MANGOCEUTICALS, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction You should read the matters described and incorporated by reference in “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. This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our prospectus dated March 20, 2023, filed pursuant to Rule 424(b)(4) in connection with our IPO (defined below)(the “ Prospectus ”). Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our financial statements included above under “ Part I - Financial Information ” – “ Item 1. Financial Statements ”. Please see the “Glossary of Industry Terms” beginning on page ii of the Prospectus for a list of abbreviations, acronyms and definitions of certain terms used in this Report, which are commonly used in our industry. 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 ®, ™ 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; and we have not commissioned any of the market or survey data that is presented in this Report. 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 “Risk Factors” of this Report. 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, ” “ Mango ”, “ MangoRX ” and “Mangoceuticals” refer specifically to Mangoceuticals, Inc. 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; ● “ SEC ” or the “ Commission ” refers to the United States Securities and Exchange Commission; and ● “ Securities Act ” refers to the Securities Act of 1933, as amended. 21 Table of Contents Where You Can Find Other Information We file annual, quarterly, and current reports, proxy statements and other information with the Securities and Exchange Commission. Our SEC filings (reports, proxy and information statements, and other information) are available to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “Investor Relations,” “SEC Filings” page of our website at https://investors.mangorx.com. Information on our website is not part of this Report, and we do not desire to incorporate by reference such information herein. Copies of documents filed by us with the SEC 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. Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows: ● Overview. Summary of our operations. ● Key Performance Indicators. Indicators describing our performance for the periods presented. ● Plan of Operations . A description of our plan of operations for the next 12 months including required funding. ● Results of Operations . An analysis of our financial results comparing the three and nine months ended September 30, 2023 and 2022. ● Liquidity and Capital Resources . An analysis of changes in our balance sheets and cash flows and discussion of our financial condition. ● Critical Accounting Policies and Estimates . Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. 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 and 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. We have developed what we believe is a go-to-market strategy inclusive of product development, operations, marketing and advertising; however, we have not sold a significant amount of products and have not generated revenues sufficient to support our operations to date. 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”) products. We have developed, are 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 Sildenafil (the active ingredient in Viagra) or Tadalafil (the active ingredient in Cialis) and Oxytocin, which are used in U.S. Food and Drug Administration (“FDA”) approved drugs; and L-Arginine, an amino acid that is available as a dietary supplement. However, the fact that Tadalafil, Sildenafil 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 products and anticipate doctors prescribing a dosage based on the needs and medical history of the patient. Our Mango ED products currently includes the following amounts of the three ingredients discussed above: (1) either Sildenafil (50 milligrams (mg) or Tadalafil (10 (mg)), Oxytocin (100 International units (IU)) and L-Arginine (50mg); and (2) either Sildenafil (100mg) or Tadalafil (20mg), Oxytocin (100IU) and L-Arginine (50mg). Our Mango ED products have not been, and will not be, approved by the FDA and instead we produce and sell our Mango ED products and plan to produce and sell future pharmaceutical products, under an exemption provided by Section 503A of the Federal Food, Drug, and Cosmetic Act, as discussed below. 22 Table of Contents We are not aware of any clinical studies involving the administration of Tadalafil or Sildenafil sublingually at the doses we provide patients, or the compounding of Tadalafil or Sildenafil, oxytocin, and L-arginine to treat ED, as is contemplated by our ED product. We are, however, aware of other companies that are currently selling oral disintegrating tablets for ED, including those using a combination of Tadalafil and Sildenafil. Additionally, because our Mango ED products are being specially compounded for the customer by a pharmacist with a physician’s prescription and because the ingredients for our Mango ED products are publicly disclosed, this product formula can be replicated by other companies. 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. Mango has been formulated as a Rapid Dissolve Tablet (“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 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. Mango is currently sold exclusively online via our website at www.MangoRX.com . Key Performance Indicators Key performance indicators that we use to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions include average order value (“AOV”); the percentage breakdown between subscribing and non-subscribing customers; and the percentage breakdown between new orders and refills/auto-refills. Average Order Value (AOV) For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Subscribing Customers $ 130.27 $ 0.00 $ 130.00 $ 0.00 Non-Subscribing Customers $ 105.35 $ 0.00 $ 104.88 $ 0.00 23 Table of Contents Percentage Breakdown Between Subscribing and Non-Subscribing Customers For the Three Months Ended For the Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Subscribing Customers 11 % 0 % 9 % 0 % Non-Subscribing Customers 89 % 0 % 91 % 0 % Total 100 % 0 % 100 % 0 % In addition to continuously working to acquire new customers for our Mango ED products, our goal is to gradually increase the percentage and number of subscribing customers, compared to one-time non-subscribing customers, which if successful, we expect will drive greater predictability and growth in revenues and cash flow, allowing us to invest even more aggressively in new customer acquisition. Further, our goal is to increase our AOVs, which we also anticipate will grow over time as the Company launches, markets and sells additional men’s health and wellness products through its online telemedicine platform. Plan of Operations We had working capital of $1.2 million as of September 30, 2023. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we currently anticipate the need for additional funding in order to continue our operations at their current levels and to pay the costs associated with being a public company for the next 12 months. We may also require additional funding in the future to expand or complete acquisitions. We plan to raise additional required funding through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues. Our plan for the next twelve months is to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand our operations organically or through acquisitions as funding and opportunities arise. As our business continues to grow, customer feedback will be integral in making small adjustments to improve products and our overall customer experience. We are headquartered in Dallas, Texas and intend to grow our business both organically and through identifying acquisition targets over the next 12 months in the technology, health and wellness space, funding permitting. Specifically, we plan to continue to make additional and ongoing technology enhancements to its platform, further develop, market and advertise additional men’s health and wellness related products on its telemedicine platform, and identify strategic acquisitions that complement our vision. As these opportunities arise, we will determine the best method for financing such acquisitions and growth which may include the issuance of debt instruments, common stock, preferred stock, or a combination thereof, all of which may result in significant dilution to existing shareholders. Results of Operations Comparison of the Three and Nine months Ended September 30, 2023 and 2022 Revenues We began generating revenues in November 2022 and had revenues of $245,160 and $487,119 for the three and nine months ended September 30, 2023, respectively, and we did not generate any revenues for the three and nine months ended September 30, 2022. 24 Table of Contents Cost of Revenues We had cost of revenues of $52,193 and $101,538 for the three and nine months ended September 30, 2023, respectively, and related party cost of revenues of $48,378 and $96,663 for the three and nine months ended September 30, 2023, respectively, relating to amounts paid to Epiq Scripts, LLC, a related party, 51% owned and controlled by Jacob D. Cohen, our Chairman and Chief Executive Officer, which entity provides us pharmacy and compounding services (“ Epiq Scripts ”), resulting in gross profit of $144,589 and $288,918 for the three and nine months ended September 30, 2023, respectively. The related party cost of revenues was associated with the Master Services Agreement entered into with Epiq Scripts and a related statement of work and the remaining cost of revenues was attributed to the amounts paid to our unrelated party doctors network and shipping expenses. We did not have any cost of revenues for the three and nine months ended September 30, 2022, as we did not begin generating revenues until November 2022. The Company analyzed the following factors when determining the amounts to be paid to Epiq Scripts under the Master Services Agreement and related statement of work: a) the fairness of the terms for the Company (including fairness from a financial point of view); b) the materiality of the transaction; c) bids / terms for a similar transaction from unrelated parties; d) the structure of the transaction; and e) the interests of each related party in the transaction. Operating Expenses and Net Loss We had total general and administrative expenses of $1,944,049 and $6,939,761 and imputed interest gain of $0 and $6,473 (which represented imputed interest canceled and reversed on the related party loans repaid as discussed below under “Liquidity and Capital Resources”) for the three and nine months ended September 30, 2023, resulting in a net loss of $1,799,460 and $6,644,370, respectively, compared to general and administrative expenses of $991,825 and $1,319,727 and $3,090 and $4,673 of imputed interest expense (which represented imputed interest on the related party loans discussed below under “Liquidity and Capital Resources”) for the three and nine months ended September 30, 2022. This resulted in a net loss of $994,915 and $1,324,400, respectively. The increase in general administration expenses for the three and nine months ended September 30, 2023, compared to the prior period, was due primarily to (a) stock-based compensation totaling $151,592 and $1,367,134 (including a total of $84,750 and $1,171,750 attributed to stock issued for services and $66,842 and $195,384 attributed to stock-based compensation from issuances of options and warrants) and 0 and $490,000 for the three and nine months ended September 30, 2023 and 2022, respectively, which increase was due to us having issued less stock for compensation during the 2022 period; (b) advertising and marketing expenses in the amount of $720,531 and $1,633,528 and $98,797 and $164,085, for the three and nine months ended September 30, 2023 and 2022, respectively, related to us increasing our advertising and marketing costs in the 2023 period as we ramped up our marketing efforts in connection with the expansion of our operations; (c) legal fees of $58,725 and $257,111 and $0 and $156,987, for the three and nine months ended September 30, 2023 and 2022, respectively, mainly related to legal fees in connection with our initial public offering and related matters; (d) placement agent fees of $0 and $400,000, for the three and nine months ended September 30, 2023 and $0 and $120,040 for 2022, respectively, relating to fees paid to our placement agent in connection with our private placement and initial public offering; (e) salaries and benefits of $262,092 and $642,007 and $51,000 and $51,000 for the three and nine months ended September 30, 2023 and 2022, respectively, which increased due to the engagement of new employees as we ramped up our operations in the current period; (f) accounting and auditing fees of $9,200 and $86,800 and $7,644 and $17,644, for the three and nine months ended September 30, 2023 and 2022, respectively, which was in connection with fees paid to our accountants and auditors in connection with the preparation of the financial statements for our initial public offering and quarterly reviews; (g) general consulting related expenses of $156,929 and $376,070 and $75,180 and $75,180, for the three and nine months ended September 30, 2023 and 2022, respectively, related to other various consulting fees paid in connection with our operations in the current period; and (h) software development fees of $70,599 and $361,740 and $31,420 and $41,020 for the three and nine months ended September 30, 2023 and 2022, respectively, related to the front and backend development of our website in the current period. Software development expenses are integral to customers accessing our ordering system and successfully placing an order for our products. We had not yet implemented our online ordering in the first nine months of 2022. 25 Table of Contents Liquidity and Capital Resources As of September 30, 2023, we had $1,236,747 of cash on-hand, compared to $682,860 of cash on-hand of December 31, 2022. We also had $84,382 of prepaid expenses, related party, relating to amounts funded to Epiq Scripts, which is 51% owned and controlled by Jacob D. Cohen, our Chairman and Chief Executive Officer, $21,581 of inventory; $102,420 of property and equipment, net, consisting of computers, office and custom product packaging equipment, $16,942 of security deposit, representing the security deposit on our leased office space and $133,433 of right of use asset in connection with our office space lease. Cash increased mainly due to funds raised in the IPO, offset by cash used for general operating expenses. As of September 30, 2023, the Company had total current liabilities of $159,176, consisting of $89,059 of accounts payable and accrued liabilities, $8,200 of payroll tax liabilities, and $61,917 of right-of-use liability, operating lease, current portion. We also had $81,507 of right-of-use liability, long-term. As of September 30, 2023, we had $1,595,505 in total assets, $240,684 in total liabilities, working capital of $1.2 million and a total accumulated deficit of $8,660,126. We have mainly relied on related party loans, as well as funds raised through the sale of securities, mainly through the private placement offering and our IPO discussed below, and revenues generated from sales of our Mango ED products, to support our operations since inception. We have primarily used our available cash to pay operating expenses. We do not have any material commitments for capital expenditures. We have experienced recurring net losses since inception. We believe that we will continue to incur substantial operating expenses in the foreseeable future as we continue to invest to bring our Mango ED products to market and to attract customers, expand the product offerings and enhance technology and infrastructure. These efforts may prove more expensive than we anticipate, and we may not succeed in generating commercial revenues or net income to offset these expenses. Accordingly, we may not be able to achieve profitability, and we may incur significant losses for the foreseeable future. Our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of December 31, 2022. As of September 30, 2023, our current capital resources are not sufficient for us to fund operations for the next 12 months. As such, we will need to raise funding in addition to the funding raised in our IPO, to support our operations in the future. We may also seek to acquire additional businesses or assets in the future, which may require us to raise funding. We currently anticipate such funding being raised through the offering of debt or equity. Such additional financing, may not be available on favorable terms, if at all. If debt financing is available and obtained, our interest expense may increase and we may be subject to the risk of default, depending on the terms of such financing. If equity financing is available and obtained it may result in our shareholders experiencing significant dilution. If such financing is unavailable, we may be forced to curtail our business plan, which may cause the value of our securities to decline in value. To support our existing operations or any future expansion of business, including the ability to execute our growth strategy, we must have sufficient capital to continue to make investments and fund operations. We have plans to pursue an aggressive growth strategy for the expansion of operations through marketing to attract new customers for our Mango ED products. Cash Flows Nine months ended September 30, 2023 Nine months ended September 30, 2022 Cash provided by (used in): Operating activities $ (5,299,634 ) $ (696,958 ) Investing activities (3,519 ) (2,531 ) Financing activities 5,857,040 1,550,430 Net increase in cash $ 553,887 $ 850,941 26 Table of Contents Net cash used in operating activities was $5,299,634 for the nine months ended September 30, 2023, which was mainly due to $6,644,370 of net loss, offset by $1,171,750 of common stock issued for services, $195,384 for options vested for stock based compensation, offset by an increase in prepaid expense of $72,637. Net cash used in operating activities was $696,958 for the nine months ended September 30, 2022, which was mainly due to $1,324,400 of net loss offset by $490,000 of common stock issued for services and $169,817 for options vested for stock based compensation. Net cash used in investing activities was $3,519 for the nine months ended September 30, 2023, compared to $2,531 for the nine months ended September 30, 2022, which were due to the purchase of equipment . Net cash provided by financing activities was $5,857,340 for the nine months ended September 30, 2023, which was mainly due to $5,000,000 of funds raised in the IPO and $1,024,500 in proceeds from the exercise of warrants, offset by repayments of notes payable of $78,260 and repayments of related party notes payable of $89,200. Net cash provided by financing activities was $1,550,430 for the nine months ended September 30, 2022, which was mainly due to $1,500,500 of proceeds from the sale of common stock in our private offering, discussed below. Related Party Loans and Advances On December 10, 2021 and March 18, 2022, the Company received advances of $39,200 and $50,000, respectively, for a total of $89,200 from its previous majority shareholder, American International Holdings Corp. (“ American International ”), in order to cover various general and administrative expenses. The amount owed to American International was $39,200 as of December 31, 2021. Imputed interest equal to 8% per annum, or $181, was recorded against the related party advance as of December 31, 2021. Other than the imputed interest discussed above, the advances bear no interest and are due on demand upon the Company’s ability to repay the advances from either future revenues or investment proceeds. Pursuant to the terms of the June 16, 2022, SPA discussed above, on June 16, 2022, Cohen Enterprises also acquired the right to be repaid the $89,200 advanced from American International to the Company. On June 29, 2022, the Company received an advance of $25,000 from Cohen Enterprises, Inc. (“Cohen Enterprises”), which is owned by Mr. Cohen, the Chairman and Chief Executive Officer of the Company, who is also the majority shareholder of the Company, in order to cover various general and administrative expenses. The Company repaid Cohen Enterprises $25,000 on August 18, 2022 and the remaining $89,200 on April 4, 2023, bringing the total amount owed to Cohen Enterprises to $0 as of September 30, 2023. The Company further recorded a credit of $6,473 towards imputed interest (previously calculated at a rate of 8% per annum) against the related party advances for the nine months ended September 30, 2023. On November 18, 2022, the Company entered into a Secured Installment Promissory Note with a vendor for the purchase of equipment in the amount of $78,260 (the “Note Payable”). The note bears no interest unless an event of default occurs, and then it bears interest at the rate of 10% per annum until paid in full. The Note Payable was payable in installments, requiring a payments of $5,000 on each of January 1, 2023, February 1, 2023, and March 1, 2023, with a $31,630 payment due on April 1, 2023 and a final payment due on May 1, 2023. The January 1 and March 1, 2023 payments were timely made and on March 23, 2023, the Company elected to pay off the remaining balance of $63,260. The outstanding balance on December 31, 2022 was $78,260 and as of September 30, 2023, was $0. 2022 Private Placement In August 2022, the Company initiated a private placement of up to $2 million of units to accredited investors, with each unit consisting of one share of common stock and a warrant to purchase one share of common stock, at a price of $1.00 per unit. The warrants have a five-year term (from each closing date that units were sold) and an exercise price of $1.00 per share. If at any time after the six-month anniversary of the issuance date, there is no effective registration statement registering, or no current prospectus available for the resale of the shares of common stock issuable upon exercise the warrants, the holder of the warrants may elect a cashless exercise of the warrants. Boustead Securities, LLC, the representative of the underwriters in our IPO, served as the placement agent in connection with the private placement. In total, we sold an aggregate of 2,000,000 units for $2,000,000 to 23 accredited investors between August 16, 2022 and December 22, 2022, the end date of the offering. 27 Table of Contents Initial Public Offering On March 23, 2023 (the “ Closing Date ”), 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 (the “ Representative ”) of several underwriters named in the Underwriting Agreement. In connection with the IPO, the Company also granted the Representative a 45-day option to purchase up to an additional 187,500 shares of its common stock, which has expired unexercised. The Common Stock offered and sold to the public pursuant to the Company’s registration statement on Form S-1 (File No. 333-269240) filed by the Company with the SEC under the Securities Act, on January 13, 2023, which became effective on March 20, 2023. On the Closing Date, the Company received gross proceeds of approximately $5 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. 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. As additional consideration in connection with the IPO, upon the closing of the IPO, we granted Boustead Securities, LLC, 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. Need for Future Funding As discussed above, our current capital resources are not be sufficient for us to fund operations for the next 12 months. As such, we will need funding in addition to the funding raised in our IPO, to support our operations in the future. We may also seek to acquire additional businesses or assets in the future, which may require us to raise funding. We currently anticipate such funding being raised through the sale of debt or equity. Such additional financing may not be available on favorable terms, if at all. If debt financing is available and obtained, our interest expense may increase and we may be subject to the risk of default, depending on the terms of such financing. If equity financing is available and obtained it may result in our shareholders experiencing significant dilution. If such financing is unavailable, we may be forced to curtail our business plan, which may cause the value of our securities to decline in value. Critical Accounting Policies and Estimates The preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. “Note 2 – Summary of Significant Accounting Policies” included in our audited financial statements included under “Index to Financial Statements” in the prospectus dated March 20, 2023, filed pursuant to Rule 424(b)(4) in connection with our IPO (the “ Prospectus ”), describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies and estimates have a higher degree of inherent uncertainty and require significant judgments. Accordingly, actual results could differ from those estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. 28 Table of Contents Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Prospectus and the notes to the audited financial statements appearing elsewhere in the Prospectus. During the quarter ended September 30, 2023, there were no material changes to our critical accounting policies from those discussed in our Prospectus. JOBS Act and Recent Accounting Pronouncements The JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act. We have implemented all new accounting pronouncements that are in effect and may impact our financial statements and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations. Recent Accounting Pronouncements Refer to “Note 2: Summary of Significant Accounting Policies” to our unaudited financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently issued accounting pronouncements not yet adopted. Item 3. Quantitative and Qualitative Disclosures about Market Risk Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “ smaller reporting company, ” as defined by Rule 229.10(f)(1).