3. MORTGAGES RECEIVABLE

The Company offers loans to purchasers in connection with the sale of real estate lots. The loans bear interest at 7.2% per annum and terms generally range from eight to ten years. Principal and interest for each loan is billed and receivable on a monthly basis. The loans are secured by a first mortgage lien on the property purchased by the borrower. Mortgages receivable include the related interest receivable and are presented at amortized cost, less bad debt allowances, in the accompanying condensed consolidated financial statements.

Management evaluates each loan individually on a quarterly basis, to assess collectability and estimate a reserve for past due amounts. The total allowance for uncollectable mortgages are $1,465,595 and $1,436,981 as of March 31, 2024 and December 31, 2023, respectively. Past due principal amounts of $597,575 and $497,588 are included in mortgages receivable, current as of March 31, 2024 and December 31, 2023, respectively.

The following represents the maturities of mortgages receivable as of March 31, 2024:

 SCHEDULE OF MATURITIES OF MORTGAGES RECEIVABLE

As of each of March 31, 2024 and December 31, 2023, two borrowers had loans outstanding representing 11% and 10% of the total balance of mortgages receivable.

The Company recorded interest income from its mortgages receivable of $10,426 and $50,344 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, there is $226,146 and $190,967, respectively, of interest receivable included in mortgages receivable on the accompanying consolidated balance sheets.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)