12. RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

As of September 30, 2023 and December 31, 2022 the Company had accounts receivable – related parties of $971,182 and $1,115,816 net of allowances for expected credit losses of $470,516 and $339,503, respectively, representing the net realizable value of advances made to, and expense sharing obligations receivable from, separate entities under common management.

During the three and nine months ended September 30, 2023, the Company made advances in the amount of $12,500 and $98,144, respectively, to the related entities, and paid expenses on behalf of the related entities (pursuant to the expense sharing agreements discussed below) in the amount of $108,994 and $492,523, respectively. The Company received repayments from the related parties in the amount of $217,414 and $585,228 during the three and nine months ended September 30, 2023, respectively.

During the three and nine months ended September 30, 2022, the Company made advances in the amount of $75,000 and $111,000, respectively, to the related entities, and paid expenses on behalf of the related entities (pursuant to the expense sharing agreements discussed below) in the amount of $163,576 and $580,990, respectively. The Company received repayments from the related parties in the amount of 60,000 and $766,000 and during the three and nine months ended September 30, 2022, respectively.

The Company recorded an allowance of $111,582 for related party credit losses upon the adoption of ASU 2016-13 on January 1, 2023. The Company recorded additional bad debt expense related to accounts receivable, related parties of $0 and $19,431 during the three and nine months ended September 30, 2023, respectively. The Company recorded bad debt expense of $0 during the three and nine months ended September 30, 2022, which is reflected within general and administrative expenses on the on the accompanying unaudited consolidated statements of operations.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended September 30, 2023 and 2022, the Company recorded a contra-expense of approximately $493,000 and $581,000, respectively, related to the reimbursement of general and administrative expenses as a result of the agreement. During the three months ended September 30, 2023 and 2022, the Company recorded a contra-expense of approximately $109,000 and $164,000, respectively, related to the reimbursement of general and administrative expenses as a result of the agreement.

Management Fee Income

The Company earns management fees of $75,000 per quarter from LVH. A member of the Company’s board of directors is the managing member of SLVH, LLC, and holds a 20% membership interest in SLVH. SLVH owns 88% of the limited liability interest of LVH. The Company earned $75,000 and $225,000 during each of the three and nine months periods ended September 30, 2023, and 2022, respectively, which is included in other income on the accompanying condensed consolidated statement of operations.

Amendment to LVH Limited Liability Company Agreement

On June 30, 2023, the Company through its wholly owned subsidiary, GVI, executed a Fourth Amendment to the Amended and Restated Limited Liability Company Agreement of LVH to extend the outside date for execution of the ground lease from June 30, 2023 to December 29, 2023.

On September 27, 2023, the Company through its wholly owned subsidiary, GVI, executive a Letter Agreement between the Company and LVH suspend the business operations of LVH and to waive the provision requiring the dissolution of LVH if not ground lease is signed, and to return all available cash to GVI. GVI received cash in the amount of $137,222 representing the return of cash in excess of agreed upon reserves, which is included in other income on the accompanying condensed consolidated statement of operations.