What changed in this filing

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Item 1. Financial Statements

2023-11-14 compared with 2023-08-09 · 536 added, 430 removed, 726 unchanged (57% of the section changed)

Financial Statements

Muscle Maker, Inc.

Sadot Group, Inc.

Condensed Consolidated Balance Sheets

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

Cash 2,422 9,898

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

Accounts receivable, net of allowance for doubtful accounts of $ 0.1 million and $ 23.4 thousand as of September 30, 2023 and December 31, 2022, respectively

Inventory 237 298

Prepaid expenses and other current assets 571 317

Prepaid forward on carbon offsets 6,424 —

Total current assets 70,862 10,648

10 unchanged sentences

Accrued stock-based compensation expense - related party — 3,603

Notes payable, current 3,727 222

Notes payable, net of discount of $ 0.2 million as of September 30, 2023 - current

Operating lease liability, current 447 560

Deferred revenue, current 97 95

Derivative liability 349 —

Other current liabilities 230 182

6 unchanged sentences

Stockholders’ equity:

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

Common stock, $ 0.0001 par value, 150 million shares authorized, 39.0 million and 29.3 million shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 107,226 95,913

Accumulated deficit ( 85,414 ) ( 79,355 )

21,816 16,561

Non-controlling interest 3,542 —

Total stockholders’ equity 25,358 16,561

1 unchanged sentence

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

Muscle Maker, Inc.

Condensed Consolidated Statement of Operations

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

Sadot Group, Inc.

Condensed Consolidated Statement of Operations and Other Comprehensive Loss

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Operating Costs and Expenses:

Commodity operating expenses:

Commodity cost 153,240 — 358,295 —

Labor 852 — 1,472 —

Other commodity operating expenses 485 — 639 —

Total commodity operating expenses 154,577 — 360,406 —

Restaurant operating expenses:

Food and beverage costs 867 1,117 1,706 2,143

Labor 956 903 1,836 1,976

Rent 290 327 564 667

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

Total restaurant operating expenses 2,664 3,035 5,129 6,124

Cost of goods sold 179,268 2,710 544,803 8,834

Impairment of goodwill 828 — 828 —

Impairment of intangible assets 810 — 810 —

Depreciation and amortization expenses 443 525 1,517 1,490

2 unchanged sentences

Post-closing expenses 60 159 173 159

Stock-based consulting expenses 1,068 — 4,427 —

Stock-based expenses 1,075 32 5,667 82

Sales, general and administrative expenses 3,310 1,219 7,175 3,620

2 unchanged sentences

Other Income / (Expense):

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

Other income 1 55 252 21

Interest income / (expense), net ( 301 ) 11 ( 320 ) ( 17 )

Change in fair value of accrued compensation 297 — 1,161 —

Warrant modification expense ( 958 ) — ( 958 ) —

Loss on fair value remeasurement ( 349 ) — ( 349 ) —

Gain on debt extinguishment — — — 140

Total other income / (expense), net ( 1,310 ) 66 ( 214 ) 144

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

Loss Before Income Tax ( 5,282 ) ( 1,896 ) ( 6,153 ) ( 5,542 )

Income tax 13 2 18 16

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 )

Net loss ( 5,295 ) ( 1,898 ) ( 6,171 ) ( 5,558 )

Other comprehensive loss

Currency translation differences — — — —

Other comprehensive gain, net of income tax — — — —

Total comprehensive loss ( 5,295 ) ( 1,898 ) ( 6,171 ) ( 5,558 )

Net loss attributable to:

Equity holders of the parent ( 5,183 ) ( 1,898 ) ( 6,059 ) ( 5,558 )

Non-controlling interest ( 112 ) — ( 112 ) —

( 5,295 ) ( 1,898 ) ( 6,171 ) ( 5,558 )

Net Loss Per Share:

Basic and Diluted ( 0.14 ) ( 0.07 ) ( 0.18 ) ( 0.20 )

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

Basic and Diluted 37,421,915 28,762,761 33,443,938 28,412,655

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

Muscle Maker, Inc.

Sadot Group, Inc.

Condensed Consolidated Statement of Changes in Stockholders' Equity

1 unchanged sentence

Capital Accumulated

Deficit Total

Deficit Non-controlling Interest Total

Shares Amount

14 unchanged sentences

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

Common stock compensation to board of directors 74 — 28 — — 28

Stock-based compensation - options — — 3 — — 3

Net loss — — — ( 1,898 ) — ( 1,898 )

Balance at September 30, 2022 28,774 3 95,881 ( 76,951 ) — 18,933

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

9 unchanged sentences

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

Common stock compensation to board of directors 33 — 39 — — 39

Common stock issued as compensation for services 816 — 654 — — 654

Cash exercise of warrants and warrant modification 2,153 — 3,111 — — 3,111

Stock-based compensation - options — — 27 — — 27

Investment in non-controlling interest — — — — 3,654 3,654

Net loss — — — ( 5,183 ) ( 112 ) ( 5,295 )

Balance at September 30, 2023 38,913 4 107,226 ( 85,414 ) 3,542 25,358

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

Muscle Maker, Inc.

Sadot Group, Inc.

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows from Operating Activities

2 unchanged sentences

Depreciation and amortization 1,517 1,490

Stock-based compensation 318 89

Stock-based expenses 5,667 121

Gain on extinguishments of debt — ( 140 )

Stock-based consulting expenses 4,427 —

Impairment of goodwill 828 —

Impairment of intangible assets 810 —

Change in fair value of compensation ( 1,161 ) —

Warrant modification expense 958 —

Loss on disposal of assets 301 206

4 unchanged sentences

Prepaid expenses and other current assets ( 254 ) 1,332

Prepaid forward on carbon offsets ( 6,424 ) —

Security deposits and other assets 19 12

Accounts payable and accrued expenses 55,869 ( 791 )

Accrued stock-based compensation expense - related party — —

Deferred rent — ( 128 )

1 unchanged sentence

Deferred revenue 23 297

Derivative liability 349 —

Other current liabilities 48 ( 104 )

3 unchanged sentences

Deposit on farmland 4,914 —

Investment in non-controlling interest 3,655 —

Purchases of property and equipment ( 12,447 ) ( 575 )

Disposal of property and equipment 208 —

Collections from loans receivable — 71

Net cash used in investing activities ( 3,670 ) ( 504 )

Cash Flows from Financing Activities

Repayments of convertible note — ( 50 )

Proceeds from other notes payable 3,500 —

Repayments of notes payables ( 69 ) ( 63 )

Proceeds from notes payable 7,684 —

Proceeds from exercise of warrants 2,153 —

Repayments of notes payable ( 4,964 ) ( 177 )

Net cash provided by (used in) financing activities 4,873 ( 177 )

3 unchanged sentences

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

Muscle Maker, Inc.

Sadot Group, Inc.

Condensed Consolidated Statements of Cash Flows (Continued)

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental Disclosures of Cash Flow Information:

1 unchanged sentence

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

Muscle Maker, Inc.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Business Organization and Nature of Operations

Muscle Maker, Inc.

Sadot Group Inc.

("Sadot Group") or ("SGI") f/k/a Muscle Maker, Inc.

(“MMI”), a Nevada corporation was incorporated in Nevada on October 25, 2019.

MMI was a wholly owned subsidiary of Muscle Maker, Inc (“MMI-Cal”), a California corporation incorporated on December 8, 2014, but the two merged on November 13, 2019, with MMI as the surviving entity.

MMI wholly owns Muscle Maker Development, LLC (“MMD”), Muscle Maker Corp, LLC (“MMC”) and Muscle Maker USA, Inc (“Muscle USA”).

MMD was formed on July 18, 2017, in the State of Nevada for the purpose of running our existing franchise operations and continuing to franchise the Muscle Maker Grill name and business system to qualified franchisees.

MMC was formed on July 18, 2017, in the State of Nevada for the purpose of developing new corporate stores and operating new and existing corporate stores of MMI.

Muscle USA was formed on March 14, 2019, in the State of Texas for the purpose of opening additional new corporate stores.

Muscle Maker Development International LLC, a directly wholly owned subsidiary of MMI, which was formed in Nevada on November 13, 2020, to franchise the Muscle Maker Grill® name, trademarks and business system to qualified franchisees internationally.

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 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 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 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.

In late 2022, SGI began a transformation from a U.S.-centric restaurant business into a global, food-focused organization.

Sadot Group is headquartered in Ft.

Worth, Texas with subsidiary operations in Miami, Dubai, Singapore, Kyiv and Zambia.

As of September 30, 2023, SGI consisted of three distinct operating units:

SADOT AGRI-FOODS :

Sadot Agri-Foods Origination and Trading Operations, which is operated through various wholly-owned subsidiaries, is an international agri-commodities company engaged in the trading and shipping of food and feed (e.g., soybean meal, wheat and corn) via dry bulk cargo ships to/from markets across the globe.

Sadot Agri-Foods executes agri-commodity trades between producing geographies such as the Americas, Africa, and the Black Sea to consumer markets in Southeast Asia, China, Latin America and the Middle East/North Africa (MENA) region.

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

SADOT FOOD SERVICES :

Sadot Food Service Operations, which is operated through various wholly-owned subsidiaries, has three unique concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, plus one subscription-based fresh prep meal concept, SuperFit Foods.

Following our strategic pivot to the global food supply chain sector, we are fully engaged in the restructuring of these legacy restaurant operations.

By refranchising company-owned units and closing underperforming locations while growing Pokémoto through franchising, the Company is continuing its restructuring efforts with the goal of reducing annualized restaurant operating expenses and overhead while potentially increasing franchise royalty revenue at Pokémoto.

SADOT FARMING OPERATIONS :

Sadot Farm Operations ("Sadot Zambia" is 100 % owned by Sadot Enterprises Limited, which is 70 % owned by Sadot LLC) includes approximately 5,000 acres of farmland in the Mkushi Region of Zambia which was acquired in August of 2023.

Farm operations are expected to provide a reliable supply of grains and tree crops (mango and avocado).

Sadot Group Inc., and its subsidiaries are hereinafter referred to as the “Company”.

Recent Corporate Developments

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) remained 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, continue to be valid.

The Company's primary source of liquidity is cash on hand.

As of September 30, 2023, the Company had a cash balance, a working capital surplus and an accumulated deficit of $ 2.4 million, $ 9.0 million, and $ 85.4 million, respectively.

During the three and nine months ended September 30, 2023, the Company incurred a Pre-tax net loss of $ 5.3 million and a Pre-tax net loss of $ 6.2 million, respectively.

The Company had Net cash used in operations of $ 8.7 million for the nine months ended September 30, 2023.

The Company believes that our existing cash on hand, current accounts receivable and future cash flows from our commodity trading, farming and franchise operations, will be sufficient to fund our operations,

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Our primary source of liquidity is cash on hand.

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.

anticipated capital expenditures and repayment obligations over the next 12 months.

In addition, the Company has access to additional liquidity if it is needed through an executed Standby Equity Purchase Agreement ("SEPA") for up to $ 25 million in capital whereby the Company may submit advance requests to the lender and the lender will provide cash in consideration of shares of common stock subject to certain limitations and conditions set forth in the SEPA.

Significant Accounting Policies

2 unchanged sentences

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 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.

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 September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022.

The results of operations for the three and nine months ended September 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.

16 unchanged sentences

• 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.

Actual results could differ from those estimates and assumptions.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Cash and Cash Equivalents

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 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.

There were no cash equivalents as of September 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 related to our Agri-foods operations, perishable food items and supplies related to our Food service operation, and raw materials, supplies and harvested crops related to our Farming operations.

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 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.

Purchase of Farmland

On May 16, 2023, the Company through its wholly owned subsidiary, Sadot LLC, 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 LLC, 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.

On May 16, 2023, Sadot LLC 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 named Sadot Enterprises Limited (“Sadot Zambia”) with Sadot LLC holding 70 % of the equity and Cropit holding 30 % of the equity.

Sadot Zambia will hold 100 % of the Farm.

Sadot LLC and Cropit each appointed one director to the Board of Directors of Sadot Zambia.

Further, Sadot LLC 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 LLC, Cropit and Chibesakunda & Co., as escrow agent (the “Escrow Agent”) entered into an Escrow Agreement pursuant to which the Escrow Agent held all documentation required to allot Sadot LLC 70 % of Sadot Zambia, documentation required to transfer the Farm to Sadot Zambia and USD $ 3.5 million contributed by Sadot LLC.

Upon closing and completion of the asset acquistion of the farmland and some related property equipment, on August 23, 2023, the Escrow Agent released the required funds to ABSA Bank and released the required documentation with respect to the allocation of Sadot LLC’s interest in Sadot Zambia and the transfer of the Farm.

The asset acquisition consisted of property and equipment of $ 8.5 million.

Cropit contributed land of $ 3.7 million for its non-controlling interest of the joint venture.

The property and equipment that were purchased in the asset acquisition are as follows:

August 23, 2023

Furniture and Equipment 211

Land and land improvements 11,766

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

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.

Leasehold 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:

1 unchanged sentence

Leasehold improvements 1 – 8 years

Vehicles 5 - 10 years

Land Improvements 3 - 20 years

Intangible Assets

20 unchanged sentences

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”).

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.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

If the instrument is determined not to be a derivative liability, the conversion feature is not required to be accounted for separately as an embedded derivative, in accordance to ASU 2020-06.

The Company amortizes debt issuance costs over the term of the Convertible Loan Note as interest expense utilizing the effective interest method on the Company’s Consolidated Statement of Operations and Other Comprehensive Loss.

As of September 30, 2023, the Company deemed there was no embedded derivative and did not need 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.

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Commodity Sales

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.

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

During the three and nine months ended September 30, 2023, the Company recorded Commodity sales revenues of $ 180.0 million and $ 547.9 million, respectively.

The Company did not have any Commodity sales revenue during the three and nine months ended September 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 $ 2.5 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 recorded retail store revenues of $ 1.9 million and $ 6.7 million during the three and nine months ended September 30, 2023 and $ 2.6 million and $ 8.1 million for the three and nine months ended September 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.

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The Company recognizes the royalties as the underlying sales occur.

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 recorded revenue

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

from royalties of $ 0.2 million and $ 0.5 million during the three and nine months ended September 30, 2023 and $ 0.1 million and $ 0.4 million during the three and nine months ended September 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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.

2 unchanged sentences

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)

the life of each 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.

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 $ 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 recorded revenue from initial franchise fees of $ 22.8 thousand and $ 0.2 million during the three and nine months ended September 30, 2023 and $ 18.7 thousand and $ 0.1 million for the three and nine months ended September 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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 $ 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.

The Company recorded revenue from rebates of $ 29.7 thousand and $ 0.1 million during the three and nine months ended September 30, 2023 and $ 22.3 thousand and $ 0.1 million for the three and nine months ended September 30, 2022, respectively, which is included in Franchise royalties and fees on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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.

6 unchanged sentences

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 $ 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.

The Company recorded contributions from franchisees of $ 16.0 thousand and $ 0.1 million, respectively, during the three and nine months ended September 30, 2023 and $ 24.0 thousand and $ 0.1 million for the three and nine months ended September 30, 2022, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

Other Revenues

1 unchanged sentence

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 The Company had Other revenues of $ 13.0 thousand and $ 13.0 thousand for the three and six months ended June 30, 2023.

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 for the nine months ended September 30, 2023.

There were no Other revenues for the three months ended September 30, 2023.

There were no Other revenue for the three and nine months ended September 30, 2022.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Deferred Revenue

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

Stock-Based Consulting Expense

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.

Stock-Based Expenses

Stock-based expenses include all expenses that are paid with stock.

This includes stock-based consulting fees due to Aggia and other consultants, stock compensation paid to the Company's board of directors, and stock compensation paid to employees.

The consulting fees due to Aggia related to ongoing Sadot Agri-Foods and Farming operations and expansion of the global agri-commodities business.

As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0 % of the Net income generated by Sadot LLC.

See Note 14 – 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.

For the three and nine months ended September 30, 2023, $ 1.1 million and $ 5.7 million, respectively, and $ 32.0 thousand and $ 0.1 million, respectively, for the three and nine months ended September 30, 2022.

are recorded as Stock-based expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

Advertising costs are charged to expense as incurred.

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.

Advertising costs of $ 0.8 million and $ 1.1 million for the three and nine months ended September 30, 2023 and $ 0.1 million and $ 5.9 thousand for the three and nine months ended September 30, 2022, respectively, are included in Sales, general and administrative expenses.

The 2022 advertising expense for the three month September 30, 2022 is more than the advertising expense for the nine month September 30, 2022 due to a reclassification to Franchise advertising fund expense.

For the three and nine months ended September 30, 2023 and 2022, $ 32.2 thousand, $ 36.0 thousand, $ 0.1 million and $ 0.2 million, respectively, are included in Cost of goods sold in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

Net Income / Loss per Share

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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:

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

September 30,

Warrants 17,783 17,874

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Total potentially dilutive shares 30,610 18,287

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,

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

stockholders:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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

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

Net loss ( 5,295 ) ( 1,898 ) ( 6,171 ) ( 5,558 )

Weighted-average shares outstanding:

2 unchanged sentences

Diluted 37,421,915 28,762,761 33,443,938 28,412,655

Net income / (loss) per share:

Net loss per share:

Basic ( 0.14 ) ( 0.07 ) ( 0.18 ) ( 0.20 )

Diluted ( 0.14 ) ( 0.07 ) ( 0.18 ) ( 0.20 )

Major Vendors

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 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.

Purchases from the Company’s largest commodity supplier totaled 99 % for the three months ended September 30, 2023 and Purchases from the Company’s four largest commodity suppliers totaled 94 % of the Company’s purchases for the nine months ended September 30, 2023.

Purchases from the Company’s largest food service supplier totaled 39 % and 33 % for the three and nine months ended September 30, 2022, respectively.

Derivative Instruments

The Company is exposed to market risks primarily related to the volatility in the price of carbon credits.

To manage these risks, the Company enters into forward sales contracts to sell carbon offset units from time to time.

The Company evaluates its contracts to determine if such contracts qualify as derivatives under FASB Accounting ASC 815, “Derivatives and Hedging” (“ASC 815”).

Derivative instruments are recorded as either assets or liabilities measured at their fair values.

As the Company’s existing contracts do not qualify for hedge accounting treatment, any changes in fair value are recorded as Gain / (loss) on fair value remeasurement within “Other income / (expense)” in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss for each reporting period.

Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is probable within the next 12 months from the balance sheet date.

The Company does not offset its derivative assets and liabilities within the Unaudited Condensed Consolidated Balance Sheets.

Changes in the fair value of derivative instruments are recorded as an adjustment to operating activities in the condensed consolidated statement of cash flows.

Refer to Fair Value of Financial Instruments below, Note 14 – Commitments and contingencies and Note 17 – Financial instruments for additional information regarding the Company’s derivative instruments.

Fair Value of Financial Instruments

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Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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 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.

See Note 16 – Fair value measurement for a summary of financial liabilities held at carrying amount including the Accrued compensation liability and the Derivative liability.

For details related to the fair value of the Accrued compensation liability measured using Level 1 inputs, refer to Note 18 – Equity For details related to the fair value of the Derivative liability measured using Level 2 inputs, refer to Note 14 – Commitments and contingencies and Note 17 – Financial instruments.

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”).

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The Company does not expect any significant changes in its unrecognized tax benefits within years of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as Sales, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations.

Stock-Based Compensation

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

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.

Financial Instruments

Derivatives are initially measured at fair value and than are subsequently remeasured to fair value at the reporting date.

Carbon Credits are derivatives that were purchased and sold at a later date at a fixed or determinable price for a specified period.

Changes in fair value are recognized in Gain / (loss) on fair value remeasurement in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss, as appropriate.

We use derivative financial instruments primarily for purposes of hedging exposures to fluctuations in agricultural commodity prices.

We enter into these derivative contracts for periods consistent with the related underlying exposures, and the contracts do not constitute positions independent of those exposures.

We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments.

We record all open contract positions on our Unaudited Condensed Consolidated Balance Sheets at fair value and typically do not offset these assets and liabilities.

There were no open positions at September 30, 2023.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Cash flows from derivative contracts are included in Net cash provided by operating activities.

Currency Translation Differences

Transactions in foreign currencies are translated to the respective functional currencies of Company's at the average foreign exchange rates for income and expenses.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the foreign exchange rate ruling as of the reporting period end date.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.

Foreign exchange differences arising on translation are recognized in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss.

The assets and liabilities of foreign operations, including farm operations and fair value adjustments arising on consolidation, are translated to the Company’s reporting currency, United States Dollars, at foreign exchange rates at the reporting date.

Non-controlling Interests

The Company consolidates entities in which the Company has a controlling financial interest.

The Company consolidates subsidiaries in which the Company holds, directly or indirectly, more than 50% of the voting rights.

Non-controlling interests represent third-party equity ownership interests in the Company’s consolidated entities.

The amount of net income attributable to Non-controlling interests is disclosed in the Unaudited Condensed Consolidated Statements of Income and Other Comprehensive Loss

Recent Accounting Pronouncements

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See Note 10 – Leases for further details.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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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.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity.

Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and updates the disclosure requirements in ASC 470-20, making them easier to understand for financial statement preparers and improving the decision-usefulness and relevance of the information for financial statement users.

The Company early adopted the new guidance from January 1, 2023, noting no material impact.

In April 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants.

The new ASU is effective for all entities in fiscal years starting after December 15, 2021.

Early adoption is permitted.

The Company adopted the new guidance from January 1, 2023, noting no material impact.

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 20 – Subsequent events .

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Loans Receivable

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

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

There were no reserves for uncollectible loans at September 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.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Prepaid Expenses and Other Current Assets

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

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

September 30, 2023 December 31, 2022

Prepaid expenses 557 89

1 unchanged sentence

Prepaid and Other Current Assets 571 317

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.

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)

Included in prepaid and other current assets is a receivable of $ 14.0 thousand and $ 0.2 million as of September 30, 2023 and December 31, 2022, respectively.

Property and Equipment, Net

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

June 30, 2023 December 31, 2022

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

September 30, 2023 December 31, 2022

Furniture and equipment 1,056 1,266

1 unchanged sentence

Leasehold improvements 1,030 2,062

Land and land improvements 11,766 —

Construction in process — 5

2 unchanged sentences

Property and equipment, net 13,165 1,895

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.

Depreciation expense amounted to $ 0.2 million and $ 0.7 million for the three and nine months ended September 30, 2023 and $ 0.2 million and $ 0.4 million during the three and nine months ended September 30, 2022, respectively.

During the three and nine months ended September 30, 2023 the Company wrote off Property and equipment with an original cost value of $ 1.0 million and $ 1.4 million, respectively and $ 0.1 million and $ 0.5 million for the three and nine months ended September 30, 2022.

The Company wrote off Property and equipment related to closed locations and future locations that were terminated due to a change of business focus and recorded a loss on disposal of $ 37.6 thousand and $ 0.2 million for the three and nine months ended September 30, 2022, respectively, and $ 0.3 million and $ 0.3 million for the three and nine months ended September 30, 2023, respectively, in the Unaudited Condensed Consolidated Statement of Operations.

Goodwill and Other Intangible Assets, Net

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Intangible assets are amortized over useful lives ranging from 2 to 13 years.

Muscle Maker, Inc.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

expense Intangible

September 30,

2022 Intangible

2 unchanged sentences

expense Intangible

September 30,

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

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6,386 — ( 1,069 ) 5,317 4,611 ( 810 ) ( 848 ) 2,953

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.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Amortization expense related to intangible assets was $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2023 and $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2022, respectively.

The estimated future amortization expense is as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2025 2026 2027 2028 Thereafter Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Trademark Muscle Maker Grill 169 334 — — — — 503

Franchise Agreements Muscle Maker Grill 14 27 27 27 27 1 123

Trademark SuperFit 5 9 9 2 — — 25

Domain Name SuperFit 13 25 25 6 — — 69

Customer List SuperFit 14 28 28 6 — — 76

Proprietary Recipes SuperFit 16 32 32 7 — — 87

Non-Compete Agreement SuperFit 44 20 — — — — 64

Trademark Pokemoto 9 35 35 13 — — 92

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Proprietary Recipes Pokemoto 41 162 161 161 161 60 746

Non-Compete Agreement Pokemoto — — — — — — —

120 475 473 451 438 996 2,953

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.

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 the remaining company-owned units.

Due to the structural change of the Company's operations and the closing or marketing for sale of the Company owned stores an impairment testing of the Company’s intangible assets was required as of September 30, 2023.

Therefore, an impairment charge of $ 0.8 million was recorded during the three and nine months ended September 30, 2023.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of the goodwill assets is presented below:

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Impairment of goodwill — — — —

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

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

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

Impairment of goodwill ( 570 ) — ( 258 ) ( 828 )

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.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Goodwill, net at September 30, 2023 — 1,798 — 1,798

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 the remaining company-owned units.

Due to the structural change of the Company's operations and the closing or marketing for sale of the Company owned stores an impairment testing of the Company’s goodwill was required as of September 30, 2023.

During the three and nine months ended September 30, 2023, there was an Impairment of goodwill of $ 0.8 million.

Accounts Payables and Accrued Expenses

Accounts payables and accrued expenses consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accounts payable 1,246 1,085

1 unchanged sentence

Accrued expenses 180 87

Accrued interest expenses 21 —

Accrued professional fees 183 185

3 unchanged sentences

Accrued Stock-Based Consulting Expenses Due to Related Party

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

At September 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.

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

See Note 19 – Related party transactions for details.

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.

As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0 % of the Net income generated by Sadot LLC.

See Note 14 – Commitments and contingencies for further details.

For the three and nine months ended September 30, 2023, $ 0.7 million and $ 5.1 million are also recorded within Stock-based expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

The Stock-based consulting expenses that were due to related party were paid in stock in 2023.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

On September 22, 2023, the Company entered into the Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”) pursuant to which the Company has the right to sell to Yorkville up to $ 25 million of its shares of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA.

Sales of the shares of common stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell any shares of common stock to Yorkville under the SEPA except in connection with notices that may be submitted by Yorkville, in certain circumstances as described below.

Upon the satisfaction of the conditions to Yorkville’s purchase obligation set forth in the SEPA, including having a registration statement registering the resale of the shares of common stock issuable under the SEPA declared effective by the SEC, the Company will have the right, but not the obligation, from time to time at its discretion until the SEPA is terminated to direct Yorkville to purchase a specified number of shares of common stock (“Advance”) by delivering written notice to Yorkville ( “Advance Notice”).

While there is no mandatory minimum amount for any Advance, it may not exceed an amount equal to 100 % of the average of the daily traded amount during the five consecutive trading days immediately preceding an Advance Notice.

The shares of common stock purchased pursuant to an Advance delivered by the Company will be purchased at a price equal to 97 % of the lowest daily VWAP of the shares of common stock during the three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which the daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject trading day.

The Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to Yorkville.

“VWAP” is defined as the daily volume weighted average price of the shares of common stock for such trading day on the Nasdaq Stock Market during regular trading hours as reported by Bloomberg L.P.

Accordingly, as may otherwise be limited by Yorkville’s 4.99 % beneficial ownership limitation, assuming the Company submits an Advance requiring Yorkville to provide $ 100,000 in funding and assuming an applicable VWAP of $ 1.10 and, in turn, a purchase price of $ 1.067 ( 97 % of the VWAP), the Company would be required to issue 93,720 shares of common stock and Yorkville would receive a profit of approximately $ 0.03201 per share, or approximately $ 2,999.98 , if it sold all of such shares at $ 1.10 per share.

In connection with the SEPA, and subject to the condition set forth therein, Yorkville has agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal amount of $ 4.0 million (the “Pre-Paid Advance”).

The Pre-Paid Advance was disbursed on September 22, 2023 with respect to $ 3.0 million and the balance of $ 1.0 million will be disbursed upon the registration statement registering the resale of the shares of common stock issuable under the SEPA being declared effective.

The purchase price for the Pre-Paid Advance is 94.0 % of the principal amount of the Pre-Paid Advance.

Interest shall accrue on the outstanding balance of any Pre-Paid Advance at an annual rate equal to 6.0 %, subject to an increase to 18 % upon an event of default as described in the Convertible Notes.

The maturity date will be 12 -months after the initial closing of the Pre-Paid Advance.

Yorkville may convert the Convertible Notes into shares of the Company’s common stock at a conversion price equal to the lower of $ 1.11495 or 95 % of the lowest daily VWAP during the seven consecutive trading days immediately proceeding the conversion (the “Conversion Price”), which in no event may the Conversion Price be lower than $ 0.33 (the “Floor Price”).

In addition, upon the occurrence and during the continuation of an event of default, the Convertible Notes shall become immediately due and payable and the Company shall pay to Yorkville the principal and interest due thereunder.

In no event shall Yorkville be allowed to effect a conversion if such conversion, along with all other shares of common stock beneficially owned by Yorkville and its affiliates would exceed 4.99 % of the outstanding shares of the common stock of the Company.

If any time on or after October 22, 2023 (i) the daily VWAP is less than the Floor Price for seven trading days during a period of nine consecutive trading days (“Floor Price Trigger”), or (ii) the Company has issued in excess of 99 % of the shares of common stock available under the Exchange Cap (“Exchange Cap Trigger” and collectively with the Floor Price Trigger, the “Trigger”)), then the Company shall make monthly payments to Yorkville beginning on the seven th trading day after the Trigger and continuing monthly in the amount of $ 500,000 plus an 8.0 % premium and accrued and unpaid interest.

The Exchange Cap Trigger will not apply in the event the Company has obtained the approval from its stockholders in accordance with the rules of Nasdaq Stock Market for the issuance of shares of common stock

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

pursuant to the transactions contemplated in the Convertible Note and the SEPA in excess of 19.99 % of the aggregate number of shares of common stock issued and outstanding as of the effective date of the SEPA (the “Exchange Cap”).

Convertible Notes Payable

On April 6, 2018, the Company issued a $ 0.5 million convertible promissory note (the “2018 ARH Note”) to the Former Parent for services rendered and expense paid on behalf of the Company.

On April 6, 2018, the Company issued a $ 0.5 million convertible promissory note (the “2018 ARH Note”) to it's former parent for services rendered and expense paid on behalf of the Company.

The 2018 ARH Note has no stated interest rate or maturity date and is convertible into shares of the Company’s common stock at a conversion price of $ 3.50 per share at a time to be determined by the lender.

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 June 30, 2023 and December 31, 2022, respectively.

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

Other Notes Payable

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

During the three and nine months ended September 30, 2023, the Company repaid a total amount of $ 0.2 million and $ 0.1 million, and $ 0.1 million and $ 1.3 million for the three and nine months ended September 30, 2022, respectively, of the other notes payable.

As of September 30, 2023, the Company had an aggregate amount of $ 3.7 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:

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

Principal Amount

10/1/23-9/30/24 3,053

10/1/24-9/30/25 88

10/1/25-9/30/26 560

10/1/26-9/30/27 —

The Company’s leases consist of restaurant locations.

1 unchanged sentence

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 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 total lease cost associated with right of use assets and operating lease liabilities for the three and nine months ended September 30, 2023, was $ 0.2 million and $ 0.6 million and $ 0.2 million and $ 0.7 million for the three and nine months ended September 30, 2022, respectively, and has been recorded in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss as Cost of goods sold.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Right to use asset 1,806 2,433

2 unchanged sentences

Total lease liabilities 1,908 2,579

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

Operating Leases

4 unchanged sentences

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

As of June 30, 2023

As of September 30, 2023

Weighted-average remaining lease term (in years)

2 unchanged sentences

Operating leases 12.0 %

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Deferred Revenue

The Company's deferred revenue consists of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Deferred revenues, net 1,395 1,371

1 unchanged sentence

Deferred revenues, non-current 1,298 1,276

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other Current Liabilities

Other current liabilities consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Gift card liability 12 25

3 unchanged sentences

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 June 30, 2023 and December 31, 2022 are presented below:

June 30, 2023 December 31, 2022

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

September 30, 2023 December 31, 2022

Deferred tax assets:

3 unchanged sentences

Intangible assets 704 314

Derivatives 76 —

Right to use asset 409 —

Disallowed interest 104 —

Deferred revenues 261 204

7 unchanged sentences

Net deferred tax asset, net of valuation allowance — —

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

June 30, 2023 December 31, 2022

Nine Months Ended September 30,

State and local:

Current 18 16

Change in valuation allowance — —

Income tax expense 18 16

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Federal income tax benefit at statutory rate 21.0 % 21.0 %

14 unchanged sentences

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 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.

As of September 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 $ 12.1 million and $ 11.0 million, respectively.

The valuation allowance increased by approximately $ 1.1 million.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions.

Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5 percent stockholders” increase their ownership, in the aggregate, by more than 50 percentage points over a 36-month time period testing period or beginning the day after the most recent ownership change, if shorter.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Generally, in addition to certain entity reorganizations, the limitation applies when one or more “5 percent stockholders” increase their ownership, in the aggregate, by more than 50 percentage points over a 36-month time period or beginning the day after the most recent ownership change, if shorter.

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.

Forward Purchase and Sales Contracts

On September 12, 2023, the Company through its wholly owned subsidiary, Sadot LLC, entered into a forward purchase contract titled the Verified Emissions Reduction Purchase Agreement (“VERPA”) for the acquisition of Verified Carbon Units (“VCUs”) generated by a conservation project along the Riau coastline in Indonesia (“conservation project”).

Under the VERPA, Sadot will acquire 180,000 VCUs between 2025 and 2027 as issued.

Delivery of VCUs to Sadot is expected within 14 days from credit issuance annually, where such delivery will occur no later than December of each respective year.

The acquisition price for these VCUs is $ 35.69 per VCU, or $ 6.4 million in the aggregate, which was paid on September 23, 2023.

The aggregate purchase price paid of $ 6.4 million was recorded on the balance sheet within the “Prepaid forward on carbon offsets” account.

On September 13, 2023, the Company through its wholly owned subsidiary, Sadot LLC, entered into a separate forward sales agreement pursuant to which the purchaser agreed to acquire 180,000 VCUs between 2025 and 2026 for an acquisition price of $ 44.62 per VCU, or $ 8.0 million.

The VCUs are expected to be generated as part of the conservation project.

The VCUs would be delivered within 14 days from credit issuance annually, where such delivery will occur no later than December of each respective year.

Payment for these VCUs would not be required until 2025 at the earliest, within 10 days of VCU issuance.

However, Sadot has the right to repurchase any VCUs during the term of this forward

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

contract at the then current market price (based on the prices reported by an independent marketplace).

This contract was determined to be a derivative in accordance with ASC 815.

Refer to Note 2 – Significant accounting policies, Note 16 – Fair value measurement and Note 17 – Financial instruments for additional information regarding the Derivative liability.

Consulting Agreements

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”).

On November 14, 2022 (the “Effective Date”), the Company, Sadot Agri and Aggia entered into a Services Agreement (the “Services Agreement”) whereby Sadot LLC engaged Aggia to provide certain advisory services to Sadot Agri-Foods and Farming operations for creating, acquiring and managing Sadot LLC’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 LLC, the Company agreed to issue shares of common stock of the Company, par value $ 0.0001 per share, to Aggia subject to Sadot LLC 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 LLC 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.

2 unchanged sentences

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 Agri-Foods 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 LLC 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.

3 unchanged sentences

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 .

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

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

1 unchanged sentence

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.

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 LLC to Aggia (the “Debt”), until such Debt has reached a maximum of $ 71.5 million.

Additionally, for the three months ended September 30, 2023, the Company reimbursed Aggia for all operating costs related to Sadot LLC operating expenses including labor and operating expenses of $ 0.8 million and $ 0.1 million, respectively.

For the nine months ended September 30, 2023, the Company reimbursed Aggia for all operating costs related to Sadot LLC including labor, operating and general administrative expenses of $ 2.3 million, $ 0.5 million and $ 0.1 million, respectively.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

During the three and nine months ended September 30, 2023, the Company entered into various Pokemoto franchise agreements for a total of 4 and 15 , respectively, compared to 6 and 25 during the three and nine months ended September 30, 2022, respectively.

The Franchisees paid the Company an aggregate of $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2023 and this has been recorded in deferred revenue as of September 30, 2023.

Master Franchise Agreement

On October 25, 2021, Muscle Maker Development International LLC (“MMDI”), a wholly-owned subsidiary of Muscle Maker Inc., entered into a Master Franchise Agreement (the “Master Franchise Agreement”) with Almatrouk Catering Company – OPC (“ACC”) providing ACC with the right to grant franchises for the development of 40 “Muscle Maker Grill” restaurants through December 31, 2030 (the “Term”) in the Kingdom of Saudi Arabia (“KSA”).

On October 25, 2021, Muscle Maker Development International LLC (“MMDI”), a wholly-owned subsidiary of Sadot Group, entered into a Master Franchise Agreement (the “Master Franchise Agreement”) with Almatrouk Catering Company – OPC (“ACC”) providing ACC with the right to grant franchises for the development of 40 “Muscle Maker Grill” restaurants through December 31, 2030 (the “Term”) in the Kingdom of Saudi Arabia (“KSA”).

Under the Master Franchise Agreement, MMDI has granted to ACC an exclusive right to establish and operate Muscle Maker restaurants in the KSA.

8 unchanged sentences

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.

The Company had accrued a sales tax liability for approximately $ 44.2 thousand and $ 44.6 thousand as of September 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

4 unchanged sentences

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 June 30, 2023 and December 31, 2022.

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

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

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

23 unchanged sentences

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

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.

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.

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

12 unchanged sentences

Mohan will continue to be employed as Chief Investment Officer of the Company on an at-will-basis.

During the term of the Employment Agreement, Mr.

During the term of the

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Employment Agreement, Mr.

Mohan is entitled to a base salary at the annualized rate of $ 0.2 million.

16 unchanged sentences

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

Muscle Maker, Inc.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

1 unchanged sentence

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 and six months ended June 30, 2023:

For the Three Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

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

For the Three Months Ended September 30, 2023

Sadot food service Sadot agri-foods Sadot farm operations Corporate adj.

Total segments

7 unchanged sentences

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

Cost of goods sold 2,167 176,617 484 — 179,268

Impairment of goodwill 828 — — — 828

Impairment of intangible assets 810 — — — 810

Depreciation and amortization expenses 382 — 61 — 443

2 unchanged sentences

Post-closing expenses 60 — — — 60

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

Stock-based expenses — — — 1,075 1,075

Sales, general and administrative expenses 278 549 4 2,479 3,310

5 unchanged sentences

Change in fair value of accrued compensation — — — 297 297

Warrant modification expense — — — ( 958 ) ( 958 )

Loss on fair value remeasurement — ( 349 ) — — ( 349 )

Total other income / (expense), net ( 1 ) ( 354 ) — ( 955 ) ( 1,310 )

2 unchanged sentences

Net (loss) / income ( 2,344 ) 1,944 ( 373 ) ( 4,522 ) ( 5,295 )

Muscle Maker, Inc.

Total assets 8,798 67,898 12,268 1,704 90,668

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Six Months Ended June 30, 2023

Restaurant division Sadot agri-foods Corporate adj.

For the Nine Months Ended September 30, 2023

Sadot food service Sadot agri-foods Sadot farm operations Corporate adj.

Total segments

7 unchanged sentences

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

Cost of goods sold 7,295 537,023 485 — 544,803

Impairment of goodwill 828 — — — 828

Impairment of intangible assets 810 — — — 810

Depreciation and amortization expenses 1,456 — 61 — 1,517

2 unchanged sentences

Post-closing expenses 172 — — 1 173

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

Stock-based expenses — — — 5,667 5,667

Sales, general and administrative expenses 449 1,136 4 5,586 7,175

1 unchanged sentence

(Loss) / income from operations ( 3,541 ) 9,230 ( 374 ) ( 11,254 ) ( 5,939 )

Other Income:

Other Income / (Expense):

Other income 1 — — 251 252

1 unchanged sentence

Change in fair value of accrued compensation — — — 1,161 1,161

Warrant modification expense — — — ( 958 ) ( 958 )

Loss on fair value remeasurement — ( 349 ) — — ( 349 )

Total other income, net 1 ( 376 ) — 161 ( 214 )

2 unchanged sentences

Net (loss) / income ( 3,542 ) 8,854 ( 374 ) ( 11,109 ) ( 6,171 )

Muscle Maker, Inc.

Total assets 8,798 67,898 12,268 1,704 90,668

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

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

For the Three Months Ended September 30, 2022

Sadot food service Sadot agri-foods Sadot farm operations Corporate adj.

Total segments

5 unchanged sentences

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

Cost of goods sold 2,710 — — — 2,710

Depreciation and amortization expenses 525 — — — 525

Franchise advertising fund expenses 24 — — — 24

Preopening expenses 117 — — — 117

Post-closing expenses 159 — — — 159

Stock-based expenses — — — 32 32

Sales, general and administrative expenses 76 — — 1,143 1,219

2 unchanged sentences

Other Income / (Expense):

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

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

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

Other income 43 — — 12 55

Interest income / (expense), net 12 — — ( 1 ) 11

Total other income, net 55 — — 11 66

Loss Before Income Tax ( 732 ) — — ( 1,164 ) ( 1,896 )

1 unchanged sentence

Net loss ( 732 ) — — ( 1,166 ) ( 1,898 )

Muscle Maker, Inc.

Total assets 21,735 — — 3,649 25,384

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Six Months Ended June 30, 2022

Restaurant division Sadot agri-foods Corporate adj.

For the Nine Months Ended September 30, 2022

Sadot food service Sadot agri-foods Sadot farm operations Corporate adj.

Total segments

5 unchanged sentences

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

Cost of goods sold 8,834 — — — 8,834

Depreciation and amortization expenses 1,490 — — — 1,490

Franchise advertising fund expenses 58 — — — 58

Preopening expenses 117 — — — 117

Post-closing expenses 159 — — — 159

Stock-based expenses — — — 82 82

Sales, general and administrative expenses 362 — — 3,258 3,620

1 unchanged sentence

Loss from operations ( 2,346 ) — — ( 3,340 ) ( 5,686 )

Other Income:

Other Income / (Expense):

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

Other income / (expense) 55 — — ( 34 ) 21

Interest income / (expense), net 10 — — ( 27 ) ( 17 )

Gain on debt extinguishment 140 — — — 140

Total other income, net 150 — ( 72 ) 78

Total other income / (expense), net 205 — — ( 61 ) 144

Loss Before Income Tax ( 2,141 ) — — ( 3,401 ) ( 5,542 )

1 unchanged sentence

Net loss ( 2,141 ) — — ( 3,417 ) ( 5,558 )

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.

Total assets 21,735 — — 3,649 25,384

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

As a result, we have reevaluated and changed our operating segments late in 2023 to align with our three distinct segments.

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

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.

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.

With the successful purchase of farmland, the Company broke all Sadot Farming operations into its own segment and combined all restaurant operations into a segment under Sadot food services.

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

Muscle Maker, Inc.

Fair Value Measurement

The following tables presents information about the Company's assets and liabilities that are measure at fair value on a recurring basis at September 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

September 30, 2023

Level 1 Level 2 Level 3 Total

Financial liabilities:

$’000 $’000 $’000 $’000

Derivative liability — 349 — 349

December 31, 2022

Level 1 Level 2 Level 3 Total

Financial liabilities:

$’000 $’000 $’000 $’000

Accrued compensation liability 3,602 — — 3,602

3,602 — — 3,602

There were no transfers between fair value levels during the three and nine months ended September 30, 2023.

See Note 18 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

See Note 14 – Commitments and contingencies and Note 17 – Financial instruments for details related to the Derivative liability being fair valued using Level 2 inputs.

Derivative Liability

The Derivative liability relates to the forward sale contract executed in September 2023.

Refer to Note 14 – Commitments and contingencies, for a more detailed discussion of the transaction.

The fair value of the derivative liability is based on quoted prices for similar assets and liabilities in active market or inputs that are observable which represent Level 2 measurements within the fair value hierarchy.

The estimated fair value of the derivative liability is based on observable prices for similar assets sourced by an independent marketplace.

During the three and nine months ended September 30, 2023, the fair value increased by $ 0.4 million.

Financial Instruments

Concentration of Credit Risk

Commodity Price Risk

The Company uses a combination of purchase orders and various short-term supply arrangements in connection with the purchase of corn, soybean and soybean products including certain commodities and agricultural products.

We also enter into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of wheat, soybean and corn.

Commodity futures, options and swap contracts are either designated as cash-flow hedging instruments or are undesignated.

Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows.

The change in fair value on undesignated instruments is recorded in Other income / (expense).

There were no current contracts at September 30, 2023.

We net settle amounts due, if any, under the contract with our counterparty.

Additionally, the Company is exposed to market risks primarily related to the volatility in the price of carbon credits.

To manage these risks, the Company enters into forward sales contracts to sell carbon offset units from time to time.

The Company evaluates its contracts to determine if such contracts qualify as derivatives under ASC 815.

As the Company’s existing carbon offset contracts do not qualify for hedge accounting treatment, any changes in fair value are recorded as Gain (loss) on fair value remeasurement within Other income / (expense).

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company recorded a Derivative liability related to the forward sale agreement entered into on September 13, 2023.

Refer to Note 14 – Commitments and contingencies for additional details on this agreement.

The fair value of the Derivative liability is based on quoted prices for similar assets and liabilities in active market or inputs that are observable, which represent Level 2 measurements within the fair value hierarchy.

The estimated fair value of the Derivative liability was determined based on observable prices for comparable assets sourced from an independent marketplace.

During the three and nine months ended September 30, 2023, the fair value of the Derivative liability increased by $ 0.4 million.

See Note 2 – Significant accounting policies, Note 14 – Commitments and contingencies and Note 16 – Fair value measurement for further details regarding the Derivative liability.

Stock Option and Stock Issuance Plan

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

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.

As of September 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 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.

As of September 30, 2023, 0.3 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 second quarter of 2022.

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

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

The Company accrued for the liability as of September 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.

3 unchanged sentences

On June 30, 2022, the Company recognized 30.9 thousand shares of common stock for book purpose to reconcile the shares outstanding to the transfer agent report.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

On July 14, 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 second quarter of 2022.

1 unchanged sentence

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.

Muscle Maker, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

1 unchanged sentence

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.

On June 30, 2023, the Company vested 0.9 million shares of common stock to Aggia as consulting fees earned during the second quarter of 2023.

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 second quarter of 2023.

On July 14, 2023, The Company issued 8.9 million Restricted Share Awards, with an effective issuance date of April 1, 2023.

On August 15, 2023, the Company authorized the issuance of 0.1 million shares of common stock to a consultant for services rendered.

On September 25, 2023, the Company authorized the issuance of 0.2 million shares of common stock in fees to a consultant for services rendered related to the SEPA.

On September 30, 2023, the Company vested 0.5 million shares of common stock to Aggia as consulting fees earned during the third quarter of 2023.

Change in fair value of accrued compensation on the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss 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 the three and nine months ended September 30, 2023, Change in fair value of accrued compensation was $ 0.3 million and $ 1.2 million, respectively.

Private Placements

4 unchanged sentences

The Private Placement closed on April 9, 2021.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Securities Purchase Agreement contains customary representations, warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties thereto.

4 unchanged sentences

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

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.

7 unchanged sentences

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

Restricted Stock Awards

Restricted Share 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 .

Pursuant to the Services Agreement these RSA's vest on a

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

progressive schedule, at a rate equal to the Net Income of Sadot LLC, calculated quarterly divided by $ 3.125 , which for accounting purposes shall equal 40 % of the net income of Sadot LLC, 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.

At September 30, 2023, there was 7.5 million restricted stock awards outstanding.

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

4 unchanged sentences

Vested ( 1,392,721 ) 1.25

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

Outstanding at September 30, 2023 7,462,731 1.25

See Note 14 – Commitments and contingencies for further details on Restricted Share Awards.

6 unchanged sentences

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 June 30, 2023.

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.

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 June 30, 2023.

Muscle Maker, Inc.

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.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

9 unchanged sentences

Forfeited — — N/A —

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, September 30, 2022 1.52 412,500 4.29 —

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

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

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

2 unchanged sentences

Forfeited — — N/A —

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

Outstanding, September 30, 2023 1.51 1,012,500 4.49 90

Expected to vest, September 30, 2023 1.18 731,233 5.05 64

Exercisable and vested, September 30, 2023 2.39 281,267 3.04 26

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

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Risk free interest rate 3.54 - 4.93 %

7 unchanged sentences

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 .

Muscle Maker, Inc.

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.

Sadot Group, 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:

In connection with the exercise of the Original Warrants, we issued an additional warrant to Altium that is exercisable to acquire 2.2 million shares of common stock (the “Additional Warrant”) exercisable at a per share price of $ 2.40 .

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.

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

Weighted-average

price Number of

warrants Weighted-average

price Weighted-average

remaining life

(in years) Aggregate intrinsic value

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

2 unchanged sentences

Forfeited — — N/A —

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

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

Outstanding, September 30, 2022 1.89 17,873,906 3.77 —

Exercisable, September 30, 2022 1.89 17,873,906 3.77 —

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

Granted — — N/A

Exercised — — N/A

Granted 2.40 2,153,309 3.14 —

Exercised 1.00 ( 2,153,309 ) 3.15 215

Forfeited — — N/A —

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 $ 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.

Outstanding, September 30, 2023 2.02 18,033,640 2.80 —

Exercisable, September 30, 2023 2.02 18,033,640 2.80 —

Stock-Based Expenses

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $ 1.1 million and $ 5.7 million, respectively for the three and nine months ended September 30, 2023, of which $ 20.3 thousand and $ 0.1 million were executive compensation, $ 0.1 million and $ 0.1 million were given to the board of directors, $ 0.3 million and $ 0.4 million were given to consultants for services rendered and $ 0.7 million and $ 5.1 million were stock-based consulting expenses paid to related party.

For the three and nine months ended September 30, 2022, Stock-based expenses were $ 32.0 thousand and $ 0.1 million, respectively, of which $ 3.2 thousand and $ 17.7 thousand were executive compensation and $ 28.5 thousand and $ 28.5 thousand were given to the board of directors and $ 0.0 thousand and $ 36.0 thousand were given to consultants for services rendered.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

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 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”);

At the meeting, the shareholders approved (i) the Services Agreement whereby Sadot LLC engaged Aggia, to provide certain advisory services to Sadot LLC for managing Sadot LLC’s 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 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;

(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 LLC 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, 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.

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

As of September 30, 2023, Aggia owned 26.9 % of the Company's common stock.

During the three and nine months ended September 30, 2023, the Company recorded Stock-based expenses of $ 0.7 million and $ 5.1 million to its related party, Aggia for consulting services rendered.

Additionally, for the three and nine months ended September 30, 2023, the Company reimbursed Aggia for certain operating costs related to Sadot Agri-Foods of $ 1.0 million and $ 2.8 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.

Muscle Maker, Inc.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Subsequent Events

Board Issued Stock

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.

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 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 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.

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 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

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

Line of Credit

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

Common Stock Issuance

On October 2, 2023, 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 third quarter of 2023.

On October 23, 2023, the Company authorized the issuance of 0.1 million shares of common stock to consultants for services rendered.

On November 6, 2023, the Company authorized the issuance of 0.1 million shares of common stock in connection with the conversion of note payables.

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.

On October 30, 2023, the Company received cash advance of $ 1.0 million on the Yorkville Convertible Promissory Note.

On November 3, 2023, the Company issued a Promissory Note in the principal amount of $ 3.0 million in consideration of cash in the amount of $ 3.0 million.

The Promissory Note is due on February 6, 2024.

Nasdaq Notice

On November 7, 2023, the Company received notice from The Nasdaq Stock Market (“Nasdaq”) that the closing bid price for the Company’s common stock had been below $1.00 per share for the previous 30 consecutive business days, and that the Company is therefore not in compliance with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Rule”).

Nasdaq’s notice has no immediate effect on the listing or trading of the Company’s common stock on The Nasdaq Capital Market.

The notice indicates that the Company will have 180 calendar days, until May 6, 2024, to regain compliance with this requirement.

The Company can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of its common stock is at least $1.00 per share for a minimum of ten (10) consecutive business days during the 180-day compliance period.

If the Company does not regain compliance during the initial compliance period, it may be eligible for additional time of 180 calendar days to regain compliance.

To qualify, the Company will be required to meet the continued listing requirement for market value of our publicly held shares and all other Nasdaq initial listing standards, except the bid price requirement, and will need to provide written notice to Nasdaq of its intention to cure the deficiency during the second compliance period.

If the Company is not eligible or it appears to Nasdaq that the Company will not be able to cure the deficiency during the second compliance period, Nasdaq will provide written notice to the Company that the Company’s common stock will be subject to delisting.

In the event of such notification, the Company may appeal Nasdaq’s determination to delist its securities, but there can be no assurance that Nasdaq would grant the Company’s request for continued listing.

The Company intends to actively monitor the minimum bid price of its common stock and may, as appropriate, consider available options to regain compliance with the Rule.

There can be no assurance that the Company will be able to regain compliance with the Rule or will otherwise be in compliance with other Nasdaq listing criteria.

Company Update

The Company passed a unanimous board resolution on September 21, 2023, naming Benjamin Petel the Company Secretary effective October 1, 2023.

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