Gaucho Group Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

12.

STOCKHOLDERS’ EQUITY

Common Stock

During the nine months ended September 30, 2015, the Company issued 2,821,942 shares of common stock at $2.00 per share for cash proceeds of $5,643,884.

Accumulated Other Comprehensive Loss

The Company recorded foreign currency translation adjustments of $(115,931) and $(133,344) during the three and nine months ended September 30, 2015 and $159,745 and $1,682,730 during the three and nine months ended September 30, 2014, respectively, as accumulated other comprehensive loss.

Warrants

During the three and nine months ended September 30, 2015, in connection with the sale of its equity securities, the Company issued five-year warrants to its subsidiary CAP, who acted as placement agent, to purchase 112,407 and 327,351 shares, respectively, of its common stock at $2.00 per share. Similarly, during the three and nine months ended September 30, 2014 the Company issued five-year warrants for the purchase of 154 and 237,618 shares of Series A Preferred, respectively, at an exercise price of $2.30 per share to CAP. CAP, in turn, awarded such warrants to its registered representatives and recorded $80,259 and $235,105 of stock-based compensation expense for three and nine months ended September 30, 2015 and $0 and $198,997, of stock-based compensation expense for three and nine months ended September 30, 2014, respectively, within general and administrative expense in the condensed consolidated statements of operations.

A summary of warrants activity during nine months ended September 30, 2015 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Life		Intrinsic
	Warrants		Price		in Years		Value
Outstanding, December 31, 2014		1,069,674	$	2.26
Issued		327,351		2.00
Exercised		-		-
Expired		(46,130)		1.59
Outstanding, September 30, 2015		1,350,895	$	2.24		2.9	$	-

Exercisable, September 30, 2015		1,350,895	$	2.24		2.9	$	-

A summary of outstanding and exercisable warrants as of September 30, 2015 is presented below:

		Warrants Oustanding			Warrants Exercisable
					Weighted
			Outstanding		Average		Exercisable
Exercise			Number of		Remaining Life		Number of
Price		Exercisable Into	Warrants		In Years		Warrants
$	2.30	Preferred A		973,544		2.8		973,544
$	2.00	Common		377,351		3.2		377,351
		Total		1,350,895		2.9		1,350,895

Stock Options

The Company has computed the fair value of options granted using the Black-Scholes option pricing model. There is currently no public trading market for the shares of AWLD common stock underlying the Company’s 2008 Equity Incentive Plan (the “2008 Plan”). Accordingly, the fair value of the AWLD common stock was estimated by management based on observations of the cash sales prices of AWLD equity securities. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The expected term of options granted to consultants represents the contractual term, whereas the expected term of options granted to employees and directors was estimated based upon the “simplified” method for “plain-vanilla” options. Given that the Company’s shares are not publicly traded, the Company developed an expected volatility figure based on a review of the historical volatilities, over a period of time, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the options. The Company estimated forfeitures related to options at an annual rate of 5% for options outstanding at September 30, 2015.

On June 15, 2015, the Company granted five-year options to purchase an aggregate of 2,211,890 shares of common stock to employees, officers, directors and consultants of the Company, pursuant to the 2008 Plan. Options to purchase an aggregate of 2,201,890 shares had an exercise price of $2.20 per share and an option to purchase 10,000 shares of common stock had an exercise price of $3.30 per share. The options vest over a four year period with one-fourth vesting on June 8, 2016 and the remainder vesting quarterly thereafter and had an aggregate grant date value of $1,409,900, of which, options granted to employees, officers and directors had an aggregate grant date fair value of $1,251,384, which will be recognized ratably over the vesting period, while options granted to consultants had an aggregate grant date value of $158,516, which will be re-measured on financial reporting dates and vesting dates until the service period is complete.

In applying the Black-Scholes option pricing model, the Company used the following weighted average assumptions:

	For The Three Months Ended					For The Nine Months Ended
	September 30,					September 30,
	2015		2014			2015			2014
Risk free interest rate		n/a		1.11	%		0.00	%		1.11	%
Expected term (years)		n/a		3.43			3.59			3.43
Expected volatility		n/a		46.4	%		46.1	%		46.4	%
Expected dividends		n/a		0	%		0	%		0	%
Forfeiture rate		n/a		5.0	%		5.0	%		5.0	%

There were no options granted during the three months ended September 30, 2015. The weighted average grant date fair value per share of options granted during the nine months ended September 30, 2015 was $0.64. The weighted average estimated fair value of the stock options granted during the three and nine months ended September 30, 2014 was $0.56 per share.

During April 2015, in connection with certain employee separation agreements, the Company modified options to purchase an aggregate of 132,671 shares of common stock such that (a) previously vested options to purchase 68,671 shares of common stock will remain outstanding and exercisable until their original expiration dates notwithstanding the termination and (b) an unvested option to purchase 64,000 shares of common stock will become vested immediately and will remain outstanding and exercisable until its original expiration date notwithstanding the termination. The Company recorded incremental stock-based compensation expense of $0 and $40,300 during the three and nine months ended September 30, 2015, respectively, as a result of the modification of the options,

The Company recorded stock-based compensation expense related to stock option grants of $178,946 and $630,372 during the three and nine months ended September 30, 2015, respectively, and $144,163 and $371,064 during the three and nine months ended September 30, 2014, respectively, which is reflected as general and administrative expenses in the condensed consolidated statements of operations. As of September 30, 2015, there was $2,033,810 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 3.5 years, of which $328,415 of unrecognized expense is subject to non-employee mark-to-market adjustments.

A summary of options activity during the nine months ended September 30, 2015 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Life		Intrinsic
	Options		Price		In Years		Value
Outstanding, December 31, 2014		7,806,836	$	2.85
Granted		2,211,890		2.20
Exercised		-		-
Expired		(643,836)		2.95
Forfeited		(418,579)		2.52
Outstanding, September 30, 2015		8,956,311	$	2.70		3.1	$	-

Exercisable, September 30, 2015		5,321,921	$	2.96		2.3	$	-

The following table presents information related to stock options at September 30, 2015:

Options Outstanding				Options Exercisable
				Weighted
		Outstanding		Average		Exercisable
Exercise		Number of		Remaining Life		Number of
Price		Options		In Years		Options
$	2.20		2,201,890		-		-
$	2.48		4,873,000		3.1		3,450,500
$	3.85		10,000		-		-
$	3.85		25,000		2.7		25,000
$	3.85		1,846,421		0.8		1,846,421
			8,956,311		2.3		5,321,921