Sadot Group Inc

Our Business Overview

Sadot Group, Inc. (referred to herein as “Sadot Group”, "SGI" or “Company”), was incorporated under the laws of the state of Nevada on October 25, 2019. The principal corporate office of Sadot Group is located at 1751 River Run, Suite 200, Fort Worth, Texas, 76107, and the telephone number at that location is (832) 604-9568. Our website address iswww.sadotgroupinc.com.

Sadot Group together with its subsidiaries, is referred to in this Form 10-K annual report (“Form 10-K”) as the Company. The terms “we”, “us” and “our” are also used in the Form 10-K to refer to the Company. Throughout the Form 10-K, the terms “restaurants”, “stores”, “eatery” and “locations” are used inter changeably. While Sadot Group, as the parent Company, does not directly own or operate any restaurants throughout this document we may refer to restaurants that are owned or operated by our subsidiaries as being Company-owned. Sadot Group is our parent company.

In late 2022, Sadot Group began a transformation 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. As of December 31, 2023, Sadot Group consisted of two distinct operating units.

1. Sadot LLC (“Sadot Agri-Foods”): Sadot Group’s largest operating unit is a global Agri-Foods company engaged in sustainable 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 large, multi-national companies such as the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. Sadot Agri-Foods operates, through a joint venture, 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.

2. Sadot Restaurant Group ("Sadot Food Services"): has three unique “healthier for you” concepts, including two fast casual restaurant concepts, Pokémoto and Muscle Maker Grill, plus one subscription-based fresh prep meal concept, SuperFit Foods. The restaurants were founded on the belief of taking every-day menu options and converting them into “healthier for you” menu choices. Consumers are demanding 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.

Throughout the year, the Company has expanded its Sadot Agri-Foods subsidiaries within the agri-commodity sourcing and trading operations into North, Central and South America, further diversifying the Company’s geographic reach beyond its existing operations in Europe, Asia, the Middle East and Africa. The expansion was facilitated by establishing two new operating locations that resulted in Sadot LLC’s subsidiaries – “Sadot Latam” and “Sadot Brazil”. Sadot Latam, LLC was formed by Sadot Agri-Foods’ agri-food operations and entered into a consulting agreement with Buenaventura Trading LLC (“Buenaventura”) based in Miami FL. Buenaventura’s team brings experience and exposure to new trade routes throughout the Americas by adding multiple sourcing and trading consultants to Sadot Agri-Foods with backgrounds from several of the largest international food supply chain organizations.

In addition, Sadot Agri-Foods has onboarded a team of seasoned industry professionals in Brazil to form the most recent subsidiary – Sadot Brasil Ltda ("Sadot Brazil"). These agreements mark a significant milestone for Sadot Agri-Foods as it provides access to new trade routes originating in North, Central, and South America with destinations to various markets in Central and South America, as well as considerably enhancing its sourcing capabilities in one of the most important agricultural production regions worldwide. The planned Americas trade routes are intended to generate accretive value for the Company by tapping into the thriving market demand for agricultural products across Central and South America. This planned expansion is expected to further enhance Sadot Agri-Foods’ position as an emerging entity in the global commodity trading industry.

Through our subsidiaries, we operate within the global food-supply chain, in an effort to integrate capabilities and create a sustainable and innovative company, that enhances the social, environmental and financial value to our Company.

Our Industry

Sadot Agri-Foods:

Sadot LLC, through its subsidiaries, Sadot Latam, Sadot Brazil and Sadot Enterprises (Zambia Farm), operates to enhance global food security by establishing a sustainable and integrated supply-chain within the international Agri-food commodity industry that includes shipping, sourcing, farming and production. Our current primary focus is on farming, trading and shipping food and feed commodity items such as soy meal, corn and wheat between countries via containers or cargo ships. These shipments enhance global food security by providing raw materials and ingredients to various food manufacturers as part of the overall food supply chain.

Sadot Latam: On May 19, 2023, the Company expanded its Sadot Agri-Foods subsidiary within the agri-commodity sourcing and trading operations into North, Central and South America, further diversifying the Company’s geographic reach beyond its existing operations in Europe, Asia, the Middle East and Africa. The expansion was facilitated by a 5 year consulting agreement signed on June 14, 2023, providing for an annual consulting fee of $0.5 million per year and potential profit sharing calculated on a quarterly basis, between Sadot Agri-Foods’ operations and newly-formed Buenaventura Trading LLC (“Buenaventura”) based in Miami FL. Buenaventura, led by Fausto Plaza, seasoned trade and finance professional, and a team of experienced trading consultants with backgrounds from several of the largest international food supply chain organizations, provides exposure to new trade routes throughout the Americas.

Sadot Enterprises: 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 focused on the supply of grains (soy, corn and wheat) as well as tree crops (mango and avocado).

Sadot Brazil: This is the company’s most recent subsidiary. The Brazilian subsidiary is managed by Paulo de Sa and Flavio de Campos, two well-known industry veterans, who’ve gathered a team of professionals in commodity farming, sourcing, financing and logistics, to operate the Brazilian operations.

Sadot Food Service:

Over the past 6 months, the Company has been implementing its announced strategy to convert all of its corporately owned and operated locations into franchise owned locations. This strategy will position the division, once complete, to potentially divest the restaurants allowing the company to focus on its new international Agri-Foods supply chain business segments.

Muscle Maker Grill Restaurants (“Muscle Maker Grill”): our Muscle Maker Grill restaurants are fast-casual style restaurants specializing in “healthier for you” high quality, made to order, lean protein-based meals. Our products are made to order. The menu features bowls, wraps, salads and burgers. We also offer protein shakes and fruit smoothies along with meal plans and catering.

SuperFit Foods Meal Prep (“SuperFit Foods”): The business operates with a centralized kitchen that prepares all meals for distribution to consumers twice per week. This is a subscription-based business model where consumers order their meals via the SuperFitfoods.com website and are charged automatically every week. There are over 150 meal plan options to choose from as well as various healthy juices, snacks and desserts. Meal plans are delivered twice per week to company owned coolers placed in various fitness locations throughout the Jacksonville Florida market. Meal plans focus on specific dietary needs such as vegetarian, high protein, gluten free and low calorie.

Pokemoto Hawaiian Poke restaurants (“Pokemoto”): Pokemoto restaurants are fast-casual style restaurants that specialize in Hawaiian inspired poke bowls, wraps and salads. Poke is native Hawaiian cuisine made up of diced fresh fish served as an appetizer or main course with strong influences of Japanese and Korean cuisine.

Our Strategy

With the substantial pivot in the company’s strategy over the past year, the Company will be focusing its growth on the international Agri-Foods supply-chain, including farming, commodity trade and shipping operations and is actively seeking alternatives to its legacy restaurant business. Our goal is to continue enhancing the Sadot Group, Inc. global operations by creating a comprehensive, global Agri-Foods company that stretches from sustainable farming, agricultural commodity shipping and trading, distribution and production.

Our strategy for both our Muscle Maker Grill and Pokemoto brands is to focus on converting company owned and operated locations into franchise owned and operated locations or closing underperforming locations. The Company currently owns and operates only six locations with the remainder franchise owned.

Our Strengths

Sadot Agri-Foods

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 companies such as the ABCD commodity companies (ADM, Bunge, Cargill, Louis-Dreyfus) as well as many regional organizations. The environment in which Sadot operates is populated with large, multi-layered, and cumbersome companies. The Sadot Group is an efficient and agile operation, with the ability to take advantage of arising opportunities in a constantly growing and evolving industry. The Company’s geographical, operational, financial and product diversification, and expose us to unique opportunities worldwide.

The Company's operational teams are all industry professionals, with decades of experience working for multinational companies, bringing their reputation, industry know-how and work practices to the group. The professionals in charge of devising and implementing the Company’s strategy and overseeing the day-to-day operations, are all well-versed and recognized in the Agri-food commodity supply-chain industry. This experience enables the Company to gain recognition amongst the Company's operational and financial counterparts. The Company is establishing its presence in the important production, finance and operational hubs throughout the world.

The Company’s first operating Farm, located in Mkushi, Zambia provides a reliable supply of grains and tree crops (mango and avocado), and is an important asset in a region that is highly focused on food security. Through the Mkushi Farm, the Company intends to seek out ESG (environmental, social, governance) related projects, with the goal of enhancing the local communities in various aspects, such as the pilot project we initiated to provide farm inputs (seeds, fertilizers etc) to small farm owners in the region.

Sadot Food Service

We believe that our brands: Muscle Maker Grill, Pokemoto and Superfit Foods, are all unique and cater to the current trends of food in the United States. There are currently 33 Pokemoto locations operating, 14 Muscle Maker Grill locations and our meal-prep Superfit Foods location.

Our Franchise Program

Overview: We use a franchising strategy to increase new restaurant growth, especially as we focus on growing the Pokemoto brand, in the United States market, leveraging the ownership of entrepreneurs with specific local market expertise and requiring a relatively minimal capital commitment by us. We believe the franchise revenue generated from our franchise base has historically served as an important source of stable and recurring cash flows to us and, as such, we plan to expand our base of franchised restaurants. We have signed over 20 franchise agreements and opened over 15 new locations since January 2023. We currently have over 60 franchise agreements sold, but not yet opened. In existing markets, we encourage growth from current franchisees. In our expansion markets, we seek highly motivated and entrepreneurial new franchisees for single-unit or multi-unit development opportunities. We market our franchise opportunities with the support of a franchising section on our website, social media, trade shows and other marketing tactics.

Franchise Agreements:

The franchise agreements currently:

•Have terms for 10 through 20 years, with termination dates ranging from 2023 until 2041. These agreements are generally renewable for terms ranging from 5 to 10 years.

•Provide for the payment of initial franchise fees ranging from $5.0 thousand to $35.0 thousand.

•Require the payment of on-going royalty payments ranging from 2% to 6% of net sales at the franchise location. In addition, franchisees contribute ranging from 1% to 2% (total) of net sales to the marketing and brand development/advertising fund.

•Franchisees are licensed the right to use the Muscle Maker Grill® or Pokemoto®trademarks, its confidential operating manual and other intellectual property in connection with the operation of a Muscle Maker Grill or Pokemoto restaurant at a location authorized by us.

•Franchisees are granted a protected territory prohibiting the establishment of another Muscle Maker Grill or Pokemoto restaurant within a geographic territory, the scope of which is the subject of negotiation between Muscle Maker Development LLC or Poke Co Holdings LLC and the franchisee.

•Franchisees are required to offer only those food products that are authorized by Muscle Maker Development LLC or Poke Co Holdings LLC, prepared using our proprietary recipes; and may obtain most supplies only from suppliers that are approved or designated by Muscle Maker Development LLC or Poke Co Holdings LLC. Muscle Maker Development LLC or Poke Co Holdings LLC receives rebates from various vendors or distributors based on total system wide purchases.

•As partial consideration for payment of the initial franchise fee and on-going royalties, Muscle Maker Development LLC or Poke Co Holdings LLC loans its franchisees a copy of its confidential operating manual.

•Administers the advertising/brand development fund and provides franchisees with preopening and on-going assistance including site selection assistance, preopening training, and in-term training.

Our Intellectual Property

We have registered Pokemoto®, SuperFit Foods®, Muscle Maker Grill® and certain other names used by our restaurants as trademarks or service marks with the United States Patent and Trademark Office and Muscle Maker Grill® in one foreign country. Our brand campaign, Great Food with Your Health in Mind™, Get in the Aloha State of Mind™, and Meal Prep and Chill™have also been approved for registration with the United States Patent and Trademark Office. In addition, the Muscle Maker Grill, Pokemoto and SuperFit Foods logos, recipes, trade dress, packaging, website name and address and Facebook, Instagram, Twitter and other social media and internet accounts are our intellectual property. We maintain the recipe for our healthy inspired recipes, as well as certain proprietary standards, specifications and operating procedures, as trade secrets or confidential proprietary information.

Our Competition

Sadot Agri-Foods

Sadot Agri-Foods operates in the global agri-food industry. We have significant competition in the markets in which we operate based principally on price, foreign exchange rates, quality, global supply and alternative products. Given the commodity-based nature of our business, Sadot, on an ongoing basis, expects to focus on managing unit costs and improving efficiency through technology improvements and productivity enhancements. We also compete with local farming operations within the countries we own farmland.

Sadot Food Service

We operate in the restaurant industry, which is highly competitive and fragmented. The number, size and strength of competitors vary by region. Our competition includes a variety of locally owned restaurants and national and regional chains that offer dine-in, carry-out and delivery services as well as meal prep companies. Our competition in the broadest perspective includes restaurants, pizza parlors, convenience food stores, delicatessens, supermarkets, third party delivery services, direct to consumer meal prep and club stores. However, we indirectly compete with fast-casual restaurants, including Chipotle and Panera Bread, among others, and with healthy inspired fast-casual restaurants, such as Pokeworks, Freshii and Veggie Grill as well as direct-to-consumer meal prep such as Freshly, among others.

We believe competition within the fast-casual restaurant and meal prep segments is based primarily on ambience, price, taste, quality and the freshness of the menu items. We also believe that QSR competition is based primarily on quality, taste, speed of service, value, brand recognition, restaurant location and customer service.

As consumer preferences continue to evolve into healthier eating options, most restaurants are developing healthier menu choices. As more restaurants offer healthier options, the competition for our product offerings becomes more intense and could pose a significant threat to future revenues. However, we believe our experience, size and flexibility allows Sadot Group, Inc’s portfolio of Companies to adapt faster than many other restaurant concepts.

Our Corporate Structure

Overview: Sadot Group, Inc. serves as a holding company of the following subsidiaries:

•Muscle Maker Development, LLC, a directly wholly owned subsidiary, which was formed in Nevada on July 18, 2019, for the purpose of running our existing franchise operations and continuing to franchise the Muscle Maker Grill name and business system to qualified franchisees.

•Muscle Maker Corp. LLC, a directly wholly owned subsidiary, which was formed in Nevada on July 18, 2019, for the purposes operating existing corporate restaurants.

•Muscle Maker USA, Inc., a directly wholly owned subsidiary, which was formed in Texas on March 14, 2019, for the purpose of holding specific assets related to a company financing arrangement.

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

•SuperFit Foods, LLC, a directly wholly owned subsidiary, which was formed in Nevada on February 23, 2021, for the purpose of running our subscription based meal prep business located in Jacksonville, Florida.

•Pokemoto LLC, a directly wholly owned subsidiary, which was formed in Nevada on August 19, 2021, to serve as a holding company of the following subsidiaries.

•GLL Enterprises LLC, a wholly owned subsidiary, which was formed in Connecticut for the purpose of running our existing Company-owned location.

•Pokemoto Orange Park LLC, a wholly owned subsidiary, which was formed in Nevada on March 31, 2022 for the purpose of running Company-owned locations.

•Pokemoto Kansas LLC, a wholly owned subsidiary, which was formed in Nevada on July 28, 2022 for the purpose of running Company-owned locations.

•Poke Co Holdings LLC, a directly wholly owned subsidiary, which was formed in Connecticut on July 18, 2018 to franchise the Pokemoto name and business system to qualified franchisees.

•Sadot LLC, a directly wholly owned subsidiary, which was formed in Delaware on October 19, 2022 to participate in activities such as sourcing, distributing and production of agri-food products.

•Sadot Latam LLC, a directly wholly owned subsidiary, which has expanded its agri-food sourcing and trading operations into North, Central and South America, further diversifying the Company’s geographic reach beyond its existing operations in Europe, Asia, the Middle East and Africa.

•Sadot Enterprises, Ltd (Farming Operations), a directly 70% owned subsidiary, ventured into crop farm production in Southern Africa with a focus on major commodities like wheat, soy, and corn, alongside high-value tree crops such as avocado and mango.

•Sadot Brasil Ltda, a directly wholly owned subsidiary, which has expanded its agri-food sourcing and trading operations from North, Central and South America, considerably enhancing the Company’s sourcing capabilities in one of the world’s most important production regions.

•Sadot LLC of Mauritius, a directly wholly owned subsidiary, which has expanded our banking and financing opportunities for the agri-food businesses.