Banking & Finance  September 17, 2019

Urban-Gro files for IPO

Proposal is to debut on OTC markets at $2.41 per share

LAFAYETTE — Urban-Gro Inc., a firm specializing in engineering and maintaining marijuana and hemp growhouses, is debuting on the public markets.

According to filings with the U.S. Securities and Exchange Commission, the company proposes to put 1,799,150 shares worth of current shareholder equity on the over-the-counter QX market at approximately $2.41 per share, producing approximately $4.33 million for those early investors. Urban-Gro said it will not receive any proceeds from the offering, but could make up to $1.96 million if all of its outstanding stock warrants are exercised.

Proceeds from the offering will go to the selling shareholders, who should expect to see proceeds of more than $4.3 million, according to SEC filings. 

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Urban-Gro chief financial officer Richard Ackright did not respond to requests for comments Tuesday afternoon.

The firm received approval to trade shares on the “pink sheets” market in August under the symbol “UGRW”, but didn’t register any stock for sale.

Urban-Gro, which was founded in 2014 and has yet to post a profit, recorded slightly lower revenues in the second quarter of fiscal year 2019, leading to a higher loss than was recorded during the same period last year.

Revenues in the most recent quarter were $5.64 million, compared to nearly $5.9 million in the second quarter of 2018. Losses in the most recent period that ended June 30 were $1.43 million, or 6 cents per share. That’s up from a loss of just under $500,000, or 2 cents per share in the same quarter last year.

While quarterly results are down compared to the second quarter of 2018, revenues are actually up about 23 percent when you compare the first six months of this year to the first six of 2018.

Urban-Gro expects to be profitable by 2020, but this is by no means a certainty, according to the company’s prospectus submitted to the SEC.

To date, the company’s sole customers have been cannabis growers but Urban-Gro is aiming to diversify the target markets for its products.

“These prospective customers include cultivators of the world’s highest value crops including tomatoes, strawberries, chilies, peppers, and leaf lettuce,” according to Urban-Gro’s prospectus. 

Lack of access to traditional banking services and financing options have been a challenge for the firm.

Even though we are not actively engaged in the production of cannabis, the federal prohibitions on the cannabis industry inhibit our ability to establish traditional banking support and opportunities. Specifically, banks are currently unwilling to provide us with any financing normally available to growth stage companies similar to ourselves, including purchase order financing,” the prospectus said. “As a result, we have been forced to finance our expansion by raising capital privately, as well as through private debt and operating capital.”

BizWest reporter Dan Mika contributed to this report.

LAFAYETTE — Urban-Gro Inc., a firm specializing in engineering and maintaining marijuana and hemp growhouses, is debuting on the public markets.

According to filings with the U.S. Securities and Exchange Commission, the company proposes to put 1,799,150 shares worth of current shareholder equity on the over-the-counter QX market at approximately $2.41 per share, producing approximately $4.33 million for those early investors. Urban-Gro said it will not receive any proceeds from the offering, but could make up to $1.96 million if all of its outstanding stock warrants are exercised.

Proceeds from the offering will go to the selling shareholders, who…

Lucas High
A Maryland native, Lucas has worked at news agencies from Wyoming to South Carolina before putting roots down in Colorado.
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