Sadot Group Inc.

Previous 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.

Current wording

The following Management’s Discussion and Analysis (“MD&A”), prepared as of May 14, 2025, should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements of Sadot Group Inc. ("Sadot Group"), for the three months ended March 31, 2025, together with the audited financial statements of the Company for the year ended December 31, 2024 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 11, 2025. 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. 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.

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 March 31, 2025, Sadot Group consisted of 1 distinct operating unit and 1 discontinued operations.

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. 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.

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. This entire operating segment was identified as held for sale. Please see Note 3 – Assets held for sale and Note 4 – Discontinued operations 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, 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.

Current wording

Our revenues are derived from Commodity sales. 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.

Previous wording

Cost of goods sold includes commodity costs, labor, food and beverage cost, rent and other operating expenses.

Current wording

Cost of goods sold includes commodity costs, labor, rent and other operating expenses.

Previous wording

Depreciation and amortization expenses primarily consist of the depreciation of property and equipment and amortization of intangible assets.

Current wording

Depreciation and amortization expenses primarily consist of the depreciation of property and equipment.

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 $1.7 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).

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 are 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 $1.4 million, for the three months ended March 31, 2025 and $0.8 million, for the three months ended March 31, 2024, respectively, and are recorded in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss).

Previous wording

Sales, general and administrative expenses include expenses associated with corporate and administrative functions that support our operations, including wages, benefits, travel expense, legal and professional fees, training, investor relations and other corporate costs. We incur incremental Sales, general and administrative expenses as a result of being a publicly listed company on the NASDAQ capital market. A certain portion of these expenses are related to the preparation of an initial stock offering and subsequent capital raises and should be considered one-time expenses.

Current wording

Sales, general and administrative expenses include expenses associated with corporate and administrative functions that support our operations, including wages, benefits, travel expense, legal and professional fees, training, investor relations and other corporate costs. We incur incremental Sales, general and administrative expenses as a result of being a publicly listed company on the NASDAQ capital market.

Previous wording

Other (expense) / income listed below the Loss from operations in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) consists of Gain of fair value remeasurement, Change in fair value of stock-based compensation, Loss on sale of trading securities and Interest expense, net. Gain on fair value remeasurement consists of the fair value remeasurement recorded on a recurring basis on the forward sales contract which was deemed to be a derivative within the scope of ASC 815.

Current wording

Total Other (expense) / income listed below the Loss from operations in the accompanying Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income / (Loss) consists of, Other income / (expense), Change in fair value of stock-based compensation, and Interest expense, net.

Previous 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.

Current wording

Net loss attributable to non-controlling interests were $0.1 million and $48.0 thousand for the three months ended March 31, 2025 and 2024, 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

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:

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 months ended March 31, 2025 and 2024:

Previous 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

Current wording

Our gross (loss) profit totaled $6.0 million profit for the three months ended March 31, 2025, compared to $2.8 million profit for the three months ended March 31, 2024. The $3.2 million increase is primarily attributed to an increase in Commodity sales partially offset by an increase in Cost of goods sold.

Previous 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.

Current wording

We generated Commodity sales of $132.2 million for the three months ended March 31, 2025, compared to $106.5 million for the three months ended March 31, 2024. This represented an increase of $25.7 million, which is attributable to an increase in operations in 2025 as a direct result of our expansion into new markets, which were not operating in 2024.

Previous 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.

Current wording

Cost of goods sold for the three months ended March 31, 2025, totaled $126.2 million compared to $103.7 million for the three months ended March 31, 2024. The $22.5 million or 21.7% change is a direct result of the increase in sales, partially offset by the reclass of gain on derivative contracts.

Previous 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.

Current wording

Stock-based expenses for the three months ended March 31, 2025, totaled $1.4 million compared to $0.8 million for the three months ended March 31, 2024. The $0.6 million increase in Stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot Agri-Foods 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 Agri-Foods. This expense is paid in the vesting in restricted stock that was issued to Aggia in 2025.

Previous 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.

Current wording

Sales, general and administrative expenses for the three months ended March 31, 2025, totaled $3.1 million compared to $1.4 million for the three months ended March 31, 2024. The $1.7 million increase was primarily attributable to an increase in consulting fees due to trades in Latin America, Brazil and Canada markets, entering the South Korea market and increases due to increases in normal operating activities.

Previous 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.

Current wording

Other income for thethree months ended March 31, 2025, totaled $0.8 million compared to $0.2 million loss for the three months ended March 31, 2024. The $1.0 million decrease was primarily attributable to a $0.3 million increase in change in fair value of stock-based compensation and a $1.3 million increase in interest expense.

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 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.

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 March 31, 2025, current ratio, which equals Total current assets divided by Total current liabilities, was 1.44, an increase of 0.28, compared to current ratio of 1.16 at December 31, 2024. At March 31, 2025, working capital, which equals Total current assets less Total current liabilities, was $21.9 million an increase of $1.4 million, compared to working capital of $20.5 million at December 31, 2024. The increase in current ratio and working capital was primarily due to an increase in Accounts receivable and a decrease in Other current liabilities, partially offset by an increase in Accounts payable and accrued expenses, a decrease in Other current assets, and a decrease in Assets held for sale. While the Company maintains a base of current assets, including inventories and receivables, the timing and certainty of converting these assets into cash has presented operational challenges.

Previous wording

Sources and Uses of Cash for the Nine Months Ended September 30, 2024 and 2023

Current wording

Sources and Uses of Cash for the Three Months Ended March 31, 2025 and 2024

Previous wording

For the nine months ended September 30, 2024, Net cash provided by operating activities was $7.0 million compared to a use of $8.7 million for the nine months ended September 30, 2023. Our Net cash provided for the nine months ended September 30, 2024, was primarily attributable to our Net income of $3.1 million, adjusted for net non-cash income in the aggregate amount of $1.8 million and $2.1 million of Net cash used by changes in the levels of operating assets and liabilities. Our Net cash used for the nine months ended September 30, 2023, was primarily attributable to our Net loss of $6.2 million, adjusted for net non-cash income in the aggregate amount of $9.0 million and $11.5 million of Net cash used in changes in the levels of operating assets and liabilities.

Current wording

For the three months ended March 31, 2025, Net cash used in operating activities from continuing operation was $3.0 million compared to $2.5 million provided by operating activities for the three months ended March 31, 2024. Net cash provided by operating activities from discontinued operations was $8.0 thousand and $0.1 million, respectively, for the three months ended March 31, 2025 and 2024. Our Net cash used for the three months ended March 31, 2025, was primarily attributable to our Net income of $0.8 million, adjusted for net non-cash income in the aggregate amount of $19.8 million and $23.6 million of Net cash used by changes in the levels of operating assets and liabilities. Our Net cash provided for the three months ended March 31, 2024, was primarily attributable to our Net loss of $0.3 million, adjusted for net non-cash income in the aggregate amount of $1.8 million and $4.6 million of Net cash used in changes in the levels of operating assets and liabilities.

Previous wording

For the nine months ended September 30, 2024, Net cash used in investing activities was $5.4 million, of which $5.9 million was the deposit on farmland and $38.0 thousand used in the purchase of property and equipment, partially offset by $0.5 million from the disposal of property and equipment. For the nine months ended September 30, 2023, Net cash used in investing activities was $3.7 million, of which $12.4 million was used to purchase Property and equipment, partially offset by $4.9 million provided by the closing out of the deposit of the farmland and an Investment in a non-controlling interest of $3.7 million for the farm.

Current wording

For the three months ended March 31, 2025, Net cash used in investing activities was nil .

Previous wording

For the nine months ended September 30, 2024, Net cash used in financing activities was $1.9 million, consisting of repayments of various other notes payable of $6.5 million partially offset by proceeds from notes payable of $4.6 million. For the nine months ended September 30, 2023, Net cash provided by financing activities was $4.9 million, consisting of $7.7 million of proceeds from notes payable and $2.2 million proceeds from exercise of warrants, partially offset by repayments of various other notes payable of $5.0 million.

Current wording

For the three months ended March 31, 2025, Net cash provided by financing activities from continuing operations was $3.1 million, consisting of proceeds from notes payable of $4.6 million partially offset by repayments of various other notes payable of $1.5 million. Net cash used in financing activities from discontinued operations was $20.0 thousand and $36.0 thousand, respectively, for the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2024, Net cash used in financing activities was $2.8 million, consisting of repayments of various other notes payable of $4.3 million partially offset by $1.5 million of proceeds from notes payable.

Previous wording

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.

Current wording

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,

Previous wording

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.

Current wording

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. The adoption of this guidance on December 31, 2024 did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.