Urban-Gro Restates Financials Amid Investigation

TL;DR

URBAN-GRO IS RESTATING OLD FINANCIALS DUE TO ACCOUNTING ISSUES - INVESTIGATION ONGOING.

AI Summary

Urban-Gro, Inc. announced on August 12, 2024, that it will not rely on previously issued financial statements for the fiscal year ended December 31, 2023, and interim periods within that year, due to an ongoing investigation into potential accounting errors. The company expects to file amended financial statements once the investigation is complete.

Why It Matters

This restatement raises concerns about the accuracy of Urban-Gro's past financial reporting, potentially impacting investor confidence and future financial decisions.

Risk Assessment

Risk Level: high — The non-reliance on previously issued financial statements indicates significant accounting irregularities that could lead to substantial financial restatements and impact the company's valuation.

Key Players & Entities

• Urban-Gro, Inc. (company) — Registrant
• December 31, 2023 (date) — Fiscal year end for restated financials
• August 12, 2024 (date) — Date of earliest event reported

FAQ

Key Financial Figures

• $0.001 — ich Registered Common stock, par value $0.001 per share UGRO The Nasdaq Stock Market

Filing Documents

• ugro-20240812.htm (8-K) — 40KB
• ex991restatement-august142.htm (EX-99.1) — 17KB
• image_0.jpg (GRAPHIC) — 4KB
• 0001706524-24-000066.txt ( ) — 196KB
• ugro-20240812.xsd (EX-101.SCH) — 2KB
• ugro-20240812_lab.xml (EX-101.LAB) — 22KB
• ugro-20240812_pre.xml (EX-101.PRE) — 13KB
• ugro-20240812_htm.xml (XML) — 3KB

02 Results of Operations and Financial Condition

Item 2.02 Results of Operations and Financial Condition The information included in Item 7.01 below is incorporated herein by reference.

02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review As reported on the Current Report on Form 8-K filed on May 6, 2024 by urban-gro, Inc. (the " Company "), the Company dismissed its previous independent registered public accounting firm, BF Borgers CPA PC (" BF Borgers "). On May 3, 2024, the Securities and Exchange Commission instituted public administrative and cease-and-desist proceedings against BF Borgers. In the Current Report on Form 8-K filed on May 29, 2024, the Company announced that it had appointed Sadler, Gibb & Associates, LLC (" Sadler Gibb ") as its new independent public accounting firm. Sadler Gibb has substantially conducted a re-audit of the Company's previously issued financial statements for the year ended December 31, 2023. In connection with the re-audit of the 2023 financial statements as conducted to date, Sadler Gibb identified accounting errors related to deferred tax liabilities associated with historical share-purchase acquisitions made by the Company. Accounting for the initial deferred tax liabilities associated with the acquisitions was determined to be proper, but due to losses incurred by the Company following the acquisitions, the majority of the deferred tax liabilities that were recorded in connection with the share-purchase acquisition of each acquired company should have been recorded as income tax benefits to the statement of operations shortly after each acquisition. The Company had amortized these deferred tax liabilities to the statement of operations corresponding to the amortization of the intangible assets with which they were associated. Effective August 12, 2024, the Audit Committee (the " Audit Committee ") of the Company's Board of Directors, in consultation with the Company's management and with Sadler Gibb, determined that the Company's previously issued audited consolidated financial statements as of and for the years ended December 31, 2022

01. Regulation FD Disclosure

Item 7.01. Regulation FD Disclosure. On August 14, 2024, the Company issued a press release announcing the intention to restate the Year-End Financial Statements and the Interim Financial Statements, as well as the related delay in the filing of the Company's Quarterly Report on Form 10-Q for the three months ended June 30, 2024 and the Company's preliminary estimated revenue for the quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information furnished pursuant to Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, unless specifically identified as being incorporated therein by reference. Cautionary Note Regarding Forward Looking Statements This Current Report on Form 8-K contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Private Securities Litigation Reform Act of 1995, including statements regarding the expected impacts of the restatements of the Year-End Financial Statements and the Interim Financial Statements and the Company's plans to file the Amended 10-K and the Amended 10-Q. These statements reflect the beliefs and assumptions of the Company's management as of the date hereof. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "plan," "project," "seek," "should," "target," "will," "would," variations of such words, and similar expressions are intended to identify forward-looking statements. Readers are cautioned tha

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Exhibit Description 99.1 Press Release Dated August 14 , 2024 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. URBAN-GRO, INC. Date: August 14, 2024 By: /s/ Bradley Nattrass Bradley Nattrass Chairperson of the Board of Directors and Chief Executive Officer