Mangoceuticals(MGRX) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section details the company's financial performance, condition, and internal controls for the quarter ended March 31, 2025 Financial Statements The company's financial statements for Q1 2025 show a significant increase in net loss and cash burn, driven by higher operating expenses and asset acquisitions, leading to a 'going concern' warning - The company's independent auditors have issued a 'going concern' opinion, citing a net loss of $4.8 million for the quarter, an accumulated deficit of $25.9 million, and the need to raise additional capital to fund operations for the next twelve months[313] Condensed Consolidated Balance Sheets Total assets significantly increased to $21.8 million by March 31, 2025, primarily due to intangible asset acquisitions, funded by a substantial rise in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Total Current Assets | $176,652 | $75,595 | | Intangible assets, net | $21,530,875 | $15,232,617 | | Total Assets | $21,753,857 | $15,370,511 | | Total Current Liabilities | $1,503,196 | $1,425,463 | | Total Liabilities | $1,503,196 | $1,425,463 | | Total Stockholders' Equity | $20,250,661 | $13,945,048 | Condensed Consolidated Statements of Operations Revenues decreased by 49% in Q1 2025, leading to a more than doubled net loss of $4.8 million due to sharply increased operating expenses Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (USD) | Three Months Ended Mar 31, 2024 (USD) | | :--- | :--- | :--- | | Revenues | $109,306 | $214,095 | | Gross Profit | $62,064 | $147,398 | | Total Operating Expenses | $4,915,253 | $2,515,015 | | Loss from Operations | ($4,853,189) | ($2,367,617) | | Net Loss | ($4,839,489) | ($2,367,617) | | Basic and Diluted Loss Per Share | ($1.29) | ($1.50) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $2.3 million in Q1 2025, largely offset by financing activities, resulting in a low cash balance Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 (USD) | Three Months Ended Mar 31, 2024 (USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($2,274,781) | ($991,131) | | Net Cash Provided by Financing Activities | $2,285,000 | $267,500 | | Cash and Cash Equivalents, End of Period | $76,496 | $15,305 | Notes to Condensed Consolidated Financial Statements The notes detail significant corporate actions including a reverse stock split, dilutive financing, major IP acquisitions, ongoing litigation, and a 'going concern' warning - On October 16, 2024, the company completed a 1-for-15 reverse stock split of its common stock[56] - The company is engaged in litigation with Eli Lilly and Company concerning allegations of false and misleading advertising for its 'TRIM' product[316] - In March 2025, the terms of the Series B Convertible Preferred Stock were amended to reduce the conversion price to a fixed $1.50 per share and remove dividend rights[83][196] - Subsequent to the quarter end, on May 13, 2025, the company's subsidiary, Mango & Peaches Corp., issued stock to CEO Jacob Cohen, giving him 49% of the common stock and 51% of the total vote via Series A Super Majority Voting Preferred Stock, resulting in 75.2% voting control over the subsidiary[350][351] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 2025 revenue decline and widened net loss, highlighting critical liquidity issues, insufficient capital for future operations, and ongoing evaluation of strategic alternatives Results of Operations Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (USD) | Q1 2024 (USD) | Change Driver | | :--- | :--- | :--- | :--- | | Revenues | $109,306 | $214,095 | Decrease due to telehealth platform migration issues | | General & Admin Expenses | $1,540,651 | $771,958 | Increase due to legal and IP acquisition costs | | Advertising & Marketing | $281,732 | $852,383 | Decrease due to focus on internal software development | | Investor Relations | $1,419,000 | $143,000 | Increase due to expanded public awareness efforts | | Net Loss | ($4,839,489) | ($2,367,617) | Increased loss from lower revenue and higher operating expenses | - The company had a working capital deficit of $1.36 million as of March 31, 2025, and management states that current cash and expected revenues are insufficient to fund operations for the next 12 months[395][413] - In October 2024, the Board initiated a process to evaluate strategic alternatives, including potential mergers, acquisitions, divestitures, and other key transactions to maximize shareholder value[399] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Mangoceuticals, Inc. is exempt from the requirement to provide disclosures about market risk[492] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[493] - During the quarter, the company added procedures to review journal entries before posting and is implementing new procedures to secure data during future system migrations[494] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered equity sales, and other material subsequent events Legal Proceedings The company is involved in legal proceedings, including a complaint from Eli Lilly regarding product advertising and a recent settlement with 1800 Diagonal Lending, LLC - Eli Lilly and Company filed a complaint against Mangoceuticals on October 31, 2024, for false and misleading advertising in connection with the Company's TRIM product[316] - On May 5, 2025, the Company entered into a Compromise Settlement Agreement and Mutual Release with 1800 Diagonal Lending, LLC, issuing 62,500 shares of restricted common stock to settle claims[319][349] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - The company states there have been no material changes to the risk factors disclosed in its 2024 Annual Report on Form 10-K[498] Unregistered Sales of Equity Securities and Use of Proceeds. The company issued unregistered equity securities through preferred stock conversions and common stock for consulting services, claiming exemptions from public offering registration - On April 3, 2025, 350 shares of Series B Preferred Stock were converted into 256,667 shares of common stock at a conversion price of $1.50 per share, claimed as exempt under Section 3(a)(9)[499][500] - In April 2025, the company issued a total of 128,260 shares of common stock to two separate consulting firms for financial advisory and investor awareness services, claiming exemption under Section 4(a)(2) and/or Rule 506[501][502][503] Other Information. This section discloses recent material events, including a new distribution agreement and the CEO gaining significant voting control over a key subsidiary - On May 14, 2025, the company's subsidiary, MangoRx IP Holdings, entered into a Master Distribution Agreement with PrevenTech Solutions, granting exclusive worldwide licensing and distribution rights for its respiratory illness prevention technology in exchange for a 10% royalty on net sales[509][510] - On May 13, 2025, CEO Jacob Cohen was issued stock in the subsidiary Mango & Peaches Corp., giving him 49% of its common stock and 75.2% of its voting control through super-voting preferred shares[512][513] Exhibits This section provides a comprehensive list of all exhibits filed with the report, including various agreements and officer certifications