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Operator: Hi, everyone. Thank you for joining today’s call. We’re going to give it a few minutes just for everybody to funnel in, and then we will go ahead and begin. Thank you.

Unidentified Company Representative: Thank you, operator, and welcome, everyone, to Muscle Maker, Inc.’s Year-End 2022 Earnings Call. Before we get started, I would like to say 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 can discuss financial projections, information or expectations about business plans, results of operations, products or markets or otherwise make 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 sees 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 Muscle Maker, 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 Muscle Maker, 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.

With me on the call today are Muscle Maker’s Chief Executive Officer, Michael Roper; and Chief Financial Officer, Jennifer Black. Michael and Jennifer will be presenting prepared remarks related to the financials filed on March 21, 2023, and those documents may be found on Muscle maker’s IR website, Newswire fees and on the SEC’s website linked from the Muscle Maker IR pages. At this point, I would like to turn the call over to Muscle Maker’s CEO, Michael Roper. Michael?

Michael Roper: Thanks, , and welcome to everyone joining us on our call today. 2022 was a transformative year for Muscle Maker as we focused our franchising efforts on Pokemoto and launched our new wholly owned subsidiary, Sadot LLC. In Q4 2022, we began evolving Muscle Maker by strategically diversifying into a food-focused company delivering high-quality, healthy food to consumers through our restaurants and to manufacturers by an international agri commodity shipping, sourcing and farming business. Our goal is to create a comprehensive global food supply chain company, spanning from sustainable farming, agri commodity shipping, distribution, production and with the goal of ultimately reaching consumers through our restaurant franchising and meal prep companies.

Today, we’ll be discussing our new diversification strategy and the impact of Sadot on operational and financial results and the performance of our restaurant division with an emphasis on Pokemoto. Now I want to turn our attention to Sadot, our new wholly owned subsidiary and its strategic in the global food supply chain. As I’m sure, many of you have seen the recent announcements and want to fully understand what this all means to Muscle Maker. Let me start by recapping why 2022 was a transformative year from the beginning. Sadot was formed in October 2022 and is a wholly owned subsidiary of Muscle Maker, Inc. Its purpose was to diversify the company’s operations and lines of business from the local U.S. restaurant and franchising business and catapult us into the global food supply chain.

All financial performance of Sadot is consolidated upwards to the parent company, Muscle Maker, Inc. Some of you might ask is other private and institutional investors have over the past few months, why do we choose this trajectory, departing from our legacy restaurant and franchise business and the move into the global food supply chain. The answer lies in the understanding of the agriculture and food landscape today and in the very near future to come. We’ve all seen how world events such as COVID and the war in Ukraine can be disruptive to the world’s supply chains on a local level. Food security and sustainable farming has become household terms, and we can only imagine what the world’s food market will look like when populations approach 10 billion people.

We understand that going forward, as a food company that’s committed to apply healthy food and sustainable practices, we need to invest in laying the groundwork today in order to bring value for years to come. On November 18, 2022, we announced an agreement with AGGIA LLC FZ to manage the day-to-day operations of Sadot. AGGIA is an international consulting company managed by seasoned professionals in various aspects of the global food supply chain. AGGIA manages the day to day operations of Sadot. Our agreement with AGGIA was designed as a pay-for-performance model, where AGGIA only earns shares of Muscle Maker common stock when they drive net income in the Sadot subsidiary. AGGIA can earn up to 14,424,275 shares of common stock, which would require them to generate approximately $22.538 million of net income for Sadot.

The calculation of shares earned uses net income generated in Sadot and this is divided by a premium share price of $1.5625 per share to $1.5625 per share. AGGIA also has the right to nominate up to 8 new Board members, of which 1 was nominated upon execution of the agreement and the balance are based on certain net income thresholds. These thresholds allow the nomination of 2 new directors at $3.3 million in net income, 2 additional new directors at $6.6 million in net income and the final 3 new directors at $9.9 million of net income generated into Sadot. The fact that AGGIA is paid in shares and can nominate board positions upon performance reflects AGGIA confidence in its abilities to perform as well as its confidence in Muscle Maker’s knowledge and management.

More than a consultancy agreement, this is really a joining of forces with a common goal. Because AGGIA can own more than 20% of the outstanding shares as well as potential future control of the Board of Directors, the agreement required that we hold a shareholder meeting to have each of these items approved by our shareholders. On February 28, 2023, the shareholders of Muscle Maker approved the transaction and all accompanying provisions. We view the formation of Sadot and the agreement with AGGIA with the approval of our shareholders as our official launch of our diversification strategy. Upon executing our agreement with AGGIA, we began implementing our new strategy by starting with the agri commodity shipping and trading portion of the food supply chain.

To be clear, we’re not sitting around with the computer trading electronic commodities. Instead, we’re actually shipping and trading physical commodities such as corn, wheat and rice, which are loaded on the cargo ships and transported between countries. A typical shipment may contain 25,000 to 75,000 metric tons with associated revenue values that range between $5 million to $40 million per shipment. Our first shipment was executed in the second half of November 2022. From mid-November through the end of December, basically half of Q4 Sadot with AGGIA’s day-to-day management generated $150,586,000 in revenue. To put that into perspective, the entire prior year revenue for Muscle Maker as a whole was $9,321,000. And in the final 6 weeks of Q4 alone, Sadot generated $150,586,000 in revenue.

This $150,586,000 in revenue generated $4,548,000 in net income or a 3% profit margin. By achieving this net income threshold and the execution of the agreement, AGGIA nominated and Muscle Maker approved the addition of 2 new Board members who bring extensive experience in the food supply chain and international business. I’d like to welcome Benjamin Patel, who was originally nominated to the Board of Directors upon execution of the agreement with AGGIA as well as Hannah O and Ray Shankar to the Board of Directors. Benjamin has worked in the global agricultural commodity trading field for over a decade and his experience spans across commodity trading, finance, M&A and operations. Hannah is an experienced agri-food business leader and certified sustainability professional with over 15 years’ experience with Bayer Crop Science and Manto.

Ray brings international legal expertise as a partner in a law firm where he manages the private wealth and family office practice. These 3 members of our Board of Directors bring a wealth acknowledged to Muscle Maker and help elevate the expertise of the new Sadot subsidiary. The agri commodity shipping business is centered on high revenue, lower-margin transactions. We believe we can improve on these margins overtime by only and managing sustainable farms. This will allow us to control the sustainability and quality of products at the farm level and enjoy the increased margins from supplying our own products to the supply chain. In addition, we’re in the process of cultivating our banking relationships with international financiers with the goal of developing more elaborate financial instruments, allowing us to conduct different types of transactions by taking possession of the physical commodities for longer periods of time or even owning our own cargo ships.

There are many ways to increase margins in this area alone, and we believe we have plans to address these areas in the future. In 2023 through the end of February, Sadot has generated over $100 million in additional revenue. This brings the total revenue generated since mid-November 2022 through February 2023 to over $250 million. Now that shareholders have approved the transaction, we believe we can begin executing at a faster pace moving forward. Our next phase with Sadot will be focused on entering farming and sustainable farm management with the goal of increasing margins and control commodities at the initial stage as well as enhancing the social, environmental and financial value to our company. As part of our agreement, all net income proceeds generated by Sadot will be reinvested in growing and executing against the food supply chain strategy.

Recently, by using proceeds from the $4,548,000 in net income generated in Q4, we placed a deposit on undeveloped farmland in Africa, representing over 27,000 acres of future development. While this transaction is billed in negotiation, our intent is to either develop this specific land or use the deposit on a more fully developed property, which could potentially generate revenue in 2023 versus further down the road, while also providing a potential opportunity to improve the profit margins in the core agri commodity shipping business. We are excited about the potential of Sadot in our company’s advancement in the global food supply chain. We believe our results to date have been very encouraging, and we look forward to further building out the supply chain strategy and executing against potentially improving margins.

Now I’d like to turn the call over to our CFO, Jennifer Black, to review the financial performance of the company for 2022. Jennifer?

Jennifer Black: Thanks, Mike, and thank you, everyone, for joining us here today. Before I begin, I would like to note that our financial results on Form 10-K were filed with the SEC on March 21 and in a press release that same day. With that, I’d like to give an overview of the financials for 2022. For the year ended December 31, 2022, our company-led revenues significantly increased and totaled $161,698,000 compared to $10,350,000 for the prior year ended December 31, 2021. The $150,348,000 increase is mainly due to the commodity sales revenue generated by Sadot in its servicing agreement with AGGIA. Sadot generated commodity sales revenue of $150,586,000 for the year ended December 31, 2022. The commodity sales revenue was attributable to the formation of Sadot and the generated from physical food-related commodities.

$150 million was generated from November 14, 2022, which was the date the servicing agreement was finalized with AGGIA through the end of the year. The restaurant division generated company restaurant sales net of discounts of $10,300,000 for the year ended December 31, 2022 compared to $9,321,000 for the year ended December 31, 2021. This represented an increase of $979,000 or 11%, which is mainly due to a full year of sales for Pokemoto restaurants in Superfit Foods compared to 2021 when these segments were acquired. Franchise royalties and fees for the year ended December 31, 2022 and 2021 totaled $727,000 and $778,000, respectively. This represents a decrease of $51,000 or 7%. Franchise fees are recognized income over the life of the franchise agreement.

As the franchise location closes, our franchise agreement is terminated for any reason, the remaining deferred revenue will be recognized in full at that time. In 2021, there were several Muscle Maker Grill franchises that closed, resulting in higher franchise fees recognized. Overall, our 2022 loss from operations narrowed by $1,330,000. This is mainly due to Sadot. However, our results were impacted by onetime expenses in 2022 or onetime gains in 2021. The onetime transactions that affected our net income for 2021 and 2022 are as follows; in 2021, we recorded $1,920,000, employee retention credit that reduced our labor expenses. In 2022, we recorded $670,000 of amortization expense that were not recorded in 2021 due to the transitioning of the trademark and Muscle Maker Grill from an infinite light asset to a finite light asset, resulting in an increase in amortization expense.

If you remove the effects of these onetime events, the company’s loss from operations would have improved by $3,920,000 compared to the $1,330,000 that was disclosed. The most significant change in expenses from prior year is the stock-based consulting expense at $3,602,000, for the year ended December 31, 2022. The stock-based consulting expense is the result of the consulting fees due to AGGIA for Sadot operations. Based on these service agreements with AGGIA, the consulting fees are calculated at approximately 80% of net income generated by the Sadot business segment. This expense is expected to be paid in stock in 2023. To elaborate a little further on the Sadot segment. It generated net income of $4,548,000. However, this net income was offset by the expense of the issuance of shares to AGGIA as per the terms of the agreement between Muscle Maker and AGGIA for the management of Sadot.

In this Sadot service agreement with AGGIA, AGGIA earns Muscle Maker shares at a premium share price of $1.5625 per share and can earn up to 14,424,275 shares, which is the equivalent to generating $22,538,000 in net income in Sadot. Once AGGIA has reached maximum number of shares they can acquire, the consulting fees due to AGGIA will accrue as debt payable by Sadot to AGGIA. As Mike previously mentioned, we view the agreement with Sadot as joining forces towards a common goal. Therefore, we clearly see how the expense to AGGIA is actually an investment towards our future growth. As of December 31, 2022, we had cash balance of $9,898,000 and a working capital surplus of $4,033,000. With that, I’d like to turn the call back over to Michael Roper.

Michael Roper: Thanks, Jennifer, for that financial overview and kind of amazes me to go through all the numbers and didn’t get to twisted so that’s actually good. So we believe our new diversification strategy, okay, will have a significant impact on our company. To date, Sadot has generated over $250 million in revenue and reported net income in the Sadot division in Q4 of $4,548,000. Muscle Maker is a food-based company. Simply put, as an example, we feed people, and our company is evolving. Our strategy is changing. We like to think of Muscle Maker, Inc., which is our parent company as more of a holding company with multiple operational divisions. Basically, we have the newly created supply chain division, Sadot and then our restaurant division.

We’ve spoken about Sadot. Now let me walk everyone through an overview of how the restaurant division has performed. Our restaurant division is seeing continued improvements in our key performance metrics. As a percentage of company restaurant net sales, our revenue is up by 10.51%. Our labor percent — expense after adjusting for the 2021 ERC credits was reduced by 3.85%. Our rent expense — percent reduced by 1.97%. Our other restaurant operating expenses as a percent were reduced by 2.86%, and our food and paper costs, although they’re up slightly, increased by 0.35%. However, I actually consider the — considering the inflationary pressures on food and paper products in the industry that we faced this year, I think we did a pretty good job managing our costs here.

So we’re up slightly in food and paper costs. And then finally, our SG&A was reduced by 27.08%. So all of our key performance metrics are improving or are basically flat in the inflationary environment. So pretty good stuff that’s happening there. Not only are we excited about the potential and performance of Sadot, we remain focused on growing the restaurant division. Our restaurant division consists of 3 brands: Muscle Maker Grill restaurants, Superfit Foods meal prep and Pokemoto, Hawaiian Poke. All of our restaurant brands focus on healthier-for-you menu options. Muscle Maker Grill is our legacy brand and has been in business for over 25 years. We currently have 16 locations open with 1 new franchise location under construction. Superfit Foods is a meal prep company based in the Jacksonville, Florida market.

Superfit is a subscription-based model that focuses on premade meals, Meals are prepurchased and assembled in a temperature-controlled facility and delivered the branded coolers placed in fitness facilities in 34 pickup locations throughout the Jacksonville market. We believe the key to our growth and performance in the restaurant division is directly tied into growing the Pokemoto brand and leveraging the corporate team’s background and growth through franchising. We currently have 28 Pokemoto locations open and operating today. We also have an additional 50 new franchise agreements that have been sold and not yet open. In addition to these 50 new franchise agreements, we’re also excited to be working on several combo stores where we’ll operate both a Muscle Maker Grill restaurant and a Pokemoto restaurant in the same location, under the same roof leveraging the existing infrastructure and reducing overall costs while offering a wide variety of options to our consumers.

Our first 2 test locations will be in Chelsea, New York, and Fort Sill in Lawton, Oklahoma. Our strategy has become the largest Hawaiian poke chain in the industry through our franchising model and strategic placement of corporate-owned locations. Pokemoto franchise locations generate initial franchise fees of up $25,000 per location upon signing the franchise agreement and then additional franchise royalty fee revenue of up to 6% of franchisee net sales each month once they’re open. A typical franchise agreement is 10 years with one 5-year renewal option. Some additional highlights I’d like to point out as Pokemoto is now open or coming soon in 16 states. These states include Connecticut, Rhode Island, Texas, Florida, New York, Massachusetts, Tennessee, South Carolina, Virginia, Mississippi, Kansas, New Jersey, Maryland, California, Oklahoma and Pennsylvania.

Pretty soon it’s going to be easier to say where we’re not in than where we are in, right? Pokemoto franchises are now available to be sold in all states aside from Hawaii. In 2022, we added California, Illinois, Indiana, Maryland, Minnesota, North Dakota, South Dakota, Virginia and Washington. We are also able to sell in the District of Columbia and Puerto Rico. We expanded Superfit Foods pickup locations to get up to 34 pickup locations. We launched our fully refrigerated production facility at Superfit Foods. We rolled out multiple menu items across Pokemoto, including lobster seafood salad as a new protein option, which actually provides for a lower food cost option and to enhance our dessert and beverage options. We created a new interior design package for Pokemoto focusing on Hawaiian theme.

We expanded our franchise sales team and we completed the full transition of the accounting and finance teams moving offices and personnel to the new location near Fort Worth, Texas. And finally, we integrated the Muscle Maker Grill meal plan menu into the Superfit Foods meal plan menu, expanding consumer choices. So a lot of things happening throughout the year. Our restaurant division is growing through our Pokemoto franchising efforts, and I’m proud of the team and what they’ve accomplished so far. I look forward to continuing to focus on Pokemoto franchising and what the team can do in 2023. To conclude, I think we’ve done a great job executing on our diversified growth strategy and look forward to what the future brings. We believe the messaging around our new strategy and evolution of Muscle Maker into the global food supply chain is just now being received.

We’ve hired investor relations companies to assist in getting this messaging out to the masses and look forward to building new relationships from these efforts. I want to thank our shareholders and stakeholders for the support of the company and our initiatives. Finally, I want to thank our employees for all they do, we’ve got an incredible team here who deserve credit for our success and will be proud to be part of what we have built here.

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Unidentified Company Representative: Thank you, ladies and gentlemen, for joining us today. That will conclude management’s prepared comments on today’s call. If you have any comments or questions, please direct them to us through the company’s new IR website at www.ir.musclemakergrill.com, or reach out to us via phone or e-mail.

Operator: Goodbye.

End of Q&A: