UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from _____________ to ___________________.
Commission
file number:
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
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| ☒ | Smaller reporting company | |||
| Emerging growth company |
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an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
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As of August 14, 2024, there were shares of common stock outstanding.
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
| i |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance of $ and $ at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Accounts receivable - related
parties, net of allowance of $ | ||||||||
| Mortgages receivable, net
of allowance of $ | ||||||||
| Inventory,
net of allowance of | ||||||||
| Inventory deposits | ||||||||
| Real estate lots held for sale | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Long Term Assets | ||||||||
| Mortgages
receivable, non-current portion, net of allowance of $ | ||||||||
| Advances to employees | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Finance lease right-of-use asset | ||||||||
| Prepaid foreign taxes, net | ||||||||
| Intangible assets, net | ||||||||
| Deposits, non-current | ||||||||
| Total Assets | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses, current portion | ||||||||
| Deferred revenue | ||||||||
| Deferred revenue, related party | ||||||||
| Finance lease liability, current portion | ||||||||
| Operating lease liabilities, current portion | ||||||||
| Loans payable, current portion | ||||||||
| Loans payable, related party | ||||||||
| Lot sale obligation, net | ||||||||
| Convertible debt obligations, net | ||||||||
| Convertible debt obligations, net, related party | ||||||||
| Derivative liability | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Accrued expenses, non-current portion | ||||||||
| Finance lease liability, non-current portion | ||||||||
| Operating lease liabilities, non-current portion | ||||||||
| Loans payable, non-current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 15) | ||||||||
| Senior Convertible Preferred Stock, par value $ per share: shares designated; shares issued and outstanding | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, shares authorized; shares issued and outstanding | ||||||||
| Common stock, par value $ per share; shares authorized; and shares issued and and shares outstanding at June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost, shares at June 30, 2024 and December 31, 2023 | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 2 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross (loss) profit | ( | ) | ||||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Expense (Income) | ||||||||||||||||
| Change in fair value of derivative liability | ||||||||||||||||
| Loss on extinguishment of debt | ||||||||||||||||
| Gains from foreign currency remeasurement, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense | ||||||||||||||||
| Other income, related party | ( | ) | ( | ) | ||||||||||||
| Total other expense | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss per Common Share | ||||||||||||||||
| Basic and Diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 3 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 4 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
(unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||||||||
| Balance - January 1, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||||||
| Options | - | |||||||||||||||||||||||||||||||
| Restricted stock units | - | |||||||||||||||||||||||||||||||
| Common stock issued for 401(k) employer matching | - | |||||||||||||||||||||||||||||||
| Common stock issued for cash in private placement | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance - March 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||||||
| Options | - | |||||||||||||||||||||||||||||||
| Restricted stock units | - | |||||||||||||||||||||||||||||||
| Common stock issued for cash in private placement | - | |||||||||||||||||||||||||||||||
| Anti-dilution shares issued | - | ( | ) | |||||||||||||||||||||||||||||
| Effect of reverse stock split | - | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||
| Balance - June 30, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 5 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
(unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||||||||
| Balance - January 1, 2023 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Cumulative effect of change upon adoption of ASU 2016-13 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||||||
| Options | - | - | ||||||||||||||||||||||||||||||
| Restricted stock units | - | |||||||||||||||||||||||||||||||
| Common stock issued for 401(k) employer matching | - | |||||||||||||||||||||||||||||||
| Shares issued under the New ELOC, net of offering costs [1] | - | |||||||||||||||||||||||||||||||
| Relative fair value of warrants issued with 2023 Notes, net of issuance costs [2] | - | - | ||||||||||||||||||||||||||||||
| Warrants issued for modification of GGH Notes | - | - | ||||||||||||||||||||||||||||||
| Reduction of warrant exercise price on new debt issuance | - | - | ||||||||||||||||||||||||||||||
| Shares issued upon conversion of debt and interest | - | |||||||||||||||||||||||||||||||
| Common stock issued for cash in private placement | - | |||||||||||||||||||||||||||||||
| Cashless warrant exercise | - | ( | ) | |||||||||||||||||||||||||||||
| True-up adjustment | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance - March 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation: | - | - | ||||||||||||||||||||||||||||||
| Options | - | - | ||||||||||||||||||||||||||||||
| Restricted stock units | - | - | ||||||||||||||||||||||||||||||
| Shares issued under the New ELOC, net of offering costs [3] | - | |||||||||||||||||||||||||||||||
| Shares issued upon conversion of debt and interest | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance - June 30, 2023 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| [1] |
| [2] |
| [3] |
The accompanying notes are an integral part of these condensed consolidated financial statements
| 6 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation: | ||||||||
| 401(k) stock | ||||||||
| Options | ||||||||
| Restricted stock units | ||||||||
| Non-cash lease expense | ||||||||
| Gains from foreign currency remeasurement, net | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Provision for credit losses, net of recoveries | ||||||||
| Provision for unrealizable prepaid taxes | ||||||||
| Provision for obsolete inventory | ||||||||
| Change in fair value of derivative liability | ||||||||
| Loss on sale of land | ||||||||
| Decrease (increase) in assets: | ||||||||
| Accounts receivable and mortgages receivable | ( | ) | ( | ) | ||||
| Employee advances | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Inventory deposits | ||||||||
| Real estate lots held for sale | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ( | ) | ||||
| Total Adjustments | ||||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of land | ||||||||
| Purchase of intangible asset | ( | ) | ||||||
| Net Cash Provided by (Used in) Investing Activities | ( | ) | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 7 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(unaudited)
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from loan payable | ||||||||
| Proceeds from loans payable, related party | ||||||||
| Proceeds from equity deposits | ||||||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Refund of lot sale obligation | ( | ) | ||||||
| Proceeds from the issuance of convertible debt | ||||||||
| Proceeds from the issuance of convertible debt, related party | ||||||||
| Financing costs in connection with the issuance of convertible debt | ( | ) | ||||||
| Repayments of convertible debt obligations | ( | ) | ||||||
| Proceeds from common stock issued for cash | ||||||||
| Redemption premiums paid on convertible debt obligations | ( | ) | ||||||
| Proceeds from issuance of shares under the New ELOC, net of offering costs [1] | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash | ( | ) | ||||||
| Net Increase in Cash | ||||||||
| Cash - Beginning of Period | ||||||||
| Cash - End of Period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-Cash Investing and Financing Activity | ||||||||
| Finance lease liability for equipment | $ | $ | ||||||
| Equity issued to satisfy accrued stock-based compensation obligation | $ | $ | ||||||
| Shares issued in connection with anti-dilution protection | $ | $ | ||||||
| Shares issued upon conversion of debt and accrued interest | $ | $ | ||||||
| Equity deposits exchanged for notes payable | $ | $ | ||||||
| Equity deposits exchanged for convertible debt | $ | $ | ||||||
| Relative fair value of warrants issued with 2023 Notes, net of allocable issuance costs [2] | $ | $ | ||||||
| Warrants issued and debt principal exchanged upon modification of convertible debt | $ | $ | ||||||
| Cashless warrant exercise | $ | $ | ||||||
| [1] |
| [2] |
The accompanying notes are an integral part of these condensed consolidated financial statements
| 8 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
Organization and Operations
Through its subsidiaries, Gaucho Group Holdings, Inc. (“Company”, “GGH”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops, and operates a collection of luxury assets, including real estate development, fine wines, and a boutique hotel in Argentina, as well as an e-commerce platform for the sale of high-end fashion and accessories.
As wholly owned subsidiaries of GGH, InvestProperty Group, LLC (“IPG”) and Algodon Global Properties, LLC (“AGP”) operate as holding companies that invest in, develop and operate global real estate and other lifestyle businesses such as wine production and distribution, golf, tennis, and restaurants. GGH operates its properties through its ALGODON® brand. IPG and AGP have invested in two ALGODON® brand projects located in Argentina. The first project is Algodon Mansion, a Buenos Aires-based luxury boutique hotel property that opened in 2010 and is owned by the Company’s subsidiary, The Algodon – Recoleta, SRL (“TAR”). The second project is the redevelopment, expansion and repositioning of a Mendoza-based winery and golf resort property now called Algodon Wine Estates (“AWE”), the integration of adjoining wine producing properties by Guacho Development S.R.L. (“GDS”), and the subdivision of a portion of this property for residential development.
GGH also manufactures, distributes, and sells high-end luxury fashion and accessories through its wholly-owned subsidiary, Gaucho Group, Inc. (“GGI”).
Reverse Stock Splits
On
September 25, 2023,
On
May 1, 2024,
All share and per share amounts in this Quarterly Report have been adjusted to reflect the effect of these reverse stock splits (hereafter referred to collectively as the “Reverse Stock Splits”) as if the Reverse Stock Splits occurred as of the earliest period presented.
| 9 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual consolidated financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results for the full year ending December 31, 2024 or any other period. These unaudited condensed consolidated financial statements have been derived from the Company’s accounting records and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on April 30, 2024.
Going Concern and Management’s Liquidity Plans
The
accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not
include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that
might be necessary should the Company be unable to continue as a going concern. As of June 30, 2024, the Company had cash of $
As
of June 30, 2024, future cash requirements for current liabilities include $
On February 27, 2024, the Company’s equity line of credit was terminated.
| 10 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.
During the period from July 3, 2024 through August 6, 2024, the Company issued 120-day convertible promissory notes in exchange for cash proceeds in the aggregate amount of $. The notes bear interest at % per annum, and automatically convert into preferred shares at a conversion price of $ per preferred share on the date that the Company obtains stockholder approval to issue such shares. If the Company does not obtain such approval, all principal and interest accrued on the notes will be due and payable at maturity.
Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these condensed consolidated financial statements are issued. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.
Highly Inflationary Status in Argentina
During
the three and six months ended June 30, 2024, the Company recorded gains of $
Concentrations
The
Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to $
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets.
The Company earns revenues from the sale of real estate lots, as well as hospitality, food and beverage, other related services, and from the sale of clothing and accessories. The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
| 11 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Real estate sales | $ | $ | $ | $ | ||||||||||||
| Hotel rooms and events | ||||||||||||||||
| Clothes and accessories | ||||||||||||||||
| Restaurants | ||||||||||||||||
| Winemaking | ||||||||||||||||
| Agricultural sales | ||||||||||||||||
| Golf, tennis and other | ||||||||||||||||
| Total Revenues | $ | $ | $ | $ | ||||||||||||
Revenue from the sale of food, wine, agricultural products, clothes and accessories is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered, and the performance obligation has been satisfied. Revenues from gift card sales are recognized when the card is redeemed by the customer. The Company does not adjust revenue for the portion of gift card values that is not expected to be redeemed (“breakage”) due to the lack of historical data. Revenue from real estate lot sales is recorded when the lot is deeded, and legal ownership of the lot is transferred to the customer.
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Deferred revenues associated with real estate lot sale deposits are recognized as revenues (along with any outstanding balance) when the lot sale closes, and the deed is provided to the purchaser. Other deferred revenues primarily consist of deposits accepted by the Company in connection with agreements to sell barrels of wine, advance deposits received for grapes and other agricultural products, and hotel deposits. Wine barrel and agricultural product advance deposits are recognized as revenues (along with any outstanding balance) when the product is shipped to the purchaser. Hotel deposits are recognized as revenue upon occupancy of rooms, or the provision of services. See Note 7, Deferred Revenue.
Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.
| 12 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments.
| As of June 30, | ||||||||
| 2024 | 2023 | |||||||
| Options | ||||||||
| Warrants | ||||||||
| Unvested restricted stock units | ||||||||
| Senior Secured Convertible Notes | [1] | [2] | ||||||
| Convertible 8.5% Preferred Promissory Notes | [3] | |||||||
| Total potentially dilutive shares | ||||||||
| [1] | |
| [2] | |
| [3] |
Derivative Instruments
The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 “Derivatives and Hedging” (“ASC 815”) of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The accounting treatment of derivative financial instruments requires that the Company record any bifurcated embedded features at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded in earnings each period as non-operating, non-cash income or expense. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Bifurcated embedded features are recorded upon note issuance at their initial fair values which create additional debt discount to the host instrument.
| 13 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The guidance becomes effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.
3. MORTGAGES RECEIVABLE
The
Company offers loans to purchasers in connection with the sale of real estate lots. The loans bear interest at
Management
evaluates each loan individually on a quarterly basis, to assess collectability and estimate a reserve for past due amounts. Past due
principal and interest in the aggregate amounts of $
The following represents the maturities of mortgages receivable as of June 30, 2024:
| For the period from July 1, 2024 through December 31, 2024 | $ | |||
| For the year ended December 31, | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Gross Receivable | ||||
| Less: Allowance | ( | ) | ||
| Net receivable | ||||
| Less: current portion | ( | ) | ||
| Mortgages receivable, non-current portion | $ |
| 14 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As
of each of June 30, 2024 and December 31, 2023, two borrowers had past-due loans outstanding representing
The
Company recorded interest income from its mortgages receivable of $
4. INVENTORY
Inventory at June 30, 2024 and December 31, 2023 was comprised of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Vineyard in process | $ | $ | ||||||
| Wine in process | ||||||||
| Finished wine | ||||||||
| Clothes and accessories | ||||||||
| Other | ||||||||
| Less: Reserve for obsolescence | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The
Company had deposits for inventory purchases in the amount of $
The
Company recorded a provision for obsolete inventory in the amount of $
| 15 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or developed by the Company. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1 - Valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include actively traded equity securities.
Level 2 - Valued based on (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) from market corroborated inputs. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted.
Level 3 - Valued based on valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments, and certain commitments and guarantees. The carrying amounts of the Company’s short-term financial instruments including cash, accounts receivable, prepaid commissions on lot sales, prepaid taxes and expenses, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the Company’s loans payable, debt obligations, convertible debt obligations and derivative liability approximate fair value, as they bear terms and conditions comparable to the market for obligations with similar terms and maturities.
6. ACCRUED EXPENSES
Accrued expenses are comprised of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accrued compensation and payroll taxes | $ | $ | ||||||
| Accrued taxes payable - Argentina | ||||||||
| Accrued insurance expense | ||||||||
| Accrued consulting fees | ||||||||
| Accrued commissions | ||||||||
| Accrued interest | ||||||||
| Accrued cash true up obligation (see Note 10) | ||||||||
| Accrued rent expense | ||||||||
| Other accrued expenses | ||||||||
| Accrued expenses, current | ||||||||
| Accrued payroll tax obligations, non-current | ||||||||
| Other long term accruals | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 16 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On
November 27, 2020, the Company entered into various payment plans, pursuant to which it agreed to pay its Argentine payroll tax obligations
over a period of
7. DEFERRED REVENUE
Deferred revenue is comprised of the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Real estate lot sales deposits | $ | $ | ||||||
| Hotel deposits | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
The
Company accepts deposits in conjunction with agreements to sell real estate building lots at Algodon Wine Estates in the Mendoza wine
region of Argentina. These lot sale deposits are generally denominated in U.S. dollars. Revenue is recorded when the sale closes, and
the deeds are issued. No lot sale deposits were recorded during the six months ended June 30, 2024. The Company recorded revenue upon
the closing of the sale of real estate lots in the amount of $
Deferred
revenue, related party represents $
| 17 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
8. LOT SALE OBLIGATIONS
The following table summarizes the activity in connection with the Company’s lot sale obligations during the six months ended June 30, 2024:
| Lot Sale Obligations | ||||||||||||
| Lot Sale Obligations | Debt Discount | Lot Sale Obligations, net of discount | ||||||||||
| Balance at January 1, 2024 | $ | $ | ( | ) | $ | |||||||
| Lot deposit refunded in 1Q24 | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ||||||||||||
| Balance at March 31, 2024 | ( | ) | ||||||||||
| Portion of lot deposit refunded in 2Q24 | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | ) | $ | |||||||
During
the fourth quarter of 2023, the Company entered into agreements (each, a “Lot Deposit Agreement”) with five investors in
the Company (each, a “Purchaser”), pursuant to which (1) each Purchaser agreed to purchase either two or three real estate
lots at a purchase price of $
During
the fourth quarter of 2023, the Company entered into Lot Deposit Agreements for the purchase of eleven real estate lots and received
Purchase Amounts in the aggregate amount of $
Interest Expense on Lot Sale Obligations
The
Company recorded interest expense in the amount of $
| 18 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
9. LOANS PAYABLE
The Company’s loans payable are summarized below:
| June 30, | December 31, | |||||||
| Loans Payable | 2024 | 2023 | ||||||
| EIDL | $ | $ | ||||||
| 2023 Loan | ||||||||
| Total Loans Payable | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Total Loans Payable, non-current portion | $ | $ | ||||||
| Loans Payable, Related Party | ||||||||
| Investor Loans | $ | $ | ||||||
EIDL Loan
On
May 22, 2020, the Company received a loan in the principal amount of $
2023 Loan
On
January 9, 2023, the Company received $
Loans Payable, related party
On June 24, 2024, the Company issued 120-day promissory notes (“Investor Loans”) in the aggregate amount of $
Interest Expense on Loans Payable
The
Company incurred interest expense related to the loans payable in the amount of $
| 19 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
10. CONVERTIBLE DEBT OBLIGATIONS
Convertible debt obligations consist of the following:
| 2023 Convertible Note | Preferred Share Convertible Notes | Total Principal | Debt Discount | Convertible debt, net of discount | Preferred Share Convertible Notes - Related Party | |||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Convertible notes issued | ( | ) | ||||||||||||||||||||||
| Convertible note issued to related party | ||||||||||||||||||||||||
| Amortization of debt discount | ||||||||||||||||||||||||
| Convertible notes outstanding at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
2023 Senior Secured Convertible Note
Effective
February 5, 2024,
The
2023 Senior Secured Convertible Note (the “2023 Note”) is convertible at the Event of Default conversion price, equal to
the lessor of a) $
On
February 21, 2024, the Company received an Event of Default Redemption Notice from the Investor, demanding immediate payment of principal,
interest and redemptions premiums owed under the 2023 Note equal to a minimum of $
There were no repayments or conversions of the 2023 Note during the six months ended June 30, 2024.
| 20 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Derivative Liability in Connection with 2023 Notes
The
Event of Default Conversion Price on the 2023 Notes represents a redemption feature, which was bifurcated from the 2023 Note host and
recorded as a derivative liability. During the six months ended June 30, 2024, the Company has recorded $
The following table sets forth a summary of the changes in the fair value of the derivative liability that are measured at fair value on a recurring basis:
| Balance at January 1, 2024 | $ | |||
| Add: fair value of derivative associated with convertible interest accrued during the period | ||||
| Balance at June 30, 2024 | $ |
Convertible 8.5% Preferred Promissory Notes
During
the period from May 2024 through June 2024, the Company issued 120-day convertible preferred promissory notes (the “Preferred
Share Convertible Notes”) in in the aggregate amount of $
Convertible 8.5% Preferred Promissory Notes - Related Party
During
the period from May 2024 through June 2024, the Company issued Preferred Share Convertible Notes in exchange for cash aggregate
amount of $
| 21 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Interest Expense on Convertible Debt Obligations
The
Company incurred total interest expense of approximately $
The
Company incurred total interest expense of approximately $
As
of June 30, 2024 and December 31, 2023, there is accrued interest of $
11. SEGMENT DATA
The
Company’s financial position and results of operations are classified into
| ● | Real Estate Development, through AWE and TAR, including hospitality and winery operations, which support the ALGODON® brand. | |
| ● | Fashion (e-commerce), through GGI, including the manufacture and sale of high-end fashion and accessories sold through an e-commerce platform. | |
| ● | Corporate, consisting of general corporate overhead expenses not directly attributable to any one of the business segments. |
The following tables present segment information for the three and six months ended June 30, 2024 and 2023, respectively:
| For the Three Months Ended June 30, 2024 | For the Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||
| Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | |||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenues from Foreign Operations | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Loss from Operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| 22 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| For the Three Months Ended June 30, 2023 | For the Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||
| Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | |||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenues from Foreign Operations | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Loss from Operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
The following table presents segment information as of June 30, 2024 and December 31, 2023.
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||||||||
| Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | Real
Estate Development | Fashion (e-commerce) | Corporate | TOTAL | |||||||||||||||||||||||||
| Total Property and Equipment, net | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Total
Property and Equipment, net in Foreign Countries | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
12. RELATED PARTY TRANSACTIONS
Accounts Receivable – Related Parties
The
Company had accounts receivable – related parties of $
| 23 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The
Company recorded recoveries of credit losses (net of credit loss expense) related to accounts receivable, related parties of $
Expense Sharing
On
April 1, 2010, the Company entered into an agreement with a Related Party to share expenses such as office space, support staff, professional
services, and other operating expenses (the “Related Party ESA”). During the three months ended June 30, 2024 and 2023, the
Company made advances in the amount of $
During
the six months ended June 30, 2024 and 2023, the Company made advances in the amount of $
Management Fee Income
During
the six months ended June 30, 2024 and 2023, the Company recorded income of $
Other Related Party Transactions
See Note 9 – Loans Payable related to promissory notes issued, and Note 10 – Convertible Debt related to Preferred Share Convertible Notes issued to a holder greater than 10% of the Company’s common stock.
13. BENEFIT CONTRIBUTION PLAN
The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction.
A
participant is always fully vested in their account, including the Company’s contribution. For the three months ended June 30,
2024 and 2023, the Company recorded a charge associated with its contribution of approximately $
| 24 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
14. TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Reverse Stock Splits
On
September 25, 2023,
On
May 1, 2024,
Preferred Stock
On
May 21, 2024, the Company filed a Certificate of Designation of Senior Convertible Preferred Stock with the Delaware
Secretary of State, designating shares of preferred stock of the Company, par value $, as Senior Convertible Preferred Stock
(the “Preferred Stock”). Holders of Preferred Stock are entitled to receive cumulative cash dividends at an annual rate of
Each share of Preferred Stock converts into shares of common stock (a) at the option of the holder (and upon approval of the Company, which shall not be unreasonably withheld) at any time after 6 months and 1 day from the date of the termination of the Preferred Stock offering (the “Termination Date”); or (b) automatically, if, on the date that is 18 months from the Termination Date, the price of the Company’s common stock increases by more than 60% from the date of the initial purchase of Preferred Stock by each Preferred Stock holder. If not previously converted, the Company must redeem all then-outstanding shares of Preferred Stock on the date that is 18 months from the Termination Date for a price equal to the liquidation value of each share, plus all unpaid and accrued and accumulated dividends, whether or not declared, within 60 days.
There are no shares of Preferred Stock issued or outstanding as of June 30, 2024.
Common Stock
On
November 27, 2023, the Company commenced a private placement (“the Private Placement”) of shares of common stock for gross
proceeds of up to $
During
the period from January 1, 2024 through February 28, 2024 the Company sold shares of common stock at $ per share for aggregate proceeds of $
During the six months ended June 30, 2024, the Company issued shares of common stock to certain of the Company’s employees, consultants and advisors in connection with the vesting of RSUs.
Termination of Equity Line of Credit
On February 22, 2024, the Company received notice from the Underwriter of its election to terminate the equity line of credit pursuant to the Common Stock Purchase Agreement and Registration Rights Agreement (the “New ELOC”). While the notice to terminate stated that it was effective immediately, the terms of the New ELOC require at least 10 Trading Days prior written notice.
Accumulated Other Comprehensive Loss
For
the three and six months ended June 30, 2024, the Company recorded a gain of $
| 25 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warrants
There was no activity with regard to the Company’s warrants during the six months ended June 30, 2024.
As
of June 30, 2024, warrants for the purchase of
A summary of outstanding and exercisable warrants as of June 30, 2024 is presented below:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||
| Exercise Price | Exercisable Into | Outstanding Number of Warrants | Weighted Average Remaining Life in Years | Exercisable Number of Warrants | ||||||||||||
| $ | ||||||||||||||||
| $ | ||||||||||||||||
| $ | ||||||||||||||||
| Total | ||||||||||||||||
Restricted Stock Units
| Weighted Average | ||||||||
| Number of | Grant Date Value | |||||||
| RSUs | Per Share | |||||||
| RSUs non-vested January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| RSUs non-vested June 30, 2024 | $ | |||||||
During
the three and six months ended June 30, 2024, the Company recorded stock-based compensation expense of $
| 26 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Stock Options
| Weighted | Weighted | |||||||||||||||
| Average | Average | |||||||||||||||
| Number of | Exercise | Remaining | Intrinsic | |||||||||||||
| Options | Price | Term (Yrs) | Value | |||||||||||||
| Outstanding, January 1, 2024 | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Outstanding, June 30, 2024 | $ | |||||||||||||||
| Exercisable, June 30, 2024 | $ | $ | ||||||||||||||
During
the three and six months ended June 30, 2024, the Company recorded total stock-based compensation expense of $
| Options Outstanding | Options Exercisable | |||||||||||||
| Weighted | ||||||||||||||
| Outstanding | Average | Exercisable | ||||||||||||
| Exercise | Number of | Remaining Life | Number of | |||||||||||
| Price | Options | In Years | Options | |||||||||||
| $ | - | |||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | - | |||||||||||||
| $ | ||||||||||||||
| 27 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
15. COMMITMENTS AND CONTINGENCIES
Legal Matters
Gaucho Group Holdings Inc. v. 3i, LP et al. (D. Del.)
On February 16, 2024, the Company commenced an action in the United States District Court for the District of Delaware (the “Delaware Action”) through the filing of a complaint against the Investor in the 2023 Note committed underlying violations of the Securities Exchange Act of 1934 and, therefore, the securities contracts entered into by the parties are void.
On April 5, 2024, the Investor filed its answer to the Company’s complaint, including affirmative defenses and asserted four counterclaims against the Company; specifically, (i) breach of contract, in connection with the 2023 Note, (ii) request for preliminary injunction and permanent injunction, (iii) unjust enrichment and (iv) restitution.
On April 26, 2024, the Company responded to the Investor’s counterclaims by filing a partial motion to dismiss, which seeks dismissal of the 3i Parties’ counterclaims for (i) preliminary and permanent injunction, (ii) unjust enrichment and (iii) restitution. On May 17, 2024, the Company’s motion to dismiss was fully briefed and submitted to the court. As of the date hereof, the court has not yet rendered a decision on the Company’s motion.
On August 13, 2024, the Company moved for a temporary restraining order and preliminary injunction against the 3i Parties. The Company’s motion specifically requests that the court enjoins the 3i Parties’ attempt to conduct a public disposition of certain assets of the Company.
The Company intends to vigorously pursue its legal claims against the Investor and defend itself against all counterclaims.
3i, LP v. Gaucho Group Holdings, Inc. et al. (Sup. Ct., NY County)
On June 7, 2024, the Investor commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a complaint the Company (the “Investor Action”). The Investor’s complaint alleges that the Company is in breach of a Senior Secured Convertible Note, dated February 21, 2023, and, therefore, the Investor is permitted to exercise certain rights granted to it by a certain Security and Pledge Agreement, dated February 21, 2023.
On June 14, 2024, the Company moved to dismiss or, in the alternative, stay the Investor Action. On July 7, 2024, the Company’s motion was fully briefed and submitted to the court. As of the date hereof, the court has not yet rendered a decision on the Company’s motion.
The Company intends to vigorously defend themselves against the Investor’s claims.
3i, LP v. Gaucho Group Holdings, Inc. (Sup. Ct., NY County)
On June 19, 2024, the Investor commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a motion for summary judgment in lieu of a complaint against the Company (the “Investor Motion for Summary Judgment”). The Investor’s motion alleges that the Company is in breach of a Senior Secured Convertible Note, dated February 21, 2023.
On June 28, 2024, the Company moved to dismiss or, in the alternative, stay the Investor Motion for Summary Judgment.
| 28 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On June 29, 2024, the Company submitted a letter application to the court requesting the Investor Motion for Summary Judgment be stayed indefinitely pending a final resolution of the Delaware Action.
On July 8, 2024, the Court issued an order granting the Company’s letter application and staying the Investor Motion for Summary Judgment indefinitely pending final resolution of the Delaware Action.
The parties are currently engaged in discovery. The Company intends to vigorously pursue its legal claims against the Investor and defend itself against all counterclaims.
General Litigation Disclosure
From time to time, the Company and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against the Company and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage. We are not involved in any litigation that we believe is likely, individually or in the aggregate, to have a material adverse effect on our condensed consolidated financial condition, results of operations or cash flows, except as disclosed.
16. LEASES
Operating Lease
On
April 8, 2021, GGI entered into a lease agreement to lease a retail space in Miami, Florida for
Total
operating lease expense was $
| 29 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Finance Lease
During
June 2024, the Company entered into a four-year lease agreement, (the “Equipment Lease”) for the lease of equipment to be
used in the wine bottling / labeling process (the “Equipment”). The lease term began on June 12, 2024. The monthly fixed
lease payment is $ARS
The
Company recorded an ROU asset and lease liability in the amount of $
Supplemental cash flow information related to the Company’s operating and finance leases is as follows:
| For
the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating lease | $ | $ | ||||||
| Operating cash flows from finance lease | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating lease | $ | $ | ||||||
| Finance lease | $ | $ | ||||||
| Weighted Average Remaining Lease Term (in years): | ||||||||
| Operating lease | ||||||||
| Finance lease | - | |||||||
| Weighted Average Discount Rate: | ||||||||
| Operating leases | % | % | ||||||
| Finance Lease | % | N/A | ||||||
| 30 |
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Future minimum lease commitments in connection with the Company’s leases are as follows:
| Operating Lease | Finance Lease | Total | ||||||||||
| For the period July 1 through December 31, 2024 | $ | $ | $ | |||||||||
| For the years ended December 31, | - | |||||||||||
| 2025 | ||||||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| Total future minimum lease payments | ||||||||||||
| Less: imputed interest | ( | ) | ( | ) | ( | ) | ||||||
| Net future minimum lease payments | ||||||||||||
| Less: operating lease liabilities, current portion | ||||||||||||
| Operating lease liabilities, non-current portion | $ | $ | $ | |||||||||
Lease Revenue
The
Company is the lessor of a building and land that it purchased in connection with the acquisition of GDS, pursuant to an operating lease
which expires on August 31, 2031. At the end of the lease, the lessee may enter into a new lease or return the asset, which would be
available to the Company for re-leasing. The Company recorded lease revenue of $
17. SUBSEQUENT EVENTS
During the period from July 3, 2024 through August 6, 2024, the Company issued 120-day Preferred Share Convertible Notes in exchange for cash proceeds in the aggregate amount of $. The notes bear interest at % per annum, and automatically convert into shares of Preferred Stock at a conversion price of $ per share of Preferred Stock on the date that the Company obtains stockholder approval to issue such shares. The Company expects to obtain stockholder approval for the issuance of the Preferred Stock at its Annual General Meeting of Stockholders, currently scheduled for August 16, 2024. If the Company does not obtain such approval, all principal and interest accrued on the Preferred Share Convertible Notes will be due and payable 120 days from the date of issuance.
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Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We disclaim any obligation to update forward-looking statements.
Unless the context requires otherwise, references in this document to “GGH”, “we”, “our”, “us” or the “Company” are to Gaucho Group Holdings, Inc. and its subsidiaries.
Please note that because we qualify as an emerging growth company and as a smaller reporting company, we have elected to follow the smaller reporting company rules in preparing this Quarterly Report on Form 10-Q.
Overview
Gaucho Group Holdings, Inc. (“GGH” or the “Company”) positions its e-commerce leather goods, accessories, and fashion brand, Gaucho – Buenos Aires™, as one of luxury, creating a platform for the global consumer to access their piece of Argentine style and high-end products. With a concentration on leather goods, ready-to-wear and accessories, this is the luxury brand in which Argentina finds its contemporary expression. During the first quarter of 2022, the Company launched Gaucho Casa, a Home & Living line of luxury textiles and home accessories, which is being marketed and sold on the Gaucho – Buenos Aires e-commerce platform. Gaucho Casa challenges traditional lifestyle collections with its luxury textiles and home accessories rooted in the singular spirit of the gaucho aesthetic. GGH seeks to grow its direct-to-consumer online products to global markets in the United States, Asia, the United Kingdom, Europe, and Argentina. We intend to focus on e-commerce and scalability of the Gaucho – Buenos Aires and Gaucho Casa brands, as real estate in Argentina is politically sensitive. GGH’s goal is to become recognized as the LVMH (“Louis Vuitton Moët Hennessy”) of South America’s leading luxury brands. Through one of its wholly owned subsidiaries, GGH also owns and operates legacy investments in the boutique hotel, hospitality and luxury vineyard property markets. This includes a golf, tennis and wellness resort, as well as an award-winning wine production company concentrating on Malbecs and Malbec blends. Utilizing these wines as its ambassador, GGH seeks to further develop its legacy real estate, which includes developing residential vineyard lots located within its 4,138-acre resort.
As a result of the COVID-19 pandemic, we terminated our corporate office lease and senior management now works remotely. GGH’s local operations are managed by professional staff with substantial hotel, hospitality and resort experience in Buenos Aires and San Rafael, Argentina.
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Recent Developments and Trends
During the period from April 1, 2024 through April 11, 2024 the Company sold 16,667 shares of common stock at $6.00 per share pursuant to a private placement, for aggregate gross proceeds of $100,000 in connection with the Private Placement.
On April 11, 2023, the Company issued a total of 4,764 shares of common stock at a price per share of $6.00 in connection with the anti-dilution provisions of the Private Placement as approved by the Company’s stockholders on February 29, 2024.
On April 19, 2024, the Board of Directors of the Company, as authorized by the stockholders of the Company, approved a 1-for-10 reverse stock split of the Company’s issued and outstanding shares of common stock. The Board of Directors of the Company also approved an amended and restated Certificate of Incorporation to effect the Reverse Stock Split. The reverse stock split was effected on May 1, 2024.
Between May 1, 2024 and August 6, 2024, the Company entered into convertible preferred promissory notes (the “Preferred Share Convertible Notes”) in in the aggregate amount of $3,266,425, with a select group of investors, all of whom have a substantial pre-existing relationship with the Company, of which Preferred Share Convertible Notes in the aggregate amount of $1,000,000 were issued to a holder of greater than 10% of the Company’s common stock. The Preferred Share Convertible Notes bear interest at 8.5% per annum, and automatically convert into Senior Convertible Preferred Stock at a price of $100 per share on the date the Company obtains stockholder approval of its Proposals No. 2, 3, and 4 at the Annual General Meeting of Stockholders, currently scheduled for August 16, 2024. If these proposals are not approved by our stockholders, the Preferred Share Convertible Notes are due in full 120 days from the date of issuance.
On June 24, 2024, the Company entered into 120-day promissory notes in the aggregate amount of $420,000 with a holder of greater than 10% of the Company’s common stock. The notes bear interest at 8.5% per annum.
The Company is currently involved in litigation with the holder of a Senior Secured Convertible Note issued by the Company. Refer to Part II. Item 1., Legal Proceedings for more information.
The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. However, substantial doubt has been raised as to the ability of the Company to continue as a going concern. The Company presently has enough cash on hand to sustain its operations on a month-to-month basis, but if the Company is not able to obtain additional sources of capital, it may not have sufficient funds to continue to operate the business for twelve months from the date these financial statements are issued. Since inception, our operations have primarily been funded through proceeds received in equity and debt financings.
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Consolidated Results of Operations
Three months ended June 30, 2024 compared to the three months ended June 30, 2023
Overview
We reported a net loss of approximately $2.6 million and $5.0 million for the three months ended June 30, 2024 and 2023, respectively.
Revenues
Revenues from operations were approximately $427,000 and $711,000 during the three months ended June 30, 2024 and 2023, respectively, reflecting a decrease of approximately $284,000 or 40%. Hotel, restaurant and agricultural sale revenues decreased by an aggregate of approximately $166,000, since inflationary price increases for these Argentine revenue streams were offset by the devaluation of the peso during the period. There were no lot sale closings during the three months ended June 30, 2024, while one lot sale closed during the same period in 2023, resulting in a decrease of lot sale revenues $155,000. These revenue decreases were partially offset by an increase of approximately $46,000 in wine revenues as the result of new wine distribution channels and the launch of new wine products during 2024.
Gross (loss) profit
We generated a gross loss of approximately $24,000 for the three months ended June 30, 2024 compared to a gross profit of approximately $42,000 for the three months ended June 30, 2023, representing a decrease in gross profit of approximately $66,000. A decrease in gross profit of approximately $122,000 resulted primarily from the decrease in lot sales and was partially offset by increases in gross profit related to wine revenues and wine cost savings resulting bottling efficiencies, and an improvement in gross loss from clothing sales resulting from the decrease in clothing revenues sold at a loss.
Selling and marketing expenses
Selling and marketing expenses were approximately $127,000 and $213,000 for the three months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $86,000 or 40%, which consisted primarily of a $29,000 decrease in Gaucho Group, Inc. (“GGI”) on-line advertising and marketing expenses, and a $57,000 decrease in marketing expense resulting from fewer investor events during the three months ended June 30, 2024 as compared to same period of the previous year.
General and administrative expenses
General and administrative expenses were approximately $2,156,000 and $1,711,000 for the three months ended June 30, 2024 and 2023, respectively, representing an increase of approximately $445,000 or 26%. An increase of approximately $359,000 in professional and consulting fees consisted primarily of additional legal fees resulting from the filing of a complaint against the holder of a convertible note and increased audit fees. Other increases included $123,000 of previously abated rent expense on the GGI lease charged by the landlord during the period as the result of a late rent payment, approximately $38,000 of increase in corporate franchise and foreign taxes and tax reserves, and approximately $200,000 of less gains on transactions denominated in a foreign currency. These expense increases were partially offset by decreases of approximately $175,000 in board compensation expense (the Company began to compensate the board in June of 2023, and the first payments included a “catch up” amount), a decrease of approximately $21,000 in travel expense, as well as other aggregated expense decreases that are not individually material.
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Depreciation and amortization expense
Depreciation and amortization expense included in operating expenses was approximately $115,000 and $104,000 during the three months ended June 30, 2024 and 2023, respectively.
Interest income
Interest income was approximately $0 and $64,000 during the three months ended June 30, 2024 and 2023, respectively, representing a decrease of $64,000 or 100%. During the three months ended June 30, 2024, the Company did not recognize interest earned on past due mortgage receivable balances.
Interest expense
Interest expense was approximately $156,000 and $1,066,000 during the three months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $910,000 or 85%. The decrease consisted of a decrease of approximately $220,000 in interest expense incurred at stated rates, resulting from lower principal balances outstanding during the period, as well as a decrease of approximately $690,000 in amortization of debt discount, since the discount on the Company’s convertible debt was fully amortized during the first quarter of 2024.
Other income, related party
Other income was $0 and $75,000 during the three months ended June 30, 2024 and 2023, respectively. Other income during the three months ended June 30, 2023 represented management fees from LVH. LVH suspended operations on September 27, 2023; accordingly, no management fees were earned during the three months ended June 30, 2024.
Loss on extinguishment of debt
There was no loss on extinguishment of debt for the three months ended June 30, 2024. Loss on extinguishment of debt for the three months ended June 30, 2023 in the aggregate amount of $32,094 consists of extinguishment loss recognized related to premiums paid on the cash redemption of convertible debt.
Gains from foreign currency remeasurement
The Company recorded net gains from foreign currency remeasurement of approximately $24,000 and $103,000 during the three months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $79,000 or 77%, due to the fluctuation in the Argentine peso to United States dollar exchange rates.
Change in fair value of derivative liability
The Company recorded a change in fair value of derivative liability of approximately $75,000 and $2,141,000 during the three months ended June 30, 2024 and 2023, respectively. The change in fair value during the three months ended June 30, 2024 is associated with the derivative liability arising default terms on the 2023 Note. The change in fair value during the three months ended June 30, 2023 is associated with the event of default on the 2023 Note as of June 30, 2023.
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Six months ended June 30, 2024 compared to the six months ended June 30, 2023
Overview
We reported a net loss of approximately $5.4 million and $7.7 million for the six months ended June 30, 2024 and 2023, respectively.
Revenues
Revenues from operations were approximately $1,015,000 and $1,159,000 during the six months ended June 30, 2024 and 2023, respectively, reflecting a decrease of approximately $144,000 or 12%. Hotel, restaurant and agricultural sale revenues decreased by an aggregate of approximately $122,000, since inflationary price increases for these Argentine revenue streams were offset by the devaluation of the peso during the period. Lot sale revenues decreased by approximately $51,000 and clothing and other revenues decreased by approximately $27,000 during the period. These revenue decreases were partially offset by an increase of approximately $56,000 in wine revenues as the result of new wine distribution channels and the launch of new wine products during 2024.
Gross profit
We generated a gross profit of approximately $195,000 for the six months ended June 30, 2024 and a gross profit of approximately $197,000 for the six months ended June 30, 2023, representing a decrease in gross profit of approximately $2,000. Increased gross losses in connection with closing sales were offset by improvements in gross profit in connection with hotel and restaurant revenues.
Selling and marketing expenses
Selling and marketing expenses were approximately $223,000 and $448,000 for the six months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $225,000 or 50%, which consisted primarily of a $24,000 decrease in GGI online advertising and marketing expenses and a $201,000 decrease in investor relation expenses, as the result of the Company’s efforts to reduce expenses and conserve cash during the period.
General and administrative expenses
General and administrative expenses were approximately $4,421,000 and $3,467,000 for the six months ended June 30, 2024 and 2023, respectively, representing an increase of approximately $954,000 or 28%. Increases in general and administrative expenses included an increase of approximately $600,000 in professional and consulting fees (consisting primarily of legal fees resulting from the filing of a complaint against the holder of a convertible note, as well as increased audit fees), an increase of approximately $119,000 in expected credit losses in connection with our mortgages receivable, aggregate increases of approximately $147,000 in corporate franchise tax, foreign taxes and tax reserves, as well as increases totaling approximately $412,000 in other aggregated expenses that are not individually material. These increases were partially offset by a decrease of approximately $324,000 in compensation expense, of which a decrease of approximately $151,000 was related to Board of Directors compensation (the Company began to compensate the board in June of 2023, and the first payments included a “catch up” amount) and a decrease of approximately $118,000 is related to severance payments paid to AWE employees during the first quarter of 2023.
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Depreciation and amortization expense
Depreciation and amortization expense included in operating expenses was approximately $225,000 and $213,000 during the six months ended June 30, 2024 and 2023, respectively.
Interest income
Interest income was approximately $15,000 and $115,000 during the six months ended June 30, 2024 and 2023, respectively, representing a decrease of $100,000 or 87%. During the six months ended June 30, 2024, the Company did not recognize interest earned on past due mortgage receivable balances.
Interest expense
Interest expense was approximately $584,000 and $1,668,000 during the six months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $1,084,000 or 65%. The decreases include a decrease of approximately $324,000 in interest expense incurred at stated rates, resulting from lower principal balances outstanding during the period, as well as a decrease of approximately $760,000 in amortization of debt discount, as the discount on the Company’s convertible debt was fully amortized during the first quarter of 2024.
Other income, related party
Other income was approximately $0 and $150,000 during the six months ended June 30, 2024 and 2023, respectively. Other income during the six months ended June 30, 2023 represented management fees from LVH. LVH suspended operations on September 27, 2023; accordingly, no management fees were earned during the three months ended June 30, 2024.
Loss on extinguishment of debt
There was no loss on extinguishment of debt for the six months ended June 30, 2024. Loss on extinguishment of debt for the six months ended June 30, 2023 in the aggregate amount of $416,000 was comprised of (i) premium paid on the conversion of GGH Notes of approximately $112,000, (ii) premium paid on the cash redemption of GGH Notes of approximately $124,000, (iii) premium paid on the 2023 Senior Secured Convertible Note (the “2023 Note”) for cash redemption of principal in the amount of approximately $32,000; (iv) premium in the amount of approximately $13,000 paid on the conversion an aggregate of $87,179 of principal and interest owed on the 2023 Note, and (iv) the fair value of approximately $135,000 in warrants issued in the exchange agreement for the GGH Notes.
Gains from foreign currency translation
The Company recorded net gains from foreign currency remeasurement of approximately $34,000 and $215,000 during the six months ended June 30, 2024 and 2023, respectively, representing a decrease of approximately $181,000 or 84%, due to the fluctuation in the Argentine peso to United States dollar exchange rates.
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Change in fair value of derivative liability
The Company recorded a change in fair value of derivative liability of approximately $156,000 and $2,141,000 during the six months ended June 30, 2024 and 2023, respectively. The change in fair value during the six months ended June 30, 2024 is associated with the derivative liability arising from the default terms on the 2023 Note. The change in fair value during the six months ended June 30, 2023 is associated with the default terms on the 2023 Note on convertible debt as of June 30, 2023.
Liquidity and Capital Resources
We measure our liquidity a variety of ways, including the following:
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Cash | $ | 469,000 | $ | 428,000 | ||||
| Working capital deficiency | $ | 8,155,000 | $ | 5,363,000 | ||||
| Debt outstanding, gross principal amount | $ | 4,143,000 | $ | 1,874,000 | ||||
| Cash true up obligations | $ | 1,485,000 | $ | 1,485,000 | ||||
| Lot sale obligations (gross principal amount, refundable upon rescission) | $ | 452,000 | $ | 525,000 | ||||
Cash requirements for our current liabilities include approximately $4,967,000 for accounts payable and accrued expenses (including cash true up obligations in connection with convertible debt in the amount of $1,485,000), approximately $611,000 for loans payable, approximately $451,000 for lot sale obligations, approximately $288,000 for future payments under leases, and approximately $79,000 for other current liabilities. Further, our convertible debt under the 2023 Note matured on February 21, 2024 and we have subsequently received event of default notices demanding immediate payment of all balances owed in connection with the 2023 Note (unless converted at the option of the investor prior to payment), including principal, accrued interest and redemption premiums in the aggregate equal to a minimum of approximately $2.1 million. Cash requirements for our long-term liabilities include approximately $936,200 future payments under operating leases, approximately $63,000 future payments under a finance lease, and approximately $19,000 for accrued expenses.
During the six months ended June 30, 2024, we financed a portion of our activities from proceeds derived from equity financings. A significant portion of the funds have been used to cover working capital needs and costs related to the infrastructure of our real estate lots.
Net cash used in operating activities for the six months ended June 30, 2024 and 2023 amounted to approximately $4,105,000 and $4,033,000, respectively. During the six months ended June 30, 2024, the net cash used in operating activities was primarily attributable to the net loss of approximately $5,364,000, adjusted for approximately $1,478,000 of net non-cash expenses, and approximately $219,000 of cash used to fund changes in the levels of operating assets and liabilities. During the six months ended June 30, 2023, the net cash used in operating activities was primarily attributable to the net loss of approximately $7,677,000 adjusted for approximately $4,143,000 of net non-cash expenses, and approximately $499,000 of cash used to fund changes in the levels of operating assets and liabilities.
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Cash provided by (used in) investing activities for the six months ended June 30, 2024 and 2023 amounted to approximately $77,000 and ($489,000), respectively, resulting from approximately $111,000 and $439,000, respectively, of cash used for the purchase of property and equipment, $0 and $50,000, respectively, of cash used for the purchase of an intangible asset, offset during the six months ended June 30, 2024 by approximately $188,000 cash received upon the sale of land.
Net cash provided by financing activities for the six months ended June 30, 2024 and 2023 amounted to approximately $4,021,000 and $5,110,000 respectively. For the six months ended June 30, 2024, the net cash provided by financing activities resulted from approximately $1,569,000 of proceeds from the issuance of convertible debt, $1,833,000 in proceeds from the issuance of common stock, $300,000 proceeds from loans payable, and $480,000 in proceeds in connection with deposits for the purchase of equity, partially offset by approximately $88,000 in repayment of loans payable, and $73,000 from the partial refund of a lot sale obligation. For the six months ended June 30, 2023, the net cash provided by financing activities resulted from approximately $5,000,000 in net proceeds from the issuance of debt, $591,000 in proceeds from the issuance of common stock in a private placement, $733,000 in proceeds from the issuance of stock under the New ELOC and $185,000 in proceeds from the issuance of a note payable, partially offset by the payment of approximately $322,000 of financing costs in connection with the issuance of convertible debt, the repayment of convertible debt obligations and related redemption premiums in the approximate amount of $1,019,000, and repayment of loans payable of approximately $59,000.
As of June 30, 2024, the Company had cash and a working capital deficit of approximately $469,000 and $8,155,000, respectively. During the six months ended June 30, 2024 and 2023, the Company incurred net losses of approximately $5.4 million and $7.7 million, respectively, and used cash in operating activities of approximately $4.1 million and $4.0 million, respectively. Further, as of June 30, 2024, approximately $3.3 million owed in connection with the Company’s convertible debt (including principal, interest, redemption premiums and cash true up obligations) is past due and payable upon demand, and approximately $0.6 million represents the current portion of the Company’s loans payable which are payable on demand or for which payments are due within twelve months after June 30, 2024.
During the period from July 3, 2024 through August 6, 2024, the Company issued 120-day convertible promissory notes in exchange for cash proceeds in the aggregate amount of $1,290,400. The notes bear interest at 8.5% per annum, and automatically convert into preferred shares at a conversion price of $100.00 per preferred share on the date that the Company obtains stockholder approval to issue such shares. If the Company does not obtain such approval, all principal and interest accrued on the notes will be due and payable at maturity.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these financial statements are made available. Since inception, the Company’s operations have primarily been funded through proceeds received from equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.
Availability of Additional Funds
As a result of our financings, we have been able to sustain operations. However, we will need to raise additional capital in order to meet our future liquidity needs for operating expenses and capital expenditures, including GGI inventory production, continued development of the GGI e-commerce platform, expansion of our winery and additional investments in real estate development. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations.
Off-Balance Sheet Arrangements
None.
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Contractual Obligations
As a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which it relies are reasonably based upon information available to us at the time that it makes these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. We consider accounting for credit losses in connection with our mortgages receivable to be a critical accounting estimate.
Other items within our financial statements that require estimation, but are not deemed critical, include the valuation of investments, equity and liability instruments, the value of right-of-use assets and related lease liabilities and reserves associated with the realizability of certain assets.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.
Item 4: Controls and Procedures
Disclosure Controls and Procedures
Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of June 30, 2024, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2024, resulting from ineffective controls over information technology general controls for information systems that are relevant to the preparation of our financial statements with respect to user provisioning and deprovisioning and cybersecurity, a lack of segregation of duties due to our small size, and lack of testing of the operating effectiveness of the controls.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Gaucho Group Holdings Inc. v. 3i, LP et al. (D. Del.)
On February 16, 2024, the Company commenced an action in the United States District Court for the District of Delaware through the filing of a complaint against 3i, LP, 3i Management LLC, and Maier Joshua Tarlow (the “3i Parties”). The Company’s complaint alleges that the 3i Parties have each committed underlying violations of the Securities Exchange Act of 1934 and, therefore, the securities contracts entered into by the parties are void.
On April 5, 2024, the 3i Parties filed their answer to the Company’s complaint, wherein they interposed affirmative defenses and asserted four counterclaims against the Company. Specifically, (i) breach of contract, arising from a Senior Secured Convertible Note dated February 21, 2023, (ii) request for preliminary injunction and permanent injunction, (iii) unjust enrichment and (iv) restitution.
On April 26, 2024, the Company responded to the 3i Parties’ counterclaims by filing a partial motion to dismiss, which seeks dismissal of the 3i Parties’ counterclaims for (i) preliminary and permanent injunction, (ii) unjust enrichment and (iii) restitution. On May 17, 2024, the Company’s motion to dismiss was fully briefed and submitted to the court. As of the date hereof, the court has not yet rendered a decision on the Company’s motion.
On August 13, 2024, the Company moved for a temporary restraining order and preliminary injunction against the 3i Parties. The Company’s motion specifically requests that the court enjoins the 3i Parties’ attempt to conduct a public disposition of certain assets of the Company.
The Company intends to vigorously pursue its legal claims against the 3i Parties and defend itself against their counterclaims.
3i, LP v. Gaucho Group Holdings, Inc. et al. (Sup. Ct., NY County)
On June 7, 2024, 3i, LP (“3i”) commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a complaint against Gaucho Group Holdings, Inc. and Gaucho Group, Inc. (together, the “Gaucho Parties”). 3i’s complaint alleges that the Company is in breach of a Senior Secured Convertible Note, dated February 21, 2023, and, therefore, 3i is permitted to exercise certain rights granted to it by a certain Security and Pledge Agreement, dated February 21, 2023.
On June 14, 2024, the Gaucho Parties moved to dismiss or, in the alternative, stay the case commenced by 3i. On July 7, 2024, the Gaucho Parties’ motion was fully briefed and submitted to the court. As of the date hereof, the court has not yet rendered a decision on the Gaucho Parties’ motion.
The Gaucho Parties intend to vigorously defend themselves against 3i’s claims.
3i, LP v. Gaucho Group Holdings, Inc. (Sup. Ct., NY County)
On June 19, 2024, 3i, LP (“3i”) commenced an action in the Supreme Court of the State of New York, County of New York through the filing of a motion for summary judgment in lieu of a complaint against Gaucho Group Holdings, Inc. 3i’s motion alleges that the Company is in breach of a Senior Secured Convertible Note, dated February 21, 2023.
On June 28, 2024, the Company moved to dismiss or, in the alternative, stay the case commenced by 3i.
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On June 29, 2024, the Company submitted a letter application to the court requesting the action be stayed indefinitely pending a final resolution of the first-filed proceeding currently pending in the United States District Court for the District of Delaware, entitled Gaucho Group Holdings Inc. v. 3i, LP et al, Case No. 1:24-cv-00212 (D. Del.) (the “Delaware Action”).
On July 8, 2024, the Court issued an order granting the Company’s letter application and staying the action indefinitely pending final resolution of the Delaware Action.
The Company intends to vigorously defend itself against 3i’s claims.
General Litigation Disclosure
From time to time, the Company and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against the Company and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage. We are not involved in any litigation that we believe is likely, individually or in the aggregate, to have a material adverse effect on our condensed consolidated financial condition, results of operations or cash flows, except as disclosed.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in Item 1A of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on April 30, 2024 and the Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 20, 2024.
We face litigation and are party to legal proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As further described in Item 1, we are party to pending litigation with the 3i Parties and 3i. Please see Item 1 for more information.
While the Company believes its claims against the 3i Parties and its defenses against 3i are valid, litigation matters are inherently uncertain and there is no guarantee that the Company will be successful in its ultimate resolution of the matters. If such matters are not ultimately resolved in our favor, our obligations under the Note Documents may become due and owing, and our assets pledged as security under the Note Documents, including the Company’s ownership interests in the Subsidiaries, may be at risk of forfeiture. Such losses arising from the results of litigation or settlements could subsequently have a material adverse effect on our business, financial condition, results of operations and cash flows.
Additionally, litigating the matters described above may require the Company to incur significant expenses and divert the attention and resources of management from its normal responsibilities. This could substantially increase our operating losses and reduce the resources available for our day-to-day operations. The litigation may also generate negative publicity, which could further adversely affect our stock price.
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Our insurance policies may not provide sufficient coverage to adequately mitigate the legal fees and potential liabilities arising from these matters and, even where fees and liabilities are covered by those policies, we may be unable to fully collect the insurance proceeds in a timely manner or at all.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Private Placement of Common Stock with Anti-Dilution Rights
On November 27, 2023, the Company commenced a private placement of shares of common stock for gross proceeds of up to $4,000,000 at a price per share which equals the Nasdaq Rule 5653(d) Minimum Price definition, but in no event at a price per share lower than $6.00) (the “Private Placement”).
Each investor in the Private Placement has certain anti-dilution protections for a period of 18 months following each closing of the Private Placement. If, during the 18-month period following each closing of the Offering, the Company issues or sells any shares of common stock of the Company (a “Dilutive Issuance”), then each participant in the Private Placement will automatically be issued such number of shares of common stock as is necessary to maintain the percentage ownership that such participant would have had if the Dilutive Issuance had not occurred. With respect to the issuance of any securities to 3i pursuant to the 2023 Convertible Note and related agreements as a result of Dilutive Issuances, the participant shall not be entitled to any additional Dilutive Issuances beyond the initial Dilutive Issuance. Further, at such time that the participant disposes of its shares acquired in the Private Placement, all rights to any Dilutive Issuance shall cease.
On April 11, 2024, pursuant to the Private Placement, the Company issued a total of 16,667 shares of common stock for gross proceeds of $100,000 at $6.00 per share.
On April 11, 2023, the Company issued a total of 4,764 shares of common stock at a price per share of $6.00 in connection with the anti-dilution provisions of the Private Placement as approved by the Company’s stockholders on February 29, 2024.
The Private Placement was conducted pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated under the Securities Act. The shares were only offered to a small select group of accredited investors, as defined in Rule 501 of Regulation D, all of whom have a substantial pre-existing relationship with the Company and no general advertising or solicitation was used. The Company filed a Form D on December 15, 2023, amended on January 11, 2024, amended on February 12, 2024, and amended on April 17, 2024.
Senior Convertible Preferred Stock
As described in our Current Report on Form 8-K as filed with the SEC on May 21, 2024, the Company filed a Certificate of Designation of Senior Convertible Preferred Stock with the Delaware Secretary of State, designating 100,000 shares of preferred stock of the Company, par value $0.01, as Senior Convertible Preferred Stock (the “Senior Convertible Preferred Stock”).
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In order to raise additional capital for the Company, the Board of Directors of the Company approved the commencement of a private placement of shares of Senior Convertible Preferred Stock and 8.5% promissory notes (the “Notes”) for aggregate proceeds of up to $7.2 million (up to $6 million with a 20% overallotment) pursuant to Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D thereunder (the “Preferred Private Placement”). The Preferred Shares will be issued at a price per share of $100; provided that the Company is limited to the sale of up to 6,731 shares of Senior Convertible Preferred Stock for gross proceeds of $637,100 until such time as stockholder approval is granted pursuant to Nasdaq Rule 5635(d) at the Company’s Annual General Meeting of Stockholders on August 16, 2024 (the “2024 AGM”).
The Notes, with 8.5% annual interest, become convertible into shares of Senior Convertible Preferred Stock at a price of $100 per share on the date the Company obtains stockholder approval of its Proposals No. 2, 3, and 4 at the 2024 AGM. If the proposals are not approved by our stockholders, the Notes are due in full 120 days from the date of issuance. Please see our Definitive Proxy as filed with the SEC on July 1, 2024.
The Company presently intends to use the net proceeds from this Preferred Private Placement to extinguish debt, fund infrastructure development at Algodon Wine Estates, and for general working capital.
No shares of Senior Convertible Preferred Stock have yet been sold in the Preferred Private Placement. See item 5 for information on the Notes.
The Preferred Private Placement is conducted pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated under the Securities Act. The shares are only offered to a small select group of accredited investors, as defined in Rule 501 of Regulation D, all of whom have a substantial pre-existing relationship with the Company. The Company will file a Form D within 15 days of the first date of sale.
Item 3. Defaults upon Senior Securities
For a description of events, please see our Current Reports on Forms 8-K as filed with the SEC on February 27, 2024, March 1, 2024, March 7, 2024, and Item 3 of our Quarterly Report on Form 10-Q as filed with the SEC on May 20, 2024. The Company received notices of default under the 2023 Convertible Note and related agreements but has maintained since February 16, 2024 that it is not in default because the underlying 2023 Convertible Note and related agreements are void and unenforceable.
Item 4. Mine and Safety Disclosure
Not applicable.
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Item 5. Other Information
Reverse Stock Split
As provided in our Current Report on Form 8-K as filed with the SEC on April 29, 2024, on April 19, 2024, the Board of Directors of the Company, as authorized by the stockholders of the Company, approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.01 per share, at a ratio of 1-for-10 (the “Reverse Stock Split”). The Board of Directors of the Company also approved an amended and restated Certificate of Incorporation (the “Certificate”) to effect the Reverse Stock Split. On April 24, 2024, the Company filed the Certificate with the Delaware Secretary of State with an effective date of 12:01 a.m., Eastern Time, on May 1, 2024.
Promissory Notes
On January 9, 2023, the Company entered into a series of promissory notes for gross proceeds of $185,000 bearing interest at 8% per annum which became due on January 9, 2024, the maturity date. The Company repaid principal in the amount of $100,000 on February 22, 2024, and the lender has agreed to extend the maturity date on a month-by-month basis. Interest continues to accrue on the outstanding principal.
Nasdaq Compliance
On April 18, 2024, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying the Company that, due to the Company’s failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with the SEC, the Company is not in compliance with Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1), which requires the timely filing of all required periodic reports with the SEC.
On May 1, 2024, the Company received a notice from the Staff notifying the Company that, due to the Company’s filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 with the SEC on April 30, 2024, the Company is now back in compliance with Nasdaq’s continued listing requirements under Nasdaq Rule 5250(c)(1), which requires the timely filing of all required periodic reports with the SEC.
On June 1, 2023, the Company received a notice from the Staff notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was trading below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Rule 5550(a)(2). On May 15, 2024, the Company received a notice from the Staff notifying the Company that it had regained compliance with Nasdaq Rule 5550(a)(2).
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Certificate of Designation
As set forth in our Current Report on Form 8-K as filed with the SEC on May 22, 2024, effective May 21, 2024, the Company filed a Certificate of Designation of Senior Convertible Preferred Stock (the “Certificate of Designation”) with the Delaware Secretary of State, designating 100,000 shares of preferred stock of the Company, par value $0.01, as Senior Convertible Preferred Stock (the “Senior Convertible Preferred Stock”). No shares of Senior Convertible Preferred Stock are currently outstanding. If and when issued (of which there can be no assurance), holders of Senior Convertible Preferred Stock will be subject to the following rights, preferences and powers:
| ● | The Senior Convertible Preferred Stock will be entitled to an 8.5% annual dividend, payable when, as and if declared by the Company’s Board of Directors. |
| ● | The Series Convertible Preferred Stock will be entitled to a liquidation preference to be paid ahead of shares of common stock or any other class or series of capital stock of the Company designated to be junior to the Senior Convertible Preferred Stock. |
| ● | The Senior Convertible Preferred Stock will not be entitled to vote, except in limited circumstances enumerated in the Certificate of Designation or as otherwise required by law. |
| ● | If, on the date that is 18 months following the termination of the offering whereby the Senior Convertible Preferred Stock is issued, the Minimum Price (as defined by Nasdaq 5635(d)) of the Company’s common stock has increased by more the 60% since the date of the initial purchase of the Senior Convertible Preferred Stock by a stockholder, then all shares of Senior Convertible Preferred Stock held by such stockholder shall be automatically converted into shares of common stock. If a stockholder’s Senior Convertible Preferred Stock is not eligible for automatic conversion pursuant to the foregoing, then on such date, all shares of Senior Convertible Preferred Stock held by such stockholder shall be redeemed by the Company. |
| ● | At any time following the date that is six months following the termination of the offering whereby the Senior Convertible Preferred Stock is issued, each stockholder holding Senior Convertible Preferred Stock may, upon approval of the Company, convert his, her or its shares of Senior Convertible Preferred Stock into shares of common stock. |
Please refer to our Certificate of Designation, incorporated by reference herein as Exhibit 3.2.
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2024 Annual General Meeting
On June 21, 2024, the Company filed a Preliminary Proxy Statement on Form 14-A, a Definitive Proxy Statement on Form 14-A on July 1, 2024, and additional definitive proxy materials on Form 14-A on July 9, 2024, which request stockholder approval at the annual general meeting of the stockholders of the company on August 16, 2024 (the “2024 AGM”) of the following proposals: (i) to elect one (1) Class II nominee to the board of directors (David R. Reinecke) to hold office for a three-year term; (ii) to approve, for purposes of complying with Nasdaq Listing Rule 5635(b), the issuance in excess of 19.99% of the Company’s outstanding common stock upon conversion of shares of the Company’s Senior Convertible Preferred Stock issued either directly in connection with, or upon the conversion of convertible promissory notes issued in connection with, a private placement pursuant to Rule 506(b) of the Securities Act, which may be deemed a “change of control” under Nasdaq listing Rule 5635(b); (iii) to approve, for purposes of complying with Nasdaq Listing Rule 5635(c), the issuance of shares of the Company’s common stock to certain advisors of the Company at a price less than the market value upon conversion of shares of the Company’s Senior Convertible Preferred Stock issued either directly in connection with, or upon the conversion of convertible promissory notes issued in connection with, a private placement pursuant to Rule 506(b) of the Securities Act; (iv) to approve, for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of the Company’s common stock upon conversion of shares of the Company’s Senior Convertible Preferred Stock issued either directly in connection with, or upon the conversion of convertible promissory notes issued in connection with, a private placement pursuant to Rule 506(b) of the Securities Act, as amended, without giving effect to the 19.99% cap provided under Nasdaq Listing Rule 5635(d); (v) to approve an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares available for awards under the plan to 30% of our common stock outstanding on a fully diluted basis as of the date of stockholder approval, with an automatic increase on January 1 of each year by the amount equal to 5% of the total number of shares outstanding on a fully diluted basis on such date; and (vi) to ratify and approve the appointment of Marcum LLP as the Company’s independent registered accounting firm for the year ended December 31, 2024.
Notes
Between May 1, 2024 and August 6, 2024, the Company entered into Notes in the total amount of $3,266,425 with a select group of investors, all of whom have a substantial pre-existing relationship with the Company. The Notes, with 8.5% annual interest, become convertible into Senior Convertible Preferred Stock at a price of $100 per share on the date the Company obtains stockholder approval of its Proposals No. 2, 3, and 4 at the 2024 AGM. If these proposals are not approved by our stockholders, the Notes are due in full 120 days from the date of issuance. Please see Item 2 for more information.
Loans
On June 24, 2024, the Company entered into 120-day promissory notes, in the aggregate amount of $420,000, with an investor. The notes bear interest at 8.5% per annum.
Rule 10b5-1 Trading Arrangements
During
the Company’s second quarter of 2024, no director or officer
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Item 6. Exhibits
The following documents are being filed with the Commission as exhibits to this Quarterly Report on Form 10-Q.
| 1. | Incorporated by reference from the Company’s Registration of Securities Pursuant to Section 12(g) on Form 10 dated May 14, 2014. |
| 2. | Incorporated by reference from the Company’s Quarterly Report on Form 10-Q, filed on November 19, 2018. |
| 3. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 9, 2019. |
| 4. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 18, 2021. |
| 5. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 22, 2021. |
| 6. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 1, 2020. |
| 7. | Incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 12, 2021. |
| 8. | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on August 16, 2021. |
| 9. | Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2021. |
| 10. | Incorporated by reference to the Company’s Current Report on Form 8-K as filed on March 1, 2022. |
| 11. | Incorporated by reference to the Company’s Annual Report on Form 10-K, filed on April 14, 2022. |
| 12. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on June 8, 2022. |
| 13. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on November 3, 2022. |
| 14. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on November 9, 2022. |
| 15. | Incorporated by reference to the Company’s Current Report as amended on Form 8-K/A, filed on November 14, 2022. |
| 16. | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed on November 18, 2022. |
| 17. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on December 1, 2022. |
| 18. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on December 13, 2022. |
| 19. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on December 15, 2022. |
| 20. | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, filed on November 16, 2015. |
| 21. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on February 21, 2023. |
| 22. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on February 21, 2023. |
| 23. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on April 29, 2024. |
| 24. | Incorporated by reference to the Company’s Current Report on Form 8-K, filed on May 22, 2024. |
| * | Filed herewith |
| ** | Furnished, not filed herewith |
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: August 14, 2024 | GAUCHO GROUP HOLDINGS, INC. | |
| By: | /s/ Scott L. Mathis | |
| Scott L. Mathis | ||
| Chief Executive Officer | ||
| By: | /s/ Maria I. Echevarria | |
| Maria Echevarria | ||
| Chief Financial Officer and Chief Operating Officer | ||
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