13. BENEFIT CONTRIBUTION PLAN

The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction.

A participant is always fully vested in their account, including the Company’s contribution. For the nine months ended September 30, 2023 and 2022, the Company recorded a charge associated with its contribution of approximately $13,292 and $26,000, respectively. For the three months ended September 30, 2023 and 2022, the Company recorded a charge associated with its contribution of approximately $4,084 and $4,000, respectively. This charge has been included as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations.

The Company issues shares of its common stock to settle these obligations based on the fair value of its common stock on the date the shares are issued. On January 23, 2023, the Company issued 2,416 shares valued at $13.50 per share in satisfaction of $32,617 of 401(k) contribution liabilities. During the nine months ended September 30, 2022, the Company issued 9 shares at $3,211.20 per share in satisfaction of $40,000 of 401(k) contribution liabilities.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS