Sadot Group Inc.

Thank you, Operator, and welcome everyone to Sadat Group Inc.' 's third quarter 2023 earnings call and webcast. Before we get started, we would like to state that this call may include forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. To the extent that the information presented on this call discusses financial projections, information, or expectations about the business plans, results of operations, products, or markets, or otherwise makes statements about future events, such statements may be forward-looking. Such forward-looking statements can be identified by the use of the words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans and proposes. Although management believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading risk factors and elsewhere in documents that Sadat Group Inc. files from time to time with the SEC. Forward-looking statements speak only as of the date of the document in which they are contained, and Sadat Group Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. For this call, all numbers disclosed have been rounded to the closest 100,000 and percentages have been rounded to the closest percent. On this call, we will refer to Sadat Group Inc. as Sadat Group or the company. With me on the call today are Sadat Group's Chief Executive Officer Michael Roper and Chief Financial Officer Jennifer Black. We will also have other members of the management team available during the Q&A session. Michael and Jennifer will be presenting prepared remarks related to Sadat Group Inc's financials file on November 14, 2023, and those documents may be found on the company's website, Newswire feeds, and on the SEC's website linked from Sadat Group's website at www.sadatgroupinc.com in the upper navigation link labeled Investors. At this point, I would like to turn the call over to Sadat Group Inc's CEO, Michael Roper. Michael.

Thanks, Frank. Good morning, everyone, and thank you for joining us today. We'll be reporting the results of our third quarter ending September 30th, 2023. But before diving into the Q3 results and key highlights, I'd like to acknowledge that the past quarter has been another important period for Sadat Group Inc. It's worth noting that in the third quarter on July 26th, 2023, we officially marked a significant milestone with the announcement of our corporate name change from MuscleMaker Inc. to Sadat Group Inc. This name change reflects our strategic evolution into a global player in the food supply chain sector. Our shares of common stock began trading on NASDAQ under the ticker symbol SDOT. That's Sam David Ocean Tom, SDOT, on July 27th, 2023. And we are excited about this new chapter in our journey. Our transformation and strategic pivot over the past year has been rapid. We have evolved from a U.S.-centric restaurant business into a truly global food supply chain organization. We've strategically segmented the parent company, Sadat Group Inc., into three operating divisions to capitalize on the opportunities presented by the global food market. These three operating divisions include, number one, Sadat Agri Foods, number two, Sadat Farm Operations, and number three, Sadat Food Service Operations, which is in an optimization process, which we'll elaborate on later in this call. To begin, I'd like to give a brief overview of each of these three main business divisions. Our first and largest division is Sadat Agri Foods. This division is our global agri-commodity trading group and serves as the company's largest revenue and net income generator since inception. Its global operations include the origination and trading of food and feed products such as soybean meal, wheat, corn, and carbon offsets. This division helps supply food and feed products to various regions of the world and is a strategic component in helping to address food security issues. Our second business division is Sadat Farm Operations. We officially began our farming operations in Q3 on our approximately 5,000-acre farm in Zambia. This facility cultivates highly sought-after and valuable commodities, including soybean, wheat, and corn, in addition to tending to high-value avocado and mango tree crops. We expect Sadat's farming operations to eventually provide additional leverage to our trading business while aligning with our strategic objective to create positive impact on the local communities and address the increasing global food security challenges. Our third business division is Sadat Food Service Operations, which operates our three legacy restaurant concepts. This unit encompasses over 48 fast casual restaurants across the United States, including two international locations. We also have franchise agreements sold for over 50 locations that are yet to be opened. Over the past quarter, this division has been undergoing a transformation and optimization in which we started closing underperforming restaurant locations and converted locations from corporate operated to franchise locations in order to position the division for potential strategic alternatives in the future. Let me now discuss some specific Q3 highlights. I'm pleased to announce that Stock Group Inc. achieved top line revenue of $182.2 million for Q3 2023, a significant increase compared to $2.8 million for Q3 2022. This announcement marks the accomplishment of 11 consecutive months since inception, above $45 million in monthly revenue for the company. These revenue numbers are led by our largest operating division, Sadat AgriFoods. Specifically, our Sadat AgriFoods division added $179.5 million in revenue and $2.3 million in operating income in the third quarter as it continues to consistently perform. In assessing our overall company-wide performance, it's important to note that the company encountered a series of one-time type of charges, which were realized this quarter, with a significant portion linked to the previously announced restructuring of our legacy restaurant brands, our corporate name change to Sadat Group Inc., and overall financing strategies. While these charges did impact this quarter's bottom line, they were one-time charges essential for helping to fortify our long-term financial strength and growth opportunities for the company. Overall, for the third quarter, we reported a net loss of approximately 5.3M in contrast to the net loss of approximately 1.9M in the previous year ending September 30, 2022. As previously mentioned, there were a number of one-time charges that significantly impacted our Q3 results. While these charges necessitated short-term financial adjustments, they are essential steps towards our long-term objectives. What is important to understand is the Sadat Agri Foods Division, which is our main revenue and net income generator, continued to perform generating $2.3 million in operating income. This division, along with the Sadat Farm Operations Division, is the strategic direction and future of the company. We will continue to optimize and or seek to divest the Sadat Food Service Operations Division moving forward. A better way, in our opinion, to view our quarter operationally is reflected in our adjusted EBITDA, which reported a loss of $841,000 for Q3 compared to a $1.4 million loss for the same period last year. By executing on these corporate strategic initiatives, we believe our adjusted EBITDA performance demonstrates that, operationally, we're on track and moving closer to achieving our financial targets. In fact, our 2023 year to date adjusted EBITDA stands at a positive $2.8 million profit, a remarkable turnaround from the negative $4.1 million loss in 2022. This significant improvement highlights our commitment to strengthening our financial position through our expansion into different areas of the global food supply chain. While some tough strategic decisions were made this past quarter that have in the short term impacted our financial results, we recognize their necessity to potentially provide long term benefits for the overall strength of the company and our valued stakeholders. We remain dedicated to executing our strategic vision and harnessing the opportunities the global food market offers. We eagerly anticipate building upon this momentum as we move ahead. Now I'd like to turn the call over to our CFO, Jennifer Black, to review the financial performance of the company for the third quarter of 2023. Jennifer?

Thanks, Mike, and thank you to everyone joining us here today. Before I begin, I would like to note that our financial results for the quarter ended September 30, 2023, on Form 10Q, were filed with the SEC yesterday, November 14, along with the press release that same day. With that, I'd like to give an overview of the financials for the third quarter of 2023. As Mike mentioned in his opening comments, our Q3 2023 company-wide revenues increased significantly, totaling $182.2 million compared to $2.8 million for Q3 of 2022. This revenue was generated by our three business segments or divisions. We use these terms interchangeably. Our first business segment is Sadat AgriFoods. Of the 182.2 million revenue increase, 179.4 million was primarily due to sales revenue from our Sadat AgriFoods division, which completed 27 transactions in Q3. The average revenue per transaction was 6.6 million, with an average cost of goods sold per transaction of 6.5 million. These 27 transactions were completed across 16 different countries. This business segment, which is the largest revenue-generating division of the company today, generated approximately $2.3 million in operating income for Q3. Our second business segment is Sadat Farm Operations. In Q3, we officially completed the acquisition of our Zambia farming assets of roughly 5,000 acres of farmland. We are pleased to report that as part of our farming operations in Zambia, we achieved our first successful harvest of premium grade winter wheat this past quarter, generating revenue exceeding $500,000. This farm currently has both corn and soybeans planted, and we expect these crops to be harvested throughout April and May of 2024. Our third business segment is Sadat Food Services Operations. In Q3, this division generated total revenue of 2.2 million. This consisted of 1.9 million from company-owned and operated locations and 245,000 in royalties and fees collected from both Muscle Maker Grill and Pokemoto franchise locations. Revenue from company-owned and operated locations decreased due to our continued optimization, restructuring, and closing of our underperforming and non-profitable Muscle Maker Grill restaurant locations while also executing our strategy to sell and convert corporate Pokemoto locations over to franchisees. Franchise royalty and fee revenue increased by 44% compared to the same period in 2022, as the company continues to focus its restaurant business unit strategy on the franchising the Pokemoto concept. Because of our optimization and restructuring of our restaurant brands, This resulted in several one-time charges, which we incurred in Q3 that totaled over $2 million in one-time expenses. The majority of these one-time expenses were incurred from taking impairment charges against Goodwill and Intangible Assets of $1.6 million. The company incurred approximately $1.1 million in stock-based expenses in Q3 of 2023. These expenses are primarily the result of the vesting of common stock shares issued to IKEA as consulting fees the Sadat AgriFoods and Sadat Farm Operations net income performance. Let me turn to the overall financial picture of Sadat Group. As of September 30, 2023, we had a cash balance of $2.4 million and a working capital surplus of $9 million. The cash decrease in the third quarter of 2023 was due primarily to cash used in operations of $2.3 million. Our total assets increased in the third quarter by $18.3 million. to 90.7 million as of September 30, 2023, even with the impairment of the goodwill and intangible assets of 1.6 million as a direct result of optimizing our food service business segment. The increase in total assets is primarily due to 13.7 million increase in accounts receivable net, 6.4 million in prepaid forward on carbon offsets, and 11.7 million increase on property and equipment net. of which $8.8 million was moved from the deposit on the Zambia farmland upon completion of the farm acquisition. It is important to remember that we continue to grow our overall revenue, increase our working capital surplus, and build our balance sheet, all while making significant strategic changes in the company. With that, I'd like to turn the call back over to Michael Roper.