UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________________.

Commission file number: 001-40075

Gaucho Group Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		52-2158952
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

112 NE 41^st Street, Suite 106‌

Miami, FL 33137

(Address of principal executive offices)

212-739-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock		VINO		The Nasdaq Stock Market LLC

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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 17, 2023, there were 2,462,545 shares of common stock outstanding.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	1

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	3

Unaudited Condensed Consolidated Statements of Comprehensive Loss (Income) for the Three and Nine Months Ended September 30, 2023 and 2022	4

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023	5

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022	6

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7

Notes to Unaudited Condensed Consolidated Financial Statements	9

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	39

ITEM 4. Controls and Procedures	39

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings	40

ITEM 1A. Risk Factors	40

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	42

ITEM 3. Defaults Upon Senior Securities	43

ITEM 4. Mine Safety Disclosures	44

ITEM 5. Other Information	44

ITEM 6. Exhibits	46

Signatures	48

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2023		2022
	(unaudited)
Assets
Current Assets
Cash	$	201,108	$	300,185
Accounts receivable, net of allowance of $20,494 and $21,229 at September 30, 2023 and December 31, 2022, respectively		75,995		106,156
Accounts receivable - related parties, net of allowance of $470,516 and $339,503 at September 30, 2023 and December 31, 2022, respectively		971,182		1,115,816
Accounts receivable		971,182		1,115,816
Mortgages receivable, net of allowance $67,587 and $46,424 at September 30, 2023 and December 31, 2022, respectively		1,033,143		586,631
Inventory		2,329,044		1,888,962
Real estate lots held for sale		607,932		559,487
Prepaid expenses and other current assets		264,907		461,637
Total Current Assets		5,483,311		5,018,874
Long Term Assets
Mortgages receivable, non-current portion, net of allowance of $183,904 and $150,126 at September 30, 2023 and December 31, 2022, respectively		2,811,154		3,278,617
Advances to employees		286,812		282,055
Property and equipment, net		7,880,174		7,621,257
Operating lease right-of-use asset		1,277,509		1,449,442
Prepaid foreign taxes, net		1,010,478		916,823
Intangible assets, net		103,557		69,787
Deposits, non-current		54,713		56,130
Total Assets	$	18,907,708	$	18,692,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED

	September 30,			December 31,
	2023			2022
	(unaudited)
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	688,419		$	917,270
Accrued expenses, current portion		1,485,033			1,664,816
Deferred revenue		1,524,765			1,373,906
Operating lease liabilities, current portion		235,432			202,775
Loans payable, current portion		208,850			164,656
Convertible debt obligations, net, current portion		1,541,962			-
Derivative liability, current portion		846,424			-
Other current liabilities		81,177			100,331
Total Current Liabilities		6,612,062			4,423,754
Long Term Liabilities
Accrued expenses, non-current portion		52,328			66,018
Operating lease liabilities, non-current portion		1,145,757			1,328,408
Loans payable, non-current portion		90,898			91,665
Convertible debt obligations, net, non-current portion		1,989,234			1,991,459
Derivative liability, non-current portion		1,128,120			-
Total Liabilities		11,018,399			7,901,304
Commitments and Contingencies (Note 15)		-			-
Stockholders’ Equity
Preferred stock, 902,670 shares authorized		-			-
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 1,059,596 and 365,340 shares issued and 1,059,568 and 365,312 shares outstanding as of September 30, 2023 and December 31, 2022, respectively		10,596			3,654
Additional paid-in capital		146,348,152			139,156,522
Accumulated other comprehensive loss		(10,856,081	)		(10,842,569	)
Accumulated deficit		(127,567,003	)		(117,479,571	)
Treasury stock, at cost, 28 shares at September 30, 2023 and December 31, 2022		(46,355	)		(46,355	)
Total Stockholders’ Equity		7,889,309			10,791,681
Total Liabilities and Stockholders’ Equity	$	18,907,708		$	18,692,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	2023			2022			2023			2022
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022

Sales	$	464,004		$	440,939		$	1,622,746		$	1,271,871
Cost of sales		(321,054	)		(433,941	)		(1,282,972	)		(1,205,534	)
Gross profit		142,950			6,998			339,774			66,337
Operating Expenses
Selling and marketing		204,938			109,299			652,674			614,529
General and administrative		1,267,399			1,729,283			4,734,592			5,403,409
Depreciation and amortization		114,370			83,677			327,857			178,896
Total operating expenses		1,586,707			1,922,259			5,715,123			6,196,834
Loss from Operations		(1,443,757	)		(1,915,261	)		(5,375,349	)		(6,130,497	)

Other Expense (Income)
Interest income		(52,810	)		(65,377	)		(167,529	)		(95,781	)
Interest expense		1,156,616			170,888			2,824,528			1,623,668
Other income, related party		(212,222	)		(75,000	)		(362,222	)		(225,000	)
Loss on extinguishment of debt		-			-			416,081			2,105,119
Gains from foreign currency translation		(132,493	)		(185,251	)		(347,201	)		(411,178	)
Change in fair value of derivative liability		95,727			-			2,236,844			-
Inducement expense		-			2,965,222			-			3,163,318
Total other expense		854,818			2,810,482			4,600,501			6,160,146
Net Loss		(2,298,575	)		(4,725,743	)		(9,975,850	)		(12,290,643	)
Net loss attributable to non-controlling interest		-			-			-			72,261
Net Loss Attributable to Common Stockholders	$	(2,298,575	)	$	(4,725,743	)	$	(9,975,850	)	$	(12,218,382	)

Net Loss per Common Share
Basic and Diluted	$	(3.04	)	$	(21.94	)	$	(10.72	)	$	(88.52	)

Weighted Average Number of Common Shares Outstanding:
Basic and Diluted		757,036			215,383			930,160			138,029

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

	2023			2022			2023			2022
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Net loss	$	(2,298,575	)	$	(4,725,743	)	$	(9,975,850	)	$	(12,290,643	)
Other comprehensive (loss) income :
Foreign currency translation adjustments		64,280			282,337			(13,512	)		903,799
Comprehensive loss		(2,234,295	)		(4,443,406	)		(9,989,362	)		(11,386,844	)
Comprehensive loss attributable to non-controlling interests		-			-			-			72,261
Comprehensive loss attributable to controlling interests	$	(2,234,295	)	$	(4,443,406	)	$	(9,989,362	)	$	(11,314,583	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

(unaudited)


	Common Stock				Treasury Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated					Total Stockholders’
	Shares		Amount		Shares		Amount			Capital			Loss			Deficit					Equity
Balance - January 1, 2023		365,340	$	3,654		28	$	(46,355	)		139,156,522		$	(10,842,569	)	$	(117,479,571	)	-	-	$	10,791,681
Cumulative effect of change upon adoption of ASU 2016-13		-		-		-		-			-			-			(111,582	)	-	-		(111,582	)
Stock-based compensation:		-		-							-
Options		-		-		-		-			38,834			-			-					38,834
Restricted stock units		389		4		-		-			79,418			-			-					79,422
Common stock issued for 401(k) employer matching		2,416		24		-		-			32,593			-			-					32,617
Shares issued under the New ELOC, net of offering costs [1]		36,443		365		-		-			441,044			-			-					441,409
Relative fair value of warrants issued with 2023 Notes, net of issuance costs [2]		-		-		-		-			1,506,319			-			-					1,506,319
Warrants issued for modification of GGH Notes		-		-		-		-			134,779			-			-					134,779
Reduction of warrant exercise price on new debt issuance		-		-		-		-			63,502			-			-					63,502
Shares issued upon conversion of debt and interest		83,333		833		-		-			1,570,720			-			-					1,571,553
Common stock issued for cash in private placement		59,100		591		-		-			590,409			-			-					591,000
Cashless warrant exercise		5,131		51		-		-			(51	)		-			-					-
True-up adjustment		28		-		-		-			-			-			-					-
Net loss		-		-		-		-			-			-			(2,695,148	)	-	-		(2,695,148	)
Other comprehensive loss		-		-		-		-			-			(39,799	)		-					(39,799	)
Balance - March 31, 2023		552,180		5,522		28		(46,355	)		143,614,089			(10,882,368	)		(120,286,301	)	-	-		12,404,587
Stock-based compensation:
Options		-		-		-		-			38,834			-			-					38,834
Restricted stock units		-		-		-		-			74,978			-			-					74,978
Shares issued under the New ELOC, net of offering costs [3]		45,877		459		-		-			291,138			-			-					291,597
Shares issued upon conversion of debt and interest		82,878		829		-		-			574,427			-			-					575,256
Net loss		-		-		-		-			-			-			(4,982,127	)	-	-		(4,982,127	)
Other comprehensive loss		-		-		-		-			-			(37,993	)		-					(37,993	)
Balance - June 30, 2023		680,935		6,810		28		(46,355	)		144,593,466			(10,920,361	)		(125,268,428	)	-	-		8,365,132
Stock-based compensation:
Options		-		-		-		-			17,910			-			-					17,910
Restricted stock units		-		-		-		-			75,645			-			-					75,645
Common stock		27,027		270		-		-			149,730			-			-					150,000
Shares issued under the New ELOC [4]		29,364		294		-		-			42,339			-			-					42,633
Shares issued under the New ELOC, net of offering costs		29,364		294		-		-			42,339			-			-					42,633
Warrant modification		-		-		-		-			392,273			-			-					392,273
Shares issued upon conversion of debt and interest		231,912		2,319		-		-			672,692			-			-					675,011
Common stock issued for cash in private placement		90,000		900		-		-			404,100			-			-					405,000
Effect of reverse stock spit		358		3		-		-			(3	)		-			-					-
Net loss		-		-		-		-			-			-			(2,298,575	)	-	-		(2,298,575	)
Other comprehensive loss		-		-		-		-			-			64,280			-					64,280
Balance - September 30, 2023		1,059,596	$	10,596		28	$	(46,355	)	$	146,348,152		$	(10,856,081	)	$	(127,567,003	)	-	-	$	7,889,309

[1]

Includes gross proceeds of $480,670, less $39,261 of offering costs

[2]

Represents $1,609,935 relative fair value of warrants, less $103,616 of allocable issuance costs

[3]

Includes gross proceeds of $316,953, less $25,356 of offering costs

[4]

Includes gross proceeds of $52,988, less $10,355 of offering costs

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(unaudited)


	Common Stock				Treasury Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Gaucho Group Holdings Stockholders’			Non- controlling			Total Stockholders’
	Shares		Amount		Shares		Amount			Capital			Loss			Deficit			Deficiency			Interest			Equity
Balance - January 1, 2022		82,350		823		28	$	(46,355	)	$	121,641,238		$	(11,607,446	)	$	(95,726,534	)	$	14,261,726		$	(169,882	)	$	14,091,844
Stock-based compensation:		-		-							-
Options		-		-		-		-			72,700			-			-			72,700			10,354			83,054
Common stock issued for 401(k) employer matching		104		1		-		-			27,820			-			-			27,821			-			27,821
Common stock issued for purchase of minority interest		8,690		87		-		-			(231,876	)		-			-			(231,789	)		231,789			-
Common stock issued for acquisition of GDS		10,695		107		-		-			2,194,546			-			-			2,194,653			-			2,194,653
Common stock issued for purchase of domain name		125		1		-		-			39,599			-			-			39,600			-			39,600
Warrants issued for modification of convertible debt principal		-		-		-		-			731,856			-			-			731,856			-			731,856
Net loss		-		-		-		-			-			-			(2,199,840	)		(2,199,840	)		(72,261	)		(2,272,101	)
Other comprehensive income		-		-		-		-			-			263,406			-			263,406			-			263,406
Balance - March 31, 2022		101,964		1,019		28		(46,355	)		124,475,883			(11,344,040	)		(97,926,374	)		15,160,133			-			15,160,133
Stock-based compensation:		-		-							-
Options		-		-		-		-			87,134			-			-			87,134			-			87,134
Common stock		5,421		54		-		-			524,946			-			-			525,000			-			525,000
Shares issued upon conversion of debt and interest		7,459		75		-		-			1,522,522			-			-			1,522,597			-			1,522,597
Inducement loss on debt conversions		-		-		-		-			198,096			-			-			198,096			-			198,096
Substantial premium on convertible debt		-		-		-		-			1,683,847			-			-			1,683,847			-			1,683,847
Common stock issued for cash, net of offering costs		5,005		50		-		-			511,296			-			-			511,346			-			511,346
Common stock issued upon exchange of subsidiary stock options		18,394		184		-		-			(184	)		-			-			-			-			-
True up adjustment		4		-		-		-			-			-			-			-			-			-
Net loss		-		-		-		-			-			-			(5,292,799	)		(5,292,799	)		-			(5,292,799	)
Other comprehensive income		-		-		-		-			-			358,056			-			358,056			-			358,056
Balance - June 30, 2022		138,247		1,382		28		(46,355	)		129,003,540			(10,985,984	)		(103,219,173	)		14,753,410			-