Sadot Group Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
SDOT$6.33+3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001701756-24-000112
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001701756-24-000166
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 120 current paragraphs.
64 unchanged; 43 reworded; 11 added; 4 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 27 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Impairment of goodwill consist of an amount by which the carry amount of the goodwill assets exceeds its fair value. This is recognized by us when the carry amount of goodwill is greater than the projected future discounted cash flows, as the asset is not fully recoverable.
Current report
Impairment of intangible assets consist of an amount by which the carry amount of the intangible assets exceeds its fair value. This is recognized by us when the carry amount of an intangible asset is greater than the projected future undiscounted cash flows, as the asset is not fully recoverable.
Current report
There was no Impairment of goodwill for the three months ended September 30, 2024. We had an Impairment of goodwill for the three months ended September 30, 2023 of $0.8 million. The Impairment of goodwill in the prior period was due to the structural change of the company's operations and the closing or marketing for sale our company owned restaurant stores.
Current report
There was no Impairment of intangible assets for the three months ended September 30, 2024. We had an Impairment of intangible assets for the three months ended September 30, 2023 of $0.8 million. The Impairment of intangible assets in the prior period was due to the structural change of the company's operations and the closing or marketing for sale our company owned restaurant stores.
Current report
The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) for the nine months ended September 30, 2024 and 2023, respectively:
Current report
Our gross profit totaled $4.6 million for the nine months ended September 30, 2024, compared to $10.7 million for the nine months ended September 30, 2023. The $6.0 million decrease is primarily attributed to a decrease in Company restaurant sales, net of discount and a decrease in Commodity sales, partially offset by a decrease in Cost of goods sold.
Current report
There was no Impairment of goodwill for the nine months ended September 30, 2024. We had an Impairment of goodwill for the nine months ended September 30, 2023 of $0.8 million. The Impairment of goodwill in the prior period was due to the structural change of the company's operations and the closing or marketing for sale our company owned restaurant stores.
Current report
There was no Impairment of intangible assets for the nine months ended September 30, 2024. We had an Impairment of intangible assets for the nine months ended September 30, 2023 of $0.8 million. The Impairment of intangible assets in the prior period was due to the structural change of the company's operations and the closing or marketing for sale our company owned restaurant stores.
Current report
Pre-Opening Expenses
Current report
The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) for the nine months ended September 30, 2024 and 2023, by our operating segments:
Current report
In December 2023, the FASB issued ASU 2023-09, which focuses on income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, provide information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted.
Removed paragraphs (4)
Previous report
The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) for the six months ended June 30, 2024 and 2023, respectively:
Previous report
The following table represents selected items in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) for the six months ended June 30, 2024 and 2023, by our operating segments:
Previous report
In October 2021, the FASB issued ASU 2021-08 Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related disclosures.
Previous report
In April 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”) to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants. The new ASU is effective for all entities in fiscal years starting after December 15, 2021. Early adoption is permitted. The Company adopted the new guidance from January 1, 2022, noting no material impact.
Reworded paragraphs (43)
Previous wording
The following Management’s Discussion and Analysis (“MD&A”), prepared as of August 13, 2024, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc. ("Sadot Group"), for the three and six months ended June 30, 2024 together with the audited financial statements of the Company for the year ended December 31, 2023 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2023 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2024. Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” "Sadot", “Muscle Maker,” “we,” “us,” “our”, “Group” and similar terms refer to Sadot Group Inc., together with its consolidated subsidiaries.
Current wording
The following Management’s Discussion and Analysis (“MD&A”), prepared as of November 12, 2024, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc. ("Sadot Group"), for the three and nine months ended September 30, 2024 together with the audited financial statements of the Company for the year ended December 31, 2023 and the accompanying MD&A for that fiscal year appearing in our Annual Report on 2023 Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2024. Unless otherwise indicated or the context otherwise requires, all references to the terms “Company,” “company,” "Sadot", “we,” “us,” “our”, “Group” and similar terms refer to Sadot Group Inc., together with its consolidated subsidiaries.
Previous wording
Sadot Group Inc. (f/k/a Muscle Maker, Inc.) is our parent company and is headquartered in Ft. Worth, Texas. In late 2022, Sadot Group began a transformation from a U.S.-centric restaurant business into a global organization focused on the Agri-foods supply-chain. Effective July 27, 2023, we changed our company name from Muscle Maker, Inc., to Sadot Group Inc. As of June 30, 2024, Sadot Group consisted of two distinct operating units.
Current wording
Sadot Group Inc. is our parent company and is headquartered in Burleson, Texas. In late 2022, Sadot Group began a transformation from a U.S.-centric restaurant business into a global organization focused on the Agri-foods supply-chain. As of September 30, 2024, Sadot Group consisted of two distinct operating units.
Previous wording
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, Costa Rica, Dominican Republic, 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, Venezuela, Vietnam and Yemen, 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 supply chain. Sadot Agri-Foods seeks to diversify over time into a sustainable and forward-looking global agri-foods company.
Current wording
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 across the globe. 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 supply chain. Sadot Agri-Foods seeks to diversify over time into a sustainable and forward-looking global agri-foods company.
Previous wording
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, 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. This entire operating segment was identified as held for sale. Please see Note 3 – Assets held for sale for further details.
Current wording
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, plus one subscription-based fresh prep meal concept, SuperFit Foods. SuperFit Foods was sold in August 2024. 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 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.
Previous wording
Our revenues are derived from four primary sources: Commodity sales, Company restaurant sales, Franchise revenues and vendor rebates from Franchisees. Commodity sales revenues are comprised of revenues generated from the purchase and sales of physical food and feed commodities related to our trading and farming operations. Franchise revenues are comprised of Franchise royalty revenues collected based on 2% to 6% of franchisee net sales and other franchise revenues which include initial and renewal franchisee fees. Vendor rebates are received based on volume purchases or services from franchise owned locations. In addition, we have Other revenues which consists of gift card breakage, which is recognized when we determine that there is no further legal obligation to remit the unredeemed gift card balance.
Current wording
Our revenues are derived from four primary sources: Commodity sales, Company restaurant sales, Franchise revenues and vendor rebates from Franchisees. Commodity sales revenues are comprised of revenues generated from the purchase and sales of physical food and feed commodities, carbon associated commodities and other commodities related to our trading and farming operations. Franchise revenues are comprised of Franchise royalty revenues collected based on 2% to 6% of franchisee net sales and other franchise revenues which include initial and renewal franchisee fees. Vendor rebates are received based on volume purchases or services from franchise owned locations. In addition, we have Other revenues which consists of gift card breakage, which is recognized when we determine that there is no further legal obligation to remit the unredeemed gift card balance.
Previous wording
Stock-based expenses include all expenses that are paid with stock. This includes stock-based consulting fees due to Aggia and other consultants, stock compensation paid to our board of directors, and stock compensation paid to employees. The consulting fees due to Aggia related to ongoing Sadot Agri-Foods and expansion of the global agri-foods 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 Agri-Foods through March 31, 2023. As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0% of the Net income generated by Sadot LLC. Stock-based expenses were $1.9 million and $2.7 million, for the three and six months ended June 30, 2024 and $1.2 million and $4.6 million, for the three and six months ended June 30, 2023, respectively, and are recorded in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss).
Current wording
Stock-based expenses include all expenses that are paid with stock. This includes stock-based consulting fees due to Aggia and other consultants, stock compensation paid to our board of directors, and stock compensation paid to employees. The consulting fees due to Aggia related to ongoing Sadot Agri-Foods and expansion of the global agri-foods 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 Agri-Foods through March 31, 2023. As of April 1, 2023 the consulting agreement was amended to calculate consulting fees on 40.0% of the Net income generated by Sadot LLC. Stock-based expenses were $1.7 million and $4.4 million, for the three and nine months ended September 30, 2024 and $1.1 million and $5.7 million, for the three and nine months ended September 30, 2023, respectively, and are recorded in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss).
Previous wording
Net loss attributable to non-controlling interests were $0.1 million and $0.1 million for the three and six months ended June 30, 2024, and nil for the three and six months ended June 30, 2023, respectively. During the year ended December 31, 2023 the Company created a joint-venture in which the Company has a 70% interest and the third-party equity ownership has a 30% Non-controlling interest.
Current wording
Net loss attributable to non-controlling interests were $0.1 million and $0.2 million for the three and nine months ended September 30, 2024, and $0.1 million and $0.1 million for the three and nine months ended September 30, 2023, respectively. During the year ended December 31, 2023 the Company created a joint-venture in which the Company has a 70% interest and the third-party equity ownership has a 30% Non-controlling interest.
Previous wording
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. We define EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. We define Adjusted EBITDA as Net loss, adjusted for depreciation, amortization, net interest (income) expense, income taxes, impairment expenses, stock-based consulting expense, other income, change in fair value of stock-based compensation, gain on extinguishment, warrant modification expense, and gain on fair value remeasurement derived from amounts presented in the Unaudited Condensed Consolidated Statement of Operations and Other Comprehensive Income / (Loss) and the associated Notes to the Unaudited Condensed Consolidated Financial Statements. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, (collectively, the “Non-GAAP Measures”) are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operating activities.
Current wording
EBITDA and EBITDA Margin are non-GAAP measures. We define EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. We believe that EBITDA and EBITDA Margin, (collectively, the “Non-GAAP Measures”) are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operating activities.
Previous wording
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, have certain limitations, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP. We caution investors that amounts presented in accordance with our definitions of any of the Non-GAAP Measures may not be comparable to similar measures disclosed by other issuers, because some issuers calculate certain of the Non-GAAP Measures differently or not at all, limiting their usefulness as direct comparative measures.
Current wording
EBITDA and EBITDA Margin, have certain limitations, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP. We caution investors that amounts presented in accordance with our definitions of any of the Non-GAAP Measures may not be comparable to similar measures disclosed by other issuers, because some issuers calculate certain of the Non-GAAP Measures differently or not at all, limiting their usefulness as direct comparative measures.
Previous wording
Reconciliations of EBITDA, Adjusted EBITDA and Other Non-GAAP Measures
Current wording
Reconciliations of EBITDA and Other Non-GAAP Measures
Previous wording
The following table presents a reconciliation of EBITDA and Adjusted EBITDA from the most comparable U.S. GAAP measure, Net loss, and the calculations of the Net loss Margin and Adjusted EBITDA Margin for the three and six months ended June 30, 2024 and 2023:
Current wording
The following table presents a reconciliation of EBITDA from the most comparable U.S. GAAP measure, Net loss, and the calculations of the Net loss Margin and EBITDA Margin for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Our gross (loss) profit totaled $2.5 million profit for the three months ended June 30, 2024, compared to $3.1 million profit for the three months ended June 30, 2023. The $0.6 million decrease is primarily attributed to a decrease in Company restaurant sales, net of discount partially offset by an increase in Commodity sales.
Current wording
Our gross (loss) profit totaled $2.5 million profit for the three months ended September 30, 2024, compared to $2.9 million profit for the three months ended September 30, 2023. The $0.4 million decrease is primarily attributed to a decrease in
Previous wording
We generated Commodity sales of $173.3 million for the three months ended June 30, 2024 compared to $157.6 million for the three months ended June 30, 2023. This represented an increase of $15.7 million, which is attributable to an increase in operations in 2024 as a direct result of our Latin American trade operations and farming activity, which was not operating in 2023.
Current wording
We generated Commodity sales of $200.9 million for the three months ended September 30, 2024 compared to $180.0 million for the three months ended September 30, 2023. This represented an increase of $20.9 million, which is attributable to an increase in operations in 2024 as a direct result of our expansion into new markets, which were not operating in 2023.
Previous wording
We generated Company restaurant sales, net of discounts, of $1.0 million for the three months ended June 30, 2024, compared to $2.5 million for the three months ended June 30, 2023. This represented an decrease of $1.5 million, or 60.1%, which is mainly attributable to the conversion of certain corporate owned Pokemoto locations to franchise locations and closing underperforming locations.
Current wording
We generated Company restaurant sales, net of discounts, of $0.5 million for the three months ended September 30, 2024, compared to $1.9 million for the three months ended September 30, 2023. This represented an decrease of $1.5 million, or 75.3%, which is mainly attributable to the conversion of certain corporate owned locations to franchise locations and closing underperforming locations.
Previous wording
Franchise royalties and fees for the three months ended June 30, 2024 totaled $0.7 million compared to $0.2 million for the three months ended June 30, 2023. This represents a increase of $0.5 million, or 211.3%. In 2024, the franchise fees were higher, primarily due to a termination of a Muscle Maker Grill development agreement in 2024 that escalated the revenue recognition.
Current wording
Franchise royalties and fees for the three months ended September 30, 2024 totaled $0.3 million compared to $0.2 million for the three months ended September 30, 2023. This represents an increase of $0.1 million, or 31.0%. In 2024, the franchise fees were higher, primarily due to an increase in Pokemoto franchises.
Previous wording
Franchise advertising fund contributions for the three months ended June 30, 2024 totaled $13.0 thousand compared to $20.0 thousand for the three months ended June 30, 2023. The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The decrease of $7.0 thousand or 35.0%, is a direct result of the decrease in Muscle Maker Grill restaurant national advertising services.
Current wording
Franchise advertising fund contributions for the three months ended September 30, 2024 totaled $12.0 thousand compared to $16.0 thousand for the three months ended September 30, 2023. The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The decrease of $4.0 thousand or 25.0%, is a direct result of the decrease in Muscle Maker Grill restaurant national advertising services.
Previous wording
There were no other revenues for the three months ended June 30, 2024. Other revenue for the three months ended June 30, 2023 were $13.0 thousand. Other revenues consisted of gift card breakage recognized.
Current wording
There were $16.0 thousand other revenues for the three months ended September 30, 2024. There were no Other revenues for the three months ended September 30, 2023. Other revenues consisted of gift card breakage recognized and Ad-fund liability that was forfeited when a franchise closed.
Previous wording
Cost of goods sold for the three months ended June 30, 2024 totaled $172.5 million compared to $157.2 million for the three months ended June 30, 2023. The $15.3 million or 9.7% change is a direct result of the increase in sales.
Current wording
Cost of goods sold for the three months ended September 30, 2024 totaled $199.3 million compared to $179.3 million for the three months ended September 30, 2023. The $20.0 million or 11.2% change is a direct result of the increase in sales.
Previous wording
Depreciation and amortization expenses for the three months ended June 30, 2024 totaled $0.1 million compared to $0.4 million, for the three months ended June 30, 2023. The $0.3 million decrease is mainly attributed to moving Sadot food service assets to Assets Held For Sale and no longer amortizing or depreciating the assets and the closing and refranchising of corporate locations and the disposal of the corresponding assets.
Current wording
Depreciation and amortization expenses for the three months ended September 30, 2024 totaled $49.0 thousand compared to $0.4 million, for the three months ended September 30, 2023. The $0.4 million decrease is mainly attributed to moving Sadot food service assets to Assets Held For Sale and no longer amortizing or depreciating the assets and the closing and refranchising of corporate locations and the disposal of the corresponding assets.
Previous wording
Franchise advertising fund expenses for the three months ended June 30, 2024 totaled$13.0 thousand compared to$20.0 thousand, for the three months ended June 30, 2023. The $7.0 thousand or 35.0% decrease is mainly attributed to the decrease in Muscle Maker Grill restaurant national advertising services.
Current wording
Franchise advertising fund expenses for the three months ended September 30, 2024 totaled$12.0 thousand compared to$16.0 thousand, for the three months ended September 30, 2023. The $4.0 thousand or 25.0% decrease is mainly attributed to the decrease in Muscle Maker Grill restaurant national advertising services.
Previous wording
Post-closing expenses for the three months ended June 30, 2024 totaled $10.0 thousand compared to $19.0 thousand for the three months ended June 30, 2023. The decrease in Post-closing expenses resulted from closing fewer corporate owned locations in 2024 compared to 2023.
Current wording
Post-closing expenses for the three months ended September 30, 2024 totaled $91.0 thousand compared to $60.0 thousand for the three months ended September 30, 2023. The increase in Post-closing expenses resulted from closing more corporate owned locations in the third quarter of 2024 compared to 2023.
Previous wording
Stock-based expenses for the three months ended June 30, 2024, totaled $1.9 million compared to $1.2 million for the three months ended June 30, 2023. The $0.7 million increase in Stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot Agri-Foods and Farming operations and the vesting of restricted stock for employees, board of directors and consultants. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 40.0% of the Net income generated by Sadot LLC which is a decrease from 80.0% in 2023. This expense is paid in the vesting in restricted stock that was issued to Aggia in 2024.
Current wording
Stock-based expenses for the three months ended September 30, 2024, totaled $1.7 million compared to $1.1 million for the three months ended September 30, 2023. The $0.6 million increase in Stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot Agri-Foods and Farming operations and the vesting of restricted stock for employees, board of directors and consultants. Based on the servicing agreement with Aggia, the consulting fees are calculated at approximately 40.0% of the Net income generated by Sadot LLC which is a decrease from 80.0% in 2023. This expense is paid in the vesting in restricted stock that was issued to Aggia in 2024.
Previous wording
Sales, general and administrative expenses for the three months ended June 30, 2024 totaled $2.4 million compared to $1.8 million for the three months ended June 30, 2023. The $0.6 million increase was primarily attributable to a increase in consulting fees due to trades in Latin America, entering the Brazil market and increases due to increases in normal operating activities.
Current wording
Sales, general and administrative expenses for the three months ended September 30, 2024 totaled $4.2 million compared to $3.3 million for the three months ended September 30, 2023. The $0.9 million increase was primarily attributable to an increase in consulting fees due to trades in Latin America, entering the Brazil and Canada markets and increases due to increases in normal operating activities.
Previous wording
Other income for thethree months ended June 30, 2024 totaled $4.3 million compared to $0.6 million for the three months ended June 30, 2023. The $3.7 million increase was primarily attributable to a $3.3 million increase in the gain on the fair value remeasurement as a result of the mark to market adjustment of derivatives and an $0.7 million increase in interest expense, a $0.9 million increase in change in fair value of stock-based compensation and a $0.1 million increase in loss on sale of trading securities.
Current wording
Other income for thethree months ended September 30, 2024 totaled $4.7 million compared to $1.3 million loss for the three months ended September 30, 2023. The $6.1 million increase was primarily attributable to a $5.8 million increase in the gain on the fair value remeasurement as a result of the mark to market adjustment of derivatives, a $1.0 million decrease in warrant modification expense, and a $0.7 million increase in change in fair value of stock-based compensation partially offset by a $1.4 million increase in interest expense.
Previous wording
Unaudited Condensed Consolidated Results of Operations - Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Current wording
Unaudited Condensed Consolidated Results of Operations - Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Previous wording
We generated Commodity sales of $279.8 million for the six months ended June 30, 2024. Commodity sales for the six months ended June 30, 2023 was $367.9 million. This represented a decrease of $88.1 million, which is attributable to a decline in global prices of staple commodities, market seasonality, the largest global consumer being out of the market for the beginning of 2024 and current harvest season less discounts and shipping delays given.
Current wording
We generated Commodity sales of $480.7 million for the nine months ended September 30, 2024. Commodity sales for the nine months ended September 30, 2023 was $547.9 million. This represented a decrease of $67.2 million, which is attributable to a decline in global prices of staple commodities, market seasonality, the largest global consumer being out of the market for the beginning of 2024.
Previous wording
We generated Company restaurant sales, net of discounts, of $2.1 million for the six months ended June 30, 2024, compared to $4.8 million for the six months ended June 30, 2023. This represented an decrease of $2.6 million, or 55.1%, which is mainly attributable to the conversion of certain corporate owned Pokemoto locations to franchise locations and closing underperforming locations.
Current wording
We generated Company restaurant sales, net of discounts, of $2.6 million for the nine months ended September 30, 2024, compared to $6.7 million for the nine months ended September 30, 2023. This represented an decrease of $4.1 million, or 60.9%, which is mainly attributable to the conversion of certain corporate owned locations to franchise locations and closing underperforming locations.
Previous wording
Franchise royalties and fees for the six months ended June 30, 2024 totaled $1.0 million compared to $0.5 million for the six months ended June 30, 2023. This represents an increase of $0.5 million, or 91.0%. In 2024, the franchise fees were higher, primarily due to a termination of one Muscle Maker Grill development agreement in 2024 that escalated the revenue recognition.
Current wording
Franchise royalties and fees for the nine months ended September 30, 2024 totaled $1.3 million compared to $0.8 million for the nine months ended September 30, 2023. This represents an increase of $0.6 million, or 72.0%. In 2024, the franchise fees were higher, primarily due to a termination of one Muscle Maker Grill development agreement in 2024 that escalated the revenue recognition and an increase in Pokemoto franchises.
Previous wording
Franchise advertising fund contributions for the six months ended June 30, 2024 totaled $28.0 thousand compared to $36.0 thousand for the six months ended June 30, 2023. The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The decrease of $8.0 thousand or 22.2%, is a direct result of the decrease in Muscle Maker Grill restaurant national advertising services.
Current wording
Franchise advertising fund contributions for the nine months ended September 30, 2024 totaled $40.0 thousand compared to $52.0 thousand for the nine months ended September 30, 2023. The Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee Company incurs the corresponding advertising expense. The decrease of $12.0 thousand or 23.1%, is a direct result of the decrease in Muscle Maker Grill restaurant national advertising services.
Previous wording
There were no Other revenues for the six months ended June 30, 2024. Other revenues for the six months ended June 30, 2023 were $13.0 thousand. Other revenues consisted of gift card breakage recognized.
Current wording
Other revenues for the nine months ended September 30, 2024 were $16.0 thousand. Other revenues for the nine months ended September 30, 2023 were $13.0 thousand. Other revenues consisted of gift card breakage recognized and Ad-fund liability that was forfeited when a franchise closed.
Previous wording
Cost of goods sold for the six months ended June 30, 2024, totaled $280.8 million. The Cost of goods sold for the six months ended June 30, 2023 was $365.5 million. The $84.7 million change is primarily due to a direct result of the decrease in sales.
Current wording
Cost of goods sold for the nine months ended September 30, 2024, totaled $480.1 million. The Cost of goods sold for the nine months ended September 30, 2023 was $544.8 million. The $64.7 million change is primarily due to a direct result of the decrease in sales.
Previous wording
Depreciation and amortization expenses for the six months ended June 30, 2024 totaled $0.4 million compared to $1.1 million, for the six months ended June 30, 2023. The $0.7 million decrease is mainly attributed to moving Sadot food service assets to Assets Held For Sale and no longer amortizing or depreciating the assets and the closing and refranchising of corporate locations and the disposal of the corresponding assets.
Current wording
Depreciation and amortization expenses for the nine months ended September 30, 2024 totaled $0.4 million compared to $1.5 million, for the nine months ended September 30, 2023. The $1.1 million decrease is mainly attributed to moving Sadot food service assets to Assets Held For Sale and no longer amortizing or depreciating the assets and the closing and refranchising of corporate locations and the disposal of the corresponding assets.
Previous wording
Franchise advertising fund expenses for the six months ended June 30, 2024 totaled$28.0 thousand compared to$36.0 thousand, for the six months ended June 30, 2023. The $8.0 thousand decrease or 22.2% is mainly attributed to the decrease in Muscle Maker Grill national advertising services.
Current wording
Franchise advertising fund expenses for the nine months ended September 30, 2024 totaled$40.0 thousand compared to$52.0 thousand, for the nine months ended September 30, 2023. The $12.0 thousand decrease or 23.1% is mainly attributed to the decrease in Muscle Maker Grill national advertising services.
Previous wording
Pre-opening expenses for the six months ended June 30, 2024 totaled nil, a $36.0 thousand decrease when compared to $36.0 thousand for the six months ended June 30, 2023. The decrease in pre-opening expense resulted from expenses incurred at the farm in 2023 from the time that the purchase documents were signed and local government approval was obtained and expenses incurred prior to the opening of our new Company-owned stores.
Current wording
Pre-opening expenses for the nine months ended September 30, 2024 totaled nil, a $371.0 thousand decrease when compared to $371.0 thousand for the nine months ended September 30, 2023. The decrease in pre-opening expense resulted from expenses incurred at the farm in 2023 from the time that the purchase documents were signed and local government approval was obtained and expenses incurred prior to the opening of our new Company-owned stores.
Previous wording
Post-closing expenses for the six months ended June 30, 2024 totaled $29.0 thousand, a $0.1 million decrease when compared to $0.1 million for the six months ended June 30, 2023. The decrease in Post-closing expenses resulted from expenses incurred after the closing of underperforming Company-owned stores in 2023.
Current wording
Post-closing expenses for the nine months ended September 30, 2024 totaled $120.0 thousand, a $0.1 million decrease when compared to $0.2 million for the nine months ended September 30, 2023. The decrease in Post-closing expenses resulted from expenses incurred after the closing of underperforming Company-owned stores in 2023.
Previous wording
Stock-based expenses for the six months ended June 30, 2024, totaled $2.7 million compared to $4.6 million for the six months ended June 30, 2023. The $1.9 million decrease in Stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot Agri-Foods and Farming operations. Based on the servicing agreement with Aggia, the consulting fees are calculated at approxim ately 80.0% and 40.0% of the Net income generated by Sadot LLC for the first quarter of 2023 and the second and third quarter of 2023, respectively.
Current wording
Stock-based expenses for the nine months ended September 30, 2024, totaled $4.4 million compared to $5.7 million for the nine months ended September 30, 2023. The $1.2 million decrease in Stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot Agri-Foods and Farming operations. Based on the servicing agreement with Aggia, the consulting fees are calculated at approxim ately 80.0% and 40.0% of the Net income generated by Sadot LLC for the first quarter of 2023 and the second and third quarter of 2023, respectively.
Previous wording
Sales, general and administrative expenses for the six months ended June 30, 2024 totaled $4.5 million, compared to $3.9 million, for the six months ended June 30, 2023. The $0.7 million increase was primarily attributable to a increase in consulting fees due to trades in Latin America, entering the Brazil market and increases due to increases in normal operating activities.
Current wording
Sales, general and administrative expenses for the nine months ended September 30, 2024 totaled $8.8 million, compared to $7.2 million, for the nine months ended September 30, 2023. The $1.6 million increase was primarily attributable to an increase in consulting fees due to trades in Latin America, entering the Brazil and Canada markets and increases due to increases in normal operating activities.
Previous wording
Total other income / (expense), net for the six months ended June 30, 2024 totaled $7.5 million compared to $1.1 million, for the six months ended June 30, 2023. The $6.4 million increase in Total other income / (expense), net was attributable toa $6.5 million increase in Gain on fair value remeasurement, $0.8 million in the Change in fair value of accrued compensation and a$0.5 million increase in Gain on sale of trading securities, partially offset by a $1.2 million increase in Interest expense, and a $0.2 million decrease in Other income.
Current wording
Total other income / (expense), net for the nine months ended September 30, 2024 totaled $12.3 million compared to $0.2 million loss, for the nine months ended September 30, 2023. The $12.5 million increase in Total other income / (expense), net was attributable toa $12.3 million increase in Gain on fair value remeasurement, $1.5 million in the Change in fair value of accrued compensation and a$0.5 million increase in Gain on sale of trading securities, partially offset by a $2.6 million increase in Interest expense, and a $0.2 million decrease in Other income.
Previous wording
Our main financial objectives are to prudently manage financial risk, ensure access to liquidity and minimize cost of capital in order to efficiently finance our business and maintain balance sheet strength. We generally finance our ongoing operations with cash flows generated from operations, borrowings under various credit facilities and term loans. At June 30, 2024, current ratio, which equals Total current assets divided by Total current liabilities, was 1.12, an increase of 0.04, compared to current ratio of 1.08 at December 31, 2023. The increase in current ratio was primarily due to an increase in other current assets, a decrease in Accounts payable and accrued expenses and increase in cash, partially offset by an increase in other current liabilities and a decrease in Accounts receivable. At June 30, 2024, working capital, which equals Total current assets less Total current liabilities, was $16.1 million an increase of $7.9 million, compared to working capital of $8.3 million at December 31, 2023. The increase in working capital was primarily due to an increase in other current assets, a decrease in Accounts payable and accrued expenses and and increase in cash, partially offset by an increase in other current liabilities and a decrease in Accounts receivable. In addition, the Company has access to additional liquidity if it is needed through an executed Standby Equity Purchase Agreement ("SEPA") for up to $25.0 million in capital whereby the Company, once the initial prepayment loan is fully paid off 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.
Current wording
Our main financial objectives are to prudently manage financial risk, ensure access to liquidity and minimize cost of capital in order to efficiently finance our business and maintain balance sheet strength. We generally finance our ongoing operations with cash flows generated from operations, borrowings under various credit facilities and term loans. At September 30, 2024, current ratio, which equals Total current assets divided by Total current liabilities, was 1.14, an increase of 0.06, compared to current ratio of 1.08 at December 31, 2023. The increase in current ratio was primarily due to an increase in other current assets, a decrease in Accounts payable and accrued expenses and increase in Assets held for sale, partially offset by an increase in other current liabilities and a decrease in Accounts receivable. At September 30, 2024, working capital, which equals Total current assets less Total current liabilities, was $18.9 million an increase of $10.7 million, compared to working capital of $8.3 million at December 31, 2023. The increase in working capital was primarily due to an increase in other current assets, a decrease in Accounts payable and accrued expenses and an increase in cash, partially offset by an increase in other current liabilities and a decrease in Accounts receivable. 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, anticipated capital expenditures and repayment obligations over the next 12 months.
Previous wording
Sources and Uses of Cash for the Six Months Ended June 30, 2024 and 2023
Current wording
Sources and Uses of Cash for the Nine Months Ended September 30, 2024 and 2023
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Company restaurant sales, net of discount partially offset by an increase in Commodity sales, and increase in Cost of goods sold.
Current report — wording carried from elsewhere
There were no Pre-opening expenses for the three months ended September 30, 2024 compared to $0.3 million for the three months ended September 30, 2023. The increase in Pre-opening expenses resulted from expenses incurred at the farm from the time that the purchase documents were signed and local government approval was obtained.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our gross profit totaled $2.2 million for the six months ended June 30, 2024, compared to $7.7 million for the six months ended June 30, 2023. The $5.6 million decrease is primarily attributed to a decrease in Commodity sales which is attributable to a decline in global prices of staple commodities, market seasonality and the largest global consumer being out of the market for the beginning of 2024.