Mangoceuticals (MGRX) risk factors, FY2024 10-K

Risks Related to our Operating History and Need for Funding

1. 01We have a limited operating history and have generated only limited revenues to date and there is no assurance that we can generate revenues or sell any commercial amount of our products in the future. We will need to raise additional funding to support our operations in the future
2. 02Since we have a limited operating history, it is difficult for potential investors to evaluate our business and our business is in a relatively new consumer product segment, which is difficult to forecast
3. 03We need additional capital which may not be available on commercially acceptable terms, if at all, and this raises questions about our ability to continue as a going concern

Risks Related to Our Business Activities

1. 04We may not be able to successfully commercialize our Pharmaceutical Products or any other potential future men’s wellness products
2. 05We expect to face intense competition, often from companies with greater resources and experience than we have
3. 06We face, and may continue to face, intellectual property infringement or misappropriation, and other claims that could be costly to defend, result in significant damage awards or other costs (including indemnification awards), and limit our ability to sell certain products
4. 07We may enter into strategic transactions in the future which may result in a material change in our operations and/or a change of control
5. 08If we fail to successfully provide a good customer experience, including by developing new product offerings, our ability to attract members and customers may be materially adversely affected
6. 09Counterfeit versions of our products could harm our customers and have a negative impact on our revenues, earnings, reputation and business
7. 10We may expend our limited resources to pursue particular products or services and may fail to capitalize on products or services that may be more profitable or for which there is a greater likelihood of success
8. 11We have entered into a Master Services Agreement and Statement of Work with Epiq Scripts, LLC, a related party, which entity is currently licensed to provide pharmacy services in only 49 states and the District of Columbia
9. 12The Master Services Agreement does not address product liability claims which may result in us bringing legal claims or actions against Epiq Scripts to attempt to seek indemnification or contribution for product liability claims
10. 13We currently owe certain rights to Epic Scrips under the Management Services Agreement which may limit our future operations and/or have a material adverse effect on our operations and cash flow
11. 14We currently exclusively rely, and continue to exclusively rely, on Epiq Scripts, a related party entity, for our pharmacy compounding services
12. 15The use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties
13. 16Our business depends on our brand, and any failure to maintain, protect or enhance our brand, including as a result of events outside our control, could materially adversely affect our business
14. 17Our ability to gain and increase market acceptance and generate commercial revenues is subject to a variety of risks, many of which are out of our control
15. 18We may be unable to scale our operations fast enough to bring down our cost of sales and generate revenues sufficient to support our operations
16. 19Economic downturns or a change in consumer preferences, perception and spending habits has in the past, and could in the future, limit consumer demand for our products and negatively affect our future business
17. 20We rely upon independent third-party transportation providers for all of our product shipments and are subject to increased shipping costs as well as the potential inability of our third-party transportation providers to deliver on a timely basis
18. 21The failure of our Telemedicine Providers to attract and retain physicians in a competitive labor market could limit our ability to execute our growth strategy, resulting in a slower rate of growth
19. 22Our business could be adversely affected if physicians were classified as employees of the Telemedicine Providers instead of independent contractors
20. 23Disruption in our global supply chain could negatively impact our business
21. 24If we are unable to maintain or enter into future agreements with suppliers or our suppliers fail to supply us with our Compounded Products ingredients or any other potential future men’s wellness products, we may experience delays in selling our products
22. 25Our business is exposed to risks associated with credit card and other online payment chargebacks and fraud
23. 26Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or customers, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation
24. 27We may experience fluctuations in our tax obligations and effective tax rate, which could adversely affect our business, results of operations, and financial condition
25. 28If we become subject to product liability claims, we may be required to pay damages that exceed our insurance coverage, if any
26. 29Disruptions in our data and information systems could harm our reputation and our ability to run our business

Risks Related to Legal, Regulatory and Government

1. 30We incur significant costs to ensure compliance with U.S. and Nasdaq reporting and corporate governance requirements
2. 31If we fail to comply with government laws and regulations it could have a materially adverse effect on our business
3. 32Marketing activities for our Pharmaceutical Products are subject to strict governmental regulation which may limit our ability to market or promote such product
4. 33Evolving government regulations and enforcement activities may require increased costs or adversely affect our results of operations
5. 34Our Compounded Products have not been, and will not be, approved by the FDA. The use of such products may cause serious side effects which could subject us to material litigation, damages and penalties
6. 35The main ingredients of our Compounded Products are publicly disclosed and are being specially compounded for the customer by a pharmacist with a physician’s prescription, and as a result, our Compounded Products formula can be replicated by other companies
7. 36Our Compounded Products need to be compounded by licensed pharmacists who are subject to risks regarding applicable exemptions from the FFDCA Act
8. 37Health care services, including arrangements with health care professionals, are heavily regulated at the state level, and the laws and regulations may be changed or subject to new interpretations
9. 38We do not have a pharmacy and depend on a related party to compound our Compounded Products and other potential future men’s wellness products

Risks Related to Related Party Relationships and Transactions and Our Management

1. 39We have engaged, and in the future may engage, in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us
2. 40We are significantly reliant on related party relationships
3. 41The related party pharmacy we have entered into an agreement with may not receive licenses in all of the 50 United States to provide national coverage for us to sell our Pharmaceutical Products and future products
4. 42In consideration for the transfer of the assets, the Company received 4,999,999 shares of Mango & Peaches’ common stock, bringing its ownership to 5,000,000 shares of common stock of Mango & Peaches upon the closing of the Contribution Agreement
5. 43Potential competition from our existing executive officers, after they leave their employment with us, and subject to the non-compete terms of their employment agreements, could negatively impact our profitability

Risks Related to Intellectual Property

1. 44We operate in an industry with the risk of intellectual property litigation. Claims of infringement against us may hurt our business
2. 45We must protect the proprietary nature of the intellectual property used in our business. There can be no assurance that trade secrets and other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties

Risks Related to the Telehealth Operations of Our Contracting Parties

1. 46The telehealth business of our telehealth provider could be adversely affected by ongoing legal challenges or by new state actions restricting the ability to provide telehealth services in certain states
2. 47Our ability to conduct business operations in each state is dependent upon the state’s treatment of medicine under such state’s laws, and rules and policies governing the practice of physician supervised services, which are subject to changing political, regulatory and other influences
3. 48Our contracting parties’ telehealth business could be adversely affected by ongoing legal challenges to their business model or by new state actions restricting their ability to provide the full range of services in certain states

Risks Related to Our Governing Documents and Texas Law

1. 49We have established preferred stock which can be designated by our Board of Directors without shareholder approval
2. 50Anti-takeover provisions in our Certificate of Formation and our Bylaws, as well as provisions of Texas law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock

Risks Related to Our Preferred Stock

1. 51Our Series B Convertible Preferred Stock and 6% Series C Convertible Cumulative Preferred Stock include a liquidation preference
2. 52Each holder of Series B Preferred Stock may, at its option, convert its shares of Series B Preferred Stock into that number of shares of common stock equal to the Stated Value of such share of Series B Preferred Stock (initially $1,100 per share), divided by $1.50
3. 53Our outstanding Series B Preferred Stock previously accrued, and our Series C Preferred Stock accrues a dividend
4. 54Accrued dividends may be settled in cash, subject to applicable law, shares of common stock (valued at the closing price on the date the dividend is due) or in-kind, by increasing the stated value by the amount of the quarterly dividend

Risks Related to Our Common Stock

1. 55Stockholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock
2. 56The market price of our common stock may be highly volatile and subject to wide fluctuations. Our financial performance, government regulatory action, tax laws, interest rates, and market conditions in general could have a significant impact on the future market price of our common stock
3. 57If our stock price fluctuates you could lose a significant part of your investment
4. 58There is no guarantee that our common stock will continue to trade on the Nasdaq Capital Market
5. 59If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and trading volume may decline
6. 60Certain of our outstanding warrants include anti-dilution and reset rights
7. 61The warrants also include customary buy-in rights in the event the Company fails to timely deliver the shares of common stock issuable upon exercise thereof
8. 62The sale of shares of common stock under an Equity Purchase Agreement may cause significant dilution to existing shareholders
9. 63We have filed a registration statement to permit the public resale of the shares of common stock issuable pursuant to the terms of the ELOC. The influx of those shares into the public market could potentially have a negative effect on the trading price of our common stock
10. 64Future sales of our common stock, other securities convertible into our common stock, or preferred stock could cause the market value of our common stock to decline and could result in dilution of your shares
11. 65We have no intention of declaring dividends on our common stock in the foreseeable future
12. 66The issuance and sale of common stock upon exercise of outstanding warrants may cause substantial dilution to existing shareholders and may also depress the market price of our common stock. Outstanding warrants to purchase shares of our common stock have cashless exercise rights
13. 67Economic uncertainty may affect our access to capital and/or increase the costs of such capital
14. 68Our business may be materially and adversely disrupted by epidemics or pandemics in the future
15. 69Our business could be disrupted by catastrophic events and man-made problems, such as power disruptions, data security breaches, and terrorism
16. 70Economic uncertainty may affect consumer purchases of discretionary items, which may affect demand for our products
17. 71Global economic conditions could materially adversely affect our business, results of operations, financial condition and growth
18. 72We may become party to litigation, mediation and/or arbitration from time to time given our product focus
19. 73Higher labor costs due to statutory and regulatory changes could materially adversely affect our business, financial condition and operating results
20. 74Failure to adequately manage our planned aggressive growth strategy may harm our business or increase our risk of failure
21. 75If we make any acquisitions, they may disrupt or have a negative impact on our business
22. 76Claims, litigation, government investigations, and other proceedings may adversely affect our business and results of operations
23. 77We may incur indebtedness in the future which could reduce our financial flexibility, increase interest expense and adversely impact our operations and our costs
24. 78Market and economic conditions may negatively impact our business, financial condition and share price
25. 79Future sales and issuances of our common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall. In addition, the perception that sales of our common stock could occur, could cause our stock price to fall
26. 80The number of shares of our common stock available for future issuance or sale could adversely affect the per share trading price of our common stock
27. 81We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors
28. 82Financial reporting obligations of being a public company in the U.S. are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters