UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2025

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

For the transition period from _________ to _________.

Commission File Number: 001-39933

URBAN-GRO, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-5158469
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1751 Panorama Point, Unit G Lafayette, CO		80026		(720) 390-3880
(Address of principal executive offices)		(Zip Code)		(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		UGRO		NASDAQ Capital Market

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 ☐ No ☒

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

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

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

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

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

The number of shares of the registrant’s only class of common stock outstanding as of February 6, 2026 was 18,790,550 shares, or 751,622 shares after giving effect to a 1-for-25 reverse stock split that was effective on February 9, 2026.

TABLE OF CONTENTS

Item No.		Page No.
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Unaudited Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Deficit	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28
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

CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements related to future events, challenges we may face, business strategy, future performance, future operations, backlog, financial position, estimated or projected revenues and losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “intend,” “could,” “should,” “believe,” and variations of such words or their negative and similar expressions. Forward-looking statements should not be read as a guarantee of future performance or results and may not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. When evaluating forward-looking statements, you should consider the risk factors and other cautionary statements described in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. We believe the expectations reflected in the forward-looking statements contained in this report are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking statements should not be unduly relied upon. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to:

●

risks related to our operating strategy;

●

competition for projects in our markets;

●

our ability to predict and respond to new laws and governmental regulatory actions affecting our business, including foreign laws and governmental regulation;

●

risks related to delays in the grant of necessary licenses to clients and delays in passage of legislation expected to benefit our clients, which could delay the funding and start of projects

●

our ability to successfully develop new and/or enhancements to our product offerings and develop a product mix to meet demand;

●

our ability to meet or exceed market expectations from analysts;

●

unfavorable economic conditions, increases in interest rates and restrictive financing markets that may cause customers to cancel contracts reflected in our backlog or cause sales to decrease;

●

our ability to successfully identify, manage and integrate acquisitions;

●

our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;

●

climate change and related laws and regulations;

●

our ability to manage our supply chain in a manner that ensures that we are able to obtain adequate raw materials, equipment and essential supplies in a timely manner and at favorable prices;

●

our ability to attract and retain key personnel;

●

risks associated with concentration of a large portion of our business from a relatively small number of key clients/customers and the effect a loss of a key client/customer could have on our business;

●

risks associated with customers or suppliers not fulfilling contracts;

●

risks associated with reliance on key suppliers and risks such suppliers could change incentive programs that negatively affect our returns;

●

the impact of inflation on costs of labor, raw materials and other items that are critical to our business;

●

property damage and other claims and insurance coverage issues;

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in the forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. Our future results will depend upon various other risks and uncertainties, including those described in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise, except as required by law. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the Securities and Exchange Commission (SEC).

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

URBAN-GRO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2025			2024
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash	$	721,249		$	819,050
Accounts receivable, net		3,059,193			8,369,116
Contract Receivables		1,691,483			4,132,817
Prepaid expenses and other current assets		1,936,219			2,486,865
Total current assets		7,408,144			15,807,848
Non-current assets:
Property and equipment, net		762,651			921,957
Operating lease right-of-use assets		569,428			1,534,560
Goodwill		1,080,638			1,080,638
Intangible assets, net		98,880			148,780
Total non-current assets		2,511,597			3,685,935
Total assets	$	9,919,741		$	19,493,783

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	18,842,196		$	14,724,589
Contract liabilities		11,550,346			14,094,176
Accrued expenses		4,523,586			4,277,545
Customer deposits		4,236,913			2,682,099
Notes payable, current		4,089,203			5,968,145
Operating lease liabilities, current		368,755			552,933
Total current liabilities		43,610,999			42,299,487
Non-current liabilities
Notes payable, long-term		323,510			795,531
Deferred tax liability		-			14,608
Operating lease liabilities, long-term		221,942			1,026,699
Total non-current liabilities		545,452			1,836,838
Total liabilities		44,156,451			44,136,325

Commitments and contingencies

Stockholders’ deficit:
Preferred stock, $0.10 par value; 3,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2025 and December 31, 2024		-			-
Common stock, $0.001 par value 200,000,000 shares authorized; 587,278 issued and 529,285 outstanding as of June 30, 2025, and 562,855 issued and 504,862 outstanding as of December 31, 2024		588			563
Additional paid-in capital		90,814,508			90,170,645
Treasury shares, cost basis: 57,993 shares as of June 30, 2025 and December 31, 2024		(12,045,542	)		(12,045,542	)
Accumulated deficit		(113,006,264	)		(102,768,208	)
Total stockholders’ deficit		(34,236,710	)		(24,642,542	)
Total liabilities and stockholders’ deficit	$	9,919,741		$	19,493,783

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

URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Revenues
Equipment	$	3,128,746		$	3,398,696		$	7,827,323		$	5,904,345
Services		1,099,378			2,357,806			2,748,476			5,491,598
Construction design-build		3,512,650			12,059,096			6,634,948			21,742,909
Other		25,328			129,651			69,430			207,434
Total revenues		7,766,102			17,945,249			17,280,177			33,346,286
Cost of revenue
Equipment		2,995,183			2,753,497			7,339,790			4,923,608
Services		1,060,162			1,513,715			2,111,308			3,022,163
Construction design-build		3,646,334			11,181,017			7,120,721			19,856,346
Other		19,680			86,704			53,593			142,393
Total cost of revenue		7,721,359			15,534,933			16,625,412			27,944,510
Gross profit		44,743			2,410,316			654,765			5,401,776
Operating expenses:
General and administrative		5,805,180			4,668,954			10,322,683			9,746,820
Depreciation and amortization		147,587			395,696			315,281			785,947
Business development		47,950			25,000			47,950			25,000
Total operating expenses		6,000,717			5,089,650			10,685,914			10,557,767

Loss from operations		(5,955,974	)		(2,679,334	)		(10,031,149	)		(5,155,991	)

Non-operating income (expense):
Interest expense		(260,590	)		(311,706	)		(715,214	)		(411,010	)
Interest income		201			155			469			236
Gain on extinguishment of debt		7,476			-			7,476			-
Other income (expense)		4,743			(22,226	)		485,754			(55,291	)
Total non-operating income (expense)		(248,170	)		(333,777	)		(221,515	)		(466,065	)

Loss before income taxes		(6,204,144	)		(3,013,111	)		(10,252,664	)		(5,622,056	)
Income tax benefit		-			48,383			14,608			96,765
Net loss	$	(6,204,144	)	$	(2,964,728	)	$	(10,238,056	)	$	(5,525,291	)
Comprehensive loss	$	6,204,144		$	(2,964,728	)	$	(10,238,056	)	$	(5,525,291	)

Net loss per common share - basic and diluted	$	(10.64	)	$	(5.99	)	$	(17.65	)	$	(11.19	)

Weighted average common shares outstanding - basic and diluted		583,352			494,820			579,962			493,580

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

URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(unaudited)

					Additional									Total Stockholders’
	Common Stock				Paid-in			Accumulated			Treasury			Equity
	Shares		Amount		Capital			Deficit			Stock			(Deficit)

Balance at December 31, 2023		540,906	$	541	$	88,402,738		$	(66,272,382	)	$	(12,045,542	)	$	10,085,355
Stock-based compensation		-		-		656,576			-			-			656,576
Stock grant program vesting		9,837		10		(10	)		-			-			-
Net loss		-		-		-			(2,560,563	)		-			(2,560,563	)
Balances at March 31, 2024		550,743		551		89,059,304			(68,832,945	)		(12,045,542	)		8,181,368
Stock-based compensation		-		-		460,785			-			-			460,785
Stock grant program vesting		6,902		7		(7	)		-			-			-
Stock issued for contingent consideration		2,848		3		129,132			-			-			129,135
Net loss		-		-		-			(2,964,728	)		-			(2,964,728	)
Balances at June 30, 2024		560,493	$	561		89,649,214		$	(71,797,673	)	$	(12,045,542	)	$	5,806,560

Balance at December 31, 2024		562,855	$	563	$	90,170,645		$	(102,768,208	)	$	(12,045,542	)	$	(24,642,542	)
Stock-based compensation		3,000		3		324,268			-			-			324,271
Stock grant program vesting		10,559		11		(11	)		-			-			-
Issuance of common stock for loan modification		6,000		6		109,418			-			-			109,424
Net loss		-		-		-			(4,033,912	)		-			(4,033,912	)
Balances at March 31, 2025		582,414		583		90,604,320			(106,802,120	)		(12,045,542	)		(28,242,759	)
Stock-based compensation						210,193			-			-			210,193
Stock grant program vesting		4,864		5		(5	)
Net loss		-		-		-			(6,204,144	)		-			(6,204,144	)
Balances at June 30, 2025		587,278	$	588		90,814,508		$	(113,006,264	)	$	(12,045,542	)	$	(34,236,710	)

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

URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	Six Months Ended
	June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(10,238,056	)	$	(5,525,291	)
Adjustments to reconcile net loss to net cash provided by (used) in operating activities:
Depreciation and amortization		315,281			785,947
Amortization of right-of-use assets		182,736			263,775
Stock-based compensation expense		534,464			1,117,361
Amortization of debt discounts		78,093			-
Common stock issued for debt modification		109,424			-
Gain on disposition of assets		(120,591	)		-
Changes in operating assets and liabilities:
Accounts receivable and contract receivables		7,770,403			(6,134,794	)
Prepaid expenses and other assets		832,966			(696,442	)
Accounts payable, contract liabilities, customer deposits and accrued expenses		3,381,098			8,741,425
Operating lease liability		(203,308	)		(216,203	)
Deferred tax liability		(14,608	)		(96,765	)
Net cash provided by (used in) operating activities		2,627,902			(1,760,987	)
Cash flows from investing activities:
Proceeds from the sale of property and equipment		123,100			-
Purchase of property and equipment		(113,219	)		(45,999	)
Net cash (used in) provided by investing activities		9,881			(45,999	)
Cash flows from financing activities:
Proceeds from promissory notes		1,197,000			4,500,000
Repayments of notes payable		(3,914,840	)		(3,300,350	)
Repayment of finance lease liability		(17,744	)		(82,710	)
Net cash (used in) provided by financing activities		(2,735,584	)		1,116,940
Net change in cash		(97,801	)		(690,046	)
Cash at beginning of period		819,050			1,074,842
Cash at end of period	$	721,249		$	384,796

Supplemental disclosure of cash flow information:
Cash paid for interest	$	361,554		$	399,218
Cash paid for income taxes	$	-		$	24,785

Supplemental disclosure of non-cash investing and financing activities:
Termination of operating lease	$	767,884		$	-
Prepaid expenses financed by notes payable	$	282,320		$	-
Debt discount	$	50,000		$	-

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

URBAN-GRO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION, ACQUISITIONS, AND LIQUIDITY

Basis of Presentation

These consolidated financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). On February 9, 2026, we effected a 1-for-25 reverse stock split with respect to our common stock. All share and per share information in these consolidated financial statements give effect to this reverse stock split, including restating prior period reported amounts.

Organization

urban-gro, Inc. (together with its wholly owned subsidiaries, collectively “urban-gro,” “we,” “us,” or “the Company”) was originally formed on March 20, 2014, as a Colorado limited liability company. On March 10, 2017, we converted to a Colorado corporation and exchanged shares of our common stock for every member’s interest issued and outstanding on the date of conversion. On October 29, 2020, we reincorporated as a Delaware corporation. On February 12, 2021, we completed an uplisting to the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “UGRO”.

In 2024, urban-gro, Inc. was an integrated professional services and design-build firm. We offered value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture (“CEA”), industrial, healthcare, and other commercial sectors. Innovation, collaboration, and a commitment to sustainability drove our team to provide exceptional customer experiences. To serve our horticulture clients, we engineered, designed and managed the construction of indoor CEA facilities and then integrate complex environmental equipment systems into those facilities. Through this work, we created high-performance indoor cultivation facilities for our clients to grow specialty crops, including leafy greens, vegetables, herbs, and plant-based medicines. Our custom-tailored approach to design, construction, procurement, and equipment integration provided a single point of accountability across all aspects of indoor growing operations. We also helped our clients achieve operational efficiency and economic advantages through a full spectrum of professional services and programs focused on facility optimization and environmental health which established facilities that allowed clients to manage, operate and perform at the highest level throughout their entire cultivation lifecycle once they are up and running. Further, we served a broad range of commercial and governmental entities, providing them with planning, consulting, architectural, engineering and construction design-build services for their facilities. We aimed to work with our clients from the inception of their project in a way that provided value throughout the life of their facility. We are a trusted partner and advisor to our clients and offer a complete set of engineering and managed services complemented by a vetted suite of select cultivation equipment systems.

Liquidity and Going Concern

The Company has produced multiple consecutive years of net losses and negative cash flows from operations. The financial results described in these financial statements and our financial position as of June 30, 2025 raise substantial doubt about our ability to continue as a going concern. However, the Company has recently taken actions to strengthen its liquidity, including decreasing headcount and operating expenses to expedite the Company’s path to cash flow positive results. If necessary, the Company will seek to raise capital by issuing additional equity shares either through a private placement or on the open market. The Company may also seek to obtain additional debt financing for which there can be no guarantee. Management has concluded that these recent positive steps alleviate any substantial doubt about the Company’s ability to continue its operations, and meet its financial obligations, for twelve months from the date these consolidated financial statements are issued.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Condensed Consolidated Financial Statements

The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for condensed financial reporting. The condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of stockholders’ equity and condensed consolidated statements of cash flows for the periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted in accordance with regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 - “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K the year ended December 31, 2024. During the six months ended June 30, 2025, there were no material changes made to the Company’s significant accounting policies.

Use of Estimates

In preparing condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated revenues earned under construction design-build contracts; estimated useful lives and potential impairment of long-lived assets, intangibles and goodwill; inventory write-offs; allowance for deferred tax assets; and allowance for bad debt.

Balance Sheet Classifications

The Company includes in current assets and liabilities the following amounts that are in connection with construction contracts that may extend beyond one year: contract assets and contract liabilities (including retainage invoiced to customers contingent upon anything other than the passage of time), capitalized costs to fulfill contracts, retainage payable to sub-contractors and accrued losses on uncompleted contracts. A one-year time period is used to classify all other current assets and liabilities when not otherwise prescribed by the applicable accounting principles.

Contract Assets and Liabilities

The timing between when the Company invoices for its construction design-build customers can create a contract asset or contract liability. Refer to Note 3 - Revenue from Contracts with Customers for further discussion of the Company’s contract assets and liabilities.

Recently Issued Accounting Standards

From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption.

Management has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of our operations.

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company recognizes revenue predominantly from the sale of equipment systems, services, construction design-build, and from other various immaterial contracts with customers from its CEA and Commercial sectors. The table below presents the revenue by source for the six months ended June 30, 2025 and 2024:

	Three months ended June 30,
	CEA						Commercial						Total
	2025			2024			2025			2024			2025			2024
Equipment systems	$	448,018		$	3,398,696		$	2,680,728		$	-		$	3,128,746		$	3,398,696
Services		-			1,009,450			1,099,378			1,348,356			1,099,378			2,357,806
Construction design-build		3,462,134			9,982,914			50,516			2,076,182			3,512,650			12,059,096
Other		-			129,651			25,328			-			25,328			129,651
Total revenues and other income	$	3,910,152		$	14,520,711		$	3,855,950		$	3,424,538		$	7,766,102		$	17,945,249
Relative percentage		50	%		81	%		50	%		19	%		100	%		100	%

	Six months ended June 30
	CEA				Commercial				Total
	2025		2024		2025		2024		2025		2024
Equipment systems	$	5,133,843	$	5,904,345	$	2,693,480	$	-	$	7,827,323	$	5,904,345
Services		682,714		1,877,357		2,065,762		3,614,241		2,748,476		5,491,598
Construction design-build		6,298,586		10,798,893		336,362		10,944,016		6,634,948		21,742,909
Other		43,298		207,434		26,132		-		69,430		207,434
Total revenues and other income

SEC Form 10-Q filed by urban-gro Inc.