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 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 in Sadot Group Inc.'s most recently filed Form 10-Q and Form 10-K and elsewhere in documents that Sadot 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 Sadot 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 thousand, and percentages have been rounded to the closest percent unless otherwise noted, and all numbers disclosed in this report are the amounts associated with Sadot Group Inc. and exclude the portion related to the noncontrolling interest. On this call, we will refer to Sadot Group Inc. as Sadot Group or the company. With me on the call today are Sadot Group Inc.'s Chief Executive Officer, Michael Roper; and Chief Financial Officer, Jennifer Black. Michael and Jennifer will be presenting prepared remarks related to Sadot Group's financials filed on May 15, 2024, and those documents may be found on the company's website, Newswire feeds, and on the SEC's website linked from the Sadot Group Inc's website at sadotgroupinc.com under the Investor tab.

Thanks, operator. Good morning, everyone. Thank you for joining us today as we present the results of our first quarter ending March 31, 2024. For the quarter ending March 31, 2024, our net loss improved by approximately $801,000 as compared to Q1 2023. The company had Q1 2024 revenues of $108 million resulting in a net loss of approximately $265,000, a considerable improvement compared to a net loss of approximately $1.1 million for Q1 2023. In addition, the company's Q1 2024 EBITDA improved, showing a gain of $458,000, marking a positive shift from a $433,000 EBITDA loss in the first quarter of 2023. Jennifer Black, our CFO, will discuss the financials in further detail here shortly. Overall market conditions in the agri-commodity sector presented challenges in Q1. One of the largest challenges was China's unexpected absence in the wheat market. As the world's largest buyer of wheat, China's pause on wheat had a material impact on the market. In addition to the China situation, we also saw softness in overall agri-commodity prices combined with expected seasonality factors. Because of these challenges, we did see a reduction in total revenue for Sadot Group in Q1. Despite the revenue drop to other areas of our business, we were able to improve our net income, improve our EBITDA, increase our total assets, and improve our working capital surplus. Importantly, we believe the market is showing indications that the headwinds on revenue may begin to subside in Q2 and Q3. As a matter of fact, I am pleased to announce that revenue for the month of April 2024 has already shown improvements, with $56 million of revenue coming in for the Agri-Foods division. I am pleased to report that while we worked to manage trading operations through the Q1 headwinds, we made significant progress on 5 of our strategic initiatives. First, we initiated the process to sell the Sadot Group's Services segment. Recently, in Q2, we signed nonbinding LOIs for the sale of Pokemoto and Superfit Foods. Both are in their respective due diligence phases. The sale of these assets is subject to customary closing conditions and remains subject to the satisfactory completion of due diligence by any buyer, negotiation and resolution of business and legal issues, negotiation, and completion of mutually satisfactory definitive agreements and corporate approvals by the parties. There is no guarantee that these transactions will result in the signing of a definitive agreement or a final sale. Second, we plan to expand the role of Fausto Plaza, consultant and manager at Sadot Latam, to play a significant role in the overall company's global trading and farm operations. Fausto brings over 2 decades of experience in agri-commodity trading and management. Prior to Sadot, he held operational and managerial positions with the global trading powerhouse, Bunge. Third, we opened a new trading office in Brazil with a team of 8 experienced agri-commodity traders, with revenue expected to come online in late Q2. In the short time since establishment, the team has made significant headway in sourcing products from the upcoming harvest and financing from multinational Brazilian banks. Led by Flavio de Campos and Paulo de Sa, both seasoned executives in international sourcing and trade, we expect the Brazilian subsidiary to substantiate itself in the region and expand Sadot's operations globally. Fourth, we began actively harvesting and have shipped 1,700 metric tons to date of corn under our agreement with the Food Reserve Agency, which was established by the Republic of Zambia. This agreement aims to support the Zambian government's efforts to safeguard national food security. We expect the majority of the revenue from this agreement to be realized in Q2 and potentially into Q3. Lastly, and importantly, we finalized terms with various institutions, providing us with approximately $27 million in trade financing for Sadot Agri-Foods operations moving forward. As we discussed in the past, the immediate growth of Sadot Group hinges on access to trade financing capital for our Sadot Agri-Foods operations. The growth of our top-line revenues and bottom-line margins is directly linked to increasing our access to trade financing. I cannot emphasize enough how important these trade financing facilities are to our growth. Access to such financing will provide us with the flexibility to pursue more agri-commodity trading opportunities, thereby increasing our top-line revenue with the goal of potentially enhancing the company's margins and net income. We are actively working on obtaining more trade finance lines to further support our growth initiatives. Now I'd like to turn the call over to our CFO, Jennifer Black, to review more specifics on the financial performance of the company for the first quarter of 2024.

Thank you, Mike. Before I begin, I'd like to note that our financial results for the quarter ending March 31, 2024, on Form 10-Q were filed with the SEC yesterday, May 15, 2024, along with the press release on the same day. With that, I'd like to give an overview of the financials for the first quarter of 2024. As Mike mentioned in his opening comments, we reported an improvement in the company's net loss by approximately $801,000 year-over-year. We reported a net loss of approximately $265,000, an improvement compared to a net loss of approximately $1.1 million for Q1 of 2023 on revenue of $108 million. This revenue was generated by our two business segments, Sadot Agri-Foods and Sadot Food Services operations. Additionally, our Q1 2024 EBITDA showed a gain of $458,000, marking a positive shift from the $433,000 EBITDA loss in the first quarter of 2023. Our first business segment is Sadot Agri-Foods. Sadot Agri-Foods contributed $106.5 million in revenue in the first quarter and completed 24 transactions in Q1 from our Sadot LLC and Sadot Latam trading line. These 24 transactions were completed across 14 different countries. Sadot Agri-Foods also contains farming operations. The farm is in harvest season, with the majority of the revenue from the current harvest expected to be realized in Q2 and potentially into Q3 depending on weather conditions. We have harvested to date over 1,700 metric tons of corn and 500 metric tons of soy that have been delivered to customers, and our contract farmer pilot program is just now starting its first deliveries. Our second business segment is Sadot Food Services operations. As Mike mentioned before, during the first quarter of 2024, the company began actively marketing the sale of the various food service concepts and identified Sadot Food Services as a disposal group that meets the requirements of ASC 360-10. Accordingly, it was classified as held for sale in the company's financials. In Q1, this division's revenue was $1.4 million for the three months ended March 31, 2024, compared to $2.6 million for the three months ended March 31, 2023. This decrease was mainly due to the conversion of certain corporate-owned Pokemoto locations to franchise locations to prepare for this divestiture. Now let me turn to the overall financial picture of Sadot Group. As of March 31, 2024, the company had a cash balance of $1.2 million and a working capital surplus of $13.2 million, respectively. This compares to a cash balance of $1.4 million and a working capital surplus of $8.3 million as of December 31, 2023. Our current cash balance is in line with our commitment to deploying capital strategically to enhance our financial position and drive sustainable growth. Our total assets in the first quarter grew to $150.5 million from $62.6 million in the same time in 2023. This was due to significant increases in property and equipment, other current assets, and our accounts receivables. Our total assets did decrease $27.6 million from December 31, 2023. This is due to the timing of payments on accounts receivable and the corresponding accounts payable related to trades. Stock-based expenses for the three months ended March 31, 2024, totaled $800,000 compared to $3.4 million for the three months ended March 31, 2023. The $2.6 million decrease in stock-based expenses is primarily the result of consulting fees due to Aggia for Sadot's Agri-Foods segment. Based on the renegotiated service agreement with Aggia, the consulting fees are calculated at approximately 40% of the net income generated by Sadot Agri-Foods, which is a decrease from the 80% in 2023. This expense is paid in investing in restricted stock that was issued to Aggia in 2023. As part of the business plan for Sadot Agri-Foods, we also enter into forward purchase and sales agreements. We currently have several forward purchases and sales agreements, one for the carbon credit offset, and in Q4, we entered into two forward sales agreements for soybeans to be delivered in the future. We can enter into forward sales agreements and internally hedge these transactions with the soy grown on the farm. The mark-to-market gain on these derivative transactions resulted in income of approximately $3.3 million in Q1 of 2024. It is important to note that we have strong revenue streams, have increased our working capital surplus, and we are building our balance sheet, all while making significant strategic changes, an achievement for the company. These developments are fortifying our balance sheet, reflecting the strategic investments we've made to bolster our operations. With that, I'd like to turn the call back over to Michael Roper.

Thank you for that financial overview, Jennifer. While we face some challenges and factors beyond our control this quarter, we stayed the course and adhered to our strategic plan for the company. With every challenge that we overcome, we believe we solidify our presence in the global markets and continue building the strong foundation required for our vision: a strong and significant participant in the global agri-commodity supply chain. We remain dedicated to executing our strategic vision and seizing the opportunities offered by the global food supply chain. Additionally, we are actively exploring options to divest our legacy restaurant brands. In closing, I want to express my gratitude to all our investors and stakeholders for joining us today and for your continued support. Thank you once again for your trust in Sadot Group Inc. We look forward to the exciting journey ahead in delivering continued success for our investors, stakeholders, and the communities we serve. With that, please give us a few moments while we open up the lines for questions.

Before we get to questions from our selected analysts, the team would like to address some questions which we have received from our stakeholders. Jennifer?

Thanks, operator. We would now like to run through a few questions. The first question is, why did revenue decrease by roughly 50% in Q1 2024 versus Q1 of 2023? Well, the decrease in this quarter's revenue can be attributed to a strategic transitional effort in our business model. We're limiting ourselves on extending credit to buyers towards a more secure payment structure. This shift resulted in a temporary reduction in sales volume as we adjusted our operations and renegotiated terms with our clients. While this has impacted our short-term revenue, it has strengthened our financial foundation by reducing credit risk and positioning it for more stable and predictable growth in the future.

In addition to that, there were several underlying market factors that had a considerable impact on the quarter's revenue. The most important factor was a considerable decrease in demand from China and a decrease in overall commodity prices. This resulted in less sales and sales at lower prices. China is the world's largest grain importer, and as reported by the U.S. Department of Agriculture in March 2024, 504,000 tons of wheat sales to China had been canceled. To put this in perspective, this figure is equivalent to about half of the total U.S. wheat shipments to China in all of 2022 and marks the largest cancellation on record dating back to 1999. Our analysis, supported by reporting from Nikkei Asia, indicates that this significant swing appears to be related to the flooding China experienced last summer, which decreased their domestic production. In response, China secured large-scale contracts for high-quality grains from other countries. However, it now appears that buyers are trying to avoid fulfilling costly contracts from the previous periods due to domestic supply issues and are instead repurchasing at lower prices, causing a temporary disruption to the normal agri-commodity trading markets. We view this as an anomalous temporary reset of the market, and we anticipate a return to its historical trading patterns. This actually reinforces our strategic vision to expand into additional trading markets and types of commodities as we've done recently with the formation of our additional global trading entities of Sadot Latam last year, and more recently with the establishment of Sadot Brazil to our existing operation centers of Singapore and Dubai. Moreover, we remain open and are actively exploring additional expansion opportunities in the future. But I really want to emphasize one more time is, as indicated, Q2, we're already starting to see some increasing revenues as we reported April revenue to be roughly $56 million. So we're already starting to see a rebound.

The second question we had is why were margins lower than expected and lower than previous quarters? And what should we expect margins to be moving forward? Well, we normally don't provide guidance on future margins due to the volatility in the market. However, trade margins narrowed due to the same market factors previously stated earlier on the call. As commodity prices drop, along with the demand from China, it resulted in a market squeeze. We believe our global expansion and commodity diversification strategy has the potential to create a positive increase on margin going forward.

Next question. With the NASDAQ extension, what is the company's plan on how they are going to raise the share price above $1? And so look, we're implementing a multifaceted strategy. First, we're enhancing our operational efficiencies and financial health through the aforementioned strategic shift. Second, we plan to increase our market visibility and investor relation efforts to better communicate our value proposition and future potential. Additionally, we're exploring strategic partnerships and potential acquisitions that align with our core business, which can drive growth and investor confidence. The company believes in our business strategy, and executing against this strategy is critical in driving results and demonstrating growth. We also believe that the divestiture of the restaurant services division will be an important driving factor overall, bringing in fresh capital while also reducing corporate overhead. This will allow the company to focus solely on the agribusiness model and help aid in accurately valuing the company. So next question is how will the restaurant sale impact the company? So the restaurant sales can mark another significant operational transition towards our focus on the global agri-commodity supply chain. Again, we're going to be focusing on the supply chain. Once sold, we will expand our existing teams where necessary, bring in additional key members from the team for various verticals, and as we mentioned earlier, use other tools and methods to reach out to the market to better communicate our value proposition and future potential.

While we can't discuss the terms of the nonbinding LOIs, which they are under due diligence process, and there's a lot of phases to still go with that, we believe that the terms received on the nonbinding LOIs are in line with our expectations.

So let me jump into the next question. It's regarding farming. Why is the company doing farming? And what is the strategic advantage? And will there be expansion? So our involvement in farming is part of a broader strategy to diversify our revenue streams and leverage synergies within the business operations. Farming offers us a strategic advantage by providing a stable supply of raw materials, reducing dependency on external suppliers and mitigating supply chain risks. Furthermore, it aligns with our basket trading approach by enabling us to manage both current and future agricultural contracts more effectively. As for expansion, we see significant potential in scaling our farming operations, especially as we integrate these activities into the mix. This will enhance our overall market presence and create additional growth opportunities.

In addition, as mentioned earlier in the call, we have the ability to enter into forward sales agreements using our farm commodities. In Q1, we were able to recognize roughly $3.3 million in income on these forward sales agreements. This allows the company to trade year-round with the underlying commodity as collateral, in case the market turns negative, to help insulate us from future market fluctuations. We anticipate adding more farms beyond Zambia to the company over time as we build this vertical segment. I believe that's all the questions we have prepared. Operator, we'd like to open it up for analysts on the call.

Yes. Thanks, team. I would like to open the call to Aaron Grey with AGP first for questions.

So first one for me. Just on the rebound at April of $56 million, can you also speak a little bit just from May month to date? We're about halfway through now. And the makeup of that $56 million, was there any rebound from China within that? Or is that what you're able to sell, not including any rebound from China? Trying to get a better picture of how we should think of the run rate, whether or not China doesn't come back in terms of their purchasing habits.

Yes. Aaron, I'll start, and then Jennifer can chime in here. Let me talk about the China side of the equation, right? We really, for the month of April, did not have, if I'm not mistaken, any trades to China in the month of April. So everything you're seeing is us moving around to different parts of the world, which is why we expanded into Latam, and we're expanding into Brazil, and all that allows us to shift around and do things. Now you can't just do that instantaneously, like overnight, so that's why you see it starting to take effect in April as we start moving into those other markets. We think China will start coming back online here through the rest of Q2 and into Q3.

Yes. When it comes to the trades, those kind of take time. And usually, those don't finalize and close out in the accounting process until the second half of the month. So I can't give you an accurate depiction of where we are right now because of the way the time involved in accounting for those to happen.

I want to emphasize that the April numbers don't currently reflect anything related to China. We anticipate that situation will change as we progress through Q2 and Q3. Additionally, Brazil will be coming online, with our first trade expected to occur at the end of May or the beginning of June. So, you will definitely see that start within Q2. Most of the general harvest from the farm will also take place in Q2, although some of it may extend into Q3 depending on weather conditions. While I can't control that, there is good momentum building for the remainder of the quarter.

Okay. That's helpful. And then on the margin side, some of the things that you talked about in terms of what's driving the margin pressure, it sounds like it might be a little bit more prolonged and less transitory than just 1 quarter, just considering the overall environment. We include the Agri-Foods, including your own farming, it looks like it was a negative gross margin for the quarter. I noticed trade alone, probably slight positive. But how do we get to a point and how far away are we from getting to more and greater gross margins? I know it had been in about the 2% range the first half of last year. So how far away from it returning to that? Or are we going to be in this lower margin levels for the near term, at least?

I think part of the key to improving margins is our shipping strategy. We have discussed two types of trades: large trades, which are comparable to entire cargo ships, and small trades, which are similar to container shipments. Many of the orders headed to China were large trades, which generally yield lower margins than container trades. As we transition to more container trades and smaller trades from regions like Latin America and Brazil, we expect to see an increase in margins. Additionally, we may explore different commodities that offer better margins, though this won't happen overnight. As we expand into various markets, these opportunities will start to emerge. In fact, in the first quarter and continuing into the second quarter, we're beginning to see other commodities, such as sunflower seeds, gaining traction. By optimizing our farming operations and implementing other initiatives, we believe we can achieve margin growth. However, predicting exact outcomes is challenging given the current volatile market conditions.

Okay, that's helpful. My final question is about the credit trends you mentioned, which could lead to adjustments in your customer base. Do you have any accounts receivable issues? It seems there are no doubtful accounts on the balance sheet and accounts receivable has decreased. Could you elaborate on that?

Yes, absolutely. So no, we don't have any AR issues right now at this time. But what you don't want to do is you don't want to overextend. You do your KYC checks and your credit checks on your customers, and you don't want to have too much outstanding to one customer at one time just for the liability state of the company. And so we have made sure to look at those closely and only limit the amount that we have outstanding to one customer at a time, just to minimize our risk and ensure we're set in a good position.

Now I'd like to open the call to Tom Kerr with Zacks.

One more clarification on the China business. Are you implying that the China business and the wheat business is a large disproportional part of your overall business? Or are we more referring to sort of the derivative effects of those China actions?

Yes. I guess maybe a little of both. So our main commodities that we trade today are corn, soy, and wheat, right? So just by that alone, it can be a big portion of what we trade. China is not the only place that we trade wheat with though, right? So we have other parts of the world, right? There's wheat that comes out of Brazil, there's wheat that comes out of different parts of the world. So it didn't completely lag in terms of where things are at.

Yes. And like when you look into Q1 of this year and you look at our trades that we did, over 35% of our trades were wheat in different countries throughout the world.

Do you have the flexibility to quickly transition into other commodities? Not all commodities experienced a decline in the first quarter. For example, cocoa beans performed well. What capacity do you have to explore other commodities?

Yes, we have the capability. As I mentioned, we've begun to explore other commodities like sunflower, among a few others that I can't recall at the moment. It's not simply a matter of deciding to enter a new commodity on a whim. Our traders have specialized knowledge in various areas, so it requires a strategic approach to determine what we truly want to trade. There will be price fluctuations, and as we expand our team and leverage their expertise, we enhance our trading operations. This is why we incorporate different trading divisions, as they bring specialized knowledge not just in specific regions and trade routes but also in individual commodities. While we can transition into new areas, it's important to note that this takes time to integrate a dedicated team into the company. Currently, we are in the process of doing so in Brazil and have done similar work in Latin America, while also exploring additional opportunities from both a geographic and commodity standpoint. We aim to diversify our trading portfolio, but our initial focus has been on primary commodities like wheat, corn, and soy, which remain the most significant in the market.

Got it. That makes sense. And on the trade financing, the $26 million, how do we figure out how that translates into revenue? So it's not a one-to-one is it, where $26 million trade financing gets you $26 million of revenues? Or is there like a derivative for that, that expands? So I hope that made sense.

So the trade lines and stuff like that all work differently. They're not all like a direct, here's $26 million, just go buy it. Most of these are set up based off of the purchasers and give us extended terms to get these transactions done. So there isn't a one-for-one like you were saying. However, it does significantly increase the amount of trades that we can do with those funds, which should generate additional revenue and margins in there.

One more for me, and I'll get back in the queue. On the restaurant business, I know you can't talk about the terms of the Pokemoto and Superfit that are being done, but can you at least say if you expect cash proceeds that can be invested in the agri business?

Yes. The sale of the terms of the nonbinding LOIs are where we thought we would be. We're happy with it. The idea there is it brings in fresh capital into the business, which is going to allow us to invest in the agri side of the business. Whether that's bringing in more personnel, expanding, or making an acquisition, whatever it is, it's going to enable us to really start focusing on the agri business model, which has been our strategy since we did the pivot into this whole scenario to be able to focus on that.

I was just trying to get you to give me how much cash is going to be coming in.

You do this every single time we talk.

Last one on that, Muscle Maker Grill wasn't mentioned. Is that still up for sale? Or is there plans for that? Or is that a separate issue?

Yes. When we look at the restaurant operations, there are 3 main divisions in there: Pokemoto, Muscle Maker Grill, and Superfit Foods. Pokemoto is the largest one. We just started focusing on that first. Superfit Foods kind of came along at the same time. We haven't necessarily actively pushed Muscle Maker Grill yet. Although we do have an interested party that we're talking to, we're not at the LOI stage with it yet. But we do have some interest that's out there. So as soon as we complete these other transactions, then we'll start focusing on the Muscle Maker Grill side as well.

That concludes our Q&A portion of the call. Mr. Roper, any final comments?

Yes. Other than just letting everybody know, look, we did have a challenge in Q1. I think we worked our way around it as best we could. We had some other positive results for the quarter that came in there from EBITDA and net income and all those different things that we talked about. And so it's pretty encouraging from that perspective. We know we're executing against our plan. We know where we want to go. We have confidence in it. We consider ourselves a growing company. And just pretty excited about everything that's happening out there. And I do appreciate all the investment community, shareholders, stakeholders, all that, that are out there. Thanks for investing in us and having confidence in us, and I look forward to what the next quarter in the near future brings.

Thank you, everyone. That concludes our call.