urban-gro(UGRO) - 2025 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2025, the company generated revenues of $7.76 million, a decrease of approximately 57% compared to $17.9 million in the same period of 2024[115] - Cost of revenues for the same period was $7.7 million, down approximately 50% from $15.5 million in 2024, resulting in a gross profit of $0.04 million, or approximately 0.01% of revenues[115] - Operating expenses increased by approximately 18% to $6.0 million for the three months ended June 30, 2025, compared to $5.1 million in 2024[116] - For the six months ended June 30, 2025, revenues were $17.3 million, a decrease of approximately 48% from $33.3 million in 2024[118] - Gross profit for the six months ended June 30, 2025, was $0.6 million, approximately 4% of revenues, down from $5.4 million, or approximately 16% of revenues in 2024[121] Working Capital and Cash Position - As of June 30, 2025, the company had negative working capital of $36.2 million, an increase of $9.7 million from negative working capital of $26.5 million as of December 31, 2024[124] - Cash decreased to $0.7 million as of June 30, 2025, down $0.1 million from December 31, 2024[125] - Net cash provided by operating activities was $2.6 million, despite a net loss of $10.2 million, due to non-cash expenses and changes in operating assets and liabilities[128] Legal and Settlement Agreements - The company entered into a settlement agreement with Gemini Finance Corp., agreeing to issue shares that would result in net proceeds equal to a claim amount of $1,486,189[144] - Grow Hill, LLC extended a secured loan of $2,100,000 with a $100,000 origination fee, secured by certain assets of the company[145] - Grow Hill filed a lawsuit alleging breach of contract and fraud, claiming default on the Secured Promissory Note, with a default fee of 1% on the outstanding principal[146] - A Settlement Agreement with J Brrothers LLC involved a promissory note of $395,556 and the issuance of 150,000 unregistered shares, with a 12% annual interest rate and a maturity date of March 18, 2026[147] - The company sold 2WR of Georgia, Inc. and certain assets for a purchase price of $2.0 million, offset by a previous deposit of $500,000[148] - Ongoing litigation with MJ's Market, Inc. includes claims for breach of contract and trademark infringement against the corporation[149] Risk Factors and Securities - No material changes to risk factors have been disclosed since the last annual report[150] - The company did not repurchase any registered equity securities during the reporting period[152]