16. STOCKHOLDERS’ EQUITY

Common Stock

On February 3, 2022, the Company issued 1,250 shares of common stock and paid $34,999 cash as consideration for the purchase of the domain name Gaucho.com. The seller is entitled to additional shares if the closing price per share is less than $31.68 on August 14, 2022, such that the collective value of the total shares issued to the seller has a fair market value of $39,600. (See Note 7, Intangible Assets). On August 14, 2022, the closing price per share was $4.32. As a result, the Company issued 7,364 additional shares to the seller of the domain name.

On February 3, 2022, the Company issued 106,952 shares of its common stock, valued at $2,194,653, to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management, in exchange for a 100% ownership interest in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L., The purpose of the acquisition was to acquire certain real property held by Gaucho Development S.R.L. (see Note 3 – Acquisition of Hollywood Burger Argentina, S.R.L.)

On March 28, 2022, the Company issued 86,899 shares of its common stock, valued at $2,419,268, to the minority holders of GGI, in exchange for the remaining 21% non-controlling interest in GGI. The acquisition of the remaining shares of GGI resulted in a decrease of non-controlling interest to zero, and an adjustment to additional paid-in capital to reflect the Company’s increased ownership in GGI.

From April 19, 2022 through June 6, 2022, the Company sold 50,049 shares of the Company’s common stock for aggregate gross proceeds of $555,811 less cash offering costs of $44,465, in connection with a Common Stock Purchase Agreement (the “Purchase Agreement”) with an underwriter (the “Underwriter”). Pursuant to the Purchase Agreement, the Company has the right to sell to the Underwriter up to $50,000,000 (the “Total Commitment”) in shares of the Company’s common stock, subject to certain limitations and conditions set forth in the Purchase Agreement. The Company has the right, but not the obligation, to direct the Underwriter to purchase up to a fixed maximum amount of shares of Common Stock as set forth in the Purchase Agreement, from time to time over a 36 month period beginning May 6, 2021. At any time when the Company’s common stock is trading below $1.00 on the Nasdaq, the Company is unable to direct the Underwriter to purchase any number of shares.

On June 7, 2022, the Company issued an aggregate of 54,214 immediately-vested shares of its common stock, with a grant date value of $525,000, as compensation to the non-executive members of its board of directors.

On June 22, 2022, the Company issued (i) 183,942 vested shares of its common stock valued at $1,379,568 and (ii) 26,278 restricted stock units valued at $197,081, in exchange for, and upon the cancellation of, options for the purchase of 5,502,500 shares of GGI common stock (the “GGI Stock Options”). (See Note 1, Business Organization, Nature of Operations and Risks and Uncertainties, Non-Controlling Interest). As of the date of this exchange, the value of the cancelled GGI options approximated the value of the common stock and restricted stock units issued to the GGI Option holders. As a result, unamortized value of the cancelled GGI options as of the date of the exchange will continue to amortize over the remaining vesting period. The restricted stock units vest quarterly, with 13,139 shares vesting on September 18, 2022, and 13,139 shares vesting on December 18, 2022.

On August 30, 2022, the Company obtained the requisite stockholder approval, and the Investor Notes comprised of $1,727,500 and $8,252 in interest, were automatically converted into an aggregate of 454,576 units based on a conversion price of $3.82. Each unit consists of one share of common stock and one warrant to purchase common stock. Each warrant issued upon the conversion of the Investor Notes is exercisable at a price of $3.82 on or before August 30, 2023 (see Note 12, Convertible Debt Obligations).

Accumulated Other Comprehensive Loss

For three and nine months ended September 30, 2022, the Company recorded a gain of approximately $282,000 and $904,000, respectively, and for the three and nine three months ended September 30, 2021, the Company recorded a gain of approximately $99,000 and $334,000, respectively, related to foreign currency translation adjustments as accumulated other comprehensive income, primarily related to fluctuations in the Argentine peso to United States dollar exchange rates (see Note 2, Summary of Significant Accounting Policies, Highly Inflationary Status in Argentina).

Warrants

A summary of warrant activity during the nine months ended September 30, 2022 is presented below:

SUMMARY OF WARRANTS ACTIVITY 

See Note 12, Convertible Debt Obligations for details regarding warrants issued during the nine months ended September 30, 2022.

A summary of outstanding and exercisable warrants as of September 30, 2022 is presented below:

SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE 

Stock Options

Gaucho Group Holdings, Inc. Stock Options

During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense of approximately $53,000 and $183,000, respectively, and during the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense of approximately $101,000 and $304,000, respectively, related to the amortization of options granted for the purchase of GGH common stock, which is reflected as general and administrative expenses (classified in the same manner as the grantees’ wage compensation) in the accompanying condensed consolidated statements of operations. As of September 30, 2022, there was approximately $234,000 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 1.5 years.

Gaucho Group, Inc. Stock Options

During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation expense of approximately $30,000 and $40,000, respectively, related to options for the purchase of GGI common stock (“GGI Stock Options”). During the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense of approximately $11,000 and $33,000, respectively, related to the GGI Stock Options. Stock-based compensation in connection with the GGI Stock Options is reflected as general and administrative expenses (classified in the same manner as the grantees’ wage compensation) in the accompanying condensed consolidated statements of operations.

There were no stock options granted during the nine months ended September 30, 2022 or during the nine months ended September 30, 2021.

Restricted Stock Units

On August 11, 2022, the Company issued an aggregate of 23,234 restricted stock units with a grant date value of $108,737 to non-executive members of the Board of Directors. On August 30, 2022, 2,568 units were automatically vested and 5,176 units were cancelled upon the departure of two directors who did not stand for re-election at the Company’s Annual General Stockholder’s Meeting.

During the three months ended September 30, 2022, the Company issued 15,707 shares of its common stock in connection with the vesting of restricted stock units.

The following table summarizes the restricted stock unit activity and weighted average grant date fair values for the nine months ended September 30, 2022:

SCHEDULE OF RESTRICTED STOCK UNITS AND WEIGHTED AVERAGE GRANT DATE FAIR VALUES 

Equity Incentive Plan

On August 30, 2022, the stockholders approved the increase of the number of shares authorized to be awarded under the 2018 Equity Incentive Plan to 25% of the Company’s common stock outstanding on a fully diluted basis as of the date of stockholder approval, which was 848,033 shares. As of September 30, 2022, the number of shares of GGH’s common stock available for issuance under the 2018 Equity Incentive Plan is 767,280.