Sadot Group Inc. 10-Q

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuance of Stock On January 4, 2024, the Company authorized the issuance of 1,056 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 2,769 shares of common stock in connection with the conversion of notes payable. On January 11, 2024, the Company authorized the issuance of 2,789 shares of common stock in connection with the conversion of notes payable. On January 22, 2024, the Company authorized the issuance of 3,058 shares of common stock in connection with the conversion of notes payable. On January 29, 2024, the Company authorized the issuance of 3,044 shares of common stock in connection with the conversion of notes payable. On February 16, 2024, the Company authorized the issuance of 30 shares of common stock to a consultant for services rendered. On February 16, 2024, the Company authorized the issuance of 3,057 shares of common stock in connection with the conversion of notes payable. On March 15, 2024, the Company authorized the issuance of 6,089 shares of common stock in connection with the conversion of notes payable. On March 20, 2024, the Company authorized the issuance of 7,608 shares of common stock in connection with the conversion of notes payable. On March 28, 2024, the Company authorized the issuance of 795 shares of common stock to a consultant for services rendered. On March 31, 2024, the Company vested 5,009 shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2023. 73 On June 30, 2024, the Company vested 13,990 shares of common stock to Aggia as consulting fees earned during the first quarter of 2024. On August 14, 2024, the Company authorized the issuance of 5,498 shares of common stock in connection with the conversion of notes payable. On August 19, 2024, the Company authorized the issuance of 10,425 shares of common stock in connection with the conversion of notes payable. On August 26, 2024 the Company authorized the issuance of 4,750 shares of common stock to a consultant for services rendered. On September 27, 2024, the Company authorized the issuance of 6,255 shares of common stock in connection with the conversion of notes payable. On September 30, 2024, the Company vested 12,115 shares of common stock to Aggia as consulting fees earned during the second quarter of 2024. On December 3, 2024, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with institutional investors (“Purchasers”) and issued an aggregate of $3.75 million aggregate principal amount of convertible senior notes due in 2025 (the “Notes”) for aggregate gross proceeds of approximately $3.0 million, before deducting fees to the placement agent and other expenses payable by the Company (the “Offering”). RBW Capital Partners LLC, offering all securities through Dominari Securities LLC, served as the exclusive placement agent for the Offering. The Offering closed on December 4, 2024. Pursuant to the Purchase Agreement, the Notes were issued with an original issue discount of 20%. The Notes matured on December 4, 2025, unless earlier converted upon the satisfaction of certain conditions. The conversion price of the Notes is $41.0 per share of common stock. The Notes include a “Most Favored Nation” clause which grants to the Purchasers the right to claim better conversion terms should the Company provide such to any as long as the Notes are outstanding. The Purchasers will be prohibited from effecting a conversion of the Notes to the extent that, as a result of such conversion, a Purchaser would beneficially own more than 9.99% of the shares of common stock outstanding immediately after giving effect to such conversion. The Company agreed to register the shares of common stock underlying the Notes for resale under a Registration Statement on Form S-3, pursuant the Securities Act of 1933. The Notes contain a covenant prohibiting the Company to incur, guarantee or assume any indebtedness, other than certain permitted indebtedness, create or allow or suffer any mortgage, lien, security interest or other encumbrance on its property or assets , other than permitted liens, redeem, defease, repurchase, repay or make any payments in respect of any indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event of default under the Notes has occurred and is continuing, declare or pay any cash dividend or distribution on any stock or other equity interest of the Company, or make, any change in the nature of its business or modify its corporate structure or purpose. The Notes contain customary events of default and customary penalties for the Company’s failure to issue conversion shares on a timely basis. The Registration Rights Agreement contains customary penalties for our failure to file the registration statement or cause it to become effective on a timely basis and for certain other events. On December 31, 2024, the Company vested 16,041 shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2024. On March 25, 2025, the Company authorized the issuance of 3,407 shares of common stock to consultants for services rendered. On March 31, 2025, the Company vested 7,934 shares of common stock to Aggia as consulting fees earned during the first quarter of 2025. On April 25, 2025, the Company exchanged a note payable of $25.0 thousand for 1,894 shares of common stock. On April 30, 2025, the Company exchanged a note payable of $0.1 million for 4,924 shares of common stock. On May 6, 2025, the Company exchanged a note payable of $0.1 million for 4,274 shares of common stock. On May 12, 2025, the Company exchanged a note payable of $0.1 million for 4,856 shares of common stock. On May 14, 2025, the Company exchanged a note payable of $0.1 million for 5,769 shares of common stock. 74 On May 19, 2025, the Company exchanged a note payable of $0.2 million for 15,000 shares of common stock. On May 28, 2025, the Company exchanged a note payable of $0.1 million for 10,416 shares of common stock. On June 2, 2025, the Company exchanged a note payable of $0.1 million for 11,111 shares of common stock. On June 10, 2025, the Company exchanged a note payable of $0.2 million for 16,667 shares of common stock. On June 12, 2025, the Company exchanged a note payable of $0.3 million for 30,000 shares of common stock. On June 15, 2025, the Company exchanged a note payable of $0.2 million for 19,000 shares of common stock. On June 30, 2025, the Company authorized the issuance of 7,770 shares of common stock to consultants for services rendered. On July 25, 2025, the Company authorized the issuance of 250,000 shares of common stock to a placement agent for services rendered in connection with an offering. On August 19, 2025, the Company authorized the issuance of 5,000 shares of common stock to a consultant for services rendered. On September 23, 2025, the Company authorized the issuance of 44,370 shares of common stock in connection with the conversion of notes payable. On September 23, 2025, the Company entered into a Purchase Agreement with Helena Global Investment Opportunities I Ltd. (“Helena”), pursuant to which the Company has the right, but not the obligation, to sell up to $10,000,000 of common stock to Helena (the “Commitment Amount”). Sales occur via Advance Notices at 97% of the lowest daily closing VWAP during the Pricing Period (subject to 90% adjustment for intra-day volatility >7%). The Company issued 13,849 Commitment Fee Shares (plus potential Make-Whole Shares) and agreed to pay a 1.25% placement agent fee. If the Company fails to submit Advance Notices aggregating at least $2,000,000 within six months following registration effectiveness, it must pay $100,000 in liquidated damages for every subsequent 30-day period until met. Registration failure triggers additional 2.0% of the Commitment Amount monthly liquidated damages. Sales are subject to 4.99% Ownership Limitation, Registration Limitation, and 19.99% Exchange Cap (unless shareholder approval obtained). The agreement terminates upon full draw, expiration, or Nasdaq delisting. On September 24, 2025, the Company authorized the issuance of 13,849 shares of common stock in connection with the conversion of notes payable. On September 30, 2025, the Company authorized the issuance of 37,063 warrants in connection with the conversion of notes payable. On September 30, 2025, the Company authorized the issuance of 9,940 shares of common stock to consultants for services rendered. On October 15, 2025, the Company exchanged a note payable of $0.5 million for 100,000 shares of common stock. On October 15, 2025, the Company entered into Securities Purchase Agreements with certain accredited investors pursuant to which the Company agreed to sell an aggregate of 103,577 shares of the Company’s Common Stock at a purchase price of $5.20 per share, for aggregate gross proceeds to the Company of approximately $538,600, before deducting placement agent fees and other offering expenses payable by the Company (the “October 2025 Offering”). The October 2025 Offering was conducted pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-281842), which was declared effective by the Securities and Exchange Commission on September 19, 2024, and a prospectus supplement dated October 16, 2025. On November 20, 2025, the Company entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) with Aggia LLC FZ (“Aggia”). Pursuant to the Settlement Agreement, the Company and Aggia agreed to terminate the Services Agreement dated as of November 14, 2022, as amended (collectively, the “Agreement Documents”), and to fully settle, compromise, and discharge all claims, debts, obligations, and liabilities arising out of or related to the Agreement Documents. In full and complete satisfaction of the debt and termination of the Agreement Documents, the Company agreed to issue to Aggia, or to Aggia’s designees, an aggregate of 1,050,000 shares of the Company’s common stock, par value $0.0001 per share (the “Settlement Shares”) and make a payment of $75,000. The Company issued 257,000 75 Settlement Shares (the “Initial Shares”) following the execution of the Settlement Agreement. The issuance of the remaining 793,000 Settlement Shares (the “Subsequent Shares”) is subject to obtaining requisite shareholder approval. If shareholder approval is not obtained by March 31, 2026, the obligation to issue the Subsequent Shares will be suspended until such approval is obtained, and the Company will continue to seek approval at subsequent meetings. The Company committed it will not issue any Subsequent Shares under the Settlement Agreement unless and until the requisite shareholder approval under Nasdaq Rule 5635(d) has been obtained. Apart from the initial issuance of Initial Shares (which is below the 19.99% threshold), no further Settlement Shares will be issued without such shareholder approval. Shareholder approval to issue the remaining 793,000 shares was obtained during the Company’s shareholder meeting on April 13, 2026. The Company plans to issue these in the near future. The Settlement Shares will be allocated pro-rata among Aggia’s designated assignees as set forth in the Settlement Agreement. The Settlement Agreement also terminates any related ancillary documents, including promissory notes issued thereunder (which will be deemed cancelled and satisfied in full upon issuance of the Settlement Shares), and eliminates any ongoing obligations under the Agreement Documents, such as services, compensation, board nomination rights, managing member representative roles, non-compete, confidentiality, or other covenants. The Settlement Agreement includes mutual releases of all claims related to the Agreement Documents and prior transactions between the parties, as well as customary representations and warranties, confidentiality provisions, governing law (State of Texas), dispute resolution (exclusive jurisdiction in federal or state courts in Dallas County, Texas, with jury trial waiver), and other miscellaneous terms. On February 6, 2026, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell, and the Purchasers agreed to purchase, 8% Unsecured Original Issue Discount Debentures (the “Debentures”) in the aggregate principal amount of up to $1,086,956.52 (with a funded amount of $1,000,000 after giving effect to an 8% original issue discount). The Debentures were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D promulgated thereunder. The financing closed on February 9, 2026. The Debentures mature on the earlier of (i) May 30, 2026, (ii) four months from the original issue date (May 30, 2026), or (iii) the closing of any debt or equity financing by the Company resulting in gross proceeds of at least $5,000,000. The Debentures do not bear regular interest but are issued at an 8% original issue discount. The Company has the option to prepay the Debentures at any time at the principal amount. As additional consideration, the Company issued an aggregate of 300,000 shares of the Company’s Common Stock to the Purchasers on a pro rata basis (the “Incentive Shares”). The SPA contains customary representations, warranties, covenants, and closing conditions. The Debentures contain negative covenants restricting the Company from incurring additional indebtedness (subject to permitted exceptions), creating liens, amending charter documents in a materially adverse manner, repurchasing equity or other indebtedness (with limited exceptions), paying dividends, or entering into affiliate transactions without Required Holders’ (holders of at least 50% plus $1.00 of the principal amount) consent. Events of default include non-payment, breaches of covenants, bankruptcy events, cross-defaults on material indebtedness, and other customary events. On January 29, 2026, the Company entered into an Engagement Agreement for Advisory Services (the “Engagement Agreement”) with RBW Capital Partners LLC and Dawson James Securities, Inc. (collectively, the “Financial Advisor”), pursuant to which the Financial Advisor provided advisory services in connection with the private debt transaction. The Company paid a one-time advisory fee of $10,000 at closing. The Engagement Agreement includes provisions for an exclusive placement agent engagement for four months post-closing, indemnification, and other standard terms. On February 11, 2026, the Company entered into a Securities Purchase Agreement (the “Preferred SPA”) with Stanley Hills, LLC (the “Preferred Purchaser”), pursuant to which the Company agreed to issue and sell to the Preferred Purchaser 10,000 shares of the Company’s newly designated Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $145,244 (the “Transaction”). On March 2, 2026, the Company entered into a First Amendment to Stock Purchase Agreement (the “SPA Amendment”) with the Preferred Purchaser, amending the Preferred SPA. The SPA Amendment amends the terms of the Series A Preferred Stock by reducing (i) the Stated Value from $14.5244 per share to $5.1596 per share and (ii) the voting rights from 14.5244 votes per share (aggregate 145,244 votes across 10,000 shares) to 5.1596 votes per share (aggregate 51,596 votes across 10,000 shares). All other material terms of the Original SPA and the Series A Preferred Stock remain unchanged. The SPA Amendment was entered into to reduce the Company’s potential redemption and liquidation exposure and to align the voting power with current corporate governance and Nasdaq compliance objectives. The terms of the Series A Preferred Stock are set forth in the Certificate of Designation of Series A Preferred Stock (the “Certificate of Designation”) filed with the Nevada Secretary of State on February 11, 2026 and the Certificate of Amendment to Designation (After Issuance of Class or Series) with the Nevada Secretary of State filed with the Nevada Secretary of State on March 5, 2026. The SPA contains customary representations, warranties, and covenants by the Company and the Purchaser. The Transaction was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D. The issuance of the above securities is exempt from the registration requirements under Rule 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D. 76 Item 3. Defaults Upon Senior Securities The Company’s outstanding notes payable (approximately $11.1 million net of discount at March 31, 2026) include obligations that matured on December 31, 2025 and remain unpaid. These obligations are currently in default. See Note 2 – Liquidity, Going Concern, and Management Plans and the related disclosures in Item 2 (MD&A) for further discussion of the defaults, the Company’s liquidity position, and management’s plans to address these matters. Item 4. Mine Safety Disclosures Not applicable.