What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2023-11-14 · 519 added, 595 removed, 667 unchanged (63% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

Cash 1,214 1,354

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

Accounts receivable, net of allowance for doubtful accounts of $ 0.2 million and $ 0.2 million as of March 31, 2024 and December 31, 2023, respectively

23,095 52,920

Inventory 2,383 2,561

Prepaid expenses and other current assets 571 317

Prepaid forward on carbon offsets 6,424 —

Assets held for sale 6,950 —

Other current assets 58,584 56,016

Total current assets 92,226 112,851

3 unchanged sentences

Intangible assets, net — 2,833

Deposit on farmland — 4,914

Security deposits and other assets 84 103

Other non-current assets 46,340 46,442

Total assets 150,527 178,091

2 unchanged sentences

Accounts payable and accrued expenses 23,342 50,167

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

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

Notes payable, current, net of discount of $ 0.1 million and $ 0.2 million as of March 31, 2024 and December 31, 2023, respectively

Operating lease liability, current — 385

Deferred revenue, current 2,165 1,229

Derivative liability 349 —

Liabilities held for sale 3,752 —

Other current liabilities 46,111 46,270

Total current liabilities 79,010 104,582

Contract liability, non-current 46,048 46,048

Notes payable, non-current — 622

4 unchanged sentences

Stockholders’ equity:

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

Common stock, $ 0.0001 par value, 200,000,000 shares authorized, 44,234,315 and 40,464,720 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 109,281 107,988

Accumulated deficit ( 87,444 ) ( 87,179 )

21,816 16,561

Accumulated other comprehensive (loss) / income ( 52 ) 8

Total Sadot Group Inc.

shareholders' equity 21,789 20,821

Non-controlling interest 3,388 3,436

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Condensed Consolidated Statement of Operations and Other Comprehensive Loss

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

2023 2022 2023 2022

$’000 $’000 $’000 $’000

Three Months Ended March 31,

Commodity sales 106,507 210,366

2 unchanged sentences

Franchise advertising fund contributions 15 16

Other revenues — — 13 —

Total revenues 182,173 2,824 555,457 8,674

Operating Costs and Expenses:

Cost of goods sold ( 108,276 ) ( 208,294 )

Impairment of goodwill 828 — 828 —

Impairment of intangible assets 810 — 810 —

Gross (loss) profit ( 340 ) 4,673

Depreciation and amortization expenses ( 280 ) ( 633 )

4 unchanged sentences

Sales, general and administrative expenses ( 2,096 ) ( 2,142 )

Total costs and expenses 186,145 4,786 561,396 14,360

Loss from operations ( 3,546 ) ( 1,607 )

Other Income / (Expense):

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

Interest (expense) / income, net ( 490 ) 3

Change in fair value of stock-based compensation 476 541

Gain on fair value remeasurement 3,259 —

Loss on sale of trading securities ( 11 ) —

Loss Before Income Tax ( 312 ) ( 1,063 )

Income tax 13 2 18 16

Income tax expense 1 3

Net loss ( 313 ) ( 1,066 )

Other comprehensive loss

Currency translation differences — — — —

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

Net loss attributable to non-controlling interest 48 —

Net loss attributable to Sadot Group Inc.

( 265 ) ( 1,066 )

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

Sadot Group Inc.

Condensed Consolidated Statement of Operations and Other Comprehensive Loss

(Unaudited) (Continued)

Three Months Ended March 31,

Net loss ( 313 ) ( 1,066 )

Other comprehensive income

Unrealized loss, net of income tax ( 60 ) —

Total other comprehensive loss ( 60 ) —

Total comprehensive loss ( 373 ) ( 1,066 )

Net loss attributable to:

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

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

Comprehensive loss attributable to non-controlling interest 48 —

Total Comprehensive loss attributable to Sadot Group Inc.

( 325 ) ( 1,066 )

Net Loss Per Share:

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

Weighted-Average # of Common Shares Outstanding:

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)

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Capital Accumulated

Deficit Non-controlling Interest Total

Deficit Accumulated Other Comprehensive Loss Non-controlling Interest Total

Shares Amount

1 unchanged sentence

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

Cumulative effect of change in accounting principal — — — ( 15 ) — ( 15 )

Cashless exercise of pre-funded warrants 2,410 — — — — —

Common stock compensation to board of directors 31 — 28 — — — 28

Common stock issued as compensation for services 2,849 — 3,020 — — — 3,020

Net loss — — — ( 1,886 ) — ( 1,886 )

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

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

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

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

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

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

Net loss — — — ( 1,066 ) — — ( 1,066 )

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

Balance at December 31, 2023 40,465 4 107,988 ( 87,179 ) 8 3,436 24,257

1 unchanged sentence

Common stock issued as compensation for services 583 — 175 — — — 175

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

Conversion of convertible loan 2,841 965 965

Stock Based Compensation - Vesting of Options and Restricted Stock Awards 239 — 111 — — — 111

Unrealized loss, net of income tax — — — — ( 60 ) — ( 60 )

Net loss — — — ( 265 ) — ( 48 ) ( 313 )

Balance at March 31, 2024 44,234 4 109,281 ( 87,444 ) ( 52 ) 3,388 25,177

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

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

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

Net income — — — 190 — 190

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

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)

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities

3 unchanged sentences

Stock-based expenses 796 3,414

Gain on extinguishments of debt — ( 140 )

Impairment of goodwill 828 —

Impairment of intangible assets 810 —

Change in fair value of compensation 476 541

Warrant modification expense 958 —

Unrealized loss, net of income tax ( 60 ) —

Loss on disposal of assets 63 —

Bad debt expense — ( 5 )

Transfer to assets held for sale ( 265 ) —

Changes in operating assets and liabilities:

1 unchanged sentence

Inventory — ( 34,848 )

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

Prepaid forward on carbon offsets ( 6,424 ) —

Security deposits and other assets 19 12

Other current assets ( 2,690 ) 111

Other non-current assets 36 —

Accounts payable and accrued expenses ( 26,498 ) 32,828

Accrued stock-based compensation expense - related party — —

Deferred rent — ( 128 )

Operating right of use asset and liability, net ( 46 ) 132

Deferred revenue 23 297

Derivative liability 349 —

Other current liabilities 71 14

Operating right to use assets and lease liabilities, net ( 61 ) ( 30 )

Deferred revenue 1,198 ( 53 )

Total adjustments 2,912 ( 2,216 )

Net cash used in operating activities ( 8,679 ) ( 3,413 )

Net cash provided by (used in) operating activities 2,599 ( 3,282 )

Cash Flows from Investing Activities

Deposit on farmland — ( 87 )

Investment in non-controlling interest 3,655 —

Purchases of property and equipment ( 11 ) ( 109 )

Disposal of property and equipment 62 —

Collections from loans receivable — 71

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

Net cash provided by (used in) investing activities 51 ( 196 )

Cash Flows from Financing Activities

Proceeds from notes payable 1,500 —

Proceeds from exercise of warrants 2,153 —

Repayments of notes payable ( 4,290 ) ( 34 )

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

Net cash used in financing activities ( 2,790 ) ( 34 )

Net Decrease in Cash ( 140 ) ( 3,512 )

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Condensed Consolidated Statements of Cash Flows (Continued)

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental Disclosures of Cash Flow Information:

Cash paid for interest 495 3

Transfer to assets held for sale 6,590 —

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

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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.

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

("Sadot Group" or "SGI" or together with its subsidiary, the “Company”) (f/k/a Muscle Maker, Inc.) , a Nevada corporation was incorporated in Nevada on October 25, 2019.

In late 2022, SGI has transformed from a U.S.-centric restaurant business into a global organization focused on the Agri-food commodity supply chain.

Effective July 27, 2023, we changed our company name from Muscle Maker, Inc., to Sadot Group Inc.

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”.

Worth, Texas with subsidiary operations throughout the United States, Brazil, Colombia, Dubai, India, Israel, Singapore, Ukraine and Zambia.

As of March 31, 2024, SGI consisted of two distinct operating units:

Sadot LLC (“Sadot Agri-Foods”):

Sadot Group’s largest operating unit is a global Agri-Foods company engaged in farming, commodity trading and shipping of food and feed (e.g., soybean meal, wheat and corn) via dry bulk cargo ships to/from markets such as Argentina, Australia, Bangladesh, Brazil, Canada, China, Columbia, Ecuador, Egypt, Guinea, Honduras, India, Indonesia, Ivory Coast, Japan, Kenya, Malaysia, Morocco, Mozambique, Nigeria, Philippines, Poland, Romania, Saudi Arabia, South Korea, Sri Lanka, Ukraine, United States and Vietnam, among others.

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

Sadot Agri-Foods operates, through a majority owned subsidiary, a roughly 5,000 acre crop producing farm in Zambia with a focus on major commodities such as wheat, soy and corn alongside high-value tree crops such as avocado and mango.

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

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

Sadot Restaurant Group, LLC ("Sadot Food Services") has three unique “healthier for you” concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, as well as one subscription-based fresh prep meal concept, SuperFit Foods.

The restaurants were founded on the belief of taking every-day menu options and converting them into “healthier for you” menu choices with the goal of satisfying consumers demand for healthier choices, customization, flavor and convenience.

Each of our three concepts offers different menus that are tailored to specific consumer segments.

We believe our concepts deliver highly differentiated customer experiences.This entire operating segment was identified as held for sale.

Please see Note 3 – Assets held for sale for further details.

Recent Corporate Developments

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

Effective July 27, 2023, the Company changed its name from Muscle Maker, Inc.

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.

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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.

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 was changed to “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.

In the first quarter of 2024, the Company classified its Sadot Food Services segment as held for sale.

See Note 3 – Assets held for sale for additional information.

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,

As of March 31, 2024, the Company had a cash balance, a working capital surplus and an accumulated deficit of $ 1.2 million, $ 13.2 million, and $ 87.4 million, respectively.

During the three months ended March 31, 2024, the Company incurred a Pre-tax net loss of $ 0.3 million.

The Company had Net

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

cash provided by operations of $ 2.6 million for the three months ended March 31, 2024.

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.

Working Capital

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

March 31, 2024 December 31, 2023

Cash 1,214 1,354

Accounts Receivable, net 23,095 52,920

Inventory 2,383 2,561

Other current assets (1)

58,584 56,016

Assets held for sale (5)

Total current assets 92,226 112,851

Accounts payable and accrued expenses 23,342 50,167

Notes payable, net 3,640 6,531

Other current liabilities (2)

48,276 47,884

Liabilities held for sale (6)

Total current liabilities 79,010 104,582

Working capital (3)

Current ratio (4)

(1) Consists of Prepaid expenses and other current assets, Prepaid forward on carbon offsets, Forward sales derivatives and Notes receivable, current

(2) Consists of Operating lease liability, current, Deferred revenue, current and Other current liabilities

(3) Working Capital is defined as Total current assets less Total current liabilities

(4) Current ratio is defined as Total current assets divided by Total current liabilities

(5) See Note 3 for additional information

(6) See Note 3 for additional information

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 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.

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 March 31, 2024, and for the three months ended March 31, 2024, and 2023.

The results of operations for the three months ended March 31, 2024, and 2023 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, 2023.

The Balance Sheet as of December 31, 2023, has been derived from the Company’s audited Financial Statements.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Principles of Consolidation

16 unchanged sentences

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 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.

There were no cash equivalents as of March 31, 2024 or December 31, 2023.

Inventory, which are stated at the lower of cost or net realizable value, related to our raw materials, supplies and harvested crops related to our farming operations of $ 2.4 million and $ 2.4 million as of March 31, 2024, and December 31, 2023, respectively.

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

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

Accounts Receivable

Accounts Receivable consists of receivables related to Sadot Agri-Foods of $ 23.1 million and $ 52.9 million net of doubtful accounts of $ 0.2 million and $ 0.2 million as of March 31, 2024, and December 31, 2023, respectively.

Accounts receivable is stated at historical carrying amounts net of write-offs and allowances for uncollectible accounts.

The Company establishes allowances for uncollectible trade accounts receivable based on lifetime expected credit losses using an aging schedule for each pool of accounts receivable.

Pools are determined based on risk characteristics such as the type of receivable and geography.

A default rate is derived using a provision matrix which is evaluated on a regular basis by management and based on past experience and other factors.

The default rate is then applied to the pool to determine the allowance for expected credit losses.

Given the short-term nature of the Company's trade accounts receivable, the default rate is only adjusted if significant changes in the credit profile of the portfolio are identified (e.g., poor crop years, credit

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

issues at the country level, systematic risk), resulting in historic loss rates that are not representative of forecasted losses.

Uncollectible accounts are written off when a settlement is reached for an amount that is less than the outstanding historical balance or when the Company has determined that collection of the balance is unlikely.

Assets held for sale

In the first quarter of 2024, the Company classified its Sadot food services segment as held for sale.

Assets and liabilities of disposal group(s) are classified as held for sale when:

• management, having the authority to approve action, commits to a plan to sell,

• the disposal group(s) are available for immediate sale in present condition,

• an active program to locate a buyer and other actions required to complete the plan to sell have been initiated,

• the sale is probable and expected to be completed within one year,

• the sale is actively marketed at a reasonable price reflecting its current fair value,

• and it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less cost to sell.

Any impairment loss resulting from this initial measurement is recognized in the period in which the held for sale criteria described above, is met.

Conversely, gains are not recognized on the sale of a disposal group until the date of sale.

The Company assesses the fair value of a disposal group, less costs to sell, at each reporting period that it remains as held for sale, with any changes as a result of the assessment adjusting the carrying value of the disposal group, but not in excess of the cumulative loss previously recognized on the disposal group.

Following their classification as held for sale, assets are not depreciated or amortized.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.

Refer to Note 3 – Assets held for sale for more details.

Property and Equipment

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In accordance with ASC 350, the Company does not amortize intangible assets having indefinite useful lives.

The Company determined that as of January 1, 2022, – the trademark – Muscle Maker had a finite life of 3 years and is amortizing the value over the new estimated life.

The Company’s goodwill has an indefinite life and is not amortized, but are evaluated for impairment at least annually, or more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable.

The Company’s goodwill has an indefinite life and is not amortized, but is evaluated for impairment at least annually, or more often whenever changes in facts and circumstances may indicate that the carrying value may not be recoverable.

ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment).

1 unchanged sentence

Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions.

Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.

The useful lives of the Company’s intangible assets are:

Franchisee agreements 13 years

Franchise license 10 years

Trademarks 3 – 5 years

Domain name, Customer list and Proprietary recipes 3 – 7 years

Non-compete agreements 2 – 3 years

Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

In the first quarter of 2024, the remaining intangible assets were moved to assets held for sale.

See Note 3 – Assets held for sale for additional information.

Impairment of Long-Lived Assets

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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”).

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.

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 March 31, 2024 and December 31, 2023, the Company deemed the conversion feature related to notes payable was not required to be bifurcated and recorded as a derivative liability.

Related Parties

12 unchanged sentences

In applying this five-step model, we made significant judgments in identifying the promised goods or services in our contracts with franchisees that are distinct, and which represent separate performance obligations.

There is a degree of seasonality in the growing cycles, procurement and transportation of crops.

The farming industry in general historically experiences seasonal fluctuations in revenues and net income.

Typically, the Company has lower sales and net income during the non-harvest seasons and higher sales and net income during the harvest season.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Commodity Sales

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.

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

During the three months ended March 31, 2024 and 2023, the Company recorded Commodity sales revenues of $ 106.5 million and $ 210.4 million, respectively, which is included in Commodity sales on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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 $ 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.

Retail store revenue at Sadot Food Service 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 $ 1.2 million during the three months ended March 31, 2024 and $ 2.3 million for the three months ended March 31, 2023, respectively, which is included in Restaurant sales on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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

The Company recognizes revenues from gift cards as restaurant revenues once the Company performs its obligation to provide food and beverage to the customer simultaneously with the redemption of the gift card or through gift card breakage, as discussed in Other revenues below.

Franchise Royalties and Fees

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The Company recognizes the royalties as the underlying sales occur.

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 recorded revenue from royalties of $ 0.2 million during the three months ended March 31, 2024 and $ 0.2 million during the three months ended March 31, 2023, 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.

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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 $ 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 recorded revenue from initial franchise fees of $ 26.9 thousand and $ 0.1 million during the three months ended March 31, 2024 and 2023, 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.

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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 $ 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.

The Company recorded revenue from rebates of $ 22.9 thousand during the three months ended March 31, 2024 and $ 26.0 thousand for the three months ended March 31, 2023, 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.

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Under the Company’s franchise agreements, the Company and its franchisees are required to contribute a certain percentage of revenues to a national advertising fund.

The Company’s national advertising services are provided on a system-wide basis and therefore, not considered distinct performance obligations for individual franchisees.

The Company’s national advertising services are provided on a

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

system-wide basis and therefore, not considered distinct performance obligations for individual franchisees.

In accordance with Topic 606, the Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense.

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

The Company recorded contributions from franchisees of $ 16.0 thousand and $ 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

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

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 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)

The Company recorded contributions from franchisees of $ 15.0 thousand during the three months ended March 31, 2024 and $ 16.0 thousand for the three months ended March 31, 2023, which are included in Franchise advertising fund contributions on the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

Deferred Revenue

Deferred revenue primarily includes initial franchise fees received by the Company, which are being amortized over the life of the Company’s franchise agreements.

Deferred revenue is recognized in income over the life of the franchise agreements.

Deferred revenue primarily includes initial franchise fees received by the Company and revenue from forward sales contracts.

Deferred revenue related to Sadot food services is recognized in income over the life of the franchise.

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.

Deferred revenue related to Sadot Agri-Foods is recognized at the completion of the commodity forward sales contract agreements.

Stock-Based Expenses

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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.

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 Sadot LLC through March 31, 2023.

The consulting fees due to Aggia related to ongoing Sadot Agri-Foods 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 15 – Commitments and contingencies for further details.

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.

For the three months ended March 31, 2024 and 2023, $ 0.8 million and $ 3.4 million, respectively, are recorded as Stock-based expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

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

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

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 .

Advertising costs are charged to expense as incurred.

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

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

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

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

September 30,

Advertising costs of $ 0.1 million for the three months ended March 31, 2024 and $ 0.1 million for the three months ended March 31, 2023, respectively, are included in Sales, general and administrative expenses.

For the three months ended March 31, 2024 and 2023, $ 24.8 thousand and $ 40.0 thousand, respectively, are included in Cost of goods sold in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss.

Net Loss per Share

Basic loss per common share is computed by dividing net loss attributable to Sadot Group Inc.

by the weighted average number of common shares outstanding during the period.

Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of potential common shares, assuming all dilutive potential common shares were issued.

Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The following securities are excluded from the calculation of weighted average diluted common shares at March 31, 2024 and 2023, respectively, because their inclusion would have been anti-dilutive:

Warrants 17,056 18,034

Options 813 1,013

Restricted stock awards 7,463 —

RSAs 10,495 —

Convertible debt 9,501 24

Total potentially dilutive shares 37,865 19,071

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

Three Months Ended March 31,

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

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

Net loss attributable to Sadot Group Inc.

( 265 ) ( 1,066 )

Weighted-average shares outstanding:

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Diluted 41,869,051 29,443,394

Net loss per share:

Net loss per share attributable to Sadot Group Inc.:

Basic ( 0.01 ) ( 0.04 )

Diluted ( 0.01 ) ( 0.04 )

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 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.

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

Purchases from the Company’s five largest commodity suppliers totaled 95 % for the three months ended March 31, 2024.

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

Derivative Instruments

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

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

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

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Refer to Fair Value of Financial Instruments below, Note 15 – Commitments and contingencies and Note 18 – Financial instruments for additional information regarding the Company’s derivative instruments.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

Forward sales contracts 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 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 Consolidated Balance Sheets at fair value and typically do not offset these assets and liabilities.

There were two open positions at March 31, 2024.

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

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.

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.

See Note 17 – Fair value measurement for a summary of financial liabilities held at carrying amount including the Accrued compensation liability, Forward sales derivatives and the Derivative liability.

For details related to the fair value of the Accrued compensation liability measured using Level 1 inputs, refer to Note 19 – Equity for details related to the fair value of the Forward sales derivatives and Derivative liability measured using Level 2 inputs, refer to Note 15 – Commitments and contingencies and Note 18 – Financial instruments.

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

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The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

Uncertain tax positions have had no impact on the Company’s financial condition, results of operations or cash flows.

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 and Other Comprehensive Loss.

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.

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.

Uncertain tax positions have had no impact on the Company’s

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.

financial condition, results of operations or cash flows.

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

Currency Translation Differences

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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.

On a monthly basis, for subsidiaries whose functional currency is a currency other than the U.S.

dollar, subsidiary statements of income and cash flows must be translated into U.S.

dollars for consolidation purposes based on weighted-average exchange rates in each monthly period.

As a result, fluctuations of local currencies compared to the U.S.

dollar during each monthly period impact our consolidated statements of income and cash flows for each reported period (per quarter and year-to-date) and also affect comparisons between those reported periods.

Non-controlling Interests

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Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842), which requires companies to recognize lease liabilities and corresponding right-of-use leased assets on the Balance Sheets and to disclose key information about leasing arrangements.

Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing, and uncertainty of cash flows arising from leases.

2016-02 is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

Additionally, in 2018 and 2019, the FASB issued the following Topic 842–related ASUs:

• ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, which clarifies the applicability of Topic 842 to land easements and provides an optional transition practical expedient for existing land easements;

• ASU 2018-10, Codification Improvements to Topic 842, Leases, which makes certain technical corrections to Topic 842;

• ASU 2018-11, Leases (Topic 842):

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

• ASU 2019-01, Leases (Topic 842):

Codification Improvements, which provides guidance for certain lessors on determining the fair value of an underlying asset in a lease and on the cash flow statement presentation of lease payments received;

2019-01 also clarifies disclosures required in interim periods after adoption of ASU No.

2016-02 in the year of adoption.

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

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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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.

Among other changes, ASU 2020-06 removes the liability and equity separation model for convertible instruments with a cash conversion feature, and

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

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

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (Topic 280).

The standard requires incremental disclosures related to reportable segments, including disaggregated expense information and the title and position of the company's chief operating decision maker ("CODM"), as identified for purposes of segment determination.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Entities must adopt the changes to the segment reporting guidance on a retrospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements.

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 21 – Subsequent events.

Loans Receivable

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 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.

Assets Held For Sale

2023 Disposal groups held for sale

During the first quarter of 2024, the Company began actively marking the sale of Sadot food services and identifying it as a disposal group that meets the requirements of ASC 360-10.

Accordingly, it was classified as held for sale in the Company's Unaudited Condensed Consolidated Balance Sheets.

This current period classification resulted in the Group identifying a triggering event as it was more likely than not that these asset groups would be disposed of under ASC 350-20.

For more details over the resulting impairment test performed prior to measuring the disposal group at the lower of their carrying amount or fair value less cost to sell, see Note 8 – Goodwill and other intangible assets, net.

The following presents the major classes of assets and liabilities for the Sadot food services reporting unit held for sale as of March 31, 2024:

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Prepaid Expenses and Other Current Assets

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

March 31, 2024

Accounts receivable, net 260

Inventory 177

Other current assets 135

Right to use assets 887

Property and equipment, net 647

Goodwill 1,798

Intangible assets, net 2,715

Other non-current assets 66

Assets held for sale 6,950

Accounts payable and accrued expenses 321

Notes payable, current, net 121

Operating lease liability, current 272

Deferred revenue, current 118

Other current liabilities 230

Notes payable, non-current 601

Operating lease liability, non-current 681

Deferred revenue, non-current 1,408

Liabilities held for sale 3,752

Sadot Food Services had the following pre-tax losses for each quarter ended March 31:

Sadot Food Services Net Loss Before Income Tax $’000

2024 ( 1,090 )

Allowance for Credit Losses on Accounts Receivable

At March 31, 2024 and December 31, 2023, a summary of the activity in the allowance for credit losses on accounts receivable appears below:

March 31, 2024 December 31, 2023

Balance at beginning of period 173 23

Adjustments related to Sadot food services — 72

Adjustments related to Sadot agri-foods 76 78

Balance at end of period 249 173

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other Current Assets

In the first quarter of 2024, the Company transferred $ 0.1 million of other current assets to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

At March 31, 2024 and December 31, 2023, the Company’s other current assets consists of the following:

March 31, 2024 December 31, 2023

Prepaid expenses 205 766

Other receivables 25 7

Prepaid and Other Current Assets 571 317

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.

Contract assets - current 47,180 47,180

Forward sales derivative 4,750 1,491

Notes receivable, current — 148

Prepaid forward on carbon offsets 6,424 6,424

Other Current Assets 58,584 56,016

Other Non-Current Assets

In the first quarter of 2024, the Company transferred $ 0.1 million of other non-current assets to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

At March 31, 2024 and December 31, 2023, the Company’s other non-current assets consists of the following:

March 31, 2024 December 31, 2023

Security deposit — 76

Notes receivable, non-current — 26

Contract assets, non-current 46,340 46,340

Other non-current assets 46,340 46,442

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Property and Equipment, Net

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

September 30, 2023 December 31, 2022

In the first quarter of 2024, the Company transferred $ 0.6 million of Property and equipment to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

As of March 31, 2024 and December 31, 2023, Property and equipment consist of the following:

March 31, 2024 December 31, 2023

Furniture and equipment 218 1,026

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Property and equipment, net 11,961 12,883

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.

Depreciation expense amounted to $ 0.2 million for the three months ended March 31, 2024 and $ 0.3 million during the three months ended March 31, 2023, respectively.

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 $ 0.1 million and nil for the three months ended March 31, 2024 and 2023, respectively, in the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income.

Goodwill and Other Intangible Assets, Net

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

In the first quarter of 2024, the Company moved the remaining intangible assets to assets held for sale and as a result of the reclassification, the Company stopped amortizing these assets.

See Note 3 – Assets held for sale for additional information.

Sadot Group, Inc.

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expense Intangible

September 30,

2023 Intangible

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intangible assets Amortization

expense Intangible

September 30,

expense Transfer to assets held for sale Intangible

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

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4,611 — ( 310 ) 4,301 2,833 — ( 118 ) ( 2,715 ) —

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:

Nine Months Ended September 30,

2024 2025 2026 2027 2028 Thereafter Total

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

Trademark Pokemoto 9 35 35 13 — — 92

Franchisee License Pokemoto 70 278 277 277 277 936 2,115

Proprietary Recipes Pokemoto 41 162 161 161 161 60 746

120 475 473 451 438 996 2,953

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)

Amortization expense related to intangible assets was $ 0.1 million and $ 0.3 million for the three months ended March 31, 2024 and 2023, respectively.

A summary of the goodwill assets is presented below:

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Impairment of goodwill — — — —

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

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

Goodwill, net at December 31 2023 — 1,798 — 1,798

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

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.

Transfer to assets held for sale — ( 1,798 ) — ( 1,798 )

Goodwill, net at March 31, 2024 — — — —

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Accounts Payables and Accrued Expenses

In the first quarter of 2024, the Company transferred $ 0.3 million of Accounts payables and accrued expenses to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

Accounts payables and accrued expenses consist of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accounts payable 3,294 3,488

1 unchanged sentence

Accrued expenses 90 204

Accrued interest expenses 5 77

Accrued professional fees 214 255

Accounts payable commodities 19,161 45,342

Accrued purchases — 17

Sales taxes payable 3 28

(1) See Note 14 – Commitments and contingencies for details related to delinquent sales taxes.

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 and Farming operations.

See Note 19 – Related party transactions for details.

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)

23,342 50,167

Notes Payable

8 unchanged sentences

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.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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”).

7 unchanged sentences

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.

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

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 September 30, 2023, are as follows:

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 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”).

No triggering event occurred as of March 31, 2024.

As of March 31, 2024, 3.9 million shares of common stock have been converted leaving an aggregate principle balance remaining of 2.7 million.

Notes Payable

During the three months ended March 31, 2024 and 2023, the Company repaid a total amount of $ 4.3 million and $ 0.1 million, respectively, of the notes payable.

As of March 31, 2024, the Company had an aggregate amount of $ 3.6 million in notes payable.

The notes had interest rates ranging between 6.00 % - 24.39 % per annum, due on various dates through September 2024.

In the first quarter of 2024, the Company transferred $ 0.7 million of notes payable to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

The maturities of notes payable as of March 31, 2024, are as follows:

Principal Amount

3 unchanged sentences

1/1/27-12/31/27 —

Total maturities 3,739

Less discount ( 99 )

Notes payable, net 3,640

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Leases Held for Sale

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 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 total lease cost associated with right of use assets and operating lease liabilities for the three months ended March 31, 2024 and 2023, was $ 0.1 million and $ 0.1 million, respectively, and has been recorded in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Loss as Cost of goods sold.

In the first quarter of 2024 all of the Company's leased assets of $ 0.9 million and lease liabilities of $ 1.0 million were moved to Assets held for sale.

See Note 3 – Assets held for sale for additional information.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Right to use asset 887 1,284

Transferred to assets held for sale ( 887 ) —

Total lease assets — 1,284

Operating leases – current 272 385

Operating leases – non-current 681 1,027

Transferred to liabilities held for sale ( 953 ) —

Total lease liabilities — 1,412

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

The table below presents the future minimum lease payments under the noncancellable operating leases as of March 31, 2024:

Operating Leases

2 unchanged sentences

Less imputed interest ( 337 )

Less assets transferred to held for sale ( 953 )

Present value of lease liabilities —

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

As of September 30, 2023

As of March 31, 2024

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

In the first quarter of 2024, the Company transferred $ 1.5 million of deferred revenue to Liabilities held for sale.

See Note 3 – Assets held for sale for additional information.

The Company's deferred revenue consists of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Deferred revenues, net 2,457 2,784

1 unchanged sentence

Deferred revenues, non-current 292 1,555

Deferred revenue related to commodity forward sales contracts were $ 2.5 million and $ 1.4 million, as of March 31, 2024 and December 31, 2023, respectively.

Deferred revenue related to deferred franchise fees were nil and $ 1.4 million, as of March 31, 2024 and December 31, 2023, respectively.

Other Current Liabilities

In the first quarter of 2024, the Company transferred $ 0.2 million of other current liabilities to Liabilities held for sale.

See Note 3 – Assets held for sale for additional information.

Other current liabilities consist of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Gift card liability — 13

2 unchanged sentences

Advertising fund liability — 29

Derivative liability 65 —

Contract liabilities, current 46,046 46,046

46,111 46,270

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

1 unchanged sentence

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

The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of March 31, 2024 and December 31, 2023 are presented below:

March 31, 2024 December 31, 2023

Deferred tax assets:

3 unchanged sentences

Intangible assets 719 727

Derivatives 76 —

Right to use asset 409 —

Disallowed interest 104 —

163(j) adjustment 201 100

Accrued expenses 86 106

Capitalized costs 8 4

Deferred revenues 351 310

Leases 206 301

Gross deferred tax asset 14,014 13,495

1 unchanged sentence

Property and equipment ( 11 ) ( 60 )

Right to use liability ( 387 ) —

Leases ( 192 ) ( 274 )

Unrealized gains ( 1,025 ) ( 317 )

Gross deferred tax liabilities ( 1,228 ) ( 651 )

3 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

State and local:

Current 18 16

Change in valuation allowance — —

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Federal income tax benefit at statutory rate 21.0 % 21.0 %

1 unchanged sentence

Permanent differences ( 2.0 ) % ( 0.3 ) %

PPP loan forgiveness — % 0.4 %

Return to provision adjustments ( 38.6 ) % 0.5 %

Deferred tax asset true up- State — % ( 14.5 ) %

Deferred tax asset true up- Federal — % ( 6.8 ) %

Warrant modification expense — % ( 2.5 ) %

Fair value gain/loss on share issuance — % 3.6 %

Other ( 2.3 ) % — %

3 unchanged sentences

major tax jurisdictions as follows:

Nevada, California, Connecticut, Florida, New Jersey, Texas, Virginia, New York State and New York City.

Connecticut, Kansas, Florida, Texas, Virginia, New York State and New York City.

The earliest year that the Company is subject to examination is the year ended December 31, 2015.

1 unchanged sentence

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 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.

As of March 31, 2024 and December 31, 2023, 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 $ 12.8 million and $ 12.8 million, respectively.

The valuation allowance decreased by approximately $ 58.0 thousand.

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.

2 unchanged sentences

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.

On September 12, 2023, the Company through Sadot Agri-Foods, 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 Agri-Foods will acquire 180,000 VCUs between 2025 and 2027 as issued.

Delivery of VCUs to Sadot Agri-Foods 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.

On September 13, 2023, the Company through Sadot Agri-Foods, 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.

1 unchanged sentence

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

However, Sadot Agri-Foods has the right to repurchase any VCUs during the term of this forward 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.

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).

On November 24, 2023, the Company through Sadot Agri-Foods, entered into a forward sale contract for the sale of 70,000 Metric Tons (“MTs”) of soybeans.

Sadot Agri-Foods will provide 70,000 MTs to a third-party in May 2025, which is the executed contract date.

The acquisition price for these MTs is $ 662 per MT, or $ 46.3 million in the aggregate.

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

On December 6, 2023, the Company through Sadot Agri-Foods, entered into a forward sale contract for the sale of 70,000 Metric Tons (“MTs”) of soybeans.

Sadot Agri-Foods will provide 70,000 MTs to a third-party in November/December 2024, which is the executed contract date.

The acquisition price for these MTs is $ 674 per MT, or $ 47.2 million in the aggregate.

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

Refer to Note 2 – Significant accounting policies, Note 17 – Fair value measurement and Note 18 – Financial instruments for additional information regarding the Derivative liability.

Consulting Agreements

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”).

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

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.

Further, once Aggia has been issued a number of shares constituting 19.99 % of the issued and outstanding shares of common stock of the Company, no additional shares shall be issued to Aggia unless and until this transaction has been approved by the shareholders of the Company.

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 LLC 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 Group 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.

4 unchanged sentences

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 .

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

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

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 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.

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

Additionally, for the three months ended March 31, 2024, the Company reimbursed Aggia for all operating costs related to Sadot Agri-Foods' operating expenses including labor and operating expenses and general administrative expenses of $ 0.9 million, $ 0.1 million and nil , respectively.

For the three months ended March 31, 2023, operating costs related to Sadot Agri-Foods' operating expenses including labor and operating expenses and general administrative expenses were $ 0.6 million, $ 0.2 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.

During the three months ended March 31, 2024 and 2023, the Company entered into various Pokemoto franchise agreements for a total of 15 and 5 , respectively, potentially new Pokemoto locations with various franchisees.

The Franchisees paid the Company an aggregate of $ 0.2 million for the three months ended March 31, 2024 and this has been recorded in liabilities held for sale as of March 31, 2024.

See Note 3 – Assets held for sale for additional information.

Master Franchise Agreement

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”).

On October 25, 2021, Muscle Maker Development International LLC (“MMDI”), a wholly-owned subsidiary of the Company, 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.

4 unchanged sentences

Further, ACC is to adhere to the agreed upon development schedule as outlined in the master franchise agreement.

An initial $ 20.0 thousand deposit was paid on the agreement and no other amount is due at this time.

An initial $ 20.0 thousand deposit was paid on the agreement.

ACC has not performed against this agreement.

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

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

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.

The Company had accrued a sales tax liability for approximately $ 33.0 thousand and $ 28.0 thousand as of March 31, 2024, and December 31, 2023, 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.

Litigations, Claims and Assessments

On April 24, 2022, the Company and a convertible note holder entered into an agreement in which the Company will repay a total of $ 0.1 million in connection with the default judgement issued on June 22, 2018, by the Iowa District Court for Polk County #CVCV056029, filed against the Company for failure to pay the remaining balance due on a promissory note in the amount of $ 0.1 million, together with interest, attorney fees and other costs of $ 0.2 million.

The Company agreed to pay $ 40.0 thousand on or before May 1, 2022 and to make seven installment payments of $ 10.0 thousand per month starting on or before June 1, 2022.

As of December 30, 2022, the Company had paid this note in full.

On or about March 7, 2019, the Company was listed as a defendant to a lawsuit filed by a contractor in the State of Texas in El Paso County #2019DCV0824.

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 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 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)

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

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

8 unchanged sentences

Roper will be eligible for a discretionary performance bonus to be determined by the Board annually.

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

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

Roper received an additional bonus of $ 0.1 million on March 2, 2023 and an additional $ 25.0 thousand which was paid on March 8, 2024, relating to the appointment of certain directors pursuant to the agreement with Aggia.

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

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

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

7 unchanged sentences

Black will be eligible for a discretionary performance bonus up to 50 % of her annual salary.

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

Black received an additional bonus of $ 0.1 million on March 2, 2023 and an additional $ 25.0 thousand which was paid on March 8, 2024, relating to the appointment of certain directors pursuant to the agreement with Aggia.

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

2 unchanged sentences

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.

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

Pursuant to the Miller Agreement, Mr.

3 unchanged sentences

Miller will be eligible for a discretionary performance bonus up to 75 % of his annual salary.

Miller will be entitled to an additional bonus of $ 25.0 thousand upon the Designated Directors representing a majority of the Board of Directors.

Miller will be entitled to an additional bonus of $ 25.0 thousand which was paid on March 8, 2024, relating to the appointment of certain directors pursuant to the agreement with Aggia.

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

5 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

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Employment Agreement, Mr.

During the term of the Employment Agreement, Mr.

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

Mohan will be eligible for a discretionary performance bonus up to 75 % of his annual salary.

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

Mohan received an additional bonus of $ 0.1 million on March 2, 2023 and an additional $ 25.0 thousand which was paid on March 8, 2024, relating to the appointment of certain directors pursuant to the agreement with Aggia.

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

8 unchanged sentences

Infante will be eligible for a discretionary performance bonus up to 25 % of her annual salary.

Infante will be entitled to an additional bonus of $ 25.0 thousand upon the Designated Directors representing a majority of the Board of Directors.

Infante will be entitled to an additional

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

bonus of $ 25.0 thousand which was paid on March 8, 2024, relating to the appointment of certain directors pursuant to the agreement with Aggia.

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

2 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.

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.

On April 29, 2024, the Company submitted a request to Nasdaq requesting an additional 180 days to regain compliance.

On May 7, 2024, the Company received notice from Nasdaq that the request for an additional 180 days to regain compliance was approved.

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.

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.

Sadot Group, Inc.

2 unchanged sentences

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 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.

The following table sets forth the results of operations for the relevant segments for the three months ended March 31, 2024:

For the Three Months Ended March 31, 2024

Sadot food service Sadot agri-foods Corporate adj.

Total segments

4 unchanged sentences

Franchise advertising fund contributions 15 — — 15

Other revenues — — — — —

Total revenues 2,198 179,464 511 — 182,173

Operating Costs and Expenses:

Cost of goods sold ( 1,331 ) ( 106,945 ) — ( 108,276 )

Impairment of goodwill 828 — — — 828

Impairment of intangible assets 810 — — — 810

Gross (loss) profit 98 ( 438 ) — ( 340 )

Depreciation and amortization expenses ( 189 ) ( 91 ) — ( 280 )

Franchise advertising fund expenses ( 15 ) — — ( 15 )

Pre-opening expenses — — 335 — 335

Post-closing expenses ( 19 ) — — ( 19 )

1 unchanged sentence

Sales, general and administrative expenses ( 703 ) ( 731 ) ( 662 ) ( 2,096 )

Total costs and expenses 4,541 177,166 884 3,554 186,145

(Loss) / income from operations ( 2,343 ) 2,298 ( 373 ) ( 3,554 ) ( 3,972 )

Other Income / (Expense):

Other income 1 — — — 1

Interest expense, net ( 2 ) ( 5 ) — ( 294 ) ( 301 )

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 )

Loss from operations ( 828 ) ( 1,260 ) ( 1,458 ) ( 3,546 )

Interest income / (expense), net ( 262 ) ( 407 ) 179 ( 490 )

Change in fair value of stock-based compensation — — 476 476

Gain on fair value remeasurement — 3,259 — 3,259

Loss on sale of trading securities — ( 11 ) — ( 11 )

(Loss) / Income Before Income Tax ( 1,090 ) 1,581 ( 803 ) ( 312 )

Income tax — — — 13 13

Income tax expense — — 1 1

Net (loss) / income ( 1,090 ) 1,581 ( 804 ) ( 313 )

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Nine Months Ended September 30, 2023

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

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

For the Three Months Ended March 31, 2023

Sadot food service Sadot agri-foods Corporate adj.

Total segments

4 unchanged sentences

Franchise advertising fund contributions 16 — — 16

Other revenues 13 — — — 13

Total revenues 7,557 547,389 511 — 555,457

Operating Costs and Expenses:

Cost of goods sold ( 2,465 ) ( 205,829 ) — ( 208,294 )

Impairment of goodwill 828 — — — 828

Impairment of intangible assets 810 — — — 810

Gross (loss) profit 136 4,537 — 4,673

Depreciation and amortization expenses ( 633 ) — — ( 633 )

4 unchanged sentences

Sales, general and administrative expenses ( 82 ) ( 286 ) ( 1,774 ) ( 2,142 )

Total costs and expenses 11,098 538,159 885 11,254 561,396

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

Other Income / (Expense):

Other income 1 — — 251 252

Interest income / (expense), net — ( 27 ) — ( 293 ) ( 320 )

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 )

(Loss) / Income Before Income Tax ( 3,540 ) 8,854 ( 374 ) ( 11,093 ) ( 6,153 )

Income tax 2 — — 16 18

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

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 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

$’000 $’000 $’000 $’000 $’000

Company restaurant sales, net of discounts 2,630 — — — 2,630

Franchise royalties and fees 170 — — — 170

Franchise advertising fund contributions 24 — — — 24

Total revenues 2,824 — — — 2,824

Operating Costs and Expenses:

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

Total costs and expenses 3,611 — — 1,175 4,786

Loss from operations ( 725 ) 4,251 ( 5,133 ) ( 1,607 )

Other Income / (Expense):

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 )

Income tax — — — 2 2

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

Total assets 21,735 — — 3,649 25,384

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Nine Months Ended September 30, 2022

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

Total segments

$’000 $’000 $’000 $’000 $’000

Company restaurant sales, net of discounts 8,075 — — — 8,075

Franchise royalties and fees 541 — — — 541

Franchise advertising fund contributions 58 — — — 58

Total revenues 8,674 — — — 8,674

Operating Costs and Expenses:

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

Total costs and expenses 11,020 — — 3,340 14,360

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

Other Income / (Expense):

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

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

Gain on debt extinguishment 140 — — — 140

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

Interest income, net 3 — — 3

Change in fair value of stock-based compensation — — 541 541

Loss Before Income Tax ( 722 ) 4,251 ( 4,592 ) ( 1,063 )

Income tax — — — 16 16

Income tax expense 1 — 2 3

Net loss ( 723 ) 4,251 ( 4,594 ) ( 1,066 )

Total assets 8,711 45,853 8,034 62,598

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.

During the first quarter of Fiscal 2024, assets related to our Sadot food services segment met the criteria for classification as Assets Held for Sale.

For additional information, see Note 2 – Significant accounting policies and Note 3 – Assets held for sale.

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 two distinct segments.

As a result, we have reevaluated and changed our operating segments late in 2023 to align with our 2 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.

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.

With the transformation of our business into a global, food-focused organization, we operate the business in 2 distinct business segments Sadot Agri-Foods and Sadot Food Service.

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

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.

The following tables presents information about the Company's assets and liabilities that are measure at fair value on a recurring basis at March 31, 2024 and December 31, 2023 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

March 31, 2024

Level 1 Level 2 Level 3 Total

1 unchanged sentence

$’000 $’000 $’000 $’000

Contract liability — 92,094 — 92,094

Derivative liability — 65 — 65

Forward sales derivatives — 4,750 — 4,750

— 96,909 — 96,909

December 31, 2023

2 unchanged sentences

$’000 $’000 $’000 $’000

Accrued compensation liability 3,602 — — 3,602

Contract liability — 92,094 — 92,094

Forward sales derivatives — 1,491 — 1,491

— 93,585 — 93,585

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

There were no transfers between fair value levels during the three months ended March 31, 2024.

See Note 19 – Equity for details related to accrued compensation liability being fair valued using Level 1 inputs.

See Note 15 – Commitments and contingencies and Note 18 – 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.

Forward Sales Derivative and Derivative Liability

The Forward sales derivative asset and Derivative liability primarily relate to the forward sale contracts.

The fair value of the Forward sales derivative asset and 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 and is based on observable prices for similar assets sourced by an independent marketplace.

The Forward sales derivative refers to the forward sales contracts executed in September, November and December 2023.

Refer to 15 – Commitments and contingencies, for a more detailed discussion of the transactions.

During the three months ended March 31, 2024, the fair value increased by $ 3.3 million .

Please refer to Please refer to Note 2 – Significant accounting policies for additional information on ASC 815 leveling.

Financial Instruments

1 unchanged sentence

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.

The Company uses a combination of purchase orders and various long and 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.

2 unchanged sentences

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

There were no current contracts at September 30, 2023.

There were two current contracts designated as a hedge at March 31, 2024.

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

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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

2 unchanged sentences

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.

The Forward sales derivative asset and Derivative liability primarily relate to the forward sale contracts.

The fair value of the Forward sales derivative asset and 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 and is based on observable prices for similar assets sourced by an independent marketplace.

The Forward sales derivative refers to the forward sales contracts executed in September, November and December 2023.

Refer to Note 15 – Commitments and contingencies, for a more detailed discussion of the transactions.

During the three months ended March 31, 2024, the fair value increased by $ 3.3 million.

See Note 2 – Significant accounting policies, Note 15 – Commitments and contingencies and Note 17 – Fair value measurement for further details regarding the Derivative liability.

2 unchanged sentences

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

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.

As of March 31, 2024, 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 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.

As of March 31, 2024, 2.4 million shares have been issued and 0.1 million option to purchase shares have been awarded under the 2023 Plan.

The Company’s board of directors and shareholders approved and adopted on December 20, 2023 the 2024 Equity Incentive Plan (“2024 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 2024 Plan, the Company reserved 7.5 million shares of common stock for issuance.

As of March 31, 2024, 2.2 million shares have been issued under the 2024 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 third quarter of 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 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.

On April 4, 2022, the Company authorized the issuance of 20.0 thousand shares of common stock to a member of the executive team per the employment agreement.

The stock was not fully earned until April 4, 2022.

On June 8, 2022, the Company authorized the issuance of 5.0 thousand shares of common stock to a contractor for work done at a Company owned location.

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.

On October 12, 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 third quarter of 2022.

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

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

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

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.

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

On April 7, 2021, the Company entered into a Securities Purchase Agreement with an accredited investor (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) pursuant to which the investor agreed to purchase from the Company for an aggregate purchase price of approximately $ 10.0 million (i) 1.3 million shares of common stock of the Company (ii) a common stock purchase warrant to purchase up to 4.1 million shares of common stock (the “Common Warrant”) and (iii) a pre-funded common stock purchase warrant to purchase up to 2.9 million shares of common stock (the “pre-funded warrant”).

Each share and accompanying common warrant is being sold together at a combined offering price of $ 2.43 per share and Common Warrant, and each pre-funded warrant and accompanying common warrant is being sold together at a combined offering price of $ 2.42 per pre-funded warrant and accompanying common warrant.

The pre-funded warrant is immediately exercisable, at a nominal exercise price of $ 0.01 per share, and may be exercised at any time until the pre-funded warrant are fully exercised.

The common warrant will have an exercise price of $ 2.43 per share, are immediately exercisable and will expire 5.5 years from the date of issuance.

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.

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

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

Pursuant to a placement agency agreement, dated April 6, 2021, between the Company and A.G.P./Alliance Global Partners (the “Placement Agent”) entered into in connection with the Private Offering, the Placement Agent acted as the sole placement agent for the Private Placement and the Company has paid customary placement fees to the Placement Agent, including a cash fee equal to 8.0 % of the gross proceeds raised in the Private Placement and a common stock purchase warrant to purchase shares of common stock in an amount equal to 4.0 % of the Shares and shares of common stock issuable upon exercise of the warrants sold in the Private Placement, the warrant has an exercise price of $ 2.916 per share and is exercisable commencing six months from the date of the pricing of the Private Placement for a period of five years after such date.

Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement.

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

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

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.

The common warrant will have an exercise price of $ 1.385 per share, are immediately exercisable and will expire 5 years from the date of issuance.

The Private Placement closed on November 22, 2021.

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

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

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

Pursuant to the Placement Agency Agreement, the Company has also agreed to reimburse certain expenses of the placement agent incurred in connection with the Private Placement.

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

On January 4, 2024 the Company authorized the issuance of 0.1 million shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2023.

On January 8, 2024, the Company authorized the issuance of 0.3 million shares of common stock in connection with the conversion of notes payable.

On January 11, 2024, the Company authorized the issuance of 0.3 million shares of common stock in connection with the conversion of notes payable.

On January 22, 2024, the Company authorized the issuance of 0.3 million shares of common stock in connection with the conversion of notes payable.

On January 29, 2024, the Company authorized the issuance of 0.3 million shares of common stock in connection with the conversion of notes payable.

On February 16, 2024 the Company authorized the issuance of 3.0 thousand shares of common stock to a consultant for services rendered.

On February 16, 2024, the Company authorized the issuance of 0.3 million shares of common stock in connection with the conversion of notes payable.

On March 15, 2024, the Company authorized the issuance of 0.6 million shares of common stock in connection with the conversion of notes payable.

On March 20, 2024, the Company authorized the issuance of 0.8 million shares of common stock in connection with the conversion of notes payable.

On March 28, 2024 the Company authorized the issuance of 0.1 million shares of common stock to a consultant for services rendered.

On March 31, 2023, the Company vested 0.5 million shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2023.

Change in fair value of stock-based 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 months ended March 31, 2024 and 2023, Change in fair value of stock-based compensation was $ 0.5 million and $ 0.5 million, respectively.

Restricted Share Awards

1 unchanged sentence

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

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 .

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

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

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

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:

The total RSA's vested for Aggia for the three months ended March 31, 2024 were 0.5 million.

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

At March 31, 2024, there were 10.5 million restricted share awards outstanding.

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

Total RSA's Weighted-average

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Vested ( 740,129 ) 0.93

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

Outstanding at March 31, 2024 10,494,638 0.89

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

Warrant and Option Valuation

The Company has computed the fair value of warrants granted and options accrued for as accrued compensation expense using the Black-Scholes option pricing model.

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model.

The expected term used for warrants and options issued to non-employees is the contractual life.

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Forfeited — — N/A —

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

Expected to vest, March 31, 2023 1.17 822,481 5.54 —

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

Outstanding, December 31, 2023 1.09 827,500 4.26 —

Granted 1.51 600,000 5.67 —

Granted — — N/A —

Exercised — — N/A —

Forfeited 1.51 ( 15,000 ) N/A —

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

Outstanding, March 31, 2024 1.10 812,500 3.92 —

Expected to vest, March 31, 2024 1.14 564,985 3.99 —

Exercisable and vested, March 31, 2024 0.97 247,515 3.77 —

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

Nine Months Ended

September 30, 2023

Three Months Ended March 31, 2023

Risk free interest rate 1.53 - 4.33 %

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Expected dividends —

On January 3, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants.

Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

On February 24, 2022, the Company issued 1.2 million shares of common stock in connection with the cashless exercise of the pre-funded warrants.

Pursuant to the terms of the pre-funded warrants a total of 1.2 million warrants were exercised.

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 .

Warrant Exercise Agreement

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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)

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 .

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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:

The Company is obligated to file a registration

Sadot Group, Inc.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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 three months ended March 31, 2024 and 2023 is presented below:

Weighted-average

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Forfeited — — N/A —

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

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

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

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

Outstanding, December 31, 2023 1.97 17,379,890 2.61 —

Granted 2.40 2,153,309 3.14 —

Exercised 1.00 ( 2,153,309 ) 3.15 215

Granted — — N/A —

Exercised — — N/A —

Forfeited 3.66 ( 323,643 ) N/A —

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.

Outstanding, March 31, 2024 1.94 17,056,247 2.41 —

Exercisable, March 31, 2024 1.94 17,056,247 2.41 —

Stock-Based Compensation Expense

Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $ 0.8 million and $ 3.4 million, respectively for the three months ended March 31, 2024 and 2023, of which $ 45.5 thousand and $ 3.2 thousand were executive compensation, $ 36.1 thousand and $ 28.5 thousand were given to the board of directors, $ 0.1 million and nil were given to consultants for services rendered and $ 0.6 million and $ 3.4 million were stock-based consulting expenses paid to related party.

Sadot Group, Inc.

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Related Party Transactions

The Company held a Special Meeting on February 28, 2023.

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 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”);

The Company held a Special Shareholder Meeting on February 28, 2023.

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

(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;

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

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 shareholders of the Company subsequently approved an increase in the authorized shares of common stock from 150.0 million to 200.0 million at the Company’s Annual Meeting held on December 20, 2023.

As of March 31, 2024, Aggia owned 29.1 % of the Company's common stock.

During the three months ended March 31, 2024 and 2023, the Company recorded Stock-based consulting expense of $ 0.6 million and $ 3.4 million to its related party, Aggia for consulting services rendered.

Additionally, for the three months ended March 31, 2024 and 2023, the Company reimbursed Aggia for all operating costs related to Sadot Agri-Foods of $ 1.1 million and $ 0.6 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.

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Subsequent Events

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 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

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.

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.

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.

Updated SEPA Agreement

On September 26, 2023, the Company, entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd.

(the “Investor”), pursuant to which the Investor has agreed to purchase up to $ 25 million of the Company’s shares of common stock..

Pursuant to the SEPA, the Investor provided pre-advances to the Company in the aggregate amount of $ 4.0 million (each, a “Pre-Advance”), with each Pre-Advance evidenced by a convertible promissory note (each, a “Note”).

The first Pre-Advance, in the principal amount of $ 3.0 million, was on September 23, 2023.

The second Pre-Advance of $ 1.0 million was advanced on October 30, 2023.

On April 10, 2024, the Company and the Investor entered into a letter agreement (the “Letter Agreement”) to amend the terms of the remaining outstanding Note providing that the Company will make payments on May 1, 2024, June 1, 2024 and July 1, 2024 each in the principal amount of $ 350,000 plus an 8 % payment premium and accrued interest.

During the period through August 1, 2024, the Investor agreed that the application of any monthly payments that may become due and payable pursuant to Section 1(c) of the Notes (i.e., as a result of a Floor Price Trigger, or Exchange Cap Trigger) shall be suspended and the Investor shall not effect any Investor Notices of Conversions Notices, unless the Conversion Price is equal to the Fixed Price as such terms are defined in the SEPA, or with the consent of the Company.

Franchise Agreement Terminations

Effective May 2, 2024, the Company terminated its franchise agreement relating to the two Muscle Maker restaurants operating in Kuwait due to the failure to pay the royalty and other fees.

Among other items in addition to terminating the franchise agreement, the Company demanded all amounts due and that the franchise cease all use of the Company's marks.

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