What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 441 added, 204 removed, 715 unchanged (47% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

Cash 5,090 9,898

Accounts receivable, net of allowance for doubtful accounts of $ 28.8 thousand and $ 23.4 thousand as of March 31, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 34.2 thousand and $ 23.4 thousand as of June 30, 2023 and December 31, 2022, respectively

Inventory 307 298

23 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.0001 par value, 150 million shares authorized, 32.2 million and 29.3 million shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.0001 par value, 150 million shares authorized, 36.0 million and 29.3 million shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 103,395 95,913

5 unchanged sentences

Condensed Consolidated Statement of Operations

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

$’000 $’000 $’000 $’000

Commodity sales 157,559 — 367,925 —

2 unchanged sentences

Franchise advertising fund contributions 20 16 36 34

Other revenues 13 — 13 —

Total revenues 160,317 2,930 373,284 5,850

2 unchanged sentences

Commodity cost 153,240 — 358,295 —

Labor 852 — 1,472 —

Other commodity operating expenses 485 — 639 —

3 unchanged sentences

Labor 956 903 1,836 1,976

Rent 290 327 564 667

Other restaurant operating expenses 551 688 1,023 1,338

8 unchanged sentences

Loss from operations ( 360 ) ( 1,737 ) ( 1,967 ) ( 3,724 )

Other Income:

Other Income / (Expense):

Other income / (expense) 251 ( 15 ) 251 ( 34 )

Interest income / (expense), net ( 22 ) ( 10 ) ( 19 ) ( 28 )

1 unchanged sentence

Gain on debt extinguishment — — — 140

Total other income, net 544 103

Loss Before Income Tax ( 1,063 ) ( 1,884 )

Total other income / (expense), net 553 ( 25 ) 1,097 78

Income / (Loss) Before Income Tax 193 ( 1,762 ) ( 870 ) ( 3,646 )

Income tax 3 12 6 14

Net loss ( 1,066 ) ( 1,886 )

Net Loss Per Share:

Basic and Diluted ( 0.04 ) ( 0.07 )

Weighted average Number of Common Shares Outstanding:

Basic and Diluted 29,443,394 27,801,604

Net income / (loss) 190 ( 1,774 ) ( 876 ) ( 3,660 )

Net Income / (Loss) Per Share:

Basic 0.01 ( 0.06 ) ( 0.03 ) ( 0.13 )

Diluted 0.01 ( 0.06 ) ( 0.03 ) ( 0.13 )

Weighted-Average # of Common Shares Outstanding:

Basic 33,362,887 28,668,116 31,407,362 28,235,052

Diluted 33,567,719 28,668,116 31,407,362 28,235,052

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

13 unchanged sentences

Balance at March 31, 2022 28,644 3 95,833 ( 73,271 ) 22,565

Cumulative effect of change in accounting principal — — — ( 8 ) ( 8 )

Stock-based compensation - options — — 4 — 4

Reconciliation for shares outstanding per transfer agent 31 — — — —

Common stock issued as compensation for services 5 — 2 — 2

Common stock issued as compensation for employment 20 — 11 — 11

Net loss — — — ( 1,774 ) ( 1,774 )

Balance at June 30, 2022 28,700 3 95,850 ( 75,053 ) 20,800

Balance at December 31, 2022 29,287 3 95,913 ( 79,355 ) 16,561

4 unchanged sentences

Balance at March 31, 2023 32,167 3 98,988 ( 80,421 ) 18,570

Common stock compensation to board of directors 30 — 32 — 32

Common stock issued as compensation for services 3,714 1 4,348 — 4,349

Stock-based compensation - options — — 27 — 27

Net income — — — 190 190

Balance at June 30, 2023 35,911 4 103,395 ( 80,231 ) 23,168

See Accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited)

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

14 unchanged sentences

Accounts payable and accrued expenses 39,014 ( 611 )

Accrued stock-based compensation expense - related party ( 1,082 ) —

Deferred rent — ( 128 )

7 unchanged sentences

Purchases of property and equipment ( 247 ) ( 283 )

Disposal of property and equipment 110 —

Net cash used in investing activities ( 4,025 ) ( 283 )

Cash Flows from Financing Activities

Repayments of convertible note — ( 50 )

Proceeds from other notes payable 3,500 —

Repayments of notes payables ( 69 ) ( 63 )

Net cash used in financing activities ( 34 ) ( 32 )

Net cash provided by (used in) financing activities 3,431 ( 113 )

Net Decrease in Cash ( 4,808 ) ( 2,301 )

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Continued)

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental Disclosures of Cash Flow Information:

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On March 25, 2021, MMI acquired the assets and trademarks of SuperFit Foods™, a subscription based fresh-prepared meal prep business located in Jacksonville, Florida.

On May 14, 2021, MMI acquired the assets and trademarks of PKM Stamford, LLC, Poke Co., LLC, LB Holdings LLC, TNB Holdings, LLC, Poke Co Holdings LLC, GLL Enterprises, LLC, and TNB Holdings II, LLC, each a Connecticut limited liability company, an operator and franchisor of a fast casual restaurant chain concept, collectively known as “Pokémoto®.” On October 19, 2022, MMI formed Sadot LLC, a Delaware limited liability company and a wholly-owned subsidiary of MMI, ("Sadot"), for the purpose of shipping and trading agri-commodities on a global basis.

With the formation of Sadot in late 2022, MMI has evolved from a U.S.-centric restaurant business into a global, food-focused organization.

As of March 31, 2023, MMI consisted of two distinct operating units:

On May 14, 2021, MMI acquired the assets and trademarks of PKM Stamford, LLC, Poke Co., LLC, LB Holdings LLC, TNB Holdings, LLC, Poke Co Holdings LLC, GLL Enterprises, LLC, and TNB Holdings II, LLC, each a Connecticut limited liability company, an operator and franchisor of a fast casual restaurant chain concept, collectively known as “Pokémoto®.” On October 19, 2022, MMI formed Sadot LLC, a Delaware limited liability company and a wholly-owned subsidiary of MMI, ("Sadot Agri-Foods"), for the purpose of shipping and trading agri-commodities on a global basis.

With the formation of Sadot Agri-Foods in late 2022, MMI has evolved from a U.S.-centric restaurant business into a global, food-focused organization.

As of June 30, 2023, MMI consisted of two distinct operating units:

MMI’s largest operating unit is a global agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat, corn, etc.) via dry bulk cargo ships to/from markets such as Brazil, Canada, China, India, Japan, Malaysia, Philippines, Poland, Romania, Ukraine and Vietnam.

Sadot competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations.

Sadot seeks to diversify over time into a sustainable and forward-looking global agri-foods company.

Sadot Agri-Foods competes with the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations.

Sadot Agri-Foods seeks to diversify over time into a sustainable and forward-looking global agri-foods company.

MMI RESTAURANT GROUP:

This is MMI’s legacy business with two fast casual restaurant concepts, Pokémoto Hawaiian Poké® and Muscle Maker Grill®, plus a fresh-prep meal service, SuperFit Foods™, with 34 points of distribution plus in-home and national delivery.

As of March 31, 2023, the MMI Restaurant Group included 19 company-owned restaurants, including the SuperFit Foods™ kitchen, and 26 franchise restaurants.

As of June 30, 2023, the MMI Restaurant Group included 19 company-owned restaurants, including the SuperFit Foods™ kitchen, and 29 franchise restaurants.

The MMI Restaurant Group seeks to develop Pokémoto® into a national restaurant brand through franchising.

MMI and its subsidiaries are hereinafter referred to as the “Company”.

On May 19, 2023, the Company has expanded its Sadot Agri-Foods subsidiary within the agri-commodity sourcing and trading operations into North, Central and South America, further diversifying the Company’s geographic reach beyond its existing operations in Europe, Asia, the Middle East and Africa.

The expansion was facilitated by a 5 year consulting agreement signed on June 14, 2023, with a fixed cost of 0.5 million per year and potential profit sharing calculated on a quarterly basis, between Sadot Agri-Foods’ operations and newly-formed Buenaventura Trading LLC (“Buenaventura”) based in Miami FL.

Buenaventura’s team brings a wealth of experience and exposure to new trade routes throughout the Americas by adding multiple sourcing and trading consultants to Sadot Agri-Foods with backgrounds from several of the largest international food supply chain organizations.

In order to support the expansion into the Americas and our agreement with Buenaventura, Sadot LLC has formed a new subsidiary, Sadot Latam LLC.

This agreement marks a significant milestone for Sadot Agri-Foods as it provides access to new trade routes originating in North America to markets in Central and South America.

The planned Americas trade routes are intended to generate accretive value for the Company by tapping into the thriving market demand for agricultural products across Central and South America.

This planned expansion is expected to further enhance Sadot Agri-Foods’ position as an emerging entity in the global commodity trading industry.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Our primary source of liquidity is cash on hand.

As of March 31, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $ 6.4 million, $ 6.4 million, and $ 80.4 million, respectively.

During the three months ended March 31, 2023, the Company incurred a Pre-tax net loss of $ 1.1 million and Net cash used in operations of $ 3.3 million.

The Company believes that our existing cash on hand and future cash flows from our franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

As of June 30, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $ 5.1 million, $ 7.7 million, and $ 80.2 million, respectively.

During the three and six months ended June 30, 2023, the Company incurred a Pre-tax net income of $ 0.2 million and a Pre-tax net loss of $ 0.9 million, respectively.

The Company had Net cash used in operations of $ 4.2 million for the six months ended June 30, 2023.

The Company believes that our existing cash on hand and future cash flows from our commodity trading and franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

Significant Accounting Policies

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Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

of the Unaudited Condensed Consolidated Financial Statements of the Company as of March 31, 2023, and for the three months ended March 31, 2023, and 2022.

The results of operations for the three months ended March 31, 2023, and 2022 are not necessarily indicative of the operating results for the full year.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the Unaudited Condensed Consolidated Financial Statements of the Company as of June 30, 2023, and for the three and six months ended June 30, 2023, and 2022.

The results of operations for the three and six months ended June 30, 2023, and 2022 are not necessarily indicative of the operating results for the full year.

It is suggested that these Unaudited Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022.

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• the recognition, measurement and valuation of current and deferred income taxes.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Estimates and assumptions are periodically reviewed, and the effects of any material revisions are reflected in the financial statements in the period that they are determined to be necessary.

2 unchanged sentences

The Company considers all highly-liquid instruments with an original maturity of three months or less when purchased to be cash equivalents.

There were no cash equivalents as of March 31, 2023 or December 31, 2022.

Inventories, which are stated at the lower of cost or net realizable value, consist primarily of commodity trade shipments in-transit, perishable food items and supplies.

There were no cash equivalents as of June 30, 2023 or December 31, 2022.

Inventory, which are stated at the lower of cost or net realizable value, consist primarily of commodity trade shipments in-transit, perishable food items and supplies.

Cost is determined using the first-in, first-out method.

Deposit on Farmland

Deposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary.

As of March 31, 2023, the Company recorded a deposit of $ 5.0 million.

The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland.

The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Deposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot Agri-Foods subsidiary.

As of June 30, 2023, the Company recorded a deposit of $ 8.8 million and $ 4.9 million as of December 31, 2022.

The Company has entered into a letter of intent with a deposit to purchase developed farmland.

The Company is still in final negotiations, awaiting government approval to finalize the agreement.

On May 16, 2023, the Company through its wholly owned subsidiary, Sadot Agri-Foods, entered into a Purchase of Right and Variation Agreement (the “Variation Agreement”) with Zamproagro Limited, a Liberian corporation (“ZPG”) and Cropit Farming Limited, a Zambian corporation (“Cropit”) pursuant to which ZPG assigned all of its rights, liabilities and obligations of the Put and Call Option Agreement Over Land entered between ZPG and Cropit dated December 29, 2022 (the “Put Land Agreement”) to Sadot Agri-Foods, which provided ZPG with a one year call option to acquire 70 % of 4,942 acres ( 2000 hectares) of producing agricultural land along with buildings and related assets located within the Mkushi Farm Block of Zambia’s Region II agricultural zone (the “Farm”) for a purchase price of approximately $ 8.5 million USD.

The Put Land Agreement further provides that Cropit will continue to retain 30 % of the Farm and that following closing, Cropit and the purchaser will form a special purpose vehicle in which both parties will contribute their ownership interest in the Farm to the special purpose vehicle for their respective percentage interest.

On May 16, 2023, Sadot Agri-Foods and Cropit entered into Joint Venture Shareholders Agreement pursuant to which the parties agreed to form a new entity in Zambia to serve as a joint venture with respect to the farming of the Farm.

The joint venture is expected to be named Sadot Enterprises Limited (“Sadot Zambia”) with Sadot Agri-Foods holding 70 % of the equity and Cropit holding 30 % of the equity.

Following its formation, Sadot Zambia will hold 100 % of the Farm.

Sadot Agri-Foods and Cropit will each have the right to appoint one director to the Board of Directors of Sadot Zambia.

Further, upon formation, Sadot Agri-Foods contributed $ 3.5 million into escrow for the primary purpose of discharging a loan secured by the Farm held by ABSA Bank.

On May 16, 2023, Sadot Agri-Foods, Cropit and Chibesakunda & Co., as escrow agent (the “Escrow Agent”) entered into an Escrow Agreement pursuant to which the Escrow Agent is holding all documentation required to allot Sadot Agri-Foods 70 % of Sadot Zambia, documentation required to transfer the Farm to Sadot Zambia and USD $ 3.5 million contributed by Sadot Agri-Foods.

At closing, the Escrow Agent will release the required funds to ABSA Bank and release the required documentation with respect to the allocation of Sadot Agri-Foods’ interest in Sadot Zambia and the transfer of the Farm.

Closing is subject to obtaining clearance from the Zambian Competition and Consumer Protection Commission.

Property and Equipment

2 unchanged sentences

Depreciation and amortization expenses are calculated on the straight-line basis over the estimated useful lives of the assets.

Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset.

The estimated useful lives are as follows:

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If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

As of June 30, 2023 and December 31, 2022, the Company deemed the conversion feature was not required to be bifurcated and recorded as a derivative liability.

Related Parties

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2023 and December 31, 2022, the Company deemed the conversion feature was not required to be bifurcated and recorded as a derivative liability.

Related Parties

A party is considered to be related to the Company if the party directly, indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.

12 unchanged sentences

Commodity Sales

Commodity sale revenue is generated by our Sadot subsidiary and is recognized when the commodity is delivered as evidenced by the bill of lading and the invoice is prepared and submitted to the customer.

During the three months ended March 31, 2023, the Company recorded Commodity sales revenues of $ 210.4 million.

The Company did not have any Commodity sales revenue during the three months ended March 31, 2022.

Commodity sale revenue is generated by our Sadot Agri-Foods subsidiary and is recognized when the commodity is delivered as evidenced by the bill of lading and the invoice is prepared and submitted to the customer.

During the three and six months ended June 30, 2023, the Company recorded Commodity sales revenues of $ 157.6 million and $ 367.9 million, respectively.

The Company did not have any Commodity sales revenue during the three and six months ended June 30, 2022.

Restaurant Sales

Retail store revenue at Company-operated restaurants is recognized when payment is tendered at the point of sale, net of sales tax, discounts and other sales-related taxes.

The Company recorded retail store revenues of $ 2.3 million and $ 2.7 million during the three months ended March 31, 2023 and 2022, respectively.

The Company recorded retail store revenues of $ 2.5 million and $ 4.8 million during the three and six months ended June 30, 2023 and $ 2.8 million and $ 5.4 million for the three and six months ended June 30, 2022, respectively.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances.

4 unchanged sentences

The Company recognizes the royalties as the underlying sales occur.

The Company recorded revenue from royalties of $ 0.2 million and $ 0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company recorded revenue from royalties of $ 0.2 million and $ 0.3 million during the three and six months ended June 30, 2023 and $ 0.1 million and $ 0.2 million during the three and six months ended June 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company provides the franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for the multi-unit development fees and initial franchise fees.

The Company capitalizes these fees upon collection from the franchisee.

These initial fees are then recognized as franchise fee revenue on a straight-

These initial fees are then recognized as franchise fee revenue on a straight-line basis over the life of the related franchise agreements and any exercised renewal periods.

Cash payments are due upon the execution of the related franchise agreement.

The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

line basis over the life of the related franchise agreements and any exercised renewal periods.

Cash payments are due upon the execution of the related franchise agreement.

The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement.

the life of each franchise agreement.

If a franchise location closes or a franchise agreement is terminated for any reason, the unrecognized revenue will be recognized in full at that time.

The Company recorded revenue from initial franchise fees of $ 0.1 million and $ 49.0 thousand during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company recorded revenue from initial franchise fees of $ 23.0 thousand and $ 0.1 million during the three and six months ended June 30, 2023 and $ 15.3 thousand and $ 0.1 million for the three and six months ended June 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company has supply agreements with certain food and beverage vendors.

1 unchanged sentence

Rebates earned on purchases by franchise stores are recorded as revenue during the period in which the related food and beverage purchases are made.

The Company recorded revenue from rebates of $ 26.0 thousand and $ 0.1 million during the three months ended March 31, 2023 and 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company recorded revenue from rebates of $ 30.0 thousand and $ 0.1 million during the three and six months ended June 30, 2023 and $ 26.2 thousand and $ 0.1 million for the three and six months ended June 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations.

Rebates earned on purchases by Company-owned stores are recorded as a reduction of Food and beverage costs during the period in which the related food and beverage purchases are made.

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Conversely, when an advertising contribution fund is under-spent at a period-end, the Company will accrue advertising costs up to advertising contributions recorded in revenue.

The Company recorded contributions from franchisees of $ 16.0 thousand and $ 18.0 thousand, respectively, during the three months ended March 31, 2023 and 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Company recorded contributions from franchisees of $ 20.0 thousand and $ 36.0 thousand, respectively, during the three and six months ended June 30, 2023 and $ 16.2 thousand and $ 34.3 thousand for the three and six months ended June 30, 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations.

Other Revenues

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The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns.

Gift card liability is recorded in other current liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Gift card liability is recorded in other current liabilities on the Unaudited Condensed Consolidated Balance Sheets The Company had Other revenues of $ 13.0 thousand and $ 13.0 thousand for the three and six months ended June 30, 2023.

Deferred Revenue

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Stock-Based Consulting Expense

Stock-based consulting expenses are for consulting fees due to Aggia related to ongoing Sadot operations and expansion of the global agri-commodities business.

Based on the servicing agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees are calculated at approximately 80.0 % of the Net Income generated by the Sadot business segment.

For the three months ended March 31, 2023, $ 3.4 million is recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations and a corresponding liability is recorded as Accrued stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Balance Sheets.

This expense is expected to be paid in stock in 2023.

Stock-based consulting expenses are for consulting fees due to Aggia related to ongoing Sadot Agri-Foods operations and expansion of the global agri-commodities business.

Based on the initial Services Agreement with Aggia LLC FZ, a Company formed under the laws of United Arab Emirates (“Aggia”), the consulting fees were calculated at approximately 80.0 % of the Net Income generated by the Sadot Agri-Foods business segment through March 31, 2023.

As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0 % of the Net income generated by the Sadot Agri-Foods business segment.

See Note 15 – Commitments and contingencies for further details.

For the three and

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

six months ended June 30, 2023, $ 1.1 million and $ 4.4 million, respectively, are recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Advertising costs are charged to expense as incurred.

Advertising costs were $ 0.1 million and $ 33.0 thousand for the three months ended March 31, 2023 and 2022, respectively, are included in Sales, general and administrative expenses and $ 40.0 thousand and $ 0.1 million, respectively, are included in Other restaurant operating expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the exercise of warrants, options or the conversion of convertible notes payable.

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

Advertising costs of $ 32.0 thousand and $ 0.1 million for the three and six months ended June 30, 2023 and $ 0.8 thousand and $ 0.1 million for the three and six months ended June 30, 2022, respectively, are included in Sales, general and administrative expenses.

For the three and six months ended June 30, 2023 and 2022, $ 76.0 thousand, $ 0.1 million, $ 0.1 million and $ 0.2 million, respectively, are included in Other restaurant operating expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Net Income / Loss per Share

Basic earnings per common share is computed using the weighted average number of common shares outstanding during the period.

Diluted earnings per common share is computed using the weighted average number of common shares outstanding during the period plus any potentially dilutive common shares, resulting from the exercise of warrants, options or the conversion of convertible notes payable, calculated using the treasury stock method.

The following securities are excluded from the calculation of weighted average diluted common shares at June 30, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive:

Warrants 18,034 17,874

Options 1,013 413

Restricted stock awards 8,001 —

Convertible debt 24 27

Total potentially dilutive shares 27,072 18,314

The following table sets forth the computation of basic and dilutive net loss per share attributable to the Company’s stockholders:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(In thousands, except for share count and per share data)

Net income / (loss) 190 ( 1,774 ) ( 876 ) ( 3,660 )

Weighted-average shares outstanding:

Basic 33,362,887 28,668,116 31,407,362 28,235,052

Effect of potentially dilutive stock options 204,832 — — —

Diluted 33,567,719 28,668,116 31,407,362 28,235,052

Net income / (loss) per share:

Basic 0.01 ( 0.06 ) ( 0.03 ) ( 0.13 )

Diluted 0.01 ( 0.06 ) ( 0.03 ) ( 0.13 )

The Company engages various vendors to purchase commodities for resale and distribute food products to their Company-owned restaurants.

Purchases from the Company’s three largest commodity suppliers totaled 98 % of the Company’s purchases for the three months ended March 31, 2023.

Purchases from the Company’s largest food products supplier totaled 45 % of the Company’s purchases for the three months ended March 31, 2022.

Purchases from the Company’s three largest commodity suppliers totaled 96 % for the three months ended June 30, 2023 and Purchases from the Company’s four largest commodity suppliers totaled 92 % of the Company’s

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

purchases for the six months ended June 30, 2023.

Purchases from the Company’s largest supplier totaled 19 % and 30 % for the three and six months ended June 30, 2022, respectively.

Fair Value of Financial Instruments

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The carrying amounts of accrued liabilities approximate fair value due to the short-term nature of these instruments.

The carrying amounts of our short–term credit obligations approximate fair value because the effective yields on these

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of common stock and warrants, are comparable to rates of returns for instruments of similar credit risk.

The carrying amounts of our short–term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates, taken together with other features such as concurrent issuance of common stock and warrants, are comparable to rates of returns for instruments of similar credit risk.

See Note 17 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

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The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally recorded on the grant date and re-measured on financial reporting dates and vesting dates until the service period is complete.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

and vesting dates until the service period is complete.

The fair value amount of the award is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period.

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Targeted Improvements, which allows companies to adopt Topic 842 without revising comparative period reporting or disclosures and provides an optional practical expedient to lessors to not separate lease and non-lease components of a contract if certain criteria are met;

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

• ASU 2019-01, Leases (Topic 842):

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The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended subsequently by ASUs 2018-19, 2019-04, 2019-05, 2019-10, 2019-11 and 2020-03.

The guidance in the ASUs requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used.

The standard also establishes additional disclosures related to credit risks.

This standard is effective for fiscal years beginning after December 15, 2022.

The adoption of this guidance on January 1, 2023 did not have a material impact on the Company's Unaudited Condensed Consolidated Financial Statements and related disclosures.

Subsequent Events

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Based upon the evaluation and transactions, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Financial Statements, except as disclosed in Note 19 – Subsequent events .

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Loans Receivable

The Company had no loan receivable balance at March 31, 2023 and December 31, 2022.

The Company had no loan receivable balance at June 30, 2023 and December 31, 2022.

Loans receivable include loans to franchisees totaling, in the aggregate, net of reserves for uncollectible loans.

There were no reserves for uncollectible loans at March 31, 2023 and $ 0.1 million at March 31, 2022.

There were no reserves for uncollectible loans at June 30, 2023 and December 31, 2022.

Loans receivable were paid in full during the third quarter of 2022 and the corresponding reserve for loan loss was reversed.

Prepaid Expenses and Other Current Assets

At March 31, 2023 and December 31, 2022, the Company’s prepaid expenses and other current assets consists of the following:

March 31, 2023 December 31, 2022

At June 30, 2023 and December 31, 2022, the Company’s prepaid expenses and other current assets consists of the following:

June 30, 2023 December 31, 2022

Prepaid expenses 314 89

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Prepaid and Other Current Assets 319 317

Included in prepaid and other current assets is a receivable of $ 17.0 thousand and $ 0.2 million as of March 31, 2023 and December 31, 2022, respectively.

The receivable reduced Labor expense for 2021 included in Restaurant operating expenses, related to the employee retention tax credits receivable from the Internal Revenue Services (“IRS”) that was made available to companies effected by COVID-19.

The Company started to early access the credit in the fourth quarter of 2021 as allowed by the IRS.

Included in prepaid and other current assets is a receivable of $ 5.0 thousand and $ 0.2 million as of June 30, 2023 and December 31, 2022, respectively.

Deposit on Farmland

At December 31, 2022, the Company's deposit on farmland balance was $ 4.9 million.

At March 31, 2023, the Company gave an additional $ 0.1 million deposit, totaling $ 5.0 million deposit on farmland balance.

Deposit on farmland consists of

During the six months ended June 30, 2023, the Company gave an additional $ 3.9 million deposit, totaling $ 8.8 million deposit on farmland balance.

Deposit on farmland consists of funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot Agri-Foods subsidiary.

The Company has entered into a letter of intent with a deposit to purchase developed farmland.

The Company is still in final negotiations awaiting government approval with the intent to finalize the agreement by the end of the third quarter of 2023.

On May 16, 2023, the Company through its wholly owned subsidiary, Sadot Agri-Foods, entered into the “Variation Agreement with ZPG and Cropit pursuant to which ZPG assigned all of its rights, liabilities and obligations of the Put Land Agreement to Sadot Agri-Foods, which provided ZPG with a one year call option to acquire 70 % of the Farm for a purchase price of approximately $ 8.5 million USD.

On May 16, 2023, Sadot Agri-Foods and Cropit entered into Joint Venture Shareholders Agreement pursuant to which the parties agreed to form Sadot Zambia with Sadot Agri-Foods holding 70 % of the equity and Cropit holding 30 % of the equity.

Following its formation, Sadot Zambia will hold 100 % of the Farm.

Sadot Agri-Foods and Cropit will each have the right to appoint one director to the Board of Directors of Sadot Zambia.

Further, upon formation, Sadot Agri-Foods contributed $ 3.5 million into escrow for the primary purpose of discharging a loan secured by the Farm held by ABSA Bank.

On May 16, 2023, Sadot Agri-Foods and the Escrow Agent entered into an Escrow Agreement pursuant to which the Escrow Agent will hold all documentation required to allot Sadot Agri-Foods 70 % of Sadot Zambia, documentation required to transfer the Farm to Sadot Zambia and USD $ 3.5 million contributed by Sadot Agri-Foods.

Closing is subject to obtaining clearance from the Zambian Competition and Consumer Protection Commission.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

funds paid as a deposit with the intent to acquire farmland in Africa by our Sadot subsidiary.

The Company has entered into a letter of intent with a deposit to purchase undeveloped farmland.

The Company is still in final negotiations with the intent to finalize the agreement by the end of the second quarter of 2023.

Property and Equipment, Net

As of March 31, 2023 and December 31, 2022, Property and equipment consist of the following:

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, Property and equipment consist of the following:

June 30, 2023 December 31, 2022

Furniture and equipment 1,170 1,266

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Property and equipment, net 1,497 1,895

Depreciation expense amounted to $ 0.3 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

During the three months ended March 31, 2023 there were no write off's related to Property and equipment.

For the three months ended March 31, 2022, the Company wrote off Property and equipment with an original cost value of $ 0.4 million, related to closed locations and future locations that were terminated due to the economic environment as a result of COVID-19 and increased Labor and Food cost and recorded a loss on disposal of $ 0.2 million, after accumulated depreciation of $ 0.1 million, in the Unaudited Condensed Consolidated Statement of Operations.

Depreciation expense amounted to $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2023 and $ 0.1 million and $ 0.3 million during the three and six months ended June 30, 2022, respectively.

During the three and six months ended June 30, 2023 the Company wrote off property and equipment with an original cost value of $ 0.5 million and $ 0.5 million, respectively and $ 36.7 thousand and $ 0.4 million for the three and six months ended June 30, 2022.

For the three and six months ended June 30, 2022, the Company wrote off Property and equipment related to closed locations and future locations that were terminated due to the economic environment as a result of COVID-19 and recorded a loss on disposal of $ 26.9 thousand and $ 0.3 million, respectively, and $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2023, respectively, in the Unaudited Condensed Consolidated Statement of Operations.

Goodwill and Other Intangible Assets, Net

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6,387 — ( 708 ) 5,679 4,611 — ( 592 ) 4,019

Amortization expense related to intangible assets was $ 0.3 million and $ 0.4 million for the three months ended March 31, 2023 and 2022, respectively.

Amortization expense related to intangible assets was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023 and $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2022, respectively.

Muscle Maker, Inc.

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The estimated future amortization expense is as follows:

Three Months Ended March 31,

Six Months Ended June 30,

2024 2025 2026 2027 2028 Thereafter Total

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514 950 594 499 465 997 4,019

The Company determined that no impairment testing of the Company’s intangible assets was required as of March 31, 2023.

The Company determined that no impairment testing of the Company’s intangible assets was required as of June 30, 2023.

Therefore, no impairment charge was recorded.

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Impairment of goodwill — — — —

Goodwill, net at March 31, 2022 570 1,798 258 2,626

Goodwill, net at June 30, 2022 570 1,798 258 2,626

Goodwill, net at December 31 2022 570 1,798 258 2,626

Impairment of goodwill — — — —

Goodwill, net at March 31, 2023 570 1,798 258 2,626

The Company determined that no impairment testing of the Company’s goodwill was required as of March 31, 2023.

Goodwill, net at June 30, 2023 570 1,798 258 2,626

The Company determined that no impairment testing of the Company’s goodwill was required as of June 30, 2023.

Therefore, no impairment charge was recorded.

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Accounts payables and accrued expenses consist of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Accounts payable 860 1,085

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Accrued expenses 170 87

Accrued interest expenses 21 —

Accrued professional fees 166 185

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Accrued Stock-Based Consulting Expenses Due to Related Party

At March 31, 2023, Accrued stock-based consulting expenses due to related party was $ 3.4 million.

At December 31, 2022, Accrued stock-based consulting expenses was $ 3.6 million.

Accrued stock-based consulting expenses are related to consulting fees due to our newly established related party, Aggia, for Sadot operations.

At June 30, 2023, there were no Accrued stock-based consulting expenses due to related party.

At December 31, 2022, Accrued stock-based consulting expenses were $ 3.6 million.

Accrued stock-based consulting expenses were related to consulting fees due to our newly established related party, Aggia, for Sadot Agri-Foods operations.

See Note 18 – Related party transactions for details.

Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 80.0 % of the Net income generated by the Sadot business segment.

For the three months ended March 31, 2023, $ 3.4 million are also recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Stock-based consulting expense that is due to related party is expected to be paid in stock in 2023.

Based on the servicing agreement with Aggia, the consulting fees were calculated at approximately 80.0 % of the Net income generated by the Sadot Agri-Foods business segment.

For the three and six months ended June 30, 2023, $ 1.1 million and $ 4.4 million are also recorded as Stock-based consulting expense in the accompanying Unaudited Condensed Consolidated Statements of Operations.

The Stock-based consulting expense that was due to related party was paid in stock in 2023.

Notes Payable

Line of Credit

On April 28, 2023 the Company entered into a line of credit agreement with a bank whereby it may borrow up to $ 3.5 million at 3.00 % per year.

The line of credit commitment expires August 2023.

At June 30, 2023, the balance outstanding on the line of credit was $ 3.5 million.

Convertible Notes Payable

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On April 11, 2018, the Former Parent elected to partially convert the 2018 ARH Note for the principal of $ 0.4 million into 0.1 million shares of the Company’s common stock.

The Company had an aggregate gross amount of $ 0.1 million and $ 0.1 million of convertible notes payable as of March 31, 2023 and December 31, 2022 included in notes payable on the Unaudited Condensed Consolidated Balance Sheets.

The Company had an aggregate gross amount of $ 0.1 million and $ 0.1 million of convertible notes payable as of June 30, 2023 and December 31, 2022, respectively.

Other Notes Payable

During the three months ended March 31, 2023 and 2022, the Company repaid a total amount of $ 0.1 million and $ 1.3 million, respectively, of the other notes payable.

As of March 31, 2023, the Company had an aggregate amount of $ 0.9 million in other notes payable.

The notes had interest rates ranging between 3.75 % - 8.00 % per annum, due on various dates through May 2027.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The maturities of notes payable as of March 31, 2023, are as follows:

During the three and six months ended June 30, 2023, the Company repaid a total amount of $ 0.1 million and $ 0.1 million, and $ 0.1 million and $ 1.2 million for the three and six months ended June 30, 2022, respectively, of the other notes payable.

As of June 30, 2023, the Company had an aggregate amount of $ 4.4 million in other notes payable.

The notes had interest rates ranging between 3.00 % - 8.00 % per annum, due on various dates through May 2027.

The maturities of notes payable as of June 30, 2023, are as follows:

Principal Amount

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The leases generally have remaining terms of 1 - 10 years and most leases included the option to extend the lease for an additional 5 years.

The total lease cost associated with right of use assets and operating lease liabilities for the three months ended March 31, 2023, was $ 0.1 million and has been recorded in the Unaudited Condensed Consolidated Statement of Operations as Rent expense within Restaurant operating expenses.

The total lease cost associated with right of use assets and operating lease liabilities for the three and six months ended June 30, 2023, was $ 0.2 million and $ 0.4 million and $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively, and has been recorded in the Unaudited Condensed Consolidated Statement of Operations as Rent expense within Restaurant operating expenses.

The assets and liabilities related to the Company’s leases were as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Right to use asset 2,059 2,433

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below presents the future minimum lease payments under the noncancellable operating leases as of March 31, 2023:

The table below presents the future minimum lease payments under the noncancellable operating leases as of June 30, 2023:

Operating Leases

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The Company’s lease term and discount rates were as follows:

As of March 31, 2023

As of June 30, 2023

Weighted-average remaining lease term (in years)

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The Company's deferred revenue consists of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Deferred revenues, net 1,388 1,371

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Other current liabilities consist of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Gift card liability 13 25

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See Note 2 – Significant accounting policies for details related to the gift card liability and advertising fund liability.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of March 31, 2023 and December 31, 2022 are presented below:

March 31, 2023 December 31, 2022

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of June 30, 2023 and December 31, 2022 are presented below:

June 30, 2023 December 31, 2022

Deferred tax assets:

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Intangible assets 386 314

Right to use asset 471 —

Deferred revenues 267 204

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Property and equipment ( 163 ) ( 160 )

Right to use liability ( 442 ) —

Gross deferred tax liabilities ( 605 ) ( 160 )

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The income tax expense for the periods shown consist of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

State and local:

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A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the periods shown, are as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Federal income tax benefit at statutory rate 21.0 % 21.0 %

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The net operating loss carryforwards generated prior to 2018, if not utilized, will expire from 2035 to 2037 for federal and state purposes.

As of March 31, 2023 and December 31, 2022, the Company has determined that it is more likely than not that the Company will not recognize the future tax benefit of the loss carryforwards and has recognized a valuation allowance of $ 11.2 million and $ 11.0 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company has determined that it is more likely than not that the Company will not recognize the future tax benefit of the loss carryforwards and has recognized a valuation allowance of $ 11.2 million and $ 11.0 million, respectively.

The valuation allowance increased by approximately $ 0.2 million.

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Commitments and Contingencies

Farmland Purchase Agreement

On May 16, 2023, the Company through its wholly owned subsidiary, Sadot Agri-Foods, entered into the Variation Agreement with ZPG and Cropit pursuant to which ZPG assigned all of its rights, liabilities and obligations of the Put Land Agreement to Sadot Agri-Foods, which provided ZPG with a one year call option to acquire 70 % of the Farm for a purchase price of approximately $ 8.5 million USD.

On May 16, 2023, Sadot Agri-Foods and Cropit entered into 70 % of the equity and Cropit holding 30 % of the equity.

Following its formation, Sadot Zambia will hold 100 % of the Farm.

Sadot Agri-Foods and Cropit will each have the right to appoint one director to the Board of Directors of Sadot Zambia.

Further, upon formation, Sadot Agri-Foods contributed $ 3.5 million into escrow for the primary purpose of discharging a loan secured by the Farm held by ABSA Bank.

On May 16, 2023, Sadot Agri-Foods, the Escrow Agent entered into an Escrow Agreement pursuant to which the Escrow Agent will hold all documentation required to allot Sadot Agri-Foods 70 % of Sadot Zambia, documentation required to transfer the Farm to Sadot Zambia and USD $ 3.5 million contributed by Sadot Agri-Foods.

Closing is subject to obtaining clearance from the Zambian Competition and Consumer Protection Commission.

Consulting Agreements

On November 14, 2022 (the “Effective Date”), the Company, Sadot and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot engaged Aggia to provide certain advisory services to Sadot for creating, acquiring and managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities.

As consideration for Aggia providing the services to Sadot, the Company agreed to issue shares of common stock of the Company, par value $ 0.0001 per share, to Aggia subject to Sadot generating net income measured on a quarterly basis at per share price of $ 1.5625 , subject to equitable adjustments for any combinations or splits of the common stock occurring following the Effective Date.

Upon Sadot generating net income for any fiscal quarter, the Company shall issue Aggia a number of shares of common stock equal to the net income for such fiscal quarter divided by the per share price (the “Shares”).

On November 14, 2022 (the “Effective Date”), the Company, Sadot Agri-Foods and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot Agri-Foods engaged Aggia to provide certain advisory services to Sadot Agri-Foods for creating, acquiring and managing Sadot Agri-Foods’ business of wholesaling food and engaging in the purchase and sale of physical food commodities.

As consideration for Aggia providing the services to Sadot Agri-Foods, the Company agreed to issue shares of common stock of the Company, par value $ 0.0001 per share, to Aggia subject to Sadot Agri-Foods generating net income measured on a quarterly basis at per share price of $ 1.5625 , subject to equitable adjustments for any combinations or splits of the common stock occurring following the Effective Date.

Upon Sadot Agri-Foods generating net income for any fiscal quarter, the Company shall issue Aggia a number of shares of common stock equal to the net income for such fiscal quarter divided by the per share price (the “Shares”).

The Company may only issue authorized, unreserved shares of common stock.

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The shareholders approved the Services Agreement on February 28, 2023.

In the event that the shares cap has been reached, then the remaining portion of the net income, if any, not issued as shares shall accrue as debt payable by Sadot to Aggia until such debt has reached a maximum of $ 71.5 million.

In the event that the shares cap has been reached, then the remaining portion of the net income, if any, not issued as shares shall accrue as debt payable by Sadot Agri-Foods to Aggia until such debt has reached a maximum of $ 71.5 million.

The Company will prepare the shares earned calculation after the annual audit or quarter review is completed by the auditors.

The shares will be issued within 10 days of the final calculation.

Additionally, for the three months ended March 31, 2023, the Company reimbursed Aggia for all operating costs related to Sadot including labor, operating and general administrative expenses of $ 0.6 million, $ 0.2 million and $ 0.1 million, respectively.

During the three months ended March 31, 2023 and 2022, the Company entered into various Pokemoto franchise agreements for a total of 5 and 11 , respectively, potentially new Pokemoto locations with various franchisees.

The Franchisees paid the Company an aggregate of $ 0.1 million and $ 0.2 million and this has been recorded in deferred revenue as of March 31, 2023 and 2022, respectively.

On July 14, 2023 (the “Addendum Date”), effective April 1, 2023, the parties entered into Addendum 2 to the Services Agreement (“Addendum 2”) pursuant to which the parties amended the compensation that Aggia is entitled.

Pursuant to Addendum 2, on the Addendum Date, the Company issued 8.9 million shares (the “Shares”) of common stock, par value $ 0.0001 per share, of the Company, which such Shares represent 14.4 million Shares that Aggia is entitled to receive pursuant to the Services Agreement less the 5.6 million Shares that have been issued to Aggia pursuant to the Services Agreement as of the Addendum Date.

The Company will not issue Aggia in excess of 14.4 million Shares representing 49.9 % of the number of issued and outstanding shares of common stock as of the effective date of the Services Agreement.

The Shares shall be considered issued and outstanding as of the Addendum Date and Aggia shall hold all rights

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

associated with such Shares.

The Shares vest on a progressive schedule, at a rate equal to the net income of Sadot Agri-Foods, calculated quarterly divided by $ 3.125 , which for accounting purposes shall equal 40 % of the net income of Sadot Agri-Foods, calculated quarterly divided by $ 1.25 .

During the 30 day period after July 14, 2028 (the “Share Repurchase Date”), Aggia may purchase any Shares not vested.

All Shares not vested or purchased by Aggia, shall be repurchased by the Company from Aggia at per share price of $ 0.001 per share.

Further, the parties clarified that the Lock Up Agreement previously entered between the Company and Aggia dated November 16, 2022 shall be terminated on May 16, 2024 provided that any Shares that have not vested or been purchased by Aggia may not be transferred, offered, pledged, sold, subject to a contract to sell, granted any options for the sale of or otherwise disposed of, directly or indirectly.

Following the Share Repurchase Date, in the event that there is net income for any fiscal quarter, then an amount equal to 40 % of the net income shall accrue as debt payable by Sadot Agri-Foods to Aggia (the “Debt”), until such Debt has reached a maximum of $ 71.5 million.

Additionally, for the three months ended June 30, 2023, the Company reimbursed Aggia for all operating costs related to Sadot Agri-Foods operating expenses related to Sadot Agri-Foods including labor and operating expenses of $ 0.8 million and $ 0.2 million, respectively.

For the six months ended June 30, 2023, the Company reimbursed Aggia for all operating costs related to Sadot Agri-Foods including labor, operating and general administrative expenses of $ 1.4 million, $ 0.3 million and $ 0.1 million, respectively.

During the three and six months ended June 30, 2023, the Company entered into various Pokemoto franchise agreements for a total of 8 and 13 , respectively, compared to 4 and 17 during the three and six months ended June 30, 2022, respectively.

potentially new Pokemoto locations with various franchisees.

The Franchisees paid the Company an aggregate of $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2023 and this has been recorded in deferred revenue as of June 30, 2023.

Master Franchise Agreement

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The Company failed in certain instances in paying past state and local sales taxes collected from customers in specific states that impose a tax on sales of the Company’s products during 2017 and 2018.

As of the second quarter 2022, all past

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

due tax on sales from 2017 and 2018 has been paid in full.

The Company had accrued a sales tax liability for approximately $ 0.1 million and $ 44.6 thousand as of March 31, 2023, and December 31, 2022, respectively.

As of the second quarter 2022, all past due tax on sales from 2017 and 2018 has been paid in full.

The Company had accrued a sales tax liability for approximately $ 0.1 million and $ 44.6 thousand as of June 30, 2023, and December 31, 2022, respectively.

All current state and local sales taxes from January 1, 2018, for open Company-owned locations have been fully paid and in a timely manner.

The Company has completed all the payment plans with the various state or local entities for these past owed amounts.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Litigations, Claims and Assessments

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The contractor is claiming a breach of contract and is seeking $ 33.0 thousand in damages for services claimed to be rendered by the contractor.

The Company accrued $ 30.0 thousand for the liability in accounts payable and accrued expenses as of March 31, 2023 and December 31, 2022.

The Company accrued $ 30.0 thousand for the liability in accounts payable and accrued expenses as of June 30, 2023 and December 31, 2022.

On January 23, 2020, the Company was served a judgment issued by the Judicial Council of California in the amount of $ 0.1 million for a breach of a lease agreement in Chicago, Illinois, in connection with a Company-owned store that was closed in 2018.

As of March 31, 2023 and December 31, 2022, the Company has accrued for the liability in accounts payable and accrued expenses.

As of June 30, 2023 and December 31, 2022, the Company has accrued for the liability in accounts payable and accrued expenses.

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business.

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Black will be entitled to an additional bonus of $ 0.1 million upon the Company obtaining approval of the Shareholder Matters and $ 25.0 thousand upon the Designated Directors representing a majority of the Board of Directors.

Black is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

exercise any equity compensation rights through the last day of the term applicable to such stock option.

Black is terminated for any reason, she will be entitled to receive accrued salary and vacation pay, accrued bonus payments, all expense reimbursements and shall be entitled to exercise any equity compensation rights through the last day of the term applicable to such stock option.

Black is terminated by the Company for any reason other than cause or resigns for a good reason, Ms.

Black will be entitled to a severance payment equal to 36 months of salary, which will be reduced to six months following the second anniversary of the Black Agreement, and all equity compensation shall be fully accelerated.

In the event the Shareholder Matters are not approved by the shareholders, the Black Agreement will automatically terminate and the prior employment agreement will again be in full effect.

In the event the Shareholder Matters are not

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

approved by the shareholders, the Black Agreement will automatically terminate and the prior employment agreement will again be in full effect.

On November 16, 2022, the Company entered into an Executive Employment Agreement with Kenneth Miller (the “Miller Agreement”), which replaced his prior employment agreement.

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See Note 1 – Business organization and nature of operations for descriptions of our operating segments.

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2023:

For the Three Months Ended March 31, 2023

Restaurant division Sadot division Corporate adj.

The following table sets forth the results of operations for the relevant segments for the three and six months ended June 30, 2023:

For the Three Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

Total segments

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Franchise advertising fund contributions 20 — — 20

Other revenues 13 — — 13

Total revenues 2,758 157,559 — 160,317

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(Loss) / income from operations ( 186 ) 2,681 ( 2,855 ) ( 360 )

Other Income / (Expense):

Other income — — 251 251

Interest expense, net ( 1 ) ( 20 ) ( 1 ) ( 22 )

Change in fair value of accrued compensation — — 324 324

Total other income / (expense), net ( 1 ) ( 20 ) 574 553

(Loss) / Income Before Income Tax ( 187 ) 2,661 ( 2,281 ) 193

Income tax 1 — 2 3

Net (loss) / income ( 188 ) 2,661 ( 2,283 ) 190

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Six Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

Total segments

$’000 $’000 $’000 $’000

Commodity sales — 367,925 — 367,925

Company restaurant sales, net of discounts 4,788 — — 4,788

Franchise royalties and fees 522 — — 522

Franchise advertising fund contributions 36 — — 36

Other revenues 13 — — 13

Total revenues 5,359 367,925 — 373,284

Operating Costs and Expenses:

Commodity operating expenses:

Commodity cost — 358,295 — 358,295

Labor — 1,472 — 1,472

Other commodity operating expenses — 639 — 639

Total commodity operating expenses — 360,406 — 360,406

Restaurant operating expenses:

Food and beverage costs 1,706 — — 1,706

Labor 1,836 — — 1,836

Rent 564 — — 564

Other restaurant operating expenses 1,023 — — 1,023

Total restaurant operating expenses 5,129 — — 5,129

Depreciation and amortization expenses 469 — 605 1,074

Franchise advertising fund expenses 36 — — 36

Pre-opening expenses 36 — — 36

Post-closing expenses 112 — 1 113

Stock-based consulting expenses — — 4,427 4,427

Sales, general and administrative expenses 171 587 3,272 4,030

Total costs and expenses 5,953 360,993 8,305 375,251

(Loss) / income from operations ( 594 ) 6,932 ( 8,305 ) ( 1,967 )

Other Income:

Other income — — 251 251

Interest income / (expense), net 2 ( 21 ) — ( 19 )

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2022:

For the Three Months Ended March 31, 2022

Restaurant division Sadot division Corporate adj.

The following table sets forth the results of operations for the relevant segments for the three and six months ended June 30, 2022:

For the Three Months Ended June 30, 2022

Restaurant division Sadot agri-foods Corporate adj.

Total segments

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Loss from operations ( 388 ) — ( 1,349 ) ( 1,737 )

Other Income / (Expense):

Other income / (expense) 10 — ( 25 ) ( 15 )

Interest expense, net ( 5 ) — ( 5 ) ( 10 )

Total other income / (expense), net 5 — ( 30 ) ( 25 )

Loss Before Income Tax ( 383 ) — ( 1,379 ) ( 1,762 )

Income tax — — 12 12

Net loss ( 383 ) — ( 1,391 ) ( 1,774 )

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Six Months Ended June 30, 2022

Restaurant division Sadot agri-foods Corporate adj.

Total segments

$’000 $’000 $’000 $’000

Company restaurant sales, net of discounts 5,445 — — 5,445

Franchise royalties and fees 132 — 239 371

Franchise advertising fund contributions — — 34 34

Total revenues 5,577 — 273 5,850

Operating Costs and Expenses:

Restaurant operating expenses:

Food and beverage costs 2,145 — ( 2 ) 2,143

Labor 1,976 — — 1,976

Rent 667 — — 667

Other restaurant operating expenses 1,338 — — 1,338

Total restaurant operating expenses 6,126 — ( 2 ) 6,124

Depreciation and amortization expenses 243 — 722 965

Franchise advertising fund expenses — — 34 34

Sales, general and administrative expenses 287 — 2,164 2,451

Total costs and expenses 6,656 — 2,918 9,574

Loss from operations ( 1,079 ) — ( 2,645 ) ( 3,724 )

Other Income:

Other income / (expense) 12 — ( 46 ) ( 34 )

Interest income / (expense), net 3 — ( 21 ) ( 18 )

Interest expense, net ( 2 ) — ( 26 ) ( 28 )

Gain on debt extinguishment 140 — — 140

3 unchanged sentences

Net loss ( 929 ) — ( 2,731 ) ( 3,660 )

With the creation of our Sadot subsidiary in late 2022, we began to transform from a U.S.-centric restaurant business into a global, food-focused organization with two distinct segments.

As a result, we have reevaluated and changed our operating segments during the three months ended March 31, 2023.

With the creation of our Sadot Agri-Foods subsidiary in late 2022, we began to transform from a U.S.-centric restaurant business into a global, food-focused organization with two distinct segments.

As a result, we have reevaluated and changed our operating segments early in 2023.

Previously we split out Muscle Maker Grill, Pokemoto, and SuperFit Foods as their own restaurant operating segments.

Since Sadot's operations is primarily in commodities trading and is such a large portion of the Companies business, the Company segregated it into its own segment and combined all restaurant operations into a segment.

Since Sadot Agri-Foods' operations is primarily in commodities trading and is such a large portion of the Company’s business, the Company segregated it into its own segment and combined all restaurant operations into a segment.

On June 22, 2023, the Company created the new subsidiary, Sadot Latam LLC, which has e xpanded its agri-commodity sourcing and trading operations into North, Central and South America, further diversifying the Company’s geographic reach beyond its existing operations in Europe, Asia, the Middle East and Africa.

This new line of business is included within the Sadot Agri-Foods segment in the tables above.

The Company will continue to evaluate its operating segments and update as necessary.

Stock Option and Stock Issuance Plan

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing.

Stock Option and Stock Issuance Plan

The Company’s board of directors and shareholders approved and adopted on October 7, 2021 the 2021 Equity Incentive Plan (“2021 Plan”), effective on September 16, 2020 under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing.

Under the 2021 Plan, the Company reserved 1.5 million shares of common stock for issuance.

As of March 31, 2023, 1.2 million shares have been issued and 0.3 million options to purchase shares have been awarded under the 2021 Plan.

As of June 30, 2023, 0.7 million shares have been issued and 0.8 million options to purchase shares have been awarded under the 2021 Plan.

The Company’s board of directors and shareholders approved and adopted on February 28, 2023 the 2023 Equity Incentive Plan (“2023 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock Units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing.

Under the 2023 Plan, the Company reserved 2.5 million shares of common stock for issuance.

As of March 31, 2023 no shares have been issued and 68.9 thousand option to purchase shares have been awarded under the 2023 Plan.

As of June 30, 2023 0.2 million shares have been issued and 0.1 million option to purchase shares have been awarded under the 2023 Plan.

Common Stock Issuances

On January 6, 2022, the Company authorized the issuance of an aggregate of 39.6 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022.

The Company accrued for the liability as of March 31, 2022.

The Company accrued for the liability as of June 30, 2022.

On January 18, 2022, the Company issued an aggregate of 30.0 thousand shares of common stock of the Company to a consultant that assisted with the acquisition of SuperFit Foods and Pokemoto, with an aggregate fair value amount of $ 15.6 thousand.

The Company accrued for the liability as of March 31, 2022.

The Company accrued for the liability as of June 30, 2022.

On March 31, 2022, the Company authorized the issuance of an aggregate of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2022.

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On November 29, 2022, the Company authorized the issuance of an aggregate of 0.4 million shares of common stock in connection with the exercise of pre-funded warrants.

On January 5, 2023, the Company authorized the issuance of an aggregate of 31.3 thousand shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2022.

On March 27, 2023, the Company authorized the issuance of 2.8 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2022.

Change in fair vale of accrued compensation on the Unaudited Condensed Consolidated Statement of Operations is made up of the difference between the agreed upon issuance price, per the servicing agreement with Aggia and the market price

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

on the day of issuance.

For three months ended March 31, 2023, Change in fair value of accrued compensation was $ 0.5 million.

On March 27, 2023, the Company authorized the issuance of 2.8 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2022.

On May 25, 2023, the Company authorized the issuance of 2.7 million shares of common stock to Aggia as consulting fees earned during the first quarter of 2023.

Change in fair value of accrued compensation on the Unaudited Condensed Consolidated Statement of Operations is made up of the difference between the agreed upon issuance price, per the servicing agreement with Aggia and the market price on the day of issuance.

For three and six months ended June 30, 2023, Change in fair value of accrued compensation was $ 0.3 million and $ 0.9 million, respectively.

Private Placements

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On November 17, 2021, the Company entered into a Securities Purchase Agreement with accredited investors (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investors (the “Purchasers”) agreed to purchase from the Company for an aggregate purchase price of approximately $ 15.0 million (i) 6.8 million shares (the “Shares”) of common stock, par value $ 0.0001 per share, of the Company (the “common stock”) (ii) a common stock purchase warrant to purchase up to 10.8 million shares of common stock (the “common warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “pre-funded warrant”).

Each share and accompanying common warrant were being sold together at a combined offering price of $ 1.385 per share and common warrant, and each pre-funded warrant and accompanying Common Warrant is being sold together at a combined offering price of $ 1.3849 per pre-funded warrant and accompanying common warrant.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

a combined offering price of $ 1.3849 per pre-funded warrant and accompanying common warrant.

The pre-funded warrant is immediately exercisable, at a nominal exercise price of $ 0.0001 per share, and may be exercised at any time until the pre-funded warrant is fully exercised.

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Pursuant to the Securities Purchase Agreement, the Company is required to register the resale of the shares and the shares issuable upon exercise of the common warrant and the pre-funded warrant.

The Company was required to prepare and file a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and used

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

The Company was required to prepare and file a registration statement with the Securities and Exchange Commission within 30 days of the date of the Securities Purchase Agreement and used commercially reasonable efforts to have the registration statement declared effective within 90 days of the closing of the Private Placement.

Pursuant to a placement agency agreement, dated November 17, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0 % of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of Common Stock in an amount equal to 4.0 % of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, which warrant has an exercise price of $ 1.662 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date.

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The warrants for the November 17, 2021, private placement for the Placement Agents were issued in the fourth quarter of 2022.

Restricted Stock Awards

Per Addendum 2, on July 14, 2023, the Company issued Restricted Share Awards ("RSA's") to Aggia.

For further information see Note 19 – Subsequent events.

These RSA are considered issued as of the effective date on April 1, 2023.

Pursuant to the Services Agreement these RSA's vest on a progressive schedule, at a rate equal to the Net Income of Sadot Agri-Foods, calculated quarterly divided by $ 3.125 , which for accounting purposes shall equal 40 % of the net income of Sadot Agri-Foods, calculated quarterly divided by $ 1.25 .

Shares shall be considered issued and outstanding as of the Addendum Date and Aggia shall hold rights associated with such Shares;

provided, however, Shares not earned or purchased may not be transferred, offered, pledged, sold, subject to a contract to sell, granted any options for the sale of or otherwise disposed of, directly or indirectly.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2023, there was $ 8.0 million restricted stock awards outstanding.

A summary of the activity related to the restricted stock awards, is presented below:

Total RSA's Weighted-average

Outstanding at December 31, 2022 — —

Granted 8,855,452 1.25

Forfeited — —

Vested ( 854,714 ) 1.25

Outstanding at June 30, 2023 8,000,738 1.25

See Note 15 – Commitments and contingencies for further details on Restricted Share Awards.

Warrant and Option Valuation

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On February 27, 2023, the Company issued options to purchase an aggregate of 0.5 million shares of the Company's common stock to officers and directors.

The options had an exercise price of $ 1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

The options had an exercise price of $ 1.51 per share and vest ratably over 20 quarters with the first vesting occurring June 30, 2023.

On March 15, 2023, the Company issued options to purchase 0.1 million shares of the Company's common stock.

The options had an exercise price of $ 1.51 per share and vest ratably over 20 quarters with the first vesting occurring March 31, 2023.

A summary of option activity during the three months ended March 31, 2023 and 2022 is presented below:

The options had an exercise price of $ 1.51 per share and vest ratably over 20 quarters with the first vesting occurring June 30, 2023.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of option activity is presented below:

Weighted-average

4 unchanged sentences

Outstanding, December 31, 2021 5.00 100,000 1.91 —

Issued — — N/A —

Granted 0.41 312,500 5.21 12

Exercised — — N/A —

Forfeited — — N/A —

Outstanding, March 31, 2022 5.00 100,000 1.66 —

Exercisable, March 31, 2022 5.00 100,000 1.66 —

Outstanding, June 30, 2022 1.52 412,500 4.29 —

Expected to vest, June 30, 2022 0.41 296,875 5.21 —

Exercisable and vested, June 30, 2022 4.38 115,625 1.93 —

Outstanding, December 31, 2022 1.52 412,500 3.53 156

Issued 1.51 600,000 6.17 —

Granted 1.51 600,000 5.92 —

Exercised — — N/A —

Forfeited — — N/A —

Outstanding, March 31, 2023 1.52 1,212,500 5.00 206

Exercisable, March 31, 2023 3.00 190,019 1.51 40

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Outstanding, June 30, 2023 1.51 1,012,500 4.75 244

Expected to vest, June 30, 2023 1.17 776,857 5.30 195

Exercisable and vested, June 30, 2023 2.64 235,643 2.92 59

The Company has estimated the fair value of the options using the Black-Scholes model using the following assumptions:

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Risk free interest rate 3.54 - 4.93 %

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On November 29, 2022, the Company issued 0.4 million shares of common stock in connection with the exercising of pre-funded warrants for $ 44 .

A summary of warrants activity during the three months ended March 31, 2023 and 2022 is presented below:

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of warrants activity during the six months ended June 30, 2023 and 2022 is presented below:

warrants Weighted-average

2 unchanged sentences

Outstanding, December 31, 2021 20,284,016 1.66 3.99

Issued — — N/A

Granted — — N/A

Exercised ( 2,410,110 ) — N/A

Forfeited — — N/A

Outstanding, March 31, 2022 17,873,906 $ 1.90 4.30

Exercisable, March 31, 2022 17,873,906 $ 1.90 4.30

Outstanding, June 30, 2022 17,873,906 1.89 4.03

Exercisable, June 30, 2022 17,873,906 1.89 4.03

Outstanding, December 31, 2022 18,033,640 1.93 3.51

Issued — — N/A

Granted — — N/A

Exercised — — N/A

Forfeited — — N/A

Outstanding, March 31, 2023 18,033,640 $ 1.93 3.26

Exercisable, March 31, 2023 18,033,640 $ 1.93 3.26

Outstanding, June 30, 2023 18,033,640 1.93 3.01

Exercisable, June 30, 2023 18,033,640 1.93 3.01

Stock-Based Compensation Expense

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $ 3.4 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively, of which $ 58.7 thousand and $ 0.1 million, respectively, was recorded in Sales, general and administrative expenses.

There was $ 3.4 million recorded in Stock-based consulting expense for the three months ended March 31, 2023.

There were no expenses recorded in Stock-based consulting expense for the three months ended March 31, 2022.

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $ 1.1 million and $ 4.6 million for the three and six months ended June 30, 2023 respectively, of which $ 0.1 million and $ 0.1 million, respectively, was recorded in Sales, general and administrative expenses.

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $ 44.9 thousand and $ 0.1 million, respectively, for the three and six months ended June 30, 2022 of which $ 44.9 thousand and $ 0.1 million was recorded in Sales, general and administrative expenses.

There was $ 1.1 million and $ 4.4 million recorded in Stock-based consulting expense for the three and six months ended June 30, 2023.

There were no expenses recorded in Stock-based consulting expense for the three and six months ended June 30, 2022.

Muscle Maker, Inc.

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Of the 29.3 million shares of Common Stock outstanding on January 19, 2023, the record date, 17.2 million shares were represented at the Special Meeting, in person or by proxy, constituting a quorum.

At the meeting, the shareholders approved (i) the Services Agreement whereby Sadot engaged Aggia, to provide certain advisory services to Sadot for managing Sadot’s business of wholesaling food and engaging in the purchase and sale of physical food commodities (the “Sadot Transaction”);

At the meeting, the shareholders approved (i) the Services Agreement whereby Sadot Agri-Foods engaged Aggia, to provide certain advisory services to Sadot Agri-Foods for managing Sadot Agri-Foods’ business of wholesaling food and engaging in the purchase and sale of physical food commodities (the “Sadot Agri-Foods Transaction”);

(ii) an amendment of the Company’s articles of incorporation to increase the number of authorized shares of common stock from 50.0 million to 150.0 million;

(iii) for purposes of complying with NASDAQ Listing Rule 5635(b), the issuance of the Shares pursuant to the Services Agreement entered between the Company, Sadot and Aggia representing more than 20 % of our common stock outstanding, which would result in a “change of control” of the Company under applicable Nasdaq listing rules;

(iii) for purposes of complying with NASDAQ Listing Rule 5635(b), the issuance of the Shares pursuant to the Services Agreement entered between the Company, Sadot Agri-Foods and Aggia representing more than 20 % of our common stock outstanding, which would result in a “change of control” of the Company under applicable Nasdaq listing rules;

(iv) for purposes of complying with NASDAQ Listing Rule 5635(c), the issuance of up to 14.4 million Shares of Common Stock to Aggia pursuant to the Services Agreement and net income generated thresholds;

1 unchanged sentence

and (vi) the adoption of the 2023 Equity Incentive Plan.

In April of 2023, MMI recognized a related party relationship between newly appointed directors of the Company and Aggia.

As of March 31, 2023, Aggia owned 8.9 % of the Company's commons stock.

While a related party relationship exists, the amounts recognized during the period are immaterial to the Company's consolidated results.

During the three months ended March 31, 2023, the Company recorded Stock-based consulting expense of $ 3.4 million to its related party, Aggia for consulting services rendered.

As of March 31, 2023 the Company accrued stock-based compensation expense due to related party of $ 3.4 million.

In April of 2023, the Company recognized a related party relationship between newly appointed directors of the Company and Aggia.

As of June 30, 2023, Aggia owned 24.7 % of the Company's commons stock.

During the three and six months ended June 30, 2023, the Company recorded Stock-based consulting expense of $ 1.1 million and $ 4.4 million to its related party, Aggia for consulting services rendered.

Additionally, for the three and six months ended June 30, 2023, the Company reimbursed Aggia for all operating costs related to Sadot Agri-Foods of $ 1.0 million and $ 1.8 million, respectively.

The Company will continue to monitor and evaluate its related party transactions to ensure that they are conducted in accordance with applicable laws and regulations and in the best interests of the Company and its shareholders.

2 unchanged sentences

Subsequent Events

Stock Issuance

On April 5, 2023, the Company authorized the issuance of an aggregate of 29.7 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2023.

The Company accrued for the liability as of March 31, 2023.

Appointment of Directors

On April 3, 2023, the Board appointed Marvin Yeo and Paul Sansom to the Board of Directors, effective April 10, 2023.

Repurchase Program

On April 13, 2023, the Company announced that its Board of Directors had approved a share repurchase program.

Under the program, the Company is authorized to purchase shares of its common stock with a value of up to $ 2.0 million in open market transactions at the discretion of management.

Board Issued Stock

On July 11, 2023, the Company authorized the issuance of an aggregate of 32.9 thousand shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2023.

On July 14, 2023 with an effective date of April 1, 2023, the Company amended its current Services Agreement with AGGIA.

The new addendum, among other features, modifies the formula by which the Company will issue shares of common stock earned by AGGIA for net income generated through the Company’s Sadot Agri-Foods division from 80 % of net income to 40 % of net income.

The overall intended effect will be to reduce, by 50 %, the quarterly non-cash expenses related to stock issuances to AGGIA, streamline the reporting processes and is expected to have a favorable impact the Company’s financial performance.

On October 19, 2022, the Company formed Sadot Agri-Foods.

On November 14, 2022, the Company, Sadot Agri-Foods and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot Agri-Foods engaged Aggia to provide certain advisory services to Sadot Agri-Foods for creating, acquiring and managing Sadot Agri-Foods’ business of wholesaling food and engaging in the purchase and sale of physical food commodities.

The closing date of the Services Agreement was November 16, 2022.

The parties entered into Addendum 1 to the Services Agreement on November 17, 2022.

Further, on July 14, 2023 (the “Addendum Date”), effective April 1, 2023, the parties entered into Addendum 2 to the Services Agreement (“Addendum 2”) pursuant to which the parties amended the compensation that Aggia is entitled.

The Shares shall be considered issued and outstanding as of the Addendum Date and Aggia shall hold all rights associated with such Shares.

During the 30 day period after July 14, 2028 (the “Share Repurchase Date”), Aggia may purchase any Shares not vested.

All Shares not vested or purchased by Aggia, shall be repurchased by the Company from Aggia at per share price of $ 0.001 per share.

Company Name Change

Effective July 27, 2023, the Company changed its name to Sadot Group Inc.

The name change was made in accordance with Section 92A.180 of the Nevada Revised Statutes by merging a wholly-owned subsidiary of the Company with and into the Company, with the Company being the surviving corporation in the merger.

The Company effectuated the merger by filing Articles of Merger with the Secretary of State of the State of Nevada.

In connection with the merger, the Company amended Article I of its Articles of Incorporation to change the Company’s corporate name to Sadot Group Inc.

With the exception of the name change, there were no other changes to the Company’s Articles of Incorporation.

Additionally, as of the opening of trading on July 27, 2023, the ticker symbol of the Company’s common stock on The Nasdaq Capital Market will be “SDOT” and the CUSIP number of the Company’s common stock (627333107) will remain unchanged.

The Company’s name and ticker symbol change do not affect the rights of the Company’s security holders, creditors, customers or suppliers.

Following the name change, any stock certificates that reflect the Company’s prior name, if any, will continue to be valid.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Warrant Exercise Agreement

On July 27, 2023 (the “Closing Date”), the Company entered into a Warrant Exercise Agreement (the “Exercise Agreement”) with Altium Growth Fund Ltd.

(the “Exercising Holder”), the holder of outstanding warrants to purchase 2.2 million shares of common stock of the Company issued in November 2021 (collectively, the “Original Warrants”), whereby the Exercising Holder exercised the Original Warrants in consideration of 2.2 million shares of common stock (the “Shares”).

The Company received aggregate gross proceeds before expenses of approximately $ 2.2 million.

In order to induce the Exercising Holder to exercise the Original Warrants, the Company reduced the exercise price on the Original Warrants from $ 1.385 to $ 1.00 per share.

Additional Warrants Issued

In connection with the exercise of the Original Warrants, the Company issued an additional warrant to the Exercising Holder that is exercisable for the number of shares of common stock equal to one hundred percent of the Shares purchased by the Exercising Holder (the “Additional Warrant”).

The Additional Warrant is substantially identical to the Original Warrants, except that the exercise price of the Additional Warrant is $ 2.40 .

The Company is obligated to file a registration statement covering the shares of common stock underlying the warrants within 30 days and to have the registration statement declared effective within 90 days after filing with the Commission.

Line of Credit

On August 1, 2023, the Company paid off its line of credit in the amount of $ 3.5 million.

Promissory Notes

On July 12, 2023, the Company issued a Convertible Promissory Note in the principal amount of $ 0.6 million in consideration of cash in the amount of $ 0.5 million.

The Convertible Promissory Note was paid off in full on July 31, 2023.

On July 18, 2023, the Company issued a Convertible Promissory Note in the principal amount of $ 0.2 million in consideration of cash in the amount of $ 0.2 million.

The Convertible Promissory Note was paid off in full on July 31, 2023.

On July 18, 2023, the Company issued a Convertible Promissory Note in the principal amount of $ 0.2 million in consideration of cash in the amount of $ 0.2 million.

The Convertible Promissory Note was paid off in full on August 2, 2023.

Strategic Restructuring

On August 4, 2023 the Company announced its intention to strategically pivot towards the global food supply chain sector.

The Company plans to reduce restaurant operating expenses by closing underperforming units while refranchising (selling) most of our remaining company-owned units.

We will shift to a franchise, royalty-generating model focused on our successful Pokémoto concept.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements