As
filed with the Securities and Exchange Commission on November 24,
2021
Registration
No.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
Registration statement under the Securities Act of
1933
Gaucho Group Holdings, Inc.
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Delaware |
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6552 |
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52-2158952 |
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
No.)
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112 NE 41st Street, Suite 106, Miami, Florida
33137
(Address,
including zip code, and telephone number, including area
code,
of
registrant’s principal executive offices)
Scott
L. Mathis
President
& Chief Executive Officer
Gaucho
Group Holdings, Inc.
112
NE 41st Street, Suite 106
Miami,
Florida 33137
T.
212-739-7700
(Name,
address, including zip code, and telephone number, including area
code, of agent service)
Copies to:
Victoria
B. Bantz, Esq.
Burns,
Figa & Will, P.C.
6400
S. Fiddler’s Green Circle, Suite 1000
Greenwood
Village, Colorado 80111
T.
303-796-2626
Approximate
Date of Commencement of Proposed Sale to the Public: As soon as
possible after this Registration Statement becomes
effective.
If
any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended (the “Securities Act”),
check the following box. [X]
If
this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller
reporting 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.
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Large
accelerated filer [ ] |
Accelerated
filer [ ] |
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Non-accelerated
filer [X] |
Smaller
reporting company [X] |
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Emerging
growth company [X] |
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 7(a)(2)(B) of the Securities Act.
[ ]
CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities to be Registered |
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Amount
to be Registered(1) |
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Proposed
Maximum Offering Price Per
Security(2)(3) |
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Proposed
Maximum Aggregate Offering Price(2) |
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Amount
of Registration Fee |
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Shares
of Common Stock, par value $0.01 per share |
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4,500,000 |
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$ |
3.00 |
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$ |
13,500,000 |
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$ |
1,251.45 |
(1) |
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(1) |
Represents
4,500,000 shares of Common Stock that are issuable pursuant to a
purchase agreement with the selling stockholder named herein.
Pursuant to Rule 416(a) of the Securities Act of 1933, as amended
(the “Securities Act”), this Registration Statement also covers any
additional shares of Common Stock which may become issuable to
prevent dilution from stock splits, stock dividends and similar
events. |
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(2) |
The
proposed maximum offering price per share of Common Stock will be
determined from time to time in connection with, and at the time
of, the sale by the holder of such Common Stock. |
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(3) |
Estimated
solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) of the shares of
Common Stock on the basis of the closing price per share as
reported on the Nasdaq Exchange on November 23, 2021. |
We
hereby amend this registration statement on such date or dates as
may be necessary to delay our effective date until we will file a
further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended or until
this Registration Statement will become effective on such date as
the Securities and Exchange Commission, in accordance with Section
8(a) may determine.
The
information in this prospectus is not complete and may be changed.
The selling stockholder may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and the selling stockholder is not soliciting an
offer to buy these securities in any jurisdiction where the offer
or sale is not permitted.
SUBJECT
TO COMPLETION, DATED NOVEMBER 24, 2021
PRELIMINARY
PROSPECTUS
Gaucho Group Holdings, Inc.
4,500,000
Shares
This
prospectus relates to the resale of up to 4,500,000 shares of our
common stock, par value $0.01 per share (the “Common Stock”), by
Tumim Stone Capital LLC (Tumim Stone Capital). Tumim Stone Capital
is also referred to in this prospectus as the selling stockholder.
Gaucho Group Holdings, Inc. (the “Company”, “we”, “us”, or “our”)
will not receive proceeds from the sale of the shares by the
selling stockholder.
We have already received
proceeds of approximately $5,135,210 from the sale of our Common
Stock to the selling stockholder pursuant to that certain Common
Stock Purchase Agreement dated May 6, 2021 (the “Purchase
Agreement”). The Purchase Agreement provides us the right to sell
to Tumim Stone Capital shares of the Company’s Common Stock for
gross proceeds of up to $50,000,000, subject to certain limitations
and conditions set forth therein.
In connection with the Purchase Agreement, we also executed that
certain Registration Rights Agreement dated May 6, 2021 (the
“Registration Rights Agreement”), pursuant to which we agreed to
register the resale by Tumim Stone Capital of the shares of Common
Stock issued to Tumim Stone Capital under the Purchase Agreement.
In accordance with the Registration Rights Agreement, we previously
filed a registration statement with the Securities and Exchange
Commission (the “SEC”) effective May 25, 2021 (the “Prior
Registration Statement”) pursuant to which we registered 1,494,404
shares of Common Stock. This number represented 19.99% of the
shares of Common Stock outstanding immediately prior to the
execution of the Purchase Agreement (the “Exchange Cap”), which
pursuant to the rules of the Nasdaq Capital Market (“Nasdaq”), we
are limited in issuing shares in excess of the Exchange Cap without
stockholder approval.
Pursuant to the Purchase Agreement, we may continue to receive
gross proceeds of up to an additional $44,864,790 from the sale of
our Common Stock to the selling stockholder. This registration
statement of which this prospectus is a part registers 4,500,000
shares of common stock for resale, allowing us to raise
approximately $13,500,000, based upon the Nasdaq closing price on
November 23, 2021 of $3.00, once this registration statement is
declared effective.
As of November 23, 2021, the Company has sold to Tumim Stone
Capital a total of 1,374,067 shares of Common Stock under the
Purchase Agreement and issued 120,337 Commitment Shares, all of
which were registered for resale pursuant to the Prior Registration
Statement. As of November 23, 2021, a total of 101,878 shares
issued under the Purchase Agreement may be resold by the selling
stockholder under the Prior Registration Statement.
Subsequent to the effectiveness of the Prior Registration
Statement, and pursuant to the applicable Nasdaq rules, the
Company’s stockholders on August 26, 2021 approved the issuance of
an additional 10,000,000 shares of Common Stock to Tumim Stone
Capital pursuant to the Purchase Agreement, thereby allowing us to
issue up to 10,000,000 shares in excess of the Exchange Cap. In
accordance with our obligations under the Registration Rights
Agreement, we are filing a registration statement that includes
this prospectus with the SEC to register under the Securities Act
the resale by Tumim Stone Capital of up to 4,500,000 shares of
Common Stock that we may issue to Tumim Stone Capital under the
Purchase Agreement. The registration statement that includes this
prospectus will be the second registration statement filed to
register the resale of shares sold to Tumim Stone Capital under the
Purchase Agreement.
The
selling stockholder is an “underwriter” within the meaning of
Section 2(a)(11) of the Securities Act. Tumim Stone Capital may
sell the shares of Common Stock described in this prospectus in a
number of different ways and at varying prices. See “Plan of
Distribution” for more information about how the selling
stockholder may sell the shares of Common Stock being registered
pursuant to this prospectus.
We
will pay the expenses of registering these shares, but all selling
and other expenses incurred by the selling stockholder will be paid
by the selling stockholder. See “Plan of Distribution.”
Our
Common Stock is presently listed on the Nasdaq Capital Market
(“Nasdaq”) under the symbol “VINO.” On November 23, 2021, the last
reported closing bid price of our Common Stock on the Nasdaq was
$3.00 per share.
You
should read this prospectus, together with additional information
described under the headings “Incorporation of Certain Information
by Reference” and “Where You Can Find More Information,” carefully
before you invest in any of our securities.
Investing
in the securities involves a high degree of risk. See “Risk
Factors” beginning on page 10 of this prospectus.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state
securities commission has approved or disapproved of the securities
offered hereby or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is November 24, 2021
INDEX
ABOUT THIS PROSPECTUS
The
registration statement on Form S-1, of which this prospectus forms
a part and that we have filed with the Securities and Exchange
Commission (the “SEC”), includes exhibits that provide more detail
of the matters discussed in this prospectus.
Additionally,
we incorporate by reference important information into this
prospectus. You may obtain the information incorporated by
reference without charge by following the instructions under the
section of this prospectus entitled “Where You Can Find More
Information.” You should read this prospectus and the related
exhibits filed with the SEC, together with the additional
information described under the headings “Incorporation of Certain
Information by Reference” and “Where You Can Find More
Information.”
You
should rely only on the information contained in this prospectus
and in any free writing prospectus prepared by or on behalf of us.
We have not, and the selling stockholder has not, authorized anyone
to provide you with information different from, or in addition to,
that contained in this prospectus or any related free writing
prospectus. This prospectus is an offer to sell only the securities
offered hereby but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this
prospectus is current only as of its date. Our business, financial
condition, results of operations and prospects may have changed
since that date.
Neither
we nor the selling stockholder are offering to sell or seeking
offers to purchase these securities in any jurisdiction where the
offer or sale is not permitted. Neither we nor the selling
stockholder have done anything that would permit this Offering or
possession or distribution of this prospectus in any jurisdiction
where action for that purpose is required, other than in the United
States. Persons outside the jurisdiction of the United States who
come into possession of this prospectus and any free writing
prospectus related to this Offering are required to inform
themselves about and to observe any restrictions relating to this
Offering and the distribution of this prospectus and any such free
writing prospectus applicable to that jurisdiction.
Unless
the context otherwise requires, the terms “Gaucho Group Holdings,”
“GGH,” the “Company,” “we,” “us” and “our” refer to Gaucho Group
Holdings, Inc. and our subsidiaries. We have registered our name,
logo and the trademarks “ALGODON®,” and “Gaucho – Buenos Aires™” in
the United States. Other service marks, trademarks and trade names
referred to in this prospectus are the property of their respective
owners. Except as set forth above and solely for convenience, the
trademarks and trade names in this prospectus are referred to
without the ®, © and ™ symbols, but such
references should not be construed as any indicator that their
respective owners will not assert, to the fullest extent under
applicable law, their rights thereto.
This
prospectus includes industry and market data and other information,
which we have obtained from, or is based upon, market research,
independent industry publications or other publicly available
information. Although we believe each such source to have been
reliable as of its respective date, we have not independently
verified the information contained in such sources. Any such data
and other information is subject to change based on various
factors, including those described below under the heading “Risk
Factors” and elsewhere in this prospectus.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Certain
statements included or incorporated by reference in this prospectus
constitute forward-looking statements within the meaning of
applicable securities laws. All statements contained in this
registration statement that are not clearly historical in nature
are forward-looking, and the words “anticipate”, “believe”,
“continue”, “expect”, “estimate”, “intend”, “may”, “plan”, “will”,
“shall” and other similar expressions are generally intended to
identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934 (the
“Exchange Act”). All forward-looking statements are based on our
beliefs and assumptions based on information available at the time
the assumption was made. These forward-looking statements are not
based on historical facts but on management’s expectations
regarding future growth, results of operations, performance, future
capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business
prospects and opportunities. Forward-looking statements involve
significant known and unknown risks, uncertainties, assumptions and
other factors that may cause our actual results, levels of
activity, performance or achievements to differ materially from
those implied by forward-looking statements. These factors should
be considered carefully and prospective investors should not place
undue reliance on the forward-looking statements. Although the
forward-looking statements contained in this registration statement
or incorporated by reference herein are based upon what management
believes to be reasonable assumptions, there is no assurance that
actual results will be consistent with these forward-looking
statements. These forward-looking statements are made as of the
date of this registration statement or as of the date specified in
the documents incorporated by reference herein, as the case may be.
Important factors that could cause such differences include, but
are not limited to:
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the
uncertainties associated with the ongoing COVID-19 pandemic,
including, but not limited to uncertainties surrounding the
duration of the pandemic, government orders and travel
restrictions, and the effect on the global economy and consumer
spending. |
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the
risks and additional expenses associated with international
operations and operations in a country (Argentina) which has had
significantly high inflation in the past; |
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the
uncertainties raised by a fluid political situation and fundamental
policy changes that could be affected by presidential
elections; |
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the
risks associated with a business that has never been profitable,
whose business model has been restructured from time to time, and
which continues to have and has significant working capital
needs; |
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the
possibility of external economic and political factors preventing
or delaying the acquisition, development or expansion of real
estate projects, or adversely affecting consumer interest in our
real estate offerings; |
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changes
in external market factors, as they relate to our emerging
e-commerce business; |
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changes
in the overall performance of the industries in which our various
business units operate; |
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changes
in business strategies that could be necessitated by market
developments as well as economic and political
considerations; |
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possible
inability to execute the Company’s business strategies due to
industry changes or general changes in the economy
generally; |
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changes
in productivity and reliability of third parties, counterparties,
joint venturers, suppliers or contractors; and |
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the
success of competitors and the emergence of new
competitors. |
Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
levels of activity or performance. You should not place undue
reliance on forward-looking statements contained in this
prospectus.
We
undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date on which such
statements were made or to reflect the occurrence of unanticipated
events, except as may be required by applicable securities
laws.
Prospectus Summary
This
summary highlights information contained elsewhere in this
prospectus or incorporated by reference. It may not contain all of
the information that you should consider before investing in our
securities. You should read this entire prospectus carefully,
including the “Risk Factors”, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” sections, and the
financial statements and related notes included herein. This
prospectus includes forward-looking statements that involve risks
and uncertainties. See “Cautionary Note Regarding Forward-Looking
Statements.”
Company
Structure and History
Gaucho
Group Holdings, Inc. (“GGH” or the “Company”) is a publicly traded
holding company that includes a growing collection of e-commerce
retail platforms with a concentration on fine wines, olive oil,
hospitality, luxury real estate, leather goods, ready-to-wear,
fashion accessories, and luxury home items.
For
more than ten years, Gaucho Group Holdings, Inc.’s
(gauchoholding.com) mission has been to source and develop
opportunities in Argentina’s undervalued luxury real estate and
consumer marketplace. Our company has positioned itself to take
advantage of the continued and fast growth pace of global
e-commerce across multiple market sectors, with the goal of
becoming a leader in diversified luxury goods and experiences in
sought after lifestyle industries and retail landscapes. With a
concentration on fine wines (algodonfinewines.com &
algodonwines.com.ar), hospitality (algodonhotels.com) and luxury
real estate (algodonwineestates.com) associated with our
proprietary Algodon brand, as well as the leather goods,
ready-to-wear and accessories of the fashion brand Gaucho – Buenos
Aires™ (gauchobuenosaires.com), these are the luxury brands in
which Argentina finds its contemporary expression.
GGH
seeks to grow its direct-to-consumer online products to global
markets in the United States, Asia, the United Kingdom, Europe, and
Argentina.
GGH’s
goal is to become recognized as the LVMH (“Louis Vuitton Moët
Hennessy”) of South America’s leading luxury brands. Through its
wholly owned subsidiary Algodon Global Properties, LLC, 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.
The
Company’s senior management is based in Florida, and its local
operations are managed in Buenos Aires and San Rafael, Argentina by
professional staff with considerable e-commerce, wine, hotel,
hospitality and resort experience.
The
Company was incorporated on April 5, 1999 in the State of Delaware
in the dot com era, and has pivoted from its origins as one of the
earliest online private investment banking firms to its current
mission and offerings. Effective March 11, 2019, the Company
changed its name from Algodon Group, Inc. to Gaucho Group Holdings,
Inc. to reflect its expanded growth strategy, progress, and
transition to a diversified luxury goods company.
Our
website is http://www.gauchoholdings.com. Information
contained on our website does not constitute part of and is not
incorporated into this prospectus.
The
current corporate organizational structure of GGH and how we have
operated substantially for the past year appears below.
The
remaining 21% of Gaucho Group, Inc. (“GGI”) is held by certain
affiliates and outside investors who provided the startup capital
for GGI, a majority of which are stockholders of GGH. At the
Company’s 2021 Annual Stockholder Meeting held on August 26, 2021,
the stockholders approved the acquisition by the Company of the
remaining 21% of shares of GGI in exchange for the issuance of
shares of the Company. See “Certain Relationships and Related
Transactions” on page 28.
Recent
Business Developments
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On
June 14, 2021, the Company organized Gaucho Ventures I – Las Vegas,
LLC (“GVI”) as a wholly owned subsidiary, pursuant to the Delaware
Limited Liability Company Act. |
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On
June 16, 2021, the Company, through GVI, entered into the Amended
and Restated Limited Liability Company Agreement (the “LVH LLC
Agreement”) of LVH Holdings LLC (“LVH”). |
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On
July 2, 2021, the Company issued 274,500 shares of common stock
upon exercise of warrants to purchase 274,500 shares of common
stock with an exercise price of $6.00 per share and received
aggregate proceeds of $1,647,000. |
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On
July 6, 2021, the Company issued 8,254 shares of common stock at
$4.79 per share with a fair value of $39,537 in settlement of its
matching obligations for the year ended December 31, 2020 under the
Company’s 401(k) profit sharing plan. |
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On
July 21, 2021, the Company issued 30,000 shares of common stock at
$3.53 per share with a fair value of $105,900 pursuant to a service
agreement with TraDigital Marketing Group. |
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On
August 26, 2021 at the Annual General Meeting of the Stockholders
of the Company, the stockholders approved: (i) an amendment to the
2018 Equity Incentive Plan thereby increasing the number of shares
available for awards under the plan to 15% of our common stock
outstanding on a fully diluted basis as of the date of stockholder
approval; (ii) the purchase of Argentina real estate from Hollywood
Burger Holdings, Inc.; and (iii) the purchase of shares of the
remaining 21% of common stock of Gaucho Group, Inc; |
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On
October 26, 2021, the Company’s compensation committee approved an
extension to our President and CEO’s employment agreement to expire
on December 31, 2021. Please see “Executive Compensation” for
additional information. |
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Effective November 1, 2021, non-resident foreign citizens are
permitted to enter Argentina. |
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On
November 3, 2021, the Company entered into a Securities Purchase
Agreement with certain institutional investors, pursuant to which
on November 9, 2021, the Company sold to the investors a series of
senior secured convertible notes of the Company, in the aggregate
original principal amount of $6,480,000 (the “Notes”), which Notes
shall be convertible into shares of common stock of the Company at
a conversion price of $3.50 (subject to adjustment). |
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On
November 10, 2021, the Company made an additional capital
contribution to LVH in the amount of $3.5 million and received an
additional 198 Units. |
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On
November 11, 2021, in connection with the Securities Purchase
Agreement, the Company issued 596,165 shares of common stock to the
holders of the Notes. |
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On
November 16, 2021, the Company, through GVI, executed a First
Amendment to the LVH LLC Agreement to modify the number, amount,
and timing of the Company’s additional capital contributions to
LVH. As of November 23, 2021, the Company, through GVI, has made a
total of $6.0 million in capital contributions. |
For a
more thorough discussion of the Company’s business, see “Business”
on page 24.
Implications
of Being an Emerging Growth Company
We
qualify as an “emerging growth company” as defined in the JOBS Act.
For so long as we remain an emerging growth company, we are
permitted and currently intend to rely on the following provisions
of the JOBS Act that contain exceptions from disclosure and other
requirements that otherwise are applicable to companies that
conduct initial public offerings and file periodic reports with the
SEC. These provisions include, but are not limited to:
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being
permitted to present only two years of audited financial statements
in this prospectus and only two years of related “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in our periodic reports and registration statements,
including this prospectus; |
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not
being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act (“SOX”); |
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reduced
disclosure obligations regarding executive compensation in our
periodic reports, proxy statements and registration statements,
including in this prospectus; and |
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exemptions
from the requirements of holding a nonbinding advisory vote on
executive compensation and stockholder approval of any golden
parachute payments not previously approved. |
We
will remain an emerging growth company until:
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the
first to occur of the last day of the fiscal year (i) that follows
February 19, 2026, (ii) in which we have total annual gross revenue
of at least $1.07 billion or (iii) in which we are deemed to be a
“large accelerated filer,” as defined in the Exchange Act, which
means the market value of our Common Stock that is held by
non-affiliates exceeds $700 million as of the end of that year’s
second fiscal quarter; or |
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if it
occurs before any of the foregoing dates, the date on which we have
issued more than $1 billion in non-convertible debt over a
three-year period. |
We
have elected to take advantage of certain of the reduced disclosure
obligations in this prospectus and may elect to take advantage of
other reduced reporting requirements in our future filings with the
SEC. As a result, the information that we provide to our
stockholders may be different than what you might receive from
other public reporting companies in which you hold equity
interests.
We
have elected to avail ourselves of the provision of the JOBS Act
that permits emerging growth companies to take advantage of an
extended transition period to comply with new or revised accounting
standards until those standards apply to private companies. As a
result, we will not be subject to new or revised accounting
standards at the same time as other public companies that are not
emerging growth companies.
For
additional information, see the section titled “Risk
Factors — Risks of being an Emerging Growth Company — We are an
“emerging growth company” and the reduced disclosure requirements
applicable to emerging growth companies may make our Common Stock
less attractive to investors.
THE OFFERING
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Issuer |
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Gaucho
Group Holdings, Inc. |
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Common
Stock offered by the selling
stockholder
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Up to
4,500,000 shares of our Common Stock, consisting of up to 4,500,000
shares of Common Stock that we may sell to Tumim Stone Capital,
from time to time at our sole discretion, pursuant to the Purchase
Agreement, described below.
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Common
Stock outstanding prior to
this
Offering
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9,879,081
shares (as of November 23, 2021) |
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Common
Stock outstanding immediately
after
this Offering
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14,379,081
shares (as
of November 23, 2021)
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Nasdaq
symbol |
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Our
Common Stock is currently listed on Nasdaq under the symbol
“VINO.” |
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Use
of proceeds |
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The
selling stockholder will receive all of the proceeds from the sale
of the shares offered for sale by it under this prospectus. We will
not receive proceeds from the sale of the shares of our Common
Stock by the selling stockholder through this prospectus. However,
we may receive gross proceeds of up to $50 million from the sale of
our Common Stock to the selling stockholder under the Purchase
Agreement ($5,135,210 of which we have already received). We intend
to use proceeds from the selling stockholder that we receive under
the Purchase Agreement for working capital and general corporate
purposes, which include, but are not limited to, inventory
production and marketing for Gaucho Group, Inc., costs of this
Offering, operating expenses and working capital. See “Use of
Proceeds” on page 13 for more information. |
|
|
|
|
|
Risk
factors |
|
Investing
in our securities involves a high degree of risk. As an investor
you should be prepared to lose your entire investment See “Risk
Factors” beginning on page 10. |
The
above discussion excludes:
|
● |
587,699
shares of Common Stock underlying options issued as of September
30, 2021 with a weighted average exercise price of $9.67 per
share; |
|
● |
2,026,478
shares of Common Stock underlying warrants issued as of September
30, 2021, with a weighted average exercise price of $5.94;
and |
|
● |
1,851,429
shares of Common Stock underlying secured convertible promissory
notes issued as of November 9, 2021. |
THE
TUMIM STONE CAPITAL TRANSACTION
On
May 6, 2021, we entered into a Common Stock Purchase Agreement (the
“Purchase Agreement”) and a Registration Rights Agreement (the
“Registration Rights Agreement”) with Tumim Stone Capital LLC
(“Tumim Stone Capital”). Pursuant to the Purchase Agreement, we
have the right to sell to Tumim Stone Capital 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. In accordance with our obligations under the
Registration Rights Agreement, we previously filed a registration
statement with the Securities and Exchange Commission (the “SEC”)
effective May 25, 2021 (the “Prior Registration Statement”), to
register under the Securities Act of 1933, as amended (the
“Securities Act”), the resale by Tumim Stone Capital of shares of
Common Stock issuable to Tumim Stone Capital under the Purchase
Agreement. Under the Prior Registration Statement, we registered
1,494,404 shares of Common Stock. This number represented 19.99% of
the shares of Common Stock outstanding immediately prior to the
execution of the Purchase Agreement (the “Exchange Cap”), which
pursuant to the rules of the Nasdaq Capital Market (“Nasdaq”), we
are limited in issuing shares in excess of the Exchange Cap without
stockholder approval.
As of November 23, 2021, the Company has sold to Tumim Stone
Capital a total of 1,374,067 shares of Common Stock under the
Purchase Agreement for total gross proceeds of $5,135,210 and
issued 120,337 Commitment Shares, which were resold pursuant to the
Prior Registration Statement. As of November 23, 2021, a total of
101,878 shares issued under the Purchase Agreement may be resold by
the selling stockholder under the Prior Registration Statement.
Subsequent
to the effectiveness of the Prior Registration Statement, and
pursuant to the applicable rules of The Nasdaq Stock Market LLC
(“Nasdaq”), the Company’s stockholders approved the issuance of an
additional 10,000,000 shares of Common Stock to Tumim Stone Capital
pursuant to the Purchase Agreement, thereby allowing us to issue up
to 10,000,000 shares in excess of the Exchange Cap. In accordance
with our obligations under the Registration Rights Agreement, we
are filing a registration statement that includes this prospectus
with the SEC to register under the Securities Act the resale by
Tumim Stone Capital of an additional 4,500,000 shares of Common
Stock that we may issue to Tumim Stone Capital under the Purchase
Agreement. The registration statement that includes this
prospectus will be the second registration statement filed to
register the resale of shares sold to Tumim Stone Capital under the
Purchase Agreement.
As
set forth in the Purchase Agreement, we have the right, but not the
obligation, from time to time at our sole discretion over the
36-month period beginning June 8, 2021, to direct Tumim Stone
Capital to purchase up to a fixed maximum amount of shares of
Common Stock as set forth in the Purchase Agreement (each, a “Fixed
Purchase”), on any trading day, so long as, in addition to other
requirements set forth in the Purchase Agreement, (i) the daily
volume weighted average price for the Common Stock for such trading
day is not the lowest daily volume weighted average price for the
Common Stock during the 10-consecutive trading day period ending on
and including such trading day (the “Fixed Purchase Valuation
Period”), and (ii) the closing sale price of the Common Stock on
such trading day is greater than each of (A) the specified
threshold price for such Fixed Purchase set forth in the Purchase
Agreement and (B) the arithmetic average of the 10-daily volume
weighted average prices for the Common Stock during such Fixed
Purchase Valuation Period for such Fixed Purchase.
In
addition to Fixed Purchases, we have the right, but not the
obligation, from time to time at our sole discretion over the
36-month period beginning June 8, 2021, to direct Tumim Stone
Capital to purchase additional amounts of our Common Stock as VWAP
purchases under the Purchase Agreement (each, a “VWAP Purchase”),
by delivering a VWAP Purchase notice on any trading day, so long
as, in addition to other requirements set forth in the Purchase
Agreement, the closing sale price of the Common Stock on the date
we deliver such VWAP Purchase notice to Tumim Stone Capital is not
less than the specified threshold price for such VWAP Purchase set
forth in the Purchase Agreement. The Company may not deliver a
Fixed Purchase notice for a Fixed Purchase and a VWAP Purchase
notice for a VWAP Purchase to Tumim Stone Capital on the same
trading day, and we may not deliver any Fixed Purchase notice or
VWAP Purchase notice to Tumim Stone Capital, unless at least three
trading days has elapsed since the date on which the most recent
prior notice for a Fixed Purchase or VWAP Purchase was delivered by
us to Tumim Stone Capital.
The
purchase price of the shares of Common Stock that we elect to sell
to Tumim Stone Capital pursuant to a Fixed Purchase under the
Purchase Agreement will be determined by reference to the market
prices of the Common Stock during the applicable Fixed Purchase
Valuation Period for such Fixed Purchase as set forth in the
Purchase Agreement, less a fixed 7% discount. The purchase price of
the shares of Common Stock that we elect to sell to Tumim Stone
Capital pursuant to a VWAP Purchase under the Purchase Agreement
will be determined by reference to the lowest daily volume weighted
average price of the Common Stock during the three consecutive
trading day-period immediately following the date on which we
timely deliver the applicable VWAP Purchase notice for such VWAP
Purchase to Tumim Stone Capital (the “VWAP Purchase Valuation
Period”) as set forth in the Purchase Agreement, less a fixed 5%
discount. There is no upper limit on the price per share that Tumim
Stone Capital could be obligated to pay for the Common Stock under
the Purchase Agreement. The purchase price per share of Common
Stock to be sold in a Fixed Purchase or a VWAP Purchase will be
equitably adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other
similar transaction occurring during the applicable Fixed Purchase
Valuation Period or the applicable VWAP Purchase Valuation Period,
respectively, used to compute the purchase price per share for such
purchase.
The Company will control the timing and amount of any sales of
Common Stock to Tumim Stone Capital. Actual sales of shares of our
Common Stock 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
Purchase Agreement also prohibits us from directing Tumim Stone
Capital to purchase any shares of our Common Stock if those shares,
when aggregated with all other shares of our Common Stock then
beneficially owned by Tumim Stone Capital (as calculated pursuant
to Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder), would result in Tumim Stone
Capital beneficially owning more than 4.99% of the outstanding
Common Stock (the “Beneficial Ownership Cap”).
As of November 23, 2021, the Company has received gross proceeds of
$5,135,210 under the Purchase Agreement. The
net proceeds from any additional sales under the Purchase
Agreement, will depend on the frequency and prices at which the
Company continues to sell shares of Common Stock to Tumim Stone
Capital. The Company currently plans to use the 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 into a “Variable Rate Transaction,” as
defined in the Purchase Agreement, and as more specifically
described in the section of this prospectus entitled “The Tumim
Stone Capital Transaction.” 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 the term of the
Purchase Agreement.
The
Purchase Agreement will automatically terminate upon the earliest
of (i) July 1, 2024, (ii) Tumim Stone Capital’s purchase of all
$50,000,000 worth of Common Stock, or (iii) the occurrence of
certain other events set forth in the Purchase Agreement. The
Company has the right to terminate the Purchase Agreement at any
time, 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 and obligations under the
Purchase Agreement, and no provision of the Purchase Agreement or
the Registration Rights Agreement may be modified or waived by the
parties.
The
Purchase Agreement and the 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.
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 has paid, and will
continue to 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 in connection with purchases of our Common
Stock pursuant to Fixed Purchases and VWAP Purchases that we elect
to make from time to time, in our sole discretion, pursuant to the
Purchase Agreement.
We
have previously sold 1,347,067 shares of Common Stock to Tumim
Stone Capital Market under the Purchase Agreement for total gross
proceeds of $5,135,210. Because the purchase
price per share to be paid by Tumim Stone Capital for the shares of
Common Stock that we may elect to sell to Tumim Stone Capital under
the Purchase Agreement after the effective date of this prospectus
will fluctuate based on the market prices of our Common Stock
during the applicable Fixed Purchase Valuation Period and
applicable VWAP Purchase Valuation Period for each Fixed Purchase
and VWAP Purchase made pursuant to the Purchase Agreement, as of
the date of this prospectus it is not possible for us to guarantee
the number of shares of Common Stock that we will sell to Tumim
Stone Capital under the Purchase Agreement after the effective date
of this prospectus, the actual purchase price per share to be paid
by Tumim Stone Capital for those shares, or the actual gross
proceeds to be raised by us from those sales. As of November 23,
2021, there were 9,879,081 shares of our Common Stock outstanding,
of which 9,460,592 shares were held by non-affiliates, but excludes
the 4,500,000 shares of Common Stock we may, in our sole
discretion, sell to Tumim Stone Capital from time to time from and
after the effective date of this prospectus pursuant to the
Purchase Agreement. Although the Purchase Agreement provides that
we may sell up to an aggregate of $50,000,000 of our Common Stock
to Tumim Stone Capital, and under the Prior Registration Statement,
1,374,067 shares of Common Stock have been sold for gross proceeds
of $5,135,210, only an additional 4,500,000 shares of our Common
Stock are being registered for resale under this prospectus. If all
of the 4,500,000 shares offered for resale by Tumim Stone Capital
under this prospectus were issued and outstanding as of November
23, 2021, such shares would represent approximately 31.30% of the
total number of shares of our Common Stock outstanding and
approximately 32.23% of the total number of outstanding shares held
by non-affiliates, in each case as of November 23, 2021.
If,
in addition to the 1,374,067 shares of Common Stock already sold
pursuant to the Prior Registration Statementwe elect to sell to
Tumim Stone Capital all of the 4,500,000 shares of Common Stock
being registered for resale under this prospectus that are
available for sale by us to Tumim Stone Capital in Fixed Purchases
and VWAP Purchases under the Purchase Agreement, depending on the
market prices of our Common Stock during the applicable Fixed
Purchase Valuation Period for each Fixed Purchase and the
applicable VWAP Purchase Valuation Period for each VWAP Purchase
made pursuant to the Purchase Agreement, the actual gross proceeds
from the sale of shares may still be substantially less than the
$50,000,000 Total Commitment available to us under the Purchase
Agreement. If it becomes necessary for us to issue and sell to
Tumim Stone Capital under the Purchase Agreement more shares than
are being registered for resale under this prospectus in order to
receive aggregate gross proceeds equal to the Total Commitment of
$50,000,000 under the Purchase Agreement, we must first file with
the SEC one or more additional registration statements to register
under the Securities Act the resale by Tumim Stone Capital of any
such additional shares of our Common Stock we wish to sell from
time to time under the Purchase Agreement, which the SEC must
declare effective, in each case before we may elect to sell any
additional shares of our Common Stock to Tumim Stone Capital under
the Purchase Agreement. Any issuance and sale by us under the
Purchase Agreement of a substantial amount of shares of Common
Stock in addition to the 4,500,000 shares of our Common Stock being
registered for resale by Tumim Stone Capital under this prospectus
could cause additional substantial dilution to our stockholders.
The number of shares of our common stock ultimately offered for
sale by Tumim Stone Capital is dependent upon the number of shares
of Common Stock we ultimately sell to Tumim Stone Capital under the
Purchase Agreement.
The
issuance of our Common Stock to Tumim Stone Capital pursuant to the
Purchase Agreement will not affect the rights or privileges of our
existing stockholders, except that the economic and voting
interests of each of our existing stockholders will be diluted.
Although the number of shares of our Common Stock that our existing
stockholders own will not decrease, the shares of our Common Stock
owned by our existing stockholders will represent a smaller
percentage of our total outstanding shares of our Common Stock
after any such issuance. There are substantial risks to our
stockholders as a result of the sale and issuance of Common Stock
to Tumim Stone Capital under the Purchase Agreement. See “Risk
Factors.”
SUMMARY CONSOLIDATED FINANCIAL
INFORMATION
The
following tables present our summary consolidated financial and
other data as of and for the periods indicated. The summary
consolidated statements of operations data for the fiscal years
ended December 31, 2020 and December 31, 2019, and the summary
consolidated balance sheet data as of December 31, 2020 and
December 31, 2019, are derived from our audited financial
statements incorporated by reference. The consolidated statement of
operations data for the three months ended September 30, 2021 and
2020 and the summary consolidated balance sheet data as of
September 30, 2021, are derived from our unaudited condensed
consolidated financial statements incorporated by
reference.
The
summarized financial information presented below is derived from
and should be read in conjunction with our audited consolidated
financial statements and our unaudited consolidated financial
statements incorporated by reference including the notes to those
financial statements, both of which are incorporated by reference
in this prospectus along with the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.” Our historical results are not necessarily indicative
of our future results.
|
|
|
September
30, |
|
|
December
31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Consolidated
Balance Sheets Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,836,500 |
|
|
$ |
134,536 |
|
|
$ |
40,378 |
|
|
Total
current assets |
|
|
6,655,914 |
|
|
|
2,523,342 |
|
|
|
2,428,747 |
|
|
Total
assets |
|
|
17,613,893 |
|
|
|
5,970,536 |
|
|
|
5,920,360 |
|
|
Total
current liabilities |
|
|
2,341,579 |
|
|
|
5,096,441 |
|
|
|
5,737,953 |
|
|
Total
liabilities |
|
|
4,031,728 |
|
|
|
5,576,710 |
|
|
|
5,920,934 |
|
|
Total
stockholders’ equity (deficiency) |
|
|
17,613,893 |
|
|
|
(8,616,998 |
) |
|
|
(9,027,398 |
) |
| |
|
For
the Three Months Ended |
|
|
For
the Years Ended |
|
| |
|
September
30, |
|
|
December
31, |
|
| |
|
2021 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
Statement
of Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
2,605,158 |
|
|
$ |
60,288 |
|
|
$ |
635,789 |
|
|
$ |
1,284,437 |
|
|
Net
income (loss) |
|
|
887,233 |
|
|
|
(1,007,087 |
) |
|
|
(5,781,683 |
) |
|
|
(6,956,815 |
) |
Risk
Factors
An
investment in our securities involves certain risks relating to our
structure and investment objective. The risks set forth below are
the risks we have identified and which we currently deem material
or predictable. We also may face additional risks and uncertainties
not currently known to us, or which as of the date of this Annual
Report we might not consider significant, which may adversely
affect our business. In general, you take more risk when you invest
in the securities of issuers in emerging markets such as Argentina
than when you invest in the securities of issuers in the United
States. If any of the following risks occur, our business,
financial condition and results of operations could be materially
adversely affected. In such case, our net asset value and the price
of our Common Stock could decline, and you may lose all or part of
your investment.
In
evaluating the Company, its business and any investment in the
Company, readers should carefully consider the following factors,
together with the additional risk factors incorporated by reference
from Item 1A of the Company’s Annual Report on Form 10-K as filed
with the SEC on April 12, 2021, from Item 1A of the Company’s
Quarterly Report on Form 10-Q as filed with the SEC on May 17,
2021, from Item 1A of the Company’s Quarterly Report on Form 10-Q
as filed with the SEC on August 16, 2021, and from Item 1A of the
Company’s Quarterly Report on Form 10-Q as filed with the SEC on
November 15, 2021 (see “Incorporation of Certain Information by
Reference”):
Risks
Related to this Offering
It is not possible to predict the actual number of shares we will
sell under the Purchase Agreement to the selling stockholder after
the effective date of this prospectus, or the actual gross proceeds
resulting from those sales.
On
May 6, 2021, we entered into the Purchase Agreement with Tumim
Stone Capital, pursuant to which Tumim Stone Capital has committed
to purchase up to $50,000,000 in shares of our Common Stock,
subject to certain limitations and conditions set forth in the
Purchase Agreement. The shares of our Common Stock that may be
issued under the Purchase Agreement may be sold by us to Tumim
Stone Capital at our discretion from time to time over a 36-month
period commencing June 8, 2021.
As of November 23, 2021, we have sold 1,374,067 shares of Common
Stock to Tumim Stone Capital under the Purchase Agreement for total
gross proceeds of $5,135,210. A total of $44,864,790 in shares of
our Common Stock under the Purchase Agreement may be sold by us to
the selling stockholder, subject to certain limitations and
conditions.
We
generally have the right to control the timing and amount of any
sales of our shares of Common Stock to Tumim Stone Capital under
the Purchase Agreement. Additional sales of our Common Stock to
Tumim Stone Capital under the Purchase Agreement after the date of
this prospectus will depend upon market conditions and other
factors to be determined by us. We may ultimately decide not to
sell to Tumim Stone Capital all $44,846,790 worth of shares of
Common Stock remaining under the Purchase Agreement.
Because
the purchase price per share to be paid by Tumim Stone Capital for
the shares of Common Stock that we may elect to sell to them under
the Purchase Agreement after the date of this prospectus will
fluctuate based on the market prices of our Common Stock during the
applicable Fixed Purchase Valuation Period and applicable VWAP
Purchase Valuation Period for each Fixed Purchase and VWAP Purchase
made pursuant to the Purchase Agreement, it is not possible for us
to guarantee, as of the date of this prospectus and prior to any
such sales, the number of additional shares of Common Stock that we
will sell to Tumim Stone Capital under the Purchase Agreement after
the date of this prospectus, the purchase price per share that
Tumim Stone Capital will pay for the additional shares purchased
from us under the Purchase Agreement, or the aggregate gross
proceeds that we will receive from those purchases by Tumim Stone
Capital under the Purchase Agreement.
Moreover,
although the Purchase Agreement provides that we may sell up to an
aggregate of $50,000,000 of our Common Stock to Tumim Stone
Capital, and under the Prior Registration Statement, 1,374,067
shares of Common Stock have been sold for gross proceeds of
$5,135,210, only an additional 4,500,000 shares of our Common Stock
are being registered for resale under this prospectus. If we elect
to sell to Tumim Stone Capital all of the 4,500,000 shares of
Common Stock being registered for resale under this prospectus in
Fixed Purchases and VWAP Purchases under the Purchase Agreement,
depending on the market prices of our Common Stock during the
applicable Fixed Purchase Valuation Period for each Fixed Purchase
and the applicable VWAP Purchase Valuation Period for each VWAP
Purchase made pursuant to the Purchase Agreement, the actual gross
proceeds from the sale of shares may still be substantially less
than the $50,000,000 Total Commitment available to us under the
Purchase Agreement, which could materially adversely affect our
liquidity.
If it
becomes necessary for us to issue and sell to Tumim Stone Capital
under the Purchase Agreement more than the additional 4,500,000
shares being registered for resale under this prospectus in order
to receive aggregate gross proceeds equal to the Total Commitment
of $50,000,000 under the Purchase Agreement, we must first file
with the SEC one or more additional registration statements to
register under the Securities Act the resale by Tumim Stone Capital
of any such additional shares of our Common Stock we wish to sell
from time to time under the Purchase Agreement, which the SEC must
declare effective, in each case before we may elect to sell any
additional shares of our Common Stock to Tumim Stone Capital under
the Purchase Agreement. Any issuance and sale by us under the
Purchase Agreement of a substantial amount of shares of Common
Stock in addition to the 4,500,000 shares of our Common Stock being
registered for resale by Tumim Stone Capital under this prospectus
could cause additional substantial dilution to our stockholders.
The number of shares of our common stock ultimately offered for
sale by Tumim Stone Capital is dependent upon the number of
additional shares of Common Stock, we ultimately sell to Tumim
Stone Capital under the Purchase Agreement.
Investors who buy shares at different times will likely pay
different prices.
Pursuant
to the Purchase Agreement, we have discretion, subject to market
demand, to vary the timing, prices, and numbers of shares sold to
Tumim Stone Capital. If and when we do elect to sell additional
shares of our Common Stock to Tumim Stone Capital pursuant to the
Purchase Agreement, after Tumim Stone Capital has acquired such
shares, Tumim Stone Capital may resell all, some or none of such
shares at any time or from time to time in its discretion and at
different prices. As a result, investors who purchase shares from
Tumim Stone Capital in this Offering at different times will likely
pay different prices for those shares, and so may experience
different levels of dilution and in some cases substantial dilution
and different outcomes in their investment results. Investors may
experience a decline in the value of the shares they purchase from
Tumim Stone Capital in this Offering as a result of future sales
made by us to Tumim Stone Capital at prices lower than the prices
such investors paid for their shares in this Offering.
We may require additional financing to sustain our operations and
without it we will not be able to continue
operations.
Subject
to the terms and conditions of the Purchase Agreement, we may, at
our discretion, direct Tumim Stone Capital to purchase up to
$50,000,000 of shares of our Common Stock under the Purchase
Agreement from time-to-time over a 36-month period beginning June
8, 2021. As of November 23, 2021, the Company has sold to Tumim
Stone Capital 1,374,067 shares of Common Stock under the Purchase
Agreement for gross proceeds of $5,135,210. Although we may sell up
to an additional $44,864,790.49 of our Common Stock to Tumim Stone
Capital, only an additional 4,500,000 shares of our Common Stock
are being registered for resale by Tumim Stone Capital under this
prospectus. The purchase price per share for the shares of Common
Stock that we may elect to sell to Tumim Stone Capital under the
Purchase Agreement after the date of this prospectus will fluctuate
based on the market prices of our Common Stock during the
applicable Fixed Purchase Valuation Period and applicable VWAP
Purchase Valuation Period for each Fixed Purchase and VWAP Purchase
made pursuant to the Purchase Agreement. Accordingly, it is not
currently possible to predict the additional number of shares that
will be sold to Tumim Stone Capital after the date of this
prospectus, the actual purchase price per share to be paid by Tumim
Stone Capital for those shares, or the actual gross proceeds to be
raised in connection with those sales.
Assuming
a purchase price of $3.00 per share (which represents the closing
price of our Common Stock on Nasdaq on November 23, 2021), the
purchase by Tumim Stone Capital of all of the 4,500,000 shares of
Common Stock being registered for resale under this prospectus that
are available for sale by us to Tumim Stone Capital in Fixed
Purchases and VWAP Purchases under the Purchase Agreement from the
date of this prospectus would result in aggregate gross proceeds to
us of approximately $13,500,000. Even after adding the $5,135,210
in gross proceeds to us from the sale of shares registered under
the Prior Registration Statement, such amount is substantially less
than the $50,000,000 Total Commitment available to us under the
Purchase Agreement. After deducting our fees and expenses,
including the 8% cash placement fee payable to EF Hutton from such
gross proceeds, the aggregate net proceeds to us from the purchase
by Tumim Stone Capital of all additional 4,500,000 shares of Common
Stock registered under this prospectus would be approximately
$12,370,000.
In
order to
receive aggregate gross proceeds equal to the $50,000,000 Total
Commitment available to us under the Purchase Agreement, we would
need to issue and sell to Tumim Stone Capital under the Purchase
Agreement more than the 4,500,000 shares of our Common Stock that
are being registered for resale under this prospectus, which would
require us to first to file with the SEC one or more additional
registration statements to register under the Securities Act the
resale by Tumim Stone Capital any such additional shares of our
Common Stock we wish to sell from time to time under the Purchase
Agreement. However, even if we receive all $50,000,000 in gross
proceeds, after deducting our fees and expenses, including the 8%
cash placement fee payable to EF Hutton from such gross proceeds,
the aggregate net proceeds to us under the Purchase Agreement would
be significantly less than $50,000,000.
The
extent to which we rely on Tumim Stone Capital as a source of
funding will depend on a number of factors, including the
prevailing market price of our Common Stock and the extent to which
we are able to secure working capital from other sources. If
obtaining sufficient additional funding from Tumim Stone Capital
were to prove unavailable or prohibitively dilutive, we may need to
secure another source of funding in order to satisfy our working
capital needs. Even if we were to sell to Tumim Stone Capital all
of the shares of Common Stock available for sale to Tumim Stone
Capital under the Purchase Agreement, we may still need additional
capital to fully implement our business, operating and development
plans. Should the financing we require to sustain our working
capital needs be unavailable or prohibitively expensive when we
require it, the consequences would be a material adverse effect on
our business, operating results, financial condition and
prospects.
Future sales and issuances of our Common Stock or other securities
might result in significant dilution and could cause the price of
our Common Stock to decline.
To
raise capital, we may sell Common Stock, convertible securities or
other equity securities in one or more transactions other than
those contemplated by the Purchase Agreement, at prices and in a
manner we determine from time to time. We may sell shares or other
securities in any other offering at a price per share that is less
than the price per share paid by investors in this offering, and
investors purchasing shares or other securities in the future could
have rights superior to existing stockholders. The price per share
at which we sell additional shares of our Common Stock, or
securities convertible or exchangeable into Common Stock, in future
transactions may be higher or lower than the price per share paid
by investors in this offering.
We
cannot predict what effect, if any, sales of shares of our Common
Stock in the public market or the availability of shares for sale
will have on the market price of our Common Stock. However, future
sales of substantial amounts of our Common Stock in the public
market, including shares issued upon exercise of outstanding
options, or the perception that such sales may occur, could
adversely affect the market price of our Common Stock.
Management will have broad discretion as to the use of the proceeds
from the sale of shares under the Purchase Agreement, and uses may
not improve our financial condition or market
value.
While
we will not receive proceeds from the sale of the shares by the
selling stockholder, we have received, and will continue to receive
proceeds from the sale of our Common Stock to the selling
stockholder pursuant to the Purchase Agreement.Because we have not
designated the amount of net proceeds from such sales to be used
for any particular purpose, our management will have broad
discretion as to the application of such net proceeds and could use
them for purposes other than those contemplated hereby. Our
management may use the net proceeds for corporate purposes that may
not improve our financial condition or market value.
We face significant business disruption and related risks resulting
from the COVID-19 pandemic, which could have a material adverse
effect on our business and results of
operations.
On
October 19, 2020, we re-opened our winery and golf and tennis
facilities with COVID-19 measures implemented. Most recently, we
reopened the Algodon Mansion as of November 11, 2020 with COVID-19
measures implemented. Additionally, the construction on homes were
temporarily halted from March to September but has since resumed.
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. On November 1, 2021, the
Argentinian Government opened the border for fully vaccinated
international travelers. After more than one year and a half,
people have been able to travel back to Argentina. Algodon’s San
Rafael hotel is currently under renovation, and is working at 50%
capacity. We anticipate the hotel will fully reopen in December
2021. The San Rafael restaurant (Chez Gaston) is also currently
closed for renovation. We anticipate the restaurant to fully reopen
in January 2022. Algodon’s Buenos Aires hotel is currently open and
operational.
We
temporarily closed our hotel, restaurant, winery operations, and
golf and tennis operations. On October 19, 2020, we re-opened our
winery and golf and tennis facilities with COVID-19 measures
implemented. We reopened the Algodon Mansion as of November 11,
2020 with COVID-19 measures implemented. Due to COVID-19
restrictions on workers, construction on homes was temporarily
halted from March to September but has resumed. The Argentine
Government has announced that effective November 1, 2021,
non-resident foreign citizens were permitted to enter.
On
November 1, 2021, the Argentinian government opened the border for
fully vaccinated international travelers. After more than a year
and a half, people have been able to travel back to Argentina.
Algodon’s San Rafael hotel is currently under renovation, and is
working at 50% capacity. We anticipate the hotel will fully reopen
in December 2021. The San Rafael restaurant (Chez Gaston) is also
currently closed for renovation. We anticipate the restaurant to
fully reopen in January 2022. Algodon’s Buenos Aires hotel is
currently open and operational.
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.
USE OF PROCEEDS
This
prospectus relates to shares of Common Stock that may be offered
and sold from time to time by Tumim Stone Capital. We will not
receive any proceeds from the resale of shares of Common Stock by
Tumim Stone Capital.
We
have already received gross proceeds of approximately $5,135,210
from the sale of 1,374,067 shares of our Common Stock to Tumim
Stone Capital pursuant to the Purchase Agreement. A total of
$44,864,790 in shares of our Common Stock under the Purchase
Agreement remains available for sale by us to the selling
stockholder, subject to certain limitations and conditions.
Assuming we receive all $50 million in gross proceeds pursuant to
the Purchase Agreement., we estimate that the net proceeds to us
from the sale of our Common Stock to Tumim Stone Capital pursuant
to the Purchase Agreement, less our fees and expenses, including
the 8% cash placement fee payable to EF Hutton, would be up to
$45.6 million over an approximately 36-month period. See “Plan of
Distribution” elsewhere in this prospectus for more
information.
We
intend to use any proceeds from the selling stockholder that we
receive under the Purchase Agreement for working capital and
general corporate purposes, which include, but are not limited to,
inventory production and marketing for Gaucho Group, Inc., costs of
this Offering, operating expenses and working capital. We cannot
specify with certainty all of the particular uses for the net
proceeds that we will have from the sale of our shares pursuant to
the Purchase Agreement. Therefore, our management will have broad
discretion to determine the specific use for the net proceeds and
we may use the proceeds for purposes that are not contemplated at
the time of this Offering.
We
will incur all costs associated with this prospectus and the
registration statement of which it is a part.
TUMIM STONE CAPITAL
TRANSACTION
General
On
May 6, 2021, we entered into the Purchase Agreement and the
Registration Rights Agreement with Tumim Stone Capital. Pursuant to
the Purchase Agreement, we have the right to sell to Tumim Stone
Capital up to a Total Commitment of $50,000,000 in shares of our
Common Stock, subject to certain limitations and conditions set
forth in the Purchase Agreement.
In
accordance with our obligations under the Registration Rights
Agreement, we filed the Prior Registration Statement which was
declared effective on May 25, 2021 to register under the Securities
Act the resale by Tumim Stone Capital of shares of Common Stock
issuable to Tumim Stone Capital under the Purchase
Agreement. Under the Prior Registration Statement, we
registered 1,494,404 shares of Common Stock. This number
represented 19.99% of the shares of Common Stock outstanding
immediately prior to the execution of the Purchase Agreement (the
“Exchange Cap”), as pursuant to the rules of the Nasdaq Capital
Market (“Nasdaq”) we could not issue shares in excess of the
Exchange Cap without stockholder approval.
As of
November 23, 2021, the Company has sold to Tumim Stone Capital a
total of 1,374,067 shares of Common Stock under the Purchase
Agreement for total gross proceeds of $5,135,210 and issued 120,337
Commitment Shares, which were resold pursuant to the Prior
Registration Statement. As of November 23, 2021, a total of 101,878
shares issued under the Purchase Agreement may be resold by the
selling stockholder under the Prior Registration
Statement.
Subsequent
to the effectiveness of the Prior Registration Statement, and
pursuant to the applicable Nasdaq rules, the Company’s stockholders
approved the issuance of an additional 10,000,000 shares of Common
Stock to Tumim Stone Capital pursuant to the Purchase Agreement on
August 26, 2021, thereby allowing us to issue up to 10,000,000
shares in excess of the Exchange Cap. In accordance with our
obligations under the Registration Rights Agreement, we are filing
a registration statement that includes this prospectus with the SEC
to register under the Securities Act the resale by Tumim Stone
Capital of an additional 4,500,000 shares of Common Stock that we
may issue to Tumim Stone Capital under the Purchase
Agreement. The registration statement that includes this
prospectus will be the second registration statement filed to
register the resale of shares sold to Tumim Stone Capital under the
Purchase Agreement.
We
will control
the timing and amount of any additional sales of our Common Stock
to Tumim Stone Capital. Actual sales of shares of our Common Stock
to Tumim Stone Capital under the Purchase Agreement after the date
of this prospectus will depend on a variety of factors to be
determined by us from time to time, including, among others, market
conditions, the trading price of the Common Stock and
determinations by us as to the appropriate sources of funding for
our company and our operations.
The
purchase price of the shares of Common Stock that we elect to sell
to Tumim Stone Capital pursuant to a Fixed Purchase under the
Purchase Agreement will be determined by reference to the market
prices of the Common Stock during the applicable Fixed Purchase
Valuation Period for such Fixed Purchase as set forth in the
Purchase Agreement, less a fixed 7% discount, as described in
greater detail below. The purchase price of the shares of Common
Stock that we elect to sell to Tumim Stone Capital pursuant to a
VWAP Purchase under the Purchase Agreement will be determined by
reference to the lowest daily volume weighted average price of the
Common Stock during the applicable VWAP Purchase Valuation Period,
less a fixed 5% discount, as described in greater detail below.
There is no upper limit on the price per share that Tumim Stone
Capital could be obligated to pay for the Common Stock under the
Purchase Agreement.
The
Purchase Agreement also prohibits us from directing Tumim Stone
Capital to purchase any shares of our Common Stock if those shares,
when aggregated with all other shares of our Common Stock then
beneficially owned by Tumim Stone Capital (as calculated pursuant
to Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder), would result in Tumim Stone
Capital beneficially owning more than the Beneficial Ownership Cap
of 4.99% of the outstanding Common Stock.
Because
the purchase price per share to be paid by Tumim Stone Capital for
the additional shares of Common Stock that we may elect to sell to
Tumim Stone Capital under the Purchase Agreement after the date of
this prospectus will fluctuate based on the market prices of our
Common Stock during the applicable Fixed Purchase Valuation Period
and applicable VWAP Purchase Valuation Period for each Fixed
Purchase and VWAP Purchase made pursuant to the Purchase Agreement,
as of the date of this prospectus it is not possible for us to
guarantee the number of shares of Common Stock that we will sell to
Tumim Stone Capital under the Purchase Agreement after the
effective date of this prospectus, the actual purchase price per
share to be paid by Tumim Stone Capital for those shares, or the
actual gross proceeds to be raised by us from those sales. As of
November 23, 2021, there were 9,879,081 shares of our Common Stock
outstanding, of which 9,460,592 shares were held by non-affiliates,
but excludes the 4,500,000 shares of Common Stock we may, in our
sole discretion, sell to Tumim Stone Capital from time to time from
and after the effective date of this prospectus pursuant to the
Purchase Agreement. Although the Purchase Agreement provides that
we may sell up to an aggregate of $50,000,000 of our Common Stock
to Tumim Stone Capital, and under the Prior Registration Statement,
1,374,067 shares of Common Stock have been sold for gross proceeds
of $5,135,210, only an additional 4,500,000
shares of our Common Stock are being registered for resale under
this prospectus. If all of the 4,500,000 shares offered for resale
by Tumim Stone Capital under this prospectus were issued and
outstanding as of November 23, 2021, such shares would represent
approximately 31.30% of the total number of shares of our Common
Stock outstanding and approximately 32.23% of the total number of
outstanding shares held by non-affiliates, in each case as of
November 23, 2021.
The
net proceeds from additional sales under the Purchase Agreement,
will depend on the frequency and prices at which the Company sells
shares of Common Stock to Tumim Stone Capital. 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.
The
issuance of our Common Stock to Tumim Stone Capital pursuant to the
Purchase Agreement will not affect the rights or privileges of our
existing stockholders, except that the economic and voting
interests of each of our existing stockholders will be diluted.
Although the number of shares of our Common Stock that our existing
stockholders own will not decrease, the shares of our Common Stock
owned by our existing stockholders will represent a smaller
percentage of our total outstanding shares of our Common Stock
after any such issuance.
EF
Hutton Capital Markets, 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 has paid and will continue to 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 in connection
with purchases of our Common Stock pursuant to Fixed Purchases and
VWAP Purchases that we elect to make from time to time, in our sole
discretion, pursuant to the Purchase Agreement.
The
Purchase Agreement and the 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.
Neither
the Company nor Tumim Stone Capital may assign or transfer its
rights and obligations under the Purchase Agreement, and no
provision of the Purchase Agreement or the Registration Rights
Agreement may be modified or waived by the parties
Purchase
of Shares by Tumim Stone Capital
Fixed Purchases
Upon
the terms and subject to the conditions set forth in the Purchase
Agreement, we have the right, but not the obligation, from time to
time at our sole discretion over the 36-month period beginning June
8, 2021, to direct Tumim Stone Capital, by our timely delivery of a
Fixed Purchase notice to Tumim Stone Capital on the applicable
Fixed Purchase Date (as defined below), to purchase up to a fixed
maximum amount of shares of Common Stock at the applicable fixed
purchase price per share (each, a “Fixed Purchase”), on any trading
day (each, a “Fixed Purchase Date”), so long as (in addition to the
conditions described elsewhere in this prospectus):
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the
daily volume weighted average price for the Common Stock for such
Fixed Purchase Date is not the lowest daily volume weighted average
price for the Common Stock during the applicable Fixed Purchase
Valuation Period for such Fixed Purchase (subject to equitable
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction occurring during such Fixed Purchase Valuation
Period); |
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the
closing sale price of the Common Stock on such Fixed Purchase Date
is greater than each of (i) $1.00 (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction occurring
after the date of the Purchase Agreement) and (ii) the arithmetic
average of the 10-daily volume weighted average prices for the
Common Stock during the applicable Fixed Purchase Valuation Period
for such Fixed Purchase (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction occurring during
such Fixed Purchase Valuation Period); |
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at
least three trading days has elapsed between the applicable Fixed
Purchase Date for such Fixed Purchase and the date on which the
most recent prior Fixed Purchase notice or VWAP Purchase notice was
delivered by us to Tumim Stone Capital (the Purchase Agreement also
prohibits us from delivering a Fixed Purchase notice for a Fixed
Purchase and a VWAP Purchase notice for a VWAP Purchase to Tumim
Stone Capital on the same trading day); and |
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all
shares of Common Stock subject to all prior Fixed Purchase notices
and VWAP Purchase notices (as applicable) delivered by the Company
to Tumim Stone Capital under the Purchase Agreement have
theretofore been received by Tumim Stone Capital in electronic form
as “DWAC Shares” (as such term is defined in the Purchase
Agreement). |
The
maximum number of shares of Common Stock that Tumim Stone Capital
is required to purchase in any single Fixed Purchase under the
Purchase Agreement (the “Fixed Purchase Maximum Amount”) is equal
to the lesser of:
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100,000
shares of Common Stock (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction occurring after
the date of the Purchase Agreement); and |
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100%
of the lowest daily trading volume in the Common Stock on Nasdaq
(or, in the event the Common Stock is then listed on an “Eligible
Market” as defined under the Purchase Agreement, on such Eligible
Market) during the applicable Fixed Purchase Valuation Period for
such Fixed Purchase (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction occurring during
such Fixed Purchase Valuation Period). |
The
purchase price per share of Common Stock to be purchased by Tumim
Stone Capital in a Fixed Purchase (the “Fixed Purchase Price”) will
be equal to 93% of the lower of:
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the
lowest sale price for our Common Stock on the applicable Fixed
Purchase Date for such Fixed Purchase; and |
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the
arithmetic average of the three lowest closing sale prices for the
Common Stock during the applicable Fixed Purchase Valuation Period
for such Fixed Purchase. |
The
Fixed Purchase Price to be paid by Tumim Stone Capital in a Fixed
Purchase will be equitably adjusted as set forth in the Purchase
Agreement for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction occurring during the applicable Fixed Purchase
Valuation Period used to compute the applicable Fixed Purchase
Price for such Fixed Purchase.
The
payment for, against simultaneous delivery of, shares in respect of
each Fixed Purchase under the Purchase Agreement will be settled on
the trading day immediately following the applicable Fixed Purchase
Date for such Fixed Purchase, as set forth in the Purchase
Agreement.
VWAP Purchase
Upon
the terms and subject to the conditions set forth in the Purchase
Agreement, in addition to Fixed Purchases under the Purchase
Agreement as described above, we also have the right, but not the
obligation, from time to time at our sole discretion over the
36-month period beginning June 8, 2021, to direct Tumim Stone
Capital to purchase up to a fixed maximum amount of shares of
Common Stock at the applicable purchase price per share to be
calculated on the trading day immediately following the applicable
VWAP Purchase Valuation Period (the “VWAP Purchase Date”) in
accordance with the Purchase Agreement (each, a “VWAP Purchase”),
by our timely delivery of a VWAP Purchase notice to Tumim Stone
Capital on the trading day immediately prior to the applicable VWAP
Purchase Valuation Period (each, a “VWAP Purchase Exercise Date”),
so long as (in addition to the conditions described elsewhere in
this prospectus):
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the
closing sale price of the Common Stock on such VWAP Purchase
Exercise Date is equal to or greater than $1.00 (subject to
equitable adjustment for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other
similar transaction occurring after the date of the Purchase
Agreement); |
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at
least three trading days has elapsed between the applicable VWAP
Purchase Exercise Date for such VWAP Purchase and the date on which
the most recent prior Fixed Purchase notice or VWAP Purchase notice
was delivered by us to Tumim Stone Capital (the Purchase Agreement
also prohibits us from delivering a VWAP Purchase notice for a VWAP
Purchase and a Fixed Purchase notice for a Fixed Purchase to Tumim
Stone Capital on the same trading day); and |
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all
shares of Common Stock subject to all prior Fixed Purchase notices
and VWAP Purchase notices (as applicable) delivered by the Company
to Tumim Stone Capital under the Purchase Agreement have
theretofore been received by Tumim Stone Capital in electronic form
as DWAC Shares. |
The
maximum number of shares of Common Stock that Tumim Stone Capital
is required to purchase in any single VWAP Purchase under the
Purchase Agreement (the “VWAP Purchase Maximum Amount”) is equal to
the lesser of:
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300%
of the Fixed Purchase Maximum Amount that would be applicable to a
Fixed Purchase for which the applicable Fixed Purchase Date is the
same trading day as the applicable VWAP Purchase Exercise Date for
such VWAP Purchase, assuming for purposes of this calculation that
the Purchase Agreement did not preclude us from delivering a Fixed
Purchase notice to Tumim Stone Capital on the same trading day that
we delivered a VWAP Purchase notice (subject to equitable
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction occurring during the applicable VWAP Purchase Valuation
Period for such VWAP Purchase); and |
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100%
of the daily trading volume in the Common Stock on Nasdaq (or, in
the event the Common Stock is then listed on an “Eligible Market”
as defined under the Purchase Agreement, on such Eligible Market)
on the applicable VWAP Purchase Exercise Date for such VWAP
Purchase (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction occurring during the applicable
VWAP Purchase Valuation Period for such VWAP Purchase). |
The
purchase price per share of Common Stock to be purchased by Tumim
Stone Capital in a VWAP Purchase (the “VWAP Purchase Price”) will
be equal to 95% of the lowest daily volume weighted average price
of the Common Stock during the applicable VWAP Purchase Valuation
Period. At or prior to 9:30 a.m., New York City time, on the
applicable VWAP Purchase Date immediately following the applicable
VWAP Purchase Valuation Period for such VWAP Purchase, Tumim Stone
Capital will provide us with a written confirmation for such VWAP
Purchase setting forth the applicable VWAP Purchase Price (both on
a per share basis and the total aggregate VWAP Purchase Price) to
be paid by Tumim Stone Capital for the shares of Common Stock
purchased by Tumim Stone Capital in such VWAP Purchase.
The
VWAP Purchase Price to be paid by Tumim Stone Capital in a VWAP
Purchase will be equitably adjusted as set forth in the Purchase
Agreement for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction occurring during the applicable VWAP Purchase Valuation
Period used to compute the applicable VWAP Purchase Price for such
VWAP Purchase.
The
payment for, against simultaneous delivery of, shares in respect of
each VWAP Purchase under the Purchase Agreement will be settled on
the applicable VWAP Purchase Date immediately following the
applicable VWAP Purchase Valuation Period for such VWAP Purchase,
as set forth in the Purchase Agreement.
Conditions
Precedent For Delivery of Fixed Purchase Notices and VWAP Purchase
Notices
Our
right to deliver Fixed Purchase notices and VWAP Purchase notices
to Tumim Stone Capital under the Purchase Agreement, and Tumim
Stone Capital’s obligation to accept Fixed Purchase notices and
VWAP Purchase notices delivered by us under the Purchase Agreement,
are subject to the satisfaction, on the applicable Fixed Purchase
Date for each Fixed Purchase and on the applicable VWAP Purchase
Exercise Date for each VWAP Purchase, of the conditions precedent
thereto set forth in the Purchase Agreement, all of which are
entirely outside of Tumim Stone Capital’s control, which conditions
including the following:
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the
accuracy in all material respects of the representations and
warranties of the Company included in the Purchase
Agreement; |
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the
Company having performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Purchase Agreement to be performed, satisfied or complied with
by the Company; |
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the
registration statement that includes this prospectus (and any one
or more additional registration statements filed with the SEC that
include shares of Common Stock that may be issued and sold by the
Company to Tumim Stone Capital under the Purchase Agreement) having
been declared effective under the Securities Act by the SEC, and
Tumim Stone Capital being able to utilize this prospectus (and the
prospectus included in any one or more additional registration
statements filed with the SEC under the Registration Rights
Agreement) to resell all of the shares of Common Stock included in
this prospectus (and included in any such additional
prospectuses); |
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the
SEC shall not have issued any stop order suspending the
effectiveness of the registration statement that includes this
prospectus (or any one or more additional registration statements
filed with the SEC that include shares of Common Stock that may be
issued and sold by the Company to Tumim Stone Capital under the
Purchase Agreement) or prohibiting or suspending the use of this
prospectus (or the prospectus included in any one or more
additional registration statements filed with the SEC under the
Registration Rights Agreement), and the absence of any suspension
of qualification or exemption from qualification of the Common
Stock for offering or sale in any jurisdiction; |
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there
shall not have occurred any event and there shall not exist any
condition or state of facts, which makes any statement of a
material fact made in the registration statement that includes this
prospectus (or in any one or more additional registration
statements filed with the SEC that include shares of Common Stock
that may be issued and sold by the Company to Tumim Stone Capital
under the Purchase Agreement) untrue or which requires the making
of any additions to or changes to the statements contained therein
in order to state a material fact required by the Securities Act to
be stated therein or necessary in order to make the statements then
made therein (in the case of this prospectus or the prospectus
included in any one or more additional registration statements
filed with the SEC under the Registration Rights Agreement, in
light of the circumstances under which they were made) not
misleading; |
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this
prospectus, in final form, shall have been filed with the SEC under
the Securities Act, and all reports, schedules, registrations,
forms, statements, information and other documents required to have
been filed by the Company with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), shall have been filed with the
SEC; |
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trading
in the Common Stock shall not have been suspended by the SEC or the
Nasdaq, the Company shall not have received any final and
non-appealable notice that the listing or quotation of the Common
Stock on the Nasdaq shall be terminated on a date certain (unless,
prior to such date, the Common Stock is listed or quoted on any
other Eligible Market, as such term is defined in the Purchase
Agreement), and there shall be no suspension of, or restriction on,
accepting additional deposits of the Common Stock, electronic
trading or book-entry services by DTC with respect to the Common
Stock; |
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the
Company shall have complied with all applicable federal, state and
local governmental laws, rules, regulations and ordinances in
connection with the execution, delivery and performance of the
Purchase Agreement and the Registration Rights
Agreement; |
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the
absence of any statute, regulation, order, decree, writ, ruling or
injunction by any court or governmental authority of competent
jurisdiction which prohibits the consummation of or that would
materially modify or delay any of the transactions contemplated by
the Purchase Agreement or the Registration Rights
Agreement; |
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the
absence of any action, suit or proceeding before any arbitrator or
any court or governmental authority seeking to restrain, prevent or
change the transactions contemplated by the Purchase Agreement or
the Registration Rights Agreement, or seeking material damages in
connection with such transactions; |
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all
of the shares of Common Stock that may be issued pursuant to the
Purchase Agreement shall have been approved for listing or
quotation on The Nasdaq Capital Market (or if the Common Stock is
not then listed on The Nasdaq Capital Market, on any Eligible
Market), subject only to notice of issuance; |
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no
condition, occurrence, state of facts or event constituting a
material adverse effect shall have occurred and be
continuing; |
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the
absence of any bankruptcy proceeding against the Company commenced
by a third party, and the Company shall not have commenced a
voluntary bankruptcy proceeding, consented to the entry of an order
for relief against it in an involuntary bankruptcy case, consented
to the appointment of a custodian of the Company or for all or
substantially all of its property in any bankruptcy proceeding, or
made a general assignment for the benefit of its creditors;
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the
receipt by Tumim Stone Capital of the opinions, bring-down opinions
and negative assurances from outside counsel to the Company in the
forms mutually agreed to by the Company and Tumim Stone Capital
prior to the date of the Purchase Agreement. |
Termination
of the Purchase Agreement
Unless
earlier terminated as provided in the Purchase Agreement, the
Purchase Agreement will terminate automatically on the earliest to
occur of:
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July
1, 2024; |
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the
date on which Tumim Stone Capital shall have purchased shares of
Common Stock under the Purchase Agreement for an aggregate gross
purchase price equal to its $50,000,000 Total Commitment under the
Purchase Agreement; |
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the
date on which the Common Stock shall have failed to be listed or
quoted on The Nasdaq Capital Market or any other Eligible Market;
and |
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the
date on which the Company commences a voluntary bankruptcy case or
any third party commences a bankruptcy proceeding against the
Company, a custodian is appointed for the Company in a bankruptcy
proceeding for all or substantially all of its property, or the
Company makes a general assignment for the benefit of its
creditors. |
We
have the right to terminate the Purchase Agreement at any time, at
no cost or penalty, upon 10 trading days’ prior written notice to
Tumim Stone Capital. We and Tumim Stone Capital may also terminate
the Purchase Agreement at any time by mutual written
consent.
Tumim
Stone Capital also has the right to terminate the Purchase
Agreement upon 10 trading days’ prior written notice to us, but
only upon the occurrence of certain events, including:
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the
occurrence of a Material Adverse Effect (as defined in the Purchase
Agreement); |
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the
occurrence of a Fundamental Transaction (as defined in the Purchase
Agreement) involving the Company; |
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our
failure to file with the SEC, or the SEC’s failure to declare
effective, the registration statement that includes this prospectus
or any additional registration statement we file with the SEC
pursuant to the Registration Rights Agreement, within the time
periods set forth in the Registration Rights Agreement; |
| |
|
|
| |
● |
the
effectiveness of the registration statement that includes this
prospectus or any additional registration statement we file with
the SEC pursuant to the Registration Rights Agreement lapses for
any reason (including the issuance of a stop order by the SEC), or
this prospectus or the prospectus included in any additional
registration statement we file with the SEC pursuant to the
Registration Rights Agreement otherwise becomes unavailable to
Tumim Stone Capital for the resale of all of the shares of Common
Stock included therein, and such lapse or unavailability continues
for a period of 20 consecutive trading days or for more than an
aggregate of 60 trading days in any 365-day period, other than due
to acts of Tumim Stone Capital; or |
| |
|
|
| |
● |
trading
in the Common Stock on The Nasdaq Capital Market (or if the Common
Stock is then listed on an Eligible Market, trading in the Common
Stock on such Eligible Market) has been suspended for a period of
three consecutive trading days. |
No
termination of the Purchase Agreement by us or by Tumim Stone
Capital will become effective prior to the first Trading Day
immediately following the applicable settlement date related to any
pending Fixed Purchase or any pending VWAP Purchase (as applicable)
that has not been fully settled in accordance with the terms and
conditions of the Purchase Agreement, and will not affect any of
our respective rights and obligations under the Purchase Agreement
with respect to any pending Fixed Purchase or any pending VWAP
Purchase (as applicable), and both we and Tumim Stone Capital have
agreed to complete our respective obligations with respect to any
such pending Fixed Purchase or any pending VWAP Purchase (as
applicable) under the Purchase Agreement. Furthermore, no
termination of the Purchase Agreement will affect the Registration
Rights Agreement, which will survive any termination of the
Purchase Agreement.
No
Short-Selling or Hedging by Tumim Stone Capital
Tumim
Stone Capital has agreed that neither it nor any of its affiliates
shall engage in any direct or indirect short-selling or hedging of
our Common Stock during any time prior to the termination of the
Purchase Agreement.
Prohibition
on Variable Rate Transactions
Subject
to specified exceptions included in the Purchase Agreement, we are
limited in our ability to enter into specified variable rate
transactions during the term of the Purchase Agreement. Such
transactions include, among others, the issuance of convertible
securities with a conversion or exercise price that is based upon
or varies with the trading price of our Common Stock after the date
of issuance.
Effect
of Performance of the Purchase Agreement on our
Stockholders
All
shares of Common Stock that have been or may be issued or sold by
us to Tumim Stone Capital under the Purchase Agreement that are
being registered under the Securities Act for resale by Tumim Stone
Capital in this offering are expected to be freely tradable. The
shares of Common Stock being registered for resale in this offering
may be issued and sold by us to Tumim Stone Capital from time to
time at our discretion over a period of up to 36 months commencing
June 8, 2021. The resale by Tumim Stone Capital of a significant
amount of shares registered for resale in this offering at any
given time, or the perception that these sales may occur, could
cause the market price of our Common Stock to decline and to be
highly volatile. Additional sales of our Common Stock, to Tumim
Stone Capital under the Purchase Agreement will depend upon market
conditions and other factors to be determined by us. We may
ultimately decide not to sell to Tumim Stone Capital all
$44,846,790 worth of shares of our Common Stock remaining under
Purchase Agreement as of the date of this prospectus.
If
and when we do elect to sell additional shares of our Common Stock
to Tumim Stone Capital pursuant to the Purchase Agreement, after
Tumim Stone Capital has acquired such shares, Tumim Stone Capital
may resell all, some or none of such shares at any time or from
time to time in its discretion and at different prices. As a
result, investors who purchase shares from Tumim Stone Capital in
this Offering at different times will likely pay different prices
for those shares, and so may experience different levels of
dilution and in some cases substantial dilution and different
outcomes in their investment results. Investors may experience a
decline in the value of the shares they purchase from Tumim Stone
Capital in this Offering as a result of future sales made by us to
Tumim Stone Capital at prices lower than the prices such investors
paid for their shares in this Offering. In addition, if we sell a
substantial number of shares to Tumim Stone Capital under the
Purchase Agreement, or if investors expect that we will do so, the
actual sales of shares or the mere existence of our arrangement
with Tumim Stone Capital may make it more difficult for us to sell
equity or equity-related securities in the future at a time and at
a price that we might otherwise wish to effect such
sales.
Although
the Purchase Agreement provides that we may sell up to an aggregate
of $50,000,000 of our Common Stock to Tumim Stone Capital, and
under the Prior Registration Statement, 1,374,067 shares of Common
Stock have been sold for gross proceeds of $5,135,210, only an
additional 4,500,000 shares of our Common Stock are being
registered for resale under this prospectus. If, in addition
to the 1,374,067 shares of Common Stock sold pursuant to the Prior
Registration Statement, we elect to sell to Tumim Stone Capital all
of the 4,500,000 shares of Common Stock being registered for resale
under this prospectus that are available for sale by us to Tumim
Stone Capital in Fixed Purchases and VWAP Purchases under the
Purchase Agreement, depending on the market prices of our Common
Stock during the applicable Fixed Purchase Valuation Period for
each Fixed Purchase and the applicable VWAP Purchase Valuation
Period for each VWAP Purchase made pursuant to the Purchase
Agreement, the actual gross proceeds from the sale of shares may
still be substantially less than the $50,000,000 Total Commitment
available to us under the Purchase Agreement. If it becomes
necessary for us to issue and sell to Tumim Stone Capital under the
Purchase Agreement more shares than are being registered for resale
under this prospectus in order to receive aggregate gross proceeds
equal to the Total Commitment of $50,000,000 under the Purchase
Agreement, we must first file with the SEC one or more additional
registration statements to register under the Securities Act the
resale by Tumim Stone Capital of any such additional shares of our
Common Stock we wish to sell from time to time under the Purchase
Agreement, which the SEC must declare effective, in each case
before we may elect to sell any additional shares of our Common
Stock to Tumim Stone Capital under the Purchase Agreement. Any
issuance and sale by us under the Purchase Agreement of a
substantial amount of shares of Common Stock in addition to the
4,500,000 shares of our Common Stock being registered for resale by
Tumim Stone Capital under this prospectus could cause additional
substantial dilution to our stockholders. The number of shares of
our common stock ultimately offered for sale by Tumim Stone Capital
is dependent upon the number of shares of Common Stock we
ultimately sell to Tumim Stone Capital under the Purchase
Agreement.
The
following table sets forth the amount of gross proceeds we would
receive from Tumim Stone Capital from our sale of shares of Common
Stock to Tumim Stone Capital under the Purchase Agreement at
varying purchase prices:
|
Assumed Average Purchase Price Per Share |
|
|
Number of Registered Shares to be Issued if Full Purchase (1) |
|
|
Percentage of Outstanding Shares After Giving Effect to the
Issuance to Tumim Stone Capital (2) |
|
|
Gross Proceeds from the Sale of Shares to Tumim Under the Purchase
Agreement |
|
| $ |
1.00 |
|
|
|
4,500,000 |
|
|
|
31.30 |
% |
|
$ |
4,500,000 |
|
| $ |
2.00 |
|
|
|
4,500,000 |
|
|
|
31.30 |
% |
|
$ |
9,000,000 |
|
| $ |
3.00 |
|
|
|
4,500,000 |
|
|
|
31.30 |
% |
|
$ |
13,500,000 |
|
| $ |
4.00 |
|
|
|
4,500,000 |
|
|
|
31.30 |
% |
|
$ |
18,000,000 |
|
(1)
Although the Purchase Agreement provides that we may sell up to an
aggregate of $50,000,000 of our Common Stock to Tumim Stone
Capital, and under the Prior Registration Statement, 1,374,067
shares of Common Stock have been sold for gross proceeds of
$5,135,210, only an additional 4,500,000 shares of our Common Stock
are being registered for resale under this prospectus and may or
may not cover all of the shares we ultimately sell to Tumim Stone
Capital under the Purchase Agreement. We will not issue more than
an aggregate of 4,500,000 shares of our Common Stock registered
under this prospectus unless otherwise approved by our board of
directors. The number of registered shares to be issued as set
forth in this column is without regard for the Beneficial Ownership
Cap.
(2)
The denominator is based on 9,879,081 shares outstanding as of
November 23, 2021 adjusted to include the issuance of the number of
shares set forth in the adjacent column that we would have sold to
Tumim, assuming the average purchase price in the first column. The
numerator is based on the number of shares issuable under the
Purchase Agreement (that are the subject of this Offering) at the
corresponding assumed average purchase price set forth in the first
column.
(3)
The closing sale price of our Common Stock on November 23,
2021.
SELLING STOCKHOLDERS
This
prospectus relates to the possible resale from time to time by
Tumim Stone Capital of any or all of the 4,500,000 shares of Common
Stock registered under this prospectus that may be issued by us to
Tumim Stone Capital under the Purchase Agreement. For additional
information regarding the issuance of Common Stock covered by this
prospectus, see the section titled “Tumim Stone Capital Committed
Equity Financing” above. We are registering the shares of Common
Stock pursuant to the provisions of the Registration Rights
Agreement we entered into with Tumim Stone Capital on May 6, 2021
in order to permit the selling stockholder to offer the shares for
resale from time to time. Except for the transactions contemplated
by the Purchase Agreement and the Registration Rights Agreement,
Tumim Stone Capital has not had any material relationship with us
within the past three years. As used in this prospectus, the term
“selling stockholder” means Tumim Stone Capital, LLC.
The
table below presents information regarding the selling stockholder
and the shares of Common Stock that it may offer from time to time
under this prospectus. This table is prepared based on information
supplied to us by the selling stockholder, and reflects holdings as
of November 23, 2021. The number of shares in the column “Maximum
Number of Shares of Common Stock to be Offered Pursuant to this
Prospectus” represents all of the shares of Common Stock that the
selling stockholder may offer under this prospectus. The selling
stockholder may sell some, all or none of its shares in this
Offering. We do not know how long the selling stockholder will hold
the shares before selling them, and we currently have no
agreements, arrangements or understandings with the selling
stockholder regarding the sale of any of the shares.
Beneficial
ownership is determined in accordance with Rule 13d-3(d)
promulgated by the SEC under the Exchange Act, and includes shares
of Common Stock with respect to which the selling stockholder has
voting and investment power. The percentage of shares of Common
Stock beneficially owned by the selling stockholder prior to the
Offering shown in the table below is based on an aggregate of
9,879,081 shares of our Common Stock outstanding on November 23,
2021. Because the purchase price of the shares of Common Stock
issuable under the Purchase Agreement is determined on each Fixed
Purchase Date, with respect to a Fixed Purchase, and on each VWAP
Purchase Date, with respect to a VWAP Purchase, the number of
shares that may actually be sold by the Company under the Purchase
Agreement may be fewer than the number of shares being offered by
this prospectus. The fourth column assumes the sale of all of the
shares offered by the selling stockholder pursuant to this
prospectus.
|
Name
of Selling Stockholder |
|
Number
of Shares of Common Stock Owned Prior to Offering |
|
|
Maximum
Number of Shares of Common Stock to be Offered Pursuant to this
Prospectus |
|
|
Number
of Shares of Common Stock Owned After Offering |
|
|
|
|
Number(1) |
|
|
|
Percent(2) |
|
|
|
|
|
|
Number(3) |
|
|
Percent(2) |
|
|
Tumim
Stone Capital LLC(4) |
|
|
552,372 |
|
|
|
4.99 |
% |
|
|
4,500,000 |
|
|
776,922
|
|
|
4.99 |
% |
(1)
Consists of (i) 35,000 shares of Common Stock acquired by 3i, LP,
the sole member of Tumim Stone Capital, in a transaction unrelated
to the transactions contemplated by the Purchase Agreement, none of
which shares are being registered for resale under this prospectus;
(ii) up to 200,000 shares of Common Stock underlying warrants held
by 3i, LP, currently exercisable, representing the shares
underlying such warrants that may be issued to 3i, LP as of the
date of this prospectus upon exercise of such warrants (at a price
of $6.00 per share), subject to a 4.99% beneficial ownership cap
limitation therein, acquired by 3i, LP in a transaction unrelated
to the transactions contemplated by the Purchase Agreement, none of
which underlying warrant shares are being registered for resale
under this prospectus; (iii) up to 67,494 shares of Common Stock
underlying a secured convertible promissory note held by 3i, LP,
currently convertible, representing the shares underlying such
secured convertible promissory note that may be issued to 3i, LP as
of the date of this prospectus upon conversion of the secured
convertible note (at a price of $3.50 per share), subject to a
4.99% beneficial ownership cap limitation therein, acquired by 3i,
LP in a transaction unrelated to the transactions contemplated by
the Purchase Agreement, none of which underlying shares are being
registered for resale under this prospectus; (iv) 148,000 shares of
Common Stock acquired by 3i, LP, representing Pre-Delivery Shares
pursuant to the Securities Purchase Agreement entered into between
the Company and several institutional investors on November 3, 2021
and the Notes entered into as of November 9, 2021; and (v) 101,878
shares of Common Stock held by Tumim Stone Capital, pursuant to the
Purchase Agreement, none of which shares are being registered for
resale under this prospectus and all of which shares were
registered for resale under the Prior Registration Statement. In
accordance with Rule 13d-3(d) under the Exchange Act, we have
excluded from the number of shares beneficially owned prior to the
Offering all of the shares that Tumim Stone Capital may be required
to purchase from us under the Purchase Agreement, because the
issuance of such shares to Tumim Stone Capital is solely at our
discretion and is subject to a number of conditions contained in
the Purchase Agreement, the satisfaction of which are entirely
outside of Tumim Stone Capital’s control, including the
registration statement that includes this prospectus becoming and
remaining effective. Furthermore, the Fixed Purchases and VWAP
Purchases of Common Stock are subject to certain agreed upon
maximum amount limitations set forth in the Purchase Agreement.
Also, the Purchase Agreement prohibits us from issuing and selling
any shares of our Common Stock to Tumim Stone Capital to the extent
such shares, when aggregated with all other shares of our Common
Stock then beneficially owned by Tumim Stone Capital, would cause
Tumim Stone Capital’s beneficial ownership of our Common Stock to
exceed the 4.99% Beneficial Ownership Cap. We are also prohibited
from issuing or selling more than 10,000,000 shares of our Common
Stock under the Purchase Agreement without obtaining stockholder
approval (in addition to the 1,494,404 already issued pursuant to
the Purchase Agreement.
(2)
Applicable percentage ownership is based on 9,879,081 shares of our
Common Stock outstanding as of November 23, 2021 and based on
14,379,081 shares of our Common Stock outstanding after the
Offering.
(3)
Assumes the sale of all shares being offered pursuant to this
prospectus and consists of (i) 35,000 shares of Common Stock
acquired by 3i, LP, the sole member of Tumim Stone Capital, in a
transaction unrelated to the transactions contemplated by the
Purchase Agreement, none of which shares are being registered for
resale under this prospectus; (ii) up to 200,000 shares of Common
Stock underlying warrants held by 3i, LP, currently exercisable,
representing the shares underlying such warrants that may be issued
to 3i, LP as of the date of this prospectus upon exercise of such
warrants (at a price of $6.00 per share), subject to a 4.99%
beneficial ownership cap limitation therein, acquired by 3i, LP in
a transaction unrelated to the transactions contemplated by the
Purchase Agreement, none of which underlying warrant shares are
being registered for resale under this prospectus; (iii) up to
292,044 shares of Common Stock underlying a secured convertible
promissory note held by 3i, LP, currently convertible, representing
the shares underlying such secured convertible promissory note that
may be issued to 3i, LP as of the date of this prospectus upon
conversion of the secured convertible note (at a price of $3.50 per
share), subject to a 4.99% beneficial ownership cap limitation
therein, acquired by 3i, LP in a transaction unrelated to the
transactions contemplated by the Purchase Agreement, none of which
underlying shares are being registered for resale under this
prospectus; (iv) 148,000 shares of Common Stock acquired by 3i, LP,
representing Pre-Delivery Shares pursuant to the Securities
Purchase Agreement entered into between the Company and several
institutional investors on November 3, 2021 and the Notes entered
into as of November 9, 2021; and (v) 101,878 shares of Common Stock
held by Tumim Stone Capital, pursuant to the Purchase Agreement,
none of which shares are being registered for resale under this
prospectus and all of which shares were registered for resale under
the Prior Registration Statement. In accordance with Rule 13d-3(d)
under the Exchange Act, we have excluded from the number of shares
beneficially owned prior to the Offering all of the shares that
Tumim Stone Capital may be required to purchase from us under the
Purchase Agreement, because the issuance of such shares to Tumim
Stone Capital is solely at our discretion and is subject to a
number of conditions contained in the Purchase Agreement, the
satisfaction of which are entirely outside of Tumim Stone Capital’s
control, including the registration statement that includes this
prospectus becoming and remaining effective. Furthermore, the Fixed
Purchases and VWAP Purchases of Common Stock are subject to certain
agreed upon maximum amount limitations set forth in the Purchase
Agreement. Also, the Purchase Agreement prohibits us from issuing
and selling any shares of our Common Stock to Tumim Stone Capital
to the extent such shares, when aggregated with all other shares of
our Common Stock then beneficially owned by Tumim Stone Capital,
would cause Tumim Stone Capital’s beneficial ownership of our
Common Stock to exceed the 4.99% Beneficial Ownership Cap. We are
also prohibited from issuing or selling more than 10,000,000 shares
of our Common Stock under the Purchase Agreement without obtaining
stockholder approval (in addition to the 1,494,404 already issued
pursuant to the Purchase Agreement.
(4)
The business address of Tumim Stone Capital LLC is 140 Broadway,
38th Floor, New York, NY 10005. Tumim Stone Capital
LLC’s principal business is that of a private investor. Maier
Joshua Tarlow is the manager of 3i Management, LLC, the general
partner of 3i, LP, which is the sole member of Tumim Stone Capital,
LLC, and has sole voting control and investment discretion over
securities beneficially owned directly by Tumim Stone Capital LLC
and indirectly by 3i Management, LLC and 3i, LP. 3i Management, LLC
is also the manager of Tumim Stone Capital LLC. We have been
advised that none of Mr. Tarlow, 3i Management, LLC, 3i, LP or
Tumim Stone Capital LLC is a member of the Financial Industry
Regulatory Authority, or FINRA, or an independent broker-dealer, or
an affiliate or associated person of a FINRA member or independent
broker-dealer. The foregoing should not be construed in and of
itself as an admission by Mr. Tarlow as to beneficial ownership of
the securities beneficially owned directly by Tumim Stone Capital
LLC and directly or indirectly by 3i Management, LLC and 3i, LP,
and the foregoing should not be construed in and of itself as an
admission by Tumim Stone Capital LLC as to beneficial ownership of
the securities beneficially owned directly by 3i, LP.
PLAN OF DISTRIBUTION
The
shares of Common Stock offered by this prospectus are being offered
by the selling stockholder, Tumim Stone Capital. The shares may be
sold or distributed from time to time by the selling stockholder
directly to one or more purchasers or through brokers, dealers, or
underwriters who may act solely as agents at market prices
prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or at fixed prices, which may
be changed. The sale of the ordinary shares offered by this
prospectus could be effected in one or more of the following
methods:
|
|
● |
ordinary
brokers’ transactions; |
| |
● |
transactions
involving cross or block trades; |
| |
● |
through
brokers, dealers, or underwriters who may act solely as
agents; |
| |
● |
“at
the market” into an existing market for the ordinary
shares; |
| |
● |
in
other ways not involving market makers or established business
markets, including direct sales to purchasers or sales effected
through agents; |
| |
● |
in
privately negotiated transactions; or |
| |
● |
any
combination of the foregoing. |
In
order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or
qualified for sale in the state or an exemption from the state’s
registration or qualification requirement is available and complied
with.
Tumim
Stone Capital is an “underwriter” within the meaning of Section
2(a)(11) of the Securities Act.
Tumim
Stone Capital has informed us that it intends to use one or more
registered broker-dealers to effectuate all sales of our Common
Stock that it has acquired and may in the future acquire from us
pursuant to the Purchase Agreement. Such sales will be made at
prices and at terms then prevailing or at prices related to the
then current market price. Each such registered broker-dealer will
be an underwriter within the meaning of Section 2(a)(11) of the
Securities Act. Tumim Stone Capital has informed us that each such
broker-dealer will receive commissions from Tumim Stone Capital
that will not exceed customary brokerage commissions.
Brokers,
dealers, underwriters or agents participating in the distribution
of the shares of our Common Stock offered by this prospectus may
receive compensation in the form of commissions, discounts, or
concessions from the purchasers, for whom the broker-dealers may
act as agent, of the shares sold by the selling stockholder through
this prospectus. The compensation paid to any such particular
broker-dealer by any such purchasers of shares of our Common Stock
sold by the selling stockholder may be less than or in excess of
customary commissions. Neither we nor the selling stockholder can
presently estimate the amount of compensation that any agent will
receive from any purchasers of shares of our Common Stock sold by
the selling stockholder.
We
know of no existing arrangements between the selling stockholder or
any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the shares of our Common
Stock offered by this prospectus.
We
may from time to time file with the SEC one or more supplements to
this prospectus or amendments to the registration statement of
which this prospectus forms a part to amend, supplement or update
information contained in this prospectus, including, if and when
required under the Securities Act, to disclose certain information
relating to a particular sale of shares offered by this prospectus
by the selling stockholder, including the names of any brokers,
dealers, underwriters or agents participating in the distribution
of such shares by the selling stockholder, any compensation paid by
the selling stockholder to any such brokers, dealers, underwriters
or agents, and any other required information.
We
also have agreed to indemnify Tumim Stone Capital and certain other
persons against certain liabilities in connection with the offering
of shares of our Common Stock offered hereby, including liabilities
arising under the Securities Act or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect
of such liabilities. Tumim Stone Capital has agreed to indemnify us
against liabilities under the Securities Act that may arise from
certain written information furnished to us by Tumim Stone Capital
specifically for use in this prospectus or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect
of such liabilities. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors,
officers, and controlling persons, we have been advised that in the
opinion of the SEC this indemnification is against public policy as
expressed in the Securities Act and is therefore,
unenforceable.
EF
Hutton Capital Markets, 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 has paid, and will continue to 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 in connection
with purchases of our Common Stock pursuant to Fixed Purchases and
VWAP Purchases that we elect to make from time to time, in our sole
discretion, pursuant to the Purchase Agreement.
We
will pay the expenses incident to the registration under the
Securities Act of the offer and sale of the shares of our Common
Stock covered by this prospectus by the selling
stockholder.
We
estimate that the total expenses for this Offering, excluding the
cash placement fee payable to EF Hutton, will be approximately
$50,000.
Tumim
Stone Capital has represented to us that at no time prior to the
date of the Purchase Agreement has Tumim Stone Capital or its
agents, representatives or affiliates engaged in or effected, in
any manner whatsoever, directly or indirectly, any short sale (as
such term is defined in Rule 200 of Regulation SHO of the Exchange
Act) of our Common Stock or any hedging transaction, which
establishes a net short position with respect to our Common Stock.
Tumim Stone Capital has agreed that during the term of the Purchase
Agreement, neither Tumim Stone Capital, nor any of its agents,
representatives or affiliates will enter into or effect, directly
or indirectly, any of the foregoing transactions.
We
have advised the selling stockholder that it is required to comply
with Regulation M promulgated under the Exchange Act. With certain
exceptions, Regulation M precludes the selling stockholder, any
affiliated purchasers, and any broker-dealer or other person who
participates in the distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security
which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or
purchases made in order to stabilize the price of a security in
connection with the distribution of that security. All of the
foregoing may affect the marketability of the securities offered by
this prospectus.
This
Offering will terminate on the date that all shares of our Common
Stock offered by this prospectus have been sold by the selling
stockholder.
Our
Common Stock is currently listed on Nasdaq under the symbol
“VINO”.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our
discussion and analysis of financial condition and results of
operations is incorporated by reference from Part II, Item 7 of the
Company’s Annual Report on Form 10-K as filed with the SEC on April
12, 2021, from Part I, Item 2 of the Company’s Quarterly Report on
Form 10-Q as filed with the SEC on May 17, 2021, from Part I, Item
2 of the Company’s Quarterly Report on Form 10-Q as filed with the
SEC on August 16, 2021, and from Part I, Item 2 of the Company’s
Quarterly Report on Form 10-Q as filed with the SEC on November 15,
2021 (see “Incorporation of Certain Information by
Reference”).
BUSINESS
The
description of our business is incorporated by reference from Part
I, Item 1 of the Company’s Annual Report on Form 10-K as filed with
the SEC on April 12, 2021 (see “Incorporation of Certain
Information by Reference”).
DESCRIPTION OF OUR CAPITAL
STOCK
The
following description summarizes important terms of our capital
stock and our other securities. For a complete description, you
should refer to our Certificate of Incorporation and bylaws, forms
of which are incorporated by reference to the exhibits to the
registration statement of which this prospectus is a part, as well
as the relevant portions of the Delaware General Corporation Law
(“DGCL”). Please also see “Effect of Certain Provisions of our
Bylaws” below.
Capital
Stock
The
Company has two classes of stock: common and preferred. The
Company’s Certificate of Incorporation authorizes the issuance of
up to 150,000,000 shares of Common Stock, par value $0.01 per
share, and 11,000,000 shares of preferred stock, par value $0.01
per share.
Common
Stock
As of
November 23, 2021 there were 9,882,450 shares of Common Stock
issued and 9,879,081 shares of Common Stock outstanding. 3,369
shares of our Common Stock that are held by the Company in treasury
are the result of the redemption of WOW Group membership interests
and indirectly, GGH’s shares. Each share of Common Stock entitles
the holder thereof to one vote, either in person or by proxy, at a
meeting of stockholders. The holders are not entitled to vote their
shares cumulatively. Accordingly, the holders of more than 50% of
the issued and outstanding shares of Common Stock can elect all of
the directors of the Company.
Each
share of Common Stock has equal and identical rights to every other
share for purposes of dividends, liquidation preferences, voting
rights and any other attributes of the Company’s Common Stock. No
voting trusts or any other arrangement for preferential voting
exist among any of the stockholders, and there are no restrictions
in the articles of incorporation, or bylaws precluding issuance of
further Common Stock or requiring any liquidation preferences,
voting rights or dividend priorities with respect to this class of
stock.
All
shares of Common Stock are entitled to participate ratably in
dividends when and as declared by the Company’s board of directors
out of the funds legally available. Any such dividends may be paid
in cash, property or additional shares of Common Stock. The Company
has not paid any dividends on its shares of Common Stock since its
inception and presently anticipates that no dividends on such
shares will be declared in the foreseeable future. Any future
dividends will be subject to the discretion of the Company’s board
of directors and will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its
capital requirements, general business conditions and other
pertinent facts. Therefore, there can be no assurance that any
dividends on the Common Stock will be paid in the
future.
Holders
of Common Stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions.
In the event of the dissolution, whether voluntary or involuntary
of the Company, each share of Common Stock is entitled to share
ratably in any assets available for distribution to holders of the
equity securities of the Company after satisfaction of all
liabilities.
Preferred
Stock
As of
November 23, 2021, the Company has authorized 11,000,000 shares of
preferred stock, with 10,097,330 shares designated as Series A
Convertible Preferred Stock, par value $0.01 per share (“Series A
Preferred”), and 902,670 shares designated as Series B Preferred
Stock. The Board of Directors has the ability to issue blank check
preferred stock under the Certificate of Incorporation.
As of
November 23, 2021, there were no shares issued and outstanding of
Series A Preferred and no shares issued and outstanding shares of
Series B Preferred Stock.
Warrants
On
February 19, 2021, as of part of the public offering and uplist to
Nasdaq, the Company issued 1,533,333 Common Stock purchase warrants
as part of the units. Each warrant has an exercise price equal to
$6.00. The warrants are immediately exercisable and will expire on
the eighteen-month anniversary of the original issuance date. The
warrants may be exercised only for a whole number of shares of our
Common Stock, and no fractional shares will be issued upon exercise
of the warrants.
Outstanding
Stock Options and Warrants
As of
September 30, 2021, there were options to acquire a total of
587,699 shares of Common Stock granted pursuant to our 2016 and
2018 equity incentive plans at a weighted-average exercise price of
$9.67, of which 353,680 shares of our Common Stock are issuable
upon exercise of outstanding stock options at a weighted-average
exercise price of $11.03 per share, and there were warrants to
acquire a total of 2,026,478 shares of our Common Stock, all of
which are issuable upon exercise, at a weighted-average exercise
price of $5.94.
Senior
Secured Convertible Promissory Notes
On
November 3, 2021, the Company entered into a Securities Purchase
Agreement with certain institutional investors, pursuant to which
on November 9, 2021, the Company sold to the investors a series of
senior secured convertible notes of the Company, in the aggregate
original principal amount of $6,480,000 (the “Notes”), which Notes
shall be convertible into shares of common stock of the Company at
a conversion price of $3.50 (subject to adjustment). The Notes are
due and payable on the first anniversary of the Issuance Date and
bear interest at a rate of 7% per annum, which shall be payable in
cash quarterly in arrears on each Amortization Date (as defined in
the Notes) or otherwise in accordance with the terms of the Notes.
The investors are entitled to convert any portion of the
outstanding and unpaid Conversion Amount (as defined in the Notes)
at any time or times on or after the Issuance Date, but we may not
effect the conversion of any portion of the Notes if it would
result in either of the investors beneficially owning more than
4.99% of the common stock.
Under
the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in
no event may the Company issue any shares of common stock upon
conversion of the Notes or otherwise pursuant to the terms of this
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 Securities Purchase Agreement and
Notes (the “Exchange Cap”), unless the Company (i) obtains
stockholder approval to issue shares of common stock in excess of
the Exchange Cap or (ii) obtains a written opinion from the
Company’s counsel that such approval is not required. In any event,
The Company may not issue any shares of its common under the
Securities Purchase Agreement or Notes if such issuance or sale
would breach any applicable rules or regulations of the
Nasdaq.
The
Notes will rank senior to all outstanding and future indebtedness
of the Company and its subsidiaries and will be secured by all
existing and future assets of the Company, as evidenced by the
Security and Pledge Agreement entered into between the Company and
the investors on November 9, 2021 (the “Security Agreement”).
Additionally, Scott L. Mathis, President and CEO of the Company,
pledged 275,600 of his shares of common stock and 66,667 options to
purchase common stock of the Company as additional collateral under
the Notes, as evidenced by the Stockholder Pledge Agreement between
the Company, Mr. Mathis and the investors, dated on November 9,
2021 (the “Pledge Agreement”).
In
connection with the foregoing, the Company entered into a
Registration Rights Agreement with the investors on November 9,
2021 (the “Registration Rights Agreement”), pursuant to which the
Company has agreed to provide certain registration rights with
respect to the Registrable Securities (as defined in the
Registration Rights Agreement) under the Securities Act of 1933
(the “1933 Act”) and the rules and regulation promulgated
thereunder, and applicable state securities laws. The Securities
Purchase Agreement and the 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.
EF
Hutton, division of Benchmark Investments, Inc. (“EF Hutton”) acted
as the exclusive placement agent in connection with the
transactions contemplated by the Securities Purchase Agreement, for
which the Company will pay to EF Hutton a cash placement fee equal
to 6.0% of the amount of capital raised, invested or committed
under the Securities Purchase Agreement and Notes.
On
November 11, 2021, in connection with the Securities Purchase
Agreement, the Company issued 596,165 shares of common stock to the
holders of the Notes (the “Pre-Delivery Shares”).
Effect
of Certain Provisions of our Bylaws
Our
Bylaws contain provisions that could have the effect of delaying,
deferring, or discouraging another party from acquiring control of
us. These provisions and certain provisions of Delaware law, which
are summarized below, could discourage takeovers, coercive or
otherwise.
Our
Bylaws provide for our Board of Directors to be divided into three
classes serving staggered terms. Approximately one-third of the
Board of Directors will be elected each year. This method of
electing directors makes changes in the composition of the Board of
Directors more difficult, and thus a potential change in control of
a corporation a lengthier and more difficult process. A classified
board of directors is designed to assure continuity and stability
in a board of directors’ leadership and policies by ensuring that
at any given time a majority of the directors will have prior
experience with our Company and be familiar with our business and
operations.
The
classified board structure may increase the amount of time required
for a takeover bidder to obtain control of the Company without the
cooperation of our Board of Directors, even if the takeover bidder
were to acquire a majority of the voting power of our outstanding
Common Stock. Without the ability to obtain immediate control of
our Board of Directors, a takeover bidder will not be able to take
action to remove other impediments to its acquisition of our
Company. Thus, a classified Board of Directors could discourage
certain takeover attempts, perhaps including some takeovers that
stockholders may feel would be in their best interests. Further, a
classified Board of Directors will make it more difficult for
stockholders to change the majority composition of our Board of
Directors, even if our stockholders believe such a change would be
beneficial. Because a classified Board of Directors will make the
removal or replacement of directors more difficult, it will
increase the directors’ security in their positions, and could be
viewed as tending to perpetuate incumbent management.
Since
the creation of a classified Board of Directors will increase the
amount of time required for a hostile bidder to acquire control of
our Company, the existence of a classified board of directors could
tend to discourage certain tender offers which stockholders might
feel would be in their best interest. However, our Board of
Directors believes that forcing potential bidders to negotiate with
our Board of Directors for a change of control transaction will
allow our Board of Directors to better maximize stockholder value
in any change of control transaction.
Our
bylaws also provide that, unless we consent in writing to an
alternative forum, the federal and state courts of the State of
Delaware will be the sole and exclusive forum for: (i) any
derivative action or proceeding brought on our behalf; (ii) any
action asserting a claim of breach of a fiduciary duty owed by any
of our directors, officers, or employees to us or our stockholders;
(iii) any action asserting a claim arising pursuant to any
provision of the Delaware General Corporation Law; or (iv) any
action asserting a claim that is governed by the internal affairs
doctrine, in each case subject the court having personal
jurisdiction over the indispensable parties named as defendants
therein. This exclusive forum provision would not apply to suits
brought to enforce any liability or duty created by the Securities
Act or the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction. This forum selection provision
may limit our stockholders’ ability to bring a claim in a judicial
forum that they find favorable for disputes with us or our
directors, officers, employees or agents, which may discourage such
lawsuits against us and our directors, officers, employees and
agents even though an action, if successful, might benefit our
stockholders.
Our
bylaws establish an advance notice procedure for stockholder
proposals to be brought before any meeting of our stockholders,
including proposed nominations of persons for election to our board
of directors. At an annual or special meeting, stockholders may
only consider proposals or nominations (i) specified in the notice
of meeting; (ii) brought before the meeting by or at the direction
of our board of directors or (iii) otherwise properly brought
before the meeting by any stockholder who is a stockholder of
record on the date of the giving of the notice and on the record
date of the meeting and who complies with the notice procedures set
forth in our bylaws. The bylaws do not give our board of directors
the power to approve or disapprove stockholder nominations of
candidates or proposals regarding other business to be conducted at
a special or annual meeting of our stockholders. However, our
bylaws may have the effect of precluding the conduct of certain
business at a meeting if the proper procedures are not followed.
These provisions may also discourage or deter a potential acquirer
from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to obtain control of
the Company.
Delaware
Anti-Takeover Statute
We
are subject to the provisions of Section 203 of the DGCL regulating
corporate takeovers. These provisions can discourage certain
coercive and inadequate takeover bids of the Company by requiring
those seeking control of the Company to negotiate with the Board of
Directors first. In general, Section 203 prohibits a publicly-held
Delaware corporation from engaging, under certain circumstances, in
a business combination with an interested stockholder (one who owns
15% or more of the Company’s outstanding voting stock) for a period
of three years following the date the person became an interested
stockholder unless:
|
|
● |
Before
the stockholder became an interested stockholder, the board of
directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder
becoming an interested stockholder; |
|
|
● |
On
completion of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced with the total
number of shares outstanding calculated when the transaction
commenced (excluding certain shares owned by officers or directors
or under employee stock plans); or |
|
|
|
|
|
|
● |
At or
subsequent to the time of the transaction, the business combination
is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders, and not
by written consent, by the affirmative vote of at least 66 2/3% of
the outstanding voting stock which is not owned by the interested
stockholder. |
Generally,
a business combination includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the
interested stockholder. We expect the existence of this provision
to have an anti-takeover effect with respect to transactions that
our Board of Directors does not approve in advance and could result
in making it more difficult to accomplish transactions that our
stockholders may see as beneficial such as (i) discouraging
business combinations that might result in a premium over the
market price for the shares of our Common Stock; (ii) discouraging
hostile takeovers which could inhibit temporary fluctuations in the
market price of our Common Stock that often result from actual or
rumored hostile takeover attempts; and (iii) preventing changes in
our management.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Common Stock is Continental
Stock Transfer & Trust Company. The transfer agent’s address
is: 1 State Street, 30th Floor, New York, New York 10004-1561.
Shares of our Common Stock offered hereby will be issued in
uncertificated form only, subject to limited
circumstances.
Market
Listing
Our
Common Stock is currently listed on Nasdaq under the symbol
“VINO”.
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, we have been informed that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
PROPERTIES
The
description of our properties is incorporated by reference from
Part I, Item 2 of the Company’s Annual Report on Form 10-K as filed
with the SEC on April 12, 2021 (see “Incorporation of Certain
Information by Reference”).
Legal
Proceedings
The
description of our legal proceedings is incorporated by reference
from Part II, Item 1 of the Company’s Quarterly Report on Form 10-Q
as filed with the SEC on November 15, 2021 (see “Incorporation of
Certain Information by Reference”).
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
The
description of directors, executive officers and corporate
governance is incorporated by reference from Part III, Item 10 of
the Company’s Annual Report on Form 10-K as filed with the SEC on
April 12, 2021, and from the Company’s Current Report on Form 8-K
as filed with the SEC on May 3, 2021 (see “Incorporation of Certain
Information by Reference”).
EXECUTIVE COMPENSATION
The
description of our executive compensation is incorporated by
reference from Part III, Item 11 of the Company’s Annual Report on
Form 10-K as filed with the SEC on April 12, 2021 (see
“Incorporation of Certain Information by Reference”).
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
The
description of our security ownership of beneficial owners and
management is incorporated by reference from Part III, Item 12 of
the Company’s Annual Report on Form 10-K as filed with the SEC on
April 12, 2021 (see “Incorporation of Certain Information by
Reference”).
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
The
description of certain relationships and related transactions and
director independence is incorporated by reference from Part III,
Item 13 of the Company’s Annual Report on Form 10-K as filed with
the SEC on April 12, 2021 and from the Company’s Definitive Proxy
Statement on Schedule 14A filed with the SEC on July 16, 2021 (see
“Incorporation of Certain Information by Reference”).
LEGAL MATTERS
The
validity of the Common Stock offered by this prospectus will be
passed upon by Burns, Figa & Will, P.C.
EXPERTS
The
consolidated financial statements of Gaucho Group Holdings, Inc. as
of December 31, 2020 and 2019, and for each of the years then
ended, have been incorporated by reference from our Annual Report
on Form 10-K as filed with the SEC on April 12, 2021, in reliance
upon the report of Marcum LLP, independent registered public
accounting firm. Such report is incorporated by reference upon the
authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE
INFORMATION
We
file annual, quarterly and other reports, proxy statements and
other information with the SEC. Our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
including any amendments to those reports, and other information
that we file with or furnish to the SEC pursuant to Section 13(a)
or 15(d) of the Exchange Act can be accessed free of charge through
the Internet. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at
http://www.sec.gov. You may access the registration
statement of which this prospectus is a part at the SEC’s Internet
site.
We
make available through our website, free of charge, copies of our
SEC filings as soon as reasonably practicable after we
electronically file or furnish them to the SEC on our website,
http://www.gauchoholdings.com. We have not incorporated by
reference into this prospectus the information on our website, and
you should not consider it to be a part of this
prospectus.
This
prospectus forms part of a registration statement we have filed
with the SEC relating to, among other things, the Common Stock. As
permitted by SEC rules, this prospectus does not contain all the
information we have included in the registration statement and the
accompanying exhibits and schedules we have filed with the SEC. You
may refer to the registration statement, exhibits and schedules for
more information about us and the Common Stock. The statements this
prospectus make pertaining to the content of any contract,
agreement or other document that is an exhibit to the registration
statement necessarily are summaries of their material provisions,
and we qualify them in their entirety by reference to those
exhibits for complete statements of their provisions. The
registration statement, exhibits and schedules are available
through the SEC’s website.
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The
SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC at www.sec.gov. The
SEC allows us to “incorporate by reference” the information in
certain documents that we file with it, which means that we can
disclose important information to you by referring you to documents
previously filed with the SEC. The information incorporated by
reference is considered to be part of this prospectus, and the
information that we subsequently file with the SEC will
automatically update and supersede this information. This
prospectus incorporates by reference the Company’s documents listed
below and all documents subsequently filed by us with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of the Offering of the shares under this
prospectus:
|
|
● |
Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2020 filed on April 12, 2021, which contains audited financial
statements of the Company for the fiscal years ended December 31,
2020 and 2019 |
| |
● |
Our
Quarterly Reports on Form 10-Q filed with the SEC on November 15, 2021, August 16, 2021 and May 17, 2021 |
| |
● |
Our
Current Reports on Form 8-K filed with the SEC on November 17, 2021, November 12, 2021, November 8, 2021, September 29, 2021, August 31, 2021, July 13, 2021, June 17, 2021, June 16, 2021, May 11, 2021, May 7, 2021, May 3, 2021, March 2, 2021, February 22, 2021, February 18, 2021, and February 17,
2021 |
| |
● |
Our
Definitive Proxy Statement on Schedule 14A filed with the SEC
on July 16, 2021 |
To
the extent that any information contained in any Current Report on
Form 8-K, or any exhibit thereto, was furnished, rather than filed,
with the SEC, that information or exhibit is specifically not
incorporated by reference in this document.
You
may obtain copies of these documents free of charge on our website,
http://www.gauchoholdings.com, as soon as reasonably
practicable after they have been filed with the SEC and through the
SEC’s website, www.sec.gov. You may also obtain such
documents by submitting a written request either to the Company’s
Corporate Secretary, Gaucho Group Holdings, Inc., c/o Burns Figa
& Will PC, Attn: Victoria Bantz, 6400 S. Fiddlers Green Circle,
Suite 1000, Greenwood Village, CO 80111 or to
mechevarria@gauchoholdings.com, or an oral request by
calling the Company’s Corporate Secretary at (212) 735-7688. The
Company will provide to each person, including any beneficial
owner, to whom a prospectus is delivered, a copy of any or all of
the reports that have been incorporated by reference in the
prospectus contained in the registration statement but not
delivered with the prospectus upon oral or written request, at no
cost to the requester, by contacting the Company as noted
above.
PROSPECTUS
Gaucho
Group Holdings, Inc.
Offering
of 4,500,000 shares
,
2021
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
13. Other Expenses of Issuance and
Distribution.
The
following table sets forth all expenses to be paid by the Company,
other than underwriting discounts and commissions, upon the
completion of this Offering. All amounts shown are estimates except
for the SEC filing fee.
| |
|
Approximate
Amount |
|
|
SEC
registration fee |
|
$ |
1,252 |
|
|
Legal
fees and expenses |
|
|
20,000 |
|
|
Accounting
fees and expenses |
|
|
10,000 |
|
|
Transfer
agent and registrar fees |
|
|
5,000 |
|
| Miscellaneous |
|
|
13,748 |
|
| |
|
|
|
|
| Total |
|
$ |
50,000 |
|
Item
14. Indemnification of Directors and Officers.
Section
102 of the General Corporation Law of the State of Delaware permits
a corporation to eliminate the personal liability of directors of a
corporation to the corporation or its stockholders for monetary
damages for a breach of fiduciary duty as a director, except for
breaches of the director’s duty of loyalty to the corporation or
its stockholders, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of a law,
authorizations of the payments of a dividend or approval of a stock
repurchase or redemption in violation of Delaware corporate law or
for any transactions from which the director derived an improper
personal benefit.
Section
145 of the General Corporation Law of the State of Delaware
provides that a corporation has the power to indemnify a director,
officer, employee, or agent of the corporation and certain other
persons serving at the request of the corporation in related
capacities against expenses (including attorney’s fees), judgments,
fines and amounts paid in settlements actually and reasonably
incurred by the person in connection with a threatened, pending, or
completed action, suit or proceeding to which he or she is or is
threatened to be made a party by reason of such position, if such
person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, and, in any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful, except
that, in the case of actions brought by or in the right of the
corporation, indemnification is limited to expenses (including
attorney’s fees) actually and reasonably incurred by the person in
connection with defense or settlement of such action or suit and no
indemnification shall be made with respect to any claim, issue, or
matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or other adjudicating court determines that,
despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. In addition, to the extent
that a present or former director or officer of a corporation has
been successful on the merits or otherwise in defense of any
action, suit, or proceeding described above (or claim, issue, or
matter therein), such person shall be indemnified against expenses
(including attorney’s fees) actually and reasonably incurred by
such person in connection therewith. Expenses (including attorney’s
fees) incurred by an officer or director in defending any civil,
criminal, administrative, or investigative action, suit, or
proceeding may be advanced by the corporation upon receipt of an
undertaking by such person to repay such amount if it is ultimately
determined that such person is not entitled to indemnification by
the corporation under Section 145 of the General Corporation Law of
the State of Delaware.
Our
Certificate of Incorporation provides for the indemnification of
our directors to the fullest extent permissible under Delaware
General Corporation Law. Our Certificate of Incorporation provides
for the indemnification of our directors and officers to the
maximum extent permitted by the Delaware General Corporation Law.
In addition, we maintain insurance policies insuring our directors
and officers against certain liabilities that they may incur in
their capacity as officers and directors of the Company.
See
also the undertakings set out in response to Item 17
herein.
Item
15. Recent Sales of Unregistered Securities.
A
summary of all securities that we have sold in the last year, since
January 1, 2020 without registration under the Securities Act of
1933, as amended (the “Securities Act”), is incorporated by
reference from Part II, Item 5 of the Company’s Annual Report on
Form 10-K as filed with the SEC on April 14, 2021, Part II, Items 3
and 5 of the Company’s Quarterly Report on Form 10-Q as filed with
the SEC on May 16, 2021, Part II, Item 2 of the Company’s Quarterly
Report on Form 10-Q as filed with the SEC on August 16, 2021, and
Part II, Item 2 of the Company’s Quarterly Report on Form 10-Q as
filed with the SEC on November 15, 2021 (see “Incorporation of
Certain Information by Reference”).
Item
16. Exhibits and Financial Statement Schedules.
(a)
See the Exhibit Index on the page immediately preceding the
signature page hereto for a list of exhibits filed as part of this
registration statement on Form S-1, which Exhibit Index is
incorporated herein by reference.
(b)
No financial statement schedules are provided because the
information called for is not required or is shown either in the
financial statements or the notes thereto.
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
The
undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration
statement:
(i)
To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the “Securities
Act”);
(ii)
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration statement;
and
(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.; provided, however, that paragraphs (1)(i), (1)(ii) and
(1)(iii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3)
To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities
Act to any purchaser:
(A)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the
registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5) or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by Section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided
in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to
be a new effective date of the registration statement relating to
the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
(5)
That, for purposes of determining any liability under the
Securities Act, each filing of the registrant’s annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated
by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(6)
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to any charter
provision, by law or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
EXHIBIT
INDEX
The
following documents are being filed with the Commission as exhibits
to this registration statement on Form S-1.
|
Exhibit |
|
Description |
|
1.1 |
|
Underwriting
Agreement, dated February 16, 2021 (11) |
|
1.2 |
|
Warrant
Agreement, including the form of Warrant, made as of February 19,
2021, between the Company and Continental. (12) |
|
3.1 |
|
Amended
and Restated Certificate of Incorporation filed with the Delaware
Secretary of State effective February 16, 2021(11) |
|
3.2 |
|
Amended
and Restated Bylaws as amended and adopted December 17, 2017
(4) |
|
3.3 |
|
Amendment
to the Company’s Amended and Restated Bylaws as approved on July 8,
2019 (6) |
|
4.1 |
|
Amended
and Restated Certificate of Designation of the Series A Preferred
filed September 30, 2013(1) |
|
4.2 |
|
Amendment
No. 1 to the Amended and Restated Certificate of Designation of
Series A Convertible Preferred Stock, dated February 28, 2017
(2) |
|
4.3 |
|
Certificate
of Designation of Series B Convertible Preferred Stock, dated
February 28, 2017 (2) |
|
4.4 |
|
Amendment
to the Company’s Certificate of Designation of the Series B
Convertible Preferred Stock as approved by the Board of Directors
and the Series B Preferred stockholders on December 3, 2019 and
filed with the Delaware Secretary of State (7) |
|
4.5 |
|
Amendment
to the Company’s Certificate of Designation of the Series B
Convertible Preferred Stock as approved by the Board of Directors
and the Series B Preferred stockholders on January 30, 2020 and
filed with the Delaware Secretary of State. (8) |
|
4.6 |
|
2016
Stock Option Plan. (3) |
|
4.7 |
|
First
Amendment to 2016 Stock Option Plan as adopted by the Board of
Directors on October 20, 2016. (3) |
|
4.8 |
|
2018
Equity Incentive Plan. (5) |
|
4.9 |
|
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 (6) |
|
4.10 |
|
Amendment
to the Company’s 2018 Equity Incentive Plan effective July 8, 2019
as approved by the Board of Directors (9) |
|
4.11 |
|
Amendment
No. 3 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 (16) |
|
4.12 |
|
Form
of Unit Warrant (10) |
|
5.1 |
|
Opinion
of Burns, Figa & Will PC* |
|
10.1 |
|
Retention
Bonus Agreement by and between the Company and Scott L. Mathis
dated March 29, 2020 (13) |
|
10.2 |
|
Commercial
Lease Agreement between Gaucho Group, Inc. and Design District
Development Partners, LLC, dated April 8, 2021(14) |
|
10.3 |
|
Common
Stock Purchase Agreement by and between Gaucho Group Holdings, Inc.
and Tumim Stone Capital LLC, dated May 6, 2021(15) |
|
10.4 |
|
Registration
Rights Agreement by and between Gaucho Group Holdings, Inc. and
Tumim Stone Capital LLC, dated May 6, 2021(15) |
|
10.5 |
|
Amended
and Restated Limited Liability Company Agreement of LVH Holdings
LLC, dated June 16, 2021 (17) |
|
10.6 |
|
Securities
Purchase Agreement dated November 3, 2021(18) |
|
10.7 |
|
Senior
Secured Convertible Notes Issued by the Company(18) |
|
10.8 |
|
Security
and Pledge Agreement(18) |
|
10.9 |
|
Stockholder
Pledge Agreement(18) |
|
10.10 |
|
Registration
Rights Agreement(18) |
|
10.11 |
|
First
Amendment to Amended and Restated Limited Liability Agreement dated
November 16, 2021 (19) |
|
21.1 |
|
Subsidiaries
of Gaucho Group Holdings, Inc.* |
|
23.1 |
|
Consent
of Marcum LLP* |
|
23.2 |
|
Consent
of Burns, Figa & Will PC (included in Exhibit
5.1)* |
|
31.1 |
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002* |
|
31.2 |
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002* |
|
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(13) |
|
101.INS |
|
XBRL
Instance Document |
|
101.SCH |
|
XBRL
Schema Document |
|
101.CAL |
|
XBRL
Calculation Linkbase Document |
|
101.DEF |
|
XBRL
Definition Linkbase Document |
|
101.LAB |
|
XBRL
Label Linkbase Document |
|
101.PRE |
|
XBRL
Presentation Linkbase 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 Current Report on Form 8-K, filed
on March 2, 2017. |
|
3. |
|
Incorporated
by reference from the Company’s Annual Report on Form 10-K, filed
on March 31, 2017. |
|
4. |
|
Incorporated
by reference from the Company’s current Report on Form 8-K, filed
on December 20, 2017. |
|
5. |
|
Incorporated
by reference from the Company’s Quarterly Report on Form 10-Q,
filed on November 19, 2018. |
|
6. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
July 9, 2019. |
|
7. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
December 4, 2019. |
|
8. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
January 31, 2020. |
|
9. |
|
Incorporated
by reference to the Company’s Registration Statement on Form S-1
filed on August 30, 2019. |
|
10. |
|
Incorporated
by reference to the Company’s Amended Registration Statement on
Form S-1 filed on December 8, 2020. |
|
11. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
February 18, 2021. |
|
12. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
February 22, 2021. |
|
13. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
April 1,2020. |
|
14. |
|
Incorporated
by reference to the Company’s Annual Report on Form 10-K filed on
April 12, 2021. |
|
15. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
May 7, 2021. |
|
16. |
|
Incorporated
by reference to the Company’s Amended Current Report on Form 8-K
filed on September 29, 2021. |
|
17. |
|
Incorporated
by reference to the Company’s Quarterly Report on Form 10-Q filed
on August 16, 2021. |
|
18. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
November 8, 2021. |
|
19. |
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on
November 17, 2021. |
|
* |
|
Filed
herewith |
|
** |
|
Furnished,
not filed herewith |
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Miami, State of Florida,
on November 24, 2021.
| |
GAUCHO
GROUP HOLDINGS, INC. |
|
|
|
|
| |
By: |
/s/
Scott L. Mathis |
| |
|
Scott
L. Mathis |
| |
|
President,
Chief Executive Officer & Chairman of the Board |
Pursuant
to the requirement of the Securities Exchange Act of 1934, this
registration statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated:
|
Dated:
November 24, 2021 |
By: |
/s/
Scott L. Mathis |
|
|
|
Scott
L. Mathis |
|
|
|
President,
Chief Executive Officer (principal executive officer) &
Chairman of the Board |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Maria I. Echevarria |
|
|
|
Maria
I. Echevarria |
|
|
|
Chief
Financial Officer (principal financial and accounting
officer) |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Peter J.L. Lawrence |
|
|
|
Peter
J.L. Lawrence |
|
|
|
Director |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Reuben Cannon |
|
|
|
Reuben
Cannon |
|
|
|
Director |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Marc Dumont |
|
|
|
Marc
Dumont |
|
|
|
Director |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Edie Rodriguez |
|
|
|
Edie
Rodriguez |
|
|
|
Director |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
William Allen |
|
|
|
William
Allen |
|
|
|
Director |
|
|
|
|
|
Dated:
November 24, 2021 |
By: |
/s/
Steven A. Moel |
|
|
|
Steven
A. Moel |
|
|
|
Director |
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