UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Check the appropriate box:

 

Preliminary Proxy Statement
Confidential, for use of the Commission only as permitted by Rule 14a-6(e)(2)
Definitive Proxy Statement
Definitive Additional Material
Solicitation Material under §240.14a-12

 

GAUCHO GROUP HOLDINGS, Inc.

(Name of Registrant as Specified in Its Charter)

 

Payment of filing fee (Check the appropriate box):

 

No fee required.
   
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  1) Title of each class of securities to which transaction applies:
     
  2) Aggregate number of securities to which transaction applies:
     
  3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
     
  4) Proposed maximum aggregate value of transaction:
     
  5) Total fee paid:

 

Fee paid with preliminary materials.
   
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, of the Form or Schedule and the date of its filing.

 

  1) Amount Previously Paid:
     
  2) Form, Schedule or Registration Statement No.:
     
  3) Filing Party:
     
  4) Date Filed:

 

 

 

 

 

 

PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

 

GAUCHO Group HOLDINGS, Inc.

112 NE 41st Street, Suite 106

Miami, FL 33137

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND IMPORTANT NOTICE REGARDING THE AVAILABILITY OF THE COMPANY’S PROXY STATEMENT

 

On August 26, 2022

 

To our Stockholders:

 

You are cordially invited to virtually attend the Annual Meeting of Stockholders of Gaucho Group Holdings, Inc. (the “Company”, or “GGH”) on August 26, 2022, at 12:00 p.m. Eastern Time, via webcast at https://www.cstproxy.com/gauchogroupholdings/2022 (the “Annual Meeting”). At the Annual Meeting the Company will submit the following six (6) proposals to its stockholders for approval:

 

  1. To elect two (2) Class I nominees to the board of directors named in this Proxy Statement to hold office for a three-year term.
     
  2. To grant the Board of Directors discretion (if necessary to prevent the delisting of the Company’s common stock on Nasdaq) on or before June 30, 2023, to implement a reverse stock split of the outstanding shares of common stock in a range from one-for-two (1:2) up to one-for-twenty (1:20), or anywhere between (the “Reverse Stock Split”), while maintaining the number of authorized shares of common stock required for Nasdaq listing. 
     
  3. To approve an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares available for awards under the plan to 25% of our common stock outstanding on a fully diluted basis as of the date of stockholder approval.
     
  4. To approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of up to 15,000,000  of the Company’s common stock upon the conversion of convertible promissory notes issued in a private placement pursuant to Rule 506(b) of the Securities Act of 1933, as amended (the “PP Notes”), without giving effect to Nasdaq’s 20% Rule.
     
  5. To approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to 7,227,291 shares  of our common stock pursuant to that certain Securities Purchase Agreement, dated November 3, 2021 (the “Purchase Agreement”), those certain senior secured convertible promissory notes dated November 9, 2021 (the “Notes”), and that certain Registration Rights Agreement, dated November 9, 2021 (the “Registration Rights Agreement”) by and between the Company and certain institutional investors.
     
  6. To ratify and approve the appointment of Marcum LLP as the Company’s independent registered accounting firm for the year ended December 31, 2022.

 

Additionally, any other business that may properly come before the Annual Meeting will be conducted.

 

The discussion of the proposals set forth above is intended only as a summary and is qualified in its entirety by the information contained in the accompanying Proxy Statement. Only holders of record of our common stock on July 7, 2022 (the “Record Date”) will be entitled to notice of and to vote at this Annual Meeting, and any postponements or adjournments thereof.

 

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The accompanying Proxy Statement is being furnished to our stockholders for informational purposes only, pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations prescribed thereunder. The Board will be soliciting your proxy in connection with the matters discussed above. Stockholders who wish to vote on the proposals accordingly must either attend the Annual Meeting and vote during the Annual Meeting or otherwise designate a proxy to attend the Annual Meeting and vote on their behalf.

 

We are using the “Notice and Access” method of providing proxy materials to stockholders via the internet. We are mailing all stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials. Notice and Access provides a convenient way for stockholders to access the Company’s proxy materials and vote shares on the internet, and also allows us to reduce costs and conserve resources. The Notice of Internet Availability includes instructions on how to access our proxy materials and how to vote your shares. The Notice of Internet Availability also contains instructions on how to receive a paper copy of the proxy materials if you prefer.

 

The Company’s Proxy Statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and the other Annual Meeting materials are available on the internet at: https://www.cstproxy.com/gauchogroupholdings/2022.

 

Whether or not you expect to attend the Annual Meeting, please vote your shares in advance online to ensure that your vote will be represented at the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.

 

  Sincerely,
   
  /s/ Scott L. Mathis 
  Scott L. Mathis, Chairman of the Board and
  Chief Executive Officer

 

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GAUCHO Group HOLDINGS, Inc.

112 NE 42st Street, Suite 106

Miami Beach, FL 33137

 

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS

To Be Held on August 26, 2022 at 12:00 p.m. Eastern Time

 

July 15, 2022

 

We are furnishing this Proxy Statement to stockholders of GAUCHO GROUP HOLDINGS, INC. (“we” or “GGH” or the “Company”) in connection with the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournments or postponements thereof. We will hold the Annual Meeting virtually on August 26, 2022 at 12:00 p.m. Eastern Time, webcast at https://www.cstproxy.com/gauchogroupholdings/2022.

 

The Annual Meeting is being held for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement (including the Notice of Annual Meeting of Stockholders) is first being made available to stockholders beginning on or about July 15, 2022. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including financial statements (“Annual Report”), was filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2022, and Amendment No. 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including financial statements (“Amended Annual Report”), was filed with the Securities and Exchange Commission (the “SEC”) on May 19, 2022. The Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022, including financial statements (“Quarterly Report”), was filed with the SEC on May 16, 2022. Hard copies of this Proxy Statement, the Amended Annual Report, and the Quarterly Report will be provided to stockholders via U.S. mail only by request, and this Proxy Statement, the Amended Annual Report, and the Quarterly Report are available on the internet at: https://www.cstproxy.com/gauchogroupholdings/2022

 

Voting Securities and Quorum Required.

 

Holders of record of our common stock at the close of business on July 7, 2022 (the “Record Date”) will be entitled to vote on all matters. On the Record Date, we had _________ shares of common stock issued and _________ outstanding. Each share of common stock is entitled to one vote per share. Common stock represents our only class of voting securities outstanding.

 

Cumulative voting shall not be allowed in the election of directors or any of the proposals being submitted to the stockholders at the Annual Meeting.

 

For the transaction of business at the Annual Meeting a quorum must be present. A quorum consists of not less than one-third of the shares entitled to vote at the Annual Meeting. In the event there are not sufficient votes for a quorum or to approve any proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned to a future time and date.

 

Revocability of Proxies

 

You can revoke your proxy at any time before it is exercised by timely delivery of a properly executed, later-dated proxy, by delivering a written revocation of your proxy to our Secretary, or by voting at the Annual Meeting via the internet. The method by which you vote by proxy will in no way limit your right to vote at the Annual Meeting if you decide to attend the meeting virtually. If your shares are held in the name of a bank or brokerage firm, you must obtain a proxy, executed in your favor, from the bank or broker, to be able to vote at the Annual Meeting.

 

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No Dissenters Rights

 

The proposed corporate actions on which the stockholders are being asked to vote are not corporate actions for which stockholders of a Delaware corporation have the right to dissent under the Delaware General Corporation Law (the “DGCL”).

 

Proposals by Security Holders

 

No stockholder has requested that we include any additional proposals in this Proxy Statement or otherwise requested that any proposals be submitted to the stockholders at the Annual Meeting.

 

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

 

Q. Why am I receiving these materials?

 

A. We have sent you these proxy materials because the Board of Directors (the “Board”) of Gaucho Group Holdings, Inc. (sometimes referred to as the “Company” or “GGH”) is soliciting your proxy to vote at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”), including at any adjournments or postponements of the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may cast your vote by proxy over the internet by following the instructions provided in the Notice of Internet Availability, or, if you have requested to receive printed proxy materials, you can also vote by mail pursuant to the instructions provided on the proxy card.

 

In accordance with SEC rules, we may furnish proxy materials, including this Proxy Statement and our Annual Report, to our stockholders by providing access to such documents on the internet instead of mailing printed copies. Stockholders will not receive printed materials unless they request them. Instead, a Notice of Internet Availability is mailed that instructs stockholders as to how they may access and review all of the proxy materials on the internet. We intend to commence the mailing of the Notice of Internet Availability on or about July 15, 2022 to all stockholders of record entitled to vote at the Annual Meeting.

 

Q. How do I attend the Annual Meeting?

 

A. The Annual Meeting will be held virtually and in person on August 26, 2022 at 12:00 p.m. Eastern Time, webcast at https://www.cstproxy.com/gauchogroupholdings/2022. You will receive a link to the webcast and telephone call in instructions.

 

Q. Who can vote at the Annual Meeting?

 

A. Only stockholders of record at the close of business on July 7, 2022 will be entitled to vote at the Annual Meeting. On this Record Date, there were ______________ shares of common stock outstanding and entitled to vote.

 

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Q. What am I voting on?

 

A. There are six (6) matters scheduled for a vote:

 

  To elect two (2) Class I nominees to the board of directors named in this Proxy Statement to hold office for a three-year term.
     
  To grant the Board of Directors discretion (if necessary to prevent the delisting of the Company’s common stock on Nasdaq) on or before June 30, 2023, to implement a reverse stock split of the outstanding shares of common stock in a range from one-for-two (1:2) up to one-for-twenty (1:20), or anywhere between (the “Reverse Stock Split”), while maintaining the number of authorized shares of common stock required for Nasdaq listing.
     
  To approve an amendment to the Company’s 2018 Equity Incentive Plan to increase the number of shares available for awards under the plan to 25% of our common stock outstanding on a fully diluted basis as of the date of stockholder approval.
     
  To approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of shares of a maximum of 15,000,000 of the Company’s common stock upon the conversion of convertible promissory notes issued in a private placement (the “PP Notes”), without giving effect to Nasdaq’s 20% rule.
     
  To approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to an additional 7,227,291 shares of our common stock pursuant to that certain Securities Purchase Agreement, dated November 3, 2021 (the “Purchase Agreement”), those certain senior secured convertible promissory notes dated November 9, 2021 (the “Notes”), and that certain Registration Rights Agreement, dated November 9, 2021 (the “Registration Rights Agreement”) by and between the Company and certain institutional investors.
     
  To ratify and approve the appointment of Marcum LLP as the Company’s independent registered accounting firm for the year ended December 31, 2022.

 

Q. What if another matter is properly brought before the Annual Meeting?

 

A. At this time, the Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

 

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Q. How do I vote and what is the vote required for each proposal?

 

A. As to the election of the Class I director nominees under Proposal No. 1, you may vote “For” the election of the nominees proposed by the Board, or “Withhold” for the nominees being proposed. The directors will be elected by a plurality of votes cast at the Annual Meeting.

 

With respect to Proposal No. 2 (granting the Board the authority to implement a reverse stock split) you may vote “For” or “Against” or “Abstain” for such proposal. Proposal No. 2 will be approved if a majority of common stock outstanding and present at the Annual Meeting is voted in favor of such proposal.

 

With respect to Proposal No. 3 (amendment to 2018 Plan), you may vote “For” or “Against” or “Abstain” for such proposal. Proposal No. 3 will be approved if a majority of the common stock outstanding and present at the Annual Meeting is voted in favor of such proposal.

 

With respect to Proposal No. 4 (issuance of shares in excess of the 20% Nasdaq rule upon conversion of the PP Notes), you may vote “For” or “Against” or “Abstain” for such proposal. Proposal No. 4 will be approved if a majority of the common stock outstanding and present at the Annual Meeting is voted in favor of such proposal.

 

With respect to Proposal No. 5 (issuance of shares in excess of the 19.99% exchange cap pursuant to the Purchase Agreement), you may vote “For” or “Against” or “Abstain” for such proposal. Proposal No. 5 will be approved if a majority of the common stock outstanding and present at the Annual Meeting is voted in favor of such proposal.

 

With respect to Proposal No. 6 (ratification and approval of the appointment of Marcum LLP as the Company’s independent auditors), you may vote “For” or “Against” or “Abstain” for such proposal. Proposal No. 6 will be approved if a majority of common stock outstanding and present at the Annual Meeting are voted in favor of such proposal.

 

Q. What are the effects of abstentions and broker non-votes?

 

An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If a stockholder indicates on its proxy card that it wishes to abstain from voting its shares, or if a broker, bank or other nominee holding its customers’ shares of record causes abstentions to be recorded for shares, these shares will be considered present and entitled to vote at the Annual Meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum and will also count as votes against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the shares present and entitled to vote at the Annual Meeting.

 

A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker, bank or other nominee does not have discretionary voting power with respect to such proposal and has not received voting instructions from the beneficial owner of the shares. Broker non-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting but will not be counted for purposes of determining the number of votes cast. Therefore, a broker non-vote will make a quorum more readily attainable but will not otherwise affect the outcome of the vote on any proposal.

 

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The procedures for voting are fairly simple:

 

Stockholder of Record: Shares Registered in Your Name

 

If on July 7, 2022 your shares were registered directly in your name with GGH’s transfer agent, Continental Stock Transfer & Trust Company, Inc., then you are a stockholder of record. As a stockholder of record, you may vote in person or online at the Annual Meeting or vote by proxy by visiting https://www.cstproxy.com/gauchogroupholdings/2022 and following the instructions provided on the Notice of Internet Availability. Whether or not you plan to attend the Annual Meeting, we urge you to fill out your proxy via the internet to cast your votes or vote via telephone.

 

If you have requested to receive printed copies of the proxy materials by mail, you may vote using the proxy card enclosed with the proxy materials and returning it by mail. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote online or in person even if you have already voted by proxy.

 

  To vote in person, attend the Annual Meeting and you will be afforded an opportunity to vote via the internet.
     
  To vote online or via telephone, follow the instructions on the Notice of Internet Availability mailed to you.
     
  If you have requested to receive your proxy materials by mail, you have the option to vote using the proxy card included in the mailing. To do so, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If we receive your signed proxy card before the Annual Meeting, we will vote your shares as you direct.

 

Beneficial Owner: Shares Registered in the Name of Broker or Bank

 

If on July 7, 2022 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. Simply complete the steps included in the voting instruction form to ensure that your vote is counted.

 

You are also invited to attend the Annual Meeting. To vote at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials or contact your broker or bank to request a proxy form.

 

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Q. How many votes do I have?

 

A. On each matter to be voted upon, you have one vote for each share of common stock you own as of July 7, 2022.

 

Q. What happens if I do not vote?

 

Stockholders of Record: Shares Registered in Your Name

 

A. If you are a stockholder of record and do not vote by proxy by accessing https://www.cstproxy.com/gauchogroupholdings/2022, by telephone, or online at the Annual Meeting, or, if you’ve received or requested to receive the proxy materials by mail, and do not complete and return your proxy card by mail, your shares will not be voted.

 

Beneficial Owners: Shares Registered in the Name of Broker or Bank

 

A. If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is considered to be a routine matter under applicable rules. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine” under applicable rules but not with respect to “non-routine” matters. Under applicable rules and interpretations, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Unless you provide voting instructions to your broker, your broker or nominee may NOT vote your shares on the election of directors (Proposal 1), the approval of a reverse stock split (Proposal 2), the approval of an amendment to the Company’s 2018 Equity Incentive Plan to allow for additional shares available for awards (Proposal 3), the approval of the issuance of up to 15,000,000 shares of the Company’s common stock pursuant to the PP Notes (Proposal 4), or the approval of the additional issuance of up to 7,227,291 shares of the Company’s common stock pursuant to the Purchase Agreement (Proposal 5), but may vote your shares on the ratification and approval of the appointment of Marcum LLP as the Company’s independent registered accounting firm (Proposal 6) even in the absence of your instruction.

 

Q. What if I return a proxy card or otherwise vote but do not make specific choices?

 

A. If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of the nominees for director named in this Proxy Statement, “For” the approval of a reverse stock split, “For” the approval of an amendment to the Company’s 2018 Equity Incentive Plan to allow for additional shares available for awards, “For” the approval of the issuance of up to 15,000,000 shares of the Company’s common stock pursuant to the PP Notes, “For” the approval of the additional issuance of up to 7,227,291 shares of the Company’s common stock pursuant to the Purchase Agreement, and “For” the ratification and approval of the appointment of Marcum LLP as the Company’s independent registered accounting firm. If any other matter is properly presented at the Annual Meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

 

Q. Who is paying for this proxy solicitation?

 

A. The Company will pay for the entire cost of soliciting proxies. In addition to these proxy materials, the Company’s directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. The Company may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

 

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Q. What does it mean if I receive more than one set of proxy materials?

 

A. If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each Notice of Internet Availability (or each proxy card in the proxy materials if you have requested printed proxy materials) to ensure that all of your shares are voted.

 

Q. Can I change my vote after submitting my proxy?

 

All Stockholders of Record: Shares Registered in Your Name

 

A. Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

 

1. If you have requested your proxy materials be mailed to you, you may submit another properly completed proxy card with a later date;
   
2. You may send a timely written notice that you are revoking your proxy to the Company’s legal counsel, Burns Figa & Will PC, Attn: Victoria Bantz, 6400 S. Fiddlers Green Circle, Suite 1000, Greenwood Village, CO 80111;
   
3. You may change your vote using the online voting method, in which case your latest internet proxy submitted prior to the Annual Meeting will be counted; or
   
4. You may attend the Annual Meeting and vote online. Simply attending the Annual Meeting will not, by itself, revoke your proxy.

 

Your most current proxy card is the one that is counted.

 

Beneficial Owner: Shares Registered in the Name of Broker or Bank

 

A. If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

 

Q. When are stockholder proposals and director nominations due for next year’s Annual Meeting?

 

A. We anticipate that our 2023 Annual Meeting will be held in August 2023. To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing to the attention of the Secretary of Gaucho Group Holdings, Inc. c/o Burns Figa & Will PC, Attn: Victoria Bantz, 6400 S. Fiddlers Green Circle, Suite 1000, Greenwood Village, CO 80111. If you wish to submit a proposal at the Annual Meeting that is to be included in next year’s proxy materials, you must do so in accordance with the Company’s amended and restated bylaws (the “Bylaws”), which contain additional requirements about advance notice of stockholder proposals and director nominations. In addition, you must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934.

 

Q. What are “broker non-votes”?

 

A. As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the Nasdaq Capital Market (“Nasdaq”) to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”

 

Q. What is the quorum requirement?

 

A. A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least one-third of the outstanding common shares entitled to vote are present at the Annual Meeting via the internet or represented by proxy. On the Record Date, there were ______________ common shares outstanding. Thus, the holders of _____________ shares of common stock must be present in person or represented by proxy at the Annual Meeting to have a quorum.

 

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Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote via internet at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the chairman of the Annual Meeting or the holders of a majority of shares present at the Annual Meeting or represented by proxy may adjourn the Annual Meeting to another date.

 

Q. How can I find out the results of the voting at the Annual Meeting?

 

A. Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

 

Q. What proxy materials are available on the internet?

 

A. The Proxy Statement, the Amended Annual Report, and the Quarterly Report are available at: https://www.cstproxy.com/gauchogroupholdings/2022.

 

Forward Looking Statements

 

This Proxy Statement may contain certain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements.

 

Such forward-looking statements include statements about our expectations, beliefs or intentions regarding actions contemplated by this Proxy Statement, our potential business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made and are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” or “will,” and similar expressions or variations. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption “Risk Factors” included in our other filings with the Securities and Exchange Commission (“SEC”), including the disclosures set forth in Item 1A of our Form 10-K/A for the year ended December 31, 2021. Furthermore, such forward-looking statements speak only as of the date of this Proxy Statement. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

 

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RECORD DATE AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT

 

Security Ownership of Management  

 

As of July 5, 2022, the Company had 16,589,668 shares of its common stock issued and 16,586,299 outstanding . The following table sets forth the beneficial ownership of the Company’s common as of the Record Date by each person who serves as a director and/or an executive officer of the Company on that date, and the number of shares beneficially owned by all of the Company’s directors and named executive officers as a group:

 

Name and Address of

Beneficial Owner

  Position  

Amount and

Nature of Beneficial Ownership (1)

   

Percent of

Common Stock

 
Scott L. Mathis, 1445 16th Street, Suite 403, Miami Beach, FL 33139   Chairman, Class III Director, Chief Executive Officer, President     3,793,921 (2)     22.3 %
                     
Maria Echevarria, 14 Benmore
Ter., Bayonne, NJ 07002
  Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Compliance Officer     115,999 (3)     1.0 %
                     
Peter J.L. Lawrence, 5
Landsdowne Crescent, London
WII 2NH, England
   Class II Director     171,909 (4)     1.0 %
                     
Steven A. Moel, 7934 La
Mirada Drive, Boca Raton, FL
33433
   Class I Director     168,577 (5)     1.0 %
                     
Reuben Cannon, 280 S.
Beverly Drive, #208, Beverly
Hills, CA 90212
  Class I Director     137,457 (6)     1.0 %
                     
Marc Dumont, 43 rue de la
Prétaire, CH-1936, Verbier, Switzerland
  Class I Director     288,086 (7)     1.7 %
                     
Edie Rodriguez, 1764 Victoria
Pointe Circle, Weston, FL
33327
  Class I Director     128,010 (8)     1.0 %
                     
William Allen
23 Corporate Plaza Dr., Suite 150,
Newport Beach, CA 92660
  Class III Director     108,427 (9)     1.0 %
                     
All current directors, directors elect, director nominees, executive officers and named executive officers as a group (seven persons)         4,394,998 (10)     30.0 %

 

Notes to Security Ownership of Management table shown above:

 

  (1) Calculated in accordance with 1934 Act Rule 13d-3.
     
  (2) Consists of (a) 1,833,461 shares of our common stock owned by Mr. Mathis directly; (b) 251,829 shares owned by The WOW Group, LLC, of which Mr. Mathis is a controlling member; (d) 1,283,423 shares owned by Hollywood Burger Holdings, Inc.; (e) 27,481 shares owned by Mr. Mathis’s 401(k) account; and (f) the right to acquire 287,231 shares of common stock subject to the exercise of options.

 

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  (3) Consists of (a) 91,258 shares of our common stock owned by Ms. Echevarria directly; (b) 10,992 shares owned by Mrs. Echevarria’s 401(k) account and (c) 19,008 shares of our common stock issuable upon the exercise of stock options.
     
  (4) Consists of (a) 140,825 shares of our common stock owned by Mr. Lawrence directly; (b) 716 shares owned by Mr. Lawrence and his spouse as trustees for the Peter Lawrence 1992 Settlement Trust; and (c) 29,167 shares of our common stock issuable upon the exercise of stock options.
     
  (5) Consists of (a) 138,593 shares owned by Dr. Moel directly; (b) 11,770 shares held by Dr. Moel’s Roth IRA; (c) 1,780 shares held by Andrew Moel, his son; (d) 1,900 shares held by Erin Moel, his daughter; and (e) 11,667 shares issuable upon the exercise of stock options.
     
  (6) Consists of (a) 128,876 shares held by Mr. Cannon individually; (b) 1,960 shares owned by Reuben Cannon Productions; (c) 3,854 shares issuable upon the exercise of stock options; and (d) 3,333 shares issuable upon the exercise of warrants held by Mr. Cannon individually.
     
  (7) Consists of (a) 108,427 shares of our common stock owned by Mr. Dumont directly; (b) 30,000 shares owned by Mr. Dumont, his wife Vinciane Dumont, and his daughter Catherine Dumont, JTWROS; (c) 39,282 shares held by Mr. & Mrs. Dumont and Patrick Dumont, JTWROS; (d) 101,210 shares held by Mr. Dumont and Patrick Dumont, JTWROS; and (e) 9,167 shares issuable upon the exercise of stock options.
     
  (8) Consists of (a) 116,760 shares of our common stock owned by Ms. Rodriguez owned directly; (b) warrants to purchase 8,333 shares of common stock directly; and (c) 2,917 shares issuable upon the exercise of stock options.
     
  (9) Consists of (a) 108,427 shares of our common stock owned by Mr. Allen owned directly.
     
  (10) Consists of 4,307,551 shares of our common stock, 75,781 shares of our common stock issuable upon the exercise of stock options, and 11,666 shares of our common stock issuable upon the exercise of warrants.

 

Security Ownership of Certain Beneficial Owners

 

As of July 5, 2022, the only persons or entities that beneficially own more than 5% of its outstanding common stock who do not serve as an executive officer or director:

 

Name and Address of

Beneficial Owner

  Amount and
Nature of
Beneficial
Ownership (1)
    Percent of
Common Stock
 
Hollywood Burger Holdings, Inc., 6250 Hollywood Blvd, Suite 100, Los Angeles, CA 90028     1,283,423 (2)     7.7 %
All 5% beneficial owners, as a group     1,283,423 (2)     7.7 %

 

  (1) Calculated in accordance with 1934 Act Rule 13d-3.
     
  (2) Consists of 1,283,423 shares of our common stock held directly.
     
  (3) Consists of 1,283,423 shares of our common stock.

 

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Information Regarding the Board of Directors and Corporate Governance

 

As of the Record Date, the names, titles, and ages of the members of the Company’s Board of Directors and its Director nominees are as set forth in the below table.

 

Name   Age as of
July 5, 2022
  Position
Scott L. Mathis   60   Chairman, Class III Director, Chief Executive Officer, President
Maria I. Echevarria   42   Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer and Compliance Officer
Peter J.L. Lawrence   88   Class II Director
Steven A. Moel   78   Class I Director; Director Nominee
Reuben Cannon   76   Class I Director; Director Nominee
Marc Dumont   79   Class I Director
Edie Rodriguez   60   Class I Director
William Allen   62   Class III Director

 

The Company’s Board of Directors seeks to ensure that it is composed of members whose particular experience, qualifications, attributes, and skills, when taken together, will allow the Board of Directors to satisfy its oversight obligations effectively. On June 15, 2022, the Board of Directors created the Nominating and Corporate Governance Committee (the “Nominating Committee”), which is responsible for identifying and nominating appropriate persons to add to the Board of Directors when necessary. In identifying Board candidates, it is the goal of the Nominating Committee to identify persons whom they believe have appropriate expertise and experience to contribute to the oversight of a company of GGH’s nature while also reviewing other appropriate factors. Messrs. Cannon, Lawrence, and Dumont are current members of the Nominating Committee, each of whom are considered independent in compliance with Nasdaq Rules 5065(a) and (e).

 

Messrs. Mathis, Lawrence, Cannon, Dumont, Allen, Ms. Rodriguez, and Dr. Moel are current members of the Board of Directors.

 

Board Diversity Matrix for Gaucho Group Holdings, Inc. (as of July 5, 2022)

 

Total Number of Directors   7
     
Part I: Gender Identity   Female   Male   Non-Binary   Did Not Disclose Gender
                 
Directors:   1   5   0   1
                 
Part II: Demographic Background
African American or Black   0   1   0   0
Alaskan Native or American Indian   0   0   0   0
Asian   0   0   0   0
Hispanic or Latinx   0   0   0   0
Native Hawaiian or Pacific Islander   0   0   0   0
White   1   4   0   0
Two or More Races or Ethnicities   0   0   0   0
LGBTQ+   0
Did Not Disclose Demographic Background   1

 

Summaries of the background and experience of the Company’s directors and officers are as follows:

 

 

Scott Mathis: Mr. Mathis is the founder of GGH and has served as Chief Executive Officer and Chairman of the Board of Directors since its inception in April 1999. Mr. Mathis is also the founder and, CEO and Chairman of the Board of Directors of GGI. Mr. Mathis has over five years’ experience serving as Chief Executive Officer and Chairman of the Board of Directors of Mercari Communications Group, Ltd., a public company. Mr. Mathis is also the founder, Chief Executive Officer, and Chairman of IPG, AGP and various other affiliated entities of GGH. Since July 2009, Mr. Mathis has served as the Chief Executive Officer and Chairman of Hollywood Burger Holdings, Inc., a company he founded which is developing Hollywood-themed American fast food restaurants in Argentina and the United States. Since June 2011, Mr. Mathis has also served as the Chairman and Chief Executive Officer of InvestBio, Inc., a former subsidiary of GGH that was spun off in 2010. Including his time with GGH and its subsidiaries, Mr. Mathis worked for over 25 years in the securities brokerage field. From 1995-2000, he worked for National Securities Corporation and The Boston Group, L.P. Before that, he was a partner at Oppenheimer and Company and a Senior Vice President and member of the Directors Council at Lehman Brothers. Mr. Mathis also worked with Alex Brown & Sons, Gruntal and Company, Inc. and Merrill Lynch. Mr. Mathis received a Bachelor of Science degree in Business Management from Mississippi State University. The determination was made that Mr. Mathis should serve on GGH’s Board of Directors due to his executive level experience working in the real estate development industry and in several consumer-focused businesses. He has also served on the board of directors of a number of non-public companies in the biotechnology industry. 

 

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Maria I. Echevarria: In April 2015, the Board of Directors of GGH appointed Ms. Echevarria as the Company’s Chief Financial Officer and Secretary. On January 3, 2017, Ms. Echevarria was appointed as Chief Financial Officer, Treasurer and Secretary of Gaucho Group, Inc. She joined the Company as Corporate Controller in June 2014 and had primary responsibility for the Company’s corporate consolidation, policies and procedures as well as financial reporting for SEC compliance, coordinating budgets and projections, preparing financial presentations and analyzing financial data. Ms. Echevarria has over 15 years of experience in Accounting, Compliance, Finance, Information Systems and Operations. Her experience includes SEC reporting and financial analysis, and her career accomplishments include developing and implementing major initiatives such as SOX, BSA and AML reporting and valuation of financial instruments. Prior to her employment with the Company, Ms. Echevarria served as Director of Finance and Accounting for The Hope Center, a nonprofit, from 2008 to June 2014 overseeing Finance, Information Systems and Operations. From 2001 through 2008 she served as a Quality Control and Compliance Analyst, Financial Analyst, and Accounting Manager for Banco Popular in San Juan, Puerto Rico, where she specialized in Mortgage Quality Control, Compliance, Financial Analysis and Mortgage Accounting, and corresponding with the FHA, VA and other mortgage guarantors. Ms. Echevarria also coordinated audits and compliance programs related to reporting, remittances, escrow accounting and default management for Fannie Mae, Freddie Mac and other private investors. She has developed and taught accounting courses for Herzing University, and currently serves as an adjunct faculty member at Southern New Hampshire University. She is a CPA, licensed in New Jersey and Puerto Rico, and holds a B.B.A. in Accounting from the University of Puerto Rico and an MBA in Business from University of Phoenix. Mrs. Echevarria was born and raised in Puerto Rico and is fluent in Spanish and English.

 

 

Peter J.L. Lawrence: Mr. Lawrence has served as a director of GGH since July 1999. The Board has determined that he is a valuable member of the Board due to his experience as an investor in smaller public companies and service as a director for a number of public companies. Specifically, Mr. Lawrence was from 2000 to 2014 a director of Sprue Aegis plc, a U.K. company traded on the London Stock Exchange that designs and sells smoke and carbon monoxide detectors for fire protection of domestic and industrial premises in the U.K. and Europe. In the same period he also served as Chairman of Infinity IP, a private company involved with intellectual property and distribution in Australasia; and director of Hollywood Burger Holdings, Inc. From 1970 to 1996, Mr. Lawrence served as Chairman of Associated British Industries plc, a holding company of a group of chemical manufacturers making car engine and aviation jointings and sealants both for OEM and after markets, specialty waxes and anti-corrosion coatings for the automotive, tire and plastics industries in U.K, Europe and USA.

 

Mr. Lawrence has additional experience as a director of a publicly-traded company by serving as a director of Beacon Investment Trust PLC, a London Stock Exchange-listed company from 2003 to June 2010. Beacon invested in small and recently floated companies on the Alternative Investment Market of the London Stock Exchange. Mr. Lawrence served on the investment committee of ABI Pension fund for 20 years as well as the investment committee of Coram Foundation Children Charity founded in 1739 as the Foundling Hospital from 1977 to 2004. He received a Bachelor of Arts in Modern History from Oxford University where he graduated with honors.

 

  Steven A. Moel, M.D., J.D.: Dr. Moel began serving as a director of GGH in April 2019 and has served as a director of GGI as of November 2018. Previously, Dr. Moel served as a Senior Business Advisor for GGH. Dr. Moel is a medical doctor and licensed attorney (currently inactive). Dr. Moel had a private legal practice as a business and transactional attorney and is a member of the California and American Bar Associations and has served as legal counsel to many corporations. The Board determined him to be a valuable member of the Board due to his extensive and broad experience and knowledge in business. In addition to serving as a member of the Company’s Board of Advisors, Dr. Moel is presently a member of the board of directors of Hollywood Burger Holdings, Inc., a related party to the Company (International Fast Food Restaurants).

 

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Previously, Dr. Moel served in many roles, including most recently as a Senior Business Advisor for Global Job Hunt (International Recruiting and Education). He was also founder of Akorn, Inc., Nasdaq: AKRX (Biotechnology/Pharmaceutical Mfg.), where he served as a Director on the Executive Board and as Vice President of Mergers & Acquisitions. Dr. Moel previously served as: the Vice President, Mergers & Acquisitions and Business Development of Virgilian, LLC (Nutraceuticals/Agricultural); CEO of U.S. Highland, Inc. BB:UHLN (Mfg. of Motorcycles/Motorsports); CEO of Millennial Research Corp. (Mfg./Ultra-high efficiency motors); Chairman and COO of WayBack Granola Co. (Granola Manufacturing); Executive VP, Mergers and Acquisitions of Agaia Inc. (Green Cleaning Products). He has also served as: President, COO and Executive Director of American Wine Group (Wine Production/Distribution); Senior Business and Advisor, of viaMarket Consumer Products, LLC (Manufacturer of Consumer Products); as a member of the Board of Directors of Grudzen Development Corp. (Real Estate); COO and Chairman of the Board of Directors of Paradigm Technologies (Electronics/Computer Developer); President and CEO of Sem-Redwood Enterprises (Stock Pool), and as a member of the Advisory Board of Mahlia Collection (Jewelry Design/ Manufacturing).

 

Dr. Moel is a board-certified ophthalmologist who was in private practice and academia. He is an Emeritus Fellow of the American Academy of Ophthalmology and his academic history includes Washington University, University of Miami-Coral Gables, Marshall University, West Virginia University, University of Colorado, Harvard University, Louisiana State University-New Orleans, University of Illinois-Chicago, and the College of Law in Santa Barbara.

 

 

Reuben Cannon: Mr. Cannon has been a stockholder of the Company for several years and is a producer and casting director who has helped shape and guide some of the most critically acclaimed film and television projects in Hollywood during the past 30 years. The Company believes Mr. Cannon is uniquely qualified to serve as a director of the Company because of running his successful long-term business in Hollywood and connections to promote the Company’s luxury brand goods.

 

Mr. Cannon worked at Universal Studios from 1970 to 1978, eventually becoming a casting director. He also was the head of television casting for Warner Brothers from 1977 to 1978. In 1978, Mr. Cannon started his own casting agency called Reuben Cannon & Associates. His agency has cast nearly one hundred television series and films. Projects include “The Color Purple” (11 Oscar nominations), “Columbo,” “Alfred Hitchcock Presents,” “The A Team,” the 1990s remake of “Perry Mason”, the Emmy-Award winning comedy series “The Bernie Mac Show,” “My Wife and Kids,” and “Boondocks.” Producing credits include “The Women of Brewster Place” and “Brewster Place” (in collaboration with Oprah Winfrey), “Down in the Delta” (directed by Dr. Maya Angelou), and “Get on the Bus” (with Spike Lee). In 2004, Mr. Cannon formed a production alliance with Tyler Perry Studios and is currently Executive Producer for Tyler Perry’s “House of Payne.” In addition to two Emmy nominations, he has received numerous awards including an Honorary Doctorate of Human Letters from Morehouse College, and the “Behind the Lens Award” for outstanding contributions in entertainment in the areas of film and television. He has been credited with launching the careers of many of today’s major film and television stars. He is also a producer in both film and television. Mr. Cannon attended Southeast City College.

 

  Marc Dumont: Mr. Dumont became a director of the Company upon the listing of our common stock to Nasdaq on February 16, 2021. He is an Independent Investment Banker and International Financial Consultant. He is also Chairman and CEO of Château de Messey Wineries, Meursault, France. Mr. Dumont previously served as the President of PSA International SA (a PSA Peugeot Citroen Group company) from January 1981 to March 1995. He consults and advises international clients in Europe and Asia, as well as the United States. He is also the Chairman of Sanderling Ventures (a European affiliate of a U.S. venture capital firm) since 1993, managing five biotechnology funds. Mr. Dumont is also a Board member of Lightwave Systems Inc., Santa Barbara, California (since 1997) and Caret Industries, Oxnard, California (since 1995) and a Board member of SenesTech, Inc. since 2016. He has served on many other boards including Finterbank Zurich, Banque Internationale a Luxemborg, Xiphias International Investment Fund Limited (an alternative investment fund), and also Irvine Sensors Corporation where he was member/Chairman of their Audit, Nominating, and Corporate Governance, and Compensation Committees. Mr. Dumont holds a Degree in Electrical Engineering and Applied Economics from the University of Louvain, Belgium and an MBA from the University of Chicago. The Company believes Mr. Dumont is uniquely qualified to serve as a director of the Company because of his background in finance, the wine industry, and diverse experience as a board member for multiple companies.

 

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Edie Rodriguez: Ms. Rodriguez became a director of the Company upon the listing of our common stock to Nasdaq on February 16, 2021. She is a globally respected thought leader on Luxury and Luxury Branding and frequent speaker on Fox News, Fox Business News, CNN, CNBC and Bloomberg TV in the U.S., U.K., and Hong Kong. She is a Member of the Board of Directors for the Saudi Tourism Authority (SAT) and is also the Chair of the SAT’s Nominating and Renumeration Committee. Ms. Rodriguez is also a Director for RAND Corporation’s Center for Global Risk and Security (CGRS). As an Advisory Board Member she provides governance and fiduciary guidance, advising from billion-dollar corporations’ perspectives. She received a significant honor in 2018 when she was hand selected by The Kingdom of Saudi Arabia to be a Founding Steering Committee Member and Executive Committee Member for The KSA Public Investment Fund (PIF) for a project that was integral for their strategic #SaudiVision2030 plan.

 

From October 2017 to April 2020, she was Americas Brand Chairwoman for the world’s leading Luxury Yacht Expedition Cruise Company, Ponant Cruises – a subsidiary of the multi-billion dollar luxury leader Groupe Artemis/Kering, where she provided strategy, direction and implementation road maps.

 

Previously, she led as CEO and President of Crystal Cruises Corporation, a multi-billion dollar global brand with ocean cruise ships, river vessels, yacht expedition vessels, private charter air traveling worldwide. She guided the company’s strategy, operations, finance, and customer focus. During her tenure with Crystal Cruises Corporation she was a member of the BoD of Cruise Line International Association (CLIA).

 

She is an Advisory Board Member for The Retail Summit, advising on the convergence of technology, digital disruption, hospitality, corporate social responsibility and global luxury experiences. She has completed Wharton Business School’s Executive Management Program, Boards that Lead, Stanford University’s Executive Management Program, Finance for C-Suite Executives, Harvard Business School Women’s Leadership Forum and holds a Bachelor of Science Degree from Nova Southeastern University. The Company believes Ms. Rodriguez is uniquely qualified to serve as a director of the Company because of her previous experience as Chairwomen of one of the top luxury cruise lines in the world, for her experience in the industries of international luxury travel and hospitality, and for her diverse experience member of the board of directors and board of advisors for multiple companies, as well as for her committee membership for The KSA Public Investment Fund (PIF), which is the sovereign wealth fund of Saudi Arabia and among the largest sovereign wealth funds in the world with total estimated assets of $382 billion.

 

 

William Allen: Mr. Allen became a director of the Company on April 29, 2021. Mr. Allen is a well-respected leader within the restaurant industry. The Company believes Mr. Allen is uniquely qualified to serve as a director of the Company given his unique blend of executive acumen, which includes experience in start-ups, turn-arounds, leveraged buyouts, and acquisitions. As Co-Founder of Fleming’s Prime Steakhouse & Wine Bar and former Chief Executive Officer and Chairman of OSI Restaurant Partners (Bloomin’ Brands), Mr. Allen has been instrumental in building restaurant companies for over twenty-five years.

 

In the past five years, Mr. Allen has been a consultant or served in an advisory role with Orange County Vibe, PDQ, Butterfly PE, and L. Catterton PE. He has also served on the board of directors of Habit Burger, Bruxie, Paul Martin’s American Bistro, Founders Table, Punch Bowl Social, Modern Market, Whiskey Cake Holdings, Uncle Julio’s, Hopdoddy and Velvet Taco.

 

Bill served for five years as the CEO of OSI Restaurant Partners (Bloomin’ Brands), a portfolio of casual dining brands including Outback Steakhouse, Carrabba’s Italian Grill, Fleming’s Prime Steakhouse & Wine Bar, and Bonefish Grill. Bloomin’ Brands. Most notable, Mr. Allen was responsible for taking OSI private in a $3.9 Billion transaction which was approved by the OSI shareholders in June 2007. He retired in November of 2009 and served as Chairman of the Board and trusted advisor to the current CEO, Elizabeth Smith, until 2011.

 

Prior to his appointment as CEO of OSI Restaurant Partners, Mr. Allen was involved in the creation and expansion of Fleming’s Prime Steakhouse & Wine Bar with his Partner and Co-Founder, Paul Fleming. He served as President and CEO for La Madeleine French Bakery and Café and Koo KooRoo. He was also Vice-President and Partner for Restaurant Enterprises Group, a multi-concept group. He spent 10 years with the Marriott Corporation, where he rose through the ranks from general manager to senior vice-president.

 

Mr. Allen has also acted as an investor, advisor, and Board member to a wide portfolio of established and early-stage growth companies to include: Fleming’s Steakhouse, Mendocino Farms, Piada, Protein Bar, Dig Inn, Lemonade, TE2, Omnivore, Pepper Technology, Studio Movie Grill, Just Food for Dogs, Tender Greens, Relevant, Barcelona and Bar Taco, The Laser Spine Institute, PDQ, Cobalt, Matchbox Pizza, Punch Bowl Social, Proper Foods, and Boqueria. Mr. Allen attended Rider University in Lawrence Township, New Jersey for undergraduate studies.

 

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On July 1, 2022, the Board of Directors, upon the recommendation of the Nominating Committee, voted to reduce the number of directors on the Board from seven to five. At the Annual Meeting, the term of four Class I Director (Messrs. Reuben and Dumont, Ms. Rodriguez, and Dr. Moel) will expire. As such, at the Annual Meeting, only two persons will be elected to serve as Class I Directors.

 

Directors are elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote for directors. The nominee receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominee named below. Abstentions and broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether any nominee is elected. If any nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by us. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.

 

Significant Employees

 

Sergio O. Manzur Odstrcil: Mr. Odstrcil is Chief Financial Officer (“CFO”) and Chief Operating Officer (“COO”) of Algodon Mansion & Algodon Wine Estates. Mr. Manzur Odstrcil is an Argentina Certified Public Accountant whose professional experience includes administration and management positions with companies in Argentina, Brazil, Mexico and Chile. As CFO and COO for all of GGH’s Argentine subsidiaries, he is responsible for day-to-day management including financial planning and analysis, overseeing the implementation of financial strategies for the corporation, and for ensuring prudent corporate governance. Prior to joining GGH, Mr. Manzur Odstrcil was the Administration and Finance Director for Bodega Francois Lurton since May 2007, where he was responsible for the design and development of a financial debt strategy and negotiations with banks and strategic suppliers to obtain credits. He was also responsible for the organization of new funding to the company for $4 million and also served as a member of the company’s executive committee. From March 2002 to September 2006 he previously held the position of Country Controller for the Boston Scientific Corporation (BSC) in Chile, and prior to that he served as Controller for Southern Cone BSC in Buenos Aires and Mexico City. He also served as Senior Financial Analyst for BSC’s Latin American Headquarters in Buenos Aires, as well as in Sao Paulo, Brazil, and prior to that he served as BSC’s Accountant Analyst in Buenos Aires. Mr. Manzur Odstrcil began his career at Cerveceria y Malteria Quilmes in Argentina from 1997 to 1998. He obtained his MBA at INCAE in Costa Rica in 1996, and received his CPA from the Universidad Nacional de Tucumán, San Miguel de Tucumán, Argentina in 1994.

 

Transactions with Related Persons

 

The following is a description of transactions during the last fiscal year in which the transaction involved a material dollar amount and in which any of the Company’s directors, executive officers or holders of more than 5% of GGH common stock had or will have a direct or indirect material interest, other than compensation which is described under “Executive Compensation.”

 

Transaction with GGI Option Holders. On June 24, 2022, the Company issued a total of 2,207,309 shares of its common stock to certain investors (the “Option Holders”) holding options to purchase common stock of Gaucho Group, Inc., a wholly owned subsidiary of the Company (“GGI”). On June 24, 2022, the Company further granted to the Option Holders the right to receive, in the aggregate, up to 315,330 shares of restricted stock units subject to vesting, with an aggregate of 157,665 shares vesting on September 18, 2022, and 157,665 shares vesting on December 18, 2022. The issuance and grant were made in consideration for the Option Holders’ agreement to cancel their outstanding options to purchase common stock of GGI. The value of the stock issuance and grant of restricted stock units is approximately $1,576,648.
   
Transaction with LVH. As previously reported on our Current Report on Form 8-K filed on June 17, 2021, the Company, through its wholly owned subsidiary Gaucho Ventures I – Las Vegas, LLC (“GVI”) entered into the Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) of LVH Holdings LLC (“LVH”). LVH was organized on May 24, 2021, with a sole member of SLVH LLC, a Delaware limited liability company (“SLVH”). William Allen, a director of the Company, is the managing member of SLVH and holds a 20% membership interest in SLVH. GVI holds a minority interest in LVH, with the majority interest owned by SLVH. On June 7, 2022, the Company, through GVI, executed a Second Amendment to the Amended and Restated Limited Liability Company Agreement of LVH to modify the rules for distributions to the members of LVH, and modify the number, amount and timing of GVI’s additional capital contributions to LVH.
   
Transaction with and Ownership in Hollywood Burger Holdings, Inc. As previously reported on our Current Report on Form 8-K filed on August 31, 2021 and our Current Report on Form 8-K filed on February 25, 2022, on February 3, 2022, the Company, through its subsidiaries, acquired 100% of Hollywood Burger Argentina SRL, now Gaucho Development S.R.L., in exchange for issuing 1,283,423 shares of its common stock to Hollywood Burger Holdings, Inc. Mr. Mathis is a Chairman and CEO of an affiliate of the Company, Hollywood Burger Holdings, Inc., a private company. He also holds 45.4% of the outstanding shares of HBH. In addition, Ms. Echevarria is CFO of HBH and the board of directors of HBH consists of Dr. Moel, Mr. Lawrence, and Mr. Mathis. Dr. Moel, Mr. Lawrence, and Mr. Cannon, all hold minority interests in HBH.

 

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Transaction with and Ownership in Gaucho Group, Inc. As previously reported on our Current Report on Form 8-K filed on August 31, 2021 and our Current Report on Form 8-K filed on March 21, 2022, on February 28, 2022, the Company, holding 79% of the common stock of Gaucho Group, Inc., a Delaware corporation and private company (“GGI”) offered to purchase up to 5,266,509 shares of common stock of GGI in exchange for an aggregate of approximately 1,042,788 shares of common stock of the Company, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Share Exchange and Subscription Agreement. The Company’s CEO, Scott Mathis, is CEO, Chairman of the Board, and a stockholder of GGI. Additionally, the Company’s current CFO, Maria Echevarria, is CFO of GGI; the Company’s current directors, Peter Lawrence and Steven Moel, are directors of GGI; and the Company’s current directors, Reuben Cannon and Marc Dumont, own nominal interests in GGI. All directors of GGI are directors of the Company. As a result of the foregoing, this is considered a related party transaction. The stockholders of the Company approved this on August 26, 2021, with approval by the independent board of directors of the Company on February 8, 2022. A total of 1,042,788 shares were issued to the minority holders of GGI on March 28, 2022, of which 3,710 shares were issued to Mr. Mathis, 5,083 shares to Mr. Cannon, and 101,210 shares issued to Mr. Dumont held jointly with his son. See Item 9B for more information.
   
Accounts receivable – related parties. On April 1, 2010, the Company entered into an expense sharing agreement (“ESA”) with a related, but independent, entity under common management, Hollywood Burger Holdings, Inc. (“HBH”), to share expenses with GGH such as office space, support staff and other operating expenses. HBH is a private company founded by Scott Mathis which is developing Hollywood-themed fast food restaurants in the United States. Mr. Mathis is Chairman and Chief Executive Officer of HBH, and Maria Echevarria is Chief Financial Officer. The ESA was amended on April 1, 2011 and last amended on December 27, 2019 to reflect the current use of personnel, office space, professional services and additional general office expenses. Under this ESA, HBH owed $918,000 and $246,125 as of December 31, 2021 and 2020, respectively. During the three months ended March 31, 2022 and 2021, the Company recorded a contra-expense of $228,226 and $93,021, respectively, related to the reimbursement of general and administrative expenses as a result of the agreement.
   
Shares held by affiliates in subsidiaries. Mr. Mathis, who is also the Chairman, CEO & President of the Gaucho Group, Inc., holds 18,736 shares of common stock of GGI. Reuben Cannon, as a director of the Company, holds 25,670 shares of common stock of GGI. Marc Dumont, as a director of the Company, holds 511,156 shares of common stock of GGI with his son.
   
Ownership in The WOW Group, LLC. Mr. Mathis is a managing member and holds a controlling interest in an affiliate of the Company, The WOW Group, LLC. Non-managing members include certain GGH consultants and GGH stockholders. The WOW Group’s only asset is its interest in GGH as of December 31, 2021 and December 31, 2020.
   
Accounts payable – related parties. As part of the Company’s convertible note financing in early 2018, the Company sold promissory notes totaling $1,163,354 to John I. Griffin and his wholly owned company JLAL Holdings Ltd. Mr. Griffin is an advisor to the Company. The notes have a 90-day maturity, bear interest at 8% per annum and were convertible into the Company’s common stock at a at a 10% discount to the price used for the sale of the Company’s common stock in the Company’s next private placement offering. These notes matured on June 30, 2019. On January 8, 2021, the Company issued 237,012 shares of common stock and warrants to purchase 237,012 shares of common stock in total to Mr. Griffin and JLAL Holdings Ltd., reflecting a conversion of $1,163,354 in principal and $ 258,714 in interest.

 

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Employment Agreements

 

See the Executive Compensation section of this Proxy Statement for a discussion of the employment agreement between the Company and Mr. Mathis and between the Company and Ms. Echevarria.

 

Delinquent Section 16(a) Reports

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s directors, executive officers and holders of more than 10% of the Company’s common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. To our knowledge, based solely on a review of copies of Forms 3, 4 and 5 and any amendments thereto filed with the Securities and Exchange Commission and stockholder reports from our transfer agent and written representations that no other reports were required, during the fiscal year ended December 31, 2021 our officers, directors and 10% or more stockholders complied with all Section 16(a) filing requirements applicable to them except that: (i) Mr. Mathis filed one Form 4 late representing one transaction not reported on a timely basis; (ii) Ms. Echevarria filed one Form 4 late representing one transaction not reported on a timely basis; (iii) Mr. Allen filed one Form 3 late representing one transaction not reported on a timely basis; (iv) Ms. Rodriguez filed one Form 3 and one Form 4 late representing two transactions not reported on a timely basis; (v) Mr. Cannon filed one Form 4 late representing one transaction not reported on a timely basis; and (vi) Mr. Dumont filed one Form 4 late representing one transaction not reported on a timely basis.

 

Director Independence

 

Based on the review of each director’s background, employment and affiliations, including family relationships, the Board of Directors has determined that five of our seven directors (Peter J.L. Lawrence, Steven A. Moel, Reuben Cannon, Marc Dumont, and Edie Rodriguez) are “independent” under the rules and regulations of the SEC and Section 5605(a)(2) of the Nasdaq Rules. In making this determination, our Board of Directors considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of the Company’s capital stock. Mr. Mathis was not deemed independent as a result of his service as our Chief Executive Officer, and his significant stock ownership. Mr. Allen was not deemed independent as a result of his 20% ownership interest in, and service as the Managing Member of SLVH LLC (“SLVH”). SLVH is the Managing Member of LVH Holdings LLC (“LVH”) and the Company, through its wholly owned subsidiary Gaucho Ventures I – Las Vegas, LLC (“GVI”) holds a minority membership interest in LVH. For more information, see the section entitled “Compensation Committee” below.

 

Involvement in Certain Legal Proceedings

 

During the past ten years, except as provided below, none of the persons serving as executive officers and/or directors of the Company has been the subject matter of any of the following legal proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K including: (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (d) any finding by a court, the SEC or the CFTC to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered entity or equivalent exchange, association or entity. Further, no such legal proceedings are believed to be contemplated by governmental authorities against any director or executive officer.

 

FINRA Enforcement Action (2004-2015): In May 2007, InvestPrivate (now known as DPEC Capital), Scott Mathis and two other InvestPrivate officers entered into a settlement of a disciplinary action filed in May 2004 by the NASD (now known as the Financial Industry Regulatory Authority, Inc. (“FINRA”)), the regulatory body that had primary jurisdiction over InvestPrivate. As part of the settlement, the NASD expressly withdrew numerous allegations and charges, and also resolved almost all of the remaining charges in the case. Mr. Mathis received a 30-day suspension from acting in a principal capacity for InvestPrivate, and InvestPrivate was suspended for 60 days from accepting new engagements to offer private placements. The settling parties paid fines totaling $215,000, and InvestPrivate was also required to engage an independent consultant to evaluate InvestPrivate’s practices and procedures relating to private placement offerings, and to make necessary changes in response to the consultant’s recommendations.

 

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While the settlement with the NASD resolved most of the issues in the case, a few remaining charges were not resolved, namely, whether Mr. Mathis inadvertently or willfully failed to properly make certain disclosures on his personal NASD Form U-4, specifically, the existence of certain federal tax liens on his Form U4 during the years 1996-2002.

 

In December 2007, the FINRA Office of Hearing Officers (“OHO”) held that Mr. Mathis negligently failed to make certain disclosures on his Form U4 concerning personal tax liens, and to have willfully failed to make other required U4 disclosures regarding those tax liens. (All of the underlying tax liabilities were paid in 2003 so the liens were released in 2003.) Mr. Mathis received a three-month suspension, and a $10,000 fine for the lien nondisclosures. With respect to other non-willful late U4 filings relating to two customer complaints, he received an additional 10-day suspension (to run concurrently) plus an additional $2,500 fine. The suspension was completed on September 4, 2012, and all fines have been paid.

 

Mr. Mathis has never disputed that he failed to make or timely make these disclosures on his Form U4; he only disputed the willfulness finding. He appealed the decision (principally with respect to the willfulness issue) to the FINRA National Adjudicatory Council (“NAC”). In December 2008, NAC affirmed the OHO decision pertaining to the “willful” issue, and slightly broadened the finding. Thereafter, Mr. Mathis appealed the NAC decision to the Securities and Exchange Commission and thereafter to the U.S. Court of Appeals. In each instance, the decision of the NAC was affirmed.

 

While under FINRA’s rules the finding that Mr. Mathis was found to have acted willfully subjects him to a “statutory disqualification,” in September 2012, Mathis submitted to FINRA an application on Form MC-400 in which he sought permission to continue to work in the securities industry notwithstanding the fact that he is subject to a statutory disqualification. That application was approved in Mr. Mathis’ favor in April 2015. Mr. Mathis was at all times able to remain as an associated person of a FINRA member in good standing. Subsequently, the Company expanded into other business opportunities and the broker dealer subsidiary (DPEC Capital, Inc.) was no longer necessary to the Company’s operations. Therefore, Mr. Mathis voluntarily ceased all activities at the Company’s broker-dealer subsidiary (DPEC Capital, Inc.), and voluntarily terminated his registration with FINRA in December 2016, when DPEC Capital, Inc. elected to discontinue its operations and filed a Notice of Withdrawal as a Broker or Dealer on Form BDW.

 

Corporate Governance

 

In considering its corporate governance requirements and best practices, GGH looks to the Nasdaq Listed Company manual, which is available through the internet at http://nasdaq.cchwallstreet.com/.

 

Board Leadership Structure

 

The Board does not have an express policy regarding the separation of the roles of Chief Executive Officer and Board Chairman as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has not designated a lead independent director. Currently, Scott Mathis serves as both the Company’s Chief Executive Officer and Chairman of the Board. As Chief Executive Officer, Mr. Mathis is involved in the day-to-day operations of the Company and also provides strategic guidance on the Company’s operations. The Board believes Mr. Mathis’s experience and knowledge are valuable in the oversight of both the Company’s operations as well as with respect to the overall oversight of the Company at the Board level. The Board believes that this leadership structure is appropriate as Mr. Mathis is intimately knowledgeable with the Company’s current and planned operations.

 

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Role of the Board and the Audit Committee in Risk Oversight

 

While management is charged with the day-to-day management of risks that GGH faces, the Board of Directors, and the Audit Committee of the Board, have been responsible for oversight of risk management. The full Board, and the Audit Committee since it was formed, have responsibility for general oversight of risks facing the Company. Specifically, the Audit Committee reviews and assesses the adequacy of GGH’s risk management policies and procedures with regard to identification of GGH’s principal risks, both financial and non-financial, and review updates on these risks from the Chief Financial Officer and the Chief Executive Officer. The Audit Committee also reviews and assesses the adequacy of the implementation of appropriate systems to mitigate and manage the principal risks.

 

Review and Approval of Transactions with Related Parties

 

The Board of Directors adopted a policy to comply with Item 404 of Regulation S-K of the Exchange Act as well as the Nasdaq Rules requiring that disinterested directors approve transactions with related parties which are not market-based transactions.

 

Generally, the Board of Directors will approve transactions only to the extent the disinterested directors believe that they are in the best interests of GGH and on terms that are fair and reasonable (in the judgment of the disinterested directors) to GGH. Our policy is available on our Company website at https://ir.gauchoholdings.com/governance-docs.

 

Audit Committee

 

The Board of Directors established the Audit Committee on April 15, 2015 and revised the charter as of March 25, 2021. Effective upon the uplisting of our common stock to Nasdaq on February 16, 2021, our Audit Committee charter complies with Section 3(a)(58)(A) of the Exchange Act and Nasdaq Rule 5605. The Audit Committee was established to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. The members of our Audit Committee are Dr. Moel, (chairperson), Messrs. Lawrence, Dumont, and Ms. Rodriguez. The Board of Directors determined that Messrs. Lawrence, Dumont, Dr. Moel, and Ms. Rodriguez are independent under SEC Rule 10A-3(b)(1) and Nasdaq Rule 5605(a)(2). The Board has determined that all current members of the Audit Committee are “financially literate” as interpreted by the Board in its business judgment. No members of the Audit Committee have been qualified as an audit committee financial expert, as defined in the applicable rules of the SEC because the Board believes that the Company’s status as a smaller reporting company does not require expertise beyond financial literacy.

 

The Audit Committee meets periodically with our independent accountants and management to review the scope and results of the annual audit and to review our financial statements and related reporting matters prior to the submission of the financial statements to the Board. In addition, the Audit Committee meets with the independent auditors at least on a quarterly basis to review and discuss the annual audit or quarterly review of our financial statements.

 

We have established an Audit Committee Charter that deals with the establishment of the Audit Committee and sets out its duties and responsibilities. The Audit Committee is required to review and reassess the adequacy of the Audit Committee Charter on an annual basis. The Audit Committee Charter is available on our Company website at https://ir.gauchoholdings.com/governance-docs.

 

Nominating Committee

 

On June 15, 2022, the Board of Directors created the Nominating and Corporate Governance Committee (the “Nominating Committee”), which is responsible for identifying and nominating appropriate persons to add to the Board of Directors when necessary. In identifying Board candidates, it is the goal of the Nominating Committee to identify persons whom they believe have appropriate expertise and experience to contribute to the oversight of a company of GGH’s nature while also reviewing other appropriate factors. Messrs. Cannon, Lawrence, and Dumont are current members of the Nominating Committee, each of whom are considered independent in compliance with Nasdaq Rules 5065(a) and (e).

 

We have established a Nominating Committee Charter that deals with the establishment of the Nominating Committee and sets out its duties and responsibilities. The Nominating Committee is required to review and reassess the adequacy of the Nominating Committee Charter on an annual basis. The Nominating Committee Charter is available on our Company website at https://ir.gauchoholdings.com/governance-docs.

  

Compensation Committee

 

The Board of Directors established the Compensation Committee effective upon the uplisting of our common stock to Nasdaq and amended the Compensation Committee’s charter effective March 25, 2021. In reliance on the exemption provided pursuant to Nasdaq Rule 5605(d)(2)(B), the Compensation Committee consists of three independent directors and one non-independent director, all of whom are all non-employee directors for purposes of Rule 16b-3 of the Exchange Act. The members of our Compensation Committee are Ms. Rodriguez (chairperson), and Messrs. Dumont, Cannon, and Allen.

 

Mr. Allen has been deemed not to meet the definition of an independent director as defined in Rule 5605(a)(2) because he owns a 20% interest in and is the Managing Member of SLVH LLC, (“SLVH”). SLVH is the Managing Member of LVH Holdings LLC (“LVH”) and the Company, through its wholly owned subsidiary Gaucho Ventures I – Las Vegas, LLC (“GVI”) holds a minority membership interest in LVH. Please see Item 13 for additional information.

 

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

 

The compensation of our CEO and our CFO, Mr. Mathis and Ms. Echevarria, must be determined by the Compensation Committee and the CEO and CFO may not be present during voting or deliberations for their compensation.

 

The Compensation Committee is also responsible for making recommendations to the Board of Directors regarding the compensation of other executive officers, to review and administer our Company’s equity compensation plans, to review, discuss, and evaluate at least annually the relationship between risk management policies and practices and compensation, as well as oversee the Company’s engagement with stockholders and proxy advisors.

 

22

 

 

Nasdaq Rule 5605(d)(3) provides that the Compensation Committee may (in its discretion, not Board discretion) retain compensation consultants, independent legal counsel, and other advisors. The independent directors acting as the compensation committee may decide to do so. Our Compensation Committee Charter, as amended, is available at our website: https://ir.gauchoholdings.com/governance-docs.

 

Code of Business Conduct and Whistleblower Policy

 

On March 24, 2015, our Board of Directors adopted a Code of Business Conduct and Whistleblower Policy effective April 15, 2015 and amended on March 25, 2021 (the “Code of Conduct”). Our Code of Conduct is applicable to all of the Company’s and its subsidiaries’ employees, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Compliance Office. The Code of Conduct contains written standards that are designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; full, fair, accurate, timely and understandable public disclosures and communications, including financial reporting; compliance with applicable laws, rules and regulations; prompt internal reporting of violations of the code; and accountability for adherence to the code. A copy of our Code of Business Conduct and Whistleblower Policy of the Company is posted at our website at https://ir.gauchoholdings.com/governance-docs.

 

Insider Trading Policy

 

Our Insider Trading Policy and policy on Trading Blackout Periods, Benefit Plans and Section 16 Reporting applies to all of our officers, directors, and employees and provides strict guidelines as to restrictions on trading activity in the Company’s stock. These policies are posted at our website: https://ir.gauchoholdings.com/governance-docs.

 

Employee, Officer and Director Hedging

 

The Company does not allow employees, officers, or directors, or any of their designees, to purchase financial instruments or otherwise engage in transaction that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities.

 

Stockholder Communications to the Board

 

Stockholders who are interested in communicating directly with members of the Board, or the Board as a group, may do so by writing directly to the individual Board member c/o Secretary, Gaucho Group Holdings, Inc., 112 NE 41st Street, Suite 106, Miami, Florida 33137. The Company’s Secretary will forward communications directly to the appropriate Board member. If the correspondence is not addressed to the particular member, the communication will be forwarded to a Board member to bring to the attention of the Board. The Company’s Secretary will review all communications before forwarding them to the appropriate Board member.

 

Meetings of the Board and Committees; Attendance at the Annual Meeting

 

The Board of Directors held 11 formal meetings either in person or via telephone during the fiscal year ended December 31, 2021 and acted by unanimous written consent 15 times during 2021. The Board has held nine meetings thereafter through the date of this Proxy Statement and has acted by unanimous written consent four times. Regular communications were maintained throughout 2020 and 2021 among all of the officers and directors of the Company.

 

The Audit Committee has held one meeting thereafter through the date of this Proxy Statement. Regular communications were maintained throughout 2020 and 2021 among all of the committee members.

 

The Compensation Committee held seven formal meetings either in person or via telephone during the fiscal year ended December 31, 2021 and acted by unanimous written consent three times during 2021. The Compensation Committee has held six meetings thereafter through the date of this Proxy Statement and has acted by unanimous written consent one time. Regular communications were maintained throughout 2020 and 2021 among all of the committee members.

 

The Nominating Committee has acted by unanimous written consent one time. Regular communications were maintained throughout 2021 among all of the committee members.

 

23

 

 

Board members are not required to attend the Annual Meeting. This Annual Meeting is the Company’s sixth time hosting an annual meeting.

 

Executive Compensation

 

The below table summarizes the compensation paid to our executive officers for the years ending December 31, 2020 and 2021.

 

Summary Compensation Table for Executive Officers
Name and Principal Position  

Fiscal

Year

   

Salary

($)

   

Bonus

($)

   

Stock

Awards

($)

   

Option

Awards

($)

   

All Other

Compensation

($)

   

Total

($)

 
Scott L. Mathis(1)     2021       479,651       163,000       -       -       -       642,651  
Chairman of the Board and Chief Executive Officer     2020       465,680       115,000 (2)     -       -       -       580,680  
                                                         
Maria I Echevarria(3)     2021       180,000       100,000       -       -       -       280,000  
Chief Financial Officer and Chief Operating Officer     2020       180,000       35,000       -       -       -       215,000  

 

(1)

On September 28, 2015, we entered into a new employment agreement with Scott Mathis, our CEO (the “Employment Agreement”). Among other things, the agreement provides for a three-year term of employment at an annual salary of $401,700 (subject to a 3% cost-of-living adjustment per year), bonus eligibility, paid vacation and specified business expense reimbursements. The agreement sets limits on the Mr. Mathis’ annual sales of GGH common stock. Mr. Mathis is subject to a covenant not to compete during the term of the agreement and following his termination for any reason, for a period of twelve months. Upon a change of control (as defined by the agreement), all of Mr. Mathis’ outstanding equity-based awards will vest in full and his employment term resets to two years from the date of the change of control. Following Mr. Mathis’s termination for any reason, Mr. Mathis is prohibited from soliciting Company clients or employees for one year and disclosing any confidential information of GGH for a period of two years. The agreement may be terminated by the Company for cause or by the CEO for good reason, in accordance with the terms of the agreement. The Employment Agreement, as amended and approved by independent members of the Board of Directors, expires on June 30, 2022. All other terms of the Employment Agreement remain the same.

   
(2) Represents the grant date full fair value of a real estate lot granted to Scott Mathis, our CEO, in connection with a retention bonus. On March 29, 2020, the Board of Directors entered into an employment retention bonus agreement with Mr. Mathis, which offered him a retention bonus in recognition for his continued service with GGH for an additional three years. The retention bonus consists of the real estate lot on which Mr. Mathis has been constructing a home at Algodon Wine Estates, to vest in one-third increments over the next three years (the “Retention Period”), provided Mr. Mathis’s performance as an employee with the Company continues to be satisfactory, as deemed by the Board of Directors. Mr. Mathis is eligible to receive a pro-rata portion of the retention bonus if his employee is terminated by GGH prior to the last day of the Retention Period.
   
3) Maria Echevarria was appointed Chief Financial Officer, Chief Operating Officer, Secretary and Compliance Officer effective April 13, 2015.

 

The Compensation Committee is charged with reviewing and approving the terms and structure of the compensation of the Company’s executive officers. Please see “Compensation Committee” above at page 22 for details on the Company’s Compensation Guidelines.

 

The Compensation Committee considers various factors when evaluating and determining the compensation terms and structure of its executive officers, including the following:

 

  1. The executive’s leadership and operational performance and potential to enhance long-term value to the Company’s stockholders;
  2. The Company’s financial resources, results of operations, and financial projections;
  3. Performance compared to the financial, operational and strategic goals established for the Company;
  4. The nature, scope and level of the executive’s responsibilities;
  5. Competitive market compensation paid by other companies for similar positions, experience and performance levels; and
  6. The executive’s current salary, the appropriate balance between incentives for long-term and short-term performance.

 

Company management is responsible for reviewing the base salary, annual bonus and long-term compensation levels for other Company employees, and the Company expects this practice to continue going forward. The entire Board of Directors remains responsible for significant changes to, or adoption, of new employee benefit plans.

 

24

 

 

The Company believes that the compensation environment for qualified professionals in the industry in which we operate is highly competitive. In order to compete in this environment, the compensation of our executive officers is primarily comprised of the following four components:

 

  Base salary;
  Stock option awards and/or equity based compensation;
  Discretionary cash bonuses; and
  Other employment benefits.

 

Base Salary. Base salary, paid in cash, is the first element of compensation to our officers. In determining base salaries for our key executive officers, the Compensation Committee aims to set base salaries at a level it believes enables us to hire and retain individuals in a competitive environment and to reward individual performance and contribution to our overall business goals. The Compensation Committee believes that base salary should be relatively stable over time, providing the executive a dependable, minimum level of compensation, which is approximately equivalent to compensation that may be paid by competitors for persons of similar abilities. The Compensation Committee believes that base salaries for our executive officers (not including our chief executive officer) are appropriate for persons serving as executive officers of public companies similar in size and complexity similar to the Company.

 

On September 28, 2015, we entered into an employment agreement with Scott Mathis, our CEO. For a description of the agreement terms, please see “Employment Agreements” at pages 23 and 25. The Company’s other executive officer, Ms. Echevarria, does not have a written employment agreement but receives a base salary as noted above, believed to be in accordance with industry standards and norms. 

 

Stock Option Plan Benefits – Each of the Company’s executive officers is eligible to be granted awards under the Company’s equity compensation plans. The Compensation Committee believes that equity-based compensation helps align management and executives’ interests with the interests of our stockholders. Our equity incentives are also intended to reward the attainment of long-term corporate objectives by our executives. The Compensation Committee also believes that grants of equity-based compensation are necessary to enable us to be competitive from a total remuneration standpoint. At the present time, we have two equity incentive plans for our management and employees. The first is the 2016 Equity Incentive Plan, and the second is the 2018 Equity Incentive Plan. Almost all shares of common stock reserved for issuance in connection with awards under the 2016 Equity Incentive Plan have been or were utilized in conjunction with existing, expired or cancelled awards of stock options. The Company will not issue any additional options under the 2016 Equity Incentive Plan. As of March 31, 2022, there are a total of 1,585,762 shares of common stock that are reserved and available for issuance in connection with awards under the 2018 Equity Incentive Plan.

 

We have no set formula for granting awards to our executives or employees. In determining whether to grant awards and the amount of any awards, we take into consideration discretionary factors such as the individual’s current and expected future performance, level of responsibilities, retention considerations, and the total compensation package.

 

The Company has granted each of its executive officers stock options, as outlined below.

 

Discretionary Annual Bonus. Discretionary cash bonuses are another prong of our compensation plan. The Board of Directors believes that it is appropriate that executive officers and other employees have the potential to receive a portion of their annual cash compensation as a cash bonus to encourage performance to achieve key corporate objectives and to be competitive from a total remuneration standpoint.

 

We have no set formula for determining or awarding discretionary cash bonuses to our other executives or employees. In determining whether to award bonuses and the amount of any bonuses, we have taken and expect to continue to take into consideration discretionary factors such as the individual’s current and expected future performance, level of responsibilities, retention considerations, and the total compensation package, as well as the Company’s overall performance including cash flow and other operational factors.

 

Pursuant to his employment agreement, Scott Mathis, our CEO, is eligible to receive a discretionary cash bonus, to be determined by the Board of Directors. For a description of the agreement terms, please see “Employment Agreements” at pages [23] and [25].

 

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Other Compensation/Benefits. Another element of the overall compensation is through providing our executive officers various employment benefits, such as the payment of health and life insurance premiums on behalf of the executive officers. Our executive officers are also eligible to participate in our 401(k) plan on the same basis as other employees and the Company historically has made matching contributions to the 401(k) plan, including for the benefit of our executive officers.

 

Employment Agreements  

 

We have entered into an employment agreement with the Company’s Chief Executive Office, Scott L. Mathis.

 

Scott Mathis - On September 28, 2015, the Company entered into an employment agreement with Scott Mathis, the Company’s CEO (the “Employment Agreement”). Among other things, the agreement provided for a three-year term of employment at an annual salary of $401,700 (subject to a 3% cost-of-living adjustment per year), bonus eligibility, paid vacation and specified business expense reimbursements. The agreement sets limits on Mr. Mathis’ annual sales of GGH common stock. Mr. Mathis is subject to a covenant not to compete during the term of the agreement and following his termination for any reason, for a period of twelve months. Upon a change of control (as defined by the agreement), all of Mr. Mathis’ outstanding equity-based awards will vest in full and his employment term resets to two years from the date of the change of control. Following Mr. Mathis’s termination for any reason, Mr. Mathis is prohibited from soliciting Company clients or employees for one year and disclosing any confidential information of GGH for a period of two years. The agreement may be terminated by the Company for cause or by the CEO for good reason, in accordance with the terms of the agreement. The Board of Directors extended the Employment Agreement on various dates such that as of July 5, 2021 the Employment Agreement, as amended, expires on October 31, 2021. All other terms of the Employment Agreement remain the same. The Board of Directors also approved the payment of Mr. Mathis’ cost of living salary adjustment of 3% for the years 2019 and 2020 to be paid in equal monthly installments beginning January 1, 2021, provided the Company has uplisted to a national stock exchange. The Board of Directors granted a retention bonus to Mr. Mathis that consists of the real estate lot on which Mr. Mathis has been constructing a home at Algodon Wine Estates, to vest in one-third increments over the next three years (the “Retention Period”), provided Mr. Mathis’s performance as an employee with the Company continues to be satisfactory, as deemed by the Board of Directors. The current market value of the lot is $115,000, and before ownership of the lot can be transferred to Mr. Mathis, the Company must be legally permitted to issue a deed for the property. Mr. Mathis is eligible to receive a pro-rata portion of the bonus if his employment is terminated before the end of the Retention Period.

 

Due to economic circumstances related to the global coronavirus outbreak 2019 (COVID-19), on March 13, 2020, Mr. Mathis voluntarily deferred payment of 85% of his salary through August 21, 2020. The Company is accruing all compensation not paid to Mr. Mathis pursuant to his employment agreement until the Company has sufficient funds to pay his full compensation. Between August 26, 2020 and October 14, 2020, the Company paid out $141,812 which was owed to Mr. Mathis in connection with his deferred compensation. During December, Mr. Mathis voluntarily deferred an additional $24,328 of his salary. The balance owed to Mr. Mathis as of December 31, 2020 is $58,001, which was paid in full on April 7, 2021.

 

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Stock Option, Stock Awards and Equity Incentive Plans

 

The Company granted certain of its executive officers stock options during the Company’s 2021 fiscal year; no other equity based awards were granted to executive officers during the fiscal year.

 

The following table provides information as to option awards granted by the Company and held by each of the named executive officers of GGH as of December 31, 2021.

 

    Option Awards
Name   Number of Securities Underlying Unexercised Options Exercisable (#)     Number of Securities Underlying Unexercised Options Unexercisable (#)     Option Exercise Price ($)     Option Expiration Date
Scott L. Mathis     20,000 (1)     - (1)     16.50     12/17/2022
      62,500 (2)     4,167 (2)     11.55     2/14/2023
      39,272 (3)     9,062 (3)     8.09     9/20/2023
      20,625 (4)     9,375 (4)     5.78     1/31/2024
      82,871 (5)     64,455 (5)     6.78     7/7/2024
Maria I. Echevarria     3,334 (6)     - (6)     16.50     12/17/2022
      1,563 (7)     104 (7)     11.55     2/14/2023
      1,625 (8)     375 (8)     8.09     9/20/2023
      3,438 (9)     1,562 (9)     5.78     1/31/2024
      5,813 (10)     4,521 (10)     5.78     7/7/2024

 

The above table does not include any options granted under our subsidiary’s 2018 Equity Incentive Plan for Gaucho Group, Inc.

 

(1) On November 17, 2017, Mr. Mathis was granted an option to acquire 20,000 shares of the Company’s common stock, of which 5,000 shares underlying the option vest on December 17, 2018, and 1,250 shares vest every three months thereafter.
(2) On February 14, 2018, Mr. Mathis was granted an option to acquire 66,667 shares of the Company’s common stock, of which 16,667 shares underlying the option vest on February 14, 2019, and 4,167 shares vest every three months thereafter.
(3) On September 20, 2018, Mr. Mathis was granted an option to acquire 48,334 shares of the Company’s common stock, of which 12,084 shares underlying the option vest on September 20, 2019, and 3,021 shares vest every three months thereafter.
(4) On January 31, 2019, Mr. Mathis was granted an option to acquire 30,000 shares of the Company’s common stock, of which 7,500 shares underlying the option vest on January 31, 2020, and 1,875 shares vest every three months thereafter.
(5) On July 8, 2019, Mr. Mathis was granted an option to acquire 147,326 shares of the Company’s common stock, of which 36,832 shares underlying the option vest on July 8, 2020, 9,208 shares vest on October 8, 2020, and 9,208 shares vest every three months thereafter.
(6) On July 8, 2019, Ms. Echevarria was granted an option to acquire 10,334 shares of the Company’s common stock, of which 2,584 shares underlying the option vest on July 8, 2020, 647 shares underlying the option vest on October 8, 2020, and 646 shares vest every three months thereafter.
(7) On November 17, 2017, Ms. Echevarria was granted an option to acquire 3,334 shares of the Company’s common stock, of which 834 shares underlying the option vest on December 17, 2018, and 209 shares vest every three months thereafter.
(8) On February 14, 2018, Ms. Echevarria was granted an option to acquire 1,667 shares of the Company’s common stock, of which 418 shares underlying the option vest on February 14, 2019, and 105 shares vest every three months thereafter.
(9) On September 20, 2018, Ms. Echevarria was granted an option to acquire 2,000 shares of the Company’s common stock, of which 500 shares underlying the option vest on September 20, 2019, and 125 shares vest every three months thereafter.
(10) On January 31, 2019, Ms. Echevarria was granted an option to acquire 5,000 shares of the Company’s common stock, of which 1,250 shares underlying the option vest on January 31, 2020, and 313 shares vest on April 30, 2020, and 313 shares vest every three months thereafter.

 

27

 

 

Compensation of Directors

 

Since its founding, the Company has compensated the non-employee members of its Board of Directors only with grants of stock options. The following table sets forth compensation received by our non-employee directors:

 

          Director Compensation  
    Year    

Fees

Earned

or Paid

in Cash

($)

   

Bonus

($)

   

Stock

Awards

($)

   

Option

Awards(1)

($)

   

Total

($)

 
Peter Lawrence (2)     2021       -       -       -       -       -  
      2020       -       -       -                 16,944       16,944  
Steven A. Moel (3)     2021       -       -       -       -       -  
      2020       -       -       -       16,944       16,944  
Reuben Cannon (4)     2021       -       -       -       -       -  
      2020       -       -       -       16,944       16,944  

 

The above table does not include any options granted under our subsidiary’s 2018 Equity Incentive Plan for Gaucho Group, Inc.

 

(1) Represents the grant date full fair value of compensation costs of stock options granted during the respective year for financial statement reporting purposes, using the Black-Scholes option pricing model. Assumptions used in the calculation of these amounts are included in the Company’s consolidated financial statements.
(2) As of December 31, 2021, Mr. Lawrence held options to acquire 36,667 shares of the Company’s common stock, of which 24,167 were vested and exercisable.
(3) As of December 31, 2021, Dr. Moel held options to acquire 16,002 shares of the Company’s common stock, of which 9,875 were vested and exercisable.
(4) As of December 31, 2021, Mr. Cannon held options to acquire 7,667 shares of the Company’s common stock, of which 2,897 were vested and exercisable. Of that total, options to acquire 6,667 shares of the Company’s common stock which were issued to Mr. Cannon on September 28, 2020 as compensation for his services on the Board of Directors.

 

On June 7, 2022, the Board approved, as recommended by the Compensation Committee of the Board, annual compensation to the non-executive members of the Board of $25,000 in cash, and $75,000 in restricted stock for the fiscal year 2022, and compensation of $50,000 in restricted stock for fiscal year 2021. Pursuant to the 2018 Equity Incentive Plan of the Company, of a total of 650,562 shares of restricted stock, vested immediately, at $0.807 per share were issued to the non-executive directors of the Company as compensation for service as members of the Board for 2021 and the first half of 2022. The remainder of the compensation, pending service through December 31, 2022, will be paid no later than January 15, 2023.

 

The Board also approved, that each chairperson of a committee of the Board is entitled to cash compensation of $5,000 for service for 2022. A total of $80,000 in cash for the services rendered through June 30, 2022 is payable on July 15, 2022 to the non-executive directors. The remainder of the compensation, pending service through December 31, 2022, will be payable no later than January 15, 2023.

 

In addition, each member of a committee of the Board is also entitled to payment of $500 in cash per committee meeting attended in 2022. Through June 30, 2022, total compensation for each committee meeting attended was $12,500 and will be paid on July 15, 2022.

 

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Frequency of the Advisory Vote on Executive Compensation

 

At the 2017 Annual Meeting of Stockholders, the Board of Directors included an advisory stockholder vote regarding named executive officer compensation every three years. The next required advisory vote regarding the frequency of an advisory vote on named executive officer compensation will be at the 2023 Annual Meeting of Stockholders.

 

Risks of Compensation Programs

 

The Company’s equity-based compensation is performance based in that the issued stock options become valuable as the stockholders’ returns (measured by stock price) increase. Furthermore, in all cases, options granted to the Company’s employees are time-based vesting. The Company believes that this vesting, coupled with the internal controls and oversight of the risk elements of its business, have minimized the possibility that the compensation programs and practices will have a material adverse effect on the Company and its financial, and operational, performance.

 

As described above, the Board of Directors has general oversight responsibility with respect to risk management and exercises appropriate oversight to ensure that risks are not viewed in isolation and are appropriately controlled. The Company’s compensation programs are designed to work within this system of oversight and control, and the Board considers whether these compensation programs reward reasonable risk-taking and achieve the proper balance between the desire to appropriately reward employees and protecting the Company.

 

At the Annual Meeting a vote will be taken on a proposal to approve the election of the two (2) Class I director nominees.

 

29

 

 

PROPOSAL NO. 1

ELECTION OF DIRECTORS

 

The Board currently consists of seven (7) directors divided into three classes. On July 8, 2019, the stockholders approved an amendment to the Company’s bylaws to create a staggered board of directors. On July 1, 2022, the Board, upon the recommendation of the Nominating Committee, voted to reduce the number of directors from seven (7) to five (5) effective as of the Annual Meeting.

 

Delaware law permits, but does not require, a classified or staggered board of directors, pursuant to which the directors can be divided into as many as three classes with staggered terms of office, with one class of directors standing for election each year. As a classified board, a certain number, but not all, of the directors of our Board of Directors will be elected each year.

 

Article V, Section A of the Company’s Amended and Restated Certificate of Incorporation (the “Certificate”), states that the number of directors shall be fixed from time to time in the manner provided in the bylaws and may be increased or decreased from time to time in the manner provided in the bylaws; provided that the number shall be not less than two, nor more than nine. Pursuant to Article III, Section A of the Company’s Amended and Restated Bylaws, as amended July 8, 2019 (the “Bylaws”), the number of directors will be fixed from time to time exclusively by resolutions adopted by the Board of Directors of the Company.

 

Pursuant to a written consent date June 30, 2022, the Nominating Committee determined that in light of the economic conditions of the Company, including the low stock price and lack of cash flow and revenues, it was in the best interests of the Company to reduce the number of members of the Board from seven to five members.

 

At a meeting of the Board of Directors on July 1, 2022, a majority of the members of the Board of Directors, upon the recommendation of the Nominating Committee, voted to reduce the number of directors on the Board from seven to five effective as of the Annual Meeting

 

As a result of this reduction, only two (2) of the previous four (4) Class I Directorships will continue after the Annual Meeting.

 

On July 1, 2022, a majority of the Board of Directors, upon the recommendation of the Nominating Committee, nominated Reuben Cannon and Marc Dumont for re-election as Class I directors, to be elected at the 2022 Annual Meeting to serve a three-year term until the 2025 annual meeting of stockholders, or until their respective successors, if any, are duly elected and qualified.

 

There are no family relationships between or among any of our executive officers, directors or nominees for director.

 

Dr. Moel and Ms. Rodriguez, Class I Directors whose terms expire at the Annual Meeting, will not continue as Class I directors, unless nominated and re-elected by a plurality of votes cast.

 

Mr. Mathis (Class III Director) and Mr. Allen (Class III Director) will continue to serve as directors until their re-election at the 2023 annual stockholder meeting, and Mr. Lawrence (Class II Director) will continue to serve until his re-election at the 2024 annual stockholder meeting.

 

Required Vote

 

In accordance with Delaware law, the directors will be elected by a plurality of votes cast at the Annual Meeting. As a result, abstentions and broker non-votes will have no effect on this proposal.

 

OUR Board Of Directors Recommends A VOTE “FOR” Reuben Cannon and MArc Dumont as CLASS I directorS.

 

30

 

 

PROPOSAL NO. 2

APPROVAL OF REVERSE STOCK SPLIT 

 

The Company’s common stock ($0.01 par value, 150,000,000 shares authorized, referred to herein as the “Common Stock”) is currently listed on the Nasdaq Capital Market (“Nasdaq”). To comply with Nasdaq’s continued listing requirements, the Company’s Common Stock must maintain a bid price of at least $1.00 per share. On July 1, 2022, the Common Stock closed at $0.6328 per share.

 

If the Common Stock closes below the minimum $1.00 per share requirement for 30 consecutive business days, Nasdaq will notify the Company of its noncompliance, and the Company will have 180 calendar days to regain compliance. If compliance cannot be demonstrated by the end of the 180-day period, the Common Stock may be subject to delisting.

 

The Board of Directors believes that a reverse stock split will increase the price per share of the Common Stock and assist in meeting the price per share requirements for maintaining Nasdaq listing.

 

Therefore, the Board recommends that the stockholders grant the Board the discretion, on or before June 30, 2023, to complete a reverse stock split of all the outstanding shares of GGH’s Common Stock at an exchange ratio ranging from one post-split share for two pre-split shares (1:2) up to one post-split share for twenty pre-split shares (1:20), or anywhere between those ratios, at the Board’s discretion (the “Reverse Stock Split”) and approve an amendment to Article IV of GGH’s Amended and Restated Certificate of Incorporation to effect such Reverse Stock Split. The Board may only effect the Reverse Stock Split if its deems it to be reasonably necessary for maintaining listing on Nasdaq. The Board based the wide stock split ratio on the closing price of the Company’s shares as of July 1, 2022, which was $0.633, and to give it flexibility in determining the most conservative stock split ratio possible that will still meet the price per share requirements necessary to prevent delisting.

 

Except for adjustments that may result from the treatment of fractional shares, which will be rounded up to the nearest whole number, each stockholder will beneficially hold the same percentage of Common Stock immediately following the Reverse Stock Split as such stockholder held immediately prior to the Reverse Stock Split. Also, proportionate adjustments will be made to the per-share exercise price and the number of shares covered by outstanding options and warrants to buy Common Stock, so that the total prices required to be paid to fully exercise each option and warrant before and after the Reverse Stock Split will be approximately equal.

 

The Board does not intend as part of the Reverse Stock Split to reduce the amount of the Company’s authorized shares of Common Stock. As of July 5, 2022, the Company has a total of 150,000,000 shares of Common Stock authorized and 16,589,668 shares issued, leaving 133,410,332 shares available for issuance, not including shares reserved for issuance upon exercise of warrants or options, or any other convertible security. If Proposal No. 2 is approved, the number of unissued, available authorized shares of Common Stock will increase, as reflected in the following table as if the Reverse Stock Split were to occur on July 5, 2022:

 

Ratio     Authorized     Issued pre-
Reverse
Stock
Split*
    Issued post-
Reverse
Stock
Split**
    Increase in
post- Reverse
Stock Split
Shares Available
for Issuance*
 
  1:2       150,000,000       16,589,668       8,294,834       125,115,498  
  1:5       150,000,000       16,589,668       3,317,934       130,092,398  
  1:10       150,000,000       16,589,668       1,658,967       131,751,365  
  1:15       150,000,000       16,589,668       1,105,978       132,304,354  
  1:20       150,000,000       16,589,668       829,483       132,580,849  

 

*Does not reflect shares reserved for issuance upon exercise of warrants or options, or any other convertible security.

 

**For purposes of this illustration, fractional shares are rounded.

 

31

 

 

The increase in the number of shares of Common Stock available for issuance and any subsequent issuance of such shares could have the effect of delaying or preventing a change in control of GGH without further action by the stockholders. The Board is not aware of any attempt to take control of GGH and has not presented this proposal with the intention that the Reverse Stock Split be used as a type of antitakeover device. Any additional common stock, when issued, would have the same rights and preferences as the shares of common stock presently outstanding.

 

Additional Reasons for the Reverse Stock Split

 

In addition to the achievement of a stock price required for listing on a national exchange, there are other reasons the Board believes the Reverse Stock Split will be beneficial to GGH. One is that the Board believes that the increased market price of the Common Stock expected as a result of implementing the Reverse Stock Split will improve the marketability of the Common Stock and will encourage interest and trading in the Common Stock by brokerage houses and institutions that are not currently able or willing to trade the Common Stock. Because of the trading volatility often associated with low-priced stocks, many potential investors have internal policies and practices that either prohibit them from investing in low-priced stocks or that tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, low-priced stocks not listed on an exchange are subject to the additional broker-dealer disclosure requirements and restrictions found in SEC Rule 15g-6.

 

It should be noted that the liquidity of the Common Stock may be adversely affected by the Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split. The Board anticipates, however, that the expected higher market price and (if successful) exchange listing will mitigate, to some extent, the effects on the liquidity through the anticipated increase in marketability discussed above.

 

The Board understands that there is a risk that the market price for the Common Stock may not react proportionally to the Reverse Stock Split. For example, if GGH accomplishes a 1:20 Reverse Stock Split at a time when the market price is $0.20 per share, there can be no assurance that the resulting market price will thereafter remain at or above $4.00 per share.

 

The Board confirms that the contemplated reverse stock split is not and will not be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

 

Based upon the foregoing factors and understanding the risks, the Board has determined that the Reverse Stock Split is in the best interests of the Company and its stockholders.

 

Required Vote

 

In accordance with Delaware law, approval of Proposal No. 3 requires the affirmative vote of a majority of the shares of common stock outstanding and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against this proposal and broker non-votes will have no effect on this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” Granting THE Board of Directors discretion (if necessary to Maintain listing of GGH’s common stock on NASDAQ) on or before June 30, 2023, to implement a reverse stock split of the outstanding shares of common stock in a range from one-for-two (1:2) up to one-for-TWENTY (1:20), or anywhere between, while maintaining the number of authorized shares of Common Stock.

 

32

 

 

proposal no. 3

approval of an amendment to the Company’s 2018 Equity Incentive Plan to

allow for UP to 25% of the Company’s Fully Diluted and OutstandING

Common Stock to be awarded under the plan

 

The Board of Directors recommends that the Company amend its 2018 Equity Incentive Plan to increase the number of shares of common stock available for awards to 25% of the outstanding common stock on a fully diluted basis as of the date of this stockholder approval. At the present time, the Company has two equity incentive plans for management and employees. The first is the 2016 Equity Incentive Plan, and the second is the 2018 Equity Incentive Plan (the “2018 Plan”). Almost all shares of common stock reserved for issuance in connection with awards under the 2016 Equity Incentive Plan have been or were utilized in conjunction with existing, expired or cancelled awards of stock options. The Company will not issue any additional options under the 2016 Equity Incentive Plan.

 

On August 28, 2019, the Company increased its number of shares available under the 2018 Plan to 5,946,933 shares of common stock (396,462 shares on a post-split basis) with an automatic increase on January 1 of each year by the amount equal to 2.5% of the total number of shares outstanding on a fully diluted basis. On January 1, 2020, the number of authorized shares under the plan was increased by 1,733,708 as a result of the automatic increase. On January 1, 2021, the number of authorized shares under the plan was increased by 356,128 on a post-split basis as a result of the automatic increase. At the 2021 Annual Stockholder Meeting held on August 26, 2021, the number of authorized shares under the plan was increased again to 15% of the Company’s fully diluted and outstanding common stock as of the August 26, 2022. Currently, a total of 2,022,779 shares are authorized under the 2018 Plan. As of March 31, 2022 , a total of 1,585,762 shares are available under the 2018 Plan for awards.

 

The Company now desires to increase the number of authorized shares of common stock under the plan to 25% of the outstanding common stock on a fully diluted basis as of the date of stockholder approval, in addition to the automatic increase that has occurred on January 1, 2022 and that will occur on January 1, 2023. The increase is a one-time increase in number of shares available under the 2018 Plan. This means that if the stockholders approve this Proposal No. 3, the shares available under 2018 Plan will be increased to 25% of the outstanding common stock on a fully diluted basis as of the date of stockholder approval, but no other increases in the number shares available under the 2018 Plan, other than the existing 2.5% automatic increase, will occur without stockholder approval.

 

The primary goal of the amendment to the 2018 Plan is to provide the company with a sufficient reserve of common stock to offer appropriate incentives to Company employees, directors and consultants. The following table shows, for each name executive officer and director, the total number of shares of Company common stock subject to stock awards that have been granted under the 2016 Equity Incentive Plan and the 2018 Plan since both plans have been effective through March 31, 2022:

 

Officer/Director Name:   Number of Options:  
Scott Mathis     312,217  
Maria Echevarria     22,335  
Peter Lawrence     36,669  
Steven Moel     16,002  
Rueben Cannon     7,667  
Marc Dumont     13,335  
Edie Rodriguez     6,667  
William Allen     0  

 

Additionally, the following table provides other information regarding the 2018 Equity Incentive Plan:

 

    As of March 31, 2022   
Total stock options outstanding     437,017  
Total shares available for grant     1,585,762  

 

Required Vote

 

In accordance with Delaware law, approval of Proposal No. 3 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2018 EQUITY INCENTIVE PLAN TO ALLOW FOR UP TO 25% OF THE COMPANY’S FULLY DILUTED AND OUTSTANDING COMMON STOCK TO BE AWARDED UNDER THE PLAN.

 

33

 

 

PROPOSAL NO. 4

TO APPROVE FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(D), THE ISSUANCE OF SHARES OF UP TO 15,000,000 OF THE COMPANY’S COMMON STOCK UPON THE CONVERSION OF CONVERTIBLE PROMISSORY NOTES ISSUED IN A PRIVATE PLACEMENT, WITHOUT GIVING EFFECT TO NASDAQ’S 19.99% EXCHANGE CAP.

 

In order to raise additional capital for the Company, the Board intends to complete a private placement of 7.0% convertible promissory notes in an aggregate principal amount of up $3.0 million (or $6,000,000 in total assuming full exercise of the warrants) pursuant to Rule 506(b) of the Securities Act of 1933, as amended (the “PP Notes”). Conditional upon the stockholders’ approval of this Proposal No. 4, the PP Notes will be mandatorily convertible into units, with each unit being comprised on one share of the Company’s common stock, and one warrant to purchase one share of the Company’s common stock. We anticipate that the Company will issue no more than 15,000,000 shares, taking into account each share, each share received upon exercise of the warrant, and interest accruing. The conversion price of the PP Notes will be equal to the lesser of: (a) $0.55 per unit; and (b) the three-day volume weighted average closing price (“VWAP”) the Company’s common stock beginning on the date of stockholder approval. Each warrant will be exercisable at the same price per share as determined above.

 

Why does the Company need Stockholder Approval?

 

Our common stock is listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Stock Rule 5635(d) is referred to as the “Nasdaq 20% Rule.” In order to comply with the Nasdaq 20% Rule, we are seeking stockholder approval to permit the potential issuance of more than 20% of our outstanding common stock.

 

The Nasadaq 20% Rule requires that an issuer obtain stockholder approval prior to certain issuances of common stock or securities convertible into or exchangeable for common stock at a price less than the greater of market price or book value of such securities (on an as exercised basis) if such issuance equals 20% or more of the common stock or voting power of the issuer outstanding before the transaction.

 

Upon the conversion of the PP Notes and assuming the exercise of all warrants, the Company will be required to issue approximately 15,000,000 shares of the Company’s common stock, which would represent approximately [____________]% of the ____________ shares of common stock issued and outstanding on the date such PP Notes were granted plus accrued interest.

 

To meet the Nasdaq 20% rule, we need stockholder approval under the listing rules of Nasdaq to permit the potential issuance of more than 20% of our outstanding common stock in accordance with the terms of the PP Notes.

 

What is the Effect on Current Stockholders if the Proposal is Approved?

 

If our stockholders approve this proposal, we will be able to require the conversion of the PP Notes, and issue up to 15,000,000 shares of common stock convertible under the PP Notes assuming the exercise of all warrants, which would exceed 20% of our issued and outstanding shares of common stock as of the date we issued the PP Notes. If stockholders approve the Nasdaq 20% Issuance proposal, the rights or privileges of our existing stockholders will not be affected, except that the economic and voting interests of each of our existing stockholders may be significantly 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.

 

What is the Effect on Current Stockholders if the Proposal is NOT Approved?

 

We are not seeking the approval of our stockholders to authorize the commencement of the private placement or the issuance of the PP Notes. The failure of our stockholders to approve the proposal will not cancel the PP Notes. The PP Notes will instead become a straight debt of the Company, and if Proposal 4 is not approved by our stockholders, we will be required to repay our obligations under the PP Notes in cash, rather than by the conversion of the PP Notes into our shares of common stock.

 

Our ability to successfully implement our business plans and ultimately generate value for our stockholders is dependent upon our ability to raise capital and satisfy our ongoing business needs. If we are required to repay our obligations under the PP Notes in cash rather than shares of common stock, we may not have the capital necessary to fully satisfy our ongoing business needs, the effect of which would adversely impact future operating results, and result in a delay in our business plans. Additionally, it may be necessary for the Company to acquire additional financing in order to repay the obligations under the PP Notes in cash, which may result in additional transaction expenses.

 

Required Vote

 

In accordance with Delaware law, approval of Proposal No. 4 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against this proposal.

 

THE DISINTERESTED DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMEND A VOTE “FOR” THE ISSUANCE OF SHARES OF UP TO 15,000,000 OF THE COMPANY’S COMMON STOCK UPON THE CONVERSION OF CONVERTIBLE PROMISSORY NOTES ISSUED IN A PRIVATE PLACEMENT, TO EXCEED THE NASDAQ 20% RULE.

 

34

 

 

PROPOSAL NO. 5

APPROVAL OF UP TO 7,227,291 SHARES OF THE COMPANY’S COMMON STOCK ISSUABLE PURSUANT TO THE PURCHASE AGREEMENT, NOTES, AND REGISTRATION RIGHTS AGREEMENT.

 

General Information About the Securities Purchase Agreement

 

On November 3, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with 3i, LP, Nomis Bay, Ltd., and BPY Limited (collectively, the “Investors”). On November 9, 2021, pursuant to the terms of the Purchase Agreement, 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 are 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 November 9, 2022, 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 issuance, but the Company may not effect the conversion of any portion of the Notes if it would result in any of the selling stockholders beneficially owning more than 4.99% of the common stock of the Company (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder).

 

The Company and the Investors executed the Purchase Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under the 1933 Act.

 

The Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries, and are 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 certain of his shares of Common Stock and certain 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 or about 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 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 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 paid to EF Hutton a cash placement fee equal to 6.0% of the amount of capital raised, invested, or committed under the Purchase Agreement and Note.

 

On January 11, 2022, pursuant to the terms of the Registration Rights Agreement, we filed a Registration Statement (the “Registration Statement”) under which we registered 12,164,312 shares of our Common Stock – the maximum number of shares of common stock issued or issuable pursuant to the Notes, including payment of interest on the notes through November 9, 2022, without regard to any limitations on conversion, at the floor price of $0.57 (the conversion price applicable upon an event of default).

 

Under the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in no event may we issue any shares of Common Stock upon conversion of the Notes or otherwise pursuant to the terms of the 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 Purchase Agreement and Notes (the “Exchange Cap”), unless we (i) obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or (ii) obtain a written opinion from our counsel that such approval is not required. In any event, we may not issue any shares of our common under the Purchase Agreement or Notes if such issuance or sale would breach any applicable rules or regulations of the Nasdaq.

 

At the January 25, 2022 Special Meeting of Stockholder, in order to comply with the Nasdaq 20% Rule (defined below), the Company approved the issuance of up to 12,164,312 shares of our Common Stock pursuant to the terms of the Purchase Agreement and Notes.

 

The information set forth in this Proposal 5 is qualified in its entirety by reference to the full text of the Purchase Agreement, Notes, Pledge Agreement, and Registration Rights Agreement attached as Exhibits 10.1, 10.2, 10.3, and 10.5 to our Current Report on Form 8-K filed with the SEC on November 8, 2021.

 

Conversion of Notes Issued Pursuant to the Securities Purchase Agreement

 

On February 22, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with the Holders in order to amend and waive certain provisions of the Note Documents and exchange $100 in aggregate principal amount of each of the Notes.

 

In addition, the Company and the Holders entered into a letter agreement (the “Letter Agreement #1”) pursuant to which the parties agreed to reduce the Conversion Price from $3.50 to $1.35 for the period beginning May 2, 2022 through May 13, 2022 (the “Reduced Price Conversion Period”).

 

On May 12, 2022, the Company and the Holders entered into a letter agreement (the “Letter Agreement #2”) pursuant to which the parties agreed to reduce the Conversion Price to $0.95 and the Holders have committed to converting up to 4.90% of the outstanding shares of common stock of the Company.

 

On July 1, 2022, the Company and the Holders entered into a third letter agreement (the “Letter Agreement #3”) pursuant to which the parties agreed to reduce the Conversion Price to $0.30 for the Trading Days of July 5, 2022, through and inclusive of September 5, 2022. Any conversion which occurs shall be voluntary at the election of the Holder.

 

The Note Documents, Exchange Agreement, Letter Agreement #1, Letter Agreement #2, and Letter Agreement #3 are referred to herein as the Transaction Documents. For the full description of the Transaction Documents, please refer to our Current Reports on Forms 8-K and the exhibits attached thereto as filed with the SEC on November 8, 2021, March 1, 2022, May 2, 2022, and May 13, 2022.

 

As explained further above, in our Registration Statement filed on January 11, 2022, we registered 12,164,312 shares of our common stock, which was the maximum number of shares issuable upon conversion of the Notes based on the floor price of $0.57 per share. However, pursuant to the Letter Agreement #3, we reduced the conversion price of the Notes $0.30 per share. As a result of this decrease in conversion price, the aggregate number of shares that the Company may issue upon conversion of the Notes may exceed 12,164,312.

 

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In order to issue more than 12,164,312 pursuant to the Securities Purchase Agreement, we must amend the Registration Statement to increase the number of shares registered.

 

Why does the Company need Stockholder Approval?

 

Our common stock is listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Stock Rule 5635(d) is referred to as the “Nasdaq 20% Rule.” In order to comply with the Nasdaq 20% Rule and to satisfy conditions under the Purchase Agreement, we are seeking stockholder approval for elimination of the Exchange Cap to permit the potential issuance of more than 20% of our outstanding common stock in accordance with the Purchase Agreement.

 

The Nasdaq 20% Rule requires that an issuer obtain stockholder approval prior to certain issuances of common stock or securities convertible into or exchangeable for common stock at a price less than the greater of market price or book value of such securities (on an as exercised basis) if such issuance equals 20% or more of the common stock or voting power of the issuer outstanding before the transaction.

 

While we previously obtained stockholder approval to issue shares in excess of the Exchange Cap pursuant to the Securities Agreement, we only obtained approval to issue up to 12,164,312 shares of our common stock.

 

Given that we may now be required to issue more than 12,164,312 shares upon conversion of the notes, we must again obtain stockholder approval in order to comply with Nasdaq Rule 5635(d).

 

Because the conversion of the shares underlying the Notes is subject to the discretion of the Investors, the Company cannot guarantee the number of shares that it may issue to the Investors pursuant to the Purchase Agreement. As of July 5, there were 16,586,299 shares of our common stock outstanding. In addition to the 12,164,312 shares already approved by the stockholders and registered for resale, we will register an additional 7,277,291 shares of our common stock will be registered for resale pursuant to an amended registration statement on Form S-1, which number represents the maximum number of shares of common stock issued or issuable pursuant to the Notes, including payment of interest on the notes through November 9, 2022 determined as if the outstanding Notes (including interest on the Notes through November 9, 2022) were converted in full (without regard to any limitations on conversion contained therein solely for the purpose of such calculation) at the floor price of $0.30. If all 17,950,271 shares of our common stock that may be convertible were issued and outstanding as of November 9, 2021, such shares would represent _____________% of the outstanding shares of common stock held as of November 9, 2021.

 

To meet the Nasdaq 20% rule, we need stockholder approval under the listing rules of Nasdaq to remove the Exchange Cap provisions in the Purchase Agreement to permit the potential issuance of more than 20% of our outstanding common stock in accordance with the terms of the Purchase Agreement and Notes.

 

Additionally, we will not issue or sell, and the Investors will not purchase or acquire, any shares of common stock pursuant to the Purchase Agreement which, when aggregated with all other shares of common stock then beneficially owned by each of the Investors and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by any of the Investors of more than 4.99% of the outstanding shares of common stock.

 

What is the Effect on Current Stockholders if the Proposal is Approved?

 

If our stockholders approve this proposal, we will be able to eliminate the Exchange Cap in the Purchase Agreement and Notes and therefore potentially issue an additional 7,277,291 shares of common stock convertible under the Notes which would exceed 20% of our issued and outstanding shares of common stock as of the date we executed the Purchase Agreement. If stockholders approve the Nasdaq 20% Issuance proposal, the rights or privileges of our existing stockholders will not be affected, except that the economic and voting interests of each of our existing stockholders may be significantly 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.

 

What is the Effect on Current Stockholders if the Proposal is NOT Approved?

 

We are not seeking the approval of our stockholders to authorize our entry into the Purchase Agreement and related transaction documents, as we have already entered into the Purchase Agreement and related transaction documents, which is are binding obligations on us. The failure of our stockholders to approve the proposal will not negate the existing terms of the documents relating to the Purchase Agreement. The Purchase Agreement will remain a binding obligation of the Company. However, if Proposal 5 is not approved by our stockholders, we may be required to repay our obligations under the Purchase Agreements and related transaction documents in cash, rather than by the conversion of the Notes into our shares of Common Stock.

 

Our ability to successfully implement our business plans and ultimately generate value for our stockholders is dependent upon our ability to raise capital and satisfy our ongoing business needs. If we are required to repay our obligations under the Purchase Agreement in cash rather than Common Stock, we may not have the capital necessary to fully satisfy our ongoing business needs, the effect of which would adversely impact future operating results, and result in a delay in our business plans. Additionally, it may be necessary for the Company to acquire additional financing in order to repay the obligations under the Purchase Agreement in cash, which may result in additional transaction expenses.

 

If our stockholders do not approve this proposal, we will be required to seek stockholder approval of this proposal again until we receive stockholder approval of this proposal. As such, our failure to obtain stockholder approval of this proposal will require us to incur the costs of holding one or more additional stockholder meetings until we receive such approval.

 

Required Vote

 

In accordance with Nasdaq Rule 5635(d), approval of Proposal No. 5 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote on this proposal at the Special Meeting. As a result, abstentions will have the same effect as votes against this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF AN ADDITIONAL 7,277,291 SHARES OF THE COMPANY’S COMMON STOCK ISSUABLE PURSUANT TO THE PURCHASE AGREEMENT, NOTES, AND REGISTRATION RIGHTS AGREEMENT.

 

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PROPOSAL NO. 6

RATIFICATION OF THE APPOINTMENT OF MARCUM LLP

 

The Board of Directors has selected the accounting firm of Marcum LLP (“Marcum”) to serve as our independent registered public accounting firm for the 2022 fiscal year. We are asking our stockholders to ratify the selection of Marcum as our independent registered public accounting firm. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Marcum to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice.

 

If our stockholders fail to ratify the selection, it will be considered as a direction to the Board to consider the selection of a different firm. The Board considers Marcum to be well qualified to serve as the independent auditors for the Company and Marcum has experience since 2010 in doing so. However, even if the selection is ratified, the Board of Directors in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. To the Company’s knowledge, a representative from Marcum is not expected to be present at the Annual Meeting.

 

Fees Billed by Independent Accounting Firm

 

The following table sets forth the aggregate fees billed to us by Marcum, LLP, our independent registered public accounting firm, for the years ended December 31, 2021 and 2020:

 

    2021     2020  
Audit fees (1)   $ 225,000     $ 317,918  
Audit-related fees (2)     -       -  
Tax fees     -       -  
    $ 225,000     $ 317,918  

 

  (1) Represents fees for services performed in connection with the audit of the Company’s consolidated financial statements for the fiscal years ended December 31, 2021 and 2020, and the reviews of the consolidated financial statements included in the Company’s quarterly reports on Form 10-Q during 2021 and 2020.
     
  (2) Represents primarily travel costs associated with the audit of the Company’s consolidated financial statements for the fiscal years ended December 31, 2021 and 2020.

 

Pre-Approval Policies and Procedures

 

The Audit Committee Charter provides that the Audit Committee is responsible for the appointment, compensation, retention and oversight of the independent public accountants, and pre-approves all audit services and permissible non-audit services to be provided to the Company by the independent public accountants. The Audit Committee may, in its discretion, delegate the authority to pre-approve all audit services and permissible non-audit services to the Chairman of the Audit Committee provided the Chairman reports any delegated pre-approvals to the Audit Committee at the next meeting thereof. The Audit Committee has not, however, adopted any specific policies and procedures for the engagement of non-audit services.

 

The Board of Directors approved Marcum performing our audit for the 2020 and 2021 fiscal years and approved Marcum performing our audit for the 2022 fiscal year.

 

Required Vote

 

In accordance with Delaware law, approval of Proposal No. 6 requires the affirmative vote of a majority of the shares of common stock present or represented by proxy and entitled to vote on this proposal at the Annual Meeting. As a result, abstentions will have the same effect as votes against this proposal.

 

While we intend to carefully consider the voting results of this proposal, the final vote is advisory in nature and therefore not binding on the Company. However, our Board of Directors values the opinions of all of our stockholders and will consider the outcome of this vote when making future decisions with respect to our auditors.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF MARCUM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022.

 

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OTHER MATTERS

 

As of the date of this Proxy Statement, management does not know of any other matters that will come before the Annual Meeting.

 

ANNUAL REPORT ON FORM 10-K AND ADDITIONAL INFORMATION

 

Annual Report

 

Available with this Proxy Statement on the internet (and available by mail if a stockholder has made such a request) is the Company’s 2021 Amended Annual Report to Stockholders on Form 10-K/A.

 

Information Available

 

The Company is subject to the information and reporting requirements of the Exchange Act and in accordance with the Exchange Act, the Company files periodic reports, documents and other information with the SEC relating to its business, financial statements and other matters, including the Company’s amended annual report on Form 10-K/A for the year ended December 31, 2021, the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2022, and any reports prior to or subsequent to that date.

 

These reports and other information filed with the SEC by the Company may be inspected and are available for copying at the public reference facilities maintained at the Securities and Exchange Commission at 100 F Street NW, Washington, D.C. 20549.

 

The Company’s filings with the Securities and Exchange Commission are also available to the public from the SEC’s website, http://www.sec.gov and at the Company’s website, http://www.gauchoholdings.com. Our Amended Annual Report on Form 10-K/A for the year ended December 31, 2021, and other reports filed under the Exchange Act, are also available in print to any stockholder at no cost upon request to: 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; tel: (212) 735-7688.

 

Proxy Materials Are Available on the Internet

 

The Company is using the internet as the primary means of furnishing proxy materials to certain holders of common stock. We are sending a Notice of Internet Availability of Proxy Materials to you which includes instructions on how to access the proxy materials online or how to request a printed copy of the materials.

 

We encourage stockholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of our annual meetings and reduce the Company’s printing and mailing costs.

 

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