Financial Information Condensed Consolidated Financial Statements (Unaudited) Q1 2025 financial statements reflect a strategic shift to agri-foods, with decreased assets, a net income turnaround, and negative operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2025, total assets and liabilities significantly decreased, while stockholders' equity slightly increased Condensed Consolidated Balance Sheet Highlights (in $'000) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | 71,802 | 152,679 | | Total Assets | 83,744 | 164,654 | | Total Current Liabilities | 49,934 | 132,170 | | Total Liabilities | 50,039 | 132,281 | | Total Stockholders' Equity | 33,705 | 32,373 | - The significant decrease in current assets and liabilities is primarily linked to the settlement and revaluation of derivative contracts previously held on the balance sheet11119146 Condensed Consolidated Statement of Operations Q1 2025 saw a net income turnaround driven by increased commodity sales and gross profit, despite rising operating expenses Statement of Operations Highlights (in $'000) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Commodity sales | 132,168 | 106,507 | | Gross profit | 6,012 | 2,810 | | Income from operations | 1,476 | 530 | | Net income / (loss) | 820 | (313) | | Net income / (loss) attributable to Sadot Group Inc. | 938 | (265) | | Diluted EPS from continuing operations | $0.16 | $0.20 | Condensed Consolidated Statements of Cash Flows Q1 2025 operating activities used cash due to increased receivables, while financing activities provided inflow, slightly increasing the cash balance Cash Flow Summary (in $'000) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by / (used in) operating activities | (2,950) | 2,507 | | Net cash provided by investing activities | — | 29 | | Net cash provided by / (used in) financing activities | 3,114 | (2,761) | | Net Increase (Decrease) in Cash | 154 | (140) | | Cash – end of period | 1,940 | 1,214 | Notes to the Condensed Consolidated Financial Statements Notes detail the company's transformation to agri-foods, reclassification of fair value gains, liquidity reliance on factoring, legal proceedings, and related-party transactions - The company has transformed from a U.S. restaurant business into a global agri-food commodity supply chain organization. The restaurant segment is now classified as discontinued operations held for sale2831101 - The company reclassified fair value gains on certain financial instruments from 'Other income' to 'Cost of goods sold' to better reflect their economic link to inventory and sales activities. For Q1 2024, this increased gross profit by $3.25 million4445 - The company is involved in two significant legal proceedings: one initiated by Cropit Farming in Zambia seeking $6.7 million in damages, and another by Lombard Trading in Florida seeking $7.4 million. The company is vigorously defending against both claims165167172 - Significant related-party transactions exist with Aggia LLC, which owns 11.2% of the company. In Q1 2025, this included $1.0 million in stock-based consulting fees and $0.8 million in reimbursed operating costs230231 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A discusses the company's agri-foods transformation, increased commodity sales and gross profit, but highlights liquidity pressures from receivables and rising operating expenses Results of Operations Q1 2025 results show increased commodity sales and gross profit driven by market expansion, despite substantial rises in SG&A and net interest expenses Results of Operations Comparison (in $'000) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Variance $ | Variance % | | :--- | :--- | :--- | :--- | :--- | | Commodity sales | 132,168 | 106,507 | 25,661 | 24.1% | | Gross profit | 6,012 | 2,810 | 3,202 | 114.0% | | Sales, general and administrative expenses | (3,081) | (1,393) | (1,688) | 121.2% | | Income from operations | 1,476 | 530 | 946 | 178.5% | | Net income / (loss) attributable to Sadot Group Inc. | 938 | (265) | 1,203 | 454.0% | - The increase in commodity sales is attributed to expanded operations in new markets that were not active in the prior year272 - The increase in SG&A expenses was primarily due to higher consulting fees related to trades in Latin America, Brazil, and Canada, and entry into the South Korean market276 Liquidity and Capital Resources Working capital increased, but liquidity is challenged by delayed receivables conversion, necessitating reliance on factoring and potential future capital raises Working Capital (in $'000) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | 71,802 | 152,679 | | Total current liabilities | 49,934 | 132,170 | | Working capital | 21,868 | 20,509 | | Current ratio | 1.44 | 1.16 | - The company faces liquidity challenges due to delays in converting receivables into cash, despite having sufficient working capital on paper281283 - The company relies on a factoring agreement for liquidity, where it can sell certain receivables with recourse for an 85% upfront advance283 - Management states the need to raise additional capital, warning that failure to do so could require selling business lines or assets and could result in significant shareholder dilution285286 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable, indicating no material market risk disclosures are required for this smaller reporting company filing - Not applicable for this filing297 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective298 - No material changes were made to the internal control over financial reporting during the first quarter of 2025299 Other Information Legal Proceedings The company is defending against two significant legal proceedings, one in Zambia for $6.7 million and another in Florida for $7.4 million, both related to commodity transactions - Cropit Farming Limited has sued Sadot LLC in Zambia, seeking rescission of agreements and damages of approximately $6.7 million. Sadot LLC has denied the allegations and filed counterclaims302303 - Lombard Trading International Corp. has sued the company in Florida for $7.4 million related to a commodities transaction, alleging unjust enrichment, fraud, and theft. The company denies the allegations307 - Management believes it has strong defensible positions in both matters and has not recorded any material liabilities, as a loss is not considered probable or reasonably estimable at this time305306 Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered common stock in Q1 2025, primarily for consulting services and to its related party, Aggia - On March 25, 2025, the company issued 34,074 shares of common stock to consultants for services rendered314 - On March 31, 2025, the company vested 79,342 shares of common stock to its related party, Aggia, as consulting fees earned during Q1 2025315 - The company also issued shares in Q1 2024 for board compensation, conversion of notes payable, and other consulting services309310312 Other Information The company experienced significant changes in its board and executive leadership, including director resignations, a board member's passing, and a CEO transition - Two directors, Kevin Mohan and Chairman Mark McKinney, resigned from the Board effective May 8, 2025319 - Board member Marvin Yeo passed away unexpectedly on April 27, 2025320 - CEO Catia Jorge resigned effective June 1, 2025, and David Hanna was appointed Interim CEO for a 90-day period321
Sadot (SDOT) - 2025 Q1 - Quarterly Report