Mangoceuticals, Inc. 2023 Form 10-K Summary
Business context and reporting period
Mangoceuticals, Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The company operates an online telehealth platform connecting consumers with licensed healthcare providers and a related-party compounding pharmacy. Its principal products are Mango ED, a compounded erectile-dysfunction product, and Mango GROW, a compounded hair-growth product. The company began generating revenue in November 2022 and remains an early-stage business.
Financial performance and condition
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $731,493 | $8,939 | Substantial increase from limited initial sales |
| Cost of revenues | $299,992 | $4,089 | Higher with increased sales |
| Gross profit | $431,501 | $4,850 | Higher |
| Gross margin | Approximately 59.0% | Approximately 54.3% | Improved |
| Total operating expenses | $9,650,391 | $1,996,432 | Increased substantially |
| Loss from operations | $(9,218,890) | $(1,991,582) | Worsened |
| Net loss | $(9,212,417) | $(1,998,055) | Worsened |
| Basic and diluted loss per share | $(0.57) | $(0.19) | Worsened |
| Cash and cash equivalents at year-end | $739,006 | $682,860 | Increased modestly |
| Net cash used in operating activities | $(6,997,375) | $(1,346,518) | Higher cash burn |
| Net cash provided by financing activities | $7,057,040 | $2,049,930 | Higher financing dependence |
| Total assets | $1,050,793 | $1,003,287 | Increased |
| Total liabilities | $276,039 | $389,257 | Decreased |
| Stockholders’ equity | $774,754 | $614,030 | Increased |
Operating expenses included approximately $2.10 million of advertising and marketing, $2.16 million of stock-based compensation, $1.10 million of investor-relations expense, $1.0 million of salary and benefits, and $3.32 million of general and administrative expense. The resulting operating margin and net margin were both approximately negative 1,260%.
Year-end current assets were $818,460 and current liabilities were $211,078, implying working capital of approximately $607,000. The balance sheet showed no outstanding notes payable or related-party loans at December 31, 2023; liabilities primarily consisted of accounts payable, accrued liabilities, payroll tax liabilities, and operating lease obligations totaling $128,679. The company had no material capital-expenditure commitments.
Material changes versus the prior comparable period
- Revenue increased to $731,493 from $8,939 as product sales expanded from a very limited base.
- Gross profit increased to $431,501, with gross margin improving to approximately 59.0%.
- Operating expenses increased by approximately $7.65 million, driven primarily by marketing, stock-based compensation, investor relations, personnel, and software-development costs.
- Net loss increased to $9.21 million from $2.00 million, while operating cash usage increased to $7.00 million from $1.35 million.
- The company raised approximately $5.0 million gross in its March 2023 IPO, approximately $1.2 million gross in its December 2023 follow-on offering, and received $1.02 million from warrant exercises during 2023.
- Common shares outstanding increased to 21.42 million at December 31, 2023 from 13.37 million at December 31, 2022. Additional options and warrants create further potential dilution.
- The company entered into a marketing agreement with Marius Pharmaceuticals to market Kyzatrex, an FDA-approved testosterone-replacement product, and issued Marius 100,000 shares valued at approximately $58,000 or $68,000 depending on the disclosure referenced in the filing.
Guidance, outlook, risks and unusual items
Management plans to continue marketing Mango ED and Mango GROW, enhance its telehealth technology, introduce additional men’s wellness products, pursue broader pharmacy licensing, and evaluate strategic acquisitions. The company states that its current resources are not expected to fund operations for the next 12 months and that additional debt or equity financing will be required. Any equity financing could materially dilute existing shareholders.
The independent auditor included a going-concern emphasis, noting recurring operating losses and substantial doubt about the company’s ability to continue as a going concern. The financial statements do not include adjustments that could result from this uncertainty.
- Mango ED and Mango GROW are compounded products and are not, and will not be, FDA-approved. The filing states that the company is relying on the Section 503A compounding exemption and that there have been no FDA discussions confirming that the products qualify.
- The company relies exclusively on Epiq Scripts, a related-party pharmacy 51% owned and controlled by CEO Jacob Cohen, for compounding, fulfillment, packaging, and distribution. Epiq Scripts was licensed in the District of Columbia and 47 states, limiting sales in other jurisdictions.
- Nasdaq notified the company of noncompliance with the $1.00 minimum bid-price requirement and the $2.5 million stockholders’ equity requirement. The company received an extension through April 29, 2024 to demonstrate compliance and may face delisting if it cannot satisfy the requirements.
- Stockholders approved a potential one-for-two to one-for-fifty reverse stock split, but the board had not selected a ratio or determined whether to implement it as of the filing.
- On March 1 and March 18, 2024, the company borrowed $37,500 and $50,000, respectively, from entities controlled by Mr. Cohen. The loans are payable on demand and bear no interest.
- On March 28, 2024, Jonathan Arango resigned as an officer and director. The filing also disclosed a proposed Series B convertible preferred stock designation; no Series B shares had been issued as of the filing, and the designation had not yet been officially filed with the Texas Secretary of State.
- The company reported no material legal proceedings and no cybersecurity incidents that materially affected its business, results, or financial condition during 2023.
Important facts for investors to verify
- Reconcile the filing’s inconsistent references to the 2023 net loss, working capital, and related-party transaction amounts.
- Assess the company’s actual cash runway, financing requirements, and ability to raise capital on acceptable terms.
- Monitor Nasdaq compliance, any reverse stock split, and the risk of delisting.
- Review the FDA and state-regulatory status of the compounded products, including the company’s reliance on Section 503A.
- Evaluate related-party pricing, governance protections, and dependence on Epiq Scripts and CEO-controlled entities.
- Quantify dilution from outstanding options, warrants, equity compensation, the amended equity incentive plan, and any Series B preferred stock issuance.
- Verify whether the marketing agreement for Kyzatrex generates meaningful customers and revenue and whether its performance targets could result in termination.