What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-10 · 413 added, 114 removed, 374 unchanged (58% of the section changed)

1 unchanged sentence

Preliminary Note

The following Management’s Discussion and Analysis (“MD&A”), prepared as of May 10, 2023, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Muscle Maker, Inc., for the three months ended March 31, 2023 together with the audited financial statements of the Company for the year ended December 31, 2022 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2022 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2023.

Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” “Muscle Maker,” “we,” “us,” “our”, “Group” and similar terms refer to Muscle Maker, Inc., together with its consolidated subsidiaries.

Our website address is http://musclemakerinc.com.

The following Management’s Discussion and Analysis (“MD&A”), prepared as of August 9, 2023, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc.

(f/k/a Muscle Maker, Inc.), for the three and six months ended June 30, 2023 together with the audited financial statements of the Company for the year ended December 31, 2022 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2022 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2023.

Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” "Sadot", “Muscle Maker,” “we,” “us,” “our”, “Group” and similar terms refer to Sadot Group, Inc., together with its consolidated subsidiaries.

Our website address is http://sadotgroupinc.com.

The information on, or that can be accessed through, our website is not part of this Report.

11 unchanged sentences

The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “forecast,” “model,” “proposal,” “should,” “may,” “intend,” “estimate,” and “continue,” and similar expressions (or the negative versions of such words or expressions), are intended to identify forward-looking statements.

These forward-looking statements include, without limitation, information concerning Muscle Maker’s possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment and possible growth opportunities .

These forward-looking statements include, without limitation, information concerning Sadot’s possible or assumed future results of operations, business strategies, debt levels, competitive position, industry environment and possible growth opportunities .

We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based.

Reference is made to “Factors That May Affect Future Results and Financial Condition” in this Item 2 for a discussion of some of the uncertainties, risks and assumptions associated with these statements.

Muscle Maker, Inc.

("MMI") is our parent company and is headquartered in Ft.

Sadot Group Inc.

(f/k/a Muscle Maker, Inc.) ("MMI") is our parent company and is headquartered in Ft.

Worth, Texas.

In late 2022, MMI began a transformation from a U.S.-centric restaurant business into a global, food-focused organization with two distinct business units.

Sadot LLC is an international agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat and corn) 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 was formed as part of the Company’s diversification strategy to own and operate, through its subsidiaries, the business lines throughout the food value chain.

Sadot is MMI's largest operating unit.

MMI Restaurant Group has three unique “healthier for you” concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, plus one subscription-based fresh prep meal concept, SuperFit Foods.

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

Sadot LLC (Sadot Agri-Foods") is an international agri-commodities company engaged in trading and shipping of food and feed (e.g., soybean meal, wheat and corn) via dry bulk cargo ships to/from markets such as Argentina, Brazil, Canada, China, Egypt, Guinea, India, Indonesia, Japan, Kenya Malaysia, Philippines, Poland, Romania, Sri Lanka, Ukraine and Vietnam.

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

Sadot Agri-Foods was formed as part of the Company’s diversification strategy to own and operate, through its subsidiaries, the business lines throughout the food value chain.

Sadot Agri-Foods is Sadot Group's largest operating unit.

Sadot Restaurant Group has three unique “healthier for you” concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, plus one subscription-based fresh prep meal concept, SuperFit Foods.

Our Company was founded on the belief of taking every-day menu options and converting them into “healthier for you” menu choices.

2 unchanged sentences

We believe our concepts deliver highly differentiated customer experiences.

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.

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 strategic agreement between Sadot Agri-

Foods’ agri-food 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.

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 / loss of $0.2 million and $0.9 million, respectively.

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 trades and franchise operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

Key Financial Definitions

1 unchanged sentence

Governmental and other economic factors affecting our operations may vary.

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the 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

10 unchanged sentences

The breakout of our main revenue streams by business segment is shown below:

Three Months Ended March 31,

Sadot Division 98.8 % —

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 2023 2022

Sadot agri-foods 98.3 % — 98.6 % —

Restaurant division 1.7 % 100.0 % 1.4 % 100.0 %

43 unchanged sentences

Stock-based Consulting Expenses

Stock-based consulting expenses are related to consulting fees due to Aggia for Sadot operations.

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 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 related to consulting fees due to Aggia for Sadot Agri-Foods operations.

Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 40.0% 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 respectively, are 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 was paid in stock.

Sales, General and Administrative Expenses

5 unchanged sentences

Income taxes represent federal, state and local current and deferred income tax expenses.

Other (Expense) / Income

Other (expense) / income consists of amortization of debt discounts on the convertible notes, interest expense related to notes payable, Change in fair value of accrued compensation and gains on debt extinguishments in connection with the Paycheck Protection Program, (“PPP”) loan forgiveness.

Non-GAAP Measures

7 unchanged sentences

The following table presents a reconciliation of EBITDA and Adjusted EBITDA from the most comparable U.S.

GAAP measure, Net loss, and the calculations of the Net loss Margin and Adjusted EBITDA Margin for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,

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

GAAP measure, Net loss, and the calculations of the Net loss Margin and Adjusted EBITDA Margin for the three and six months ended June 30, 2023 and 2022:

For the Three Months Ended June 30, For the Six Months Ended June 30,

2023 2022 2023 2022

$’000 $’000 $’000 $’000

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

Adjustments to EBITDA:

10 unchanged sentences

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

Net loss Margin (0.5) % (64.6) %

Net income / (loss) Margin 0.1 % (60.5) % (0.2) % (62.6) %

Adjusted EBITDA Margin 0.7 % (42.6) % 0.9 % (47.2) %

Unaudited Condensed Consolidated Results of Operations - Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively:

Three Months Ended March 31, Variance

Unaudited Condensed Consolidated Results of Operations - Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2023 and 2022, respectively:

Three Months Ended June 30, Variance

2023 2022 $ %

4 unchanged sentences

Franchise advertising fund contributions 20 16 4 24.2 %

Other revenues 13 — 13 NM

Total revenues 160,317 2,930 157,387 5371.4 %

13 unchanged sentences

Franchise advertising fund expenses 20 16 4 24.2 %

Pre-opening expenses 36 — 36 NM

Post-closing expenses 19 — 19 NM

3 unchanged sentences

Loss from operations (360) (1,737) 1,377 (79.3) %

Other Income:

Other Income / (Expense):

Other income / (expense) 251 (15) 266 (1773.3) %

Interest income / (expense), net (22) (10) (12) 120.0 %

Change in fair value of accrued compensation 324 — 324 NM

Total other income / (expense), net 553 (25) 578 (2312.0) %

Income / (Loss) Before Income Tax 193 (1,762) 1,955 (111.0) %

Income tax 3 12 (9) (75.0) %

Net income / (loss) 190 (1,774) 1,964 (110.7) %

NM= not meaningful

The following table sets forth our results of operations as a percentage of total revenue for each period presented preceding:

Three Months Ended June 30,

Commodity sales 98.3 % —

Company restaurant sales, net of discounts 1.6 % 93.9 %

Franchise royalties and fees 0.1 % 5.6 %

Franchise advertising fund contributions — 0.5 %

Other revenues — —

Total revenues 100.0 % 100.0 %

Operating Costs and Expenses:

Commodity operating expenses:

Commodity cost 95.6 % —

Labor 0.5 % —

Other commodity operating expenses 0.3 % —

Total commodity operating expenses 96.4 % —

Restaurant operating expenses:

Food and beverage costs 0.5 % 38.1 %

Labor 0.6 % 30.8 %

Rent 0.2 % 11.2 %

Other restaurant operating expenses 0.3 % 23.5 %

Total restaurant operating expenses 1.7 % 103.6 %

Depreciation and amortization expenses 0.3 % 16.7 %

Franchise advertising fund expenses — 0.5 %

Post-closing expenses — —

Stock-based consulting expenses 0.7 % —

Sales, general and administrative expenses 1.2 % 38.5 %

Total costs and expenses 100.2 % 159.3 %

Loss from operations (0.2) % (59.3) %

Other Income / (Expense):

Other income / (expense) — (0.5) %

Interest income / (expense), net — (0.3) %

Change in fair value of accrued compensation 0.2 % —

Gain on debt extinguishment — —

Total other income / (expense), net 0.3 % (0.9) %

Income / (Loss) Before Income Tax 0.1 % (60.1) %

Income tax — 0.4 %

Net income / (loss) 0.1 % (60.5) %

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Commodity sales 157,559 — 157,559 NM

Company restaurant sales, net of discounts 2,487 2,751 (264) (9.6) %

Franchise royalties and fees 238 163 75 46.0 %

Franchise advertising fund contributions 20 16 4 24.2 %

Other revenues 13 — 13 NM

Total revenues 160,317 2,930 157,387 5371.4 %

NM= not meaningful

Our revenues totaled $160.3 million for the three months ended June 30, 2023, compared to $2.9 million for the three months ended June 30, 2022.

The $157.4 million increase is primarily attributed to an increase in Commodity sales as a direct result of the formation of Sadot Agri-Foods and its added revenue.

We generated Commodity sales of $157.6 million for the three months ended June 30, 2023.

We did not have any Commodity sales for the three months ended June 30, 2022.

This represented an increase of $157.6 million, which is attributable to Sadot Agri-Foods sales generated from physical food related commodities.

We generated Company restaurant sales, net of discounts, of $2.5 million for the three months ended June 30, 2023, compared to $2.8 million for the three months ended June 30, 2022.

This represented an decrease of $0.3 million, or 9.6%, which is mainly attributable to the closures of certain unprofitable Muscle Maker Grill locations.

Franchise royalties and fees for the three months ended June 30, 2023 totaled $238.0 thousand compared to $163.0 thousand for the three months ended June 30, 2022.

This represents an increase of $0.1 million, or 46.0%.

In 2023, the franchise fees were higher, primarily due to the sales and opening of new Pokemoto franchises.

Franchise advertising fund contributions for the three months ended June 30, 2023 totaled $20.0 thousand compared to $16.1 thousand for the three months ended June 30, 2022.

The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense.

The increase of $3.9 thousand or 24.2%, is a direct result of the increase in Muscle Maker Grill national advertising services to benefit the brand as a whole.

Other revenues for the three months ended June 30, 2023 totaled $13.0 thousand.

There was no other revenues for the three months ended June 30, 2022.

Other revenues consisted of gift card breakage recognized.

Operating Costs and Expenses

Operating costs and expenses primarily consist of Commodity costs, Restaurant food and beverage costs, Restaurant labor expense, Restaurant rent expense, Other restaurant operating expenses, Depreciation and amortization expenses and Sales, general and administrative expenses.

Commodity Costs

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Commodity cost 153,240 — 153,240 NM

Commodity costs for the three months ended June 30, 2023, totaled $153.2 million or 97.3% as a percentage of Commodity sales.

There was no Commodity cost for the three months ended June 30, 2022.

The $153.2 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Commodity Labor Cost

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Labor 852 — 852 NM

Commodity labor costs for the three months ended June 30, 2023, totaled $0.9 million or 0.5% as a percentage of Commodity sales.

There were no Commodity labor costs for the three months ended June 30, 2022.

The $0.9 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Other Commodity Operating Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Other commodity operating expenses 485 — 485 NM

Other commodity operating expenses for the three months ended June 30, 2023 totaled $0.5 million or 0.3% as a percentage of Commodity sales There were no Other commodity operating expenses for the three months ended June 30, 2022.

The $0.5 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Restaurant Food and Beverage Costs

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Food and beverage costs 867 1,117 (250) (22.4) %

Restaurant food and beverage costs for the three months ended June 30, 2023 totaled $0.9 million or 34.9% as a percentage of Company restaurant net sales, and $1.1 million or 40.6%, as a percentage of Company restaurant net sales, for the three months ended June 30, 2022.

The $0.3 million decrease resulted from a decrease in sales due to the closures of certain unprofitable Muscle Maker Grill locations.

Total restaurant food and beverage cost as a percentage of sales decreased by 5.7% as a operational efficiencies in 2023.

Restaurant Labor Expense

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Labor 956 903 53 5.9 %

Restaurant labor expense for the three months ended June 30, 2023 totaled $1.0 million, or 38.4%, as a percentage of Company restaurant net sales, and $0.9 million, or 32.8%, as a percentage of Company restaurant net sales, for the three months ended June 30, 2022.

The $0.1 million increase is due to higher cost of labor in 2023.

Restaurant Rent Expense

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Rent 290 327 (37) (11.3) %

Restaurant rent expense for the three months ended June 30, 2023 totaled $0.3 million, or 11.7% as a percentage of restaurant sales, and $0.3 million, or 11.9%, as a percentage of restaurant sales, for the three months ended June 30, 2022.

The decrease of $37.0 thousand is directly attributed to the closure of a nonperforming corporate location.

The percentage of total sales decreased by 0.2% as sales decreased overall.

Other Restaurant Operating Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Other restaurant operating expenses 551 688 (137) (19.9) %

Other restaurant operating expenses for the three months ended June 30, 2023 totaled $0.6 million, or 22.2% as a percentage of restaurant sales, and $0.7 million, or 25.0% as a percentage of restaurant sales, for the three months ended June 30, 2022.

The $0.1 million decrease is primarily due to a decrease in insurance costs resulting from a consolidation in insurance companies and a decrease in third party processing fees, partially offset by an increase in merchant processing fees.

The Other restaurant operating expenses as a percent of total sales decreased by 2.9%.

Depreciation and Amortization Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Depreciation and amortization expenses 441 489 (48) (9.8) %

Depreciation and amortization expenses for the three months ended June 30, 2023 totaled $0.4 million compared to $0.5 million, for the three months ended June 30, 2022.

The $48.0 thousand decrease is mainly attributed to the closing of nonperforming locations and the disposal of the corresponding assets.

Franchise Advertising Fund Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Franchise advertising fund expenses 20 16 4 24.2 %

Franchise advertising fund expenses for the three months ended June 30, 2023 totaled $20.0 thousand compared to $16.1 thousand , for the three months ended June 30, 2022.

The $3.9 thousand or 24.2% increase is mainly attributed to the increase in Muscle Maker Grill national advertising services to benefit the brand.

Post-Closing Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Post-closing expenses 19 — 19 NM

Post-closing expenses for the three months ended June 30, 2023 totaled $19.0 thousand.

There were no Post-closing expenses for the three months ended June 30, 2022.

The increase in Post-closing expenses resulted from expenses incurred after the closing of underperforming Company-owned stores.

Stock-Based Consulting Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Stock-based consulting expenses 1,068 — 1,068 NM

Stock-based consulting expenses for the three months ended June 30, 2023, totaled $1.1 million.

There were no Stock-based consulting expenses for the three months ended June 30, 2022.

The increase in Stock-based consulting expenses is the result of consulting fees due to Aggia for Sadot Agri-Foods operations.

Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 40.0% of the Net income generated by the Sadot Agri-Foods business segment.

Thi s expense is expected to be paid in stock in 2023.

Sales, General and Administrative Expenses

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Sales, general and administrative expenses 1,888 1,127 761 67.5 %

Sales, general and administrative expenses for the three months ended June 30, 2023 totaled $1.9 million, or 1.2% of total revenue, compared to $1.1 million, or 38.5% of total revenue, for the three months ended June 30, 2022.

The $0.8 million increase was primarily attributable to an increase in professional and consulting fees and employee salaries and benefits.

Total Other Income, Net

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Total other income / (expense), net 553 (25) 578 (2312.0) %

Total other income / (expense), net for the three months ended June 30, 2023 totaled $0.6 million income compared to $25.0 thousand expense, for the three months ended June 30, 2022.

The $0.6 million increase in Total other income / (expense), net was primarily attributable to a increase of $0.3 million in the Change in fair value of accrued compensation and a $0.3 million increase in Other income, partially offset by a $12.0 thousand increase in Interest expense.

Three Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Income tax 3 12 (9) (75.0) %

Our Income tax for the three months ended June 30, 2023, was $3.0 thousand which was an increase of $9.0 thousand as compared to Income taxes of $12.0 thousand for the three months ended June 30, 2022 due to an increase in current state taxes.

The following table represents selected items in our Condensed Consolidated Statements of Operations for the three months ended June 30, 2023, by our operating segments:

Three Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

$’000 $’000 $’000 $’000

Commodity sales — 157,559 — 157,559

Company restaurant sales, net of discounts 2,487 — — 2,487

Franchise royalties and fees 238 — — 238

Franchise advertising fund contributions 20 — — 20

Other revenues 13 — — 13

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

Operating Costs and Expenses:

Commodity operating expenses:

Commodity cost — 153,240 — 153,240

Labor — 852 — 852

Other commodity operating expenses — 485 — 485

Total commodity operating expenses — 154,577 — 154,577

Restaurant operating expenses:

Food and beverage costs 867 — — 867

Labor 956 — — 956

Rent 290 — — 290

Other restaurant operating expenses 551 — — 551

Total restaurant operating expenses 2,664 — — 2,664

Depreciation and amortization expenses 153 — 288 441

Franchise advertising fund expenses 20 — — 20

Post-closing expenses 19 — — 19

Stock-based consulting expenses — — 1,068 1,068

Sales, general and administrative expenses 88 301 1,499 1,888

Total costs and expenses 2,944 154,878 2,855 160,677

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

Other Income:

Other income — — 251 251

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

Change in fair value of accrued compensation — — 324 324

Total other income, 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

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2022, by our operating segments:

Three Months Ended June 30, 2022

Restaurant division Sadot agri-foods Corporate adj.

$’000 $’000 $’000 $’000

Company restaurant sales, net of discounts 2,751 — — 2,751

Franchise royalties and fees 70 — 93 163

Franchise advertising fund contributions — — 16 16

Total revenues 2,821 — 109 2,930

Operating Costs and Expenses:

Restaurant operating expenses:

Food and beverage costs 1,137 — (20) 1,117

Labor 903 — — 903

Rent 327 — — 327

Other restaurant operating expenses 688 — — 688

Total restaurant operating expenses 3,055 — (20) 3,035

Depreciation and amortization expenses 124 — 365 489

Franchise advertising fund expenses — — 16 16

Sales, general and administrative expenses 30 — 1,097 1,127

Total costs and expenses 3,209 — 1,458 4,667

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

Other Income:

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

Interest expense, net (5) — (5) (10)

Total other income, net 5 — (30) (25)

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

1 unchanged sentence

Net loss (383) — (1,391) (1,774)

Unaudited Condensed Consolidated Results of Operations - Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the six months ended June 30, 2023 and 2022, respectively:

For the Six Months Ended June 30, Variance

2023 2022 $ %

$’000 $’000 $’000

Commodity sales 367,925 — 367,925 NM

Company restaurant sales, net of discounts 4,788 5,445 (657) (12.1) %

Franchise royalties and fees 522 371 151 40.7 %

Franchise advertising fund contributions 36 34 2 5.9 %

Other revenues 13 — 13 NM

Total revenues 373,284 5,850 367,434 6280.9 %

Operating Costs and Expenses:

Commodity operating expenses:

Commodity cost 358,295 — 358,295 NM

Labor 1,472 — 1,472 NM

Other commodity operating expenses 639 — 639 NM

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

Restaurant operating expenses:

Food and beverage costs 1,706 2,143 (437) (20.4) %

Labor 1,836 1,976 (140) (7.1) %

Rent 564 667 (103) (15.4) %

Other restaurant operating expenses 1,023 1,338 (315) (23.5) %

Total restaurant operating expenses 5,129 6,124 (995) (16.2) %

Depreciation and amortization expenses 1,074 965 109 11.3 %

Franchise advertising fund expenses 36 34 2 5.9 %

Pre-opening expenses 36 — 36 NM

Post-closing expenses 113 — 113 NM

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

Sales, general and administrative expenses 4,030 2,451 1,579 64.4 %

Total costs and expenses 375,251 9,574 365,677 3819.5 %

Loss from operations (1,967) (3,724) 1,757 (47.2) %

Other Income / (Expense):

Other income / (expense) 251 (34) 285 (838.2) %

Interest income / (expense), net (19) (28) 9 (32.1) %

Change in fair value of accrued compensation 865 — 865 NM

Gain on debt extinguishment — 140 (140) (100.0) %

Total other income / (expense), net 1,097 78 1,019 1306.4 %

Income / (Loss) Before Income Tax (870) (3,646) 2,776 (76.1) %

Income tax 6 14 (8) (57.1) %

Net income / (loss) (876) (3,660) 2,784 (76.1) %

NM= not meaningful

The following table sets forth our results of operations as a percentage of total revenue for each period presented preceding:

Three Months Ended March 31,

For the Six Months Ended June 30,

Commodity sales 98.6 % —

2 unchanged sentences

Franchise advertising fund contributions — 0.6 %

Other revenues — —

Total revenues 100.0 % 100.0 %

28 unchanged sentences

Net loss (0.2) % (62.6) %

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

4 unchanged sentences

Franchise advertising fund contributions 36 34 2 5.9 %

Other revenues 13 — 13 NM

Total revenues 373,284 5,850 367,434 6280.9 %

NM= not meaningful

Our revenues totaled $213.0 million for the three months ended March 31, 2023, compared to $2.9 million for the three months ended March 31, 2022.

The $210.0 million increase is primarily attributed to an increase in Commodity sales as a direct result of the formation of Sadot and its added revenue.

We generated Commodity sales of $210.4 million for the three months ended March 31, 2023.

We did not have any Commodity sales for the three months ended March 31, 2022.

This represented an increase of $210.4 million, which is attributable to Sadot sales generated from physical food related commodities.

We generated Company restaurant sales, net of discounts, of $2.3 million for the three months ended March 31, 2023, compared to $2.7 million for the three months ended March 31, 2022.

Our revenues totaled $373.3 million for the six months ended June 30, 2023, compared to $5.9 million for the six months ended June 30, 2022.

The $367.4 million increase is primarily attributed to an increase in Commodity sales as a direct result of the formation of Sadot Agri-Foods and its added revenue.

We generated Commodity sales of $367.9 million for the six months ended June 30, 2023.

We did not have any Commodity sales for the six months ended June 30, 2022.

This represented an increase of $367.9 million, which is attributable to Sadot Agri-Foods sales generated from physical food related commodities.

We generated Company restaurant sales, net of discounts, of $4.8 million for the six months ended June 30, 2023, compared to $5.4 million for the six months ended June 30, 2022.

This represented an decrease of $0.7 million, or 12.1%, which is mainly attributable to the closures of certain unprofitable Muscle Maker Grill locations.

Franchise royalties and fees for the three months ended March 31, 2023 totaled $0.3 million compared to $0.2 million for the three months ended March 31, 2022.

Franchise royalties and fees for the six months ended June 30, 2023 totaled $0.5 million compared to $0.4 million for the six months ended June 30, 2022.

This represents an increase of $0.2 million, or 40.7%.

In 2023, the franchise fees were higher, primarily due to termination of one Muscle Maker Grill Franchise agreement, which corresponds to accelerating the recognition of initial franchise fees.

Franchise advertising fund contributions for the three months ended March 31, 2023 totaled $16.0 thousand compared to $18.0 thousand for the three months ended March 31, 2022.

In 2023, the franchise fees were higher, primarily due to termination of one Muscle Maker Grill franchise agreement, which corresponds to accelerating the recognition of initial franchise fees and an increase in Pokemoto franchise sales and store openings.

Franchise advertising fund contributions for the six months ended June 30, 2023 totaled $36.0 thousand compared to $34.0 thousand for the six months ended June 30, 2022.

The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense.

The decrease of $2.0 thousand or 11.1%, is a direct result of the decrease in Muscle Maker Grill franchises and the national advertising services to benefit the brand as a whole.

The increase of $2.0 thousand or 5.9%, is a direct result of the increase in Muscle Maker Grill national advertising services to benefit the brand as a whole.

Other revenues for the six months ended June 30, 2023 totaled $13.0 thousand.

There were no Other revenues for the six months ended June 30, 2022.

Other revenues consisted of gift card breakage recognized.

Operating Costs and Expenses

1 unchanged sentence

Commodity Costs

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Commodity cost 358,295 — 358,295 NM

Commodity costs for the three months ended March 31, 2023, totaled $205.1 million or 97.5% as a percentage of Commodity sales.

There was no Commodity cost for the three months ended March 31, 2022.

The $205.1 million increase resulted from a new line of business operated by Sadot.

Commodity costs for the six months ended June 30, 2023, totaled $358.3 million or 97.4% as a percentage of Commodity sales.

There was no Commodity cost for the six months ended June 30, 2022.

The $358.3 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Commodity Labor Cost

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Labor 1,472 — 1,472 NM

Commodity labor costs for the three months ended March 31, 2023, totaled $0.6 million or 0.3% as a percentage of Commodity sales.

There were no Commodity labor costs for the three months ended March 31, 2022.

The $0.6 million increase resulted from a new line of business operated by Sadot.

Commodity labor costs for the six months ended June 30, 2023, totaled $1.5 million or 0.4% as a percentage of Commodity sales.

There were no Commodity labor costs for the six months ended June 30, 2022.

The $1.5 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Other Commodity Operating Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Other commodity operating expenses 639 — 639 NM

Other commodity operating expenses for the three months ended March 31, 2023 totaled $0.2 million or 0.1% as a percentage of Commodity sales There were no Other commodity operating expenses for the three months ended March 31, 2022.

The $0.2 million increase resulted from a new line of business operated by Sadot.

Other commodity operating expenses for the six months ended June 30, 2023 totaled $0.6 million or 0.2% as a percentage of Commodity sales There were no Other commodity operating expenses for the six months ended June 30, 2022.

The $0.6 million increase resulted from a new line of business operated by Sadot Agri-Foods.

Restaurant Food and Beverage Costs

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Food and beverage costs 1,706 2,143 (437) (20.4) %

Restaurant food and beverage costs for the three months ended March 31, 2023 totaled $0.8 million or 36.5% as a percentage of Company restaurant net sales, and $1.0 million or 38.1%, as a percentage of Company restaurant net sales, for the three months ended March 31, 2022.

Restaurant food and beverage costs for the six months ended June 30, 2023 totaled $1.7 million or 35.6% as a percentage of Company restaurant net sales, and $2.1 million or 39.4%, as a percentage of Company restaurant net sales, for the six months ended June 30, 2022.

The $0.4 million decrease resulted from a decrease in sales due to the closures of certain unprofitable Muscle Maker Grill locations.

Total restaurant food and beverage cost as a percentage of sales decreased by 1.6% as a result of higher commodity prices in 2023.

Total restaurant food and beverage cost as a percentage of sales decrease by 3.7% as a result of increased efficiencies in 2023.

Restaurant Labor Expense

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Labor 1,836 1,976 (140) (7.1) %

Restaurant labor expense for the three months ended March 31, 2023 totaled $0.9 million, or 38.2%, as a percentage of Company restaurant net sales, and $1.1 million, or 39.8%, as a percentage of Company restaurant net sales, for the three months ended March 31, 2022.

The $0.2 million decrease resulted from a reduction in Labor expense.

Restaurant labor expense for the six months ended June 30, 2023 totaled $1.8 million, or 38.3%, as a percentage of Company restaurant net sales, and $2.0 million, or 36.3%, as a percentage of Company restaurant net sales, for the six months ended June 30, 2022.

The $0.1 million decrease resulted from the closure of nonperforming corporate locations.

Restaurant Rent Expense

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Rent 564 667 (103) (15.4) %

Restaurant rent expense for the three months ended March 31, 2023 totaled $0.3 million, or 11.9% as a percentage of restaurant sales, and $0.3 million, or 12.6%, as a percentage of restaurant sales, for the three months ended March 31, 2022.

The decrease of $0.1 million is directly attributed to the closure of a nonperforming corporate location.

Restaurant rent expense for the six months ended June 30, 2023 totaled $0.6 million, or 11.8% as a percentage of restaurant sales, and $0.7 million, or 12.2%, as a percentage of restaurant sales, for the six months ended June 30, 2022.

The decrease of $0.1 million is directly attributed to the closure of nonperforming corporate locations.

The percentage of total sales decreased by 0.5% as sales decreased overall.

Other Restaurant Operating Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Other restaurant operating expenses 1,023 1,338 (315) (23.5) %

Other restaurant operating expenses for the three months ended March 31, 2023 totaled $0.5 million, or 20.5% as a percentage of restaurant sales, and $0.7 million, or 24.1% as a percentage of restaurant sales, for the three months ended March 31, 2022.

Other restaurant operating expenses for the six months ended June 30, 2023 totaled $1.0 million, or 21.4% as a percentage of restaurant sales, and $1.3 million, or 24.6% as a percentage of restaurant sales, for the six months ended June 30, 2022.

The $0.3 million decrease is primarily due to a decrease in insurance costs resulting from a consolidation in insurance companies and a decrease in third party processing fees, partially offset by an increase in merchant processing fees.

1 unchanged sentence

Depreciation and Amortization Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Depreciation and amortization expenses 1,074 965 109 11.3 %

Depreciation and amortization expenses for the three months ended March 31, 2023 totaled $0.6 million compared to $0.5 million, for the three months ended March 31, 2022.

Depreciation and amortization expenses for the six months ended June 30, 2023 totaled $1.1 million compared to $1.0 million, for the six months ended June 30, 2022.

The $0.1 million increase is mainly attributed to the accelerated depreciation of leasehold improvements for leases that were modified resulting in a shorter life.

Franchise Advertising Fund Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Franchise advertising fund expenses 36 34 2 5.9 %

Franchise advertising fund expenses for the three months ended March 31, 2023 totaled $16.0 thousand compared to $18.0 thousand , for the three months ended March 31, 2022.

The $2.0 thousand decrease is mainly attributed to the decrease of $2.0 thousand or 11.1%, is a direct result of the decrease in Muscle Maker Grill franchises and the national advertising services to benefit the brand.

Franchise advertising fund expenses for the six months ended June 30, 2023 totaled $36.0 thousand compared to $34.0 thousand , for the six months ended June 30, 2022.

The $2.0 thousand increase or 5.9% is mainly attributed to the increase in Muscle Maker Grill national advertising services to benefit the brand.

Pre-Opening Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Pre-opening expenses 36 — 36 NM

Pre-opening expenses for the three months ended March 31, 2023 totaled $36.0 thousand .

There were no Pre-opening expenses for the three months ended March 31, 2022.

Pre-opening expenses for the six months ended June 30, 2023 totaled $36.0 thousand .

There were no Pre-opening expenses for the six months ended June 30, 2022.

The increase in pre-opening expense resulted from expenses incurred prior to the opening of our new Company-owned stores.

Post-Closing Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Post-closing expenses 113 — 113 NM

Post-closing expenses for the three months ended March 31, 2023 totaled $0.1 million.

There were no Post-closing expenses for the three months ended March 31, 2022.

Post-closing expenses for the six months ended June 30, 2023 totaled $0.1 million.

There were no Post-closing expenses for the six months ended June 30, 2022.

The increase in Post-closing expenses resulted from expenses incurred after the closing of underperforming Company-owned stores.

Stock-Based Consulting Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

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

Stock-based consulting expenses for the three months ended March 31, 2023, totaled $3.4 million.

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

The increase in Stock-based consulting expenses is the result of consulting fees due to Aggia for Sadot operations.

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.

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

Stock-based consulting expenses for the six months ended June 30, 2023, totaled $4.4 million.

There were no Stock-based consulting expenses for the six months ended June 30, 2022.

The increase in Stock-based consulting expenses is the result of consulting fees due to Aggia for Sadot Agri-Foods operations.

Based on the servicing agreement with Aggia, the consulting fees are calculated at approxim ately 80% and 40.0% of the Net income generated by the Sadot Agri-Foods business segment for the first quarter of 2023 and the second quarter of 2023, respectively.

Sales, General and Administrative Expenses

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Sales, general and administrative expenses 4,030 2,451 1,579 64.4 %

Sales, general and administrative expenses for the three months ended March 31, 2023 totaled $2.1 million, or 1.0% of total revenue, compared to $1.3 million, or 45.3% of total revenue, for the three months ended March 31, 2022.

Sales, general and administrative expenses for the six months ended June 30, 2023 totaled $4.0 million, or 1.1% of total revenue, compared to $2.5 million, or 41.9% of total revenue, for the six months ended June 30, 2022.

The $1.6 million increase was primarily attributable to an increase in professional and consulting fees and employee salaries and benefits.

Total Other Income, Net

Three Months Ended March 31, Variance

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Total other income / (expense), net 1,097 78 1,019 1306.4 %

Total other income / (expense), net for the three months ended March 31, 2023 totaled $0.5 million compared to $0.1 million, for the three months ended March 31, 2022.

The $0.4 million decrease in Total other income / (expense), net was primarily attributable to an increase in the Gain on extinguishment of debt of $0.1 million due to the forgiveness of our PPP loans, a decrease of $0.5 million in the Change in fair value of accrued compensation, partially offset by a $21.0 thousand decrease in Interest expense and a $19.0 thousand decrease in Other income.

Three Months Ended March 31, Variance

Total other income / (expense), net for the six months ended June 30, 2023 totaled $1.1 million compared to $0.1 million, for the six months ended June 30, 2022.

The $1.0 million increase in Total other income / (expense), net was attributable to an decrease in the Gain on extinguishment of debt of $0.1 million due to the forgiveness of our PPP loans, a increase of $0.9 million in the Change in fair value of accrued compensation, partially offset by a $9.0 thousand decrease in Interest expense and a $0.3 million increase in Other income.

For the Six Months Ended June 30, Variance

2023 2022 $ %

1 unchanged sentence

Income tax 6 14 (8) (57.1) %

Our Income tax for the three months ended March 31, 2023, was $3.0 thousand which was an increase of $1.0 thousand as compared to Income taxes of $2.0 thousand for the three months ended March 31, 2022 due to an increase in current state taxes.

Three Months Ended March 31, Variance

2023 2022 $ %

$’000 $’000 $’000

Net loss (1,066) (1,886) 820 (43.5) %

Our Net loss for the three months ended March 31, 2023, was $1.1 million which was a decrease of $0.8 million as compared to a Net loss of $1.9 million for the three months ended March 31, 2022, resulting from an increase of Total revenues of $210.0 million, partially offset by the increase in Total cost and expenses of $209.7 million and a $19.0 thousand decrease in Other income.

The following table represents selected items in our Condensed Consolidated Statements of Operations for the three months ended March 31, 2023, by our operating segments:

Three Months Ended March 31, 2023

Restaurant division Sadot Division Corporate adj.

Our Income tax for the six months ended June 30, 2023, was $6.0 thousand which was an increase of $8.0 thousand as compared to Income taxes of $14.0 thousand for the six months ended June 30, 2022 due to an increase in current state taxes.

The following table represents selected items in our Condensed Consolidated Statements of Operations for the six months ended June 30, 2023, by our operating segments:

Six Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

$’000 $’000 $’000 $’000

3 unchanged sentences

Franchise advertising fund contributions 36 — — 36

Other revenues 13 — — 13

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

20 unchanged sentences

Other Income:

Other income — — 251 251

Interest income , net 2 (21) — (19)

4 unchanged sentences

Net (loss) / income (594) 6,911 (7,193) (876)

The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022, by our operating segments:

Three Months Ended March 31, 2022

Restaurant division Sadot Division Corporate adj.

The following table represents selected items in our Condensed Consolidated Statements of Operations for the six months ended June 30, 2022, by our operating segments:

Six Months Ended June 30, 2022

Restaurant division Sadot agri-foods Corporate adj.

$’000 $’000 $’000 $’000

17 unchanged sentences

Other income 12 — (46) (34)

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

Interest expense, net (2) — (26) (28)

Gain on debt extinguishment 140 — — 140

5 unchanged sentences

We measure our liquidity in a number of ways, including the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash 5,090 9,898

2 unchanged sentences

Availability of Additional Funds

Although we have a working capital surplus of $6.4 million, we presently have an accumulated deficit of $80.4 million, as of December 31, 2022, and we utilized $3.3 million of cash in operating activities during the three months ended March 31, 2023.

We believe that our existing cash on hand and future cash flows from our franchise operations and commodity

trading operations, will be sufficient to fund our operations, anticipated capital expenditures and repayment obligations over the next 12 months.

Although we have a working capital surplus of $7.7 million, we presently have an accumulated deficit of $80.2 million, as of December 31, 2022, and we utilized $4.2 million of cash in operating activities during the six months ended June 30, 2023.

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

In the event we are required to obtain additional financing, either through borrowings, private placements, public offerings, or some type of business combination, such as a merger, or buyout, and there can be no assurance that we will be successful in such pursuits.

10 unchanged sentences

Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition.

Sources and Uses of Cash for the Three Months Ended March 31, 2023 and March 31, 2022

For the three months ended March 31, 2023, we used Net cash of $3.3 million compared to $0.9 million, for the three months ended March 31, 2022, in operations.

Our Net cash used for the three months ended March 31, 2023, was primarily attributable to our Net loss of $1.1 million, adjusted for net non-cash income in the aggregate amount of $4.6 million offset by $6.8 million of Net cash provided by changes in the levels of operating assets and liabilities.

Our Net cash used for the three months ended March 31, 2022, was primarily attributable to our Net loss of $1.9 million, adjusted for net non-cash income in the aggregate amount of $0.6 million, partially offset by $0.3 million of Net cash used in changes in the levels of operating assets and liabilities.

For the three months ended March 31, 2023, Net cash used in investing activities was $0.2 million, of which $0.1 million was used to purchase Property and equipment.

For the three months ended March 31, 2022, Net cash used in investing activities was $35.0 thousand, of which $35.0 thousand was used to purchase Property and equipment.

For the three months ended March 31, 2023, Net cash used in financing activities was $34.0 thousand, consisting of repayments of various other notes payable of $34.0 thousand.

For the three months ended March 31, 2022, Net cash provided by financing activities was $32.0 thousand, partially offset by repayments of various other notes payable of $32.0 thousand.

Sources and Uses of Cash for the Six Months Ended June 30, 2023 and 2022

For the six months ended June 30, 2023, we used Net cash of $4.2 million compared to $1.9 million, for the six months ended June 30, 2022, in operations.

Our Net cash used for the six months ended June 30, 2023, was primarily attributable to our Net loss of $0.9 million, adjusted for net non-cash income in the aggregate amount of $5.0 million offset by $8.4 million of Net cash provided by changes in the levels of operating assets and liabilities.

Our Net cash used for the six months ended June 30, 2022, was primarily attributable to our Net loss of $3.7 million, adjusted for net non-cash income in the aggregate amount of $1.1 million, partially offset by $0.6 million of Net cash used in changes in the levels of operating assets and liabilities.

For the six months ended June 30, 2023, Net cash used in investing activities was $4.0 million, of which $0.2 million was used to purchase Property and equipment, $0.1 million was used on the Disposal of property and equipment and $3.9 million was used for a deposit with the intent to purchase farmland.

For the six months ended June 30, 2022, Net cash used in investing activities was $0.3 million, of which $0.3 million was used to purchase Property and equipment.

For the six months ended June 30, 2023, Net cash provided by financing activities was $3.4 million, consisting of repayments of various other notes payable of $0.1 million.

For the six months ended June 30, 2022, Net cash used in financing activities was $0.1 million, partially offset by repayments of various other notes payable of $0.1 million.

Recently Issued Accounting Pronouncements

12 unchanged sentences

2016-02 in the year of adoption.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of accumulated deficit of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand.

The Company adopted Topic 842 as of January 1, 2022 and recognized a cumulative-effect adjustment to the opening balance of $15.0 thousand as of the adoption date, and recognized an additional $7.8 thousand during the second quarter of 2022, based on updated information on two of our leases, for an aggregate cumulative-effect adjustment to accumulated deficit of $22.8 thousand.

In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”):

4 unchanged sentences

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.

Off-Balance Sheet Arrangements

3 unchanged sentences

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 2. Management’s Discussion and Analysis