discussed in further detail below, which has agreed to make available to us, healthcare professionals, to allow them to provide clinical
services directly to our future customers via telehealth. We have integrated these healthcare professionals to allow for telehealth consultations
and related services on our Mangoceuticals platform which has been developed and is complete. This platform is the backbone of our business
as it connects consumers with both the medical provider and the pharmacy for fulfillment. It is also the system that we will use to create
marketing funnels for outgoing marketing, customer management and support, and analytics for future sales.
Table of Contents
Through
our Physician Services Agreement with Doctegrity (as defined below), the healthcare professionals are responsible for the practice of
medicine and control of the clinical decision-making.
Our
Related Party Pharmacy
As
discussed in greater detail below under “—Material Agreements—Master Services Agreement with Epiq Scripts” and
“—First Amendment to MSA,” we have entered into an exclusive Master Services Agreement and statement of work with Epiq
Scripts, LLC (“Epiq Scripts”), for its specialty compounding and packaging capabilities, fulfillment, and distribution of
certain prescription products available through our platform. These prescription products include our Mango ED and Mango GROW products.
Epiq Scripts is a related party because it was 51%-owned by American International Holdings Corp (“American International”)
at the time of our entry into the Master Services Agreement and is currently 51% owned by Mr. Jacob D. Cohen, our Chairman and Chief
Executive Officer. Mr. Cohen, our Chairman and Chief Executive Officer, also served as the Chief Executive Officer and a director of,
and had voting control over, American International at the time of the entry into the Master Services Agreement. Our company was previously
wholly-owned by American International until April 16, 2022, when control of our company was sold to Cohen Enterprises, which is owned
by Mr. Cohen. Epiq Scripts is a relatively newly formed entity, having been formed in January 2022, and only began compounding drugs
for patients in November 2022. On February 15, 2023, the 51% of Epiq Scripts then owned by American International was transferred to
Mr. Cohen as part of an exchange transaction, whereby Mr. Cohen agreed to cancel his preferred stock of American International, which
provided him voting control over American International, in exchange for among other assets, American International’s ownership
of Epiq Scripts. As a result, Epiq Scripts is currently 51% owned by Mr. Cohen, our Chairman and Chief Executive Officer. Additionally,
Mr. Cohen has served as the co-Manager of Epiq Scripts since January 2022.
Epiq
Scripts is currently fully licensed with the Texas State Board of Pharmacy (“TSBP”) and further has State Board of Pharmacy
(or its equivalent) licenses from the District of Columbia and 47 other states: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware,
Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin,
and Wyoming, with the intent of obtaining the remaining 3 state licenses by the end of 1st quarter of 2024. Epiq Scripts has
obtained its National Provider Identifier (“NPI”) number and is now a member of the National Council for Prescription Drug
Programs (“NCPDP”), a standards development organization. Additionally, Epiq Scripts has applied for the highest level of
accreditation with the Utilization Review Accreditation Commission (“URAC”), a Washington DC-based healthcare accrediting
organization that establishes quality standards for the entire healthcare industry. Until Epiq Scripts receives licenses in the other
three states, we are limited to selling our Mango ED and Mango GROW products in only the states in which Epiq Scripts holds licenses.
Although Epiq Scripts is physically located in Texas, it can ship products to customers in each state in which it holds licenses.
As
a result of the above, Epiq Scripts can currently only provide services to the Company in the District of Columbia and those 47 states
described above and the Company will be unable to sell its products to any customers in any states other than those listed above, until
Epiq Scripts is able to obtain licenses in other states and will thereafter be limited to selling products to customers only in the states
in which Epiq Scripts holds licenses.
Table of Contents
Our
Customer Portal
Our
customer platform connects consumers to licensed healthcare professionals through our website at www.MangoRX.com, for the provision
of care via telehealth and also provides access for customers to a licensed pharmacy for online fulfillment and distribution of certain
medications that may be prescribed as part of telehealth consultations. Additional features to this backend technology solution allow
for the creation and management of customer accounts whereby customers have the ability to login, view and make changes to their respective
accounts. These changes include, but are not limited to, reviewing order history, tracking order shipments, requesting and ordering product
refills and making other profile changes such as shipping address and payment changes. Our portal is not unique to the industry and is
not anticipated to be difficult or costly to replicate or replace.
The
backend technology solution also houses and manages all customer data allowing the Company with additional key functionality, including
but not limited to, providing customer service and support and data analytics for various marketing initiatives and reporting functions.
We
do not anticipate selling any third-party products via our portal.
Our
Growth Strategy
Utilize
a variety of marketing channels using data analytics to attract customers
We
currently market and advertise our Mango ED and Mango GROW products on a variety of advertising mediums including, but not limited to,
social media, online search websites, podcasts, television, radio, out-of-home, and other media channels, in compliance with applicable
FDA rules and requirements. However, due to such rules and requirements, we are extremely limited in the content of the claims and promotional
statements that we are able to make regarding our products under applicable FDA regulations. We believe advertising in a diversified
set of media channels is important to prevent overreliance on any single channel and to maximize the exposure of our brand to our desired
customers. We also intend to reach customers through our own social media accounts, press coverage and public relations, internally developed
educational and lifestyle content, and through engagement of social media influencers, hired and paid celebrities and talent, and physical
brand advertising campaigns, in each case funding permitting, and in each case subject to applicable rules and regulations, which are
expected to significantly limit the content of such marketing materials. We believe that this overall strategy will drive significant
customer traffic to our platform, including direct type-in traffic and organic online search traffic.
We
also intend to utilize a marketing strategy focused on analytics and data. We are designing our internal systems to measure consumer
behavior, including which types of consumers generate more revenue in their first purchase, generate more revenue over time, generate
more gross profit from their purchases, and which types of consumers are most valuable over their lifetime. We also plan on measuring
the effectiveness of our marketing budgets and the rate of return we generate from our marketing campaigns. We have retained and plan
on using an outside marketing and advertising firm to assist management in identifying marketing and advertising campaigns, media purchases
and mediums, and seeking to drive a sufficient rate of return from our marketing and advertising budgets.
Invest
in our telemedicine platform to enable sales throughout the United States
We
utilize both a synchronous and asynchronous approach through our telemedicine platform, connecting customers through our platform and
contracted physicians and pharmacy. An asynchronous visit allows a physician to verify the patient’s identity, demographics and
collect the medical history online without needing to physically see or speak to the patient. A synchronous visit requires the doctor
to either speak directly to the patient and/or see the patient either via video conference or in person. As discussed above, we initially
are focusing our sales in the District of Columbia and 47 states where our related party pharmacy is licensed, with the goal of eventually
undertaking sales across all 50 states, pending licensing approvals of our related party pharmacy.
Provide
subscription plans for recurring revenue and introduction of new products
We
provide our customers with an option to purchase our Mango ED and Mango GROW products on a subscription basis. Subscription plans provide
an easy and convenient way for customers to get ongoing treatment while simultaneously providing the Company with predictability through
a recurring revenue stream.
Table of Contents
For
subscription plans, customers are able to select a desired timeframe in which to receive products, which range from once every month
to once every six months. The customer will then be billed on a recurring basis based on the selected timeframe and specified quantity
of product, which is shipped after each billing from our contracted pharmacy (Epiq Scripts). Customers are able to cancel subscriptions
in between billing periods to stop receiving additional products and reactivate subscriptions. Our integrated technology platform serves
customers from customer discovery, through the purchase of products on our website, to connecting customers with medical providers for
telehealth consultations (through our contracted physician network), to the fulfillment and delivery of orders (through our contracted
pharmacy), and finally through ongoing management by medical providers (also through our contracted physician network). We believe our
platform provides us cost advantages and efficiencies to offer customers affordable prices and generate increased revenues over time.
In
addition to our Mango ED and Mango GROW products, we intend to launch new products over time and offer additional subscription-based
offerings which we hope will result in growth in revenue through recurring revenue streams.
Recent
Events
Marketing
Agreement
On
December 10, 2023, the Company entered into a Marketing Agreement with Marius Pharmaceuticals, LLC (“Marius”) allowing the
Company the use of the trademark “Kyzatrex®” oral testosterone undecanoate softgel capsules, for the purposes of branding,
packaging, marketing, and selling Kyzatrex® on the Company’s website, and to be sold via its telehealth platform at www.MangoRx.com.
Pursuant to the Marketing Agreement, Marius granted the Company a non-exclusive, non-transferable, royalty-free license to use the Marius
Marks in the United States, for the purpose discussed above.
The
Marius Agreement contains customary confidentiality and indemnification provisions and has an initial term of two years, automatically
renewable thereafter for successive one year terms unless otherwise terminated (a) by Marius if the Company does not have at least 2,500
monthly customers of “Kyzatrex®” oral testosterone undecanoate softgel capsules at least 30 days prior to the end of
the initial term, (b) by either party for cause in connection with a material breach that has not been cured within 30 business days
of written notice thereof provided by the non-breaching party to the breaching party, or (c) by Marius in its sole discretion without
cause by providing at least 60 days’ prior written notice to the Company. Marius may also terminate the agreement with written
notice to the Company if the Company has not met at least 30% of the Minimum Subscribers within six months of the product launch date
on the Company’s website, which commenced on or around February 29, 2024.
Within
30 days of the date the Marius Agreement is terminated (or on the date of termination, which cannot occur earlier than 60 days after
notice of termination is provided, if Marius terminates the Marius Agreement for convenience), we are required to stop and cease all
use of the Marius Marks and are required to remove all references to the Marius Marks from our advertising/promotional materials, and
signage.
During
the term of the Marius Agreement and for a period of 12 months thereafter, we agreed to not create, publish or broadcast any advertisement
or otherwise promote or market any other product containing testosterone undecanoate.
Pursuant
to the Marius Agreement, and in consideration of the license granted thereunder, the Company issued Marius 100,000 shares of the Company’s
restricted common stock (the “Marius Shares”) which are fully earned upon entry into the agreement. The Marius Shares were
valued at $0.68 per share for a total of $68,000.
Table of Contents
Nasdaq
Non-Compliance
As
a condition to consummating our IPO, we were required to list our common stock on Nasdaq and in March 2023, our common stock was approved
for listing on Nasdaq under the symbol “MGRX”. Notwithstanding such listing, there is no guarantee that we will be able to
maintain our listing on NASDAQ for any period of time. Among the conditions required for continued listing on Nasdaq, NASDAQ requires
us to maintain at least $2.5 million in stockholders’ equity, $35 million in market value of listed securities, or $500,000 in
net income over the prior two years or two of the prior three years, to have a majority of independent directors (subject to certain
“controlled company” exemptions, which we do not currently meet), to comply with certain audit committee requirements,
and to maintain a stock price over $1.00 per share. Our stockholders’ equity is currently not above NASDAQ’s $2.5 million
minimum, as discussed below, we may not generate over $500,000 of yearly net income moving forward, we may not maintain $35 million in
market value of listed securities, we may not be able to maintain independent directors (to the extent required), and as discussed below,
we do not currently have a stock price over $1.00 per share. Nasdaq’s determination that we fail to meet the continued listing
standards of NASDAQ may result in our securities being delisted from Nasdaq.
On
October 30, 2023, we received written notice from the Listing Qualifications Department of Nasdaq notifying us that we were not in compliance
with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq. Nasdaq Listing Rule
5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that
a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business
days. Based on the closing bid price of our common stock for the thirty (30) consecutive business days from September 15, 2023 to October
27, 2023, we no longer meet the minimum bid price requirement.
The
letter did not impact the listing of our common stock on Nasdaq. Instead, the letter stated that we have 180 calendar days or until April
29, 2024, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of our common stock must have
a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. If we do not regain compliance by April
29, 2024, an additional 180 days may be granted to regain compliance, so long as we meet Nasdaq’s initial listing criteria (except
for the bid price requirement)(which we do not currently meet, as we do not have stockholders’ equity of at least $5 million) and
notify Nasdaq in writing of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split,
if necessary. If we do not qualify for the second compliance period or fail to regain compliance during the second 180-day period, our
common stock will be subject to delisting, at which point we would have an opportunity to appeal the delisting determination to a Hearings
Panel.
At a special meeting of stockholders held on March 25, 2024, the stockholders
approved an amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as amended, to effect a reverse
stock split of the Company’s issued and outstanding shares of our common stock, par value $0.0001 per share, by a ratio of between
one-for-two to one-for-fifty inclusive, with the exact ratio to be set at a whole number to be determined by the Company’s Board
of Directors or a duly authorized committee thereof in its discretion, at any time after approval of the amendment and prior to March
25, 2025. No formal determination has been made by the Board of Directors of the Company regarding the reverse stock split ratio, whether
or not to move forward with a reverse stock split, or the timing thereof.
We
intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain
compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
Separately,
on November 3, 2023, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that our stockholders’
equity as reported in our Quarterly Report on Form 10-Q for the period ending September 30, 2023 (the “Form 10-Q”), did not
meet the minimum stockholders’ equity requirement for continued listing on Nasdaq. Nasdaq Listing Rule 5550(b)(1) (the “Rule”)
requires companies listed on Nasdaq to maintain stockholders’ equity of at least $2,500,000. In our Form 10-Q, we reported stockholders’
equity of $1,354,821, which is below the minimum stockholders’ equity required for continued listing pursuant to Nasdaq Listing
Rule 5550(b)(1). Additionally, we do not meet the alternative Nasdaq continued listing standards under Nasdaq Listing Rules.
This
notice of noncompliance had had no immediate impact on the continued listing or trading of our common stock on Nasdaq, which continues
to be listed and traded on Nasdaq, subject to our compliance with the other continued listing requirements. Nasdaq provided the Company
until December 18, 2023 to submit to Nasdaq a plan to regain compliance. We submitted the plan to regain compliance in a timely manner,
and on January 24, 2024, Nasdaq advised the Company that it has determined to grant the Company an extension to regain compliance with
the Rule.
Table of Contents
The
terms of the extension are as follows: on or before April 29, 2024, the Company must complete certain transactions described in greater
detail in the compliance plan, contemplated to result in the Company increasing its stockholders’ equity to more than $2.5 million,
and opt for one of the two following alternatives to evidence compliance with the Rule: Alternative 1: The Company must furnish
to the SEC and Nasdaq a publicly available report (e.g., a Form 8-K) including: 1. A disclosure of Staff’s deficiency letter and
the specific deficiency(ies) cited; 2. A description of the completed transaction or event that enabled the Company to satisfy the stockholders’
equity requirement for continued listing; and 3. An affirmative statement that, as of the date of the report, the Company believes it
has regained compliance with the stockholders’ equity requirement based upon the specific transaction or event referenced in Step
2; or Alternative 2: The Company must furnish to the SEC and Nasdaq a publicly available report including: 1. Steps 1 & 2
set forth above; 2. A balance sheet no older than 60 days with pro forma adjustments for any significant transactions or event occurring
on or before the report date; and 3. that the Company believes it satisfies the stockholders’ equity requirement as of the report
date. The pro forma balance sheet must evidence compliance with the stockholders’ equity requirement.
Additionally,
in either case the Company is required to disclose that Nasdaq will continue to monitor the Company’s ongoing compliance with the
stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that