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 June 30, 2024

☐ 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 August 14, 2024, there were 889,263 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 June 30, 2024 (unaudited) and December 31, 2023	1

Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	3

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	4

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2024	5

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023	6

Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7

Notes to Condensed Consolidated Financial Statements (unaudited)	9

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	40

ITEM 4. Controls and Procedures	40

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings	41

ITEM 1A. Risk Factors	42

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

ITEM 3. Defaults Upon Senior Securities	44

ITEM 4. Mine Safety Disclosures	44

ITEM 5. Other Information	45

ITEM 6. Exhibits	48

Signatures	49

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	$	469,049	$	427,961
Accounts receivable, net of allowance of $7,832 and $6,649 at June 30, 2024 and December 31, 2023, respectively		93,648		41,261
Accounts receivable - related parties, net of allowance of $1,506,651 and $1,517,836 at June 30, 2024 and December 31, 2023, respectively		4,473		-
Accounts receivable, net of allowance		4,473		-
Mortgages receivable, net of allowance of $520,763 and $369,549 at June 30, 2024 and December 31, 2023, respectively		712,124		675,512
Inventory, net of allowance of 367,357 and 186,736 at June 30, 2024 and December 31, 2023, respectively		1,916,041		2,031,880
Inventory deposits		50,214		161,531
Real estate lots held for sale		560,869		615,585
Prepaid expenses and other current assets		540,066		343,199
Total Current Assets		4,346,484		4,296,929
Long Term Assets
Mortgages receivable, non-current portion, net of allowance of $1,152,603 and $1,067,432 at June 30, 2024 and December 31, 2023, respectively		1,577,752		1,850,405
Advances to employees		282,805		281,783
Property and equipment, net		7,463,278		7,806,370
Operating lease right-of-use asset		1,097,381		1,218,408
Finance lease right-of-use asset		75,361		-
Prepaid foreign taxes, net		954,311		953,570
Intangible assets, net		87,327		98,147
Deposits, non-current		54,713		54,713
Total Assets	$	15,939,412	$	16,560,325

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

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	$	931,351		$	925,422
Accrued expenses, current portion		4,035,702			3,719,798
Deferred revenue		1,376,325			1,471,813
Deferred revenue, related party		250,000			250,000
Deferred revenue		250,000			250,000
Finance lease liability, current portion		11,701			-
Operating lease liabilities, current portion		276,440			250,711
Loans payable, current portion		191,073			188,169
Loans payable, related party		420,000			-
Loans payable		420,000			-
Lot sale obligation, net		506,954			541,027
Convertible debt obligations, net		2,529,644			1,320,902
Convertible debt obligations, net, related party		1,000,000			-
Convertible debt obligations, net		1,000,000			-
Derivative liability		893,767			738,140
Other current liabilities		78,731			254,768
Total Current Liabilities		12,501,688			9,660,750
Long Term Liabilities
Accrued expenses, non-current portion		18,648			35,527
Finance lease liability, non-current portion		62,757			-
Operating lease liabilities, non-current portion		936,201			1,077,697
Loans payable, non-current portion		-			90,372
Total Liabilities		13,519,294			10,864,346
Commitments and Contingencies (Note 15)		-			-
Senior Convertible Preferred Stock, par value $0.01 per share: 100,000 shares designated; no shares issued and outstanding		-			-
Stockholders’ Equity
Preferred Stock, 902,670 shares authorized; no shares issued and outstanding		-			-
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 889,266 and 480,794 shares issued and 889,263 and 480,791 shares outstanding at June 30, 2024 and December 31, 2023, respectively		8,893			4,808
Additional paid-in capital		152,667,334			150,631,395
Accumulated other comprehensive loss		(11,056,896	)		(11,104,706	)
Accumulated deficit		(139,152,858	)		(133,789,163	)
Treasury stock, at cost, 3 shares at June 30, 2024 and December 31, 2023		(46,355	)		(46,355	)
Total Stockholders’ Equity		2,420,118			5,695,979
Total Liabilities and Stockholders’ Equity	$	15,939,412		$	16,560,325

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)

	2024			2023			2024			2023
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023

Sales	$	427,227		$	710,975		$	1,014,605		$	1,158,742
Cost of sales		(451,560	)		(668,619	)		(819,209	)		(961,918	)
Gross (loss) profit		(24,333	)		42,356			195,396			196,824
Operating Expenses
Selling and marketing		126,983			213,157			223,020			447,736
General and administrative		2,156,317			1,710,505			4,420,919			3,467,193
Depreciation and amortization		114,521			104,281			224,860			213,487
Total operating expenses		2,397,821			2,027,943			4,868,799			4,128,416
Loss from Operations		(2,422,154	)		(1,985,587	)		(4,673,403	)		(3,931,592	)

Other Expense (Income)
Change in fair value of derivative liability		75,037			2,141,117			155,627			2,141,117
Loss on extinguishment of debt		-			32,094			-			416,081
Gains from foreign currency remeasurement, net		(23,602	)		(102,916	)		(33,585	)		(214,708	)
Interest income		-			(64,375	)		(15,400	)		(114,719	)
Interest expense		156,460			1,065,620			583,650			1,667,912
Other income, related party		-			(75,000	)		-			(150,000	)
Total other expense		207,895			2,996,540			690,292			3,745,683
Net Loss	$	(2,630,049	)	$	(4,982,127	)	$	(5,363,695	)	$	(7,677,275	)

Net Loss per Common Share
Basic and Diluted	$	(3.11	)	$	(7.99	)	$	(7.36	)	$	(14.08	)

Weighted Average Number of Common Shares Outstanding:
Basic and Diluted		846,002			623,674			729,105			545,354

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

(unaudited)

	2024			2023			2024			2023
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Net loss	$	(2,630,049	)	$	(4,982,127	)	$	(5,363,695	)	$	(7,677,275	)
Other comprehensive loss:
Foreign currency translation adjustments		84,201			(37,993	)		47,810			(77,792	)
Comprehensive loss	$	(2,545,848	)	$	(5,020,120	)	$	(5,315,885	)	$	(7,755,067	)

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 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		480,794	$	4,808	-		3	$	(46,355	)	$	150,631,395		$	(11,104,706	)	$	(133,789,163	)	$	5,695,979
Stock-based compensation:
Options				-			-		-			17,911			-			-			17,911
Restricted stock units		1,841		19			-		-			74,747			-			-			74,766
Common stock issued for 401(k) employer matching		3,497		35			-		-			14,733			-			-			14,768
Common stock issued for cash in private placement		288,824		2,888			-		-			1,730,046			-			-			1,732,934
Net loss				-	-		-		-			-			-			(2,733,646	)		(2,733,646	)
Other comprehensive loss				-			-		-			-			(36,391	)		-			(36,391	)
Balance - March 31, 2024		774,956		7,750	-		3		(46,355	)		152,468,832			(11,141,097	)		(136,522,809	)		4,766,321
Stock-based compensation:
Options				-			-		-			17,909			-			-			17,909
Restricted stock units		12,500		125			-		-			81,611			-			-			81,736
Common stock issued for cash in private placement		16,667		166			-		-			99,834			-			-			100,000
Anti-dilution shares issued		4,764		48			-		-			(48	)		-			-			-
Effect of reverse stock split		80,379		804			-		-			(804	)		-			-			-
Net loss		-		-	-		-		-			-			-			(2,630,049	)		(2,630,049	)
Other comprehensive loss		-		-			-		-			-			84,201			-			84,201
Balance - June 30, 2024		889,266	$	8,893	-		3	$	(46,355	)	$	152,667,334		$	(11,056,896	)	$	(139,152,858	)	$	2,420,118

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 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		36,534	$	365	-		3	$	(46,355	)	$	139,159,811		$	(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		39		-			-		-			79,422			-			-			79,422
Common stock issued for 401(k) employer matching		242		3			-		-			32,614			-			-			32,617
Shares issued under the New ELOC, net of offering costs [1]		3,644		37			-		-			441,372			-			-			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		8,333		83			-		-			1,571,470			-			-			1,571,553
Common stock issued for cash in private placement		5,910		59			-		-			590,941			-			-			591,000
Cashless warrant exercise		513		5			-		-			(5	)		-			-			-
True-up adjustment		3		-			-		-			-			-			-			-
Net loss		-		-	-		-		-			-			-			(2,695,148	)		(2,695,148	)
Other comprehensive loss		-		-			-		-			-			(39,799	)		-			(39,799	)
Balance - March 31, 2023		55,218		552	-		3		(46,355	)		143,619,059			(10,882,368	)		(120,286,301	)		12,404,587
Balance		55,218		552	-		3		(46,355	)		143,619,059			(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]		4,588		46			-		-			291,551			-			-			291,597
Shares issued upon conversion of debt and interest		8,288		83			-		-			575,173			-			-			575,256
Net loss		-		-	-		-		-			-			-			(4,982,127	)		(4,982,127	)
Other comprehensive loss		-		-			-		-			-			(37,993	)		-			(37,993	)
Balance - June 30, 2023		68,093	$	681	-		3	$	(46,355	)	$	144,599,595		$	(10,920,361	)	$	(125,268,428	)	$	8,365,132
Balance		68,093	$	681	-		3	$	(46,355	)	$	144,599,595		$	(10,920,361	)	$	(125,268,428	)	$	8,365,132

[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

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

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	2024			2023
	For the Six Months Ended
	June 30,
	2024			2023
Cash Flows from Operating Activities
Net loss	$	(5,363,695	)	$	(7,677,275	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation:
401(k) stock		6,816			5,908
Options		35,820			77,668
Restricted stock units		156,502			154,400
Non-cash lease expense		121,400			113,744
Gains from foreign currency remeasurement, net		(33,585	)		(214,708	)
Depreciation and amortization		232,875			213,487
Amortization of debt discount		318,819			1,079,034
Provision for credit losses, net of recoveries		226,743			57,104
Provision for unrealizable prepaid taxes		32,124			-
Provision for obsolete inventory		180,620			99,323
Change in fair value of derivative liability		155,627			2,141,117
Loss on sale of land		44,406			416,081
Decrease (increase) in assets:
Accounts receivable and mortgages receivable		(85,352	)		(126,017	)
Employee advances		-			(571	)
Inventory		(64,781	)		(57,274	)
Inventory deposits		111,317			1,417
Real estate lots held for sale		54,716			-
Prepaid expenses and other current assets		(229,732	)		(30,668	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		380,100			(162,671	)
Operating lease liabilities		(115,767	)		(98,126	)
Deferred revenue		(95,488	)		(4,985	)
Other liabilities		(174,156	)		(20,131	)
Total Adjustments		1,259,024			3,644,132
Net Cash Used in Operating Activities		(4,104,671	)		(4,033,143	)
Cash Flows from Investing Activities
Purchase of property and equipment		(111,229	)		(438,895	)
Proceeds from sale of land		187,860			-
Purchase of intangible asset		-			(50,000	)
Net Cash Provided by (Used in) Investing Activities		76,631			(488,895	)

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

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		-			185,000
Proceeds from loans payable, related party		300,000			-
Proceeds from equity deposits		380,000			-
Repayments of loans payable		(87,469	)		(58,718	)
Refund of lot sale obligation		(73,450	)		-
Proceeds from the issuance of convertible debt		669,303			5,000,000
Proceeds from the issuance of convertible debt, related party		1,000,000			-
Financing costs in connection with the issuance of convertible debt		-			(321,803	)
Repayments of convertible debt obligations		-			(862,541	)
Proceeds from common stock issued for cash		1,832,934			591,000
Redemption premiums paid on convertible debt obligations		-			(156,160	)
Proceeds from issuance of shares under the New ELOC, net of offering costs [1]		-			733,006
Net Cash Provided by Financing Activities		4,021,318			5,109,784
Effect of Exchange Rate Changes on Cash		47,810			(77,792	)
Net Increase in Cash		41,088			509,954
Cash - Beginning of Period		427,961			300,185
Cash - End of Period	$	469,049		$	810,139

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	240,725		$	561,876
Income taxes paid	$	-		$	-

Non-Cash Investing and Financing Activity
Finance lease liability for equipment	$	75,734		$	-
Equity issued to satisfy accrued stock-based compensation obligation	$	14,768		$	32,617
Shares issued in connection with anti-dilution protection	$	48		$	-
Shares issued upon conversion of debt and accrued interest	$	-		$	2,146,809
Equity deposits exchanged for notes payable	$	120,000		$	-
Equity deposits exchanged for convertible debt	$	260,000		$	-
Relative fair value of warrants issued with 2023 Notes, net of allocable issuance costs [2]	$	-		$	1,506,319
Warrants issued and debt principal exchanged upon modification of convertible debt	$	-		$	63,502
Cashless warrant exercise	$	-		$	513

[1]

Gross proceeds of $797,623, less offering costs of $64,617

[2]

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

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

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, the Company effected a reverse stock split wherein each 10 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock.

On May 1, 2024, the Company effected another reverse stock split wherein each 10 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock.

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.

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 $469,049 and a working capital deficit of $8,155,204. During the six months ended June 30, 2024 and 2023, the Company incurred net losses of $5,363,695 and $7,677,275, respectively, and used cash in operating activities of $4,104,671 and $4,033,143, respectively.

As of June 30, 2024, future cash requirements for current liabilities include $4,967,053 for accounts payable and accrued expenses (including cash true up obligations in connection with convertible debt in the amount of $1,484,677), $451,550 for lot sale obligations, $3,531,722 of principal owed in connection with convertible debt, $611,073 for loans payable, $276,440 for future payments under an operating lease, $11,701 for future payments under a finance lease, and $78,731 for other current liabilities. Further, the Company’s convertible debt matured on February 21, 2024 and the Company has subsequently received event of default notices demanding immediate payment of all balances owed in connection with the convertible debt, including cash true up obligations. Balances owed in connection with convertible debt in default remain outstanding as of the date of the filing of this quarterly report on Form 10-Q. Future cash requirements for long-term liabilities include $936,201 for future payments under an operating lease, $62,757 for future payments under a finance lease and $18,648 for accrued expenses.

On February 27, 2024, the Company’s equity line of credit was terminated.

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 $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.

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 $23,602 and $33,585, respectively, and during the three and six months ended June 30, 2023, the Company recorded gains of $102,916 and $214,708, respectively, resulting from foreign currency remeasurement of the Company’s Argentine subsidiaries’ net monetary liability position of its Argentine subsidiaries.

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 $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $106,378 and $93,878 at June 30, 2024 and December 31, 2023, respectively, which represents cash held in Argentine bank accounts.

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.

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:

SCHEDULE OF DISAGGREGATION OF REVENUE

	2024		2023		2024		2023
	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023

Real estate sales	$	-	$	154,960	$	104,143	$	154,959
Hotel rooms and events		146,174		218,837		459,561		464,525
Clothes and accessories		31,977		42,381		86,918		107,763
Restaurants		41,789		56,989		96,470		136,007