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ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY | 9 Months Ended
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Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY | NOTE 1 – ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY Organization urban-gro, Inc. and its direct and indirect wholly owned subsidiaries (collectively, the “Companies”) (“we,” “us,” “our,” the “Company,” or “urban-gro”) is a leading architectural, engineering, consulting and design services company focused on the sustainable commercial indoor horticulture market. To serve our horticulture clients, we engineer and design indoor controlled environment agriculture (“CEA”) facilities and then integrate complex environmental equipment systems into those facilities. Through this work, we create 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, procurement, and equipment integration provides a single point of accountability across all aspects of indoor growing operations. We also help 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 establish facilities that allow clients to manage, operate and perform at the highest level throughout their entire cultivation lifecycle once they are up and running. We also serve a broad range of commercial and governmental entities, providing them with planning, consulting, architectural and engineering design services for their facilities. We aim to work with our clients from inception of their project in a way that provides 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. Acquisitions On June 28, 2021, urban-gro, Inc., (the “Company” or “Parent”), urban-gro Architect Holdings, LLC, (the “Buyer”), a wholly-owned subsidiary of the Company, the 2WRCO Shareholders, the 2WRGA Shareholders, the MJ12 Shareholders, the 2WRMS Shareholders (collectively, the “Sellers” and each a “Seller”), and Sam Andras, an individual (the “Seller Representative”) entered into a Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which the Buyer would purchase all of the issued and outstanding capital stock of 2WR of Colorado, Inc., a Colorado corporation (“2WRCO”), 2WR of Georgia, Inc., a Georgia corporation (“2WRGA”), MJ12 Design Studio, Inc., a Colorado corporation (“MJ12”) (collectively, the “Purchased Shares”) from the Sellers. In connection with the acquisition of the Purchased Shares, Buyer would enter into an affiliate relationship with 2WR of Mississippi, P.C., a Mississippi professional corporation (“2WRMS” and together with 2WRCO, 2WRGA and MJ12, the “Target Companies”). Pursuant to the Purchase Agreement, the Purchased Shares had an initial purchase price of up to $7.1 million, which purchase price is subject to customary working capital adjustments (the “Purchase Price”). At closing, the Purchase Price was paid in the form of wire transfer of immediately available funds and the issuance of unregistered shares (the “Closing Payment Shares”) of Parent’s common stock, par value $0.001 (“Parent Common Stock”), which Closing Payment Shares had an aggregate stated value of $2.0 million. Additionally, the Purchase Agreement provides for additional earnout payments (“Earnout Payments”) to the Sellers of up to an aggregate amount of $2.0 million, payable in cash or unregistered shares of Parent Common Stock in the Buyer’s sole discretion. The Earnout Payments are payable quarterly for a two-year period and will be equal to twenty percent of the Target Companies’ Quarterly Gross Profit (as defined in the Purchase Agreement). The value of the shares of Parent Common Stock issued in the transaction was determined based upon the daily volume weighted average closing price of the Parent Common Stock in the ten trading days prior to the issuance of such shares. The Company accounted for the initial acquisition of the Target Companies as follows: SCHEDULE OF INITIAL ACQUISITION OF TARGET COMPANIES
Purchase Price |  | $ | 10,058,536 |
Allocation of Purchase Price: |  |  |  |
Cash |  | $ | 943,894 |
Accounts receivable, net |  | $ | 1,597,341 |
Prepayments and other assets |  | $ | 71,936 |
PPE, net |  | $ | 63,246 |
Goodwill |  | $ | 7,990,980 |
Intangible assets |  | $ | 1,763,000 |
Accrued expenses |  | $ | 1,931,111 |
Deferred tax liability |  | $ | 440,750 |
The following table summarizes the supplemental information on an unaudited pro forma basis, as if the acquisition had been consummated as of January 1, 2020: SCHEDULE OF SUPPLEMENTAL INFORMATION ON UNAUDITED PRO-FORMA BASIC OF ACQUISITION
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Revenues |  |  | 19,225,173 |  |  |  | 9,600,989 |  |  |  | 47,842,906 |  |  |  | 21,036,536 |
Net income (loss) |  |  | 389,217 |  |  |  | (655,831 | ) |  |  | 1,022,095 |  |  |  | (3,490,989 | )
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of the acquisitions to reflect the additional amortization of intangibles and the purchase price adjustments as if they had been applied on January 1, 2020. 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 December 31, 2020, we effected a 1-for-6 reverse stock split with respect to our common stock. All share and per share information in these consolidated financial statements gives effect to this reverse stock split, including restating prior period reported amounts. On July 30, 2021, we acquired 2WR of Colorado, Inc., 2WR of Georgia, Inc. and MJ12 Design Studio, Inc., entities that had common ownership and management. We have accounted for the business combination by applying the acquisition method of accounting (ASC 805-10-25). Liquidity and Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are available to be issued.

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