UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30,~~March 31, ~~2022~~2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________________.

Commission file number: 001-40075

Gaucho Group Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		52-2158952
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

112 NE 41^st Street, Suite ~~106‌~~106‌

Miami, FL 33137

(Address of principal executive offices)

212-739-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock		VINO		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the ~~preceding12~~preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 14, 2022,~~May 18, 2023, there were ~~2,756,884~~6,592,924 shares of common stock ~~outstanding~~.outstanding.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 (unaudited) and December 31, ~~2021~~2022	1
Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	3
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	4
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three ~~and Nine~~ Months Ended ~~September 30, 2022~~March 31, 2023	5
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity ~~(Deficiency)~~ for the Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022	6
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	7
Notes to Unaudited Condensed Consolidated Financial Statements	9
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	3633
ITEM 4. Controls and Procedures	3633
PART II
OTHER INFORMATION	37
ITEM 1. Legal Proceedings	3734
ITEM 1A. Risk Factors	3734
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	4036
ITEM 3. Defaults Upon Senior Securities	4240
ITEM 4. Mine Safety Disclosures	4240
ITEM 5. Other Information	4340
ITEM 6. Exhibits	4741
Signatures	4944

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	2023		2022
		(unaudited)
Assets
Current Assets
Cash	$	2,389,882	$	300,185
Accounts receivable, net of allowance of $17,968 and $21,229 at March 31, 2023 and December 31, 2022, respectively		56,336		106,156
Accounts receivable - related parties, net of allowance of $470,516 and $339,503 at March 31, 2023 and December 31, 2022, respectively		1,179,121		1,115,816
Accounts receivable		1,179,121		1,115,816
Mortgages receivable, net of allowance $42,769 and $46,424 at March 31, 2023 and December 31, 2022, respectively		710,313		586,631
Inventory		1,998,994		1,888,962
Real estate lots held for sale		559,487		559,487
Prepaid expenses and other current assets		651,623		461,637
Total Current Assets		7,545,756		5,018,874
Long Term Assets
Mortgages receivable, non-current portion, net of allowance of $147,403 and $150,126 at March 31, 2023 and December 31, 2022, respectively		3,185,791		3,278,617
Advances to employees		288,796		282,055
Property and equipment, net		7,563,369		7,621,257
Operating lease right-of-use asset		1,392,993		1,449,442
Prepaid foreign taxes, net		907,962		916,823
Intangible assets, net		68,544		69,787
Deposits, non-current		56,130		56,130
Total Assets	$	21,009,341	$	18,692,985

September 30, December 31,
2022 2021
(unaudited)
Assets
Current Assets
Cash $ 260,984 $ 3,649,407
Accounts receivable, net of allowance of $17,781 and $25,773
at September 30, 2022 and December 31, 2021, respectively 128,018 161,501
Accounts receivable - related parties, net of allowance of $339,503 at
September 30, 2022 and December 31, 2021 853,942 927,874
Mortgages receivable, current portion, net of allowance of $37,022 and $16,825 at September 30, 2022 and December 31, 2021, respectively

647,954

496,590

Inventory 1,740,762 1,490,639
Real estate lots held for sale 562,885 542,885
Prepaid expenses and other current assets 489,667 422,129
Total Current Assets 4,684,212 7,691,025
Long Term Assets
Mortgages receivable, non-current portion, net of allowance of $182,133 and $187,171 at September 30, 2022 and December 31,2021, respectively 3,187,664 3,027,247
Advances to employees 282,163 290,915
Property and equipment, net 7,681,018 3,776,941
Operating lease right-of-use asset 1,505,061 1,667,209
Prepaid foreign taxes, net 925,708 804,265
Intangible assets 71,285 -
Investment - related parties 7,000,000 7,000,000
Deposits 56,130 56,130
Total Assets $ 25,393,241 $ 24,313,732

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS, ~~continued~~CONTINUED

	September 30,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
		(unaudited)					(unaudited)
Liabilities and Stockholders’ Equity
Liabilities, Temporary Equity and Stockholders’ Equity
Current Liabilities
Accounts payable	$	892,439		$	507,734		$	551,597		$	917,270
Accrued expenses, current portion		812,903			965,411			1,214,916			1,664,816
Deferred revenue		1,262,219			713,616			1,466,652			1,373,906
Operating lease liabilities, current portion		197,061			175,316			208,590			202,775
Loans payable, current portion		142,656			223,356			293,110			164,656
Debt obligations		-			7,000
Convertible debt obligations, net		1,912,837			5,728,348
Convertible debt obligations, net, current portion								3,382,509			-
Other current liabilities		88,595			160,578			67,190			100,331
Total Current Liabilities		5,308,710			8,481,359			7,184,564			4,423,754
Long Term Liabilities
Accrued expenses, non-current portion		84,592			115,346			51,951			66,018
Operating lease liabilities, non-current portion		1,380,889			1,531,183			1,274,698			1,328,408
Loans payable, non-current portion		91,982			94,000			93,541			91,665
Convertible debt obligations, net, non-current portion								-			1,991,459
Total Liabilities		6,866,173			10,221,888			8,604,754			7,901,304
Commitments and Contingencies (Note 17)		-
Commitments and Contingencies (Note 14)								-			-
Series B convertible redeemable preferred stock, par value $0.01 per share; 902,670 shares designated; none issued and outstanding at March 31, 2023 and December 31, 2022; no shares are available for issuance								-			-
Stockholders’ Equity
Preferred stock, 902,670 shares authorized, none issued and outstanding		-			-
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 2,749,534 and 823,496 shares issued and 2,749,253 and 823,215 shares outstanding as of September 30, 2022 and December 31, 2021, respectively		27,495			8,235
Preferred stock, 902,670 shares authorized								-			-
Common stock, par value $0.01 per share; 150,000,000 shares authorized; 5,521,800 and 3,653,401 shares issued and 5,521,519 and 3,653,120 shares outstanding as of March 31, 2023 and December 31, 2022, respectively								55,215			36,534
Additional paid-in capital		137,194,491			121,633,826			143,564,396			139,123,642
Accumulated other comprehensive loss		(10,703,647	)		(11,607,446	)		(10,882,368	)		(10,842,569	)
Accumulated deficit		(107,944,916	)		(95,726,534	)		(120,286,301	)		(117,479,571	)
Treasury stock, at cost, 281 shares at September 30, 2022 and December 31, 2021		(46,355	)		(46,355	)
Total Gaucho Group Holdings, Inc. Stockholders’ Equity		18,527,068			14,261,726
Non-controlling interest		-			(169,882	)
Treasury stock, at cost, 281 shares at March 31, 2023 and December 31, 2022								(46,355	)		(46,355	)
Total Stockholders’ Equity		18,527,068			14,091,844			12,404,587			10,791,681
Total Liabilities and Stockholders’ Equity	$	25,393,241		$	24,313,732
Total Liabilities, Temporary Equity and Stockholders’ Equity							$	21,009,341		$	18,692,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	2023			2022
	For the Three Months Ended
	March 31,
	2023			2022

Sales	$	447,767		$	425,597
Cost of sales		(293,299	)		(238,127	)
Gross profit		154,468			187,470
Operating Expenses
Selling and marketing		234,579			171,820
General and administrative		1,756,688			1,745,234
Depreciation and amortization		109,206			46,219
Total operating expenses		2,100,473			1,963,273
Loss From Operations		(1,946,005	)		(1,775,803	)

Other Expense (Income)
Interest income		(50,344	)		(3,852	)
Interest expense		602,292			758,072
Other income, related party		(75,000	)		(75,000	)
Loss on extinguishment of debt		383,987			-
Gains from foreign currency translation		(111,792	)		(182,922	)
Total other (income) expense		749,143			496,298
Net Loss		(2,695,148	)		(2,272,101	)
Net loss attributable to non-controlling interest		-			72,261
Net Loss Attributable to Common Stockholders	$	(2,695,148	)	$	(2,199,840	)

Net Loss Per Common Share
Basic and Diluted	$	(0.58	)	$	(2.53	)

Weighted Average Number of Common Shares Oustanding
Basic and Diluted		4,661,643			869,799

The accompanying notes are an integral part of these condensed consolidated financial statements.

2022 2021 2022 2021
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2022 2021 2022 2021

Sales $ 440,939 $ 2,605,158 $ 1,271,871 $ 3,220,557
Cost of sales (433,941 ) (210,437 ) (1,205,534 ) (650,003 )
Gross profit 6,998 2,394,721 66,337 2,570,554
Operating Expenses
Selling and marketing 109,299 100,870 614,529 336,081
General and administrative 1,729,283 1,370,870 5,403,409 3,934,500
Depreciation and amortization 83,677 35,758 178,896 103,680
Total operating expenses 1,922,259 1,507,498 6,196,834 4,374,261
(Loss) Income from Operations (1,915,261 ) 887,223 (6,130,497 ) (1,803,707 )

Other Expense (Income)
Interest expense, net 105,511 49,646 1,527,887 88,209
Forgiveness of PPP Loan - - - (242,486 )
Other income (75,000 ) (87,500 ) (225,000 ) (87,500 )
Gains from foreign currency translation (185,251 ) (6,130 ) (411,178 ) (34,991 )
Loss on extinguishment of debt - - 2,105,119 -
Inducement expense 2,965,222 - 3,163,318 -
Total other expense (income) 2,810,482 (43,984 ) 6,160,146 (276,768 )
Net (Loss) Income (4,725,743 ) 931,207 (12,290,643 ) (1,526,939 )
Net loss attributable to non-controlling interest - 45,086 72,261 142,647
Net (Loss) Income Attributable to Common Stockholders $ (4,725,743 ) $ 976,293 $ (12,218,382 ) $ (1,384,292 )

Net (Loss) Income per Common Share $ (2.19 ) $ 1.35 $ (8.85 ) $ (2.21 )

Weighted Average Number of
Common Shares Outstanding:
Basic and Diluted 2,153,824 721,533 1,380,289 627,569

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	2023			2022
	For the Three Months Ended
	March 31,
	2023			2022

Net loss	$	(2,695,148	)	$	(2,272,101	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(39,799	)		263,406
Comprehensive loss		(2,734,947	)		(2,008,695	)
Comprehensive loss attributable to non-controlling interests		-			72,261
Comprehensive loss attributable to controlling interests	$	(2,734,947	)	$	(1,936,434	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~COMPREHENSIVE (LOSS) INCOME~~CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2023

(unaudited)


													Accumulated
										Additional			Other								Total
	Common Stock				Treasury Stock					Paid-In			Comprehensive			Accumulated					Stockholders’
	Shares		Amount		Shares		Amount			Capital			Loss			Deficit					Equity
Balance - January 1, 2023		3,653,401	$	36,534		281	$	(46,355	)	$	139,123,642		$	(10,842,569	)	$	(117,479,571	)	-	-	$	10,791,681
Cumulative effect of change upon adoption of ASU 2016-13		-		-		-		-			-			-			(111,582	)	-	-		(111,582	)
Balance - January 1, 2023		3,653,401	$	36,534		281	$	(46,355	)	$	139,123,642		$	(10,842,569	)	$	(117,479,571	)	-	-	$	10,791,681
Stock-based compensation:																						-
Options		-		-		-		-			38,834			-			-					38,834
Restricted stock units		3,890		39		-		-			79,383			-			-					79,422
Common stock issued for 401(k) employer matching		24,160		242		-		-			32,375			-			-					32,617
Shares issued under the New ELOC, net of offering costs [1]		364,430		3,644		-		-			437,765			-			-					441,409
Relative fair value of warrants issued with 2023 Notes, net of issuance costs [2]		-		-		-		-			1,506,319			-			-					1,506,319
Warrants issued for modification of GGH Notes		-		-		-		-			134,779			-			-					134,779
Reduction of warrant exercise price on new debt issuance		-		-		-		-			63,502			-			-					63,502
Shares issued upon conversion of debt and interest		833,333		8,333		-		-			1,563,220			-			-					1,571,553
Common stock issued for cash in private placement		591,000		5,910		-		-			585,090			-			-					591,000
Cashless warrant exercise		51,305		513		-		-			(513	)		-			-					-
True-up adjustment		281		-		-		-			-			-			-					-
Net loss		-		-		-		-			-			-			(2,695,148	)	-	-		(2,695,148	)
Other comprehensive income		-		-		-		-			-			(39,799	)		-					(39,799	)
Balance, March 31, 2023		5,521,800	$	55,215		281	$	(46,355	)	$	143,564,396		$	(10,882,368	)	$	(120,286,301	)	-	-	$	12,404,587

2022 2021 2022 2021
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Net (loss) income $ (4,725,743 ) $ 931,207 $ (12,290,643 ) $ (1,526,939 )
Other comprehensive income :
Foreign currency translation adjustments 282,337 98,709 903,799 334,349
Comprehensive (loss) income (4,443,406 ) 1,029,916 (11,386,844 ) (1,192,590 )
Comprehensive (loss) attributable to non-controlling interests - 45,086 72,261 142,647
Comprehensive (loss) income attributable to controlling interests $ (4,443,406 ) $ 1,075,002 $ (11,314,583 ) $ (1,049,943 )

[1]		Includes gross proceeds of $480,670, less $39,261 offering costs
[2]		Represents $1,609,935 relative fair value of warrants, less $103,616 of allocable issuance costs

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2022

(unaudited)

Shares Amount Shares Amount
Capital
Loss
Deficit

Equity

Interest
Equity
Common Stock Treasury Stock
Additional
Paid-In

Accumulated Other
Comprehensive
Accumulated
Gaucho Group
Holdings
Stockholders’

Non-
Controlling

Total
Stockholders’

Shares Amount Shares Amount
Capital
Loss
Deficit

Equity

Interest
Equity
Balance - January 1, 2022 823,496 $ 8,235 281 $ (46,355 ) $ 121,633,826 $ (11,607,446 ) $ (95,726,534 ) $ 14,261,726 $ (169,882 ) $ 14,091,844
Stock-based compensation:
Options - - - - 72,700 - - 72,700 10,354 83,054
Common stock issued for 401(k)
employer matching 1,040 10 - - 27,811 - - 27,821 - 27,821
Common stock issued for
purchase of minority interest 86,899 869 - - (232,658 ) - - (231,789 ) 231,789 -
Common stock issued for
acquisition of GDS 106,952 1,070 - - 2,193,583 - - 2,194,653 - 2,194,653
Common stock issued for
purchase of domain name 1,250 13 - - 39,587 - - 39,600 - 39,600
Warrants issued for
modification of convertible
debt principal - - - - 731,856 - - 731,856 - 731,856
Net loss - - - - - - (2,199,840 ) (2,199,840 ) (72,261 ) (2,272,101 )
Other comprehensive income - - - - - 263,406 - 263,406 - 263,406
Balance - March 31, 2022 1,019,637 10,197 281 (46,355 ) 124,466,705 (11,344,040 ) (97,926,374 ) 15,160,133 - 15,160,133
Stock-based compensation:
Options - - - - 87,134 - - 87,134 - 87,134
Common stock 54,214 542 - - 524,458 - - 525,000 - 525,000
Shares issued upon conversion
of debt and interest 74,589 746 - - 1,521,851 - - 1,522,597 - 1,522,597
Inducement loss on debt
conversions - - - - 198,096 - - 198,096 - 198,096
Substantial premium on
convertible debt - - - - 1,683,847 - - 1,683,847 - 1,683,847
Common stock issued
for cash, net of offering costs 50,049 500 - - 510,846 - - 511,346 - 511,346
Common stock issued upon
exchange of subsidiary
stock options 183,942 1,839 - - (1,839 ) - - - - -
True up adjustment 41 - - - - - - - - -
Net loss - - - - - - (5,292,799 ) (5,292,799 ) - (5,292,799 )
Other comprehensive income - - - - - 358,056 - 358,056 - 358,056
Balance - June 30, 2022 1,382,472 13,824 281 (46,355 ) 128,991,098 (10,985,984 ) (103,219,173 ) 14,753,410 - 14,753,410
Stock-based compensation:
Options - - - - 53,058 - - 53,058 - 53,058
Restricted stock units 15,707 157 - - 158,514 - - 158,671 - 158,671
Shares issued upon conversion
of debt and interest 1,343,991 13,440 - - 4,924,206 - - 4,937,646 - 4,937,646
Inducement loss on debt
conversions - - - - 2,965,222 - - 2,965,222 - 2,965,222
Shares issued for purchase
of domain name 7,364 74 - - (74 ) - - - - -
Warrants issued for modification
of convertible debt principal - - - - 102,467 - - 102,467 - 102,467
Net loss - - - - - - (4,725,743 ) (4,725,743 ) - (4,725,743 )
Other comprehensive income - - - - - 282,337 - 282,337 - 282,337
Balance - September 30, 2022 2,749,534 $ 27,495 281 $ (46,355 ) $ 137,194,491 $ (10,703,647 ) $ (107,944,916 ) $ 18,527,068 $ - $ 18,527,068


													Accumulated						Gaucho Group
										Additional			Other						Holdings			Non-			Total
	Common Stock				Treasury Stock					Paid-In			Comprehensive			Accumulated			Stockholders’			Controlling			Stockholders’
	Shares		Amount		Shares		Amount			Capital			Loss			Deficit			Equity			Interest			Equity
Balance - January 1, 2022		823,496	$	8,235		281	$	(46,355	)	$	121,633,826		$	(11,607,446	)	$	(95,726,534	)	$	14,261,726		$	(169,882	)	$	14,091,844
Stock-based compensation:
Options		-		-		-		-			72,700			-			-			72,700			10,354			83,054
Common stock issued for 401(k) employer matching		1,040		10		-		-			27,811			-			-			27,821			-			27,821
Common stock issued for purchase of minority interest		86,899		869		-		-			(232,658	)		-			-			(231,789	)		231,789			-
Common stock issued for acquisition of GDS		106,952		1,070		-		-			2,193,583			-			-			2,194,653			-			2,194,653
Common stock issued for purchase of domain name		1,250		13		-		-			39,587			-			-			39,600			-			39,600
Warrants issued for modification of convertible debt principal		-		-		-		-			731,856			-			-			731,856			-			731,856
Net loss		-		-		-		-			-			-			(2,199,840	)		(2,199,840	)		(72,261	)		(2,272,101	)
Other comprehensive income		-		-		-		-			-			263,406			-			263,406			-			263,406
Balance, March 31, 2022		1,019,637	$	10,197		281	$	(46,355	)	$	124,466,705		$	(11,344,040	)	$	(97,926,374	)	$	15,160,133		$	-		$	15,160,133

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIENCY)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021~~

~~(unaudited)~~

Shares Amount Shares Amount Shares Amount
Capital

Loss

Deficit
Deficiency
Interest
Equity

Series B
Convertible Redeemable
Preferred Stock
Common Stock Treasury Stock
Additional
Paid-In

Accumulated Other
Comprehensive
Accumulated
Gaucho Group
Holdings
Stockholders’
Non-
controlling

Total
Stockholders’
(Deficiency)

Shares Amount Shares Amount Shares Amount
Capital

Loss

Deficit
Deficiency
Interest
Equity
Balance - January 1, 2021 901,070 $ 9,010,824 436,201 $ 4,362 281 $ (46,355 ) $ 96,999,422 $ (11,932,801 ) $ (93,534,828 ) $ (8,510,200 ) $ (106,798 ) $ (8,616,998 )
Stock-based compensation:
Options and warrants - - - - - - 101,453 - - 101,453 67,196 168,649
Common stock and warrants issued for cash, in public
offering, net of offering costs ^[1] - - 111,111 1,111 - - 6,601,230 - - 6,602,341 - 6,602,341
Common stock and warrants issued for cash - - 6,097 61 - - 438,939 - - 439,000 - 439,000
Common stock and warrants issued to underwriter in
public offering - - - - - - 297,963 - - 297,963 - 297,963
Common stock and warrants issued upon exchange of
debt and accrued interest - - 19,751 198 - - 1,421,870 - - 1,422,068 - 1,422,068
Common stock issued upon conversion of Series B
Convertible Preferred Stock (901,070 ) (9,010,824 ) 50,059 501 - - 9,010,323 - - 9,010,824 - 9,010,824
Effect of reverse stocksplit - - 41 - - - - - - - - -
Comprehensive loss: - - -
Net loss - - - - - - - - (1,112,851 ) (1,112,851 ) (27,509 ) (1,140,360 )
Other comprehensive
income - - - - - - - 98,980 - 98,980 - 98,980
Balance - March 31, 2021 - - 623,260 6,233 281 (46,355 ) 114,871,200 (11,833,821 ) (94,647,679 ) 8,349,578 (67,111 ) 8,282,467
Stock-based compensation:
Options and warrants - - - - - - 101,453 - - 101,453 44,610 146,063
Common stock issued to placement agent as
commitment fees - - 10,028 100 - - 499,900 - - 500,000 - 500,000
Common stock issued for cash, net of offering costs ^[2] - - 40,783 408 - - 1,586,552 - - 1,586,960 - 1,586,960
Comprehensive loss: - - - - -
Net loss - - - - - - - - (1,247,734 ) (1,247,734 ) (70,052 ) (1,317,786 )
Other comprehensive
income - - - - - - - 136,660 - 136,660 - 136,660
Balance - June 30, 2021 - - 674,071 6,741 281 (46,355 ) 117,059,105 (11,697,161 ) (95,895,413 ) 9,426,917 (92,553 ) 9,334,364
Beginning balance - - 674,071 6,741 281 (46,355 ) 117,059,105 (11,697,161 ) (95,895,413 ) 9,426,917 (92,553 ) 9,334,364
Stock-based compensation:
Common stock issued in satisfaction of 401(k) profit
sharing liability - - 688 7 - - 39,530 - - 39,537 - 39,537
Options and warrants - - - - - - 101,453 - - 101,453 11,211 112,664
Common stock issued upon exercise of warrants - - 22,875 229 - - 1,646,771 - - 1,647,000 - 1,647,000
Common stock issued for cash, net of offering costs ^[3] - - 31,917 319 - - 1,312,465 - - 1,312,784 - 1,312,784
Common stock issued for service - - 2,500 25 - - 105,875 - - 105,900 - 105,900
Comprehensive loss: - - - - -
Net income (loss) - - - - - - - - 976,293 976,293 (45,086 ) 931,207
Other comprehensive
income - - - - - - - 98,709 - 98,709 - 98,709
Balance - September 30, 2021 - $ - 732,051 $ 7,321 281 $ (46,355 ) $ 120,265,199 $ (11,598,452 ) $ (94,919,120 ) $ 13,708,593 $ (126,428 ) $ 13,582,165
Ending balance - $ - 732,051 $ 7,321 281 $ (46,355 ) $ 120,265,199 $ (11,598,452 ) $ (94,919,120 ) $ 13,708,593 $ (126,428 ) $ 13,582,165

~~[1]~~	~~Includes gross proceeds of $8,002,004, less offering costs of $1,399,663~~ ($~~1,034,684~~ ~~of cash and $364,979~~ ~~of non-cash).~~
~~[2]~~	~~Includes gross proceeds of $2,303,211, less offering costs of $716,251~~ ($~~216,251~~ ~~of cash and $500,000~~ ~~of non-cash).~~
~~[3]~~	~~Includes gross proceeds of $1,443,243, less cash offering costs of $130,459~~.

��

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	2022			2021			2023			2022
	For the Nine Months Ended						For the Three Months Ended
	September 30,						March 31,
	2022			2021			2023			2022
Cash Flows from Operating Activities
Net loss	$	(12,290,643	)	$	(1,526,939	)	$	(2,695,148	)	$	(2,272,101	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation:
401(k) stock		26,360			23,845			5,908			18,976
Stock options		223,246			427,376			38,834			83,054
Restricted stock units		158,671			-			79,422			-
Common stock		525,000			105,900
Noncash lease expense		162,148			134,261			56,449			53,325
Gain on foreign currency translation		(411,178	)		(34,991	)		(111,792	)		(182,922	)
Unrealized investment losses		-			457
Depreciation and amortization		178,896			103,680			109,206			46,219
Amortization of debt discount		1,078,731			-			362,166			551,441
Provision for uncollectible assets		67,295			19,865
Provision for obsolete inventory		115,563			-
Forgiveness of PPP Loan		-			(242,486	)
Provision for credit losses								45,272			94
Loss on extinguishment of debt		2,105,119			-			383,987			-
Inducement expense		3,163,318			-
Decrease (increase) in assets:
Accounts receivable and mortgages receivable		(314,065	)		(2,713,685	)		(236,674	)		(272,116	)
Employee advances		4,579			-			(7,141	)		2,080
Inventory		(385,686	)		(75,095	)		(110,032	)		(92,564	)
Deposits		-			(35,545	)		-			-
Prepaid expenses and other current assets		(100,513	)		(498,785	)		(181,125	)		(207,513	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		866,987			(1,057,858	)		(690,419	)		186,280
Operating lease liabilities		(128,549	)		(109,705	)		(47,895	)		(38,892	)
Deferred revenue		542,578			(180,639	)		92,746			40,259
Other liabilities		(71,983	)		(1,267	)		(33,141	)		(14,866	)
Total Adjustments		7,806,517			(4,134,672	)		(244,229	)		172,855
Net Cash Used in Operating Activities		(4,484,126	)		(5,661,611	)		(2,939,377	)		(2,099,246	)
Cash Used in Investing Activities
Cash paid to acquire GDS, net of cash acquired		(7,560	)		-			-			(7,560	)
Purchase of property and equipment		(1,915,952	)		(640,440	)		(50,074	)		(767,068	)
Purchase of domain name		(34,999	)		-
Purchase of investment - related parties		-			(3,500,000	)
Purchase of intangible asset								-			(34,999	)
Net Cash Used in Investing Activities		(1,958,511	)		(4,140,440	)		(50,074	)		(809,627	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, ~~continued~~CONTINUED

(unaudited)

	For the Nine Months Ended						For the Three Months Ended
	September 30,						March 31,
	2022			2021			2023			2022
Cash Provided by Financing Activities
Proceeds from loans payable								185,000			-
Repayments of loans payable		(81,431	)		(159,441	)		(32,605	)		(26,329	)
Proceeds from common stock issued for cash		511,346			-			591,000			-
Proceeds from the issuance of debt in private placement		1,727,500
Repayments of debt obligations		(7,000	)		(100,000	)
Proceeds from underwritten public offering, net of offering costs ⁽¹⁾		-			7,287,004
Cash offering costs paid for underwritten public offering		-			(690,400	)
Proceeds from common stock issued for cash		-			3,746,454
Proceeds from sale of common stock and warrants		-			439,000
Proceeds from the exercise of warrants					1,647,000
Proceeds from the issuance of convertible debt								5,000,000			-
Financing costs in connection with the issuance of convertible debt								(321,803	)
Repayments of convertible debt obligations								(744,054	)		-
Proceeds from issuance of shares under the New ELOC, net of offering costs [1]								441,409			-
Net Cash Provided by Financing Activities		2,150,415			12,169,617			5,118,947			(26,329	)
Effect of Exchange Rate Changes on Cash		903,799			334,398			(39,799	)		263,406
Net (Decrease) Increase in Cash		(3,388,423	)		2,701,964			2,089,697			(2,671,796	)
Cash - Beginning of Period		3,649,407			134,536			300,185			3,649,407
Cash - End of Period	$	260,984		$	2,836,500		$	2,389,882		$	977,611

Supplemental Disclosures of Cash Flow Information:
Interest paid							$	307,635		$	108,691

Non-Cash Investing and Financing Activity
Equity issued to satisfy accrued stock based compensation obligation							$	32,617		$	27,821
Equity issued as consideration for intangible assets							$	-		$	39,600
Equity issued for purchase of non controlling interest							$	-		$	231,789
Equity issued for acquisition of GDS							$	-		$	2,194,653
Warrants issued and debt principal exchanged upon modification of convertible debt							$	-		$	731,856
Shares issued upon conversion of debt and interest							$	1,571,553		$	-
Cashless warrant exercise							$	513		$	-
Relative fair value of warrants issued with 2023 Notes, net of allocable issuance costs [2]							$	1,506,319		$	-
Change in value of modified warrants							$	63,502		$	-

~~(1)~~[1]	~~Includes gross~~	Gross proceeds of $~~8,002,004~~480,671, less offering costs of $~~715,000~~39,261.
[2]		Represents $1,609,935 relative fair value of warrants, less $103,616 in allocable issuance costs

Supplemental Disclosures of Cash Flow Information:
Interest paid 175,252 411,981
Income taxes paid - -

Non-Cash Investing and Financing Activity
Equity issued to satisfy accrued stock-based compensation expense $ 27,821 $ -
Equity issued as consideration for intangible assets $ 39,600 $ -
Equity issued for purchase of non-controlling interest $ 231,789 $ -
Equity issued for acquisition of GDS $ 2,194,653 $ -
Warrants issued and debt principal exchanged upon modification of convertible debt $ 834,323 $ -
Shares issued upon conversion of debt and interest $ 6,460,243 $ 1,422,068
Common stock and restricted stock units in GGH issued upon exchange of GGI options $ 1,576,648 $ -
Accrued stock-based compensation converted to equity $ - $ 39,537
Series B Preferred stock converted to common stock $ - $ 9,010,824
Reclassification of deferred offering cost to additional paid in capital $ - $ 67,016
Common stock and warrants issued to underwriter in public offering $ - $ 297,963
Common stock issued to placement agent as commitment fees $ - $ 500,000
Right-of-use assets obtained in exchange for lease obligations $ - $ 1,843,043

The accompanying notes are an integral part of these condensed consolidated financial statements.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BUSINESS ORGANIZATION AND NATURE OF OPERATIONS ~~AND RISKS AND UNCERTAINTIES~~

Organization and Operations

Through its subsidiaries, Gaucho Group Holdings, Inc. (“Company”, “GGH”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops, and operates a collection of luxury assets, including real estate development, fine wines, and a boutique hotel in Argentina, as well as an e-commerce platform for the sale of high-end fashion and accessories.

As wholly owned subsidiaries of GGH, InvestProperty Group, LLC (“IPG”) ~~and~~, Algodon Global Properties, LLC (“AGP”) and Gaucho Ventures I – Las Vegas, LLC (“GVI”) operate as holding companies that invest in, develop and operate global real estate and other lifestyle businesses such as wine production and distribution, golf, tennis, and restaurants.

GGH operates its properties through its ALGODON® brand. IPG and AGP have invested in two ALGODON® brand projects located in Argentina. The first project is Algodon Mansion, a Buenos Aires-based luxury boutique hotel property that opened in 2010 and is owned by the Company’s subsidiary, The Algodon – Recoleta, SRL (“TAR”). The second project is the redevelopment, expansion and repositioning of a Mendoza-based winery and golf resort property now called Algodon Wine Estates (“AWE”), the integration of adjoining wine producing properties, and the subdivision of a portion of this property for residential development. (“GDS”). GVI is a party to an agreement with LVH Holdings (“LVH”) to develop a project in Las Vegas, Nevada.

On February 3, 2022, the Company acquired additional real estate through the acquisition of ~~100%~~100% ownership in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L. ~~(“GDS”).~~

GGH also manufactures, distributes, and sells high-end luxury fashion and accessories through its subsidiary, Gaucho Group, Inc. (“GGI”). GGH held a 79% ownership interest in GGI through March 28, 2022, at which time GGH acquired the remaining 21% ownership interest in GGI. See Non-Controlling Interest, below.

On June 14, 2021, the Company formed a wholly-owned subsidiary, Gaucho Ventures I – Las Vegas, LLC (“GVI”), and on June 17, 2021, Gaucho Group Holdings, Inc announced the signing of an agreement between GVI and LVH Holdings LLC (“LVH”) to develop a project in Las Vegas, Nevada. As of September 30, 2022, the Company has contributed total capital of $~~7.0~~ ~~million to LVH and received 396 limited liability company interests, representing an~~ ~~11.9% equity interest in LVH. See Note 14, Related Party Transactions.~~

~~Going Concern and Management’s Liquidity Plans~~

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. As of September 30, 2022, the Company had cash of approximately $~~261,000and a working capital deficit of approximately $624,000. During the nine months ended September 30, 2022, the Company incurred a net loss of approximately $12.3~~ ~~million and used cash in operations of approximately $4,484,000. The Company has an accumulated deficit of approximately $107.9~~ ~~million at September 30, 2022. Further, as of September 30, 2022, the Company has short-term convertible debt obligations of approximately $2.0~~ ~~million and loans payable of approximately $235,000~~.Non-Controlling interest

~~In the period following September 30, 2022 and prior to filing, the Company received aggregate cash proceeds of $1,051,500~~ ~~upon the issuance of convertible promissory notes, pursuant to an offering of a series up to $1.5~~ ~~million of~~ 7~~% convertible promissory notes approved by the Board of Directors on October 22, 2022.~~ ~~The notes are convertible into units comprised of~~ ~~one~~ ~~share of common stock and~~ ~~one~~ ~~warrant for the purchase of common stock, at a conversion price equal to the lower of (a) $2.52~~ ~~per share or (b) the three-day volume weighted average closing price beginning on the date that is two days prior to the conversion date, subject to a floor price on conversion of $2.40~~ ~~per share.~~ ~~See Note 19, Subsequent Events for additional details.~~

On November 8, 2022, the Company entered into a new equity line of credit agreement (the “Purchase Agreement”) with an Underwriter, pursuant to which the Company will have the ability (but not the obligation) to sell, from time to time, up to an aggregate of up to $~~44,308,369~~ of newly issued shares to the Underwriter, at a price equal to 95% of the lowest daily volume weighted average price per share during the three consecutive days immediately following the date that Company directs the Underwriter to purchase such shares. The commencement of the equity line of credit is contingent upon the satisfaction of certain conditions in the Purchase Agreement. As of the date of this filing, these conditions have not been satisfied, and the Company is not yet able to sell securities pursuant to the Purchase Agreement. (See Note 19 – Subsequent Events, for further details.)

Management believes that the Company has access to capital resources and continues to evaluate additional financing opportunities. However, there is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.

Based on current cash on hand and subsequent activity as described herein, the Company presently only has enough cash on hand to operate on a month-to-month basis. Because of the Company’s limited cash availability, its operations have been scaled back to the extent possible. Management continues to explore opportunities with third parties and related parties to provide additional capital; however, it has not entered into any agreement to provide the necessary capital. If the Company is not able to obtain additional financing on a timely basis, it may have to delay vendor payments and/or initiate cost reductions, which would have a material adverse effect on its business, financial condition and results of operations, and ultimately, it could be forced to discontinue operations, liquidate assets and/or seek reorganization under the U.S. bankruptcy code.

Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these financial statements are issued. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

~~Non-Controlling Interest~~

As a result of ~~the~~a 2019 conversion of certain convertible debt into shares of Gaucho Group, Inc. (“GGI”) common stock, GGI investors obtained a 21% ownership interest in GGI, which was recorded as a non-controlling interest. The profits and losses of GGI ~~for the three and nine months ended September 30, 2021 and~~ for the period from January 1, 2022 through March 28, 2022 are allocated between the controlling interest and the non-controlling interest in the same proportions as their membership interest. On March 28, 2022, the Company issued 86,899 shares of its common stock to the minority holders of GGI, in exchange for the remaining 21% ownership of ~~GGI, such that as of September 30, 2022,~~GGI. Consequently, the Company owns 100% of the outstanding common stock of GGI.

~~Further, on June 22, 2022, the Company issued an aggregate of~~ ~~183,942~~ ~~shares of its common stock in exchange for, and upon the cancellation of, options for the purchase of~~ ~~458,542~~ ~~shares of GGI common stock. On June 24, 2022, the Company also granted~~ ~~26,278~~ ~~restricted stock units, subject to vesting, with an aggregate of~~ ~~13,139~~ ~~shares vesting on September 18, 2022, and~~ ~~13,139~~ ~~shares vesting on December 18, 2022. See Note 16, Stockholders’ Equity, for additional details.~~

~~Risks and Uncertainties~~

In December 2019, the 2019 novel coronavirus (“COVID-19”) surfaced in Wuhan, China. The World Health Organization declared the outbreak as a global pandemic in March 2020. resulting in the temporarily closure of our corporate office, and the temporary suspension of our hotel, restaurant, winery operations, golf and tennis operations, and our real estate development operations. Further, some outsourced factories from which Gaucho ordered products had closed, borders for importing product had been impacted and the Gaucho fulfillment center was also closed for several weeks. In response, the Company reduced its costs by negotiating out of its New York lease, renegotiating with vendors, and implementing salary reductions. The Company also created an e-commerce platform for our wine sales in response to the pandemic. As of the date of this report, the Company has resumed real estate development operations and has re-opened its winery and golf and tennis facilities, as well as its hotels.

The Company is continuing to monitor the outbreak of COVID-19 and the related business and travel restrictions, and changes to behavior intended to reduce its spread, and the related impact on the Company’s operations, financial position and cash flows, as well as the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company’s future operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as set forth in the Company’s audited consolidated financial statements included in the annual report on Form 10-K for the year ended December 31, 2022, except as disclosed below.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of ~~September 30, 2022~~March 31, 2023 and for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the Securities and Exchange Commission (“SEC”) on April ~~14, 2022.~~17, 2023.

On November 4, 2022, the Company effected a reverse stock split in a ratio of 1 share of common stock for 12 issued shares of common stock. As a result of the reverse stock split, prior period shares and per share amounts appearing in the accompanying condensed consolidated financial statements and all references in this Quarterly Report to our common stock, as well as amounts per share of our common stock, have been retroactively restated as if the reverse stock split occurred at the beginning of the period presented.

Going Concern and Management’s Liquidity Plans

As of March 31, 2023, the Company had cash and working capital of $2,389,882 and $361,192, respectively. During the three months ended March 31, 2023 and 2022, the Company incurred net losses of $2,695,148 and $2,272,101, respectively, and used cash in operating activities of $2,939,377 and $2,099,246, respectively. Further, as of March 31, 2023, $5,536,404 owed in connection with the Company’s convertible debt matures on February 21, 2024, and $293,110 represents the current portion of the Company’s loans payable which are payable on demand or for which payments are due within twelve months after March 31, 2023. During the three months ended March 31, 2023, the Company funded its operations with proceeds from convertible debt financing of $5,000,000, proceeds of $185,000 from a loan, proceeds of $441,409 from draws on the Company’s equity line of credit, and $591,000 from the sale of common stock.

The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these financial statements are made available. Since inception, the Company’s operations have primarily been funded through proceeds received from equity and debt financings. The ~~Company’s future~~Company believes it has access to capital ~~requirements~~resources and continues to evaluate additional financing opportunities. There is no assurance that the ~~adequacy~~Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its ~~available funds will depend on many~~development initiatives or attain profitable operations. The aforementioned factors ~~including~~raise substantial doubt about the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.continue as a going concern.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Highly Inflationary Status in Argentina

The Company recorded gains on foreign currency transactions of ~~approximately~~ $~~185,000~~111,792 and $~~411,000~~182,922 during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~respectively, and approximately $6,000~~ ~~and $35,000~~ ~~during the three and nine months ended September 30 2021,~~ respectively, as a result of the net monetary liability position of its Argentine subsidiaries.

Concentrations

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of ~~approximately~~ $~~141,000~~2,094,461and $115,338 at ~~September 30,~~March 31, 2023 and December 31, 2022, respectively, of which ~~consists of~~$193,318 and $115,338, respectively, represents cash held in Argentine bank accounts.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets.

The Company earns revenues from the sale of real estate lots, as well as hospitality, food & beverage, other related services, and from the sale of clothing and accessories. The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The following table summarizes the revenue recognized in the Company’s condensed consolidated statements of operations:

SCHEDULE OF DISAGGREGATION OF REVENUE

	2023		2022
	For the Three Months Ended
	March 31,
	2023		2022

Real estate sales	$	-	$	184,658
Hotel rooms and events		245,687		139,099
Restaurants		79,018		17,270
Winemaking		29,823		26,809
Agricultural		-		27,498
Golf, tennis and other		27,857		25,101
Clothes and accessories		65,382		5,162
Total revenues	$	447,767	$	425,597

2022 2021 2022 2021
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2022 2021 2022 2021

Real estate sales $ - $ 2,500,001 $ 184,659 $ 2,647,257
Hotel rooms and events 204,383 46,803 487,604 168,482
Restaurants 55,764 3,482 113,357 159,721
Winemaking 93,907 34,943 153,596 81,993
Agricultural - - 181,029 91,216
Golf, tennis and other 65,359 18,528 118,826 61,736
Clothes and accessories 21,526 1,401 32,800 10,152
Total revenues $ 440,939 $ 2,605,158 $ 1,271,871 $ 3,220,557

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Revenue from the sale of food, wine, agricultural products, clothes and accessories is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered, and the performance obligation has been satisfied. Revenues from gift card sales are recognized when the card is redeemed by the customer. The Company does not adjust revenue for the portion of gift card values that is not expected to be redeemed (“breakage”) due to the lack of historical data. Revenue from real estate lot sales is recorded when the lot is deeded, and legal ownership of the lot is transferred to the customer.

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Deferred revenues associated with real estate lot sale deposits are recognized as revenues (along with any outstanding balance) when the lot sale closes, and the deed is provided to the purchaser. Other deferred revenues primarily consist of deposits accepted by the Company in connection with agreements to sell barrels of wine, advance deposits received for grapes and other agricultural products, and hotel deposits. Wine barrel and agricultural product advance deposits are recognized as revenues (along with any outstanding balance) when the product is shipped to the purchaser. Hotel deposits are recognized as revenue upon occupancy of rooms, or the provision of services.

Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had deferred revenue of ~~approximately~~ $~~1,182,000~~1,466,652 and $~~622,000~~1,373,906, respectively, consisting of $1,309,495 and $1,179,654, respectively, associated with real estate lot sale deposits, ~~approximately~~ $~~75,000~~82,157 and $~~91,000~~44,252, respectively, related to hotel deposits and ~~approximately~~ $~~5,000~~75,000 and $0150,000, respectively, related to a leased property (See Note 10 – Deferred Revenue). Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.prepaid management fees received.

Net Loss per Common Share

Basic loss per common share is computed by dividing net loss attributable to GGH common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants and the conversion of convertible instruments.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

	2023			2022
	As of March 31,
	2023			2022

Options		34,806			561,027
Warrants		4,839,254			2,024,166
Unvested restricted stock units		517,610			-
Convertible debt		5,827,783	[1]		1,897,860	[2]
Total potentially dilutive shares		11,219,453			4,483,053

2022 2021
As of September 30,
2022 2021
Options 46,752 48,975
Warrants 609,269 168,873
Unvested restricted stock units 28,628 -
Convertible debt 591,150 -
Total potentially dilutive shares 1,275,799 217,848

[1]

Represents shares issuable upon conversion of $5,536,394 in convertible debt outstanding as of March 31, 2023 at a conversion price of $0.95 per share, which represents the conversion price in effect as of March 31, 2023. The conversion price of such debt is variable (see Note 9, Convertible Debt Obligations).

[2]

Represents shares issuable upon conversion of principal and interest outstanding in the aggregate amount of $6,642,510 at a conversion price of $3.50 per share.

Sequencing Policy

Under ASC 815, the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares or the Company’s total potentially dilutive shares exceed the Company’s authorized share limit, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities granted as compensation in a share-based payment arrangement are not subject to the sequencing policy.

Derivative Instruments

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. For derivative financial instruments that are accounted for as liabilities, the derivative instruments are initially recorded at their fair values and are then re-valued at each reporting date. with changes in the fair value reported in the consolidated statements of operations.

Recently Adopted Accounting Pronouncements

~~On May 3, 2021,~~In June 2016, the ~~Financial Accounting Standards Board (the “FASB”)~~FASB issued ~~Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share~~ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic ~~260), Debt—Modifications~~326)” and ~~Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718),~~also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ~~Derivatives~~ASU 2020-02 (collectively Topic 326). Topic 326 requires the measurement and ~~Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting~~recognition of expected credit losses for ~~Certain Modifications or Exchanges~~financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of ~~Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting~~forward-looking information to calculate credit loss estimates. The Company adopted the provisions of this ASU on January 1, 2023 using the modified retrospective method for ~~modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective~~all financial assets measured at amortized cost. Results for ~~fiscal years~~reporting periods beginning after December ~~15, 2021, including interim periods within those fiscal years. The Company adopted this standard on January 1,~~31, 2022 ~~and it did not have a material effect on its condensed consolidated financial statements.~~

~~Reclassifications~~

~~Certain prior year amounts have been reclassified on the Company’s condensed consolidated balance sheet as of December 31, 2022. The reclassifications were made to the~~are presented under Topic 326 while prior period amounts continue to ~~conform~~be reported in accordance with previously applicable GAAP. The Company recorded an adjustment to accumulated deficit of $111,582 as of January 1, 2023 for the ~~current period financial statement presentation and had no impact on the reported results~~cumulative effect of ~~operations.~~adopting Topic 326.

3. ~~ACQUISITION OF HOLLYWOOD BURGER ARGENTINA, S.R.L.~~GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~On February 3, 2022, the Company, through its subsidiaries, acquired~~ ~~100% of Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L., (“GDS”) in exchange for issuing~~ ~~106,952~~ ~~shares of its common stock, valued at $2,194,653~~ ~~at date of issuance, to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management and ownership.~~(unaudited)

The acquisition was accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired was represented by a group of similar assets. The total purchase consideration of $~~2,204,908~~Reclassifications ~~(including $10,255~~ ~~of legal fees incurred in connection with the acquisition) was allocated to the assets and liabilities acquired as follows:~~

~~SCHEDULE OF ASSETS AND LIABILITIES ACQUIRED~~

Land $ 1,528,134
Building 635,302
Cash 2,694
Prepaid expenses 674
Deferred tax credits 63,282
Accounts payable (313 )
Taxes payable (8,154 )
Related party payables (10,686 )
Lease deposit payable (6,025 )
Total $ 2,204,908

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation.
4.3. MORTGAGES RECEIVABLE
The Company offers loans to purchasers in connections 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 includes the related interest receivable and are presented at amortized cost, less bad debt allowances, in the 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 as of ~~September 30,~~March 31, 2023 and 2022 ~~and December 31, 2021~~ was $~~219,115~~190,172 and $~~203,996~~196,550, respectively. Past due principal amounts of $~~203,097~~309,498 and $~~143,152~~254,683 are included in mortgages receivable, current as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively.~~2022, respectively, in accordance with the mortgages’ contractual terms. In the case of each of the past due loans, the Company believes that the value of the collateral exceeds the outstanding balance on the loan, plus accrued interest.

The following isrepresents the maturities of mortgages receivable as of ~~September 30, 2022:~~March 31, 2023.
SCHEDULE OF MATURITIES OF MORTGAGES RECEIVABLE

April 1 through December 31, 2023 807,654
For the years ended December 31,
2024 381,532
2025 409,927
2026 440,436
2027 473,215
2028 480,227
Thereafter 1,093,286
Gross Receivable 4,086,276
Less: Allowance (190,172 )
Net Receivable $ 3,896,104
14
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

October 1 through December 31, 2022 $ 213,695
For the years ended December 31,
2023 343,301
2024 381,532
2025 409,927
2026 440,436
2027 473,215
Thereafter 1,573,512
Total $ 3,835,618
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, no single borrower had loans outstanding representing more than 10% of the total balance of mortgages receivable.

The Company recorded interest income of $~~63,995~~50,344 and $~~3,511~~3,852 for the three months ended ~~September 30,~~March 31, 2023 and 2022, respectively. As of March 31, 2023 and ~~2021, respectively, and recorded interest income of~~December 31, 2022, there is $~~92,638~~232,754 and $~~10,864~~ ~~for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and December 31, 2021, there is $134,557~~ ~~and $60,843~~185,197, respectively, of interest receivable included in mortgages receivable on the accompanying condensed consolidated balance sheets.

5.4. INVENTORY
Inventory at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was comprised of the following:
SCHEDULE OF INVENTORY
September 30,
2022 December 31,
2021

Wine in process $ 744,588 $ 410,755
Clothes and accessories 460,224 208,759
Vineyard in process 363,859 597,900
Other 131,382 111,549
Finished wine 40,709 34,522
Clothes and accessories in process - 127,154
Total $ 1,740,762 $ 1,490,639
14

March 31,
2023

December 31,
2022

Vineyard in process $ 711,418 $ 516,096
Wine in process 757,500 797,862
Finished wine 31,552 40,735
Clothes and accessories 498,524 534,269
Total $ 1,998,994 $ 1,888,962

6. ~~PROPERTY AND EQUIPMENT~~
~~Property and equipment consist of the following:~~
~~SCHEDULE OF PROPERTY AND EQUIPMENT~~
September 30,
2022 December 31,
2021

Buildings and improvements $ 3,847,687 $ 2,869,300
Real estate development 541,116 210,322
Land 2,194,671 575,233
Furniture and fixtures 403,560 403,560
Vineyards 219,766 219,766
Machinery and equipment 737,433 693,761
Leasehold improvements 1,502,169 449,401
Computer hardware and software 299,718 245,978
Property and equipment, gross 9,746,120 5,667,321
Less: Accumulated depreciation and amortization (2,065,102 ) (1,890,380 )
Property and equipment, net $ 7,681,018 $ 3,776,941
~~Depreciation and amortization of property and equipment was approximately $82,000~~ ~~and $175,000~~ ~~during the three and nine months ended September 30, 2022, respectively, and was approximately $36,000~~ ~~and $104,000~~ ~~during the three and nine months ended September 30, 2021, respectively.~~
7. ~~INTANGIBLE ASSETS~~
~~On February 3, 2022, the Company purchased the domain name Gaucho.com, in exchange for cash consideration of $34,999and a number of shares of common stock which would have an total value of $39,600~~ ~~as of August 14, 2022. The Company issued an aggregate total of~~ ~~8,614~~ ~~shares of common stock with an August 14, 2022 value of $39,600, of which~~ ~~1,250~~ ~~shares were issued on February 3, 2022 and the remaining~~ ~~7,364~~ ~~shares were issued on August 14, 2022. The cost of the domain name is being amortized over its useful life of~~ 15 ~~years.~~
~~The Company recognized $1,243~~ ~~and $3,229~~ ~~of amortization expense during the three and nine months ended September 30, 2022, respectively, related to the domain name. Future amortization of the Company’s intangible asset is as follows:~~
~~SCHEDULE OF INTANGIBLE ASSETS FUTURE AMORTIZATION~~

October 1 through December 31, 2022 $ 1,243
For the years ended December 31,
2023 4,973
2024 4,973
2025 4,973
2026 4,973
2027 4,973
Thereafter 45,176
Total $ 71,285
15

8.5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or developed by the Company. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1 -– Valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include actively traded equity securities.

Level 2 -– Valued based on (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) from market corroborated inputs. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted.

Level 3 -– Valued based on valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments, and certain commitments and guarantees.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The carrying amounts of the Company’s short-term financial instruments including cash, accounts receivable, advances and loans to employees, prepaid taxes and expenses, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the Company’s loans payable, debt obligations and convertible debt obligations approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities.

9.6. ACCRUED EXPENSES

Accrued expenses are comprised of the following:

SCHEDULE OF ACCRUED EXPENSES

	March 31,		December 31,
	2023		2022

Accrued compensation and payroll taxes	$	634,385	$	652,943
Accrued taxes payable - Argentina		273,226		270,239
Accrued interest		12,716		78,368
Other accrued expenses		294,589		663,266
Accrued expenses, current		1,214,916		1,664,816
Accrued payroll tax obligations, non-current		51,951		66,018
Total accrued expenses	$	1,266,867	$	1,730,834

September 30, December 31,
2022 2021

Accrued taxes payable - Argentina $ 293,070 $ 228,338
Other accrued expenses 211,819 376,416
Accrued compensation and payroll taxes 168,646 216,916
Accrued interest 139,368 76,852
Accrued placement agent commissions - 66,889
Accrued expenses, current 812,903 965,411
Accrued payroll tax obligations, non-current 84,592 115,346
Total accrued expenses $ 897,495 $ 1,080,757

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On November 27, 2020, the Company entered into various payment plans, pursuant to which it agreed to pay its Argentine payroll tax obligations over a period of 60 to 120 months. The current portion of payments due under the plan is ~~approximately~~ $~~237,000~~141,880 and $~~158,000~~209,938 as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, which is included in accrued taxes payable – Argentina, above. The non-current portion of accrued expenses represents payments under the plan that are scheduled to be paid after twelve months. The Company incurred interest expense of ~~approximately~~ $~~32,000~~17,304 and $~~65,000~~4,487 during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and incurred interest expense of approximately $46,000~~ ~~and $71,000~~ ~~during the three and nine months ended September 30, 2021,~~ respectively, related to these payment plans.

~~10.~~7. DEFERRED REVENUE

Deferred revenue is comprised of the following:

SCHEDULE OF DEFERRED REVENUES

	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022

Real estate lot sales deposits	$	1,182,124	$	622,453	$	1,309,495	$	1,179,654
Hotel deposits		74,744		91,163
Leased property deposit		5,351		-
Prepaid management fees						75,000		150,000
Other						82,157		44,252
Total	$	1,262,219	$	713,616	$	1,466,652	$	1,373,906

The Company accepts deposits in conjunction with agreements to sell real estate building lots at Algodon Wine Estates in the Mendoza wine region of Argentina. These lot sale deposits are generally denominated in U.S. dollars. The Company ~~executed new agreements for the sale of five additional lots during the nine months ended September 30, 2022 and recorded deferred revenues~~received deposits in the amount of $~~546,186~~129,841~~. This increase~~ in ~~deferred revenues is partially offset by the impact of the change in exchange rates~~connection with 5 additional lot sales during the ~~period.~~three months ended March 31, 2023. Revenue is recorded when the sale closes, and the deeds are issued.

~~11.~~8. LOANS PAYABLE

The Company’s loans payable are summarized below:

SCHEDULE OF LOANS PAYABLE

					March 31,		December 31,
					2023		2022
	September 30, 2022		December 31, 2021
EIDL	$	94,000	$	94,000	$	93,541	$	93,541
2018 Loan		140,638		223,356		74,178		111,137
Total loans payable		234,638		317,356
2022 Loan						33,932		51,643
2023 Note						185,000		-
Total Loans Payable						386,651		256,321
Less: current portion		142,656		223,356		293,110		164,656
Loans payable, non-current	$	91,982	$	94,000
Loans Payable, non-current					$	93,541	$	91,665

~~During~~On January 9, 2023, the ~~nine~~Company received $185,000 in proceeds on the issuance of a one-year, non-convertible promissory note with a February 20, 2024 maturity date. The note bears interest at a rate of 8% per annum. In addition, during the three months ended ~~September 30, 2022,~~March 31, 2023, the Company made principal payments in the amount of $~~81,431~~23,215 on the 2018 Loan payable and $9,390 on the 2022 Loan payable.

On July 20, 2022, the federal government notified the Company that installment payments on the remainder of the balance of the EIDL Loan would be required starting 30 months from the date of the loan, which is October 19, 2022. The EIDL Loan bears interest at

~~3.75~~GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES~~% per annum and matures on~~

~~May 22, 2050~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

(unaudited)

The Company incurred interest expense related to the loans payable in the amount of $~~1,566~~16,486 and $~~8,791~~4,273 during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively and incurred interest expense related to the loans payable in the amount of $7,079~~ ~~and $24,734~~ ~~during the three and nine months ended September 30, 2021,~~ respectively. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there is accrued interest of $~~9,437~~12,716 and $~~6,787~~9,437, respectively, related to the Company’s loans payable.

~~12.~~9. CONVERTIBLE DEBT OBLIGATIONS

Amounts owed pursuant to the Company’s convertible debt obligations are as follows:

SCHEDULE OF CONVERTIBLE NOTES

Principal Debt
Discount
Convertible debt,
net of discount

Balance at January 1, 2022 $ 6,480,000 $ (751,652 ) $ 5,728,348
Less: $ -
Debt principal exchanged for warrants (600 ) (833,723 ) (834,323 )
Debt principal converted to common stock (4,481,191 ) - (4,481,191 )
Amortization of debt discount - 1,078,731 1,078,731
Extinguishment loss - 421,272 421,272
Balance at September 30, 2022 $ 1,998,209 $ (85,372 ) $ 1,912,837

	GGH Notes			2023 Notes			Total Principal			Debt Discount			Convertible debt, net of discount

Balance at January 1, 2023	$	1,997,909		$	-		$	1,997,909		$	(6,450	)	$	1,991,459
Notes issued		-			5,617,978			5,617,978			(2,509,601	)		3,108,377
Debt principal converted to common stock:		(1,335,439	)		-			(1,335,439	)		-			(1,335,439	)
Principal repayments		(662,470	)		(81,584	)		(744,054	)		-			(744,054	)
Amortization of debt discount		-			-			-			362,166			362,166
Balance at March 31, 2023	$	-		$	5,536,394		$	5,536,394		$	(2,153,885	)	$	3,382,509

GGH Convertible Notes

On ~~November 9, 2021,~~February 2, 2023, the Company ~~sold~~and the holders of the remaining GGH Notes entered into a fourth letter agreement (“Letter Agreement #4). Pursuant to Letter Agreement #4, the parties agreed to reduce the conversion price of the GGH Notes to the lower of: (i) the closing sale price on the trading day immediately preceding the conversion date; and (ii) the average closing sale price of the common stock for the five trading days immediately preceding the conversion date. The conversion price is not subject to a floor price. Between February 3 and February 15, 2023, the holders elected to convert $1,571,553 in principal and interest, of which $1,335,439, $124,049, and $112,065 was principal, interest and premium paid on conversion, into 833,333 shares of common stock at prices ranging from $1.45 and $2.40. The premium paid on conversion of the GGH Notes was recorded as a loss on extinguishment.

On February 8, 2023, the Company and the holders of the remaining GGH Notes entered into a fifth letter agreement (“Letter Agreement #5). Pursuant to Letter Agreement #5, the parties agreed to extend the maturity date of the notes from February 9, 2023 to February 28, 2023.

On February 20, 2023, the Company entered into another exchange agreement (the “Exchange Agreement #4”) with the remaining holders of the GGH Notes, pursuant to which warrants for the purchase up to an aggregate of 150,000 shares of the Company’s common stock at an exercise price of $1.00 were issued as consideration for extending maturity date in connection with Letter Agreement #5. The warrants have a grant date fair value of $134,779 and expire on the second anniversary of the date of issuance. Because the value of the new warrants was deemed to be substantial as compared to the $662,470 remaining principal of the GGH Notes, the transaction was accounted for as an extinguishment of old notes which were replaced with the new note. The fair value of the warrants was recorded as a loss on extinguishment and is reflected under Other Expense (Income) in the accompanying condensed consolidated statement of operations.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On February 21, the Company redeemed the remaining GGH Notes for $905,428, which includes the $662,470 of principal, $118,909 of accrued interest and $124,049 of redemption premium, the latter of which was charged to extinguishment loss.

Securities Purchase Agreement

On February 21, 2023, the Company entered into a securities purchase agreement (the “SPA”) with an institutional investor (the “Investor”), pursuant to which the Company received proceeds of $5,000,000 in exchange for senior secured convertible notes of the Company in the aggregate original principal amount of $~~6,480,000~~5,617,978 (the ~~“GGH~~“2023 Notes”), and three-year common stock purchase warrants exercisable into an aggregate of 3,377,099 shares of common stock of the Company at an exercise price equal to $1.34 (the “2023 Note Warrants”).

Pursuant to the SPA, the exercise price of certain warrants for ~~gross proceeds~~the purchase of 62,500 common shares exercisable at $21.00 per share and warrants for the purchase of 43,814 shares exercisable at $6.00 per share was reduced to $1.00 per share. The increase in the value of the warrants in the aggregate amount of $~~6,000,000~~63,502~~. The GGH Notes are due and payable~~ as a result of the reduction in exercise price was recorded as debt discount on the ~~first anniversary of the issuance date~~2023 Notes.

The convertible notes (the ~~“Maturity Date”~~“2023 Notes”)~~, bear interest at~~ 7~~% per annum and were originally~~ are convertible into shares of common stock of the Company at a conversion price equal to the lower of (i) $421.34 ~~(subject~~(subject to adjustment for standard anti-dilution ~~events)~~events, the non-exempt issuance of common stock for less than $1.34 per share and the issuance of additional variable price securities); (ii) the trading price on the day immediately prior to conversion or (iii) the average trading price of the Company’s common stock for the 5 days preceding conversion (collectively the “Conversion Price”), subject to a floor price of $0.27. If the Conversion Price in effect on the date of conversion is less than $0.27, the Investor is entitled to a cash true up payment equal to the difference between the conversion dollar amount and the value of shares issued upon conversion (the “Cash True Up Provision”).

The 2023 Notes mature on the first anniversary of the issuance date (the “Maturity Date”) and bear interest at a rate of 7% per annum, which is payable either in cash monthly, or by way of inclusion in the accrued interest in the conversion amount on the conversion date. Interest includes a make-whole amount equal to the additional interest that would accrue if the entire 2023 Notes principal remained outstanding through the Maturity Date.

The ~~GGH~~2023 Notes ~~rank senior to all outstanding and future indebtedness~~are redeemable at the Company’s election, so long as the Company is not in default, at the greater of (a) 115% of the ~~Company and its subsidiaries and are secured by all existing and future assets of~~conversion amount, or (b) the amount equal to the shares issuable upon conversion times the greatest closing price from the redemption notice date through the date the Company ~~as well as shares of common stock and certain options to purchase common stock of~~makes the Company owned by the President and CEO of the Company. Holders of GGH Notes are entitled to certain registration rights, pursuant to a registration rights agreement between the holders of the GGH Notesredemption payment. The minimum redemption amount is $500,000 and the Company ~~dated November 9, 2021.~~can only deliver one redemption notice in a 20-day period.

Upon an event of default, the 2023 Notes the Conversion Price is reduced to the lesser of (a) $1.34 (subject to adjustment as described above); (b) 80% of the volume-weighted average price on the day preceding receipt of the conversion notice; or (c) 80% of average of the three lowest volume-weighted average prices over the fifteen trading days which precede receipt of the conversion notice, subject to a floor price of $0.27. In addition, the Investor may require the Company to redeem the 2023 Notes using the same formula that would be used for a Company-initiated redemption, described above.

In addition to other terms, conditions and rights, both the Company and the institutional investor have the right to initiate additional closings for up to $5 million of cash for additional 2023 Notes and warrants.

Pursuant to the terms of the 2023 Notes, the Company must pay, convert or redeem one quarter of the initial principal, plus any outstanding interest and make-whole amount by each three-month anniversary of the issuance date.

During the three months ended March 31, 2023, the Company made redemption payments in the aggregate amount of $100,388 related to the 2023 Notes, which included principal repayments of $81,584, accrued interest of $5,710 and redemption premiums of $13,094.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company incurred financing costs of $321,803 in connection with the SPA, of which $218,187 was allocated to the 2023 Notes and recorded as debt discount and $103,616 was allocated to the 2023 Note Warrants and charged against additional paid-in capital.

Upon the issuance of the ~~GGH~~2023 Notes, the Company recorded a debt discount at issuance in the aggregate amount $~~950,813~~2,509,601, consisting of (i) the $~~480,000~~617,978 difference between the aggregate principal amount of the ~~GGH~~2023 Notes and the cash proceeds received, ~~and~~ (ii) financing costs in the aggregate amount of $~~446,813~~218,187., (iii) value of warrant modification of $63,502, and (iv) the $1,609,935 relative fair value of the 2023 Note Warrants. The debt discount is being amortized using the effective interest method over the term of the ~~GGH~~2023 Notes.

The GGH Notes include several embedded features that require bifurcation. However, management has determined that the value of these bifurcated derivatives was de minimis as of November 3, 2021 (date of the agreement), December 31, 2021 and September 30, 2022.

~~Pursuant to the original terms of the GGH Notes, beginning~~Interest Expense on ~~February 7, 2022, the Company was to make nine monthly payments consisting of principal in the amount of $720,000~~Convertible Debt Obligations, plus (i) accrued interest and (ii) a make-whole amount equal to the additional interest that would accrue if the entire GGH Notes principal remained outstanding through the Maturity Date. Holders of GGH Notes may convert any portion of outstanding and unpaid principal and interest at any time, subject to a ~~4.99% beneficial ownership limitation.~~

On February 22, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with holders of GGH Notes. Pursuant to the Exchange Agreement, the Company was able to defer monthly principal payments until May 7, 2022 and will make six monthly payments in the amount of $~~1,080,000, plus accrued interest and make-whole amount. As consideration for entering into the Exchange Agreement, $300~~ ~~of aggregate principal amount the GGH Notes was exchanged for three-year warrants (the GGH Warrants”) for the purchase of an aggregate of~~ ~~62,500~~ ~~shares of the Company’s common stock at an exercise price of $21.00~~ ~~per share, which had an aggregate grant date value of $731,556. The Exchange Agreement was accounted for as a debt modification and the grant date value of the GGH Warrants was recorded as additional debt discount.~~

On May 2, 2022, the Company entered into a letter agreement with the holders of GGH Notes (the “Letter Agreement #1”). The Letter Agreement #1 provided for the reduction of the conversion price for shares of the Company’s common stock from $~~42.00~~ ~~to $16.20~~ ~~between May 3, 2022 through May 13, 2022. During the period from May 3, 2022 through May 11, 2022, principal, interest and fees in the amount of $357,498~~ ~~were converted into~~ ~~22,068~~ ~~shares of common stock at a conversion price of $16.20~~ ~~per share. The Company recorded inducement expense in the amount of $198,096~~ ~~as a result of the conversion of debt and interest pursuant to the Letter Agreement.~~

~~On May 12, 2022, the Company entered into a conversion agreement with the holders of GGH Notes (the “Letter Agreement #2”) pursuant to which the parties agreed to reduce the Conversion Price to $11.40~~ ~~and the holders of GGH Notes have committed to converting principal outstanding under the GGH Notes in an amount equal to~~ ~~4.90% of the outstanding shares of common stock of the Company. The reduction in conversion price was accounted for as debt extinguishment. The Company recorded a loss on extinguishment of debt of $2,105,119, which consisted of (i) $421,272~~ ~~to eliminate the debt discount related to the cancelled notes, plus (ii) $1,683,847, which represented the difference between the previous net carrying amount and the fair value of the modified debt instrument. On May 13, 2022 principal, interest and fees in the amount of $1,165,099~~ ~~were converted into~~ ~~102,202~~ ~~shares of common stock at conversion price of $11.40~~ ~~per share, of which~~ ~~49,681~~ ~~shares had been previously issued as pre-delivery shares on November 9, 2021 and the remaining~~ ~~52,521~~ ~~shares were issued on May 13, 2022.~~

~~The fair value of the modified debt instrument at the extinguishment date was determined to be $7,831,248, which consisted of principal in the amount of $6,147,401~~ ~~and the fair value of the embedded conversion option (“ECO”) of $1,682,445~~. The fair value of the ECO was determined using the Black Scholes Option Pricing Model (which is considered to be a Level 3 fair value measurement) with the following assumptions used: contractual term - ~~0.48~~ ~~years; expected volatility –~~ 61~~%; expected dividends –~~ 0~~%. The fair value of the ECO was recorded as additional paid in capital.~~

On July 1, 2022, the Company entered into another letter agreement with the holders of GGH Notes (the “Letter Agreement #3”). The Letter Agreement #3 provided for the reduction of the conversion price for shares of the Company’s common stock from $~~11.40~~ ~~to $3.60~~ ~~between July 5, 2022 through September 5, 2022.~~

~~During the period from July 7 through August 30, 2022, GGH Notes with principal, interest and fees in the amount of $3,201,894~~ ~~were converted into~~ ~~889,415~~ ~~shares of common stock at a conversion price of $3.60~~ ~~per share. The Company recorded inducement expense in the amount of $2,965,222~~ ~~as a result of the conversion of debt and interest pursuant to Letter Agreement #3.~~

~~During the period from July 13, 2022 through August 30, 2022, the Company issued convertible promissory notes to certain investors (the “Investor Notes”) in the aggregate amount of $1,727,500. Pursuant to the terms of the Investor Notes, if the stockholders approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of up to~~ ~~1,250,000~~ ~~of the Company’s common stock upon the conversion of the Investor Notes, without giving effect to Nasdaq’s~~ 20% Rule, the Investor Notes are to be automatically converted into units consisting of one share of common stock and one warrant to purchase one share of common stock at a price equal to the lesser of (a) $~~6.60~~ per unit or (b) the three-day volume weighted average closing price (“VWAP”) of the Company’s common stock beginning on the date that is two days prior to stockholder approval of such conversion at the 2022 annual stockholder meeting.

~~At the annual stockholder meeting held 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~~– the three-day VWAP of the Company’s common stock beginning on the date that is two days prior to stockholder approval of such conversion at the 2022 annual stockholder meeting. Each warrant issued upon the conversion of the Investor Notes is exercisable at a price of $~~3.82~~ ~~and expires one year from the date of issuance.~~

On September 22, 2022, the Company and the Holders of the GGH Notes entered into another exchange agreement (the “Exchange Agreement #2”) with the Holders in order to amend and waive certain provisions of the Existing Note Documents and exchange $~~300~~ ~~in aggregate principal amount of the GGH Notes, on the basis and subject to the terms and conditions set forth in the Exchange Agreement, for three-year warrants to purchase up to~~ ~~90,915~~ ~~shares of the Company’s Common Stock at an exercise price of $3.82~~. The Exchange Agreement amends the original terms of payment of the Existing Notes and waives payment of principal and interest due on each of September 7, 2022 and October 7, 2022. All principal, interest, and fees are due on the maturity date of November 9, 2022. The Exchange Agreement #2 was accounted for as a debt modification and the grant date fair value of the warrants valued at $~~102,167~~ ~~was recorded as additional debt discount. As of the date of this Quarterly Report, the GGH Notes are past due. As a result, the GGH Notes are now subject to a default interest rate of~~ ~~18%~~ ~~per annum.~~

The Company incurred total interest expense of ~~approximately~~ $~~123,000~~566,041, and $~~1,533,000~~749,229 related to ~~the GGH Notes~~its convertible debt obligations during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, including approximately~~respectively. Interest expense during the three months ended March 31, 2023 and 2022 consists of (i) $~~104,000~~117,336 and $~~318,000~~113,396, respectively, of interest accrued at 7% per annum; (ii) ~~the~~ make-whole ~~amount~~amounts of ~~approximately~~ $~~1,000~~86,539 and $~~137,000~~84,393, respectively, and (iii) amortization of debt discount in the amount of ~~approximately~~ $~~17,000~~362,166 and $~~1,079,000~~551,440, ~~respectively.~~respectively, during the three months ended March 31, 2023. During the ~~nine~~three months ended ~~September 30, 2022, the Company paid~~March 31, 2023, accrued interest in the amount of ~~approximately~~ $~~166,000~~160,782 ,was paid in cash and ~~converted~~accrued interest in the amount of ~~approximately~~ $~~243,000~~124,049 was converted into ~~shares of the Company’s~~ common stock, ~~(see Note 16, Stockholders’ Equity),~~ such that interest accrued on ~~the GGH Notes~~convertible debt is ~~approximately~~ $~~125,000~~0 ~~and $66,000~~as of ~~September 30, 2022 and December~~March 31, ~~2021, respectively.~~2023.

~~13.~~10. SEGMENT DATA

The Company’s financial position and results of operations are classified into three reportable segments, consistent with how the CODM makes decisions about resource allocation and assesses the Company’s performance.

	●	Real Estate Development, through AWE and TAR, including hospitality and winery operations, which support the ALGODON® brand.

	●	Fashion (e-commerce), through GGI, including the manufacture and sale of high-end fashion and accessories sold through an e-commerce platform.

	●	Corporate, consisting of general corporate overhead expenses not directly attributable to any one of the business segments.

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following tables present segment information for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

SCHEDULE OF SEGMENT INFORMATION

Real Estate Development Fashion
(e-commerce) Corporate TOTAL Real Estate Development Fashion
(e-commerce) Corporate TOTAL
For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022
Real Estate Development Fashion
(e-commerce) Corporate TOTAL Real Estate Development Fashion
(e-commerce) Corporate TOTAL

Revenues $ 419,413 $ 21,526 $ - $ 440,939 $ 1,239,071 $ 32,800 $ - $ 1,271,871
Revenues from
Foreign Operations $ 419,413 $ - $ - $ 419,413 $ 1,239,071 $ - $ - $ 1,239,071
Income (loss) from Operations $ 380,024 $ (570,594 ) $ (1,724,691 ) $ (1,915,261 ) $ (1,345,101 ) $ (1,270,795 ) $ (3,514,601 ) $ (6,130,497 )

	Real Estate Development		Fashion (e-commerce)			Corporate			TOTAL		Real Estate Development		Fashion (e-commerce)			Corporate			TOTAL
	For the Three Months Ended September 30, 2021										For the Nine Months Ended September 30, 2021											Real Estate Development			Fashion (e-commerce)			Corporate			TOTAL			Real Estate Development			Fashion (e-commerce)			Corporate			TOTAL
	Real Estate Development		Fashion (e-commerce)			Corporate			TOTAL		Real Estate Development		Fashion (e-commerce)			Corporate			TOTAL			For the Three Months Ended March 31, 2023												For the Three Months Ended March 31, 2022
																						Real Estate Development			Fashion (e-commerce)			Corporate			TOTAL			Real Estate Development			Fashion (e-commerce)			Corporate			TOTAL
Revenues	$	2,603,757	$	1,401		$	-		$	2,605,158	$	3,210,405	$	10,152		$	-		$	3,220,557		$	382,385		$	65,382		$	-		$	447,767		$	420,435		$	5,162		$	-		$	425,597
Revenues from Foreign Operations	$	2,603,757	$	-		$	-		$	2,603,757	$	3,210,405	$	-		$	-		$	3,210,405		$	382,385		$	-		$	-		$	382,385		$	420,435		$	-		$	-		$	420,435
Income (loss) from Operations	$	2,107,400	$	(311,853	)	$	(908,324	)	$	887,223	$	1,856,015	$	(685,744	)	$	(2,973,978	)	$	(1,803,707	)
Loss from Operations																						$	(334,004	)	$	(492,199	)	$	(1,119,802	)	$	(1,946,005	)	$	(385,853	)	$	(358,533	)	$	(1,031,417	)	$	(1,775,803	)

The following tables present segment information as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:

	Real Estate Development		Fashion (e-commerce)		Corporate		TOTAL		Real Estate Development		Fashion (e-commerce)		Corporate		TOTAL
	As of March 31, 2023								As of December 31, 2022
	Real Estate Development		Fashion (e-commerce)		Corporate		TOTAL		Real Estate Development		Fashion (e-commerce)		Corporate		TOTAL

Total Property and Equipment, net	$	6,238,314	$	1,325,055	$	-	$	7,563,369	$	6,234,856	$	1,369,205	$	17,196	$	7,621,257
Total Property and Equipment, net in Foreign Countries	$	6,238,314	$	-	$	-	$	6,238,314	$	6,234,856	$	-	$	-	$	6,234,856
Total Assets	$	14,127,549	$	3,514,330	$	3,367,462	$	21,009,341	$	13,504,914	$	3,522,415	$	1,665,656	$	18,692,985

11. RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

Real Estate Development Fashion
(e-commerce) Corporate TOTAL Real Estate Development Fashion
(e-commerce) Corporate TOTAL
As of September 30, 2022 As of December 31, 2021
Real
Estate
Development Fashion
(e-commerce) Corporate TOTAL Real
Estate
Development Fashion
(e-commerce) Corporate TOTAL

Total Property and Equipment, net $ 6,186,014 $ 1,495,004 $ - $ 7,681,018 $ 3,329,351 $ 447,590 $ - $ 3,776,941
Total Property and Equipment, net in Foreign Countries $ 6,186,014 $ - $ - $ 6,186,014 $ 3,329,351 $ - $ - $ 3,329,351
Total Assets $ 20,329,025 $ 3,689,262 $ 1,374,954 $ 25,393,241 $ 17,413,160 $ 2,660,305 $ 4,240,267 $ 24,313,732

As of March 31, 2023 and December 31, 2022 the Company had accounts receivable – related parties of $1,179,121 and $1,115,816 net of allowances for expected credits loss 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 months ended March 31, 2023 and 2022, the Company made advances in the amount of $85,644 and $36,000, respectively, to the related entities, and received repayments in the amount of $130,000 and $120,000, respectively, from the related entities. Receivables recorded in the amount of $175,426 and $228,226 in connection with an expense sharing agreement during the three months ended March 31, 2023 and 2022 are discussed below.

The Company recorded credit losses of $19,431 and $0 during the three months ended March 31, 2023 and 2022, respectively, which is reflected in the general and administrative expenses on the on the accompanying unaudited consolidated statements of operations.

~~14.~~ ~~RELATED PARTY TRANSACTIONS~~

GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

~~Expense Sharing and Related Party Receivables~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Expense Sharing

On April 1, 2010, the Company entered into an agreement ~~(the “Related Party ESA”)~~ with a ~~separate entity under common management (the “Related Party”)~~Related Party to share expenses such as office space, support staff, professional services, and other operating ~~expenses.~~expenses (the “Related Party ESA”). During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company recorded a contra-expense of ~~approximately~~ $~~164,000~~175,426 and $~~581,000, respectively, and during the three and nine months ended September 30, 2021, the Company recorded a contra-expense of $194,000~~ ~~and $440,000~~228,226, respectively, related to the reimbursement of general and administrative expenses as a result of the agreement.

~~Accounts receivable – related parties~~Management Fee Income

The Company earns management fees of ~~approximately~~ $~~854,000~~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 ~~928,000~~20 ~~at September 30, 2022 and December 31, 2021, respectively, represent~~% membership interest in SLVH. SLVH owns 88% of the ~~net realizable value~~limited liability interest of ~~amounts owed to the Company by the Related Party, and includes approximately $809,000~~ ~~receivable in connection with Related Party ESA, as well as approximately $45,000~~ ~~receivable from advances made to the Related Party.~~LVH.

~~Amended and Restated Limited Liability Company Agreement~~

On June 7, 2022, the Company, through its wholly owned subsidiary, GVI, entered into the Second Amendment to the Amended and Restated Limited Liability Company Agreement of LVH Holdings, LLC (the “Amended LLC Agreement”). Pursuant to the Amended LLC Agreement, if LVH Holdings, Inc (“LVH”) does not execute a lease in connection with the development of a project in Las Vegas Nevada by December 31, 2022, LVH will be liquidated and dissolved. Upon dissolution, after discharge of all liabilities of LVH other than liabilities to its to its unitholders, establishment of a reserve as reasonably necessary to provide for contingent liabilities of LVH, and discharge of liabilities of LVH to the unitholders, not including unreturned capital, if there are insufficient assets to repay each unitholder’s unreturned capital, remaining assets (if any) will be distributed first to the Company, to repay its unreturned capital.

~~Further, the Amended LLC Agreement modifies the number, amount and timing of GVI’s additional capital contributions to LVH, as follows:~~

	●	On or before thirty (30) days after the execution and delivery of the joint development agreement between the Landlord (as defined) and LVH Property, Inc. (the “Third Outside Date”), GVI shall make an additional capital contribution to LVH, in cash, in the amount of $~~2.0~~ ~~million and shall receive an additional~~ ~~113.1~~ ~~LVH Units;~~

	●	~~On or before the date that is ninety (90) days after the Third Outside Date (the “Fourth Outside Date”), GVI shall make an additional capital contribution to LVH, in cash, in the amount of $2.0~~ ~~million and shall receive an additional~~ ~~113.1~~ ~~LVH Units; and~~

	●	On or before the date that is ninety (90) days after the Fourth Outside Date (the “Fifth Outside Date”), GVI shall make an additional capital contribution to the Company, in cash, in the amount of $~~1.0~~ ~~million and shall receive an additional~~ ~~56.6~~ ~~LVH Units.~~

	●	On or before the date that is ninety (90) days after the Fifth Outside Date (the “Sixth Outside Date”), GVI shall make an additional capital contribution to the Company, in cash, in the amount of $~~5.0~~ ~~million and shall receive an additional~~ ~~282.9~~ ~~LVH Units.~~

	●	~~On or before the date that is ninety (90) days after the Sixth Outside Date (the “Seventh Outside Date”), GVI shall make an additional capital contribution to LVH, in cash, in the amount of $10.0~~ ~~million and shall receive an additional~~ ~~565.7~~ ~~LVH Units; and~~

	●	On or before the date that is ninety (90) days after the Seventh Outside Date (the “Eighth Outside Date”), GVI shall make an additional capital contribution to the Company, in cash, in the amount of $~~8.0~~ ~~million and shall receive an additional~~ ~~452.6~~ ~~LVH Units.~~

~~If each of the contributions described above is made timely, the Company will hold~~ ~~1,980~~ ~~LVH Units, representing~~ 40~~% of the ownership of LVH, immediately after the Eighth Outside Date.~~

~~15.~~12. 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 three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company recorded a charge associated with its contribution of ~~approximately~~ $~~4,000~~5,908 and $~~26,000, respectively, and for the three and nine months ended September 30, 2021, the Company recorded a charge associated with its contribution of approximately $3,000~~ ~~and $24,000~~18,976, 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. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023, the Company issued 24,160 shares at $1.35 per share in satisfaction of $32,617 of 401(k) contribution liabilities. During the three months ended March 31, 2022, the Company issued 1,040 shares at $26.76 per share in satisfaction of ~~approximately~~ $~~28,000~~ ~~of 401(k) contribution liabilities. During the nine months ended September 30, 2021, the Company issued~~ ~~688~~ ~~shares at $57.48~~ ~~per share in satisfaction of approximately $40,000~~27,821 of 401(k) contribution liabilities.

~~16.~~13. STOCKHOLDERS’ EQUITY

Common Stock

On February ~~3, 2022,~~2, 2023, the Company issued ~~1,250~~51,305 shares of common stock upon the cashless exercise of 134,730 warrants at exercise prices ranging from $2.40and ~~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~~3.82. ~~(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,~~10, 2023, the Company ~~issued~~sold ~~106,952~~591,000 shares of ~~its~~ common stock ~~valued~~and warrants to purchase 147,750 shares at an exercise price of $~~2,194,653~~1.00~~, to Hollywood Burger Holdings, Inc, a company with whom GGH shares common management, in exchange~~ for a aggregate proceeds of $~~100~~591,000~~% ownership interest in Hollywood Burger Argentina S.R.L., now Gaucho Development S.R.L.,~~. The ~~purpose~~warrants are immediately exercisable and expire two years from the date 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.)~~issuance.

OnDuring the three months ended 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,~~31, 2023, the Company sold an aggregate of ~~50,049~~364,430 shares of the Company’s common stock for ~~aggregate~~ gross proceeds of $~~555,811~~480,670 less ~~cash offering costs~~placement agent fees of $~~44,465~~39,261~~, in connection with~~ pursuant to a Common Stock Purchase Agreement (the ~~“Purchase Agreement”) with an underwriter (the “Underwriter”~~“New ELOC”). ~~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,~~See Note 9 – Convertible Debt Obligations for additional details regarding common shares issued during 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.~~three months ended March 31, 2023.

2322

~~On June 22, 2022, the Company issued (i)~~ GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES

~~183,942~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~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.~~(unaudited)

~~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,~~March 31, 2023 and 2022, the Company recorded a ~~gain~~loss of ~~approximately $~~$(~~282,000~~39,799) 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~~263,406, respectively, ~~related to~~of 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~~three months ended ~~September 30, 2022~~March 31, 2023 is presented below:

SUMMARY OF WARRANTS ACTIVITY

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life in Years		Intrinsic Value		Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life in Years		Intrinsic Value

Outstanding, January 1, 2022		132,029		$	72.12
Outstanding, January 1, 2023											1,299,135		$	5.77
Issued		607,991			5.01						3,674,849			1.31
Exercised		-			-						(134,730	)		3.36
Expired		(130,751	)		72.00						-			-
Canceled		-			-						-			-
Outstanding, September 30, 2022		609,269		$	5.19		1.4	$	-
Outstanding, March 31, 2023											4,839,254		$	2.15		2.3	$	-

Exercisable, September 30, 2022		609,269		$	5.19		1.4	$	-
Exercisable, March 31, 2023											4,839,254		$	2.15		2.3	$	-

See Note ~~12,~~9 – Convertible Debt Obligations and Note 13 – Stockholder’s Equity (Common Stock) for additional details regarding warrants issued during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

A summary of outstanding and exercisable warrants as of ~~September 30, 2022~~March 31, 2023 is presented below:

SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE

Warrants Outstanding Warrants Exercisable
Exercise Price Exercisable Into Outstanding Number of Warrants Weighted Average Remaining Life in Years Exercisable Number of Warrants

$ 1.00 Common Stock 404,064 1.8 404,064
$ 1.34 Common Stock 3,377,099 2.9 3,377,099
$ 3.82 Common Stock 454,588 0.4 454,588
$ 6.00 Common Stock 602,225 0.7 602,225
$ 90.00 Common Stock 1,278 2.9 1,278
Total 4,839,254 2.3 4,839,254
Warrants Outstanding Warrants Exercisable
Exercise Price Exercisable Into Outstanding Number of Warrants Weighted Average Remaining Life in Years Exercisable Number of Warrants

$ 3.82 Common Stock 545,491 1.3 545,491
$ 21.00 Common Stock 62,500 2.4 62,500
$ 90.00 Common Stock 1,278 3.4 1,278
Total 609,269 1.4 609,269
23

~~Stock Options~~GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

~~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~~A summary 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.~~
25
~~During~~RSU activity 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.~~March 31, 2023 is presented below:
~~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
Weighted Average
Number of Grant Date Value
RSUs Per Share
RSUs non-vested January 1, 2023 511,500 $ 1.16
Granted 10,000 1.31
Vested (3,890 ) 1.31
RSUs non-vested March 31, 2023 517,610 $ 1.16

Weighted Average
Number of Grant Date Value
RSUs Per Share
RSUs non-vested January 1, 2022 - $ -
Granted 49,512 6.18
Vested and delivered (15,707 ) 7.04
Cancelled (5,177 ) -
RSUs non-vested September 30, 2022 28,628 $ 5.97
On January 23, 2023, the Company granted 10,000 restricted stock units (“RSUs”) to certain employees and advisors for their service, of which 3,890 RSUs vested on the grant date and 3,055 RSUs will vest on each of the next two anniversaries of the date of the grant.
During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $79,422 and $0, respectively, related to the amortization of RSUs.
Stock Options
No stock options were granted during the three months ended March 31, 2023 or the three months ended March 31, 2022. The following table presents information related to GGH stock options outstanding as of March 31, 2023:
SCHEDULE OF STOCK OPTION ACTIVITY
Weighted Weighted
Average Average
Number of Exercise Remaining Intrinsic
Options Price Term (Yrs) Value

Outstanding, January 1, 2023 40,612 85.35
Granted - -
Exercised - -
Expired (5,806 ) 138.60
Forfeited - -
Outstanding, March 31, 2023 34,806 $ 76.47 1.4 $ -

Exercisable, March 31, 2023 29,698 $ 75.78 1.2 $ -
During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $38,834 and $72,700, respectively, related to stock options for the purchase of GGH common stock, and recorded stock-based compensation expense of $0 and $10,354, respectively, related to options for the purchase of GGI common stock. Stock-based compensation expense is reflected in general and administrative expenses (classified in the same manner as the grantees’ wage compensation) in the accompanying condensed consolidated statements of operations. As of March 31, 2023, there was $130,753 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 1.3 years.
24

~~Equity Incentive Plan~~GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

~~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~~.
~~17.~~14. COMMITMENTS AND CONTINGENCIES
Legal Matters

The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. After consulting legal counsel, the Company does not believe that the outcome of any such pending or threatened litigation will have a material adverse effect on its financial condition or results of operations. However, as is inherent in legal proceedings, there is a risk that an unpredictable decision adverse to the Company could be reached. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable.

During July 2022, the Company became aware of a demand letter and draft complaint alleging breach of contract from a current stockholder regarding the stockholder vote required to amend the Certificate of Designation of the Series B Convertible Preferred Shares. No complaint has been filed at this time, and the Company is reviewing the allegations to determine if any action is warranted.
~~18.~~15. LEASES
On April 8, 2021, GGI entered into a lease agreement to lease a retail space in Miami, Florida for 7 years, which expires May 1, 2028. As of ~~September 30, 2022,~~March 31, 2023, the lease had a remaining term of approximately ~~5.6~~5.1 years. Lease payments begin at $~~26,758~~$26,758 per month and escalate 3% every year over the duration of the lease. The Company was granted rent abatements of 15% for the first year of the lease term, and 10% for the second and third year of the lease term. The Company was required to pay a $56,130 security deposit.

As of ~~September 30, 2022,~~March 31, 2023, the Company had no leases that were classified as a financing lease.

Total operating lease expenses ~~were approximately~~was $~~83,000~~82,965 ~~and $249,000~~ during the three ~~and nine~~ months ended ~~September 30, 2022, respectively~~March 31, 2023 and ~~were approximately $83,000~~ ~~and $138,000~~ ~~during the three and nine months ended September 30, 2021, respectively.~~2022. Lease expenses are recorded in general and administrative expenses on the accompanying condensed consolidated statements of operations.

26
Supplemental cash flow information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES
For the Three Months Ended March 31,
2023 2022

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 56,449 $ 53,325

Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ - $ -

Weighted Average Remaining Lease Term:
Operating leases 5.1 6.1

Weighted Average Discount Rate:
Operating leases 7.0 % 7.0 %

For the Nine
Months Ended

September 30, 2022

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 214,997

Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ -

Weighted Average Remaining Lease Term:
Operating leases 5.6

Weighted Average Discount Rate:
Operating leases 7.0 %
25
GAUCHO GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Future minimum lease commitments are as follows:
SCHEDULE OF FUTURE MINIMUM LEASE COMMITMENT

For the period October 1 through December 31, 2022 74,413
For the period April 1 through December 31, 2023 $ 229,191
For the years ended December 31,
2023 303,603
2024 336,102 336,102
2025 357,881 357,881
2026 368,617 368,617
2027 365,004 365,004
Thereafter 120,463
2028 120,463
Total future minimum lease payments 1,926,083 1,777,258
Less: imputed interest (348,134 ) (293,970 )
Total 1,577,950
Net future minimum lease payments 1,483,288
Less: operating lease liabilities, current portion (208,590 )
Operating lease liabilities, non-current portion $ 1,274,698

The Company is the lessor of a building and land that it purchased in connection with the acquisition of GDS, pursuant to an operating lease which expires on August 31, 2031. At the end of the ~~lease,~~leases, the lessee may enter into a new lease or return the asset, which would be available to the ~~Company. Effective in the month of September 2022, the lease charge to the lessee was increased to approximately~~ ~~599,000~~ ~~Argentine Pesos from approximately~~ ~~416,000~~ ~~Argentine Pesos per month.~~Company for releasing. The Company recorded lease revenue of ~~approximately~~ $~~24,000~~10,628 and $~~39,000~~3,745, during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively, related to this lease agreement.

~~19.~~16. SUBSEQUENT EVENTS‌
During the period subsequent to March 31, 2023 and prior to filing, the Company sold an additional 458,768 shares, in aggregate, of the Company’s common stock for gross proceeds of $316,953 less placement agent fees of $25,356 pursuant to the New ELOC. The Company used $144,818 of the proceeds to repay principal, interest and redemption premiums in amount of $118,487, $8,294 and $18,037 in connection with the 2023 Notes (See Note 9 – Convertible Debt).
Between May 1 and May 5, 2023, an aggregate of $475,000, consisting of principal and interest in the amount of $443,925 and $31,075, respectively, was converted into 612,637 common shares at conversion prices ranging from $0.77 to $0.78.

Foreign Currency Exchange Rates

The Argentine Peso to United States Dollar exchange rate was 229.02, ~~160.7166~~, ~~147.16998~~208.98 and ~~102.6834~~175.74 at ~~November~~May 11, ~~September 30, 2022,~~2023, March 31, 2023, and December 31, ~~2021,~~2022, respectively.

The British pound to United States dollar exchange rate was 0.7999, ~~0.8476~~, ~~0.8957~~0.8085 and ~~0.7340~~0.8264 at ~~November~~May 11, ~~September 30, 2022,~~2023, March 31, 2023, and December 31, ~~2021,~~2022, respectively.

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~~Convertible Debt~~
~~On October 22, 2022, the Board of Directors approved an offering~~ ~~of up to $1.5~~ ~~million of~~ 7% convertible promissory notes with a one-year maturity to accredited investors (the “October Notes). The notes are convertible into units, with each unit consisting of one share of common stock and a warrant for the purchase of one share of common stock, at a conversion price equal to the lower of (a) $~~2.52~~ ~~per share or (b) the three-day volume weighted average closing price beginning on the date that is two days prior to the conversion date, subject to a floor price on conversion of $2.40~~ ~~per share.~~ ~~The warrants will be exercisable at a price of $6.00~~ ~~per share and carry a term of one year.~~
The October Notes will be mandatorily convertible upon the earlier to occur of: (i) the date of execution of that certain ground lease in connection with the previously announced agreement to develop a project in Las Vegas, Nevada (See Note 1, Business Organization and Nature of Operations), provided that such conversion would not result in the issuance of more than ~~546,949~~ ~~shares of the Company’s common stock (including the common shares issuable upon conversion of the Warrants); and (ii) the date the Company obtains stockholder approval to issue more than~~ ~~546,949~~ ~~shares of the Company’ common stock in accordance with Nasdaq Listing Rule 5635(d).~~
~~As of November 9, 2022, the Company received aggregate gross proceeds amount of $1,051,500 pursuant to the issuance of the October Notes.~~
~~As of November 9, 2022, the GGH Notes are past due and subject to the default interest rate of~~ 18~~% per annum.~~
~~Equity Line of Credit~~
~~On November 8, 2022, the parties terminated the~~ Common Stock Purchase Agreement and Registration Rights Agreement by and between the Company and an underwriter (the “Underwriter”), dated May 6, 2021. On the same date, the parties entered into a new Common Stock Purchase Agreement and Registration Rights Agreement (the “Purchase Agreement”) with the Underwriter. Upon the satisfaction of the conditions in the Purchase Agreement, including that a registration statement that the Company agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement is declared effective by the SEC and a final prospectus in connection therewith is filed with the SEC, (such event, the “Commencement”), the Company will have the right to sell to the Underwriter up to the lesser of (i) $~~44,308,969~~ of newly issued shares of the Company’s common stock and (ii) the Exchange Cap, as defined, from time to time at a price equal to 95% of the lowest daily volume weighted average price per share (“VWAP”) during the three consecutive trading days immediately following the date that the Company provides notice to the Underwriter, directing the Underwriter to purchase shares. The Company is able to sell such shares to the Underwriter over a period of up to 36 months after the date of the Commencement.
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Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We disclaim any obligation to update forward-looking statements.

Unless the context requires otherwise, references in this document to “GGH”, “we”, “our”, “us” or the “Company” are to Gaucho Group Holdings, Inc. and its subsidiaries.

Please note that because we qualify as an emerging growth company and as a smaller reporting company, we have elected to follow the smaller reporting company rules in preparing this Quarterly Report on Form 10-Q.

Overview
Gaucho Group Holdings, Inc. (“GGH” or the “Company”) positions its e-commerce leather goods, accessories, and fashion brand, Gaucho – Buenos Aires™, as one of luxury, creating a platform for the global consumer to access their piece of Argentine style and high-end products. With a concentration on leather goods, ready-to-wear and accessories, this is the luxury brand in which Argentina finds its contemporary expression. During the first quarter of 2022, the Company launched Gaucho Casa, a Home & Living line of luxury textiles and home accessories, which iswill be marketed and sold on the Gaucho – Buenos Aires e-commerce ~~platform, as well as in the Company’s flagship retail store in Miami, Florida, which opened in July, 2022.~~platform. Gaucho Casa challenges traditional lifestyle collections with its luxury textiles and home accessories rooted in the singular spirit of the gaucho aesthetic. GGH seeks to grow its direct-to-consumer online products to global markets in the United States, Asia, the United Kingdom, Europe, and Argentina. We intend to focus on e-commerce and scalability of the Gaucho – Buenos Aires and Gaucho Casa brands, as real estate in Argentina is politically sensitive.

GGH’s goal is to become recognized as the LVMH (“Louis Vuitton Moët Hennessy”) of South America’s leading luxury brands. Through one of its wholly owned subsidiaries, GGH also owns and operates legacy investments in the boutique hotel, hospitality and luxury vineyard property markets. This includes a golf, tennis and wellness resort, as well as an award winning, wine production company concentrating on Malbecs and Malbec blends. Utilizing these wines as its ambassador, GGH seeks to further develop its legacy real estate, which includes developing residential vineyard lots located within its resort.

Due to COVID-19, we have terminated the corporate office lease and senior management works remotely. GGH’s local operations are managed by professional staff with substantial hotel, hospitality and resort experience in Buenos Aires and San Rafael, Argentina.
~~Recent Developments and Trends~~
On May 26, 2022, the Company announced the completion of its winery’s multi-year expansion and infrastructure improvement initiative, which resulted in a larger and better equipped facility to produce premium quality, small batch wines. Algodon’s current winery capacity includes 485,000 liters (or approximately 546,000 bottle equivalent), which can be broken down to include tank storage of 280,000 liters, barrel storage of 135,000 storage, and 70,000 liters of bottle storage.
2927

~~On June 7, 2022, we executed a Second Amendment to the Amended~~
Recent Developments and Restated Limited Liability Company Agreement of LVH Holdings LLC (“LVH”) to modify the rules for distributions to the members of LVH, and modify the number, amount and timing of our additional capital contributions to LVH.Trends

~~On July 12, 2022, GGI opened its U.S. flagship retail space in Miami, Florida, for~~While the ~~sale of fashion, accessories, luxury textiles and home goods.~~
~~On November 4, 2022,~~World Health Organization declared an end to the Company effected a reverse stock split in a ratio of 1 share of common stock for 12 issued shares of common stock. As a result of the reverse stock split, prior period shares and per share amounts appearing in the accompanying condensed consolidated financial statements and all references in this Quarterly Report to our common stock, as well as the amounts per share of our common stock, have been retroactively restated as if the reverse stock split occurred at the beginning of the period presented.
~~See also Items 2 and~~COVID-19 global health emergency on May 5, ~~of Part II below.~~
~~The global impact of COVID-19 and its variants (“COVID-19”) pandemic continues to evolve. We~~2023, we continue to closely monitor the outbreak of COVID-19 ~~and the related business and travel restrictions, and changes to behavior intended to reduce its spread,~~ and the related impact on our operations, financial position and cash flows, as well as the impact on our employees. Due to the ~~rapid development and~~continued fluidity of this situation, and the magnitude and duration of the pandemic, ~~and~~ its impact our future operations and liquidity remains uncertain as of the date of this report.

We have faced, and may continue to face, significant cost inflation, specifically in raw materials and other supply chain costs due to increased demand for raw materials and the broad disruption of the global supply chain associated with the impact of COVID-19. International conflicts or other geopolitical events, including the 2022 Russian invasion of Ukraine, may further contribute to increased supply chain costs due to shortages in raw materials, increased costs for transportation and energy, disruptions in supply chains, and heightened inflation. Further escalation of geopolitical tensions may also lead to changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain, and consequently our results of operation. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.

~~Liquidity~~On February 2, 2023, the Company and ~~Going Concern~~the holders of notes pursuant to the 2021 SPA entered into a fourth letter agreement pursuant to which the parties agreed to reduce the Conversion Price of the Notes to the lower of: (i) the Closing Sale Price on the Trading Day immediately preceding the Conversion Date; and (ii) the average Closing Sale Price of the common stock for the five Trading Days immediately preceding the Conversion Date, beginning on the Trading Day of February 3, 2023.

~~As reflected in our accompanying condensed consolidated financial statements, we have generated significant losses~~On February 8, 2023, the Company and the holders of notes pursuant to the 2021 SPA entered into a fifth letter agreement pursuant to which ~~have resulted in a total accumulated deficit~~the parties agreed to extend the maturity date of ~~approximately $107.9 million at September 30, 2022, raising substantial doubt that we will be able~~the notes from February 9, 2023 to ~~continue operations as a going concern.~~
Our ability to execute our business plan is dependent upon our generating cash flow and obtaining additional debt or equity capital sufficient to fund operations. If we can obtain additional debt or equity capital (of which there can be no assurance), we hope to acquire additional management as well as increase the marketing of our products and continue the development of our real estate holdings.
February 28, 2023.

On ~~November 8, 2022, we~~February 10, 2023, the Company sold 591,000 shares of common stock (the “Shares”) for gross proceeds of $591,000 to accredited investors and warrants to purchase 147,750 shares of common stock at an exercise price of $1.00 per share (the “Warrants”). The Warrants are exercisable for two years from the date of issuance.
On February 20, 2023, the Company entered into ~~a new equity line~~an exchange agreement with the holders of ~~credit agreement (the “Purchase Agreement”) with an Underwriter,~~notes pursuant to ~~which we will have~~ the ~~ability (but not~~2021 SPA in order to amend certain provisions of the ~~obligation)~~2021 SPA and issued the holders warrants to ~~sell, from time to time,~~purchase up to an aggregate of ~~up to $44,308,369 of newly issued~~150,000 shares ~~to the Underwriter, at a price equal to 95%~~ of the ~~lowest daily volume weighted average~~Company’s Common Stock at an exercise price ~~per share during the three consecutive days immediately following the date we direct the Underwriter to purchase such shares. The commencement~~ of the equity line of credit is contingent upon the satisfaction of certain conditions in the Purchase Agreement. As of the date of this filing, these conditions have not been satisfied, and we are not yet able to sell securities pursuant to the Purchase Agreement.
$1.00.

~~Our business strategy may not~~On February 21, 2023, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the Company will sell to the investor a series of senior secured convertible notes of the Company in the aggregate original principal amount of $5,617,978, and a series of common stock purchase warrants of the Company, which warrants shall be ~~successful~~exercisable into an aggregate of 3,377,099 shares of common stock of the Company for a term of three years. The Company received $5,000,000 in ~~addressing our liquidity issues~~proceeds after the original issue discount of 11% on the principal. The Company used the proceeds to repay all principal, interest and ~~there can be no assurance that we will be able to obtain any additional capital.~~ If we cannot execute our business plan on a timely basis (including acquiring additional capital), our stockholders may lose their entire investment in us, because we may have to delay vendor payments and/or initiate cost reductions and possibly sell certain company assets, which would have a material adverse effect on our business, financial condition and results of operations, and we could ultimately be forced to discontinue our operations, liquidate and/or seek reorganizationfees owing under the U.S. bankruptcy code. The conditions outlined above indicate that there is substantial doubt about our ability to continue as a going concern within one year after the financial statement issuance date.2021 SPA.

~~Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted~~On February 20, 2023, we issued a one-year, non-convertible promissory note in the ~~United States~~amount of America (“U.S. GAAP”), which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.$185,000.
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Consolidated Results of Operations

Three months ended ~~September 30, 2022~~March 31, 2023 compared to three months ended ~~September 30, 2021~~March 31, 2022
Overview

We reported a net loss of approximately ~~$4,726,000~~$2.7 million and ~~net income of approximately $931,000~~$2.3 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Revenues

Revenues from operations were approximately ~~$441,000~~$448,000 and ~~$2,605,000~~$426,000 during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, reflecting ~~a decline~~an increase of approximately ~~$2,164,000~~$22,000 or ~~83%~~5%. The ~~decline~~overall increase in sales was driven by increases in hotel, restaurant and wine revenues ~~is primarily due to the reduction~~ of ~~lot~~approximately $428,000 and increases in clothes, accessories and other sales of approximately $2,534,000 over the same quarter last year. Partially offsetting the decline in lot sales is an improvement in hotel, wine, restaurant and clothing sales of approximately $420,000 in the aggregate. The improvement in sales in the aforementioned areas results$85,000 resulting from the easing of COVID restrictions and the Argentine government’s efforts to promote tourism and revitalize local businesses by subsidizing a portion of sales. Approximately $70,000 of the quarter over quarter fluctuation results from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar. All other fluctuations are immaterial individually and in the aggregate.
~~Gross profit~~
We generated a gross profit of approximately $7,000 for the three months ended September 30, 2022 and a gross profit of approximately $2,395,000 for the three months ended September 30, 2021, representing a decline of approximately $2,388,000. Gross profit declined primarily due to the decrease in lot sales, for the three months ended September 30, 2022. There were approximately $2.5 million in lot sales for the three months ended September 30, 2021 and no such sales for the three months ended September 30, 2022.
Cost of sales, which consists of real estate lots, raw materials, direct labor and indirect labor associated with our business activities, rose by approximately $224,000 from approximately $210,000 for the three months ended September 30, 2021 to approximately $434,000 for the three months ended September 30, 2022. The increase in cost of sales primarily resulted from the inventory valuation write-down of approximately $116,000, an increase in hotel and restaurant payroll costs of approximately $202,000 and an increase in costs associated with wine, clothing and other sales of approximately $68,000, which corresponds to the increase in the related revenues as discussed above. These increases were partially offset by a decrease of approximately ~~$86,000 related to costs associated with the~~$185,000 in lot sales, ~~that occurred during the three months ended September 30, 2021,~~a decrease of agricultural sales of approximately $27,000, and a decrease of ~~$76,000~~approximately $278,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar.
~~Selling and marketing expenses~~
Selling and marketing expenses were approximately $109,000 and $101,000 for the three months ended September 30, 2022 and 2021, respectively, representing an increase of $8,000 or 8%, primarily related to promoting the Company in new markets, as well as advertising and marketing expenses for GGI’s new retail space.
31
~~General and administrative expenses~~
General and administrative expenses were approximately $1,729,000 and $1,371,000 for the three months ended September 30, 2022 and 2021, respectively, representing an increase of approximately $358,000 or 26%. The increase is primarily attributed to (i) an increase of approximately $216,000 in staff payroll including stock compensation; (ii) approximately $90,000 in board compensation including stock compensation; (iii) an increase in occupancy costs related to GGI’s new retail space of approximately $50,000; (iv) an increase in taxes and tax reserve allowances of approximately $39,000; (v) an increase in travel expenses of approximately $38,000; (vi) an increase in delivery fees of approximately $34,000; and (vii) an increase of approximately $30,000 in regulatory and filing fees. The increases in expenses were partially offset by (viii) a decrease of approximately $89,000 in insurance expenses; and (ix) a decrease of approximately $74,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar. All other fluctuations are immaterial individually and in the aggregate.
~~Depreciation and amortization expense~~
Depreciation and amortization expense was approximately $84,000 and $36,000 during the three months ended September 30, 2022 and 2021, respectively, representing an increase of $48,000 or 133%, related to new asset purchases.
~~Interest expense, net~~
Interest expense, net was approximately $106,000 and $50,000 during the three months ended September 30, 2022 and 2021, respectively, representing an increase of approximately $56,000 or 112%. The increase is the result of accrued interest, and amortization of debt discount related to convertible debt issued in November of 2021.
~~Other income (expense)~~
Other income of approximately $75,000 and $88,000 during the three months ended September 30, 2022 and 2021 represents the management fee received from LVH. Gains from foreign currency translation were approximately $185,000 and $6,000 for the three months ended September 30, 2022 and 2021, respectively, resulting from the net monetary position of our Argentine subsidiaries. Additionally, the inducement expense of approximately $2,965,000 is related to reductions in the conversion price on the convertible debt during the quarter ended September 30, 2022 (see Note 12 – Convertible Debt Obligations).
~~Nine months ended September 30, 2022 compared to nine months ended September 30, 2021~~
~~Overview~~
~~We reported a net loss of approximately $12.3 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively.~~
~~Revenues~~
Revenues from operations were approximately $1,272,000 and $3,221,000 during the nine months ended September 30, 2022 and 2021, respectively, reflecting an decrease of approximately $1,949,000 or 61%. The decline in revenue is primarily due to a decrease in lot sales of approximately $2,463,000. The decrease in lot sales was partially offset by increases in hotel, agricultural, wine, clothing and other sales of approximately $829,000, in the aggregate. The increases in sales in these areas results from the easing of COVID restrictions and the Argentine government’s efforts to promote tourism and revitalize local businesses by subsidizing a portion of sales. The decrease in revenue is compounded from the impact of approximately $301,000 resulting from the decline in the value of the Argentine peso vis-à-vis the U.S. dollar. All other fluctuations are immaterial individually and in the aggregate.
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Gross profit

We generated a gross profit of approximately ~~$66,000~~$154,000 and ~~$2,571,000~~$187,000 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, representing a decrease of approximately $2,505,000. Gross profit declined primarily due to the decrease in lot sales for the nine months ended September 30, 2022. There were approximately $2,647,000 in lot sales for the nine months ended September 30, 2021 and approximately $185,000 in lot sales for the nine months ended September 30, 2022.$33,000 or 18%.

Cost of sales, which consists of real estate lots, raw materials, direct labor and indirect labor associated with our business activities, increased by approximately ~~$556,000~~$55,000, or 23%, from approximately ~~$650,000~~$238,000 for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 to approximately ~~$1,206,000~~$293,000 for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. The increase in cost of sales ~~is associated to~~resulted from the ~~corresponding~~ increase in hotel, ~~agricultural,~~restaurant and wine ~~clothing and other sales~~costs of approximately ~~$839,000~~$215,000 which corresponds to the increase in the related revenues as discussed above, and an increase in clothes, accessories and other costs of approximately ~~$116,000 related to an inventory valuation write-down,~~$44,000, which were partially offset by a ~~decline~~decrease of approximately $16,000 in costs associated with ~~the~~ lot sales ~~of approximately $91,000~~ and a decrease of approximately ~~$308,000~~$187,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar.

Selling and marketing expenses

Selling and marketing expenses were approximately ~~$614,000~~$235,000 and ~~$336,000~~$172,000 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, representing an increase of ~~approximately $279,000~~$63,000 or ~~83%~~37%, primarily related to ~~promoting the Company in new markets, as well as~~GGI advertising and marketing expenses for GGI’s new retail space.

General and administrative expenses

General and administrative expenses were approximately ~~$5,403,000~~$1,757,000 and ~~$3,935,000~~$1,745,000 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, representing an increase of ~~approximately $1,468,000~~$12,000 or ~~37%~~1%. ~~The increase~~Increases in general and administrative expenses is primarily ~~attributed to (i)~~ ~~$692,000~~consisted of a $290,000 increase ~~related to~~in employee compensation, to the Company’s Board of Directors (consisting of approximately $594,000 in stock compensation and approximately $98,000 of cash compensation); (ii) an increase of staff payroll of approximately $250,000; (iii) an increase of approximately ~~$326,000~~$117,000 in professional and consulting ~~fees; (iv) $179,000 in travel expenses related to investor activity; (v) an increase in occupancy charges of approximately $139,000 in connection with~~ ~~GGI’s new retail space;~~ ~~(vi) an increase in taxes~~fees and ~~tax reserve allowances of approximately $163,000; (vii)~~ an increase of approximately ~~$112,000~~$50,000 in ~~regulatory and filing fees, and~~ ~~(viii) an increase of approximately $72,000 in delivery fees. The increases in general and administrative~~other aggregated expenses ~~were~~not individually material, partially offset by ~~(ix)~~ a decrease ~~in insurance expenses~~ of ~~$149,000, and (x)~~ approximately ~~$378,000~~$445,000 resulting from the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar. ~~All other fluctuations are immaterial individually and in the aggregate.~~

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Depreciation and amortization expense

Depreciation and amortization expense was approximately ~~$179,000~~$109,000 and ~~$104,000~~$46,000 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, representing an increase of ~~$75,000~~$63,000 or ~~72%~~137%, ~~related~~resulting from additions to leasehold improvements associated with GGI’s new ~~asset purchases.~~retail space.
Interest income
Interest income was approximately $50,000 and $4,000 during the three months ended March 31, 2023 and 2022, respectively, representing an increase of $46,000.

Interest expense ~~net~~

Interest expense ~~net~~ was approximately ~~$1,528,000~~$602,000 and ~~$88,000~~$758,000 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, representing ~~an increase~~a decrease of ~~$1,440,000.~~$156,000 or 21%. The ~~increase~~decrease is primarily related to a reduction in the ~~result of accrued~~ interest and amortization of debt discount ~~related to~~on the convertible debt ~~issued in November~~as a result of ~~2021.~~the reduced weighted carrying value of debt for the 2023 quarter compared to the previous year’s quarter.

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Other income ~~(expense)~~

Other income of approximately ~~$225,000 and $88,000~~$75,000 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021, respectively,~~ represents the management fee received from LVH. ~~The loss~~
Loss on extinguishment of debt
Loss on extinguishment of ~~approximately $2.1 million and inducement expense of approximately $3.2 million are related to reductions~~debt in the ~~conversion price~~aggregate amount of $383,987 is comprised of (i) premium paid on the ~~convertible debt during~~conversion of GGH Notes of $112,065, (ii) premium paid on the 2^ndcash redemption of GH Notes of $124,049 , (iii) premium paid on the 2023 Notes for cash redemption of principal in the amount of $13,094, and 3^rd ~~quarters (see~~(iv) the fair value of $134,779 in warrants issued in the exchange agreement for the GGH Notes (See Note ~~12 –~~ 9—Convertible Debt ~~Obligations)~~Obligations for additional details). ~~In addition,~~
(Gains) losses from foreign currency translation
The Company recorded gains from foreign currency translation ~~were~~of approximately ~~$411,000~~$112,000 and ~~$35,000 for~~$183,000 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, as the result of the net monetary liability position of our Argentine subsidiaries. During the nine months ended September 30, 2021, we recognized a gain on forgiveness of PPP Loan~~respectively. The reduction of approximately ~~$242,000. No such gain was recognized during~~$71,000 in gains from foreign currency translation is due to the ~~nine months ended September 30, 2022.~~fluctuation in the Argentine peso to United States dollar exchange rates.
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Liquidity and Capital Resources
We measure our liquidity a variety of ways, including the following:

September 30,
2022

December 31,
2021

(unaudited)
Cash $ 260,984 $ 3,649,407
Working Capital (Deficiency) $ (624,498 ) $ (790,334 )
Loans Payable $ 234,638 $ 317,356
Debt Obligations $ - $ 7,000
Convertible Debt Obligations $ 1,998,209 $ 6,480,000

March 31,
2023

December 31,
2022

(unaudited)
Cash $ 2,389,882 $ 300,185
Working capital $ 361,192 $ 595,120
Convertible debt obligations $ 5,536,394 $ 1,997,909
Loans payable $ 386,651 $ 256,321

Based upon our working capital deficiency as of September 30, 2022, we require additional equity and/or debt financing in order to sustain operations. These conditions raise substantial doubt about our ability to continue as a going concern.
Cash requirements for our current liabilities include approximately ~~$1.7 million~~$1,767,000 for accounts payable and accrued expenses, approximately ~~$197,000~~$209,000 for lease liabilities, and approximately ~~$143,000~~$360,000 for loans payable ~~and approximately $89,000 for debt obligations~~ and other current liabilities. We also have ~~short-term~~ convertible debt obligations in the amount of ~~approximately $2.0 million.~~$5,536,394 which, if not converted prior to maturity, are due on February 21, 2024. Cash requirements for our long-term liabilities include approximately ~~$1.4 million~~$1,275,000 for operating lease liabilities, approximately ~~$85,000 related to a payment plan for Argentine payroll taxes,~~$94,000 in loans payable, and approximately ~~$92,000 for loans payable.~~$52,000 of long-term accrued expenses.

During the ~~nine~~three months ended ~~September 30, 2022 and 2021,~~March 31, 2023, we financed a portion of our activities from proceeds derived from ~~the sale of common stock during the period, and from~~ debt and equity ~~financings occurring in prior periods.~~financings. A significant portion of the funds have been used to cover working capital needs and personnel, office expenses and various consulting and professional fees.

Net cash used in operating activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ amounted to approximately ~~$4,484,000~~$2,939,000 and ~~$5,662,000,~~$2,099,000, respectively. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023, the net cash used in operating activities was primarily attributable to the net loss of approximately $2,695,000 adjusted for approximately $969,000 of net non-cash expenses, and approximately $1,214,000 of cash used to fund changes in the levels of operating assets and liabilities. During the three months ended March 31, 2022, the net cash used in operating activities was primarily attributable to the net loss of approximately ~~$12.3 million~~$2,272,000 adjusted for approximately ~~$7,392,000~~$570,000 of net non-cash expenses, and approximately ~~$414,000 of cash provided by changes in the levels of operating assets and liabilities.~~ During the nine months ended September 30, 2021, the net cash used in operating activities was primarily attributable to the net loss of approximately $1,527,000 adjusted for approximately $577,000 of net non-cash expenses, and approximately $4,712,000$397,000 of cash used to fund changes in the levels of operating assets and liabilities.

Cash used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ amounted to approximately ~~$1,959,000~~$50,000 and ~~$4,140,000, respectively, of which $1,916,000 and $640,000,~~$810,000, respectively, related to the purchase of property and equipment of $50,000 and $767,000, respectively, and $0 and ~~$3.5 million,~~$35,000, respectively, related to the purchase ~~of investment in LVH, $35,000 and $0, respectively, related to~~ the ~~purchase of the Gaucho.com~~gaucho.com domain name and $0 and $7,560, ~~and $0,~~ respectively, ~~related to net~~of cash used ~~for the purchase of~~to acquire GDS.
34

Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2022 and 2021,~~March 31, 2023 amounted to approximately ~~$2,150,000 and $12,170,000, respectively.~~$5,119,000. Net cash used in financing activities for the three months ended March 31, 2022 amounted to approximately $26,000. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the net cash provided by financing activities resulted from approximately ~~$1,727,500 of~~$4,678,000 in net proceeds from the issuance of debt, ~~issued~~$591,000 in ~~private placement, $511,000 of~~ proceeds from the issuance of common stock ~~net~~in a private placement, approximately $441,000 in proceeds from the issuance of ~~offering costs,~~stock under the New ELOC and $185,000 in proceeds from the issuance of a note payable, partially offset by ~~loan repayments~~the repayment of and interest of approximately ~~$81,000~~$744,000 and repayment of ~~debt obligations~~loans payable of ~~$7,000.~~ ~~For~~approximately $33,000. Net cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022 amounted to approximately $26,000 in repayments of loans payable.
31
As of March 31, 2023, the Company had cash and working capital of approximately $2,390,000 and $361,000, respectively. During the three months ended March 31, 2023 and 2022, the Company incurred net losses of approximately $2,695,000 and $2,272,000, respectively, and used cash ~~provided by financing~~in operating activities ~~resulted from~~of approximately ~~$7,287,000~~$2,939,000 and $2,099,000, respectively. Further, as of ~~proceeds provided by~~March 31, 2023, approximately $5,536,000 owed in connection with the ~~sale~~Company’s convertible debt matures on February 21, 2024, and $293,000 represents the current portion of ~~common stock and warrants in a public offering, approximately $3,746,000 of proceeds provided by~~ the ~~sales of common stock, $1,647,000 of~~Company’s loans payable which are payable on demand or for which payments are due within twelve months after March 31, 2023. During the three months ended March 31, 2023, the Company funded its operations with proceeds from convertible debt financing of $5,000,000, proceeds of approximately $441,000 from draws on the ~~exercise~~Company’s equity line of ~~warrants,~~credit, and ~~$439,000 from the proceeds~~$591,000 from the sale of common stock and warrants to accredited investors, partially offset by debt and loan repayments of approximately $259,000 and payments of offering costs related to the public offering and the Common Stock Purchase Agreement of approximately $690,000.
~~Going Concern and Management’s Liquidity Plans~~
stock.

The ~~accompanying condensed consolidated~~Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months from the date these financial statements are made available. Since inception, the Company’s operations have primarily been ~~prepared assuming~~funded through proceeds received from equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that ~~we will continue as a going concern, which contemplates~~ the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As discussed in Note 2 to the accompanying condensed consolidated financial statements, we have not achieved a sufficient level of revenues to support our business and development activities and have suffered substantial recurring losses from operations since our inception. ~~These conditions raise substantial doubt that we~~Company will be able to ~~continue operations as a going concern.~~obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The ~~accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if we were unable~~aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

Based on current cash on hand and subsequent activity as described herein, our cash-on-hand only allows us to operate our business operations on a month-to-month basis. Because of our limited cash availability, we have scaled back our operations to the extent possible. While we are exploring opportunities with third parties and related parties to provide some or all of the capital we need, we have not entered into any agreement to provide us with the necessary capital. Historically, we have been successful in raising funds to support our capital needs. If we are unable to obtain additional financing on a timely basis, we may have to delay vendor payments and/or initiate cost reductions, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue our operations, liquidate assets and/or seek reorganization under the U.S. bankruptcy code.
35
Availability of Additional Funds

As a result of our financings, we have been able to sustain operations. However, we will need to raise additional capital in order to meet our future liquidity needs for operating expenses and capital expenditures, including GGI inventory production, continued development of the GGI e-commerce platform, expansion of our winery and additional investments in real estate development. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations.

On November 8, 2022, we entered into a new equity line of credit agreement (the “Purchase Agreement”) with an Underwriter, pursuant to which we will have the ability (but not the obligation) to sell, from time to time, up to an aggregate of up to $44,308,369 of newly issued shares to the Underwriter, at a price equal to 95% of the lowest daily volume weighted average price per share during the three consecutive days immediately following the date we direct the Underwriter to purchase such shares. The commencement of the equity line of credit is contingent upon the satisfaction of certain conditions in the Purchase Agreement. As of the date of this filing, these conditions have not been satisfied, and we are not yet able to sell securities pursuant to the Purchase Agreement.
Off-Balance Sheet Arrangements

None.

Contractual Obligations

As a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.

Critical Accounting Policies and Estimates

There are no material changes from the critical accounting policies, estimates and new accounting pronouncements set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K filed with the SEC on April ~~12, 2021.~~17, 2023, except as described below. Please refer to that document for disclosures regarding the critical accounting policies related to our business.

32
Sequencing Policy
Under ASC 815, the Company has adopted a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares or the Company’s total potentially dilutive shares exceed the Company’s authorized share limit, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuances of securities granted as compensation in a share-based payment arrangement are not subject to the sequencing policy.
Derivative Instruments
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. For derivative financial instruments that are accounted for as liabilities, the derivative instruments are initially recorded at their fair values and are then re-valued at each reporting date. with changes in the fair value reported in the consolidated statements of operations.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.

Item 4: Controls and Procedures

Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of ~~September 30, 2022,~~March 31, 2023, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective at the reasonable assurance level.

During the year ended December 31, 2022, our management identified a material weakness in our internal control over financial reporting, which continued to exist as of ~~September 30, 2022.~~March 31, 2023, resulting from a lack of segregation of duties due to our small size, and lack of testing of the operating effectiveness of the controls.

Changes in Internal Control over Financial Reporting

~~There~~During the quarter ended March 31, 2023, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended ~~September 30, 2022~~March 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

3633

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against GGH and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage. We are not involved in any litigation that we believe is likely, individually or in the aggregate, to have a material adverse effect on our condensed consolidated financial condition, results of operations or cash flows.

As reported on our Current Report on Form 8-K as filed with the SEC on July 15, 2022, the Company became aware of a demand letter and draft complaint alleging breach of contract from a current stockholder regarding the stockholder vote required to amend the Certificate of Designation of the Series B Convertible Preferred Shares. To the Company’s knowledge, no complaint has been filed at this time. The Company is monitoring the situation to determine if any action is warranted.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in Item 1A of the Company’s Annual Report on Form ~~10-K/A~~10-K as filed with the SEC on ~~May 19, 2022 and in Item 1A of the Company’s Quarterly Report on Form 10-Q as filed with the SEC on August 15, 2022.~~April 17, 2023.

Our stock has been trading below $1.00 and our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our common stock.

Our common stock is currently listed for trading on The Nasdaq Capital Market. We must satisfy the continued listing requirements of The Nasdaq Stock Market LLC (or Nasdaq), to maintain the listing of our common stock on The Nasdaq Capital Market.

On July 14, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market notifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was trading below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”). The notification has no immediate effect on the Company’s Nasdaq listing and the Company’s common stock will continue to trade on Nasdaq under the ticker symbol “VINO.”

In accordance with Nasdaq Rules, the Company ~~has been~~was provided with an initial period of 180 calendar days, or until January 10, 2023 (the “Compliance Date”), to regain compliance with the Bid Price Requirement. If at any time before the Compliance Date the closing bid price for the Company’s common stock is at least $1.00 for a minimum of 10 consecutive business days, the Staff will provide the Company written confirmation of compliance with the Bid Price Requirement.

On November 4, 2022, the Company effected a reverse stock split in athe ratio of 1 share of common stock for 12 previously issued shares of common ~~stock. The closing price on~~stock and filed an amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”).

On November 4,21, 2022, ~~was $1.88. The~~the Company received a letter from the Staff of the Nasdaq Stock Market advising that the Company regained compliance with the ~~Bid Price Requirement as~~minimum bid price listing requirements for its shares of ~~November 18, 2022 pursuant to Staff letter notification.~~common stock and that the matter is now closed.

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~~There~~However, there can be no assurance that the ~~Company~~market price of our common stock will ~~maintain~~remain at the level required for continuing compliance with ~~any of~~that requirement. Our stock has recently been trading below $1.00 and it is not uncommon for the ~~other listing requirements. Nonetheless, the Company intends to monitor the closing bid~~market price of ~~its~~a company’s common stock to decline in the period following a reverse stock split. Other factors unrelated to the number of shares of our common stock outstanding, such as negative financial or operational results, could adversely affect the market price of our common stock and ~~may, if appropriate, consider available options, including a reverse stock split,~~thus jeopardize our ability to meet or maintain the Nasdaq’s minimum bid price requirement.

In order to maintain ~~compliance~~our listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with ~~the Bid Price Requirement.~~such applicable listing standards.

If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our common stock would be subject to SEC rules as a “penny stock”, which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock. In addition, delisting would materially and adversely affect our ability to raise capital on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.

~~War in the Ukraine may impact the business of the Company and the financial markets in which the Company needs to raise capital.~~

Political turmoil, warfare, or terrorist attacks in Ukraine could negatively affect our business. Political and military events in Ukraine, including the 2022 Russian invasion of Ukraine, as well as ongoing warfare between Russia and Ukraine may have an adverse impact on our ability to grow our business and negatively affect our results of operations.

The uncertainty impacting and potential interruption in supply chains resulting from military hostilities in Europe and the response of the United States and other countries to it by means of trade and economic sanctions, or other actions, may give rise to increases in costs of goods and services generally and may impact the market for our products as prospective customers reconsider additional capital expenditure, or other investment plans until the situation becomes clearer.

For so long as the hostilities continue and perhaps even thereafter as the situation in Europe unfolds, we may see increased volatility in financial markets and a flight to safety by investors, which may impact our stock price and make it more difficult for the Company to raise additional capital at the time when it needs to do so, or for financing to be available upon acceptable terms. All or any of these risks separately, or in combination could have a material adverse effect on our business, financial condition, results of operations, and cash flows. We cannot predict the timing, strength, or duration of any economic slowdown, instability or recovery.

~~The Company is facing and may continue to face significant cost inflation.~~

We have faced, and may continue to face, significant cost inflation, specifically in raw materials and other supply chain costs due to increased demand for raw materials and the broad disruption of the global supply chain associated with the impact of COVID-19. International conflicts or other geopolitical events, including the 2022 Russian invasion of Ukraine, may further contribute to increased supply chain costs due to shortages in raw materials, increased costs for transportation and energy, disruptions in supply chains, and heightened inflation. Further escalation of geopolitical tensions may also lead to changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain, and consequently our results of operation.

While we may try to mitigate the impact of inflation by increasing the price of some of our own products, we may be unable to do so due to the terms of existing contracts, a competitor’s pricing pressure, or other factors. Additionally, significant price increases may result in a loss of customers and adversely impact our business, results of operations, financial condition, and cash flows. Additionally, broad concerns related to the economy, including inflation may impact consumer spending, which could impact future demand for our products.

~~Revenues are currently insufficient to pay operating expenses and costs which may result in the inability to execute the Company’s business concept.~~

The Company’s operations have to date generated significant operating losses, as reflected in the financial information included in this Quarterly Report. Management’s expectations in the past regarding when operations would become profitable have not been realized, and this has continued to put a strain on working capital. Business and prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in the early stages of operations. If the Company is not successful in addressing these risks, its business and financial condition will be adversely affected. In light of the uncertain nature of the markets in which the Company operates, it is impossible to predict future results of operations.

~~Our level of debt may adversely affect our operations and our ability to pay our debt as it becomes due.~~

The fact that we are leveraged may affect our ability to refinance existing debt or borrow additional funds to finance working capital requirements, acquisitions and capital expenditures. In addition, the recent disruptions in the global financial markets, including the bankruptcy and restructuring of major financial institutions, may adversely impact our ability to refinance existing debt and the availability and cost of credit in the future. In such conditions, access to equity and debt financing options may be restricted and it may be uncertain how long these economic circumstances may last. This would require us to allocate a substantial portion of cash flow to repay principal and interest, thereby reducing the amount of money available to invest in operations, including acquisitions and capital expenditures. Our leverage could also affect our competitiveness and limit our ability to change in market conditions, changes in the real estate industry and economic downturns.

We may not be able to generate sufficient cash flows from operations to satisfy our debt service requirements or to obtain future financing. If we cannot satisfy our debt service requirements or if we default on any financial or other covenants in our debt arrangements, the lenders and/or holders of our debt will be able to accelerate the maturity of such debt or cause defaults under the other debt arrangements. Our ability to service debt obligations or to refinance them will depend upon our future financial and operating performance, which will, in part, be subject to factors beyond our control such as macroeconomic conditions and regulatory changes in Argentina. If we cannot obtain future financing, we may have to delay or abandon some or all of our planned capital expenditures, which could adversely affect our ability to generate cash flows and repay our obligations as they become due.

~~We may not be able to continue as a going concern.~~

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, doubt has been raised as to the ability of the Company to continue as a going concern. The Company presently has enough cash on hand to sustain its operations on a month-to-month basis, but if the Company is not able to obtain additional sources of capital, it may not have sufficient funds to continue to operate the business for twelve months from the date these financial statements are issued. While management believes that it will be successful in obtaining additional financing, no assurance can be provided that the Company will be able to do so. Further, there is no assurance that these funds will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail its operations and implement a plan to extend payables, reduce overhead and possibly sell certain Company assets until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Such a plan could have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations, liquidate and/or seek reorganization in bankruptcy.

If LVH does not sign a ground lease by ~~December 31, 2022,~~June 30, 2023, LVH will be dissolved and we may not receive a complete return of our investment.

Currently, the Company, through its wholly-owned subsidiary, Gaucho Ventures I – Las Vegas, LLC (“GVI”), contributed total capital of $7.0 million to LVH Holdings LLC (“LVH”) to develop a project in Las Vegas, Nevada and received 396 limited liability company interests, representing an 11.9% equity interest in LVH. Pursuant to the ~~Second~~Third Amendment to the Amended and Restated Limited Liability Company Agreement of LVH dated ~~June 7,~~December 12, 2022, if a ground lease for the premises within which the luxury hotel, casino, entertainment and retail project will be developed and constructed has not been executed by LVH on or before ~~December 31, 2022,~~June 30, 2023, then as promptly as reasonably practicable after such date, LVH will be liquidated and dissolved.

As of ~~September 30, 2022,~~March 31, 2023, LVH has used our cash contribution to LVH for land improvement expenses, such as architectural, legal, engineering, and accounting fees. Should LVH be liquidated and dissolved on or before ~~December 31, 2022,~~June 30, 2023, we most likely will not receive our entire contribution back from LVH and may lose our entire investment. ~~The loss of our investment will greatly affect our balance sheet and may translate into a lower stock price for the Company.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuance of Shares Pursuant to 401(k) Match

On ~~February 3, 2022,~~January 23, 2023, the Company ~~purchased the domain name Gaucho.com for $34,999 in cash and 1,250~~issued 24,160 shares of common stock ~~subject to adjustment. The seller is entitled to additional shares of common stock if on August 14, 2022, the closing price~~at $1.35 per share in settlement of its matching obligations for the year ended December 31, 2022 under the Company’s common stock is less than $31.68 as quoted on a national securities exchange, and the Company shall issue additional shares of common stock so that the value of the total shares issued to the seller collectively has a fair market value of $36,900. As of August 12, 2022, the most recent trading day prior to August 14, 2022, which is a non-trading day, the Company’s common stock closed at $4.284. Therefore, the Company is required to issue the seller an additional 7,364 shares of common stock so that the value of the total shares the seller owns as of August 14, 2022 has a fair market value of $36,900. The Company relied on the exemption from registration pursuant to Section 4(a)(2) the Securities Act of 1933, as amended.401(k) profit sharing plan.

Restricted Stock Units

~~As reported on our Quarterly Report dated June 30, 2022, on June 24, 2022,~~

On January 23, 2023, the ~~Company issued a total~~Board approved the issuance of ~~26,278~~ restricted stock units (“RSUs”) subject to ~~vesting. On September 18, 2022, a total of 13,139~~vesting, representing 10,000 shares of common stock ~~were issued to the RSU holders pursuant to the vesting provisions~~ of the Company to certain consultants of the Company located in Argentina with a grant date value of $1.35 per share. On the same date, RSUs ~~of which,~~representing a total of ~~11,407~~3,890 shares of common stock ~~were issued to certain officers and directors~~ of the ~~Company.~~Company vested and the Company issued such shares to the consultants. The remainder of the RSUs vest equally on January 23, 2024 and January 23, 2025. A Form D was filed on May 15, 2023.

Unit Offering

On February 10, 2023, the Company sold 591,000 shares of common stock (the “Shares”) for gross proceeds of $591,000 to accredited investors and warrants to purchase 147,750 shares of common stock at an exercise price of $1.00 per share (the “Warrants”). The Warrants are exercisable for two years from the date of issuance. For this sale of Shares, Warrants, and shares underlying the Warrants, there was no general solicitation and no commissions paid, all purchasers were accredited investors with a prior relationship with the Company, and the Company is relying on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D was filed on February 22, 2023.

Convertible Promissory Notes

As previously reported on our ~~Current~~Annual Report on Form ~~8-K~~10-K filed on ~~November 8, 2021,~~April 17, 2023, the Company and ~~the~~certain investors (the “Holders”) entered into that Securities Purchase Agreement, dated as of November 3, 2021 ~~(as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Securities Purchase Agreement”~~(the “2021 SPA”) and the Company issued to the Holders certain senior secured convertible notes ~~(as~~in the ~~same has been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, each,~~aggregate original principal amount of $6,480,000 (each, a “Note” and together with the ~~Securities Purchase Agreement,~~2021 SPA, the ~~“Note~~“2021 Note Documents”).

~~As previously reported on our Current Report on Form 8-K as filed with the SEC on July 5, 2022, on July 1, 2022,~~On February 2, 2023, the Company and the Holders entered into a ~~third~~fourth letter agreement (the “Letter Agreement ~~#3”~~#4”) pursuant to which the parties agreed to reduce the Conversion Price of the Notes to ~~$3.60~~the lower of: (i) the Closing Sale Price on the Trading Day immediately preceding the Conversion Date; and (ii) the average Closing Sale Price of the common stock for the five Trading Days immediately preceding the Conversion Date, beginning on the Trading Day of ~~July 5, 2022, through and inclusive of September 5, 2022. All conversions are~~February 3, 2023. Any conversion which occurs shall be voluntary at the election of the Holder. All terms not defined herein refer to the defined terms in the 2021 Note Documents, as amended.

On ~~September 22, 2022,~~February 8, 2023, the Company and the Holders entered into a fifth letter agreement (the “Letter Agreement #5”) pursuant to which the parties agreed to extend the Maturity Date of the Notes from February 9, 2023 to February 28, 2023. The Conversion Amount and all outstanding Amortization Amounts and Amortization Redemption Amounts (as defined in the Notes) shall be due and payable in full on the Maturity Date or such earlier date as any such amount shall become due and payable pursuant to the other terms of the Note and/or the Letter Agreement #5. All terms not defined herein refer to the defined terms in the 2021 Note Documents, as amended.

On February 20, 2023, the Company entered into an exchange agreement (the “Exchange ~~Agreement”~~Agreement #4”) with the Holders in order to amend ~~and waive~~ certain provisions of the 2021 Note Documents, ~~and Letter Agreement #3~~as amended and exchange ~~(the “Exchange” or the “Transaction”)~~ $100 in aggregate principal amount of each of the Notes, ~~(the “Exchange Notes”),~~ on the basis and subject to the terms and conditions set forth in the Exchange Agreement, for warrants ~~(the “Warrants”)~~ to purchase up to ~~90,915~~an aggregate of 150,000 shares of the Company’s common stock ~~(the “Warrant Shares”)~~ at an exercise price of ~~$3.82~~$1.00 (the “Warrants” and with respect to the common stock issuable, the “Warrant Shares”) (subject to customary adjustment upon subdivision or combination of the common stock). ~~The Exchange Agreement, the Exchange or Transaction, the Exchange Notes, the Warrants, and the Warrant Shares are collectively referred to as the “Exchange Documents.”~~

The Exchange Agreement amends the original terms of payment of the Notes and waives payment of principal and interest due on each of September 7, 2022 and October 7, 2022. All principal, interest, and fees are due on the maturity date of November 9, 2022. As of the date of this Quarterly Report, the Notes are due.

The Warrants are immediately exercisable and may be exercised at any time, and from time to time, on or before the ~~third~~second anniversary of the date of issuance. The ~~Warrant includes~~Warrants include a “blocker” provision that, subject to certain exceptions described in the ~~Warrant,~~Warrants, prevents the Investors from exercising the ~~Warrant~~Warrants to the extent such exercise would result in the Investors together with certain affiliates beneficially owning in excess of 4.99% of the ~~Common Stock~~common stock outstanding immediately after giving effect to such exercise.

The 2021 Note Documents, as amended, Letter Agreement ~~#3,~~#4, Letter Agreement #5, and Exchange ~~Documents~~Agreement #4 are referred to herein as the 2021 Transaction Documents.

During ~~the period of this Quarterly Report~~2023 and pursuant to the 2021 Transaction Documents, investors converted the following amounts of principal of the 2021 Notes: (i) on ~~July 6, 2022, certain investors~~February 3, 2023, one investor converted a total of ~~$200,000~~approximately $859,000 of principal, ofinterest and redemption premium on the 2021 Notes and the Company issued ~~55,556~~416,667 shares of common stock upon conversion; (ii) on ~~July 8, 2022,~~February 6, 2023, certain investors converted a total of ~~$180,000~~approximately $207,000 of principal ~~interest,~~ and ~~fees~~interest of the 2021 Notes and the Company issued ~~50,000~~86,250 shares of common stock upon conversion; (iii) on ~~July 12, 2022, certain investors converted a total of $420,000 of principal, interest, and fees of the Notes and the Company issued 116,667 shares of common stock upon conversion; (iv) on July~~February 13, 2022, certain investors converted a total of ~~$248,347~~approximately $360,000 of principal and interest of the 2021 Notes and the Company issued 68,985 shares of common stock upon conversion; (v) on July 14, 2022, certain investors converted a total of $154,301 of principal of the Notes and the Company issued 42,861 shares of common stock upon conversion; (vi) on July 21, 2022, certain investors converted a total of $495,000 of principal, interest, and fees of the Notes and the Company issued 137,500 shares of common stock upon conversion; (vii) on July 27, 2022, certain investors converted a total of $150,000 of principal, interest, and fees of the Notes and the Company issued 41,667 shares of common stock upon conversion; (viii) on August 3, 2022, certain investors converted a total of $30,000 of principal of the Notes and the Company issued 8,333 shares of common stock upon conversion; (ix) on August 4, 2022, certain investors converted a total of $150,000 of principal, interest, and fees of the Notes and the Company issued 41,667 shares of common stock upon conversion; (x) on August 11, 2022, certain investors converted a total of $540,000 of principal, interest, and fees of the Notes and the Company issued 150,000 shares of common stock upon conversion; (xi) on August 12, 2022, certain investors converted a total of $240,000 of principal of the Notes and the Company issued 66,667 shares of common stock upon conversion; (xii) on August 25, 2022, certain investors converted a total of $245,669 of principal, interest, and fees of the Notes and the Company issued 68,241230,000 shares of common stock upon conversion; and ~~(xiii)~~ on ~~August 30, 2022,~~(iv) on February 15, 2023, certain investors converted a total of ~~$148,577~~approximately $146,000 of principal ~~interest,~~ and ~~fees~~interest of the 2021 Notes and the Company issued ~~41,272~~100,416 shares of common stock upon conversion.

The shares of common stock that have been and may be issued under the 2021 Transaction Documents are being offered and sold in a transaction exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D thereunder. The Company filed a Form D with the SEC on or about November 9,10, 2021.

The Company filed a Registration Statement on Form S-1 (File No. 333-261564) registering the resale of up to 1,013,684 shares upon exercise of the Notes on December 9, 2021, which was declared effective on January 13, 2022. The shares registered for resale under the Form S-1 have all been resold.

~~Conversion of Promissory Notes Issued in Private Placement~~

From July 13, 2022 through August 30, 2022, the Company issued convertible promissory notes to certain investors (the “Investor Notes”) in the aggregate amount of $1,735,752. Pursuant to the terms of the Investor Notes, if the stockholders approved for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of up to 1,250,000 of the Company’s common stock upon the conversion of the Investor Notes, without giving effect to Nasdaq’s 20% Rule, the Investor Notes would be automatically converted into units consisting of one share of common stock and one warrant to purchase one share of common stock at a price equal to the lesser of (a) $6.60 per unit or (b) the three-day volume weighted average closing price (“VWAP”) of the Company’s common stock beginning on the date that is two days prior to stockholder approval of such conversion at the 2022 annual stockholder meeting (the “2022 AGM”).

AtFor the ~~2022 AGM,~~full description of the ~~Company obtained the requisite stockholder approval,~~2021 Transaction Documents, please refer to our Current Reports on Forms 8-K 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 – the three-day VWAP of the Company’s common stock beginning on the date that is two days prior to stockholder approval of such conversion at the 2022 AGM. Each warrant issued upon the conversion of the Investor Notes is exercisable at a price of $3.82. For this sale of securities, no general solicitation was used, no commissions were paid, all persons were accredited investors, and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D wasexhibits attached thereto as filed with the SEC on November 8, 2021, March 1, 2022, May 2, 2022, May 13, 2022, July 5, 2022, September ~~13, 2022.~~

~~Non-Executive Director Compensation~~

~~On August 11,~~23, 2022, ~~the Board approved the remainder of the compensation for~~December 1, 2022, of the non-executive directors to be paid as follows: (i) issuance of 3,872 restricted stock units for each of the five non-executive directors, vesting on the earlier of December 31, 2022 or termination of service;February 3, 2023, February 8, 2023, and ~~(ii) cash payment to be paid no later than January 15, 2022.~~

On August 30, 2022, the Company, issued a total of 2,568 shares at $9.68 per share to Dr. Steven Moel and Mrs. Edie Rodriguez as compensation for service as members of the Board of Directors for the second half of 2022. At the Company’s annual stockholder meeting held on August 30, 2022, Dr. Moel’s and Mrs. Rodriguez’s terms expired, and neither was re-elected. As a result, Dr. Moel’s and Mrs. Rodriguez’s service as directors terminated effective as of August 30, 2022, and their RSUs vested pro rata as of such date.

For this sale of securities, no general solicitation was used, no commissions were paid, all persons were accredited investors, and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D was filed with the SEC on October 3, 2022.

~~Item 3. Defaults upon Senior Securities~~

~~On January 25, 2018, the Company received a bank loan in the amount of $525,000 (the “2018 Loan”), denominated in U.S. dollars. The loan bears interest at 6.75% per annum and is due on January 25,~~February 21, 2023. Principal and interest will be paid in 60 equal monthly installments of $10,311, beginning on February 23, 2018. During 2018, the Company defaulted on certain 2018 Loan payments, and as a result, the 2018 Loan is currently payable upon demand. During the nine months ended September 30, 2022, the Company made principal payments, in the aggregate of $83,542. As of September 30, 2022, principal of $138,521 is outstanding.

As previously reported on the Company’s Annual Reports on Forms 10-K for the years ending December 31, 2017, 2018, 2019, 2020 and 2021, the Company sold convertible promissory notes in the aggregate principal amount of $2,046,730 (together, the “2017 Notes”). The 2017 Notes matured 90 days from the date of issuance, bore interest at 8% per annum and were convertible into the Company’s common stock at $7.56 per share, which represented a 10% discount to the price used for the sale of the Company’s common stock at the commitment date. In 2021, principal and interest of $1,163,354 and $258,714 were exchanged for common stock and warrants with an aggregate fair value of $1,422,068. During the nine months ended September 30, 2022, the Company made principal payments on the outstanding 2017 Notes in the aggregate amount of $7,000, such that the balance owed on the 2017 Notes at September 30, 2022 is $0.

On ~~September 7, 2022 and on October 7, 2022,~~February 21, 2023, the Company ~~failed to pay~~used the ~~amortization payments due totaling $2,160,000 on the~~proceeds from a new convertible promissory ~~notes dated November 9, 2021.~~note to repay all principal, interest, and fees of $905,428 owing under the Notes. Upon repayment in full, the 2021 Note Documents, as amended were terminated on February 21, 2023. See ~~Item 2 above~~below for ~~a description of the Exchange Agreement, which amended and waived certain provisions of the Securities Purchase Agreement. As of the date of this Quarterly Report, the notes are due.~~more information.

~~Item 4. Mine and Safety Disclosure~~

~~Not applicable.~~

4237

~~Item 5. Other Information~~New Convertible Promissory Note

On ~~July 20, 2022, the federal government notified~~February 21, 2023, the Company ~~that installment payments on~~entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with an institutional investor (the “Initial Closing”), pursuant to which the ~~remainder~~Company will sell to the investor a series of senior secured convertible notes of the ~~balance~~Company in the aggregate original principal amount of $5,617,978 with an original issue discount of 11% (the “2023 Notes”), and a series of common stock purchase warrants of the ~~EIDL Loan would~~Company, which warrants shall be ~~required starting 30 months from the date~~exercisable at a price per share of ~~the loan, which is October 19, 2022. The balance~~$1.34 into an aggregate of ~~the EIDL Loan is due on the maturity date, or May 22, 2050.~~

~~Results of 2022 Annual General Stockholder Meeting~~

On August 30, 2022, at the Company’s 2022 Annual General Meeting (the “2022 AGM”), the stockholders: (i) elected two (2) Class I nominees to the board of directors (Reuben Cannon and Marc Dumont) to hold office for a three-year term; (ii) granted the Board of Directors discretion (if necessary to prevent the delisting of the Company’s common stock on Nasdaq) on or before June 30, 2023, to implement a reverse stock split of the outstanding3,377,099 shares of common stock in a range from one-for-two (1:2) up to one-for-twenty (1:20), or anywhere between, while maintaining the number of authorized shares of common stock required for Nasdaq listing; (iii) approved an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares authorized for awards under the plan to 25% of our common stock outstanding on a fully diluted basis as of the date of stockholder approval; (iv) approved for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of up to 1,250,000 of the Company’s common stock upon the conversion of convertible promissory notes issued in a private placement pursuant to Rule 506(b) of the Securities Act of 1933, as amended, without giving effect to Rule 5635(d); (v) approved for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to 833,333 shares of our common stock pursuant to that certain Securities Purchase Agreement, dated November 3, 2021, those certain senior secured convertible promissory notes dated November 9, 2021, and that certain Registration Rights Agreement, dated November 9, 2021 by and between the Company and certain institutional investors; and (vi) ratified and approved the appointment of Marcum LLP as the Company’s independent registered accounting firm for the year ended December 31, 2022.

~~Change in Directors~~

As previously disclosed in the Company’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 2, 2022, as amended on September 8, 2022 and September 13, 2022, the terms of two directors of the Board of Directors, Dr. Steven Moel and Ms. Edie Rodriguez, ended and both did not stand for re-election at the 2022 AGM. The Board of Directors approved a reduction in the number of directors from seven to five effective August 30, 2022. Dr. Moel and Ms. Rodriguez were members and chairpersons of the Company’s Audit Committee and Compensation Committee, respectively. As a result, vacancies were created in both committees.

~~At a meeting of the Board of Directors~~ of the Company ~~held on September 14, 2022,~~for a term of three years (the “2023 Warrants”). The Company received $5,000,000 in proceeds after the ~~Board~~original issue discount of ~~Directors, at the recommendation of the Nominating and Corporate Governance Committee, appointed Mr. Reuben Cannon to fill the vacancy~~11% on the Audit Committee created by Dr. Steven Moel’s departure and appointed Mr. Peter Lawrence to fill the vacancy in the Compensation Committee created by Ms. Edie Rodriguez’s departure, effective August 30, 2022. The Board of Directors determined that both Mr. Cannon and Mr. Lawrence are independent pursuant to the definition of independence under Rule 5605(a)(2) of the Nasdaq Listing Rules and further meet all qualifications to serve as members of the Audit Committee and Compensation Committee, respectively.principal.

The Board of Directors, at the recommendation of the Nominating and Corporate Governance Committee, further appointed Mr. Marc Dumont as Chairman of the Audit Committee and Mr. Reuben Cannon as Chairman of the Compensation Committee effective August 30, 2022. The Board of Directors then accepted Mr. Cannon’s resignation as Chairman of the Nominating and Corporate Governance Committee and appointed Mr. Peter Lawrence as Chairman of the Nominating and Corporate Governance Committee effective August 30, 2022.

~~As a result of the above, the composition of each of the committees of the Board of Directors is as follows as of August 30, 2022:~~

●

~~Audit Committee:~~

	◌	~~Marc Dumont (Chairman)~~
	◌	~~Reuben Cannon~~
	◌	~~Peter Lawrence~~

●

~~Compensation Committee:~~

	◌	~~Reuben Cannon (Chairman)~~
	◌	~~Peter Lawrence~~
	◌	~~Marc Dumont~~
	◌	~~William Allen~~

●

~~Nominating and Corporate Governance Committee:~~

	◌	~~Peter Lawrence (Chairman)~~
	◌	~~Reuben Cannon~~
	◌	~~Marc Dumont~~

Mr. Allen, a member of the Compensation Committee, has been deemed not to meet the definition of an independent director as defined in Rule 5605(a)(2) because he owns a 20% interest in and is the Managing Member of SLVH LLC, (“SLVH”). SLVH is the Managing Member of LVH Holdings LLC (“LVH”) and the Company, through its wholly owned subsidiary Gaucho Ventures I – Las Vegas, LLC holds a minority membership interest in LVH.

~~In reliance on the exemption provided pursuant to Nasdaq Rule 5605(d)(2)(B), the Compensation Committee consists of three independent directors and one non-independent director, all of whom~~2023 Notes are ~~all non-employee directors for purposes of Rule 16b-3 of the Exchange Act.~~

The Board of Directors has, under exceptional and limited circumstances, determined that Mr. Allen’s membership on the Compensation Committee is required by the best interests of the Company and its stockholders because of his extensive experience in the leisure, hospitality, and food service industry and public company experience as an officer and director. Pursuant to Rule 5605(d)(2)(B), Mr. Allen may not serve longer than two years on the Compensation Committee and his term on the Compensation Committee will expire on or before July 21, 2023.

~~Amendment to 2018 Equity Incentive Plan~~

At the Company’s 2022 AGM, the stockholders approved the amendment to the 2018 Equity Incentive Plan thereby increasing the number of shares authorized for awards under the plan to 25% of our common stock outstanding on a fully diluted basis as of August 30, 2022 which was 848,033 shares. Of the shares authorized, 767,280 remain available for issuance as of September 30, 2022.

~~Amendment to Certificate of Incorporation~~

Effective as of September 15, 2022, the Company filed an Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to reflect the reduction in the number of authorized shares of preferred stock from 11,000,000 shares to 902,670 shares as a result of the previous conversion of the Series A Convertible Preferredconvertible into shares of common stock of the ~~Company.~~Company at a conversion price of $1.34 (subject to adjustment and a floor price of $0.27). The ~~Certificate of Incorporation also reflects~~2023 Notes are due and payable on the ~~removal of provisions related to the Corporation’s previously effective reverse-stock split. The Certificate of Incorporation was approved by the Board of Directors, without a vote~~first anniversary of the ~~stockholders, on September 14, 2022, as permitted~~Issuance Date and bear interest at a rate of 7% per annum, which shall be payable either in cash monthly or by ~~Section 242 and Section 245~~way of inclusion of the ~~General Corporation Law~~interest in the Conversion Amount on each Conversion Date (as defined in the 2023 Notes). The investor is entitled to convert any portion of the ~~State~~outstanding and unpaid Conversion Amount (as defined in the 2023 Notes) at any time or times after the Issuance Date, but we may not effect the conversion of ~~Delaware.~~

~~Gaucho Development SRL~~any portion of the 2023 Notes if it would result in any of the investor beneficially owning more than 4.99% of the common stock.

~~On February 24, 2022,~~The investor also has an option to enter into an additional promissory note for $5,617,978 and warrants to purchase 3,377,099 shares of common stock, or if certain equity condition are met, the Company ~~formed Gaucho Development SRL, an Argentine holding company slated~~may exercise that option (the “Second Closing”) on the same terms as the Initial Closing. The maximum amount of the 2023 Notes therefore, would be $11,235,956 with total 2023 Warrants to ~~develop the Company’s recently acquired land holdings in Argentina.~~purchase 6,754,198 shares of common stock.

~~Private Placement of Convertible Promissory Notes~~

On October 4, 2022, the Company commenced offering of a series of 7% convertible promissory notes to accredited investors (the “Notes”) in the maximum amount of up to $689,000 (inclusive of principal and interest). The Notes mature one year from the date of issuance unless otherwise converted. The principal and accrued interest of the Notes will convert into units (“Units”) consisting of one share of common stock and one warrant to purchase one share of common stock (the “Warrants”) at a conversion price equal to the lesser of: (a) $2.52; and (b) the three-day volume weighted average closing price (“VWAP”) of the Company’s common stock beginning on the date that is two days prior to the Mandatory Conversion Date (as defined below). The Notes will be mandatorily convertible upon the earlier to occur of (the “Mandatory Conversion Date”): (i) the date of execution of that certain ground lease to be executed in connection with the previously announced agreement to develop a project in Las Vegas, Nevada, provided that such conversion would not result in the issuance of more than 546,949 shares of the Company’s common stock (including the common shares issuable upon conversion of the Warrants); and (b) the date the Company obtains stockholder approval to issue more than 546,949 shares of the Company’ common stock in accordance with Nasdaq Listing Rule 5635(d). The Warrants will be exercisable at a price of $0.50 per share and carry a term of one year.

On October 19, 2022, the Board of Directors of the Company approved an increase to the maximum offering amount (inclusive of principal and interest) of up to $1,500,000, with an additional $3,571,429 raised assuming a conversion price of the Notes at $2.52 and exercise of all the warrants.

On October 20, 2022, to remain compliant with the Nasdaq rules, the Company amended and restated the Notes to include a floor conversion price of no more than $2.40. Total proceeds from the offering, assuming the maximum dollar amount of Notes are sold, converted at $2.40 (the floor price), and all warrants exercised, would be $5,250,000. All other terms of the Notes remain the same.

~~As of November 9, 2022, the Company had issued convertible promissory notes with an aggregate principal amount of $1,051,500.~~

For this sale of securities, there was no general solicitation and no commissions will be paid, all purchasers must be accredited investors, and the Company is relying on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D was filed with the SEC on October 19, 2022.

~~Special Meeting of Stockholders~~

On October 19, 2022, the Company announced that it will be holding a special meeting of the stockholders on December 19, 2022 at 12:00 p.m. Eastern Time for purposes of complying with the Nasdaq Exchange Cap rule, via webcast at ~~https://www.cstproxy.com/gauchogroupholdings/sm2022~~ (the “Special Meeting”). On November 9, 2022, a Notice of Special Meeting was sent by the Company to all stockholders of record as of October 31, 2022, and the Company’s proxy statement and other meeting materials have been made available to all stockholders.

~~New Equity Line of Credit~~

~~As reported on our Current Report on Form 8-K as filed with the SEC on November 9, 2022, on November 8, 2022, the parties terminated the~~ Common Stock Purchase Agreement and Registration Rights Agreement by and between the Company and Tumim Stone Capital LLC, dated May 6, 2021. On the same date, the parties entered into a new Common Stock Purchase Agreement and Registration Rights Agreement, pursuant to which the Company has the right to sell to Tumim Stone Capital up to the lesser of (i) $44,308,969.30 of newly issued shares of the Company’s common stock, par value $0.01 per share, and (ii) the Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the term of the Purchase Agreement. Sales of common stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company and the Company is under no obligation to sell securities pursuant to this arrangement. Shares of common stock may be sold by the Company pursuant to this arrangement over a period of up to 36 months after Commencement (as defined below).

Upon the satisfaction of the conditions in the Purchase Agreement, including that a registration statement that we agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the Registration Rights Agreement is declared effective by the SEC and a final prospectus in connection therewith is filed with the SEC (such event, the “Commencement”), we will have the right, but not the obligation, from time to time at our sole discretion over the 36-month period from and after the Commencement, to direct Tumim Stone Capital to purchase amounts of our common stock as VWAP purchases as set forth in the Purchase Agreement (each, a “VWAP Purchase”) on any trading day, so long as, (i) at least three trading days have elapsed since the trading day on which the most recent prior notice to purchase common stock under the Purchase Agreement was delivered by the Company to Tumim Stone Capital, and (iii) all shares subject to all prior purchases by Tumim Stone Capital under the Purchase Agreement have theretofore been received by Tumim Stone Capital electronically as set forth in the Purchase Agreement.

From and after Commencement, the Company will control the timing and amount of any sales of common stock to Tumim Stone Capital. Actual sales of shares to Tumim Stone Capital under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among other things, market conditions, the trading price of the common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

~~The Company has agreed to reimburse Tumim Stone Capital for the reasonable out-of-pocket expenses (including legal fees and expenses), up to a maximum of $35,000.~~

Under the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in no event may we issue ~~to Tumim Stone Capital under the Purchase Agreement more than 549,648~~any shares of ~~our~~ common stock ~~which represents~~upon conversion of the 2023 Notes or otherwise pursuant to the terms of the 2023 Notes if the issuance of such shares of common stock would exceed 19.99% of the shares of the common stock outstanding immediately prior to the execution of the 2023 Purchase Agreement and the 2023 Notes and 2023 Warrants (the “Exchange Cap”), unless we (i) we obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of common stock to Tumim Stone Capital under the Purchase Agreement equals or exceeds the lower of (i) the Nasdaq official closing price immediately preceding the execution of the Purchase Agreement or (ii) the arithmetic average of the five Nasdaq official closing prices for the common stock immediately preceding the execution of the Purchase Agreement,obtain a written opinion from our counsel that such ~~that the transactions contemplated by the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules.~~approval is not required. In any event, ~~the Purchase Agreement specifically provides that~~ we may not issue ~~or sell~~ any shares of our common ~~stock~~ under the 2023 Purchase Agreement or 2023 Notes if such issuance or sale would breach any applicable rules or regulations of the Nasdaq.

The 2023 Notes will rank senior to all outstanding and future indebtedness of the Company and its subsidiaries, and will be secured by (i) a security interest in all of the existing and future assets of the Company, as evidenced by the Security and Pledge Agreement entered into between the Company and the investor (the “2023 Security Agreement”; and (ii) a pledge of shares of common stock of the Company held by Scott L. Mathis, President and CEO of the Company, and other entities managed by him, as evidenced by the stockholder pledge agreements entered into between the Company, Mr. Mathis and his entities, and the investor.

In ~~all instances, we may not sell shares of our common stock~~connection with the foregoing, the Company also entered into a Registration Rights Agreement with the investor (the “2023 Registration Rights Agreement”), pursuant to ~~Tumim Stone Capital under the Purchase Agreement if it would result in Tumim Stone Capital beneficially owning more than 4.99% of the common stock.~~

~~The net proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at~~ which the Company ~~sells shares of common stock~~has agreed to ~~Tumim Stone Capital. To~~provide certain registration rights with respect to the extent the Company sells shares under the Purchase Agreement, the Company currently plans to use any proceeds therefrom for inventory production and marketing for Gaucho Group, Inc., costs of this transaction, operating expenses and for working capital and other general corporate purposes.

There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement other than a prohibition on entering (with certain limited exceptions) into a “Variable Rate Transaction,” asRegistrable Securities (as defined in the ~~Purchase Agreement. Tumim Stone Capital has agreed not to cause, or engage in any manner whatsoever, any direct or indirect short selling or hedging of the common stock during certain periods.~~

EF Hutton, division of Benchmark Investments, Inc. acted as the exclusive placement agent in connection with the transactions contemplated by the Purchase Agreement, for which the Company will pay to EF Hutton a cash placement fee equal to 8.0% of the amount of the Total Commitment actually paid by Tumim Stone Capital to the Company pursuant to the Purchase Agreement.

~~Pursuant to the terms of the~~2023 Registration Rights ~~Agreement, we have agreed to file with the SEC one or more registration statements on Form S-1 to register for resale~~Agreement) under the Securities Act of 1933 (the “1933 Act”) and the ~~shares of our common stock that may be issued to Tumim Stone Capital under the Purchase Agreement.~~rules and regulation promulgated thereunder, and applicable state securities laws. The 2023 Purchase Agreement and the 2023 Registration Rights Agreement contain customary representations, warranties, conditions and indemnification obligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.

~~The~~

EF Hutton, division of Benchmark Investments, Inc. (“EF Hutton”) acted as the exclusive placement agent in connection with the transactions contemplated by the Purchase Agreement, for which the Company will ~~automatically terminate on the earliest~~pay to ~~occur of (i) the first day~~EF Hutton a cash placement fee equal to 6.0% of the ~~month next following~~amount of capital raised, invested or committed under the ~~36-month anniversary after Commencement (which term may not be extended by the parties), (ii) the date on which Tumim Stone Capital shall have purchased the Total Commitment worth of~~2023 Purchase Agreement and Notes.

The shares of common stock ~~(iii)~~that have been and may be issued under the ~~date~~2023 Purchase Agreement, 2023 Notes, and 2023 Warrants are being offered and sold in a transaction exempt from registration under the 1933 Act, in reliance on ~~which~~Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D thereunder. The investor represented that it is an “accredited investor,” as defined in Regulation D, and are acquiring such shares under the 2023 Purchase Agreement for investment purposes only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the shares of common stock ~~shall~~that have ~~failed~~been and may be issued to ~~be listed or quoted on The Nasdaq Capital Market~~the investor under the 2023 Purchase Agreement have not been registered under the 1933 Act or any ~~other “Eligible Market” (as defined~~applicable state securities laws and may not be offered or sold in the ~~Purchase Agreement),~~United States absent registration or an exemption from registration under the 1933 Act and ~~(iv)~~any applicable state securities laws. The Company filed a Form D with the ~~date~~SEC on March 3, 2023.

The Company filed a Registration Statement on Form S-1 (File No. 333-271305) registering the resale of up to 1,519,454 shares upon conversion of the Notes on April 18, 2023, which was declared effective on April 21, 2023.

On February 21, 2023, the Company ~~commences a voluntary bankruptcy proceeding or any Person commences a proceeding against~~used the ~~Company, a Custodian is appointed for~~proceeds from the ~~Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors. The Company has the right to terminate the~~2023 Purchase Agreement ~~at any time after Commencement, at no cost or penalty, upon 10 trading days’ prior written notice~~ to ~~Tumim Stone Capital. Neither the Company nor Tumim Stone Capital may assign or transfer its rights~~repay all principal, interest, and ~~obligations~~fees of $905,428 owing under the ~~Purchase Agreement or~~2021 Notes. Upon repayment in full, the ~~Registration Rights Agreement, and no provision of the Purchase Agreement or the Registration Rights Agreement may be modified or waived by the parties.~~2021 Transaction Documents were terminated on February 21, 2023.

Equity Line of Credit

~~Convertible Debt~~

Pursuant to the Purchase Agreement with Tumim Capital dated November 8, 2022, the Company requested draw-downs and issued shares of common stock and received gross proceeds of the following for the three months ended March 31, 2023: (i) January 4, 2023, the Company issued 7,500 shares of common stock to Tumim for gross proceeds of $8,734; (ii) on January 9, 2023, the Company issued 7,300 shares of common stock to Tumim for gross proceeds of $8,329; (iii) on January 24, the Company issued 6,700 shares of common stock to Tumim for gross proceeds of $7,949; (iv) on January 31, 2023, the Company issued 6,852 shares of common stock to Tumim for gross proceeds of $7,952; (v) on February 3, 2023, the Company issued 59,357 shares of common stock to Tumim for gross proceeds of $131,437; (vi) on February 8, 2023, the Company issued 63,000 shares of common stock to Tumim for gross proceeds of $98,034; (vii) on February 22, 2023, the Company issued 68,378 shares of common stock to Tumim for gross proceeds of $71,695; (viii) on March 1, 2023, the Company issued 55,983 shares of common stock to Tumim for gross proceeds of $58,093; (ix) on March 7, 2023, the Company issued 57,968 shares of common stock to Tumim for gross proceeds of $56,716; and (x) on March 14, 2023, the Company issued 31,392 shares of common stock to Tumim for gross proceeds of $31,731. No general solicitation was used, and a commission of 8% of the total gross proceeds was paid to Benchmark Investments, Inc. pursuant to the Underwriting Agreement between the Company and Kingswood Capital Markets, a division of Benchmark Investments, Inc., f/k/a EF Hutton, dated February 16, 2021. The Company relied on the exemptions from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, in connection with the sales. A Form D was filed with the SEC on November 21, 2022.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine and Safety Disclosure

Not applicable.

Item 5. Other Information

Promissory Notes

On ~~September 22, 2022,~~January 9, 2023, the Company ~~and the Holders of the GGH Notes~~ entered into ~~another exchange agreement (the “Exchange Agreement #2”) with the Holders in order to amend and waive certain provisions~~a series of ~~the Existing Note Documents and exchange $300 in aggregate principal amount~~promissory notes for gross proceeds of ~~the GGH Notes, on the basis and subject to the terms and conditions set forth in the Exchange Agreement, for three-year warrants to purchase up to 90,915 shares of the Company’s common stock~~$185,000 bearing interest at an exercise price of $3.82. The Exchange Agreement amends the original terms of payment of the Existing Notes and waives payment of principal and interest due on each of September 7, 2022 and October 7, 2022. All principal, interest, and fees8% per annum. No payments are due onuntil the maturity date, ~~of the November~~which is January 9, ~~2022. As of the date of this Quarterly Report, the GGH Notes are due.~~2024.

~~Reverse Stock Split~~Equity Line of Credit

Pursuant to the Purchase Agreement with Tumim Capital dated November 8, 2022, the Company requested draw-downs and issued shares of common stock and received gross proceeds as follows: (i) April 19, 2023, the Company issued 195,970 shares of common stock to Tumim for gross proceeds of $144,339; and (ii) on May 5, 2023, the Company issued 262,798 shares of common stock to Tumim for gross proceeds of $172,614. No general solicitation was used, and a commission of 8% of the total gross proceeds was paid to Benchmark Investments, Inc. pursuant to the Underwriting Agreement between the Company and Kingswood Capital Markets, a division of Benchmark Investments, Inc., f/k/a EF Hutton, dated February 16, 2021. The Company relied on the exemptions from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, in connection with the sales. A Form D was filed with the SEC on November 21, 2022.

New Convertible Promissory Note

~~On November 4, 2022,~~In connection with entering into the Securities Purchase Agreement dated February 21, 2023 with an institutional investor, pursuant to which the Company ~~effected~~will sell to the investor a ~~reverse stock split~~series of senior secured convertible notes of the Company in the ~~ratio~~aggregate original principal amount of ~~1 share~~$5,617,978 (the “Notes”), the Company and holders of ~~common stock for 12 previously~~the Notes converted the following: (i) on May 2, 2023, a total of $190,000 of principal and interest of the Notes and the Company issued 246,754 shares of common stock upon conversion; (ii) on May 4, 2023, a total of $190,000 of principal and ~~filed an amended~~interest of the Notes and ~~restated certificate~~the Company issued 243,922 shares of ~~incorporation~~common stock upon conversion; and (iii) on May 5, 2023, a total of $95,000 of principal and interest of the Notes and the Company issued 121,961 shares of common stock upon conversion. A Form D was filed with the ~~Secretary~~SEC on March 3, 2023.

Warrants

In connection with the 2023 Purchase Agreement, all outstanding warrants issued in connection with the 2021 Transaction Documents were repriced at an exercise price of ~~State of Delaware.~~$1.00.

Supplemental Disclosures of Cash Flow Information:
Interest paid		175,252		411,981
Income taxes paid		-		-

Non-Cash Investing and Financing Activity
Equity issued to satisfy accrued stock-based compensation expense	$	27,821	$	-
Equity issued as consideration for intangible assets	$	39,600	$	-
Equity issued for purchase of non-controlling interest	$	231,789	$	-
Equity issued for acquisition of GDS	$	2,194,653	$	-
Warrants issued and debt principal exchanged upon modification of convertible debt	$	834,323	$	-
Shares issued upon conversion of debt and interest	$	6,460,243	$	1,422,068
Common stock and restricted stock units in GGH issued upon exchange of GGI options	$	1,576,648	$	-
Accrued stock-based compensation converted to equity	$	-	$	39,537
Series B Preferred stock converted to common stock	$	-	$	9,010,824
Reclassification of deferred offering cost to additional paid in capital	$	-	$	67,016
Common stock and warrants issued to underwriter in public offering	$	-	$	297,963
Common stock issued to placement agent as commitment fees	$	-	$	500,000
Right-of-use assets obtained in exchange for lease obligations	$	-	$	1,843,043

	2022		2021
	As of September 30,
	2022		2021
Options		46,752		48,975
Warrants		609,269		168,873
Unvested restricted stock units		28,628		-
Convertible debt		591,150		-
Total potentially dilutive shares		1,275,799		217,848


Land	$	1,528,134
Building		635,302
Cash		2,694
Prepaid expenses		674
Deferred tax credits		63,282
Accounts payable		(313	)
Taxes payable		(8,154	)
Related party payables		(10,686	)
Lease deposit payable		(6,025	)
Total	$	2,204,908


April 1 through December 31, 2023		807,654
For the years ended December 31,
2024		381,532
2025		409,927
2026		440,436
2027		473,215
2028		480,227
Thereafter		1,093,286
Gross Receivable		4,086,276
Less: Allowance		(190,172	)
Net Receivable	$	3,896,104


October 1 through December 31, 2022	$	213,695
For the years ended December 31,
2023		343,301
2024		381,532
2025		409,927
2026		440,436
2027		473,215
Thereafter		1,573,512
Total	$	3,835,618

	September 30, 2022		December 31, 2021

Wine in process	$	744,588	$	410,755
Clothes and accessories		460,224		208,759
Vineyard in process		363,859		597,900
Other		131,382		111,549
Finished wine		40,709		34,522
Clothes and accessories in process		-		127,154
Total	$	1,740,762	$	1,490,639

	March 31, 2023		December 31, 2022

Vineyard in process	$	711,418	$	516,096
Wine in process		757,500		797,862
Finished wine		31,552		40,735
Clothes and accessories		498,524		534,269
Total	$	1,998,994	$	1,888,962

	September 30, 2022			December 31, 2021

Buildings and improvements	$	3,847,687		$	2,869,300
Real estate development		541,116			210,322
Land		2,194,671			575,233
Furniture and fixtures		403,560			403,560
Vineyards		219,766			219,766
Machinery and equipment		737,433			693,761
Leasehold improvements		1,502,169			449,401
Computer hardware and software		299,718			245,978
Property and equipment, gross		9,746,120			5,667,321
Less: Accumulated depreciation and amortization		(2,065,102	)		(1,890,380	)
Property and equipment, net	$	7,681,018		$	3,776,941


October 1 through December 31, 2022	$	1,243
For the years ended December 31,
2023		4,973
2024		4,973
2025		4,973
2026		4,973
2027		4,973
Thereafter		45,176
Total	$	71,285

	Principal			Debt Discount			Convertible debt, net of discount

Balance at January 1, 2022	$	6,480,000		$	(751,652	)	$	5,728,348
Less:							$	-
Debt principal exchanged for warrants		(600	)		(833,723	)		(834,323	)
Debt principal converted to common stock		(4,481,191	)		-			(4,481,191	)
Amortization of debt discount		-			1,078,731			1,078,731
Extinguishment loss		-			421,272			421,272
Balance at September 30, 2022	$	1,998,209		$	(85,372	)	$	1,912,837

Warrants Outstanding					Warrants Exercisable
Exercise Price		Exercisable Into	Outstanding Number of Warrants		Weighted Average Remaining Life in Years		Exercisable Number of Warrants

$	1.00	Common Stock		404,064		1.8		404,064
$	1.34	Common Stock		3,377,099		2.9		3,377,099
$	3.82	Common Stock		454,588		0.4		454,588
$	6.00	Common Stock		602,225		0.7		602,225
$	90.00	Common Stock		1,278		2.9		1,278
		Total		4,839,254		2.3		4,839,254

				Weighted Average
	Number of			Grant Date Value
	RSUs			Per Share
RSUs non-vested January 1, 2023		511,500		$	1.16
Granted		10,000			1.31
Vested		(3,890	)		1.31
RSUs non-vested March 31, 2023		517,610		$	1.16

				Weighted		Weighted
				Average		Average
	Number of			Exercise		Remaining		Intrinsic
	Options			Price		Term (Yrs)		Value

Outstanding, January 1, 2023		40,612			85.35
Granted		-			-
Exercised		-			-
Expired		(5,806	)		138.60
Forfeited		-			-
Outstanding, March 31, 2023		34,806		$	76.47		1.4	$	-

Exercisable, March 31, 2023		29,698		$	75.78		1.2	$	-

	For the Three Months Ended March 31,
	2023			2022

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	56,449		$	53,325

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	-		$	-

Weighted Average Remaining Lease Term:
Operating leases		5.1			6.1

Weighted Average Discount Rate:
Operating leases		7.0	%		7.0	%

	For the Nine Months Ended
	September 30, 2022

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	214,997

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	-

Weighted Average Remaining Lease Term:
Operating leases		5.6

Weighted Average Discount Rate:
Operating leases		7.0	%


For the period October 1 through December 31, 2022	74,413
For the period April 1 through December 31, 2023			$	229,191
For the years ended December 31,
2023	303,603
2024	336,102			336,102
2025	357,881			357,881
2026	368,617			368,617
2027	365,004			365,004
Thereafter	120,463
2028				120,463
Total future minimum lease payments	1,926,083			1,777,258
Less: imputed interest	(348,134	)		(293,970	)
Total	1,577,950
Net future minimum lease payments				1,483,288
Less: operating lease liabilities, current portion				(208,590	)
Operating lease liabilities, non-current portion			$	1,274,698

	September 30, 2022			December 31, 2021
		(unaudited)
Cash	$	260,984		$	3,649,407
Working Capital (Deficiency)	$	(624,498	)	$	(790,334	)
Loans Payable	$	234,638		$	317,356
Debt Obligations	$	-		$	7,000
Convertible Debt Obligations	$	1,998,209		$	6,480,000

Exhibit		Description
1.1		Underwriting Agreement, dated February 16, 2021 ~~(6)~~(5)
1.2		Warrant Agreement, including the form of Warrant, made as of February 19, 2021, between the Company and Continental. ~~(7)~~(6)
3.1		Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State effective November 4, ~~2022(25)~~2022 (19)
3.2		Amended and Restated Bylaws (1)
3.3		Amendment to the Company’s Amended and Restated Bylaws as approved on July 8, 2019 (4)
4.1		2016 Stock Option Plan. (2)
4.2		First Amendment to 2016 Stock Option Plan as adopted by the Board of Directors on October 20, 2016. (2)
4.3		2018 Equity Incentive Plan. (3)
4.4		Amendment to the Company’s 2018 Equity Incentive Plan as approved by the Board of Directors on May 13, 2019 and the stockholders on July 8, 2019 (4)
4.5		Amendment to the Company’s 2018 Equity Incentive Plan as approved by the Board of Directors on July 12, 2021 and the stockholders on August 26, ~~2021(24)~~2021 (18)
4.6		Amendment to the Company’s 2018 Equity Incentive Plan as approved by the Board of Directors on July 1, 2022 and the stockholders on August 30, 2022*2022 (25)
4.7		Underwriters’ Warrant ~~(6)~~(5)
4.8		Form of ~~Unit~~ Warrant ~~(5)~~(12)
4.9		Form of Warrant ~~(28)~~(22)
4.10		Form of Amended and Restated Promissory Note ~~(27)~~(21)
4.11		Form Amended and Restated Warrant ~~(27)~~(21)
4.12		Form of Note ~~(29)~~(23)
4.13		Form Warrant ~~(29)~~(23)
4.14		Form Warrant (26)
4.15		Form Warrant (26)
4.16		Form Warrant (32)
4.17		Form Warrant (33)
10.1		Employment Agreement by and between the Company and Scott L. Mathis dated September 28, 2015 (29)
10.2		Retention Bonus Agreement by and between the Company and Scott L. Mathis dated March 29, 2020 ~~(9)~~(7)
~~10.2~~10.3		Employment Agreement by and between the Company and its Chief Financial Officer dated December 14, 2022 (28)
10.4		Commercial Lease Agreement between Gaucho Group, Inc. and Design District Development Partners, LLC, dated April 8, ~~2021(9)~~
~~10.3~~		~~Common Stock Purchase Agreement by and between Gaucho Group Holdings, Inc. and Tumim Stone Capital LLC, dated May 6, 2021(10)~~
~~10.4~~		~~Registration Rights Agreement by and between Gaucho Group Holdings, Inc. and Tumim Stone Capital LLC, dated May 6, 2021(10)~~2021 (8)
10.5		Amended and Restated Limited Liability Company Agreement of LVH Holdings LLC, dated June 16, 2021 ~~(11)~~(9)
10.6		Securities Purchase Agreement dated November 3, ~~2021(12)~~2021 (10)
10.7		Senior Secured Convertible Notes Issued by the ~~Company(12)~~Company (10)
10.8		Security and Pledge ~~Agreement(12)~~Agreement (10)
10.9		Stockholder Pledge ~~Agreement(12)~~Agreement (10)
10.10		Registration Rights ~~Agreement(12)~~Agreement (10)
10.11		First Amendment to Amended and Restated Limited Liability Agreement dated November 16, 2021 ~~(13)~~(11)
10.12		Second Amendment to Amended and Restated Limited Liability Agreement dated June 7, ~~2022(21)~~2022 (16)
10.13		~~Quota Purchase~~Third Amendment to Amended and Restated Limited Liability Agreement dated ~~February 3,~~June 7, 2022 ~~entered into by and between the Company, INVESTPROPERTY GROUP, LLC, and Hollywood Burger Holdings, Inc.(14)~~(27)

10.14		Exchange Agreement, dated as of February 22, 2022, by and among Gaucho Group Holdings, Inc. and the subscribers listed therein. ~~(15)~~(12)
10.15		~~Share Exchange and Subscription Agreement by and between the Company and the subscribers listed therein(16)~~
~~10.16~~		~~Offer to Purchase, dated February 28, 2022(16)~~
~~10.17~~		~~Position Statement of Gaucho Group, Inc. dated February 28, 2022(16)~~
~~10.18~~		Letter Agreement between the Company and certain institutional investors dated May 2, ~~2022(18)~~2022 (14)
~~10.19~~10.16		Conversion Agreement between the Company and certain institutional investors dated May 12, ~~2022(19)~~2022 (15)
~~10.20~~10.17		Letter Agreement, dated as of July 1, 2022, by and among Gaucho Group Holdings, Inc. and the Holders listed therein. ~~(23)~~(17)
~~10.21~~10.18		Exchange Agreement, dated as of September 22, 2022, by and among Gaucho Group Holdings, Inc. and the subscribers listed therein. ~~(28)~~(22)
~~10.22~~10.19		Common Stock Purchase Agreement by and between Gaucho Group Holdings, Inc. and Tumim Stone Capital LLC, dated November 8, 2022 ~~(30)~~(24)
~~10.23~~10.20		Registration Rights Agreement by and between Gaucho Group Holdings, Inc. and Tumim Stone Capital LLC, dated November 8, 2022 ~~(26)~~(20)
~~14.1~~10.21		~~Amended Code~~Exchange Agreement, dated as of ~~Business Conduct~~November 30, 2022, by and ~~Ethics~~among Gaucho Group Holdings, Inc. and ~~Whistleblower Policy(9)~~the subscribers listed therein. (26)
~~14.2~~10.22		~~Audit Committee Charter(9)~~Letter Agreement, dated as of February 2, 2023, by and among Gaucho Group Holdings, Inc. and the Holders listed therein. (30)
~~14.3~~10.23		~~Compensation Committee Charter~~Letter Agreement, dated as ~~amended on May 12, 2022(20)~~of February 8, 2023, by and among Gaucho Group Holdings, Inc. and the Holders listed therein. (31)
~~14.4~~10.24		~~Nominating Committee Charter adopted~~Exchange Agreement, dated as of February 20, 2023, by and among Gaucho Group Holdings, Inc. and the ~~Board of Directors on June 22, 2022 (22)~~subscribers listed therein. (32)
~~21.1~~10.25		~~Subsidiaries~~Securities Purchase Agreement dated February 21, 2023 (33)
10.26		Form of ~~Gaucho Group Holdings, Inc.(17)~~Senior Secured Convertible Note Issued by the Company (33)
10.27		Form of Security and Pledge Agreement (33)
10.28		Form of Stockholder Pledge Agreement (33)
10.29		Form of Registration Rights Agreement (33)
22.1		Subsidiary guarantors and issuers of guaranteed securities and affiliates whose securities collateralize securities of the ~~registrant(17)~~registrant (13)
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.*

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange ~~Act~~ Act.*
32		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
99.1		Algodon Wine Estates Property ~~Map(9)~~Map (34)
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Schema Document
101.CAL		Inline XBRL Calculation Linkbase Document
101.DEF		Inline XBRL Definition Linkbase Document
101.LAB		Inline XBRL Label Linkbase Document
101.PRE		Inline XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

1.		Incorporated by reference from the Company’s Registration of Securities Pursuant to Section 12(g) on Form 10 dated May 14, 2014.
2.		Incorporated by reference from the Company’s Annual Report on Form 10-K, filed on March 31, 2017.
3.		Incorporated by reference from the Company’s Quarterly Report on Form 10-Q, filed on November 19, 2018.
4.		Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 9, 2019.
5.		~~Incorporated by reference to the Company’s Amended Registration Statement on Form S-1 filed on January 27, 2020.~~
6.		Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 18, 2021.

Date: ~~November 18, 2022~~May 19, 2023	GAUCHO GROUP HOLDINGS, INC.

	By:	/s/ Scott L. Mathis
		Scott L. Mathis
		Chief Executive Officer

	By:	/s/ Maria Echevarria
		Maria Echevarria
		Chief Financial Officer and Chief Operating Officer