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2024-06-30
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VINO:ExercisePriceRangeSixMember
2024-06-30
0001559998
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2024-01-01
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2021-04-08
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2021-04-05
2021-04-08
iso4217:USD
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utr:ha
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
OR
☐
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 41st 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
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 | |
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 | |
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 | |
|