0001493152-18-007063.txt : 20180515 0001493152-18-007063.hdr.sgml : 20180515 20180515161140 ACCESSION NUMBER: 0001493152-18-007063 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 71 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180515 DATE AS OF CHANGE: 20180515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Algodon Wines & Luxury Development Group, Inc. CENTRAL INDEX KEY: 0001559998 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 522158952 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55209 FILM NUMBER: 18836578 BUSINESS ADDRESS: STREET 1: 135 FIFTH AVENUE STREET 2: 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 212-739-7650 MAIL ADDRESS: STREET 1: 135 FIFTH AVENUE STREET 2: 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2018

 

OR

 

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

 

For the transition period from _____________ to ___________________.

 

Commission file number: 000-55209

 

Algodon Wines & Luxury Development Group, Inc.

 

(Exact name of registrant as specified in its charter)

 

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

 

135 Fifth Avenue, 10th Floor

New York, NY 10010

(Address of principal executive offices)

 

212-739-7700

(Registrant’s telephone number, including area code)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

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

 

Large accelerated filer [  ]   Accelerated filer [  ]

Non-accelerated filer

[  ]  (Do not check if a smaller reporting company)

Smaller reporting company

[X]
Emerging growth company [  ]    

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

As of May 14, 2018, there were 43,179,419 shares of common stock outstanding.

 

 

 

 
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

PART I  
   
FINANCIAL INFORMATION  
   
ITEM 1. Financial Statements  
   
Condensed Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017 1
   
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 2
   
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2018 and 2017 3
   
Unaudited Condensed Consolidated Statement of Changes in Temporary Equity and Stockholders’ Deficiency for the Three Months Ended March 31, 2018 4
   
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 5
   
Notes to Unaudited Condensed Consolidated Financial Statements 7
   
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
   
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 29
   
ITEM 4. Controls and Procedures 29
   
PART II  
   
OTHER INFORMATION  
   
ITEM 1. Legal Proceedings 30
   
ITEM 1A. Risk Factors 30
   
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
   
ITEM 3. Defaults Upon Senior Securities 30
   
ITEM 4. Mine Safety Disclosures 30
   
ITEM 5. Other Information 30
   
ITEM 6. Exhibits 31
   
Signatures 32

 

 
 

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    March 31,     December 31,  
    2018     2017  
    (unaudited)        
Assets                
Current Assets                
Cash   $ 320,568     $ 358,303  
Accounts receivable, net of allowance for doubtful accounts of $3,163 and $3,421 at March 31, 2018 and December 31, 2017, respectively     231,142       188,067  
Accounts receivable - related parties, net of allowance for doubtful accounts of $514,087 at each of March 31, 2018 and December 31, 2017     409,290       851,016  
Advances and loans to employees     268,757       284,496  
Inventory     1,433,712       1,388,666  
Real estate lots held for sale     53,267       151,906  
Prepaid expenses and other current assets     140,917       159,465  
Total Current Assets     2,857,653       3,381,919  
Property and equipment, net     4,455,735       4,532,890  
Prepaid foreign taxes, net of reserve of $364,719 and $392,593 at March 31, 2018 and December 31, 2017, respectively     390,458       342,312  
Investment - related parties     24,773       26,401  
Deposits     61,284       61,284  
Total Assets   $ 7,789,903     $ 8,344,806  
                 
Liabilities, Temporary Equity and Stockholders’ Deficiency                
Current Liabilities                
Accounts payable   $ 506,199     $ 415,318  
Accrued expenses, current portion     966,295       1,000,521  
Deferred revenue     897,379       1,732,664  
Loans payable, current portion, net of debt discount     351,610       256,724  
Convertible debt obligations     1,239,704       20,000  
Current portion of other liabilities     18,629       19,156  
Total Current Liabilities     3,979,816       3,444,383  
Accrued expenses, non-current portion     221,720       247,515  
Other liabilities, non-current portion     9,996       11,474  
Loans payable, non-current portion, net of debt discount     1,017,971       634,930  
Total Liabilities     5,229,503       4,338,302  
                 
Commitments and Contingencies     -       -  
                 
Series B convertible redeemable preferred stock, par value $0.01 per share, 902,670 shares authorized, 902,670 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively. Liquidation preference of $9,465,054 at March 31, 2018     9,026,824       9,026,824  
                 
Stockholders’ Deficiency                
Preferred stock, 11,000,000 shares authorized: Series A convertible preferred stock, par value $0.01 per share; 10,097,330 shares authorized; no shares are available for issuance.     -       -  
Common stock, par value $0.01 per share; 80,000,000 shares authorized; 43,183,830 and 43,067,546 shares issued and 43,179,419 and 43,063,135 shares outstanding as of March 31, 2018 and December 31, 2017, respectively.     431,837       430,674  
Additional paid-in capital     81,166,423       80,902,967  
Accumulated other comprehensive loss     (11,081,419 )     (10,795,810 )
Accumulated deficit     (76,969,195 )     (75,544,081 )
Treasury stock, at cost, 4,411 shares at March 31, 2018 and December 31, 2017     (14,070 )     (14,070 )
Total Stockholders’ Deficiency     (6,466,424 )     (5,020,320 )
Total Liabilities, Temporary Equity and Stockholders’ Deficiency   $ 7,789,903     $ 8,344,806  

 

See Notes to the Condensed Consolidated Financial Statements

 

1
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

    For the three months ended  
    March 31,  
    2018     2017  
             
Sales   $ 1,277,923     $ 618,537  
Cost of sales     (575,962 )     (484,683 )
Gross profit     701,961       133,854  
Operating Expenses                
Selling and marketing     97,902       151,040  
General and administrative     1,952,275       1,782,885  
Depreciation and amortization     6,739       21,615  
Total operating expenses     2,056,916       1,955,540  
Loss from Operations     (1,354,955 )     (1,821,686 )
                 
Other Expense (Income)                
Interest expense, net     70,159       81,856  
Gain on sale of investment in subsidiary     -       (199,200 )
Total other expense (income)     70,159       (117,344 )
                 
Loss from Continuing Operations     (1,425,114 )     (1,704,342 )
Loss from Discontinued Operations     -       (106,543 )
Net Loss   $ (1,425,114 )   $ (1,810,885 )
Deemed dividend to Series B preferred stockholders     (155,791 )     (3,053 )
Net Loss Attributable to Common Stockholders   $ (1,580,905 )   $ (1,813,938 )
                 
Net loss per basic and diluted common share:                
Loss from continuing operations   $ (0.04 )   $ (0.04 )
Loss from discontinued operations     -       -  
Net loss per common share   $ (0.04 )   $ (0.04 )
                 
Weighted Average Number of Common Shares Outstanding:                
Basic and Diluted     43,086,927       42,935,629  

 

See Notes to the Condensed Consolidated Financial Statements

 

2
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

 

    For the three months ended  
    March 31,  
    2018     2017  
             
Net Loss   $ (1,425,114 )   $ (1,810,885 )
Other Comprehensive Loss                
Foreign currency translation adjustments     (285,609 )     200,259  
Total Comprehensive Loss   $ (1,710,723 )   $ (1,610,626 )

 

See Notes to the Condensed Consolidated Financial Statements

 

3
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY

FOR THE THREE MONTHS ENDED MARCH 31, 2018

(unaudited)

 

  

Series B

Convertible

                       Accumulated         
   Redeemable                   Additional   Other       Total 
   Preferred Stock   Common Stock   Treasury Stock   Paid-In   Comprehensive   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Loss   Deficit   Deficiency 
Balance - December 31, 2017   902,670   $9,026,824    43,067,546   $430,674    4,411   $(14,070)  $80,902,967   $(10,795,810)  $(75,544,081)  $(5,020,320)
Stock-based compensation:                                                  
Common stock issued under 401(k) profit sharing plan   -    -    116,284    1,163    -    -    80,236    -    -    81,399 
Options and warrants   -    -    -    -    -    -    183,220    -    -    183,220 
Comprehensive loss:                                                  
Net loss   -    -    -    -    -    -    -    -    (1,425,114)   (1,425,114)
Other comprehensive loss   -    -    -    -    -    -    -    (285,609)   -    (285,609)
Balance - March 31, 2018   902,670   $9,026,824    43,183,830   $431,837    4,411   $(14,070)  $81,166,423   $(11,081,419)  $(76,969,195)  $(6,466,424)

 

See Notes to the Condensed Consolidated Financial Statements

 

4
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

    For the three months ended  
    March 31,  
    2018     2017  
Cash Flows from Operating Activities                
Net loss   $ (1,425,114 )   $ (1,810,885 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock-based compensation:                
401(k) stock     20,446       18,017  
Options and warrants     183,220       164,529  
Net realized and unrealized investment losses     1,628       3,031  
Depreciation and amortization     6,739       21,615  
Amortization of debt discount     9,636       -  
Provision for uncollectible assets     (27,874 )     2,000  
Prepaid compensation amortization     -       750  
Gain on sale of investment in subsidiary     -       (199,200 )
Decrease (increase) in assets:                
Accounts receivable     604,905       (11,713 )
Inventory     (26,706 )     (26,475 )
Prepaid expenses and other current assets     (42,932 )     7,301  
Increase (decrease) in liabilities:                
Accounts payable and accrued expenses     225,147       (125,780 )
Deferred revenue     (720,454 )     (104,776 )
Other liabilities     (527 )     1,172  
Total Adjustments     233,228       (249,529 )
Net Cash Used in Operating Activities     (1,191,886 )     (2,060,414 )
Cash Flows from Investing Activities                
Purchase of property and equipment     (233,544 )     (99,699 )
Proceeds from sale of investment in subsidiary     -       199,200  
Net Cash (Used in) Provided by Investing Activities     (233,544 )     99,501  
Cash Flows from Financing Activities                
Proceeds from loans payable     525,000       517,243  
Repayments of loans payable     (26,053 )     (32,158 )
Proceeds from convertible debt obligations     1,219,704       1,260,000  
Repayments of debt obligations     -       (15,000 )
Proceeds from sale of Series B Preferred stock     -       285,000  
Proceeds from common stock offering, net of issuance costs     -       40,500  
Net Cash Provided by Financing Activities     1,718,651       2,055,585  
Effect of Exchange Rate Changes on Cash     (330,956 )     86,226  
Net (Decrease) Increase in Cash     (37,735 )     180,898  
Cash - Beginning of Period     358,303       131,190  
Cash - End of Period   $ 320,568     $ 312,088  

 

See Notes to the Condensed Consolidated Financial Statements

 

5
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(unaudited)

 

   For the three months ended 
   March 31, 
   2018   2017 
Supplemental Disclosures of Cash Flow Information:          
Interest paid  $45,786   $42,897 
Income taxes paid  $-   $- 
           
Non-Cash Investing and Financing Activity          
Accrued stock based compensation converted to equity  $81,399   $73,868 
 Exchange of 8% notes for Series B preferred stock  $-   $1,267,324 

 

See Notes to the Condensed Consolidated Financial Statements 

 

6
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1.ORGANIZATION

 

Through its wholly-owned subsidiaries, Algodon Wines & Luxury Development Group, Inc. (the “Company”, “Algodon Partners”, “AWLD”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops and operates international real estate projects. The Company’s wholly-owned subsidiaries are InvestProperty Group, LLC, Algodon Global Properties, LLC, and Algodon Europe, Ltd. Through its subsidiaries, the Company currently operates Algodon Mansion (“TAR”), a Buenos Aires-based luxury boutique hotel property and has redeveloped, expanded and repositioned an Argentine winery and golf resort property called Algodon Wine Estates (“AWE”) for subdivision of a portion of this property for residential development.

 

2.GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company incurred losses from continuing operations of $1,425,114 and $1,704,342 during the three months ended March 31, 2018 and 2017, respectively. The Company has an accumulated deficit of $76,969,195 at March 31, 2018. Cash used in operating activities was $1,191,886 and $2,060,414 during the three months ended March 31, 2018 and 2017, respectively. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company needs to raise additional capital in order to continue to pursue its business objectives. The Company funded its operations during the three months ended March 31, 2018 and 2017 primarily through the proceeds from convertible debt obligations of $1,219,704 and $1,260,000, respectively, proceeds from loans payable of $525,000 and $517,243, respectively, proceeds from the sale of Series B Preferred stock of $0 and $285,000, respectively, and proceeds from the sale of common stock for net proceeds of $0 and $40,500, respectively. The Company repaid loans payable of $26,053 and $32,158 during the three months ended March 31, 2018 and 2017, respectively.

 

If the Company is not able to obtain additional sources of capital, it may not have sufficient funds to continue to operate the business for twelve months from the date these financial statements are issued. Historically, the Company has been successful in raising funds to support its capital needs. Management believes that it will be successful in obtaining additional financing; however, no assurance can be provided that the Company will be able to do so. Further, there is no assurance that these funds will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail its operations and implement a plan to extend payables and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Such a plan could have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations, liquidate and/or seek reorganization in bankruptcy. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

7
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2018, and for the three months ended March 31, 2018 and 2017. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2018. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the Company’s audited consolidated financial statements.

 

Use of Estimates

 

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, the Company must make estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company include the valuation of equity instruments, the useful lives of property and equipment and reserves associated with the realizability of certain assets.

 

Discontinued Operations

 

The Company accounted for its decision to close down its broker-dealer subsidiary as discontinued operations in accordance with the guidance provided in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, “Accounting for Impairment or Disposal of Long-Lived Assets,” and ASC Topic 205, “Presentation of Financial Statements,” which require that only a disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results shall be reported in the financial statements as discontinued operations. Accordingly, the results of operations for the broker dealer subsidiary during the periods presented are reclassified into separate line items in the statements of operations. There were no assets or liabilities of discontinued operations as of March 31, 2018 or December 31, 2017.

 

Segment Information

 

The Financial Accounting Standards Board (“FASB”) has established standards for reporting information on operating segments of an enterprise in interim and annual financial statements. The Company operates in one segment which is the business of real estate development in Argentina. The Company’s chief operating decision-maker reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

 

8
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Foreign Currency Translation

 

The Company’s functional and reporting currency is the United States dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies (United States dollar, Argentine peso and British pound). Argentine assets and liabilities are translated into U.S. dollars using the exchange rate at the balance sheet date (20.109 and 18.593 for the Argentine peso and 0.7135 and 0.7400 for the British pound at March 31, 2018 and December 31, 2017, respectively), and revenue and expense accounts are translated using a weighted average exchange rate for the period then ended (19.6682 and 15.6680 for the Argentine peso and 0.7186 and 0.8076 for the British pound for the three months ended March 31, 2018 and 2017, respectively). Resulting translation adjustments are made directly to accumulated other comprehensive income. The Company engages in foreign currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies.

 

There has been a steady devaluation of the Argentine peso relative to the United States dollar in recent years, primarily due to inflation. A highly inflationary economy is defined as an economy with a cumulative inflation rate of approximately 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the functional currency of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. As of March 31, 2018, the Argentine economy has not been designated as highly-inflationary for accounting purposes. The Company is closely monitoring any developments in Argentina and is evaluating the potential impact on its consolidated financial statements if the Argentine economy is deemed to be highly inflationary.

 

Property and Equipment

 

Investments in property and equipment are recorded at cost. These assets are depreciated using the straight-line method over their estimated useful lives. Most of the Company’s assets are located in Argentina and are subject to variation as a result of foreign currency translation.

 

The Company capitalizes internal vineyard improvement costs when developing new vineyards or replacing or improving existing vineyards. These costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. Expenditures for repairs and maintenance are charged to operating expense as incurred. The cost of properties sold or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts at the time of disposal and resulting gains and losses are included as a component of operating income. Real estate development consists of costs incurred to ready the land for sale, including primarily costs of infrastructure as well as master plan development and associated professional fees. Such costs are allocated to individual lots proportionately based on square meters and those allocated costs will be derecognized upon the sale of individual lots. Given that they are not currently in service, capitalized real estate development costs are currently not being depreciated. Land is an inexhaustible asset and is not depreciated.

 

9
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Stock-Based Compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The Company accounts for forfeitures as they occur.

 

Concentrations

 

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $106,455 and $146,952 at March 31, 2018 and December 31, 2017, respectively, of which $57,852 and $92,168, respectively, represents cash held in Argentine bank accounts.

 

Comprehensive Income (Loss)

 

Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The guidance requires other comprehensive income (loss) to include foreign currency translation adjustments.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets. The Company adopted ASC Topic 606 for all applicable contracts using the modified retrospective method, requires a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial statements as of the date of adoption, and therefore a cumulative-effect adjustment was not required.

 

10
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Revenue Recognition, continued

 

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

 

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

 

   For The Three Months Ended 
   March 31, 
   2018   2017 
         
Real estate sales  $799,854   $- 
Hotel room and events   223,568    263,949 
Restaurants   90,097    90,269 
Winemaking   139,396    222,828 
Golf, tennis and other   25,008    41,491 
   $1,277,923   $618,537 

 

Revenue from real estate lot sales is recorded when the lot is deeded and legal ownership of the lot is transferred to the customer. Revenue from the sale of food, wine and agricultural products is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered and the performance obligation has been satisfied.

 

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

 

During the three months ended March 31, 2018 the Company recognized approximately $800,000 of revenues related to the sale of real estate lots which was included in deferred revenues as of December 31, 2017. For the three months ended March 31, 2018, the Company did not recognize any revenue related to performance obligations satisfied in previous periods. Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

 

As of March 31, 2018 and December 31, 2017, the Company had deferred revenue of $837,937 and $1,690,224, respectively, associated with real estate lot sale deposits, $12,875 and $0, respectively, related to advance deposits for wine barrel and agricultural products and had $46,567 and $42,440, respectively, of deferred revenue related to hotel deposits. Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.

 

Net Loss per Common Share

 

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

 

11
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Net Loss per Common Share, continued

 

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

 

   March 31, 
   2018   2017 
         
Options   

10,312,926

    7,979,265 
Warrants   1,389,179    1,903,730 
Series B convertible preferred stock   9,026,700    1,552,000 
Total potentially dilutive shares (1)   

20,728,805

    11,434,995 

 

  (1) In addition, $1,239,704 of convertible debt is convertible into common stock at a 10% discount to the price used for the sale of the of the Company’s common stock in a future private placement offering.

   

New Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02 will have on the Company’s consolidated financial statements and related disclosures. 

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)” which provides guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity in practice. The ASU is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of ASU 2016-15 did not have a material effect on the Company’s condensed consolidated financial statements and related disclosures.

 

12
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

New Accounting Pronouncements, continued

 

On February 22, 2017, the FASB issued ASU 2017-05, ‘Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)”, which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in substance real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The adoption of the provisions of ASU 2017-05 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718); Scope of Modification Accounting. The amendments in this ASU provide guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. If the value, vesting conditions or classification of the award changes, modification accounting will apply. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2017-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

The Company has implemented all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.

 

4.DISCONTINUED OPERATIONS

 

On November 29, 2016, the Company’s Board of Directors determined that it was in the Company’s best interest to close down its broker-dealer operations on December 31, 2016. On February 21, 2017, the Company’s request to FINRA for Broker-Dealer Withdrawal became effective.

 

Results of Discontinued Operations

 

There were no results of discontinued operations during the three months ended March 31, 2018. Results of discontinued operations during the three months ended March 31, 2017 are as follows.

 

   For The Three Months Ended 
   March 31, 
   2018   2017 
         
Revenues  $-   $- 
Gross profit  $-   $- 
Operating expenses  $-   $(106,558)
Interest income (expense)  $-   $15 
Loss from discontinued operations  $-   $(106,543)

 

13
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

5.INVENTORY

 

Inventory at March 31, 2018 and December 31, 2017 is comprised of the following:

 

   March 31,   December 31, 
   2018   2017 
         
Vineyard in process  $433,513   $349,458 
Wine in process   832,821    865,762 
Finished wine   38,529    63,964 
Other   128,849    109,482 
   $1,433,712   $1,388,666 

 

6.INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company holds certain affiliate warrants earned by the broker-dealer subsidiary prior to its discontinuation of operations, which are marked to market at each reporting date using the Black-Scholes option pricing model. The Company recorded unrealized losses on the affiliate warrants of $1,628 and $3,031 during the quarter ended March 31, 2018 and 2017, respectively, which are included in revenues on the accompanying condensed consolidated statements of operations

 

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

 

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

 

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

 

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

 

14
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

6.INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS, continued

 

Investments – Related Parties at Fair Value

 

As of March 31, 2018  Level 1   Level 2   Level 3   Total 
                 
Warrants- Affiliates  $-   $-   $24,773   $24,773 

 

As of December 31, 2017  Level 1   Level 2   Level 3   Total 
                     
Warrants- Affiliates  $-   $-   $26,401   $26,401 

 

A reconciliation of Level 3 assets is as follows:

 

   Warrants 
     
Balance - December 31, 2017  $26,401 
Unrealized loss   (1,628)
Balance - March 31, 2018  $24,773 

 

   March 31,   December 31, 
   2018   2017 
           
Accumulated unrealized (losses) gains related to investments at fair value  $(42,075)  $(40,447)

 

7.       ACCRUED EXPENSES

 

Accrued expenses are comprised of the following:

 

   March 31,
2018
   December 31,
2017
 
         
Accrued compensation and payroll taxes  $444,337   $463,604 
Accrued taxes payable   40,279    63,550 
Accrued interest   271,813    255,481 
Other accrued expenses   209,866    217,886 
Accrued expenses, current   966,295    1,000,521 
Accrued payroll tax obligations, non-current   221,720    247,515 
Total accrued expenses  $1,188,015   $1,248,036 

 

15
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

8.       LOANS PAYABLE

 

 On March 31, 2017, the Company received a bank loan in the amount of $519,156 (ARS $8,000,000) (the “2017 Loan”). The 2017 Loan bears interest at 24.18% per annum and is due on March 1, 2021. Principal and interest will be paid in forty-two monthly installments beginning on October 1, 2017 and ending on March 1, 2021. The Company incurred interest expense of $26,508 on this loan during the three months ended March 31, 2018.

 

On August 19, 2017, the Company purchased 845 hectares of land adjacent to its existing property at AWE. The Company paid $100,000 at the date of purchase and executed a note payable in the amount of $600,000 (the “Land Loan”) with a stated interest rate of 0% and with quarterly payments of $50,000 beginning on December 18, 2017 and ending August 18, 2021. At the date of purchase, the Company took possession of the property, with full use and access, but will not receive the deed to the property until after $400,000 of the purchase price has been paid. The Company imputed interest on the note at 7% per annum and recorded a discounted note balance of $517,390 on August 19, 2017. Amortization of the note discount in the amount of $9,636 for the three months ended March 31, 2018 is recorded as interest expense on the accompanying condensed consolidated statements of operations. The balance on the note was $489,243, net of debt discount of $60,757 on March 31, 2018, of which $121,274 (net of discount of $28,726) is included in loans payable, net, current and $367,968 (net of discount of $32,032) is included in loans payable, net, non-current in the accompanying condensed consolidated balance sheets.

 

On January 25, 2018 the Company received a bank loan in the amount of $525,000 (the “2018 Loan”), denominated in U.S. dollars. The 2018 Loan bears interest at 6.75% per annum and is due on January 25, 2023. Principal and interest will be paid in 60 equal monthly installments of $10,311, beginning on February 23, 2018. The Company incurred interest expense of $5,769 on this loan during the three months ended March 31, 2018. As of March 31, 2018, accrued interest of $2,953 remained outstanding.

 

The Company’s loans payable are summarized below:

 

   March 31, 2018   December 31, 2017 
   Gross Principal Amount   Debt Discount   Loans Payable,
Net of Debt Discount
   Gross Principal Amount   Debt Discount   Loans Payable,
Net of Debt Discount
 
                         
2018 Loan  $517,602   $-   $517,602   $-   $-   $- 
2017 Loan   362,737    -   $362,737    412,047    -   $412,047 
Land Loan   550,000    (60,758)  $489,242    550,000    (70,393)  $479,607 
Total Loans Payable   1,430,339    (60,758)   1,369,581    962,047    (70,393)   891,654 
Less: current portion   380,336    (28,726)   351,610    287,838    (31,114)   256,724 
Loans Payable, non-current  $1,050,003   $(32,032)  $1,017,971   $674,209   $(39,279)  $634,930 

 

16
 

  

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

9.       CONVERTIBLE DEBT OBLIGATIONS

 

During an offering that ended on September 30, 2010, the Company issued convertible notes with an interest rate of 8% and an amended maturity date of March 31, 2011 (the “2010 Debt Obligations”). During the three months ended March 31, 2018 and 2017, the Company incurred interest expense of $9,153 and $8,849 on the 2010 Debt Obligations. As of December 31, 2017, the entire principal balance owed on the 2010 Debt Obligations has been repaid, however, accrued interest of $264,635 and $255,481 remained outstanding as of March 31, 2018, and December 31, 2017, respectively. Accrued interest on the 2010 Debt Obligations is not convertible.

 

On December 31, 2017, the Company sold a convertible promissory note in the amount of $20,000 to an accredited investor. From February 2, 2018 through March 22, 2018, the Company sold additional convertible promissory notes in the aggregate principal amount of $1,219,704 (together, the “Convertible Notes”). The Convertible Notes mature 90 days from the date of issuance, bear interest at 8% per annum and are convertible into the Company’s common stock 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. The terms of the conversion option resulted in a contingent beneficial conversion feature which will be recognized when the private placement offering commences and the contingency is resolved. The Company incurred interest expense of $4,225 on this loan during the three months ended March 31, 2018.

 

The Company’s debt obligations are summarized below:

 

   March 31, 2018   December 31, 2017 
   Principal   Interest [1]   Total   Principal   Interest [1]   Total 
                         
Debt Obligations  $-   $264,635   $264,635   $-   $255,481   $255,481 
Convertible Debt   1,239,704    4,225    1,243,929    20,000    -    20,000 
   $1,239,704   $268,860   $1,508,564   $20,000   $255,481   $275,481 

 

  [1] Accrued interest is included as a component of accrued expenses on the accompanying condensed consolidated balance sheets.

  

10.       RELATED PARTY TRANSACTIONS

 

Assets

 

Accounts receivable – related parties of $409,290 and $851,016 at March 31, 2018 and December 31, 2017, respectively, represent the net realizable value of advances made to related, but independent, entities under common management, of which $184,000 and $724,591 respectively, represents amounts owed to the Company in connection with expense sharing agreements as described below.

 

Investments

 

See Note 6 – Investments and Fair Value of Financial Instruments, for information related to investments in related parties.

 

17
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

10.       RELATED PARTY TRANSACTIONS, continued

 

Expense Sharing

 

On April 1, 2010, the Company entered into an agreement with a related entity, of which AWLD’s CEO is Chairman and Chief Executive Officer and AWLD’s CFO is an executive officer, to share expenses such as office space, support staff and other operating expenses. The Company is entitled to receive reimbursement of $69,829 and $58,683 for expenses incurred during the three months ended March 31, 2018 and 2017, respectively, pursuant to this agreement. The entity owed $184,000 and $724,591, respectively, as of March 31, 2018 and December 31, 2017, under this agreement. The amount owed to the Company is being repaid in installments through October 1, 2018, pursuant to a repayment schedule agreed upon by the Company and the related entity on March 24, 2017.

 

The Company also had an expense sharing agreement with a different related entity to share expenses such as office space and other clerical services, which was terminated on August 2017. The owners of more than 5% of that entity include (i) AWLD’s Chairman, and (ii) a more than 5% owner of AWLD. The Company was entitled to receive reimbursement of $3,990 for expenses during the three months ended March 31, 2017, pursuant to this agreement. The entity owed $396,116 to the Company under the expense sharing agreement as of March 31, 2018 and December 31, 2017, of which the entire balance is deemed unrecoverable and reserved.

 

11.       BENEFIT CONTRIBUTION PLAN

 

The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction. A participant is always fully vested in their account, including the Company’s contribution. For the three months ended March 31, 2018 and 2017, the Company recorded a charge associated with its contribution of $20,446 and $18,017, respectively. This charge has been included as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company issues shares of its common stock to settle prior year’s obligations based on the fair market value of its common stock on the date the shares are issued (shares were issued at $0.70 and $2.00 per share for the three months ended March 31, 2018 and 2017, respectively).

 

12.       TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY

 

Series B Preferred Stock

 

The Series B stockholders are entitled to cumulative cash dividends at an annual rate of 8% of the Series B liquidation value (equal to face value of $10 per share), as defined, payable when, as and if declared by the Board of Directors. Cumulative dividends earned by the Series B stockholders were $155,791 and $3,053 for the three months ended March 31, 2018 and 2017, respectively. Cumulative unpaid dividends in arrears related to the Series B totaled $438,354 and $284,564 as of March 31, 2018 and December 31, 2017, respectively.

 

Common Stock

 

During March 2018, the Company issued 116,284 shares of common stock at $0.70 per share to settle its 2017 obligation, (an aggregate of $81,399) representing the Company’s 401(k) matching contributions) to the Company’s 401(k) profit-sharing plan.

 

18
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

12.       TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY, continued

 

Accumulated Other Comprehensive Income (Loss)

 

For three months ended March 31, 2018 and 2017, the Company recorded $(285,609) and $200,259, respectively, of foreign currency translation adjustment as accumulated other comprehensive income (loss).

 

Warrants

 

A summary of warrants activity during the three months ended March 31, 2018 is presented below:

 

   Number of Warrants   Weighted Average Exercise Price   Weighted Average Remaining Life in Years   Intrinsic Value 
                 
Outstanding, December 31, 2017   1,465,296    2.17           
Issued   -    -           
Exercised   -    -                   
Expired   (76,117)   2.30           
Outstanding, March 31, 2018   1,389,179   $2.17    2.2   $- 
                     
Exercisable, March 31, 2018   1,389,179   $2.17    2.2   $- 

 

A summary of outstanding and exercisable warrants as of March 31, 2018 is presented below:

 

Warrants Outstanding   Warrants Exercisable 
Exercise Price   Exercisable Into  Outstanding Number of Warrants   Weighted Average Remaining Life in Years   Exercisable Number of Warrants 
                 
$2.00   Common Stock   741,879    2.8    741,879 
$2.30   Common Stock   458,993    1.1    458,993 
$2.50   Common Stock   188,307    3.0    188,307 
     Total   1,389,179         1,389,179 

 

19
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

12.       TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY, continued

 

Stock Options

 

On February 14, 2018, the Company granted five-year options for the purchase of 1,304,328 shares of the Company’s common stock under the 2016 Plan, which options for the purchase of common stock were granted to certain employees of the Company. The options had an exercise price of $0.77 per share and vest 25% at the first anniversary of date of grant, with the remaining shares vesting ratably on a quarterly basis over the following three years. The options had an aggregate grant date fair value of $610,985, which will be recognized ratably over the vesting period. The company has computed the fair value of options granted using the Black-Scholes option pricing model. Assumptions used in applying the Black-Scholes option pricing model are as follows:, risk free interest rate of 2.56%, expected term of 5 years, expected volatility of 43.5%, and expected dividends of 0.00%. There were no stock options granted during the three months ended March 31, 2017.

 

During the three months ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of $183,220 and $163,424, respectively, related to stock option grants, which is reflected as general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2018, there was $1,900,595 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 2.5 years, of which $515,369 of unrecognized expense is subject to non-employee mark-to-market adjustments.

 

A summary of options activity during the months ended March 31, 2018 and December 31, 2017 is presented below:

 

       Weighted   Weighted     
       Average   Average     
   Number of   Exercise   Remaining   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding, December 31, 2017   9,234,265   $2.18           
Granted   

1,304,328

    0.77           
Exercised   -    -           
Expired   -    -           
Forfeited   -    -                       
Outstanding, March 31, 2018   

10,538,593

   $2.01    2.3   $- 
                     
Exercisable, March 31, 2018   6,474,016   $2.40    1.3   $- 

 

The following table presents information related to stock options at March 31, 2018:

 

Options Outstanding     Options Exercisable  
Exercise Price     Outstanding
Number of Options
    Weighted Average Remaining Life in Years     Exercisable Number of Options  
                     
$ 0.77      

1,304,328

      4.9       -  
$ 1.10       1,395,000       4.6       -  
$ 2.20       3,031,890       2.5       1,982,356  
$ 2.48       4,772,375       0.8       4,459,785  
$ 3.30       10,000       2.2       6,875  
$ 3.50       25,000       0.2       25,000  
         

10,538,593

      1.3       6,474,016  

  

13.       COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

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

 

Commitments

 

The Company leases office space in New York City under an operating lease which expires on August 31, 2020. Rent expense for this property was $56,892 and $51,781 for the three months ended March 31, 2018 and 2017, respectively, net of expense allocation to affiliates.

 

20
 

 

ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

14.       SUBSEQUENT EVENTS [OPEN]

 

Management has evaluated all subsequent events to determine if events or transactions occurring through the date the condensed consolidated financial statements were issued, require adjustment to or disclosure in the accompanying condensed consolidated financial statements.

 

Convertible Debt

 

From April 2 through April 26, 2018, the Company sold additional convertible promissory notes in the aggregate principal amount of $1,087,326. The convertible promissory notes mature 90 days from the date of issuance, bear interest at 8% per annum and are convertible into the Company’s common stock 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.

 

Foreign Currency Exchange Rates

 

The Argentine peso to United States dollar exchange rate was 20.241, 20.109 and 18.593 at May 11, March 31, 2018 and December 31, 2017, respectively.

 

21
 

 

Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We disclaim any obligation to update forward-looking statements.

 

The independent registered public accounting firm’s report on the Company’s consolidated financial statements as of December 31, 2017, and for each of the years in the two-year period then ended, includes a “going concern” explanatory paragraph, that describes substantial doubt about the Company’s ability to continue as a going concern.

 

Unless the context requires otherwise, references in this document to “AWLD”, “we”, “our”, “us” or the “Company” are to Algodon Wines & Luxury Development Group, Inc. and its subsidiaries.

 

Overview

 

We are an integrated, lifestyle related real estate development company, capitalizing on our unique brand of affordable luxury, branded as “Algodon”, to create a diverse set of interrelated products and services. Our wines, hotels and real estate ventures, currently concentrated in Argentina, offer a blend of high-end, luxury and adventures products. We hope to further broaden the reach and depth of our services to strengthen and cement the reach of our brand. Ultimately, we intend to further expand and grow our business by combining unique and promising opportunities with our brand and clientele.

 

Through our subsidiaries, we currently operate Algodon Mansion, a Buenos Aires-based luxury boutique hotel property and we have redeveloped, expanded and repositioned a winery and golf resort property called Algodon Wine Estates for subdivision of a portion of this property for residential development.

 

Investment in foreign real estate requires consideration of certain risks typically not associated with investing in the United States. Such risks include, trade balances and imbalances and related economic policies, unfavorable currency exchange rate fluctuations, imposition of exchange control regulation by the United States or foreign governments, United States and foreign withholding taxes, limitations on the removal of funds or other assets, policies of governments with respect to possible nationalization of their industries, political difficulties, including expropriation of assets, confiscatory taxation and economic or political instability in foreign nations or changes in laws which affect foreign investors.

 

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Recent Developments and Trends

 

Financings

 

During the three months ended March 31, 2018, we raised, net of repayments, approximately $1.7 million of new capital through the issuance of debt, consisting primarily of proceeds from the issuance of convertible debt and loans payable. We used the net proceeds from these debt issuances for general working capital and capital expenditures.

 

Initiatives

 

We have implemented a number of initiatives designed to expand revenues and control costs. Revenue enhancement initiatives include expanding marketing, investment in additional winery capacity and developing new real estate development revenue sources. Cost reduction initiatives include investment in equipment that will decrease our reliance on subcontractors, as well as outsourcing and restructuring of certain functions. Our goal is to become more self-sufficient and less dependent on outside financing.

 

Liquidity

 

As reflected in our accompanying condensed consolidated financial statements, we have generated significant losses which have resulted in a total accumulated deficit of approximately $77.0 million, raising substantial doubt that we will be able to continue operations as a going concern. Our independent registered public accounting firm included an explanatory paragraph in their report for the years ended December 31, 2017 and 2016, stating that we have incurred significant losses and need to raise additional funds to meet our obligations and sustain our operations. Our ability to execute our business plan is dependent upon our generating cash flow and obtaining additional debt or equity capital sufficient to fund operations. If we are able to obtain additional debt or equity capital (of which there can be no assurance), we hope to acquire additional management as well as increase the marketing of our products and continue the development of our real estate holdings.

 

Our business strategy may not be successful in addressing these issues and there can be no assurance that we will be able to obtain any additional capital. If we cannot execute our business plan on a timely basis (including acquiring additional capital), our stockholders may lose their entire investment in us, because we may have to delay vendor payments and/or initiate cost reductions, which would have a material adverse effect on our business, financial condition and results of operations, and we could ultimately be forced to discontinue our operations, liquidate and/or seek reorganization under the U.S. bankruptcy code.

 

23
 

 

Consolidated Results of Operations

 

Three months March 31, 2018 compared to three months ended March 31, 2017

 

Overview

 

We reported net losses of approximately $1.4 million and $1.8 million for the three months ended March 31, 2018 and 2017, respectively.

 

Revenues

 

Revenues from continuing operations were approximately $1,278,000 and $619,000 during the three months ended March 31, 2018 and 2017, respectively, representing an increase of $659,000 or 106%. Increases resulted primarily from real estate lot revenues which were partially offset by the impact of the decline in the value of the Argentine peso vis-à-vis the U.S. dollar in the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

 

Gross Profit

 

We generated a gross profit of approximately $702,000 for the three months ended March 31, 2018 as compared to a gross profit of approximately $134,000 for the three months ended March 31, 2017, representing an increase of $568,000 or 424%. Cost of sales, which consists of real estate lots, raw materials, direct labor and indirect labor associated with our business activities, increased by approximately $91,000 from $485,000 for the three months ended March 31, 2017 to $576,000 for the three months ended March 31, 2018. Improvement in gross profit is primarily the result of the sale real estate lot sales in Argentina, which we recognized during 2018.

 

Selling and marketing expenses

 

Selling and marketing expenses were approximately $98,000 and $151,000 for the three months ended March 31, 2018 and 2017, respectively, representing a decrease of $53,000 in 2018, primarily resulting from a shareholder marketing event held in the first quarter of 2017.

 

General and administrative expenses

 

General and administrative expenses were approximately $1,952,000 and $1,783,000 for the three months ended March 31, 2018 and 2017, respectively, representing an increase of $169,000 or 9%. Increases in administrative support expenses and travel expenses were partially offset by the decline in the value of the Argentine peso vis-à-vis the U.S. dollar for the three months ended March 31, 2018 compared to the three months ended March 31, 2017.

 

24
 

 

Depreciation and amortization expense

 

Depreciation and amortization expense was approximately $7,000 and $22,000 during the three months ended March 31, 2018 and 2017, respectively, representing a decrease of $15,000 or 68%. It should be noted that an additional $37,000 and $28,000 of depreciation and amortization expense was charged to inventory during the three months ended March 31, 2018 and 2017, respectively. The decrease in depreciation expense is primarily related to an $8,000 true up to accumulated depreciation during the three months ended March 31, 2018, as well as the impact of the decline in the value of the Argentine peso vis-à-vis the U.S dollar, as most of our property and equipment is located in Argentina.

 

Interest expense, net

 

Interest expense, net was approximately $70,000 and $82,000 during the three months ended March 31, 2018 and 2017, respectively, representing a decrease of $12,000 or 15%. This decrease was a result of a decrease in the average outstanding principal balance of convertible debt outstanding during the period, as most of the debt issued during the three months ended March 31, 2018 was issued late in the quarter. Interest expense was also impacted by the decline in the value of the Argentine peso vis-à-vis the U.S. dollar in the three months ended March 31, 2018 compared to the three months ended March 31, 2017. This was partially offset by an increase in interest expense incurred by our Argentine subsidiaries as a result of higher average debt balances during the three months ended March 31, 2018 as compared to the three months ended March 31, 2017.

 

Liquidity and Capital Resources

 

We measure our liquidity a variety of ways, including the following:

 

   March 31,   December 31, 
   2018   2017 
Cash  $320,568   $358,303 
Working Capital (Deficiency)  $(1,122,163)  $(62,464)

 

Based upon our working capital deficiency as of March 31, 2018, we require additional equity and/or debt financing in order to sustain operations. These conditions raise substantial doubt about our ability to continue as a going concern.

 

We have relied primarily on debt and equity private placement offerings to third party independent, accredited investors to sustain operations. During the three months ended March 31, 2018, we received proceeds of approximately $1,220,000 from the issuance of convertible debt. We also received approximately $525,000 of proceeds from a bank loan.

 

The proceeds from these financing activities were used to fund our existing operating deficits, legal and accounting expenses associated with being a public company, capital expenditures associated with our real estate development projects, enhanced marketing efforts to increase revenues and the general working capital needs of the business.

 

25
 

 

Availability of Additional Funds

 

As a result of the above developments, we have been able to sustain operations. However, we will need to raise additional capital in order to meet our future liquidity needs for operating expenses, capital expenditures for the winery expansion and to further invest in our real estate development. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations.

 

Sources and Uses of Cash for the Three months ended March 31, 2018 and 2017

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities for the three months ended March 31, 2018 and 2017 amounted to approximately $1,192,000 and $2,060,000, respectively. During the three months ended March 31, 2018, the net cash used in operating activities was primarily attributable to the net loss of approximately $1,425,000, adjusted for approximately $194,000 of net non-cash expenses, and approximately $39,000 of cash provided by changes in the levels of operating assets and liabilities. During the three months ended March 31, 2017, the net cash used in operating activities was primarily attributable to the net loss of approximately $1,811,000 adjusted for approximately $210,000 of net non-cash expenses, partially offset by the gain on the sale of investment in a subsidiary of $(199,200) and approximately $260,000 of cash used by changes in the levels of operating assets and liabilities.

 

Net Cash (Used in) Provided by Investing Activities

 

Net cash (used in) provided by investing activities for the three months ended March 31, 2018 and 2017 amounted to approximately ($234,000) and $100,000, respectively. Cash used in investing activities during the three months ended March 31, 2018 was resulted entirely from the purchase of property and equipment. Cash provided by investing activities during the three months ended March 31, 2017 consisted of $199,200 proceeds from the sale of our investment in a subsidiary, offset by approximately $100,000 cash used for the purchase of property and equipment during the period.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities for the three months ended March 31, 2018 and 2017 amounted to approximately $1,719,000 and $2,056,000, respectively. For the three months ended March 31, 2018, the net cash provided by financing activities resulted primarily from approximately $1,220,000 of proceeds from convertible debt obligations and approximately $525,000 of proceeds from the issuance of loans payable. For the three months ended March 31, 2017, the net cash provided by financing activities resulted primarily from the offering of equity securities for net proceeds of approximately $326,000 and new borrowings of approximately $1,777,000, less repayments of approximately $47,000.

 

26
 

 

Going Concern and Management’s Liquidity Plans

 

The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As discussed in Note 2 to the accompanying condensed consolidated financial statements, we have not achieved a sufficient level of revenues to support our business and development activities and have suffered substantial recurring losses from operations since our inception, which conditions raise substantial doubt that we will be able to continue operations as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

 

Based on current cash on hand and subsequent activity as described herein, we may not have sufficient funds to operate our business operations for the next twelve months. While we are exploring opportunities with third parties and related parties to provide some or all of the capital we need over the short and long terms, we have not entered into any external agreement to provide us with the necessary capital. Historically, the Company has been successful in raising funds to support our capital needs. If we are unable to obtain additional financing on a timely basis, we may have to delay vendor payments and/or initiate cost reductions, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue our operations, liquidate and/or seek reorganization under the U.S. bankruptcy code. As a result, our auditors have issued a going concern opinion in conjunction with their audits of our December 31, 2017 and 2016 consolidated financial statements.

 

Off-Balance Sheet Arrangements

 

None.

 

Contractual Obligations

 

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

 

Critical Accounting Policies and Estimates

 

Revenue Recognition

 

On January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets. We adopted ASC Topic 606 for all applicable contracts using the modified retrospective method, which requires a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC Topic 606 did not have a material impact on our consolidated financial statements as of the date of adoption, and therefore a cumulative-effect adjustment was not required.

 

27
 

 

We earn revenues from the real estate lot sales and sale of food and wine as well as hospitality, food & beverage, and other related services. We recognize revenue when goods or services are transferred to customers in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, we perform the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation.

 

The following table summarizes the revenue recognized in our condensed consolidated statements of operations:

 

   For The Three Months Ended 
   March 31, 
   2018   2017 
         
Real estate sales  $799,854   $- 
Hotel room and events   223,568    263,949 
Restaurants   90,097    90,269 
Winemaking   139,396    222,828 
Golf, tennis and other   25,008    41,491 
   $1,277,923   $618,537 

 

Revenue from real estate lot sales is recorded when the lot is deeded and legal ownership of the lot is transferred to the customer. Revenue from the sale of food, wine and agricultural products is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered and the performance obligation has been satisfied.

 

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

 

During the three months ended March 31, 2018 we recognized approximately $800,000 of revenues related to the sale of real estate lots which were included in deferred revenues as of December 31, 2017. For the three months ended March 31, 2018, we did not recognize any revenue related to performance obligations satisfied in previous periods. Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. We have elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

 

As of March 31, 2018 and December 31, 2017, we had deferred revenue of $837,937 and $1,690,224, respectively, associated with real estate lot sale deposits, and $12,875 and $0, respectively, related to advance deposits for wine barrel and agricultural products, and we had d $46,567 and $42,440, respectively, of deferred revenue related to hotel deposits. Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.

 

There are no other material changes from the critical accounting policies, estimates and new accounting pronouncements set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K filed with the SEC on March 30, 2018. Please refer to that document for disclosures regarding the critical accounting policies related to our business.

 

New Accounting Pronouncements

 

We have implemented all new accounting standards that are in effect and may impact our condensed consolidated financial statements and we do not believe that there are any other new accounting standards that have been issued that might have a material impact on our financial position or results of operations.

 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 — Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 was revised in July 2015 to be effective for interim periods beginning on or after December 15, 2017 and should be applied on a transitional basis either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In 2016, FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20). These new standards became effective for on January 1, 2018 and were adopted using the modified retrospective method. The adoption of ASC Topic 606 did not have a material impact on our condensed consolidated financial statements as of the date of adoption, and therefore a cumulative-effect adjustment was not required.

 

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In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)” which provides guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity in practice. The ASU is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of ASU 2016-15 did not have a material effect on our condensed consolidated financial statements and related disclosures.

 

On February 22, 2017, the FASB issued ASU 2017-05, ‘Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)”, which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in substance real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The adoption of the provisions of ASU 2017-05 did not have a material impact on our condensed consolidated financial statements and related disclosures.

 

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718); Scope of Modification Accounting. The amendments in this ASU provide guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. If the value, vesting conditions or classification of the award changes, modification accounting will apply. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2017-09 did not have a material impact on our condensed consolidated financial statements and related disclosures.

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

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

 

Item 4: Controls and Procedures

 

Disclosure Controls and Procedures

 

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of March 31, 2018, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2018.

 

Changes in Internal Control over Financial Reporting

 

During the three months ended March 31, 2018, there were no changes in our internal controls over financial reporting, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

29
 

 

Inherent Limitations of Controls

 

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

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time AWLD and its subsidiaries and affiliates are subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by its insurance coverage, and even if they are, if claims against AWLD and its subsidiaries are successful, they may exceed the limits of applicable insurance coverage

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 30, 2018.

 

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

 

Issuances of Shares, Options and Warrants

 

From February 2, 2018 through March 22, 2018, the Company sold convertible promissory notes (the “Convertible Notes”) in the amount of $1,219,704 to accredited investors. The Convertible Notes have a 90-day maturity, bear interest at 8% per annum and are convertible into the Company’s common stock 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. The terms of the Convertible Notes resulted in a contingent beneficial conversion feature which will be recognized when the private placement offering commences and the contingency is resolved. For these sales of securities, no general solicitation was used and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D will be filed shortly after the filing of this Quarterly Report on Form 10-Q

 

On February 12, 2018, the Company granted options to purchase of 1,304,328 shares of common stock at an exercise price of $0.77 to certain employees under the 2016 Stock Option Plan. For these sales of securities, no general solicitation was used and the Company relied on the exemption from registration available under Section 4(a)(2).

 

During March 2018, the Company issued 116,284 shares of common stock at $0.70 per share in settlement of its matching obligations for the year ended December 31, 2017 under the Company’s 401(k) profit sharing plan. For these sales of securities, no general solicitation was used and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering.

 

Between April 2 and April 26, 2018, the Company sold additional Convertible Notes in the amount of $1,087,326 to accredited investors. The Convertible Notes have a 90-day maturity, bear interest at 8% per annum and are convertible into the Company’s common stock 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. The terms of the Convertible Notes resulted in a contingent beneficial conversion feature which will be recognized when the private placement offering commences and the contingency is resolved. For these sales of securities, no general solicitation was used and the Company relied on the exemption from registration available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated under the Securities Act with respect to transactions by an issuer not involving any public offering. A Form D will be filed shortly after the filing of this Quarterly Report on Form 10-Q.

 

Other than as set forth herein or in the Company’s current reports on Form 8-K, there have not been any sales of unregistered securities.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine and Safety Disclosure

 

Not applicable.

 

Item 5. Other Information

 

None.

 

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Item 6. Exhibits

 

The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

 

Exhibit   Description
     
2.1   Stock Purchase Agreement between the Company and China Concentric Capital Group, Inc., dated December 20, 2016(2)
2.2   First Amendment to the Stock Purchase Agreement between the Company and China Concentric Capital Group, Inc., dated January 17, 2016(2)
2.3   Escrow Agreement between the Company, China Concentric Capital Group, Inc., and J.M. Walker & Associates, dated December 16, 2016(2)
2.4   First Amendment to the Escrow Agreement between the Company, China Concentric Capital Group, Inc., and J.M. Walker & Associates, dated January 17, 2017(2)
3.1   Amended and Restated Certificate of Incorporation filed September 30, 2013(1)
3.2   Amended and Restated Bylaws(1)
4.1   Amended and Restated Certificate of Designation of the Series A Preferred filed September 30, 2013(1)
4.2   Amendment No. 1 to the Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock, dated February 28, 2017(3)
4.3   Certificate of Designation of Series B Convertible Preferred Stock, dated February 28, 2017(3)
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
32   Certification of Chief Financial Officer pursuant to 18 U.S. C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act**
101.INS   XBRL Instance Document*
101.SCH   XBRL Taxonomy Extension Schema Document*
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   XBRL Taxonomy Extension Label Linkbase Document*
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document*

 

(1) Incorporated by reference from the Company’s Registration of Securities Pursuant to Section 12(g) on Form 10 dated May 14, 2014.
(2) Incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 31, 2017.
(3) Incorporated by reference from the Company’s Current Report on Form 8-K, filed on March 2, 2017.
* Filed herewith.
** Furnished and not filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 15, 2018 ALGODON WINES & LUXURY DEVELOPMENT GROUP, INC.
     
  By: /s/ Scott L. Mathis
    Scott L. Mathis
    Chief Executive Officer
     
  By: /s/ Maria Echevarria
    Maria Echevarria
    Chief Financial Officer and Chief Operating Officer

 

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EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

I, Scott L. Mathis, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Algodon Wines & Luxury Development Group, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

May 15, 2018   /s/ Scott L. Mathis
  Name: Scott L. Mathis
  Title: Chief Executive Officer
    (Principal Executive Officer)

 

 
 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

I, Maria Echevarria, certify that:

 

1.I have reviewed this quarterly report on Form 10-Q of Algodon Wines & Luxury Development Group, Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

May 15, 2018   /s/ Maria Echevarria
  Name: Maria I. Echevarria
  Title: Chief Financial Officer
    (Principal Executive Officer)

 

 
 

 

EX-32 4 ex32.htm

 

Exhibit 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Algodon Wines & Luxury Development Group, Inc. (the “Company’s Quarterly Report”) on Form 10-Q for the period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Scott L. Mathis, as Chief Executive Officer and principal executive officer and Maria I. Echevarria, as Chief Financial Officer and principal financial officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge and belief, that:

 

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2.Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

/s/ Scott L. Mathis  
Scott L. Mathis  
Chief Executive Officer and Principal Executive Officer  
   
Dated: May 15, 2018  
   
/s/ Maria I. Echevarria  
Maria I. Echevarria  
Chief Financial Officer and Principal Financial Officer  
   
Dated: May 15, 2018  

 

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

 
 
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Document And Entity Information - shares
3 Months Ended
Mar. 31, 2018
May 14, 2018
Document And Entity Information [Abstract]    
Entity Registrant Name Algodon Wines & Luxury Development Group, Inc.  
Entity Central Index Key 0001559998  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   43,179,419
Trading Symbol AWLD  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
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Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Current Assets    
Cash $ 320,568 $ 358,303
Accounts receivable, net of allowance for doubtful accounts of $3,163 and $3,421 at March 31, 2018 and December 31, 2017, respectively 231,142 188,067
Accounts receivable - related parties, net of allowance for doubtful accounts of $514,087 at each of March 31, 2018 and December 31, 2017 409,290 851,016
Advances and loans to employees 268,757 284,496
Inventory 1,433,712 1,388,666
Real estate lots held for sale 53,267 151,906
Prepaid expenses and other current assets 140,917 159,465
Total Current Assets 2,857,653 3,381,919
Property and equipment, net 4,455,735 4,532,890
Prepaid foreign taxes, net of reserve of $364,719 and $392,593 at March 31, 2018 and December 31, 2017, respectively 390,458 342,312
Investment - related parties 24,773 26,401
Deposits 61,284 61,284
Total Assets 7,789,903 8,344,806
Current Liabilities    
Accounts payable 506,199 415,318
Accrued expenses, current portion 966,295 1,000,521
Deferred revenue 897,379 1,732,664
Loans payable, current portion, net of debt discount 351,610 256,724
Convertible debt obligations 1,239,704 20,000
Current portion of other liabilities 18,629 19,156
Total Current Liabilities 3,979,816 3,444,383
Accrued expenses, non-current portion 221,720 247,515
Other liabilities, non-current portion 9,996 11,474
Loans payable, non-current portion, net of debt discount 1,017,971 634,930
Total Liabilities 5,229,503 4,338,302
Commitments and Contingencies
Series B convertible redeemable preferred stock, par value $0.01 per share, 902,670 shares authorized, 902,670 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively. Liquidation preference of $9,465,054 at March 31, 2018 9,026,824 9,026,824
Stockholders' Deficiency    
Common stock, par value $0.01 per share; 80,000,000 shares authorized; 43,183,830 and 43,067,546 shares issued and 43,179,419 and 43,063,135 shares outstanding as of March 31, 2018 and December 31, 2017, respectively. 431,837 430,674
Additional paid-in capital 81,166,423 80,902,967
Accumulated other comprehensive loss (11,081,419) (10,795,810)
Accumulated deficit (76,969,195) (75,544,081)
Treasury stock, at cost, 4,411 shares at March 31, 2018 and December 31, 2017 (14,070) (14,070)
Total Stockholders' Deficiency (6,466,424) (5,020,320)
Total Liabilities, Temporary Equity and Stockholders' Deficiency 7,789,903 8,344,806
Series A Convertible Preferred Stock [Member]    
Stockholders' Deficiency    
Preferred stock, 11,000,000 shares authorized: Series A convertible preferred stock, par value $0.01 per share; 10,097,330 shares authorized; no shares are available for issuance.
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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Allowance for doubtful accounts $ 3,163 $ 3,421
Income tax reserve $ 364,719 $ 392,593
Series B convertible redeemable preferred stock, par value $ 0.01 $ 0.01
Series B convertible redeemable preferred stock, shares authorized 902,670 902,670
Series B convertible redeemable preferred stock, shares issued 902,670 902,670
Series B convertible redeemable preferred stock, shares outstanding 902,670 902,670
Liquidation preference $ 9,465,054  
Preferred stock, par value $ 0.01  
Preferred stock, shares authorized 11,000,000  
Preferred stock, shares issued  
Preferred stock, shares outstanding  
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 80,000,000 80,000,000
Common stock, shares issued 43,183,830 43,067,546
Common stock, shares outstanding 43,179,419 43,063,135
Treasury stock, shares 4,411 4,411
Series A Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.01  
Preferred stock, shares authorized 10,097,330 10,097,330
Preferred stock, shares issued
Preferred stock, shares outstanding  
Related Party [Member]    
Allowance for doubtful accounts $ 514,087 $ 514,087
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Sales $ 1,277,923 $ 618,537
Cost of sales (575,962) (484,683)
Gross profit 701,961 133,854
Operating Expenses    
Selling and marketing 97,902 151,040
General and administrative 1,952,275 1,782,885
Depreciation and amortization 6,739 21,615
Total operating expenses 2,056,916 1,955,540
Loss from Operations (1,354,955) (1,821,686)
Other Expense (Income)    
Interest expense, net 70,159 81,856
Gain on sale of investment in subsidiary (199,200)
Total other expense (income) 70,159 (117,344)
Loss from Continuing Operations (1,425,114) (1,704,342)
Loss from Discontinued Operations (106,543)
Net Loss (1,425,114) (1,810,885)
Deemed dividend to preferred stockholders (155,791) (3,053)
Net Loss Attributable to Common Stockholders $ (1,580,905) $ (1,813,938)
Net loss per basic and diluted common share:    
Loss from continuing operations $ (0.04) $ (0.04)
Loss from discontinued operations
Net loss per common share $ (0.04) $ (0.04)
Weighted Average Number of Common Shares Outstanding:    
Basic and Diluted 43,086,927 42,935,629
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Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Net Loss $ (1,425,114) $ (1,810,885)
Other Comprehensive Loss    
Foreign currency translation adjustments (285,609) 200,259
Total Comprehensive Loss $ (1,710,723) $ (1,610,626)
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statement of Changes in Temporary Equity And Stockholders' Deficiency (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($)
Series B Convertible Redeemable Preferred Stock [Member]
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Other Comprehensive Loss [Member]
Accumulated Deficit [Member]
Total
Balance beginning at Dec. 31, 2017 $ 9,026,824 $ 430,674 $ (14,070) $ 80,902,967 $ (10,795,810) $ (75,544,081) $ (5,020,320)
Balance beginning, shares at Dec. 31, 2017 902,670 43,067,546 4,411        
Stock-based compensation: Common stock issued under 401(k) profit sharing plan $ 1,163 80,236 81,399
Stock-based compensation: Common stock issued under 401(k) profit sharing plan, shares 116,284        
Options and warrants 183,220 183,220
Net loss (1,425,114) (1,425,114)
Other comprehensive loss (285,609) (285,609)
Balance ending at Mar. 31, 2018 $ 9,026,824 $ 431,837 $ (14,070) $ 81,166,423 $ (11,081,419) $ (76,969,195) $ (6,466,424)
Balance ending, shares at Mar. 31, 2018 902,670 43,183,830 4,411        
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash Flows from Operating Activities    
Net loss $ (1,425,114) $ (1,810,885)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation: 401(k) stock 20,446 18,017
Stock-based compensation: Options and warrants 183,220 164,529
Net realized and unrealized investment losses 1,628 3,031
Depreciation and amortization 6,739 21,615
Amortization of debt discount 9,636
Provision for uncollectible assets (27,874) 2,000
Prepaid compensation amortization 750
Gain on sale of investment in subsidiary (199,200)
Decrease (increase) in assets:    
Accounts receivable 604,905 (11,713)
Inventory (26,706) (26,475)
Prepaid expenses and other current assets (42,932) 7,301
Increase (decrease) in liabilities:    
Accounts payable and accrued expenses 225,147 (125,780)
Deferred revenue (720,454) (104,776)
Other liabilities (527) 1,172
Total Adjustments 233,228 (249,529)
Net Cash Used in Operating Activities (1,191,886) (2,060,414)
Cash Flows from Investing Activities    
Purchase of property and equipment (233,544) (99,699)
Proceeds from sale of investment in subsidiary 199,200
Net Cash (Used in) Provided by Investing Activities (233,544) 99,501
Cash Flows from Financing Activities    
Proceeds from loans payable 525,000 517,243
Repayments of loans payable (26,053) (32,158)
Proceeds from convertible debt obligations 1,219,704 1,260,000
Repayments of debt obligations (15,000)
Proceeds from sale of Series B Preferred stock 285,000
Proceeds from common stock offering, net of issuance costs 40,500
Net Cash Provided by Financing Activities 1,718,651 2,055,585
Effect of Exchange Rate Changes on Cash (330,956) 86,226
Net (Decrease) Increase in Cash (37,735) 180,898
Cash - Beginning of Period 358,303 131,190
Cash - End of Period 320,568 312,088
Supplemental Disclosures of Cash Flow Information:    
Interest paid 45,786 42,897
Income taxes paid
Non-Cash Investing and Financing Activity    
Accrued stock based compensation converted to equity 81,399 73,868
Exchange of 8% notes for Series B preferred stock $ 1,267,324
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Cash Flows [Abstract]    
Exchange of notes interest percentage for Series B preferred stock 8.00% 8.00%
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Organization
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization

  1. ORGANIZATION

 

Through its wholly-owned subsidiaries, Algodon Wines & Luxury Development Group, Inc. (the “Company”, “Algodon Partners”, “AWLD”), a Delaware corporation that was incorporated on April 5, 1999, currently invests in, develops and operates international real estate projects. The Company’s wholly-owned subsidiaries are InvestProperty Group, LLC, Algodon Global Properties, LLC, and Algodon Europe, Ltd. Through its subsidiaries, the Company currently operates Algodon Mansion (“TAR”), a Buenos Aires-based luxury boutique hotel property and has redeveloped, expanded and repositioned an Argentine winery and golf resort property called Algodon Wine Estates (“AWE”) for subdivision of a portion of this property for residential development.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Going Concern and Management's Liquidity Plans
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern and Management's Liquidity Plans

  2. GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company incurred losses from continuing operations of $1,425,114 and $1,704,342 during the three months ended March 31, 2018 and 2017, respectively. The Company has an accumulated deficit of $76,969,195 at March 31, 2018. Cash used in operating activities was $1,191,886 and $2,060,414 during the three months ended March 31, 2018 and 2017, respectively. Based upon projected revenues and expenses, the Company believes that it may not have sufficient funds to operate for the next twelve months. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company needs to raise additional capital in order to continue to pursue its business objectives. The Company funded its operations during the three months ended March 31, 2018 and 2017 primarily through the proceeds from convertible debt obligations of $1,219,704 and $1,260,000, respectively, proceeds from loans payable of $525,000 and $517,243, respectively, proceeds from the sale of Series B Preferred stock of $0 and $285,000, respectively, and proceeds from the sale of common stock for net proceeds of $0 and $40,500, respectively. The Company repaid loans payable of $26,053 and $32,158 during the three months ended March 31, 2018 and 2017, respectively.

 

If the Company is not able to obtain additional sources of capital, it may not have sufficient funds to continue to operate the business for twelve months from the date these financial statements are issued. Historically, the Company has been successful in raising funds to support its capital needs. Management believes that it will be successful in obtaining additional financing; however, no assurance can be provided that the Company will be able to do so. Further, there is no assurance that these funds will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company may need to curtail its operations and implement a plan to extend payables and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Such a plan could have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations, liquidate and/or seek reorganization in bankruptcy. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2018, and for the three months ended March 31, 2018 and 2017. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2018. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the Company’s audited consolidated financial statements.

 

Use of Estimates

 

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, the Company must make estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company include the valuation of equity instruments, the useful lives of property and equipment and reserves associated with the realizability of certain assets.

 

Discontinued Operations

 

The Company accounted for its decision to close down its broker-dealer subsidiary as discontinued operations in accordance with the guidance provided in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, “Accounting for Impairment or Disposal of Long-Lived Assets,” and ASC Topic 205, “Presentation of Financial Statements,” which require that only a disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results shall be reported in the financial statements as discontinued operations. Accordingly, the results of operations for the broker dealer subsidiary during the periods presented are reclassified into separate line items in the statements of operations. There were no assets or liabilities of discontinued operations as of March 31, 2018 or December 31, 2017.

 

Segment Information

 

The Financial Accounting Standards Board (“FASB”) has established standards for reporting information on operating segments of an enterprise in interim and annual financial statements. The Company operates in one segment which is the business of real estate development in Argentina. The Company’s chief operating decision-maker reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

  

Foreign Currency Translation

 

The Company’s functional and reporting currency is the United States dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies (United States dollar, Argentine peso and British pound). Argentine assets and liabilities are translated into U.S. dollars using the exchange rate at the balance sheet date (20.109 and 18.593 for the Argentine peso and 0.7135 and 0.7400 for the British pound at March 31, 2018 and December 31, 2017, respectively), and revenue and expense accounts are translated using a weighted average exchange rate for the period then ended (19.6682 and 15.6680 for the Argentine peso and 0.7186 and 0.8076 for the British pound for the three months ended March 31, 2018 and 2017, respectively). Resulting translation adjustments are made directly to accumulated other comprehensive income. The Company engages in foreign currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies.

 

There has been a steady devaluation of the Argentine peso relative to the United States dollar in recent years, primarily due to inflation. A highly inflationary economy is defined as an economy with a cumulative inflation rate of approximately 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the functional currency of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. As of March 31, 2018, the Argentine economy has not been designated as highly-inflationary for accounting purposes. The Company is closely monitoring any developments in Argentina and is evaluating the potential impact on its consolidated financial statements if the Argentine economy is deemed to be highly inflationary.

 

Property and Equipment

 

Investments in property and equipment are recorded at cost. These assets are depreciated using the straight-line method over their estimated useful lives. Most of the Company’s assets are located in Argentina and are subject to variation as a result of foreign currency translation.

 

The Company capitalizes internal vineyard improvement costs when developing new vineyards or replacing or improving existing vineyards. These costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. Expenditures for repairs and maintenance are charged to operating expense as incurred. The cost of properties sold or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts at the time of disposal and resulting gains and losses are included as a component of operating income. Real estate development consists of costs incurred to ready the land for sale, including primarily costs of infrastructure as well as master plan development and associated professional fees. Such costs are allocated to individual lots proportionately based on square meters and those allocated costs will be derecognized upon the sale of individual lots. Given that they are not currently in service, capitalized real estate development costs are currently not being depreciated. Land is an inexhaustible asset and is not depreciated.

  

Stock-Based Compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The Company accounts for forfeitures as they occur.

 

Concentrations

 

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $106,455 and $146,952 at March 31, 2018 and December 31, 2017, respectively, of which $57,852 and $92,168, respectively, represents cash held in Argentine bank accounts.

 

Comprehensive Income (Loss)

 

Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The guidance requires other comprehensive income (loss) to include foreign currency translation adjustments.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets. The Company adopted ASC Topic 606 for all applicable contracts using the modified retrospective method, requires a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial statements as of the date of adoption, and therefore a cumulative-effect adjustment was not required.

  

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

 

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

 

    For The Three Months Ended  
    March 31,  
    2018     2017  
             
Real estate sales   $ 799,854     $ -  
Hotel room and events     223,568       263,949  
Restaurants     90,097       90,269  
Winemaking     139,396       222,828  
Golf, tennis and other     25,008       41,491  
    $ 1,277,923     $ 618,537  

 

Revenue from real estate lot sales is recorded when the lot is deeded and legal ownership of the lot is transferred to the customer. Revenue from the sale of food, wine and agricultural products is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered and the performance obligation has been satisfied.

 

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

 

During the three months ended March 31, 2018 the Company recognized approximately $800,000 of revenues related to the sale of real estate lots which was included in deferred revenues as of December 31, 2017. For the three months ended March 31, 2018, the Company did not recognize any revenue related to performance obligations satisfied in previous periods. Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

 

As of March 31, 2018 and December 31, 2017, the Company had deferred revenue of $837,937 and $1,690,224, respectively, associated with real estate lot sale deposits, $12,875 and $0, respectively, related to advance deposits for wine barrel and agricultural products and had $46,567 and $42,440, respectively, of deferred revenue related to hotel deposits. Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.

 

Net Loss per Common Share

 

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

  

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

 

    March 31,  
    2018     2017  
             
Options     10,312,926       7,979,265  
Warrants     1,389,179       1,903,730  
Series B convertible preferred stock     9,026,700       1,552,000  
Total potentially dilutive shares (1)     20,728,805       11,434,995  

 

  (1) In addition, $1,239,704 of convertible debt is convertible into common stock at a 10% discount to the price used for the sale of the of the Company’s common stock in a future private placement offering.

   

New Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02 will have on the Company’s consolidated financial statements and related disclosures. 

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)” which provides guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity in practice. The ASU is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of ASU 2016-15 did not have a material effect on the Company’s condensed consolidated financial statements and related disclosures.

 

On February 22, 2017, the FASB issued ASU 2017-05, ‘Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)”, which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in substance real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The adoption of the provisions of ASU 2017-05 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718); Scope of Modification Accounting. The amendments in this ASU provide guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. If the value, vesting conditions or classification of the award changes, modification accounting will apply. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2017-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

The Company has implemented all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

  4. DISCONTINUED OPERATIONS

 

On November 29, 2016, the Company’s Board of Directors determined that it was in the Company’s best interest to close down its broker-dealer operations on December 31, 2016. On February 21, 2017, the Company’s request to FINRA for Broker-Dealer Withdrawal became effective.

 

Results of Discontinued Operations

 

There were no results of discontinued operations during the three months ended March 31, 2018. Results of discontinued operations during the three months ended March 31, 2017 are as follows.

 

    For The Three Months Ended  
    March 31,  
    2018     2017  
             
Revenues   $ -     $ -  
Gross profit   $ -     $ -  
Operating expenses   $ -     $ (106,558 )
Interest income (expense)   $ -     $ 15  
Loss from discontinued operations   $ -     $ (106,543 )

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Inventory
3 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Inventory

  5. INVENTORY

 

Inventory at March 31, 2018 and December 31, 2017 is comprised of the following:

 

    March 31,     December 31,  
    2018     2017  
             
Vineyard in process   $ 433,513     $ 349,458  
Wine in process     832,821       865,762  
Finished wine     38,529       63,964  
Other     128,849       109,482  
    $ 1,433,712     $ 1,388,666  

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Investments and Fair Value of Financial Instruments

  6. INVESTMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company holds certain affiliate warrants earned by the broker-dealer subsidiary prior to its discontinuation of operations, which are marked to market at each reporting date using the Black-Scholes option pricing model. The Company recorded unrealized losses on the affiliate warrants of $1,628 and $3,031 during the quarter ended March 31, 2018 and 2017, respectively, which are included in revenues on the accompanying condensed consolidated statements of operations

 

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

 

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

 

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

 

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

  

Investments – Related Parties at Fair Value

 

As of March 31, 2018   Level 1     Level 2     Level 3     Total  
                         
Warrants- Affiliates   $ -     $ -     $ 24,773     $ 24,773  
                                 

 

As of December 31, 2017   Level 1     Level 2     Level 3     Total  
                                 
Warrants- Affiliates   $ -     $ -     $ 26,401     $ 26,401  

 

A reconciliation of Level 3 assets is as follows:

 

    Warrants  
       
Balance - December 31, 2017   $ 26,401  
Unrealized loss     (1,628 )
Balance - March 31, 2018   $ 24,773  

 

    March 31,     December 31,  
    2018     2017  
                 
Accumulated unrealized (losses) gains related to investments at fair value   $ (42,075 )   $ (40,447 )

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accrued Expenses
3 Months Ended
Mar. 31, 2018
Accrued Liabilities [Abstract]  
Accrued Expenses

7.       ACCRUED EXPENSES

 

Accrued expenses are comprised of the following:

 

    March 31,
2018
    December 31,
2017
 
             
Accrued compensation and payroll taxes   $ 444,337     $ 463,604  
Accrued taxes payable     40,279       63,550  
Accrued interest     271,813       255,481  
Other accrued expenses     209,866       217,886  
Accrued expenses, current     966,295       1,000,521  
Accrued payroll tax obligations, non-current     221,720       247,515  
Total accrued expenses   $ 1,188,015     $ 1,248,036  

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans Payable
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Loans Payable

8.       LOANS PAYABLE

 

 On March 31, 2017, the Company received a bank loan in the amount of $519,156 (ARS $8,000,000) (the “2017 Loan”). The 2017 Loan bears interest at 24.18% per annum and is due on March 1, 2021. Principal and interest will be paid in forty-two monthly installments beginning on October 1, 2017 and ending on March 1, 2021. The Company incurred interest expense of $26,508 on this loan during the three months ended March 31, 2018.

 

On August 19, 2017, the Company purchased 845 hectares of land adjacent to its existing property at AWE. The Company paid $100,000 at the date of purchase and executed a note payable in the amount of $600,000 (the “Land Loan”) with a stated interest rate of 0% and with quarterly payments of $50,000 beginning on December 18, 2017 and ending August 18, 2021. At the date of purchase, the Company took possession of the property, with full use and access, but will not receive the deed to the property until after $400,000 of the purchase price has been paid. The Company imputed interest on the note at 7% per annum and recorded a discounted note balance of $517,390 on August 19, 2017. Amortization of the note discount in the amount of $9,636 for the three months ended March 31, 2018 is recorded as interest expense on the accompanying condensed consolidated statements of operations. The balance on the note was $489,243, net of debt discount of $60,757 on March 31, 2018, of which $121,274 (net of discount of $28,726) is included in loans payable, net, current and $367,968 (net of discount of $32,032) is included in loans payable, net, non-current in the accompanying condensed consolidated balance sheets.

 

On January 25, 2018 the Company received a bank loan in the amount of $525,000 (the “2018 Loan”), denominated in U.S. dollars. The 2018 Loan bears interest at 6.75% per annum and is due on January 25, 2023. Principal and interest will be paid in 60 equal monthly installments of $10,311, beginning on February 23, 2018. The Company incurred interest expense of $5,769 on this loan during the three months ended March 31, 2018. As of March 31, 2018, accrued interest of $2,953 remained outstanding.

 

The Company’s loans payable are summarized below:

 

    March 31, 2018     December 31, 2017  
    Gross Principal Amount     Debt Discount     Loans Payable,
Net of Debt Discount
    Gross Principal Amount     Debt Discount     Loans Payable,
Net of Debt Discount
 
                                     
2018 Loan   $ 517,602     $ -     $ 517,602     $ -     $ -     $ -  
2017 Loan     362,737       -     $ 362,737       412,047       -     $ 412,047  
Land Loan     550,000       (60,758 )   $ 489,242       550,000       (70,393 )   $ 479,607  
Total Loans Payable     1,430,339       (60,758 )     1,369,581       962,047       (70,393 )     891,654  
Less: current portion     380,336       (28,726 )     351,610       287,838       (31,114 )     256,724  
Loans Payable, non-current   $ 1,050,003     $ (32,032 )   $ 1,017,971     $ 674,209     $ (39,279 )   $ 634,930  

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Debt Obligations
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Convertible Debt Obligations

9.       CONVERTIBLE DEBT OBLIGATIONS

 

During an offering that ended on September 30, 2010, the Company issued convertible notes with an interest rate of 8% and an amended maturity date of March 31, 2011 (the “2010 Debt Obligations”). During the three months ended March 31, 2018 and 2017, the Company incurred interest expense of $9,153 and $8,849 on the 2010 Debt Obligations. As of December 31, 2017, the entire principal balance owed on the 2010 Debt Obligations has been repaid, however, accrued interest of $264,635 and $255,481 remained outstanding as of March 31, 2018, and December 31, 2017, respectively. Accrued interest on the 2010 Debt Obligations is not convertible.

 

On December 31, 2017, the Company sold a convertible promissory note in the amount of $20,000 to an accredited investor. From February 2, 2018 through March 22, 2018, the Company sold additional convertible promissory notes in the aggregate principal amount of $1,219,704 (together, the “Convertible Notes”). The Convertible Notes mature 90 days from the date of issuance, bear interest at 8% per annum and are convertible into the Company’s common stock 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. The terms of the conversion option resulted in a contingent beneficial conversion feature which will be recognized when the private placement offering commences and the contingency is resolved. The Company incurred interest expense of $4,225 on this loan during the three months ended March 31, 2018.

 

The Company’s debt obligations are summarized below:

 

    March 31, 2018     December 31, 2017  
    Principal     Interest [1]     Total     Principal     Interest [1]     Total  
                                     
Debt Obligations   $ -     $ 264,635     $ 264,635     $ -     $ 255,481     $ 255,481  
Convertible Debt     1,239,704       4,225       1,243,929       20,000       -       20,000  
    $ 1,239,704     $ 268,860     $ 1,508,564     $ 20,000     $ 255,481     $ 275,481  

 

  [1] Accrued interest is included as a component of accrued expenses on the accompanying condensed consolidated balance sheets.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions

10.       RELATED PARTY TRANSACTIONS

 

Assets

 

Accounts receivable – related parties of $409,290 and $851,016 at March 31, 2018 and December 31, 2017, respectively, represent the net realizable value of advances made to related, but independent, entities under common management, of which $184,000 and $724,591 respectively, represents amounts owed to the Company in connection with expense sharing agreements as described below.

 

Investments

 

See Note 6 – Investments and Fair Value of Financial Instruments, for information related to investments in related parties.

 

Expense Sharing

 

On April 1, 2010, the Company entered into an agreement with a related entity, of which AWLD’s CEO is Chairman and Chief Executive Officer and AWLD’s CFO is an executive officer, to share expenses such as office space, support staff and other operating expenses. The Company is entitled to receive reimbursement of $69,829 and $58,683 for expenses incurred during the three months ended March 31, 2018 and 2017, respectively, pursuant to this agreement. The entity owed $184,000 and $724,591, respectively, as of March 31, 2018 and December 31, 2017, under this agreement. The amount owed to the Company is being repaid in installments through October 1, 2018, pursuant to a repayment schedule agreed upon by the Company and the related entity on March 24, 2017.

 

The Company also had an expense sharing agreement with a different related entity to share expenses such as office space and other clerical services, which was terminated on August 2017. The owners of more than 5% of that entity include (i) AWLD’s Chairman, and (ii) a more than 5% owner of AWLD. The Company was entitled to receive reimbursement of $3,990 for expenses during the three months ended March 31, 2017, pursuant to this agreement. The entity owed $396,116 to the Company under the expense sharing agreement as of March 31, 2018 and December 31, 2017, of which the entire balance is deemed unrecoverable and reserved.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Benefit Contribution Plan
3 Months Ended
Mar. 31, 2018
Retirement Benefits [Abstract]  
Benefit Contribution Plan

11.       BENEFIT CONTRIBUTION PLAN

 

The Company sponsors a 401(k) profit-sharing plan (“401(k) Plan”) that covers substantially all of its employees in the United States. The 401(k) Plan provides for a discretionary annual contribution, which is allocated in proportion to compensation. In addition, each participant may elect to contribute to the 401(k) Plan by way of a salary deduction. A participant is always fully vested in their account, including the Company’s contribution. For the three months ended March 31, 2018 and 2017, the Company recorded a charge associated with its contribution of $20,446 and $18,017, respectively. This charge has been included as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company issues shares of its common stock to settle prior year’s obligations based on the fair market value of its common stock on the date the shares are issued (shares were issued at $0.70 and $2.00 per share for the three months ended March 31, 2018 and 2017, respectively).

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity and Stockholders’ Deficiency
3 Months Ended
Mar. 31, 2018
Equity [Abstract]  
Temporary Equity And Stockholders’ Deficiency

12.       TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY

 

Series B Preferred Stock

 

The Series B stockholders are entitled to cumulative cash dividends at an annual rate of 8% of the Series B liquidation value (equal to face value of $10 per share), as defined, payable when, as and if declared by the Board of Directors. Cumulative dividends earned by the Series B stockholders were $155,791 and $3,053 for the three months ended March 31, 2018 and 2017, respectively. Cumulative unpaid dividends in arrears related to the Series B totaled $438,354 and $284,564 as of March 31, 2018 and December 31, 2017, respectively.

 

Common Stock

 

During March 2018, the Company issued 116,284 shares of common stock at $0.70 per share to settle its 2017 obligation, (an aggregate of $81,399) representing the Company’s 401(k) matching contributions) to the Company’s 401(k) profit-sharing plan.

  

Accumulated Other Comprehensive Income (Loss)

 

For three months ended March 31, 2018 and 2017, the Company recorded $(285,609) and $200,259, respectively, of foreign currency translation adjustment as accumulated other comprehensive income (loss).

 

Warrants

 

A summary of warrants activity during the three months ended March 31, 2018 is presented below:

 

    Number of Warrants     Weighted Average Exercise Price     Weighted Average Remaining Life in Years     Intrinsic Value  
                         
Outstanding, December 31, 2017     1,465,296       2.17                  
Issued     -       -                  
Exercised     -       -                  
Expired     (76,117 )     2.30                  
Outstanding, March 31, 2018     1,389,179     $ 2.17       2.2     $ -  
                                 
Exercisable, March 31, 2018     1,389,179     $ 2.17       2.2     $ -  

 

A summary of outstanding and exercisable warrants as of March 31, 2018 is presented below:

 

Warrants Outstanding     Warrants Exercisable  
Exercise Price     Exercisable Into   Outstanding Number of Warrants     Weighted Average Remaining Life in Years     Exercisable Number of Warrants  
                         
$ 2.00     Common Stock     741,879       2.8       741,879  
$ 2.30     Common Stock     458,993       1.1       458,993  
$ 2.50     Common Stock     188,307       3.0       188,307  
        Total     1,389,179               1,389,179  

  

Stock Options

 

On February 14, 2018, the Company granted five-year options for the purchase of 1,304,328 shares of the Company’s common stock under the 2016 Plan, which options for the purchase of common stock were granted to certain employees of the Company. The options had an exercise price of $0.77 per share and vest 25% at the first anniversary of date of grant, with the remaining shares vesting ratably on a quarterly basis over the following three years. The options had an aggregate grant date fair value of $610,985, which will be recognized ratably over the vesting period. The company has computed the fair value of options granted using the Black-Scholes option pricing model. Assumptions used in applying the Black-Scholes option pricing model are as follows:, risk free interest rate of 2.56%, expected term of 5 years, expected volatility of 43.5%, and expected dividends of 0.00%. There were no stock options granted during the three months ended March 31, 2017.

 

During the three months ended March 31, 2018 and 2017, the Company recorded stock-based compensation expense of $183,220 and $163,424, respectively, related to stock option grants, which is reflected as general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2018, there was $1,900,595 of unrecognized stock-based compensation expense related to stock option grants that will be amortized over a weighted average period of 2.5 years, of which $515,369 of unrecognized expense is subject to non-employee mark-to-market adjustments.

 

A summary of options activity during the months ended March 31, 2018 and December 31, 2017 is presented below:

 

          Weighted     Weighted        
          Average     Average        
    Number of     Exercise     Remaining     Intrinsic  
    Options     Price     Term (Yrs)     Value  
Outstanding, December 31, 2017     9,234,265     $ 2.18                  
Granted     1,304,328       0.77                  
Exercised     -       -                  
Expired     -       -                  
Forfeited     -       -                  
Outstanding, March 31, 2018     10,538,593     $ 2.01       2.3     $ -  
                                 
Exercisable, March 31, 2018     6,474,016     $ 2.40       1.3     $ -  

 

The following table presents information related to stock options at March 31, 2018:

 

Options Outstanding     Options Exercisable  
Exercise Price     Outstanding
Number of Options
    Weighted Average Remaining Life in Years     Exercisable Number of Options  
                     
$ 0.77       1,304,328       4.9       -  
$ 1.10       1,395,000       4.6       -  
$ 2.20       3,031,890       2.5       1,982,356  
$ 2.48       4,772,375       0.8       4,459,785  
$ 3.30       10,000       2.2       6,875  
$ 3.50       25,000       0.2       25,000  
          10,538,593       1.3       6,474,016  

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

13.       COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

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

 

Commitments

 

The Company leases office space in New York City under an operating lease which expires on August 31, 2020. Rent expense for this property was $56,892 and $51,781 for the three months ended March 31, 2018 and 2017, respectively, net of expense allocation to affiliates.

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events
3 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
Subsequent Events

14.       SUBSEQUENT EVENTS [OPEN]

 

Management has evaluated all subsequent events to determine if events or transactions occurring through the date the condensed consolidated financial statements were issued, require adjustment to or disclosure in the accompanying condensed consolidated financial statements.

 

Convertible Debt

 

From April 2 through April 26, 2018, the Company sold additional convertible promissory notes in the aggregate principal amount of $1,087,326. The convertible promissory notes mature 90 days from the date of issuance, bear interest at 8% per annum and are convertible into the Company’s common stock 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.

 

Foreign Currency Exchange Rates

 

The Argentine peso to United States dollar exchange rate was 20.241, 20.109 and 18.593 at May 11, March 31, 2018 and December 31, 2017, respectively.

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2018, and for the three months ended March 31, 2018 and 2017. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2018. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the Company’s audited consolidated financial statements.

Use of Estimates

Use of Estimates

 

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, the Company must make estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company include the valuation of equity instruments, the useful lives of property and equipment and reserves associated with the realizability of certain assets.

Discontinued Operations

Discontinued Operations

 

The Company accounted for its decision to close down its broker-dealer subsidiary as discontinued operations in accordance with the guidance provided in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, “Accounting for Impairment or Disposal of Long-Lived Assets,” and ASC Topic 205, “Presentation of Financial Statements,” which require that only a disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results shall be reported in the financial statements as discontinued operations. Accordingly, the results of operations for the broker dealer subsidiary during the periods presented are reclassified into separate line items in the statements of operations. There were no assets or liabilities of discontinued operations as of March 31, 2018 or December 31, 2017.

Segment Information

Segment Information

 

The Financial Accounting Standards Board (“FASB”) has established standards for reporting information on operating segments of an enterprise in interim and annual financial statements. The Company operates in one segment which is the business of real estate development in Argentina. The Company’s chief operating decision-maker reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

Foreign Currency Translation

Foreign Currency Translation

 

The Company’s functional and reporting currency is the United States dollar. The functional currencies of the Company’s operating subsidiaries are their local currencies (United States dollar, Argentine peso and British pound). Argentine assets and liabilities are translated into U.S. dollars using the exchange rate at the balance sheet date (20.109 and 18.593 for the Argentine peso and 0.7135 and 0.7400 for the British pound at March 31, 2018 and December 31, 2017, respectively), and revenue and expense accounts are translated using a weighted average exchange rate for the period then ended (19.6682 and 15.6680 for the Argentine peso and 0.7186 and 0.8076 for the British pound for the three months ended March 31, 2018 and 2017, respectively). Resulting translation adjustments are made directly to accumulated other comprehensive income. The Company engages in foreign currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies.

 

There has been a steady devaluation of the Argentine peso relative to the United States dollar in recent years, primarily due to inflation. A highly inflationary economy is defined as an economy with a cumulative inflation rate of approximately 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the functional currency of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. As of March 31, 2018, the Argentine economy has not been designated as highly-inflationary for accounting purposes. The Company is closely monitoring any developments in Argentina and is evaluating the potential impact on its consolidated financial statements if the Argentine economy is deemed to be highly inflationary.

Property and Equipment

Property and Equipment

 

Investments in property and equipment are recorded at cost. These assets are depreciated using the straight-line method over their estimated useful lives. Most of the Company’s assets are located in Argentina and are subject to variation as a result of foreign currency translation.

 

The Company capitalizes internal vineyard improvement costs when developing new vineyards or replacing or improving existing vineyards. These costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. Expenditures for repairs and maintenance are charged to operating expense as incurred. The cost of properties sold or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts at the time of disposal and resulting gains and losses are included as a component of operating income. Real estate development consists of costs incurred to ready the land for sale, including primarily costs of infrastructure as well as master plan development and associated professional fees. Such costs are allocated to individual lots proportionately based on square meters and those allocated costs will be derecognized upon the sale of individual lots. Given that they are not currently in service, capitalized real estate development costs are currently not being depreciated. Land is an inexhaustible asset and is not depreciated.

Stock-based Compensation

Stock-Based Compensation

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The Company accounts for forfeitures as they occur.

Concentrations

Concentrations

 

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Argentina bank accounts. There were aggregate uninsured cash balances of $106,455 and $146,952 at March 31, 2018 and December 31, 2017, respectively, of which $57,852 and $92,168, respectively, represents cash held in Argentine bank accounts.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

 

Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The guidance requires other comprehensive income (loss) to include foreign currency translation adjustments.

Revenue Recognition

Revenue Recognition

 

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers. ASC Topic 606 provides a single comprehensive model to use in accounting for revenue arising from contracts with customers, and gains and losses arising from transfers of non-financial assets including sales of property and equipment, real estate, and intangible assets. The Company adopted ASC Topic 606 for all applicable contracts using the modified retrospective method, requires a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial statements as of the date of adoption, and therefore a cumulative-effect adjustment was not required.

  

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

 

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

 

    For The Three Months Ended  
    March 31,  
    2018     2017  
             
Real estate sales   $ 799,854     $ -  
Hotel room and events     223,568       263,949  
Restaurants     90,097       90,269  
Winemaking     139,396       222,828  
Golf, tennis and other     25,008       41,491  
    $ 1,277,923     $ 618,537  

 

Revenue from real estate lot sales is recorded when the lot is deeded and legal ownership of the lot is transferred to the customer. Revenue from the sale of food, wine and agricultural products is recorded when the customer obtains control of the goods purchased. Revenues from hospitality and other services are recognized as earned at the point in time that the related service is rendered and the performance obligation has been satisfied.

 

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

 

During the three months ended March 31, 2018 the Company recognized approximately $800,000 of revenues related to the sale of real estate lots which was included in deferred revenues as of December 31, 2017. For the three months ended March 31, 2018, the Company did not recognize any revenue related to performance obligations satisfied in previous periods. Contracts related to the sale of wine, agricultural products and hotel services have an original expected length of less than one year. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

 

As of March 31, 2018 and December 31, 2017, the Company had deferred revenue of $837,937 and $1,690,224, respectively, associated with real estate lot sale deposits, $12,875 and $0, respectively, related to advance deposits for wine barrel and agricultural products and had $46,567 and $42,440, respectively, of deferred revenue related to hotel deposits. Sales taxes and value added (“VAT”) taxes collected from customers and remitted to governmental authorities are presented on a net basis within revenues in the condensed consolidated statements of operations.

Net Loss Per Common Share

Net Loss per Common Share

 

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

  

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

 

    March 31,  
    2018     2017  
             
Options     10,312,926       7,979,265  
Warrants     1,389,179       1,903,730  
Series B convertible preferred stock     9,026,700       1,552,000  
Total potentially dilutive shares (1)     20,728,805       11,434,995  

 

  (1) In addition, $1,239,704 of convertible debt is convertible into common stock at a 10% discount to the price used for the sale of the of the Company’s common stock in a future private placement offering.

New Accounting Pronouncements

New Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact that the provisions of ASU 2016-02 will have on the Company’s consolidated financial statements and related disclosures. 

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)” which provides guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows in order to reduce diversity in practice. The ASU is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted. The adoption of ASU 2016-15 did not have a material effect on the Company’s condensed consolidated financial statements and related disclosures.

 

On February 22, 2017, the FASB issued ASU 2017-05, ‘Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20)”, which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in substance real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The adoption of the provisions of ASU 2017-05 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718); Scope of Modification Accounting. The amendments in this ASU provide guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. If the value, vesting conditions or classification of the award changes, modification accounting will apply. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2017-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

The Company has implemented all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.

 

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Schedule of Revenue Recognized Multiple-Deliverable Arrangements

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

 

    For The Three Months Ended  
    March 31,  
    2018     2017  
             
Real estate sales   $ 799,854     $ -  
Hotel room and events     223,568       263,949  
Restaurants     90,097       90,269  
Winemaking     139,396       222,828  
Golf, tennis and other     25,008       41,491  
    $ 1,277,923     $ 618,537  

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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

 

    March 31,  
    2018     2017  
             
Options     10,312,926       7,979,265  
Warrants     1,389,179       1,903,730  
Series B convertible preferred stock     9,026,700       1,552,000  
Total potentially dilutive shares (1)     20,728,805       11,434,995  

 

  (1) In addition, $1,239,704 of convertible debt is convertible into common stock at a 10% discount to the price used for the sale of the of the Company’s common stock in a future private placement offering.

XML 35 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations (Tables)
3 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Operating Results of Discontinued Operations

Results of discontinued operations during the three months ended March 31, 2017 are as follows.

 

    For The Three Months Ended  
    March 31,  
    2018     2017  
             
Revenues   $ -     $ -  
Gross profit   $ -     $ -  
Operating expenses   $ -     $ (106,558 )
Interest income (expense)   $ -     $ 15  
Loss from discontinued operations   $ -     $ (106,543 )

XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
Inventory (Tables)
3 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Schedule of Inventory

Inventory at March 31, 2018 and December 31, 2017 is comprised of the following:

 

    March 31,     December 31,  
    2018     2017  
             
Vineyard in process   $ 433,513     $ 349,458  
Wine in process     832,821       865,762  
Finished wine     38,529       63,964  
Other     128,849       109,482  
    $ 1,433,712     $ 1,388,666  

XML 37 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments (Tables)
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Schedule of Investments in and Advances to Affiliates

Investments – Related Parties at Fair Value

 

As of March 31, 2018   Level 1     Level 2     Level 3     Total  
                         
Warrants- Affiliates   $ -     $ -     $ 24,773     $ 24,773  
                                 

 

As of December 31, 2017   Level 1     Level 2     Level 3     Total  
                                 
Warrants- Affiliates   $ -     $ -     $ 26,401     $ 26,401  

Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

A reconciliation of Level 3 assets is as follows:

 

    Warrants  
       
Balance - December 31, 2017   $ 26,401  
Unrealized loss     (1,628 )
Balance - March 31, 2018   $ 24,773  

Schedule of Accumulated Unrealized Loss Related to Investment at Fair Value

    March 31,     December 31,  
    2018     2017  
                 
Accumulated unrealized (losses) gains related to investments at fair value   $ (42,075 )   $ (40,447 )

XML 38 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accrued Expenses (Tables)
3 Months Ended
Mar. 31, 2018
Accrued Liabilities [Abstract]  
Schedule of Accrued Expenses

Accrued expenses are comprised of the following:

 

    March 31,
2018
    December 31,
2017
 
             
Accrued compensation and payroll taxes   $ 444,337     $ 463,604  
Accrued taxes payable     40,279       63,550  
Accrued interest     271,813       255,481  
Other accrued expenses     209,866       217,886  
Accrued expenses, current     966,295       1,000,521  
Accrued payroll tax obligations, non-current     221,720       247,515  
Total accrued expenses   $ 1,188,015     $ 1,248,036  

XML 39 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans Payable (Tables)
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of Loans Payable

The Company’s loans payable are summarized below:

 

    March 31, 2018     December 31, 2017  
    Gross Principal Amount     Debt Discount     Loans Payable,
Net of Debt Discount
    Gross Principal Amount     Debt Discount     Loans Payable,
Net of Debt Discount
 
                                     
2018 Loan   $ 517,602     $ -     $ 517,602     $ -     $ -     $ -  
2017 Loan     362,737       -     $ 362,737       412,047       -     $ 412,047  
Land Loan     550,000       (60,758 )   $ 489,242       550,000       (70,393 )   $ 479,607  
Total Loans Payable     1,430,339       (60,758 )     1,369,581       962,047       (70,393 )     891,654  
Less: current portion     380,336       (28,726 )     351,610       287,838       (31,114 )     256,724  
Loans Payable, non-current   $ 1,050,003     $ (32,032 )   $ 1,017,971     $ 674,209     $ (39,279 )   $ 634,930  

XML 40 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Debt Obligations (Tables)
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of Debt Obligations

The Company’s debt obligations are summarized below:

 

    March 31, 2018     December 31, 2017  
    Principal     Interest [1]     Total     Principal     Interest [1]     Total  
                                     
Debt Obligations   $ -     $ 264,635     $ 264,635     $ -     $ 255,481     $ 255,481  
Convertible Debt     1,239,704       4,225       1,243,929       20,000       -       20,000  
    $ 1,239,704     $ 268,860     $ 1,508,564     $ 20,000     $ 255,481     $ 275,481  

 

  [1] Accrued interest is included as a component of accrued expenses on the accompanying condensed consolidated balance sheets.

XML 41 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity and Stockholders’ Deficiency (Tables)
3 Months Ended
Mar. 31, 2018
Equity [Abstract]  
Summary of Warrants Activity

A summary of warrants activity during the three months ended March 31, 2018 is presented below:

 

    Number of Warrants     Weighted Average Exercise Price     Weighted Average Remaining Life in Years     Intrinsic Value  
                         
Outstanding, December 31, 2017     1,465,296       2.17                  
Issued     -       -                  
Exercised     -       -                  
Expired     (76,117 )     2.30                  
Outstanding, March 31, 2018     1,389,179     $ 2.17       2.2     $ -  
                                 
Exercisable, March 31, 2018     1,389,179     $ 2.17       2.2     $ -  

Schedule of Share-based Compensation, Equity Instruments Other Than Options, by Exercise Price Range

A summary of outstanding and exercisable warrants as of March 31, 2018 is presented below:

 

Warrants Outstanding     Warrants Exercisable  
Exercise Price     Exercisable Into   Outstanding Number of Warrants     Weighted Average Remaining Life in Years     Exercisable Number of Warrants  
                         
$ 2.00     Common Stock     741,879       2.8       741,879  
$ 2.30     Common Stock     458,993       1.1       458,993  
$ 2.50     Common Stock     188,307       3.0       188,307  
        Total     1,389,179               1,389,179  

Schedule of Share-based Compensation, Stock Options, Activity

A summary of options activity during the months ended March 31, 2018 and December 31, 2017 is presented below:

 

          Weighted     Weighted        
          Average     Average        
    Number of     Exercise     Remaining     Intrinsic  
    Options     Price     Term (Yrs)     Value  
Outstanding, December 31, 2017     9,234,265     $ 2.18                  
Granted     1,304,328       0.77                  
Exercised     -       -                  
Expired     -       -                  
Forfeited     -       -                  
Outstanding, March 31, 2018     10,538,593     $ 2.01       2.3     $ -  
                                 
Exercisable, March 31, 2018     6,474,016     $ 2.40       1.3     $ -  

Schedule of Share-based Compensation, Shares Outstanding Under Stock Option Plans, by Exercise Price Range

The following table presents information related to stock options at March 31, 2018:

 

Options Outstanding     Options Exercisable  
Exercise Price     Outstanding
Number of Options
    Weighted Average Remaining Life in Years     Exercisable Number of Options  
                     
$ 0.77       1,304,328       4.9       -  
$ 1.10       1,395,000       4.6       -  
$ 2.20       3,031,890       2.5       1,982,356  
$ 2.48       4,772,375       0.8       4,459,785  
$ 3.30       10,000       2.2       6,875  
$ 3.50       25,000       0.2       25,000  
          10,538,593       1.3       6,474,016  

XML 42 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
Going Concern and Management's Liquidity Plans (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]      
Losses from continuing operations $ 1,425,114 $ 1,704,342  
Accumulated deficit (76,969,195)   $ (75,544,081)
Net cash used in operating activities 1,191,886 2,060,414  
Proceeds from sale of Series B Preferred stock 285,000  
Proceeds from convertible debt obligations 1,219,704 1,260,000  
Proceeds from loans payable 525,000 517,243  
Proceeds from issuance of common stock 40,500  
Repayments of debt obligations 15,000  
Repayments of notes payable $ 26,053 $ 32,158  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended
Mar. 31, 2018
USD ($)
Segment
Mar. 31, 2017
Dec. 31, 2017
USD ($)
Property, Plant and Equipment [Line Items]      
Cumulative inflationary rate 100.00%    
Cash, FDIC insured amount $ 250,000    
Cash, uninsured amount $ 106,455   $ 146,952
Number of operating segment | Segment 1    
Revenue from sale of real estate $ 800,000    
Hotel [Member]      
Property, Plant and Equipment [Line Items]      
Deferred revenue 46,567   42,440
Wine Barrel and Agriculture Product [Member]      
Property, Plant and Equipment [Line Items]      
Deferred revenue 12,875   0
Real Estate Lot Sales Deposit [Member]      
Property, Plant and Equipment [Line Items]      
Deferred revenue 837,937   1,690,224
Argentine Bank [Member]      
Property, Plant and Equipment [Line Items]      
Cash held in bank $ 57,852   $ 92,168
Argentine Peso [Member]      
Property, Plant and Equipment [Line Items]      
Foreign currency exchange rate, translation, assets and liabilities 20.109   18.5930
Foreign currency exchange rate, revenues and expenses 19.6682 15.6680  
British Pound [Member]      
Property, Plant and Equipment [Line Items]      
Foreign currency exchange rate, translation, assets and liabilities 0.7135   0.7400
Foreign currency exchange rate, revenues and expenses 0.7186 0.8076  
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies - Schedule of Revenue Recognized Multiple-Deliverable Arrangements (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues $ 1,277,923 $ 618,537
Real Estate Sales [Member]    
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues 799,854
Hotel Rooms And Events [Member]    
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues 223,568 263,949
Restaurants [Member]    
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues 90,097 90,269
Winemaking [Member]    
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues 139,396 222,828
Golf Tennis And Other [Member]    
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]    
Revenues $ 25,008 $ 41,491
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share, amount [1] 20,728,805 11,434,995
Series B Convertible Preferred Stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share, amount 9,026,700 1,552,000
Warrants [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share, amount 1,389,179 1,903,730
Options [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of earnings per share, amount 10,312,926 7,979,265
[1] In addition, $1,239,704 of convertible debt is convertible into common stock at a 10% discount to the price used for the sale of the of the Company's common stock in a future private placement offering.
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) (Parenthetical) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Convertible debt amount $ 1,508,564 $ 275,481
Private Placement Offering [Member]    
Convertible debt amount $ 1,239,704  
Debt discount, percentage 10.00%  
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.8.0.1
Discontinued Operations - Schedule of Operating Results of Discontinued Operations (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]    
Revenues
Gross profit
Operating expenses (106,558)
Interest income (expense) 15
Loss from discontinued operations $ (106,543)
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.8.0.1
Inventory - Schedule of Inventory (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Inventory Disclosure [Abstract]    
Vineyard in Process $ 433,513 $ 349,458
Wine in Process 832,821 865,762
Finished Wine 38,529 63,964
Other 128,849 109,482
Total $ 1,433,712 $ 1,388,666
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Fair Value Disclosures [Abstract]    
Unrealized losses on affiliate warrants $ 1,628 $ 3,031
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments - Schedule of Investments in and Advances to Affiliates (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Investments in and Advances to Affiliates [Line Items]    
Warrants - Affiliates $ 24,773 $ 26,401
Fair Value, Inputs, Level 1 [Member] | Warrants [Member]    
Investments in and Advances to Affiliates [Line Items]    
Warrants - Affiliates
Fair Value, Inputs, Level 2 [Member] | Warrants [Member]    
Investments in and Advances to Affiliates [Line Items]    
Warrants - Affiliates
Fair Value, Inputs, Level 3 [Member] | Warrants [Member]    
Investments in and Advances to Affiliates [Line Items]    
Warrants - Affiliates $ 24,773 $ 26,401
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments - Schedule of Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation (Details) - Warrants [Member]
3 Months Ended
Mar. 31, 2018
USD ($)
Investments in and Advances to Affiliates [Line Items]  
Balance beginning $ 26,401
Unrealized loss (1,628)
Balance ending $ 24,773
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments and Fair Value of Financial Instruments - Schedule of Accumulated Unrealized Loss Related to Investment at Fair Value (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Fair Value Disclosures [Abstract]    
Accumulated unrealized loss related to investments at fair value $ (42,075) $ (40,477)
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Accrued Liabilities [Abstract]    
Accrued compensation and payroll taxes $ 444,337 $ 463,604
Accrued taxes payable 40,279 63,550
Accrued interest 271,813 255,481
Other accrued expenses 209,866 217,886
Accrued expenses, current 966,295 1,000,521
Accrued payroll tax obligations, non-current 221,720 247,515
Total accrued expenses $ 1,188,015 $ 1,248,036
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans Payable (Details Narrative)
3 Months Ended
Feb. 23, 2018
USD ($)
Jan. 25, 2018
USD ($)
Aug. 19, 2017
USD ($)
Mar. 31, 2017
USD ($)
Mar. 31, 2017
ARS ($)
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2017
USD ($)
Debt Instrument [Line Items]                
Proceeds from loans payable       $ 519,156        
Debt instrument interest rate   6.75% 0.00% 24.18% 24.18%   24.18%  
Debt maturity date   Jan. 25, 2023   Mar. 01, 2021 Mar. 01, 2021      
Interest expense           $ 26,508    
Debt instrument periodic payment $ 10,311   $ 50,000          
Number of installment desciption       Forty-two monthly installments Forty-two monthly installments      
Accrued interest           271,813   $ 255,481
Payment to purchase of land     100,000          
Notes payable     600,000          
Payment to acquire property     $ 400,000     233,544 $ 99,699  
Debt instrument imputed interest     7.00%          
Debt instrument unamortized discount     $ 517,390     60,758    
Amortization of debt discount           9,636  
Loans payable           489,243    
Loans payable current           351,610   256,724
Loans payable non-current           1,017,971   634,930
Loans Payable [Member]                
Debt Instrument [Line Items]                
Accrued interest           2,953    
Loans payable current           121,274    
Debt discount current           28,726    
Loans payable non-current           367,968    
Debt discount non-current           32,032    
2018 Loan [Member]                
Debt Instrument [Line Items]                
Interest expense           5,769    
Debt instrument unamortized discount            
ARS [Member]                
Debt Instrument [Line Items]                
Proceeds from loans payable   $ 525,000     $ 8,000,000      
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans Payable - Schedule of Loans Payable (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Aug. 19, 2017
Debt Instrument [Line Items]      
Debt discount $ 60,758   $ 517,390
Land Loan [Member]      
Debt Instrument [Line Items]      
Gross principal amount 550,000 $ 550,000  
Debt discount (60,758) (70,393)  
Loans payable, net of debt discount 489,242 479,607  
Loan Payable [Member]      
Debt Instrument [Line Items]      
Gross principal amount 1,430,339 962,047  
Debt discount (60,758) (70,393)  
Loans payable, net of debt discount 1,369,581 891,654  
Loan Payable Current [Member]      
Debt Instrument [Line Items]      
Gross principal amount 380,336 287,838  
Debt discount (28,726) (31,114)  
Loans payable, net of debt discount 351,610 256,724  
Loan Payable Non Current [Member]      
Debt Instrument [Line Items]      
Gross principal amount 1,050,003 674,209  
Debt discount (32,032) (39,279)  
Loans payable, net of debt discount 1,017,971 634,930  
2018 Loan [Member]      
Debt Instrument [Line Items]      
Gross principal amount 517,602  
Debt discount  
Loans payable, net of debt discount 517,602  
2017 Loan [Member]      
Debt Instrument [Line Items]      
Gross principal amount 362,737 412,047  
Debt discount  
Loans payable, net of debt discount $ 362,737 $ 412,047  
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Debt Obligations (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 25, 2018
Mar. 31, 2017
Dec. 31, 2017
Mar. 31, 2018
Dec. 31, 2017
Mar. 22, 2018
Aug. 19, 2017
Sep. 30, 2010
Convertible Debt Obligations [Line Items]                
Debt instrument interest rate 6.75% 24.18%         0.00%  
Debt instrument maturity date Jan. 25, 2023 Mar. 01, 2021            
Accrued interest expense       $ 26,508        
Accrued interest     $ 255,481 $ 271,813 $ 255,481      
Proceeds from issuance of debt   $ 519,156            
Convertible Notes 8% [Member]                
Convertible Debt Obligations [Line Items]                
Debt instrument interest rate               8.00%
Debt instrument maturity date       Mar. 31, 2011        
Accrued interest expense       $ 9,153 8,849      
Accrued interest     255,481 $ 264,635 $ 255,481      
Accredited Investor [Member] | Convertible Notes 8% [Member]                
Convertible Debt Obligations [Line Items]                
Debt instrument interest rate       8.00%        
Accrued interest expense       $ 4,225        
Proceeds from issuance of debt     $ 20,000          
Debt principal           $ 1,219,704    
Note maturity, description     The note has a 90-day maturity          
Common stock, discount percentage       10.00%        
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.8.0.1
Convertible Debt Obligations - Schedule of Debt Obligations (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Convertible Debt Obligations [Line Items]    
Principal $ 1,239,704 $ 20,000
Interest [1] 268,860 255,481
Total 1,508,564 275,481
Debt Obligations [Member]    
Convertible Debt Obligations [Line Items]    
Principal
Interest [1] 264,635 255,481
Total 264,635 255,481
Convertible Debt [Member]    
Convertible Debt Obligations [Line Items]    
Principal 1,239,704 20,000
Interest [1] 4,225
Total $ 1,243,929 $ 20,000
[1] Accrued interest is included as a component of accrued expenses on the accompanying condensed consolidated balance sheets.
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Related Party Transaction [Line Items]      
Accounts receivable related parties $ 409,290   $ 851,016
Received reimbursement expenses 69,829   58,683
Due from related parties 184,000   724,591
Sharing Agreement [Member]      
Related Party Transaction [Line Items]      
Due from related parties $ 396,116   $ 396,116
AWLD [Member]      
Related Party Transaction [Line Items]      
Received reimbursement expenses   $ 3,990  
AWLD Chairman [Member]      
Related Party Transaction [Line Items]      
Equity method investment, ownership percentage 5.00%    
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.8.0.1
Benefit Contribution Plan (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Retirement Benefits [Abstract]    
Defined contribution plan cost recognized $ 20,446 $ 18,017
Share price $ 0.70 $ 2.00
XML 60 R50.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity And Stockholders’ Deficiency (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Feb. 14, 2018
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Common stock issued under 401(k) profit sharing plan, value   $ 81,399    
Proceeds from issuance of common stock   $ 40,500  
Foreign currency translation adjustments   (285,609) 200,259  
Options exercise price $ 0.77      
Fair value of vesting period $ 610,985      
Risk free interest rate 2.56%      
Expected terms 5 years      
Expected volatility 43.50%      
Expected dividends 0.00%      
Share based compensation   $ 183,220 163,424  
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition   2 years 6 months    
Non Employee [Member]        
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options   $ 515,369    
Options [Member]        
Number of granted options   1,304,328    
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options   $ 1,900,595    
First Anniversary [Member]        
Vesting percentage 25.00%      
Vested period 4 years      
401(k) Profit Sharing Plan [Member]        
Shares issued, price per share   $ 0.70    
Common stock issued under 401(k) profit sharing plan, value   $ 81,399    
2016 Stock Options Plan [Member]        
Stock options term 5 years      
Number of granted options 1,304,328      
Common Stock [Member]        
Common stock issued under 401(k) profit sharing plan, shares   116,284    
Common stock issued under 401(k) profit sharing plan, value   $ 1,163    
Series B Preferred Stock [Member]        
Preferred stock dividend rate   8.00%    
Liquidation value per share       $ 10
Dividends declared on preferred stock   $ 155,791 $ 3,053  
Preferred stock, amount of cumulative dividends dividends in arrears   $ 438,354   $ 284,564
XML 61 R51.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity And Stockholders’ Deficiency - Summary of Warrants Activity (Details) - Warrants [Member]
3 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of Warrants, Outstanding, Beginning | shares 1,465,296
Number of Warrants, Issued | shares
Number of Warrants, Exercised | shares
Number of Warrants, Cancelled | shares (76,117)
Number of Warrants, Outstanding, Ending | shares 1,389,179
Number of Warrants, Exercisable | shares 1,389,179
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares $ 2.17
Weighted Average Exercise Price, Issued | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Cancelled | $ / shares 2.30
Weighted Average Exercise Price, Outstanding, Ending | $ / shares 2.17
Weighted Average Exercise Price, Exercisable | $ / shares $ 2.17
Weighted Average Remaining Life In Years, Outstanding 2 years 2 months 12 days
Weighted Average Remaining Life In Years, Exercisable 2 years 2 months 12 days
Intrinsic Value, Outstanding, Ending | $
Intrinsic Value, Exercisable, Ending | $
XML 62 R52.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity And Stockholders’ Deficiency - Schedule of Share-based Compensation, Equity Instruments Other Than Options, by Exercise Price Range (Details)
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Warrants [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Warrants Outstanding, Number of Warrants 1,389,179
Warrants Exercisable, Number of Warrants 1,389,179
Range of Exercise Price 2.00 [Member] | Common Stock [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Warrants Outstanding, Exercise Price | $ / shares $ 2.00
Warrants Outstanding Exercisable, Description Common Stock
Warrants Outstanding, Number of Warrants 741,879
Warrants Exercisable, Weighted Average Remaining Life in Years 2 years 9 months 18 days
Warrants Exercisable, Number of Warrants 741,879
Range of Exercise Price 2.30 [Member] | Common Stock [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Warrants Outstanding, Exercise Price | $ / shares $ 2.30
Warrants Outstanding Exercisable, Description Common Stock
Warrants Outstanding, Number of Warrants 458,993
Warrants Exercisable, Weighted Average Remaining Life in Years 1 year 1 month 6 days
Warrants Exercisable, Number of Warrants 458,993
Range of Exercise Price 2.50 [Member] | Common Stock [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Warrants Outstanding, Exercise Price | $ / shares $ 2.50
Warrants Outstanding Exercisable, Description Common Stock
Warrants Outstanding, Number of Warrants 188,307
Warrants Exercisable, Weighted Average Remaining Life in Years 3 years
Warrants Exercisable, Number of Warrants 188,307
XML 63 R53.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity and Stockholders’ Deficiency - Schedule of Share-based Compensation, Stock Options, Activity (Details) - Options [Member]
3 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
Number of Options, Outstanding, Beginning | shares 9,234,265
Number of Options, Granted | shares 1,304,328
Number of Options, Exercised | shares
Number of Options, Expired | shares
Number of Options, Forfeited | shares
Number of Options, Outstanding, Ending | shares 10,538,593
Number of Options, Exercisable, Ending | shares 6,474,016
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares $ 2.18
Weighted Average Exercise Price, Granted | $ / shares 0.77
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Outstanding, Ending | $ / shares 2.01
Weighted Average Exercise Price, Exercisable, Ending | $ / shares $ 2.40
Weighted Average Remaining Life In Years, Outstanding 2 years 3 months 19 days
Weighted Average Remaining Life In Years, Exercisable 1 year 3 months 19 days
Intrinsic Value, Outstanding | $
Intrinsic Value, Exercisable | $
XML 64 R54.htm IDEA: XBRL DOCUMENT v3.8.0.1
Temporary Equity And Stockholders’ Deficiency - Schedule of Share-based Compensation, Shares Outstanding Under Stock Option Plans, by Exercise Price Range (Details)
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Outstanding Number of Options 10,538,593
Options Exercisable, Weighted Exercise Average Remaining Life In Years 1 year 3 months 19 days
Options Exercisable, Exercisable Number of Options 6,474,016
Exercise Price Range 0.77 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 0.77
Options Outstanding, Outstanding Number of Options 1,304,328
Options Exercisable, Weighted Exercise Average Remaining Life In Years 4 years 10 months 25 days
Options Exercisable, Exercisable Number of Options
Exercise Price Range 1.10 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 1.10
Options Outstanding, Outstanding Number of Options 1,395,000
Options Exercisable, Weighted Exercise Average Remaining Life In Years 4 years 7 months 6 days
Options Exercisable, Exercisable Number of Options
Exercise Price Range 2.20 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 2.20
Options Outstanding, Outstanding Number of Options 3,031,890
Options Exercisable, Weighted Exercise Average Remaining Life In Years 2 years 6 months
Options Exercisable, Exercisable Number of Options 1,982,356
Exercise Price Range 2.48 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 2.48
Options Outstanding, Outstanding Number of Options 4,772,375
Options Exercisable, Weighted Exercise Average Remaining Life In Years 9 months 18 days
Options Exercisable, Exercisable Number of Options 4,459,785
Exercise Price Range 3.30 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 3.30
Options Outstanding, Outstanding Number of Options 10,000
Options Exercisable, Weighted Exercise Average Remaining Life In Years 2 years 2 months 12 days
Options Exercisable, Exercisable Number of Options 6,875
Exercise Price Range 3.50 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Options Outstanding, Weighted Exercise Average Price | $ / shares $ 3.50
Options Outstanding, Outstanding Number of Options 25,000
Options Exercisable, Weighted Exercise Average Remaining Life In Years 2 months 12 days
Options Exercisable, Exercisable Number of Options 25,000
XML 65 R55.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]    
Lease expiration date Aug. 31, 2020  
Operating leases, rent expense $ 56,892 $ 51,781
XML 66 R56.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events (Details Narrative)
May 11, 2018
Apr. 26, 2018
USD ($)
Mar. 31, 2018
USD ($)
Jan. 25, 2018
Dec. 31, 2017
USD ($)
Aug. 19, 2017
Mar. 31, 2017
Subsequent Event [Line Items]              
Principal amount     $ 1,239,704   $ 20,000    
Interest rate       6.75%   0.00% 24.18%
Subsequent Event [Member]              
Subsequent Event [Line Items]              
Foreign currency exchange rate, translation 20.241   20.109   18.593    
Subsequent Event [Member] | Convertible Promissory Notes [Member]              
Subsequent Event [Line Items]              
Principal amount   $ 1,087,326          
Interest rate   8.00%          
Common stock, discount percentage   10.00%          
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