10-Q

Fbacklog

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2024

or

o 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 x

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 x No o

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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

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. o

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

The number of shares of the registrant’s only class of common stock outstanding as of February 18, 2025 was 12,696,557 shares.

TABLE OF CONTENTS

Item No.		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	5
	Unaudited Condensed Consolidated Balance Sheets	5
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	7
	Unaudited Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

2

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 Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023. 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;

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•the outcome of litigation or disputes;

•risks related to our information technology systems and infrastructure, including cybersecurity incidents;

•risks to our reputation from negative publicity, social media posts or negative interpretations of our Environmental, Social and Governance (ESG) efforts;

•our ability to maintain effective internal control over financial reporting; and

•other events outside of our control.

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 Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023. 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).

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (unaudited)

URBAN-GRO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash	$	1,136,840	$	1,074,842
Accounts receivable, net	24,040,022		21,648,901
Contract receivables	4,494,635		8,436,567
Prepaid expenses and other assets	4,110,494		1,751,564
Total current assets	33,781,991		32,911,874
Non-current assets:
Property and equipment, net	1,045,554		1,419,393
Operating lease right of use assets, net	1,822,881		2,041,217
Goodwill	9,688,975		9,688,975
Intangible assets, net	2,866,648		3,451,608
Total non-current assets	15,424,058		16,601,193
Total assets	$	49,206,049	$	49,513,067
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	26,529,832	$	24,203,769
Contract liabilities	5,582,430		3,950,133
Accrued expenses	4,496,227		5,284,278
Customer deposits	3,831,796		603,046
Contingent consideration	—		49,830
Notes payable	4,539,665		3,204,840
Operating lease liabilities	694,425		707,141
Total current liabilities	45,674,375		38,003,037
Non-current liabilities:
Operating lease liabilities	1,205,176		1,380,362
Deferred tax asset/(liability)	(66,138)		44,313
Total non-current liabilities	1,139,038		1,424,675
Total liabilities	46,813,413		39,427,712
Commitments and contingencies (note 11)
Stockholders’ equity:
Preferred stock, $0.10 par value; 3,000,000 shares authorized; 0 shares issued and outstanding	—		—
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,063,337 issued and 12,613,504 outstanding as of September 30, 2024, and 13,522,669 issued and 12,072,836 outstanding as of December 31, 2023	14,063		13,523
Additional paid-in capital	89,979,596		88,389,756
Treasury shares, cost basis: 1,449,833 shares as of September 30, 2024 and as of December 31, 2023	(12,045,542)		(12,045,542)
Accumulated deficit	(75,555,481)		(66,272,382)
Total stockholders’ equity	2,392,636		10,085,355
Total liabilities and stockholders’ equity	$	49,206,049	$	49,513,067

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

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URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Equipment systems	$	3,720,174	$	3,035,758	$	9,624,514	$	10,629,327
Services	1,913,246		2,898,741		7,404,843		9,399,968
Construction design-build	4,172,110		13,466,093		25,915,018		34,253,900
Other	83,727		186,337		291,161		509,981
Total revenues and other income	9,889,257		19,586,929		43,235,536		54,793,176
Cost of revenues:
Equipment systems	3,290,624		2,774,147		8,214,233		9,321,922
Services	1,356,925		1,768,166		4,379,087		5,692,663
Construction design-build	3,932,699		12,483,972		23,789,045		31,469,185
Other	57,935		137,359		200,328		365,306
Total cost of revenues	8,638,183		17,163,644		36,582,693		46,849,076
Gross profit	1,251,074		2,423,285		6,652,843		7,944,100
Operating expenses:
General and administrative	4,386,050		5,558,767		14,132,862		19,479,003
Depreciation and Amortization	383,304		372,969		1,169,250		1,201,201
Business development	—		—		25,000		—
Total operating expenses	4,769,354		5,931,736		15,327,112		20,680,204
Loss from operations	(3,518,280)		(3,508,451)		(8,674,269)		(12,736,104)
Non-operating income (expense):
Interest expense	(220,472)		(39,929)		(631,484)		(158,134)
Interest income	285		19,461		521		167,652
Write-down of investment	—		(258,492)		—		(258,492)
Contingent consideration - change in fair value	—		—		—		(160,232)
Loss on settlement	—		—		—		(1,500,000)
Other income (expense)	(33,026)		(34,711)		(88,318)		(191,922)
Total non-operating income (expense)	(253,213)		(313,671)		(719,281)		(2,101,128)
Loss before income taxes	(3,771,493)		(3,822,122)		(9,393,550)		(14,837,232)
Income tax benefit	13,685		—		110,451		—
Net loss	$	(3,757,808)	$	(3,822,122)	$	(9,283,099)	$	(14,837,232)
Comprehensive loss	$	(3,757,808)	$	(3,822,122)	$	(9,283,099)	$	(14,837,232)
Net loss per share - basic and diluted	$	(0.30)	$	(0.33)	$	(0.76)	$	(1.37)
Weighted average shares - basic and diluted	12,423,421		11,649,790		12,249,520		10,859,820

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

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URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2023	13,522,669	$	13,523	$	88,389,756	$	(66,272,382)	$	(12,045,542)	$	10,085,355
Stock-based compensation	—	—		656,576		—		—		656,576
Stock grant program vesting	245,925	246		(246)		—		—		—
Net loss	—	—		—		(2,560,563)		—		(2,560,563)
Balance, March 31, 2024	13,768,594	$	13,769	$	89,046,086	$	(68,832,945)	$	(12,045,542)	$	8,181,368
Stock-based compensation	—	—		460,785		—		—		460,785
Stock grant program vesting	172,558	172		(172)		—		—		—
Stock issued for contingent consideration	71,147	71		129,064		—		—		129,135
Net loss	—	—		—		(2,964,728)		—		(2,964,728)
Balance, June 30, 2024	14,012,299	$	14,012	$	89,635,763	$	(71,797,673)	$	(12,045,542)	$	5,806,560
Stock-based compensation	—	—		343,884		—		—		343,884
Stock grant program vesting	51,038	51		(51)		—		—		—
Net loss	—	—		—		(3,757,808)		—		(3,757,808)
Balance, September 30, 2024	14,063,337	$	14,063	$	89,979,596	$	(75,555,481)	$	(12,045,542)	$	2,392,636

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Total Stockholders’ Equity
	Shares	Amount
Balance, December 31, 2022	12,292,104	$	12,292	$	84,189,965	$	(40,834,721)	$	(12,045,542)	$	31,321,994
Stock-based compensation	—	—		479,641		—		—		479,641
Stock grant program vesting	96,285	96		(96)		—		—		—
Stock issued for contingent consideration	64,224	64		191,855		—		—		191,919
Net loss	—	—		—		(5,251,201)		—		(5,251,201)
Balance, March 31, 2023	12,452,613	$	12,452	$	84,861,365	$	(46,085,922)	$	(12,045,542)	$	26,742,353
Stock-based compensation	—	—		622,547		—		—		622,547
Stock grant program vesting	86,020	86		(86)		—		—		—
Stock issued for contingent consideration	517,776	518		1,292,165		—		—		1,292,683
Net loss	—	—		—		(5,763,909)		—		(5,763,909)
Balance, June 30, 2023	13,056,409	$	13,056	$	86,775,991	$	(51,849,831)	$	(12,045,542)	$	22,893,674
Stock-based compensation	—	—		343,884		—		—		343,884
Stock grant program vesting	8,772	9		(9)		—		—		—
Stock issued for contingent consideration	55,232	55		76,713		—		—		76,768
Net loss	—	—		—		(3,822,122)		—		(3,822,122)
Balance, September 30, 2023	13,120,413	$	13,120	$	87,196,579	$	(55,671,953)	$	(12,045,542)	$	19,492,204

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

7

URBAN-GRO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(9,283,099)	$	(14,837,232)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,169,250		1,201,201
Amortization of right-of-use assets	156,742		323,002
Stock-based compensation expense	1,461,245		1,985,683
Impairment of investment	—		258,492
Change in fair value of contingent consideration	79,305		160,232
Interest income from investments	—		(25,653)
Changes in operating assets and liabilities (net of acquired amounts):
Accounts receivable and contract receivables	1,550,811		(6,881,091)
Prepaid expenses and other assets and property and equipment	(2,053,184)		1,316,110
Accounts payable, contract liabilities, customer deposits, and accrued expenses	6,399,059		11,017,672
Change in contingent consideration from indemnification	—		(917,699)
Operating lease liability	(146,029)		(298,405)
Deferred tax liability	(110,451)		—
Net cash provided by (used in) operating activities	(776,351)		(6,697,688)
Cash flows from investing activities:
Sale of investment	—		2,326,468
Purchases of property and equipment	(97,578)		(420,982)
Net cash provided by (used in) investing activities	(97,578)		1,905,486
Cash flows from financing activities:
Additions to notes payable	5,838,000		—
Repayment of notes payable	(4,808,921)		(1,867,907)
Repayment of finance lease liability	(93,152)		(117,586)
Payments to settle contingent consideration	—		(479,457)
Net cash used in financing activities	935,927		(2,464,950)
Net change in cash	61,998		(7,257,152)
Cash at beginning of period	1,074,842		11,754,349
Cash at end of period	$	1,136,840	$	4,497,197
Supplemental cash flow information:
Cash paid for interest	$	399,218	$	13,402
Net cash paid for income taxes	$	24,785	$	134,252
Supplemental disclosure of non-cash investing and financing activities:
Operating lease right of use assets and liabilities extension	$	—	$	295,631

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

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URBAN-GRO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION, ACQUISITIONS, AND LIQUIDITY

Organization

urban-gro, Inc. (“we,” “us,” “our,” the “Company,” or “urban-gro”) is an integrated professional services and Design-Build firm offering value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture (“CEA”), industrial, healthcare, and other sectors. To serve our horticulture clients, we engineer, design and manage the construction of indoor 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, construction, procurement, and equipment integration provides a single point of accountability across all aspects of indoor growing operations. Further, we serve a broad range of commercial and governmental entities, providing them with planning, consulting, architectural, engineering and construction services for their facilities. As a full-service Design-Build provider, we serve as a trusted partner and advisor, affording clients the simplicity of a single point-of-contact and contract from project conception through completion.

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.

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 Amendment No. 2 on Form 10-K/A for the year ended December 31, 2023.

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 Amendment No. 2 on Form 10-K/A for the year ended December 31, 2023. During the nine months ended September 30, 2024, 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.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

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

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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. 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 three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	3,720,174		$	3,035,758		$	—		$	—		$	3,720,174		$	3,035,758
Services	764,890			468,872			1,148,356			2,429,869			1,913,246			2,898,741
Construction design-build	(1,105,670)			1,739,867			5,277,780			11,726,226			4,172,110			13,466,093
Other	83,727			186,337			—			—			83,727			186,337
Total revenues and other income	$	3,463,121		$	5,430,834		$	6,426,136		$	14,156,095		$	9,889,257		$	19,586,929
Relative percentage	35		%	28		%	65		%	72		%	100		%	100		%

	Nine Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	9,624,514		$	10,629,327		$	—		$	—		$	9,624,514		$	10,629,327
Services	2,530,200			3,282,025			4,874,643			6,117,943			7,404,843			9,399,968
Construction design-build	9,416,279			2,526,427			16,498,739			31,727,473			25,915,018			34,253,900
Other	291,161			509,981			—			—			291,161			509,981
Total revenues and other income	$	21,862,154		$	16,947,760		$	21,373,382		$	37,845,416		$	43,235,536		$	54,793,176
Relative percentage	51		%	31		%	49		%	69		%	100		%	100		%

Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, a performance obligation is a promise in a contract with a customer, to transfer a distinct good or service to the customer. Equipment systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified amount. Service revenue contracts, which include both architectural and engineering designs, generally contain multiple performance obligations which can span across multiple phases of a project and are generally set forth in the contract as distinct milestones. The majority of construction design-build contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design and construction).

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The transaction price for service contracts and construction design-build contracts is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. When there are multiple performance obligations under the same service contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. In general, payment terms are fixed at the time of the contract and are not subject to discounts, incentives, payment bonuses, credits, or penalties, unless negotiated in an amendment.

When establishing the selling price to the customer, the Company uses various observable inputs. For equipment systems, the stand-alone selling price is determined by forecasting the expected costs of the products, and then adding in the appropriate margins established by management. For service revenues and construction design-build revenues, the Company estimates the selling price by reference to certain physical characteristics of the project, which include the facility size, the complexity of the design, and the mechanical systems involved, which are indicative of the scope and complexity for those services. Significant judgments are typically not required with respect to the determination of the transaction price based on the nature of the selling prices of the products and services delivered and the collectability of those amounts. Accordingly, the Company does not consider estimates of variable consideration to be constrained.

The Company recognizes equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied. For satisfaction of equipment system revenues, the Company recognizes revenue when control of the promised good transfers to the customer, which predominately occurs at the time of shipment. For service revenues, satisfaction occurs as the services related to the distinct performance obligations are rendered or completed in exchange for consideration in an amount for which the Company is entitled. The time period between recognition and satisfaction of performance obligations is generally within the same reporting period; thus, there are no material unsatisfied or partially unsatisfied performance obligations for product or service revenues at the end of the reporting period.

Construction design-build revenues are recognized as the Company's obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used for our construction design-build contracts because management considers it to be the best available measure of progress on these contracts.

Contract modifications through change orders, claims and incentives are routine in the performance of the Company’s construction design-build contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of approved contract prices that the Company seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs.

The timing of when the Company bills customers on long-term construction design-build contracts is generally dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized, the result is unbilled revenue, which is included in contract assets. Additionally, when the Company receives advances or deposits from customers before revenue is recognized; the result is deferred revenue, which is included in contract liabilities. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities.

Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts. Contract liabilities represent the Company’s obligation to perform on uncompleted contracts with customers for which the Company has received payment or for which contract receivables are outstanding.

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The following table provides information about contract assets and contract liabilities from contracts with customers:

	September 30, 2024		December 31, 2023
Contract assets:
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage	$	3,551,396	$	7,729,531
Retainage included in contract assets due to being conditional on something other than solely passage of time	943,239		707,036
Total contract assets	$	4,494,635	$	8,436,567
	September 30, 2024		December 31, 2023
Contract liabilities:
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability)	$	5,479,049	$	3,895,826
Retainage included in contract liabilities due to being conditional on something other than solely passage of time	103,381		54,307
Total contract liabilities	$	5,582,430	$	3,950,133

For equipment systems contracts, the Company’s predominant policy is to collect deposits from customers at the beginning of the contract and the balance of the contract payment prior to shipping. The Company does, in some cases, collect deposits or retainers as down payments on service contracts. Consumable products orders may be paid for in advance of shipment or for recurring customers with credit, payment terms of 30 days or less may be extended by the Company. Customer payments that have been collected prior to the performance obligation being recognized are recorded as customer deposit liabilities on the balance sheet. When the performance obligation is satisfied and all the criteria for revenue recognition are met, revenue is recognized. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company is entitled to keep the deposit and recognize revenue.

NOTE 4 – RELATED PARTY TRANSACTIONS

A director of the Company is an owner of Cloud 9 Support, LLC (“Cloud 9”) and Potco LLC (“Potco”). Cloud 9 purchases materials from the Company for use with its customers and Potco purchases equipment from the Company for use in its cultivation facility. Another director of the Company is working on a vertical farming innovation model with a group of CEA experts (“the CEA Consortium”). The CEA Consortium contracts services from the Company related to their business model. The table below presents the revenues for these related party entities for the three and nine months ended September 30, 2024, and 2023:

	Three Months Ended September 30, 2024				Nine Months Ended September 30, 2024
	2024		2023		2024		2023
Revenue - Cloud 9	$	—	$	—	$	—	$	462
Revenue - Potco	—		139,031		3,266		987,268
Revenue - CEA Consortium	$	—	$	245,000	$	—	$	245,000
Total revenues from related party transactions	$	—	$	384,031	$	3,266	$	1,232,730

The table below presents the accounts receivable from these related party entities as of September 30, 2024, and December 31, 2023:

	September 30, 2024		December 31, 2023
Accounts receivable - Cloud 9	$	—	$	—
Accounts receivable - Potco	163,088		163,088
Accounts receivable - CEA Consortium	$	245,000	$	245,000
Total accounts receivable due from related party transactions	$	408,088	$	408,088

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NOTE 5 – PREPAID EXPENSES AND OTHER ASSETS

Prepayments and other assets are comprised of prepayments paid to vendors to initiate orders, prepaid services and fees, inventories, and other assets. These amounts are summarized as follows:

	September 30, 2024		December 31, 2023
Vendor prepayments	$	3,255,901	$	130,522
Prepaid services and fees	609,721		1,168,309
Inventories	221,676		228,858
Other assets	23,196		223,875
Total Prepaid expenses and other assets	$	4,110,494	$	1,751,564

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment balances are summarized as follows:

	September 30, 2024		December 31, 2023
Computers and technology equipment	$	360,191	$	294,322
Furniture and fixtures	325,485		325,485
Leasehold improvements	228,759		228,760
Vehicles	432,823		432,823
Software	1,119,278		1,087,569
Other equipment	145,950		145,950
Total property and equipment	2,612,486		2,514,909
Accumulated depreciation	(1,566,932)		(1,095,516)
Total property and equipment, net	$	1,045,554	$	1,419,393

Depreciation expense for the three months ended September 30, 2024, and 2023 totaled $188,316 and $131,138, respectively and totaled $584,289 and $385,185 for the nine months September 30, 2024 and 2023 ended respectively.

NOTE 7 – INVESTMENTS

As of September 30, 2024 and December 31, 2023 the Company did not have any investments.

XS Financial

On October 30, 2021, the Company participated in a convertible note offering of Xtraction Services, Inc., a/k/a XS Financial Inc. (CSE: XSF) (OTCQB: XSHLF) ("XSF"), a specialty finance company providing CAPEX financing solutions, including equipment leasing, to CEA companies in the United States. The Company invested $2,500,000 of a total $43,500,000 raised by XSF. Prior to any Nasdaq listing, the investment incurs 9.5% interest payable, of which, 7.5% is cash interest and 2.0% is interest paid in kind. Subsequent to any Nasdaq listing by XSF, the investment incurs 8.0% cash interest. The debt matures on October 28, 2023, with a one-year option at the sole discretion of XSF to extend the maturity date. In addition, the Company received 1,250,000 warrants denominated in Canadian dollars ("C$") with a C$0.45 exercise price as subject to the warrant instrument. No value was attributed to the warrants at the time of the investment. In August 2023, the Company entered into an agreement to sell back its investment to XSF for $2.3 million and cancel the warrants. The Company received the $2.3 million in proceeds on August 30, 2023. In connection with the agreement to sell the investment, the Company recorded an impairment loss of $0.3 million for the three months ended September 30, 2023.

NOTE 8 – GOODWILL & INTANGIBLE ASSETS

Goodwill

The Company has recorded goodwill in conjunction with the acquisitions it has completed. The goodwill balances as of September 30, 2024 and December 31, 2023 were $9,688,975 and $9,688,975, respectively. Goodwill is not amortized. The Company did not record any impairment charges related to goodwill for the three or nine months ended September 30, 2024 and 2023.

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Intangible Assets Other Than Goodwill

Intangible assets as of September 30, 2024 and December 31, 2023 consisted of the following:

	As of September 30, 2024
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,323,003)	$	1,946,198
Trademarks and trade names	1,778,000		(930,117)		847,883
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,976,957)		2,794,081
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,976,957)	$	2,866,648

	December 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,004,743)	$	2,264,458
Trademarks and trade names	1,778,000		(663,417)		1,114,583
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,391,997)		3,379,041
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,391,997)	$	3,451,608

Amortization expense for intangible assets subject to amortization for the three months ended September 30, 2024 and 2023 was $239,332 and $241,831, respectively and totaled $584,960 and $816,016 for the nine months ended September 30, 2024 and 2023, respectively . The estimated future amortization expense for intangible assets subject to amortization as of September 30, 2024 is summarized below:

For the years ending December 31,	Estimated Future Amortization Expense
Remainder of 2024	$	194,995
2025	779,948
2026	738,364
2027	513,714
2028	405,306
2029	161,754
Total estimated future amortization expense	$	2,794,081

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NOTE 9 – ACCRUED EXPENSES

Accrued expenses are summarized as follows:

	September 30, 2024		December 31, 2023
Accrued operating expenses	$	73,835	$	277,987
Accrued wages and related expenses	1,103,290		1,349,195
Business development accrual	113,620		376,816
Accrued interest expense	73,359		26,000
Accrued 401(k)	16,736		66,642
Accrued sales tax payable	3,115,387		3,187,638
Total accrued expenses	$	4,496,227	$	5,284,278

Accrued sales tax payable is comprised of amounts due to various states and Canadian provinces.

NOTE 10 – NOTES PAYABLE

The table below shows outstanding notes payable amounts as of September 30, 2024 and December 31, 2023.

	As of
	September 30, 2024		December 31, 2023
Line of credit	$	4,400,137	$	2,500,000
DVO note	133		575,240
Other financing agreements	139,395		129,600
Total	$	4,539,665	$	3,204,840
Less current maturities	(4,539,665)		(3,204,840)
Long Term	—		–

On December 13, 2023, UG Construction, a wholly owned subsidiary of the Company, entered into an interest only asset based revolving Loan Agreement (the “Line of Credit”) with Gemini Finance Corp. (“Lender”) pursuant to which Lender extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and the Company with cash management. Lender will consider requests for advances under the Line of Credit, which Lender may accept or reject in its discretion, until September 12, 2024 (the “Initial Term”), subject to an automatic extension for an additional nine-month term until May 12, 2025, provided that UG Construction is in compliance with all the terms of the applicable loan documents and Lender has not sent a written notice of non-renewal at least 60 days prior to expiration of the Initial Term. The Line of Credit contains standard events of default and representations and warranties by UG Construction and the Lender and the Company have entered into a Continuing Guaranty pursuant to which the Company will guarantee repayment of the loans associated with the Line of Credit (the “Guaranty Agreement”).

Loans made under the Line of Credit shall be evidenced by a Secured Promissory Note - Revolving issued by UG Construction to the Lender (the “Promissory Note”), and each draw on the Promissory Note shall be due and payable on or before 180 days after such draw is funded to UG Construction; provided that, such draw is also subject to a mandatory prepayment upon UG Construction’s receipt of payment for any invoice previously submitted and approved for financing by Lender. Lender will receive a security interest in UG Construction’s Collateral (as defined in the “Security Agreement” entered into as part of the Line of Credit). The Promissory Note earns interest at a monthly rate of one and seventy-five hundredths percent (1.75%).

In connection with entering in the Line of Credit, the Company has agreed to issue to Bancroft Capital, LLC (the “Placement Agent”) cash and warrant compensation in two separate tranches, the first being earned upon closing of the Line of Credit and the remainder of which will be due if and when UG Construction draws more than $4,500,000 from the Line of Credit. Both instances are detailed as follows:

    1.At closing of the Line of Credit, the Placement Agent earned a cash fee of $200,000. In addition to the cash fee, the Company will issue to the Placement Agent or its designees, $200,000 worth of warrants (the “Placement Agent’s Warrants”) to purchase the Company’s common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company’s common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the Closing. The Placement Agent’s Warrants will be exercisable at any time and from time to time, in

15

whole or in part, during the four and a half-year period commencing six (6) months from the date of issuance. The Placement Agent’s Warrants will provide for registration rights (including a one-time demand registration right and unlimited piggyback rights), cashless exercise and customary anti-dilution provisions (for stock dividends and splits) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants) resulting from corporate events (which would include dividends, reorganizations, mergers, etc.).

    2. If and when Emerald draws more than $4,500,000 from the Line of Credit, the Placement Agent will earn an additional cash fee of $200,000, and an additional $200,000 worth of Placement Agent’s Warrants to purchase the Company’s common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company’s common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the date that the draws exceeding $4,500,000 were to take place.

As part of the Asset Purchase Agreement of DVO, a non-negotiable promissory note in the aggregate principal amount of $3,806,250, payable to DVO was issued effective November 1, 2022 (the "DVO Promissory Note"). The principal amount, together with the simple interest accrued on the unpaid principal amount outstanding was to be paid by the Company on a quarterly basis for the first four consecutive quarters, with the first payment paid in January 2023, and the remaining three payments due ten days following the end of each subsequent fiscal quarter thereafter until the earlier of the end of the fourth full fiscal quarter following the closing date December 31, 2023 or the payment in full of all amounts due. In the third quarter ended September 30, 2023, a portion of that quarter’s note payment was extended to the first quarter ended March 31, 2024. The DVO Promissory Note may be prepaid in whole or in part at any time without premium or penalty; provided, that each payment shall be accompanied by payment of all unpaid costs, fees and expenses, if any, which are due plus all accrued and unpaid interest due as of the date of such prepayment.

The outstanding principal balance under the DVO Promissory Note shall bear simple interest at a variable rate per annum equal to the rate of interest most recently published by JP Morgan Chase & Co. as the "prime rate" (the "Prime Rate"). Initially, interest will accrue at the Prime Rate as of the date of the DVO Promissory Note. The interest rate will be adjusted on a quarterly basis as of the first day of each full fiscal quarter following the first full fiscal quarter after the closing date to the then current Prime Rate. In connection with the extension of the DVO Promissory Note payment to the first quarter ended March 31, 2024, the interest rate was revised to a fixed rate of 10%, with principal and interest to be paid on a weekly basis.

The other financing agreements relate to short-term financing of the Company's insurance policies and are at an average interest rate of 13.6%.

NOTE 11 – OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

The Company has seven operating office lease liabilities and one finance office lease liability with an imputed annual interest rate of 8.0%. Five of the leases were assigned to the Company in connection with its various acquisitions. The remaining lease terms range from less than a year to 6 years, as of September 30, 2024. The following is a summary of operating lease liabilities:

	September 30, 2024		December 31, 2023
Operating lease liabilities related to right of use assets	$	1,899,601	$	2,087,503
Less current portion	(694,425)		(707,141)
Long term	$	1,205,176	$	1,380,362

The following is a schedule showing total future minimum lease payments:

For the years ending December 31,	Minimum Lease Payments
Remainder of 2024	$	185,076
2025	678,835
2026	488,751
2027	346,812
2028	253,415
Thereafter	82,489
Total minimum lease payments	2,035,378
Less: Amount representing interest	(135,777)
Net lease obligations	$	1,899,601

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From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no ongoing legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows.

On August 11, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Crest Ventures, LLC (“Crest”) and Andrew Telsey to settle all claims in the litigation filed in the District Court for Arapahoe County, Colorado, Case No. 2021CV31301. Pursuant to the Settlement Agreement, the Company paid $1,500,000 to Crest on September 7, 2023. In connection with this settlement, the Company recorded a loss in the second quarter ended June 30, 2023 of $1,500,000 in accordance with GAAP related to loss contingencies.

NOTE 12 – RISKS AND UNCERTAINTIES

Concentration Risk

The table below shows customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts receivable for the periods presented:

Customers exceeding 10% of revenue

	Three Months Ended September 30,				Nine Months Ended September 30,
Company Customer Number	2024		2023		2024		2023
C000001462	40	%	—	%	11	%	*
C000002187	13	%	22	%	22	%	23	%
C000002607	13	%	*		*		*
C000002552	*		*		24	%	*
*Amounts less than 10%

Customers exceeding 10% of accounts receivable

	As of September 30,		As of December 31,
Company Customer Number	2024		2023
C000002187	23	%	57	%
C000002552	22	%	*
*Amounts less than 10%

The table below shows vendors who account for 10% or more of the Company’s total purchases and 10% or more of the Company’s accounts payable for the periods presented:

Vendors exceeding 10% of purchases

	Three Months Ended September 30,			Nine Months Ended September 30,
Company Vendor Number	2024		2023	2024		2023
V000002275	*		*	*		*
V000002198	14	%	*	11	%	*
V000002503	51	%	*	40	%	*
*Amounts less than 10%

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Vendors exceeding 10% of accounts payable

	As of September 30,		As of December 31,
Company Vendor Number	2024		2023
V000002275	10	%	13	%
V000002503	25	%	*
V000002198	*		*
*Amounts less than 10%

Foreign Exchange Risk

Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, it may not mitigate currency risks.

NOTE 13 – STOCK-BASED COMPENSATION

Based on the vesting schedule of the grants of restricted stock units (“RSU” or “RSUs”) and options, stock-based compensation expense for the three months ended September 30, 2024 and 2023 totaled $343,884 and $722,647, respectively, and totaled $1,461,245 and $1,824,835 for the nine months ended September 30, 2024, and 2023, respectively.

The Company has adopted the 2021 Omnibus Stock Incentive Plan, as amended (the “Omnibus Incentive Plan”), which provides for the issuance of incentive stock options, grants of RSUs, and stock-based awards to employees, directors, and consultants of the Company to reward and attract employees and compensate the Company’s Board of Directors (the “Board”) and vendors when applicable. The Omnibus Incentive Plan is administered by the Company's Board. Grants of RSUs under the Omnibus Incentive Plan are valued at no less than the market price of the stock on the date of grant. The fair value of the options is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the options, risk-free interest rate and expected volatility of the price of the underlying common stock of 100%. There is a moderate degree of subjectivity involved when estimating the value of stock options with the Black-Scholes option pricing model as the assumptions used are moderately judgmental. Grant of RSUs and stock options are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Grants of RSUs and stock options typically require a 1 to 3 year period of continued employment or service performance before the grant of RSUs or stock options vest. No cash flow effects are anticipated for grants of RSUs or stock options.

The following schedule shows RSU activity for the nine months ended September 30, 2024:

	Number of Shares
Grants of RSUs unvested as of December 31, 2023	580,292
Grants of RSUs	1,081,051
Forfeiture/cancelled	(68,350)
Grants of RSUs vested	(517,149)
Grants of RSUs unvested as of September 30, 2024	1,075,844

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The following table summarizes the vesting time periods of these unvested RSUs:

Number of Shares	Vesting Time Period
2,621	Remainder of 2024
419,088	2025
296,020	2026
355,615	2027
2,500	2028
1,075,844

The following schedule shows stock option activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Stock options outstanding as of December 31, 2023	501,829	4.67	$	6.81
Issued	—	0	$	—
Forfeited	(43,279)	0	$	6.78
Exercised	—	0	$	—
Stock options outstanding as of September 30, 2024	458,550	3.78	$	6.81
Stock options exercisable as of September 30, 2024	444,888	0	$	6.79

As of September 30, 2024, the Company has $0 in unrecognized stock-based compensation expense related to these stock options. The aggregate intrinsic value of the options outstanding and exercisable at September 30, 2024 is $0.

NOTE 14 – STOCKHOLDERS’ EQUITY

On May 24, 2021, the Board authorized a stock repurchase program to purchase up to $5.0 million of the currently outstanding shares of the Company’s common stock, over a period of 12 months through open market purchases, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. On January 18, 2022, the Board authorized a $2.0 million increase to the stock repurchase program, to a total of $7.0 million. On February 2, 2022, the Board authorized an additional $1.5 million increase to the stock repurchase, to a total of $8.5 million. On September 12, 2022, the Board authorized an additional $2 million increase to the stock repurchase, to a total of $10.5 million. In total, the Company has repurchased 1,099,833 shares of common stock at an average price per share of $8.25 for a total of $9.1 million, under this program.

The Company did not repurchase shares of common stock either during the nine months ended September 30, 2024 or during the three months ended September 30, 2023. As of September 30, 2024, we have $1.4 million remaining under the repurchase program.

In February 2021, the Company repurchased 350,000 shares of common stock with an average price per share of $8.50, for a total of $3.0 million, outside of any stock repurchase or publicly announced program.

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NOTE 15 – WARRANTS

The following table shows warrant activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Exercise Price
Warrants outstanding as of December 31, 2023	511,681	$	8.74
Issued	—	$	—
Exercised	—	$	—
Expired	(25,650)	$	14.46
Warrants outstanding as of September 30, 2024	486,031	$	8.44
Warrants exercisable as of September 30, 2024	486,031	$	8.44

The aggregate intrinsic value of the warrants outstanding and exercisable as of September 30, 2024 is $22,233.

NOTE 16 – INCOME TAXES

The Company has experienced cumulative losses for both book and tax purposes since inception. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and any tax assets that that the Company may be entitled to have been fully reserved based on management’s current estimates. Management intends to continue maintaining a full valuation allowance on the Company’s deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.The deferred income tax benefit for the nine months ended September 30, 2024 and 2023 relates to the reduction in the deferred tax liability associated with the amortization of the intangible assets from the acquisitions of the 2WR Entities and Emerald. The Company records state income taxes paid during the year within the Other income (expense) financial statement line item.

NOTE 17 – SUBSEQUENT EVENTS

Term Loan

On October 1, 2024, urban-gro, Inc. (the “Company”) entered into an asset based term Loan Agreement (the “Loan”) with Grow Hill, LLC, a Washington limited liability company (the “Lender”) pursuant to which the Lender extended to the Company a secured loan of $2,100,000, to be used to assist the Company with cash management, including to support the Company’s growth in the cannabis industry. The Loan is for a term of 24 months and has an origination fee of $100,000, which was added to the amount of the Loan. There is no penalty to prepayment, except the Lender will receive at least $150,000 in minimum interest (represents approximately 6 months of interest) if Company chooses to prepay the Loan early. The Loan contains standard events of default and representations and warranties by the Company and the Lender.

The Loan is evidenced by a Secured Promissory Note issued by the Company to the Lender (the “Grow Hill Promissory Note”). The Lender received a security interest in certain of the Company’s assets pursuant to a security agreement between the Company and the Lender (the “Security Agreement”), which does not include any assets of the Company’s subsidiaries, including those securing the Company’s existing line of credit. The Grow Hill Promissory Note accrues simple interest at an annual rate of fifteen percent (15%).

In connection with entering in the Loan, the Company issued to Lender a warrant (the “Warrant”) to purchase up to an aggregate of 160,000 shares of the Company’s common stock at an exercise price of $2.50 per share. The Warrant is exercisable immediately, will expire on the five (5) year anniversary of issuance, and is exercisable on a cashless basis at the election of the holder.

Modification of Agreement with Bancroft Related to Line of Credit

On October 2, 2024, the Company amended its agreement with the Placement Agent to modify the terms of the cash and warrant compensation associated with the Line of Credit. Under this amendment, the thresholds at which the cash fee are to be paid changed as follows: 50% at placement of the line of credit; 11.23% when 45% or more of the line of credit is drawn; and the remainder of the cash fee when 60% or more of the line of credit is drawn. In addition, the thresholds at which the warrant fee are to be paid changed as follows: 50% at placement of the line of credit; and the remainder when 60% or more is drawn on the line of credit.

Equity Issuances After September 30, 2024

20

Subsequent to the period ended September 30, 2024, 170,000 RSUs were granted to employees, directors, and consultants with various vesting periods.

Settlement of Pullar Lawsuit

On May 5, 2022, Robert Pullar (“Pullar”) filed a lawsuit against urban-gro and Bradley Nattrass, in his capacity as the Company’s CEO, relating to a prior settlement agreement the Company had entered into with Pullar. On Friday, January 31, 2025, the parties entered a settlement agreement, without any admission of liability or wrongdoing, to settle all claims associated with the litigation in exchange for a cash payment by the Company to Pullar of $250,000 and an issuance of a warrant to purchase up to 75,000 shares of common stock with an exercise price per share of $1.00.

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included herein. See also “Forward-Looking Statements” on pages 3-4 of this this Quarterly Report on Form 10-Q.

OVERVIEW AND HISTORY

urban-gro, Inc. is an integrated professional services and Design-Build firm offering solutions to the Controlled Environment Agriculture (“CEA”) and other industrial sectors. Our business specializes in fee-based, knowledge-driven services and value-added equipment procurement and integration. We generate income income from our ability to drive revenue through the provision of architectural, engineering, systems procurement and integration, and construction services to clients across CEA and commercial markets. In CEA, our clients include cannabis and produce operators and facilitators throughout the United States, Canada, and Europe. In commercial sectors, we work with leading food and beverage Commercial Packaged Goods (“CPG”) companies, higher education institutions, municipalities and government agencies, hospitality brands, and more.

RESULTS OF OPERATIONS

Comparison of Results of Operations for the three months ended September 30, 2024 and 2023

During the three months ended September 30, 2024, we generated revenues of $9.9 million compared to revenues of $19.6 million during the three months ended September 30, 2023, a decrease of $9.7 million, or approximately 50%. This decrease in revenues is the net result of the following changes in individual revenue components:

•Equipment systems revenue increased $0.7 million due to increased momentum in the CEA sector;

•Services revenue decreased $1.0 million due to market headwinds in the commercial segment that the Company feels was tied to macro-influences leading up to the November presidential election; and

•Construction design-build revenue decreased $9.3 million due to a slow down in signing new contracts amid the backdrop of uncertainty driven by the November presidential election.

During the three months ended September 30, 2024, cost of revenues was $8.6 million compared to $17.2 million during the three months ended September 30, 2023, a decrease of $8.5 million, or approximately 50%. Gross profit was $1.3 million (approximately 13% of revenues) during the three months ended September 30, 2024, compared to $2.4 million (approximately 12% of revenue) during the three months ended September 30, 2023. This decrease in gross profit dollars and gross profit as a percentage of revenues was the net result of reduced margins in Construction design-build projects and increased margins in Equipment systems as compared to the prior year. Construction design-build gross profit was reduced primarily due to a legacy project that incurred costs that could not be billed back to the customer.

Operating expenses decreased by $1.2 million, or approximately 20%, to $4.8 million for the three months ended September 30, 2024 compared to $5.9 million for the three months ended September 30, 2023. This overall decrease in operating expenses was the result of decreases in salary and personnel related costs, including the elimination of the incentive retention plan in 2024.

Non-operating expense was $0.3 million for the three months ended September 30, 2024, compared to non-operating expense of $0.3 million for the three months ended September 30, 2023.

As a result of the above, for the three months ended September 30, 2024, we incurred a net loss of $3.8 million, or a net loss per share of $0.30, compared to a net loss of $3.8 million, or a net loss per share of $0.33 for the three months ended September 30, 2023.

Comparison of Results of Operations for the nine months ended September 30, 2024 and 2023

During the nine months ended September 30, 2024, we generated revenues of $43.2 million compared to revenues of $54.8 million during the nine months ended September 30, 2023, a decrease of $11.6 million, or 21%. This decrease in revenues is the result of the following changes in individual revenue components:

•Equipment systems revenue decreased $1.0 million due to negative market conditions in the CEA sector in the first half of the year and a subsequent reduction in capital equipment spending by clients;

•Services revenue decreased $2.0 million due to negative market conditions in the CEA sector in the first half of the year as well as a slow down in signing new contracts in the third quarter by our commercial clients;

22

•Construction design-build revenue decreased $8.3 million due to a slow down in signing new contracts amid the backdrop of uncertainty driven by the November presidential election, as well as a result of our division-wide review of current clients and contracts, and the profit-generating contract-types that the company intends to engage in going forward: and

•Other revenues decreased $0.2 million.

During the nine months ended September 30, 2024, cost of revenues was $36.6 million compared to $46.8 million during the nine months ended September 30, 2023, a decrease of $10.3 million, or 22%. Gross profit was $6.7 million (15% of revenues) during the nine months ended September 30, 2024, compared to $7.9 million (14% of revenue) during the nine months ended September 30, 2023. This decrease in gross profit dollars was primarily due to lower revenue. The gross profit percentage was consistent between periods.

Operating expenses decreased by $5.4 million, or 26%, to $15.3 million for the nine months ended September 30, 2024 compared to $20.7 million for the nine months ended September 30, 2023. This overall decrease was the result of the previously disclosed initiative in the first quarter to reduce operating expenses through a reduction in force as well as the elimination of the incentive retention plan in 2024. These reductions were offset by additional professional fees incurred in connection with the re-audit of the Company’s 2023 and 2022 financial statements.

Non-operating expense was $0.7 million for the nine months ended September 30, 2024, compared to non-operating expense of $2.1 million for the nine months ended September 30, 2023. Non-operating expense for the nine months ended September 30, 2023 included a loss on settlement of $1.5M.

As a result of the above, for the nine months ended September 30, 2024, we incurred a net loss of $9.3 million, or a net loss per share of $0.76, compared to a net loss of $14.8 million, or a net loss per share of $1.37 for the nine months ended September 30, 2023.

NON-GAAP FINANCIAL MEASURES

The Company uses the supplemental financial measure of Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) as a measure of our operating performance. Adjusted EBITDA is not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and it is not a substitute for other measures prescribed by GAAP such as net income (loss), income (loss) from operations, and cash flows from operating activities. We define Adjusted EBITDA as net income (loss) attributable to urban-gro, Inc., determined in accordance with GAAP, excluding the effects of certain operating and non-operating expenses including, but not limited to, interest expense/income, income taxes/benefit, depreciation of tangible assets, amortization of intangible assets, impairment of investments, foreign exchange gains and losses, debt forgiveness and extinguishment, stock-based compensation expense, and non-recurring legal and acquisition costs, that we do not believe reflect our core operating performance.

Our Board and management team focus on Adjusted EBITDA as a key performance and compensation measure. We believe that Adjusted EBITDA assists us in comparing our operating performance over various reporting periods because it removes from our operating results the impact of items that our management believes do not reflect our core operating performance.

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The following table reconciles net income (loss) attributable to the Company to Adjusted EBITDA for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net loss (GAAP)	$	(3,757,808)	$	(3,822,122)	$	(9,283,099)	$	(14,837,232)
Interest expense	220,472		39,929		631,484		158,133
Interest income	(285)		(19,461)		(521)		(167,652)
Federal and state income tax (provisions)	(13,685)		—		(110,451)		—
Federal and state income tax payments	17,825		30,976		55,975		165,228
Depreciation and amortization	383,304		372,970		1,169,250		1,201,202
EBITDA (non-GAAP)	(3,150,177)		(3,397,708)		(7,537,362)		(13,480,321)
Non-recurring professional fees	296,606		284,642		674,259		769,253
Contingent consideration - change in fair value	—		—		—		160,232
Contingent consideration - DVO acquisition	74,806		78,181		222,167		204,878
Reduction in force costs	—		31,987		465,027		294,990
One time business development expenses	—		—		25,000		—
Impairment loss	—		258,492		—		258,492
Retention incentive	—		300,000		—		942,000
Loss on settlement	—		—		—		1,500,000
Stock-based compensation	343,884		722,647		1,461,245		1,985,683
Transaction costs	—		29,141		—		91,079
Adjusted EBITDA (non-GAAP)	$	(2,434,881)	$	(1,692,618)	$	(4,689,664)	$	(7,273,714)

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2024, we had negative working capital of $11.9 million, compared to negative working capital of $5.1 million as of December 31, 2023, a decrease of $6.8 million. This decrease was primarily due to the net effects of the following:

•an increase in accounts payable, accrued expenses, contract liabilities, and accrued expenses of $6.4 million;

•an increase in the line of credit of $1.9 million;

•an increase in accounts receivable, net and contract receivables of $1.6 million.

These changes were primarily the result of the negative operating results experienced for the nine months ended September 30, 2024.

On December 13, 2023, UG Construction, Inc. ("UG Construction"), a wholly owned subsidiary of the Company, entered into an interest only asset based revolving loan agreement (the “Line of Credit") with Gemini Finance Corp. ("Lender") pursuant to which Lender extended to UG Construction the Line of Credit in an amount not to exceed $10.0 million to be used to assist UG Construction and the Company with cash management. Lender will consider requests under the Line of Credit, which Lender could have accepted or rejected in its discretion, until September 12, 2024 (the “Initial Term"), subject to an automatic extension for an additional nine-month term until May 12, 2025, provided that UG Construction is in compliance with all the terms of the applicable loan documents and Lender has not sent a written notice of non-renewal at least 60 days prior to expiration of the Initial Term. The Line of Credit contains standard events of default and representations and warranties by UG Construction and the Lender and the Company has entered into a Continuing Guaranty pursuant to which the Company will guarantee repayment of the loans associated with the Line of Credit (the “Guaranty Agreement”). Loans made under the Line of Credit earns interest at a monthly rate of one and seventy-five hundredths percent (1.75%). As of September 30, 2024, we had borrowed $4.4 million under the Line of Credit.

As of September 30, 2024, we had cash of $1.1 million, which represented a decrease of $0.1 million from December 31, 2023 due to the following changes during the nine months ended September 30, 2024:

•Net cash used by operating activities was $0.8 million. This use of cash is the net effect of the net loss of $9.3 million, offset by non-cash expenses of $2.9 million, and a reduction in net operating assets and liabilities of $5.6 million. See the condensed consolidated statements of cash flows for further details on the non-cash expenses and net changes in operating assets and liabilities;

•Net cash used in investing activities was $0.1 million. We have no material commitments for capital expenditures as of September 30, 2024.

•Net cash provided by financing activities was $0.9 million. Cash used from financing activities primarily relates to cash provided by our line of credit and other financing agreements of $5.8 million offset by $4.8 million of payments made on the line of credit and other financing agreements.

INFLATION

Inflation on the cost of labor, raw materials and other items that are critical to our business, has resulted in increased costs for our customers. In addition, the U.S. Government has responded to inflation by raising interest rates, which has increased the cost of capital for our customers. We believe this has resulted in some customers delaying projects, reducing the scope of projects or potentially canceling projects, as well as increased costs of our operations, which has negatively impacted the results of our operations during the quarter ended September 30, 2024. We maintain strategies to mitigate the impact of higher material, energy and commodity costs, including cost reduction, alternative sourcing strategies, and passing along cost increase to customers, which may offset only a portion of the adverse impact.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion about the Company’s

25

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 Amendment No. 2 on Form 10-K/A for the year ended December 31, 2023. During the nine months ended September 30, 2024, there were no material changes made to the Company’s significant accounting policies.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this this Quarterly Report on Form 10-Q.

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO have concluded, with reasonable assurance, that our disclosure controls and procedures were not effective as of September 30, 2024 because of the material weaknesses in our internal control over financial reporting described in the Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023..

We believe that our financial statements presented in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the nine months ended September 30, 2024, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Plan to Remediate the Material Weaknesses

As it relates to the material weaknesses that existed as of September 30, 2024, we are currently in the process of designing and implementing remediation plans and taking steps to address the root cause of the material weaknesses described in the Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023. There have been no changes to the remediation plan described in the Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we become involved in or are threatened with legal disputes. Most of these disputes are not likely to have a material effect on our business, financial condition, or operations. There are no new material legal proceedings that were initiated or terminated during the period covered by this report and there were no material developments in the material proceedings identified in Part 1, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 during the period covered by this report.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023, each of which is incorporated herein by reference and which could materially affect our business, financial condition or future results. The risks described herein and in those filings are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. We do not believe that there have been any material changes from the risk factors previously disclosed in our Annual Report on Amendment No. 2 on Form 10-K/A for the fiscal year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Sales of Unregistered Securities

None.

Repurchase of Equity Securities

We did not repurchase any of our registered equity securities during the period covered by this Quarterly Report on Form 10-Q.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Exhibit Description
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Schema Document
101.CAL	Inline XBRL Calculation Linkbase Document
101.DEF	Inline XBRL Definition Linkbase Document
101.LAB	Inline XBRL Label Linkbase Document
101.PRE	Inline XBRL Presentation Linkbase Document
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document)

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 18, 2025.

URBAN-GRO, INC.
By:	/s/ Bradley Nattrass
	Bradley Nattrass
	Chairperson of the Board of Directors and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Richard Akright
	Richard A. Akright
	Chief Financial Officer
	(Principal Financial Officer)
	(Principal Accounting Officer)

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bradley Nattrass, certify that:

1.I have reviewed this quarterly report on Form 10-Q of urban-gro, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 18, 2025	/s/ Bradley Nattrass
	Bradley Nattrass
	Chairperson of the Board of Directors and Chief Executive Officer

EX-31.2

Exhibit31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. Akright, certify that:

1.I have reviewed this quarterly report on Form 10-Q of urban-gro, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 18, 2025	/s/ Richard A. Akright
	Richard A. Akright
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C., SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of urban-gro, Inc. (the “Company”) on Form 10-Q for the three months ended June 30, 2024, as filed with the Securities and Exchange Commission on February 18, 2025, (the “Report”), we, the undersigned, in the capacities and on the date indicated below, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 18, 2025	/s/ Bradley Nattrass
	Bradley Nattrass
	Chairperson of the Board of Directors and Chief Executive Officer
Dated: February 18, 2025	/s/ Richard A. Akright
	Richard A. Akright
	Chief Financial Officer

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Cover - shares	9 Months Ended
	Sep. 30, 2024	Feb. 18, 2025
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-39933
Entity Registrant Name	URBAN-GRO, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-5158469
Entity Address, Address Line One	1751 Panorama Point
Entity Address, Address Line Two	Unit G
Entity Address, City or Town	Lafayette
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80026
City Area Code	720
Local Phone Number	390-3880
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	UGRO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		12,696,557
Entity Central Index Key	0001706524
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
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XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 1,136,840	$ 1,074,842
Accounts receivable, net	24,040,022	21,648,901
Contract receivables	4,494,635	8,436,567
Prepaid expenses and other assets	4,110,494	1,751,564
Total current assets	33,781,991	32,911,874
Non-current assets:
Property and equipment, net	1,045,554	1,419,393
Operating lease right of use assets, net	1,822,881	2,041,217
Goodwill	9,688,975	9,688,975
Intangible assets, net	2,866,648	3,451,608
Total non-current assets	15,424,058	16,601,193
Total assets	49,206,049	49,513,067
Current liabilities:
Accounts payable	26,529,832	24,203,769
Contract liabilities	5,582,430	3,950,133
Accrued expenses	4,496,227	5,284,278
Customer deposits	3,831,796	603,046
Contingent consideration	0	49,830
Notes payable	4,539,665	3,204,840
Operating lease liabilities	694,425	707,141
Total current liabilities	45,674,375	38,003,037
Non-current liabilities:
Operating lease liabilities	1,205,176	1,380,362
Deferred tax asset	(66,138)
Deferred tax liability		44,313
Total non-current liabilities	1,139,038	1,424,675
Total liabilities	46,813,413	39,427,712
Commitments and contingencies (note 11)
Stockholders’ equity:
Preferred stock, $0.10 par value; 3,000,000 shares authorized; 0 shares issued and outstanding	0	0
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,063,337 issued and 12,613,504 outstanding as of September 30, 2024, and 13,522,669 issued and 12,072,836 outstanding as of December 31, 2023	14,063	13,523
Additional paid-in capital	89,979,596	88,389,756
Treasury shares, cost basis: 1,449,833 shares as of September 30, 2024 and as of December 31, 2023	(12,045,542)	(12,045,542)
Accumulated deficit	(75,555,481)	(66,272,382)
Total stockholders’ equity	2,392,636	10,085,355
Total liabilities and stockholders’ equity	$ 49,206,049	$ 49,513,067

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	14,063,337	13,522,669
Common stock, shares outstanding (in shares)	12,613,504	12,072,836
Treasury stock, shares, cost basis (in shares)	1,449,833	1,449,833

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues:
Total revenues and other income	$ 9,889,257	$ 19,586,929	$ 43,235,536	$ 54,793,176
Total cost of revenues	8,638,183	17,163,644	36,582,693	46,849,076
Gross profit	1,251,074	2,423,285	6,652,843	7,944,100
Operating expenses:
General and administrative	4,386,050	5,558,767	14,132,862	19,479,003
Depreciation and amortization	383,304	372,969	1,169,250	1,201,201
Business development	0	0	25,000	0
Total operating expenses	4,769,354	5,931,736	15,327,112	20,680,204
Loss from operations	(3,518,280)	(3,508,451)	(8,674,269)	(12,736,104)
Non-operating income (expense):
Interest expense	(220,472)	(39,929)	(631,484)	(158,134)
Interest income	285	19,461	521	167,652
Write-down of investment	0	(258,492)	0	(258,492)
Contingent consideration - change in fair value	0	0	0	(160,232)
Loss on settlement	0	0	0	(1,500,000)
Other income (expense)	(33,026)	(34,711)	(88,318)	(191,922)
Total non-operating income (expense)	(253,213)	(313,671)	(719,281)	(2,101,128)
Loss before income taxes	(3,771,493)	(3,822,122)	(9,393,550)	(14,837,232)
Income tax benefit	13,685	0	110,451	0
Net loss	(3,757,808)	(3,822,122)	(9,283,099)	(14,837,232)
Comprehensive loss	$ (3,757,808)	$ (3,822,122)	$ (9,283,099)	$ (14,837,232)
Net loss per share – basic (in dollars per share)	$ (0.30)	$ (0.33)	$ (0.76)	$ (1.37)
Net loss per share – diluted (in dollars per share)	$ (0.30)	$ (0.33)	$ (0.76)	$ (1.37)
Weighted average shares – basic (in shares)	12,423,421	11,649,790	12,249,520	10,859,820
Weighted average shares – diluted (in shares)	12,423,421	11,649,790	12,249,520	10,859,820
Equipment systems
Revenues:
Total revenues and other income	$ 3,720,174	$ 3,035,758	$ 9,624,514	$ 10,629,327
Total cost of revenues	3,290,624	2,774,147	8,214,233	9,321,922
Services
Revenues:
Total revenues and other income	1,913,246	2,898,741	7,404,843	9,399,968
Total cost of revenues	1,356,925	1,768,166	4,379,087	5,692,663
Construction design-build
Revenues:
Total revenues and other income	4,172,110	13,466,093	25,915,018	34,253,900
Total cost of revenues	3,932,699	12,483,972	23,789,045	31,469,185
Other
Revenues:
Total revenues and other income	83,727	186,337	291,161	509,981
Total cost of revenues	$ 57,935	$ 137,359	$ 200,328	$ 365,306

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2022		12,292,104
Beginning balance at Dec. 31, 2022	$ 31,321,994	$ 12,292	$ 84,189,965	$ (40,834,721)	$ (12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	479,641		479,641
Stock grant program vesting (in shares)		96,285
Stock grant program vesting	0	$ 96	(96)
Stock issued for contingent consideration (in shares)		64,224
Stock issued for contingent consideration	191,919	$ 64	191,855
Net loss	(5,251,201)			(5,251,201)
Ending balance (in shares) at Mar. 31, 2023		12,452,613
Ending balance at Mar. 31, 2023	26,742,353	$ 12,452	84,861,365	(46,085,922)	(12,045,542)
Beginning balance (in shares) at Dec. 31, 2022		12,292,104
Beginning balance at Dec. 31, 2022	31,321,994	$ 12,292	84,189,965	(40,834,721)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(14,837,232)
Ending balance (in shares) at Sep. 30, 2023		13,120,413
Ending balance at Sep. 30, 2023	19,492,204	$ 13,120	87,196,579	(55,671,953)	(12,045,542)
Beginning balance (in shares) at Mar. 31, 2023		12,452,613
Beginning balance at Mar. 31, 2023	26,742,353	$ 12,452	84,861,365	(46,085,922)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	622,547		622,547
Stock grant program vesting (in shares)		86,020
Stock grant program vesting	0	$ 86	(86)
Stock issued for contingent consideration (in shares)		517,776
Stock issued for contingent consideration	1,292,683	$ 518	1,292,165
Net loss	(5,763,909)			(5,763,909)
Ending balance (in shares) at Jun. 30, 2023		13,056,409
Ending balance at Jun. 30, 2023	22,893,674	$ 13,056	86,775,991	(51,849,831)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	343,884		343,884
Stock grant program vesting (in shares)		8,772
Stock grant program vesting	0	$ 9	(9)
Stock issued for contingent consideration (in shares)		55,232
Stock issued for contingent consideration	76,768	$ 55	76,713
Net loss	(3,822,122)			(3,822,122)
Ending balance (in shares) at Sep. 30, 2023		13,120,413
Ending balance at Sep. 30, 2023	$ 19,492,204	$ 13,120	87,196,579	(55,671,953)	(12,045,542)
Beginning balance (in shares) at Dec. 31, 2023	12,072,836	13,522,669
Beginning balance at Dec. 31, 2023	$ 10,085,355	$ 13,523	88,389,756	(66,272,382)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	656,576		656,576
Stock grant program vesting (in shares)		245,925
Stock grant program vesting	0	$ 246	(246)
Net loss	(2,560,563)			(2,560,563)
Ending balance (in shares) at Mar. 31, 2024		13,768,594
Ending balance at Mar. 31, 2024	$ 8,181,368	$ 13,769	89,046,086	(68,832,945)	(12,045,542)
Beginning balance (in shares) at Dec. 31, 2023	12,072,836	13,522,669
Beginning balance at Dec. 31, 2023	$ 10,085,355	$ 13,523	88,389,756	(66,272,382)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	$ (9,283,099)
Ending balance (in shares) at Sep. 30, 2024	12,613,504	14,063,337
Ending balance at Sep. 30, 2024	$ 2,392,636	$ 14,063	89,979,596	(75,555,481)	(12,045,542)
Beginning balance (in shares) at Mar. 31, 2024		13,768,594
Beginning balance at Mar. 31, 2024	8,181,368	$ 13,769	89,046,086	(68,832,945)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	460,785		460,785
Stock grant program vesting (in shares)		172,558
Stock grant program vesting	0	$ 172	(172)
Stock issued for contingent consideration (in shares)		71,147
Stock issued for contingent consideration	129,135	$ 71	129,064
Net loss	(2,964,728)			(2,964,728)
Ending balance (in shares) at Jun. 30, 2024		14,012,299
Ending balance at Jun. 30, 2024	5,806,560	$ 14,012	89,635,763	(71,797,673)	(12,045,542)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	343,884		343,884
Stock grant program vesting (in shares)		51,038
Stock grant program vesting	0	$ 51	(51)
Net loss	$ (3,757,808)			(3,757,808)
Ending balance (in shares) at Sep. 30, 2024	12,613,504	14,063,337
Ending balance at Sep. 30, 2024	$ 2,392,636	$ 14,063	$ 89,979,596	$ (75,555,481)	$ (12,045,542)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (9,283,099)	$ (14,837,232)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,169,250	1,201,201
Amortization of right-of-use assets	156,742	323,002
Stock-based compensation expense	1,461,245	1,985,683
Impairment of investment	0	258,492
Change in fair value of contingent consideration	79,305	160,232
Interest income from investments	0	(25,653)
Changes in operating assets and liabilities (net of acquired amounts):
Accounts receivable and contract receivables	1,550,811	(6,881,091)
Prepaid expenses and other assets and property and equipment	(2,053,184)	1,316,110
Accounts payable, contract liabilities, customer deposits, and accrued expenses	6,399,059	11,017,672
Change in contingent consideration from indemnification	0	(917,699)
Operating lease liability	(146,029)	(298,405)
Deferred tax liability	(110,451)	0
Net cash provided by (used in) operating activities	(776,351)	(6,697,688)
Cash flows from investing activities:
Sale of investment	0	2,326,468
Purchases of property and equipment	(97,578)	(420,982)
Net cash provided by (used in) investing activities	(97,578)	1,905,486
Cash flows from financing activities:
Additions to notes payable	5,838,000	0
Repayment of notes payable	(4,808,921)	(1,867,907)
Repayment of finance lease liability	(93,152)	(117,586)
Payments to settle contingent consideration	0	(479,457)
Net cash used in financing activities	935,927	(2,464,950)
Net change in cash	61,998	(7,257,152)
Cash at beginning of period	1,074,842	11,754,349
Cash at end of period	1,136,840	4,497,197
Supplemental cash flow information:
Cash paid for interest	399,218	13,402
Net cash paid for income taxes	24,785	134,252
Supplemental disclosure of non-cash investing and financing activities:
Operating lease right of use assets and liabilities extension	$ 0	$ 295,631

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ORGANIZATION, ACQUISITIONS, AND LIQUIDITY

9 Months Ended

Sep. 30, 2024

Organization, Consolidation, Business Combination, And Presentation Of Financial Statements [Abstract]

ORGANIZATION, ACQUISITIONS, AND LIQUIDITY

ORGANIZATION, ACQUISITIONS, AND LIQUIDITY

Organization

urban-gro, Inc. (“we,” “us,” “our,” the “Company,” or “urban-gro”) is an integrated professional services and Design-Build firm offering value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture (“CEA”), industrial, healthcare, and other sectors. To serve our horticulture clients, we engineer, design and manage the construction of indoor 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, construction, procurement, and equipment integration provides a single point of accountability across all aspects of indoor growing operations. Further, we serve a broad range of commercial and governmental entities, providing them with planning, consulting, architectural, engineering and construction services for their facilities. As a full-service Design-Build provider, we serve as a trusted partner and advisor, affording clients the simplicity of a single point-of-contact and contract from project conception through completion.

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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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Amendment No. 2 on Form 10-K/A for the year ended December 31, 2023.

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 Amendment No. 2 on Form 10-K/A for the year ended December 31, 2023. During the nine months ended September 30, 2024, 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.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

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. 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.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

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 three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	3,720,174		$	3,035,758		$	—		$	—		$	3,720,174		$	3,035,758
Services	764,890			468,872			1,148,356			2,429,869			1,913,246			2,898,741
Construction design-build	(1,105,670)			1,739,867			5,277,780			11,726,226			4,172,110			13,466,093
Other	83,727			186,337			—			—			83,727			186,337
Total revenues and other income	$	3,463,121		$	5,430,834		$	6,426,136		$	14,156,095		$	9,889,257		$	19,586,929
Relative percentage	35		%	28		%	65		%	72		%	100		%	100		%

	Nine Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	9,624,514		$	10,629,327		$	—		$	—		$	9,624,514		$	10,629,327
Services	2,530,200			3,282,025			4,874,643			6,117,943			7,404,843			9,399,968
Construction design-build	9,416,279			2,526,427			16,498,739			31,727,473			25,915,018			34,253,900
Other	291,161			509,981			—			—			291,161			509,981
Total revenues and other income	$	21,862,154		$	16,947,760		$	21,373,382		$	37,845,416		$	43,235,536		$	54,793,176
Relative percentage	51		%	31		%	49		%	69		%	100		%	100		%

Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, a performance obligation is a promise in a contract with a customer, to transfer a distinct good or service to the customer. Equipment systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified amount. Service revenue contracts, which include both architectural and engineering designs, generally contain multiple performance obligations which can span across multiple phases of a project and are generally set forth in the contract as distinct milestones. The majority of construction design-build contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design and construction).

The transaction price for service contracts and construction design-build contracts is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. When there are multiple performance obligations under the same service contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. In general, payment terms are fixed at the time of the contract and are not subject to discounts, incentives, payment bonuses, credits, or penalties, unless negotiated in an amendment.

When establishing the selling price to the customer, the Company uses various observable inputs. For equipment systems, the stand-alone selling price is determined by forecasting the expected costs of the products, and then adding in the appropriate margins established by management. For service revenues and construction design-build revenues, the Company estimates the selling price by reference to certain physical characteristics of the project, which include the facility size, the complexity of the design, and the mechanical systems involved, which are indicative of the scope and complexity for those services. Significant judgments are typically not required with respect to the determination of the transaction price based on the nature of the selling prices of the products and services delivered and the collectability of those amounts. Accordingly, the Company does not consider estimates of variable consideration to be constrained.

The Company recognizes equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied. For satisfaction of equipment system revenues, the Company recognizes revenue when control of the promised good transfers to the customer, which predominately occurs at the time of shipment. For service revenues, satisfaction occurs as the services related to the distinct performance obligations are rendered or completed in exchange for consideration in an amount for which the Company is entitled. The time period between recognition and satisfaction of performance obligations is generally within the same reporting period; thus, there are no material unsatisfied or partially unsatisfied performance obligations for product or service revenues at the end of the reporting period.

Construction design-build revenues are recognized as the Company's obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used for our construction design-build contracts because management considers it to be the best available measure of progress on these contracts.

Contract modifications through change orders, claims and incentives are routine in the performance of the Company’s construction design-build contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of approved contract prices that the Company seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs.

The timing of when the Company bills customers on long-term construction design-build contracts is generally dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized, the result is unbilled revenue, which is included in contract assets. Additionally, when the Company receives advances or deposits from customers before revenue is recognized; the result is deferred revenue, which is included in contract liabilities. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities.

Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts. Contract liabilities represent the Company’s obligation to perform on uncompleted contracts with customers for which the Company has received payment or for which contract receivables are outstanding.

The following table provides information about contract assets and contract liabilities from contracts with customers:

	September 30, 2024		December 31, 2023
Contract assets:
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage	$	3,551,396	$	7,729,531
Retainage included in contract assets due to being conditional on something other than solely passage of time	943,239		707,036
Total contract assets	$	4,494,635	$	8,436,567
	September 30, 2024		December 31, 2023
Contract liabilities:
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability)	$	5,479,049	$	3,895,826
Retainage included in contract liabilities due to being conditional on something other than solely passage of time	103,381		54,307
Total contract liabilities	$	5,582,430	$	3,950,133

For equipment systems contracts, the Company’s predominant policy is to collect deposits from customers at the beginning of the contract and the balance of the contract payment prior to shipping. The Company does, in some cases, collect deposits or retainers as down payments on service contracts. Consumable products orders may be paid for in advance of shipment or for recurring customers with credit, payment terms of 30 days or less may be extended by the Company. Customer payments that have been collected prior to the performance obligation being recognized are recorded as customer deposit liabilities on the balance sheet. When the performance obligation is satisfied and all the criteria for revenue recognition are met, revenue is recognized. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company is entitled to keep the deposit and recognize revenue.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

A director of the Company is an owner of Cloud 9 Support, LLC (“Cloud 9”) and Potco LLC (“Potco”). Cloud 9 purchases materials from the Company for use with its customers and Potco purchases equipment from the Company for use in its cultivation facility. Another director of the Company is working on a vertical farming innovation model with a group of CEA experts (“the CEA Consortium”). The CEA Consortium contracts services from the Company related to their business model. The table below presents the revenues for these related party entities for the three and nine months ended September 30, 2024, and 2023:

	Three Months Ended September 30, 2024				Nine Months Ended September 30, 2024
	2024		2023		2024		2023
Revenue - Cloud 9	$	—	$	—	$	—	$	462
Revenue - Potco	—		139,031		3,266		987,268
Revenue - CEA Consortium	$	—	$	245,000	$	—	$	245,000
Total revenues from related party transactions	$	—	$	384,031	$	3,266	$	1,232,730

The table below presents the accounts receivable from these related party entities as of September 30, 2024, and December 31, 2023:

	September 30, 2024		December 31, 2023
Accounts receivable - Cloud 9	$	—	$	—
Accounts receivable - Potco	163,088		163,088
Accounts receivable - CEA Consortium	$	245,000	$	245,000
Total accounts receivable due from related party transactions	$	408,088	$	408,088

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PREPAID EXPENSES AND OTHER ASSETS

9 Months Ended

Sep. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

PREPAID EXPENSES AND OTHER ASSETS

PREPAID EXPENSES AND OTHER ASSETS

Prepayments and other assets are comprised of prepayments paid to vendors to initiate orders, prepaid services and fees, inventories, and other assets. These amounts are summarized as follows:

	September 30, 2024		December 31, 2023
Vendor prepayments	$	3,255,901	$	130,522
Prepaid services and fees	609,721		1,168,309
Inventories	221,676		228,858
Other assets	23,196		223,875
Total Prepaid expenses and other assets	$	4,110,494	$	1,751,564

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PROPERTY AND EQUIPMENT, NET

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET

Property and equipment balances are summarized as follows:

	September 30, 2024		December 31, 2023
Computers and technology equipment	$	360,191	$	294,322
Furniture and fixtures	325,485		325,485
Leasehold improvements	228,759		228,760
Vehicles	432,823		432,823
Software	1,119,278		1,087,569
Other equipment	145,950		145,950
Total property and equipment	2,612,486		2,514,909
Accumulated depreciation	(1,566,932)		(1,095,516)
Total property and equipment, net	$	1,045,554	$	1,419,393

Depreciation expense for the three months ended September 30, 2024, and 2023 totaled $188,316 and $131,138, respectively and totaled $584,289 and $385,185 for the nine months September 30, 2024 and 2023 ended respectively.

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INVESTMENTS

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

As of September 30, 2024 and December 31, 2023 the Company did not have any investments.

XS Financial

On October 30, 2021, the Company participated in a convertible note offering of Xtraction Services, Inc., a/k/a XS Financial Inc. (CSE: XSF) (OTCQB: XSHLF) ("XSF"), a specialty finance company providing CAPEX financing solutions, including equipment leasing, to CEA companies in the United States. The Company invested $2,500,000 of a total $43,500,000 raised by XSF. Prior to any Nasdaq listing, the investment incurs 9.5% interest payable, of which, 7.5% is cash interest and 2.0% is interest paid in kind. Subsequent to any Nasdaq listing by XSF, the investment incurs 8.0% cash interest. The debt matures on October 28, 2023, with a one-year option at the sole discretion of XSF to extend the maturity date. In addition, the Company received 1,250,000 warrants denominated in Canadian dollars ("C$") with a C$0.45 exercise price as subject to the warrant instrument. No value was attributed to the warrants at the time of the investment. In August 2023, the Company entered into an agreement to sell back its investment to XSF for $2.3 million and cancel the warrants. The Company received the $2.3 million in proceeds on August 30, 2023. In connection with the agreement to sell the investment, the Company recorded an impairment loss of $0.3 million for the three months ended September 30, 2023.

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GOODWILL & INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL & INTANGIBLE ASSETS

GOODWILL & INTANGIBLE ASSETS

Goodwill

The Company has recorded goodwill in conjunction with the acquisitions it has completed. The goodwill balances as of September 30, 2024 and December 31, 2023 were $9,688,975 and $9,688,975, respectively. Goodwill is not amortized. The Company did not record any impairment charges related to goodwill for the three or nine months ended September 30, 2024 and 2023.

Intangible Assets Other Than Goodwill

Intangible assets as of September 30, 2024 and December 31, 2023 consisted of the following:

	As of September 30, 2024
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,323,003)	$	1,946,198
Trademarks and trade names	1,778,000		(930,117)		847,883
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,976,957)		2,794,081
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,976,957)	$	2,866,648

	December 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,004,743)	$	2,264,458
Trademarks and trade names	1,778,000		(663,417)		1,114,583
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,391,997)		3,379,041
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,391,997)	$	3,451,608

Amortization expense for intangible assets subject to amortization for the three months ended September 30, 2024 and 2023 was $239,332 and $241,831, respectively and totaled $584,960 and $816,016 for the nine months ended September 30, 2024 and 2023, respectively . The estimated future amortization expense for intangible assets subject to amortization as of September 30, 2024 is summarized below:

For the years ending December 31,	Estimated Future Amortization Expense
Remainder of 2024	$	194,995
2025	779,948
2026	738,364
2027	513,714
2028	405,306
2029	161,754
Total estimated future amortization expense	$	2,794,081

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ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

ACCRUED EXPENSES

ACCRUED EXPENSES

Accrued expenses are summarized as follows:

	September 30, 2024		December 31, 2023
Accrued operating expenses	$	73,835	$	277,987
Accrued wages and related expenses	1,103,290		1,349,195
Business development accrual	113,620		376,816
Accrued interest expense	73,359		26,000
Accrued 401(k)	16,736		66,642
Accrued sales tax payable	3,115,387		3,187,638
Total accrued expenses	$	4,496,227	$	5,284,278

Accrued sales tax payable is comprised of amounts due to various states and Canadian provinces.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE

The table below shows outstanding notes payable amounts as of September 30, 2024 and December 31, 2023.

	As of
	September 30, 2024		December 31, 2023
Line of credit	$	4,400,137	$	2,500,000
DVO note	133		575,240
Other financing agreements	139,395		129,600
Total	$	4,539,665	$	3,204,840
Less current maturities	(4,539,665)		(3,204,840)
Long Term	—		–

On December 13, 2023, UG Construction, a wholly owned subsidiary of the Company, entered into an interest only asset based revolving Loan Agreement (the “Line of Credit”) with Gemini Finance Corp. (“Lender”) pursuant to which Lender extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and the Company with cash management. Lender will consider requests for advances under the Line of Credit, which Lender may accept or reject in its discretion, until September 12, 2024 (the “Initial Term”), subject to an automatic extension for an additional nine-month term until May 12, 2025, provided that UG Construction is in compliance with all the terms of the applicable loan documents and Lender has not sent a written notice of non-renewal at least 60 days prior to expiration of the Initial Term. The Line of Credit contains standard events of default and representations and warranties by UG Construction and the Lender and the Company have entered into a Continuing Guaranty pursuant to which the Company will guarantee repayment of the loans associated with the Line of Credit (the “Guaranty Agreement”).

Loans made under the Line of Credit shall be evidenced by a Secured Promissory Note - Revolving issued by UG Construction to the Lender (the “Promissory Note”), and each draw on the Promissory Note shall be due and payable on or before 180 days after such draw is funded to UG Construction; provided that, such draw is also subject to a mandatory prepayment upon UG Construction’s receipt of payment for any invoice previously submitted and approved for financing by Lender. Lender will receive a security interest in UG Construction’s Collateral (as defined in the “Security Agreement” entered into as part of the Line of Credit). The Promissory Note earns interest at a monthly rate of one and seventy-five hundredths percent (1.75%).

In connection with entering in the Line of Credit, the Company has agreed to issue to Bancroft Capital, LLC (the “Placement Agent”) cash and warrant compensation in two separate tranches, the first being earned upon closing of the Line of Credit and the remainder of which will be due if and when UG Construction draws more than $4,500,000 from the Line of Credit. Both instances are detailed as follows:

    1.At closing of the Line of Credit, the Placement Agent earned a cash fee of $200,000. In addition to the cash fee, the Company will issue to the Placement Agent or its designees, $200,000 worth of warrants (the “Placement Agent’s Warrants”) to purchase the Company’s common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company’s common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the Closing. The Placement Agent’s Warrants will be exercisable at any time and from time to time, in

whole or in part, during the four and a half-year period commencing six (6) months from the date of issuance. The Placement Agent’s Warrants will provide for registration rights (including a one-time demand registration right and unlimited piggyback rights), cashless exercise and customary anti-dilution provisions (for stock dividends and splits) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants) resulting from corporate events (which would include dividends, reorganizations, mergers, etc.).

    2. If and when Emerald draws more than $4,500,000 from the Line of Credit, the Placement Agent will earn an additional cash fee of $200,000, and an additional $200,000 worth of Placement Agent’s Warrants to purchase the Company’s common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company’s common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the date that the draws exceeding $4,500,000 were to take place.

As part of the Asset Purchase Agreement of DVO, a non-negotiable promissory note in the aggregate principal amount of $3,806,250, payable to DVO was issued effective November 1, 2022 (the "DVO Promissory Note"). The principal amount, together with the simple interest accrued on the unpaid principal amount outstanding was to be paid by the Company on a quarterly basis for the first four consecutive quarters, with the first payment paid in January 2023, and the remaining three payments due ten days following the end of each subsequent fiscal quarter thereafter until the earlier of the end of the fourth full fiscal quarter following the closing date December 31, 2023 or the payment in full of all amounts due. In the third quarter ended September 30, 2023, a portion of that quarter’s note payment was extended to the first quarter ended March 31, 2024. The DVO Promissory Note may be prepaid in whole or in part at any time without premium or penalty; provided, that each payment shall be accompanied by payment of all unpaid costs, fees and expenses, if any, which are due plus all accrued and unpaid interest due as of the date of such prepayment.

The outstanding principal balance under the DVO Promissory Note shall bear simple interest at a variable rate per annum equal to the rate of interest most recently published by JP Morgan Chase & Co. as the "prime rate" (the "Prime Rate"). Initially, interest will accrue at the Prime Rate as of the date of the DVO Promissory Note. The interest rate will be adjusted on a quarterly basis as of the first day of each full fiscal quarter following the first full fiscal quarter after the closing date to the then current Prime Rate. In connection with the extension of the DVO Promissory Note payment to the first quarter ended March 31, 2024, the interest rate was revised to a fixed rate of 10%, with principal and interest to be paid on a weekly basis.

The other financing agreements relate to short-term financing of the Company's insurance policies and are at an average interest rate of 13.6%.

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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

The Company has seven operating office lease liabilities and one finance office lease liability with an imputed annual interest rate of 8.0%. Five of the leases were assigned to the Company in connection with its various acquisitions. The remaining lease terms range from less than a year to 6 years, as of September 30, 2024. The following is a summary of operating lease liabilities:

	September 30, 2024		December 31, 2023
Operating lease liabilities related to right of use assets	$	1,899,601	$	2,087,503
Less current portion	(694,425)		(707,141)
Long term	$	1,205,176	$	1,380,362

The following is a schedule showing total future minimum lease payments:

For the years ending December 31,	Minimum Lease Payments
Remainder of 2024	$	185,076
2025	678,835
2026	488,751
2027	346,812
2028	253,415
Thereafter	82,489
Total minimum lease payments	2,035,378
Less: Amount representing interest	(135,777)
Net lease obligations	$	1,899,601

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no ongoing legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows.

On August 11, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Crest Ventures, LLC (“Crest”) and Andrew Telsey to settle all claims in the litigation filed in the District Court for Arapahoe County, Colorado, Case No. 2021CV31301. Pursuant to the Settlement Agreement, the Company paid $1,500,000 to Crest on September 7, 2023. In connection with this settlement, the Company recorded a loss in the second quarter ended June 30, 2023 of $1,500,000 in accordance with GAAP related to loss contingencies.

OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES

The Company has seven operating office lease liabilities and one finance office lease liability with an imputed annual interest rate of 8.0%. Five of the leases were assigned to the Company in connection with its various acquisitions. The remaining lease terms range from less than a year to 6 years, as of September 30, 2024. The following is a summary of operating lease liabilities:

	September 30, 2024		December 31, 2023
Operating lease liabilities related to right of use assets	$	1,899,601	$	2,087,503
Less current portion	(694,425)		(707,141)
Long term	$	1,205,176	$	1,380,362

The following is a schedule showing total future minimum lease payments:

For the years ending December 31,	Minimum Lease Payments
Remainder of 2024	$	185,076
2025	678,835
2026	488,751
2027	346,812
2028	253,415
Thereafter	82,489
Total minimum lease payments	2,035,378
Less: Amount representing interest	(135,777)
Net lease obligations	$	1,899,601

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no ongoing legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows.

On August 11, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Crest Ventures, LLC (“Crest”) and Andrew Telsey to settle all claims in the litigation filed in the District Court for Arapahoe County, Colorado, Case No. 2021CV31301. Pursuant to the Settlement Agreement, the Company paid $1,500,000 to Crest on September 7, 2023. In connection with this settlement, the Company recorded a loss in the second quarter ended June 30, 2023 of $1,500,000 in accordance with GAAP related to loss contingencies.

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RISKS AND UNCERTAINTIES

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES

Concentration Risk

The table below shows customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts receivable for the periods presented:

Customers exceeding 10% of revenue

	Three Months Ended September 30,				Nine Months Ended September 30,
Company Customer Number	2024		2023		2024		2023
C000001462	40	%	—	%	11	%	*
C000002187	13	%	22	%	22	%	23	%
C000002607	13	%	*		*		*
C000002552	*		*		24	%	*
*Amounts less than 10%

Customers exceeding 10% of accounts receivable

	As of September 30,		As of December 31,
Company Customer Number	2024		2023
C000002187	23	%	57	%
C000002552	22	%	*
*Amounts less than 10%

The table below shows vendors who account for 10% or more of the Company’s total purchases and 10% or more of the Company’s accounts payable for the periods presented:

Vendors exceeding 10% of purchases

	Three Months Ended September 30,			Nine Months Ended September 30,
Company Vendor Number	2024		2023	2024		2023
V000002275	*		*	*		*
V000002198	14	%	*	11	%	*
V000002503	51	%	*	40	%	*
*Amounts less than 10%

Vendors exceeding 10% of accounts payable

	As of September 30,		As of December 31,
Company Vendor Number	2024		2023
V000002275	10	%	13	%
V000002503	25	%	*
V000002198	*		*
*Amounts less than 10%

Foreign Exchange Risk

Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, it may not mitigate currency risks.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Based on the vesting schedule of the grants of restricted stock units (“RSU” or “RSUs”) and options, stock-based compensation expense for the three months ended September 30, 2024 and 2023 totaled $343,884 and $722,647, respectively, and totaled $1,461,245 and $1,824,835 for the nine months ended September 30, 2024, and 2023, respectively.

The Company has adopted the 2021 Omnibus Stock Incentive Plan, as amended (the “Omnibus Incentive Plan”), which provides for the issuance of incentive stock options, grants of RSUs, and stock-based awards to employees, directors, and consultants of the Company to reward and attract employees and compensate the Company’s Board of Directors (the “Board”) and vendors when applicable. The Omnibus Incentive Plan is administered by the Company's Board. Grants of RSUs under the Omnibus Incentive Plan are valued at no less than the market price of the stock on the date of grant. The fair value of the options is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the options, risk-free interest rate and expected volatility of the price of the underlying common stock of 100%. There is a moderate degree of subjectivity involved when estimating the value of stock options with the Black-Scholes option pricing model as the assumptions used are moderately judgmental. Grant of RSUs and stock options are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Grants of RSUs and stock options typically require a 1 to 3 year period of continued employment or service performance before the grant of RSUs or stock options vest. No cash flow effects are anticipated for grants of RSUs or stock options.

The following schedule shows RSU activity for the nine months ended September 30, 2024:

	Number of Shares
Grants of RSUs unvested as of December 31, 2023	580,292
Grants of RSUs	1,081,051
Forfeiture/cancelled	(68,350)
Grants of RSUs vested	(517,149)
Grants of RSUs unvested as of September 30, 2024	1,075,844

The following table summarizes the vesting time periods of these unvested RSUs:

Number of Shares	Vesting Time Period
2,621	Remainder of 2024
419,088	2025
296,020	2026
355,615	2027
2,500	2028
1,075,844

The following schedule shows stock option activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Stock options outstanding as of December 31, 2023	501,829	4.67	$	6.81
Issued	—	0	$	—
Forfeited	(43,279)	0	$	6.78
Exercised	—	0	$	—
Stock options outstanding as of September 30, 2024	458,550	3.78	$	6.81
Stock options exercisable as of September 30, 2024	444,888	0	$	6.79

As of September 30, 2024, the Company has $0 in unrecognized stock-based compensation expense related to these stock options. The aggregate intrinsic value of the options outstanding and exercisable at September 30, 2024 is $0.

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STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY

On May 24, 2021, the Board authorized a stock repurchase program to purchase up to $5.0 million of the currently outstanding shares of the Company’s common stock, over a period of 12 months through open market purchases, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. On January 18, 2022, the Board authorized a $2.0 million increase to the stock repurchase program, to a total of $7.0 million. On February 2, 2022, the Board authorized an additional $1.5 million increase to the stock repurchase, to a total of $8.5 million. On September 12, 2022, the Board authorized an additional $2 million increase to the stock repurchase, to a total of $10.5 million. In total, the Company has repurchased 1,099,833 shares of common stock at an average price per share of $8.25 for a total of $9.1 million, under this program.

The Company did not repurchase shares of common stock either during the nine months ended September 30, 2024 or during the three months ended September 30, 2023. As of September 30, 2024, we have $1.4 million remaining under the repurchase program.

In February 2021, the Company repurchased 350,000 shares of common stock with an average price per share of $8.50, for a total of $3.0 million, outside of any stock repurchase or publicly announced program.

WARRANTS

The following table shows warrant activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Exercise Price
Warrants outstanding as of December 31, 2023	511,681	$	8.74
Issued	—	$	—
Exercised	—	$	—
Expired	(25,650)	$	14.46
Warrants outstanding as of September 30, 2024	486,031	$	8.44
Warrants exercisable as of September 30, 2024	486,031	$	8.44

The aggregate intrinsic value of the warrants outstanding and exercisable as of September 30, 2024 is $22,233.

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WARRANTS

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

WARRANTS

STOCKHOLDERS’ EQUITY

On May 24, 2021, the Board authorized a stock repurchase program to purchase up to $5.0 million of the currently outstanding shares of the Company’s common stock, over a period of 12 months through open market purchases, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. On January 18, 2022, the Board authorized a $2.0 million increase to the stock repurchase program, to a total of $7.0 million. On February 2, 2022, the Board authorized an additional $1.5 million increase to the stock repurchase, to a total of $8.5 million. On September 12, 2022, the Board authorized an additional $2 million increase to the stock repurchase, to a total of $10.5 million. In total, the Company has repurchased 1,099,833 shares of common stock at an average price per share of $8.25 for a total of $9.1 million, under this program.

The Company did not repurchase shares of common stock either during the nine months ended September 30, 2024 or during the three months ended September 30, 2023. As of September 30, 2024, we have $1.4 million remaining under the repurchase program.

In February 2021, the Company repurchased 350,000 shares of common stock with an average price per share of $8.50, for a total of $3.0 million, outside of any stock repurchase or publicly announced program.

WARRANTS

The following table shows warrant activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Exercise Price
Warrants outstanding as of December 31, 2023	511,681	$	8.74
Issued	—	$	—
Exercised	—	$	—
Expired	(25,650)	$	14.46
Warrants outstanding as of September 30, 2024	486,031	$	8.44
Warrants exercisable as of September 30, 2024	486,031	$	8.44

The aggregate intrinsic value of the warrants outstanding and exercisable as of September 30, 2024 is $22,233.

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INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company has experienced cumulative losses for both book and tax purposes since inception. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and any tax assets that that the Company may be entitled to have been fully reserved based on management’s current estimates. Management intends to continue maintaining a full valuation allowance on the Company’s deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.The deferred income tax benefit for the nine months ended September 30, 2024 and 2023 relates to the reduction in the deferred tax liability associated with the amortization of the intangible assets from the acquisitions of the 2WR Entities and Emerald. The Company records state income taxes paid during the year within the Other income (expense) financial statement line item.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Term Loan

On October 1, 2024, urban-gro, Inc. (the “Company”) entered into an asset based term Loan Agreement (the “Loan”) with Grow Hill, LLC, a Washington limited liability company (the “Lender”) pursuant to which the Lender extended to the Company a secured loan of $2,100,000, to be used to assist the Company with cash management, including to support the Company’s growth in the cannabis industry. The Loan is for a term of 24 months and has an origination fee of $100,000, which was added to the amount of the Loan. There is no penalty to prepayment, except the Lender will receive at least $150,000 in minimum interest (represents approximately 6 months of interest) if Company chooses to prepay the Loan early. The Loan contains standard events of default and representations and warranties by the Company and the Lender.

The Loan is evidenced by a Secured Promissory Note issued by the Company to the Lender (the “Grow Hill Promissory Note”). The Lender received a security interest in certain of the Company’s assets pursuant to a security agreement between the Company and the Lender (the “Security Agreement”), which does not include any assets of the Company’s subsidiaries, including those securing the Company’s existing line of credit. The Grow Hill Promissory Note accrues simple interest at an annual rate of fifteen percent (15%).

In connection with entering in the Loan, the Company issued to Lender a warrant (the “Warrant”) to purchase up to an aggregate of 160,000 shares of the Company’s common stock at an exercise price of $2.50 per share. The Warrant is exercisable immediately, will expire on the five (5) year anniversary of issuance, and is exercisable on a cashless basis at the election of the holder.

Modification of Agreement with Bancroft Related to Line of Credit

On October 2, 2024, the Company amended its agreement with the Placement Agent to modify the terms of the cash and warrant compensation associated with the Line of Credit. Under this amendment, the thresholds at which the cash fee are to be paid changed as follows: 50% at placement of the line of credit; 11.23% when 45% or more of the line of credit is drawn; and the remainder of the cash fee when 60% or more of the line of credit is drawn. In addition, the thresholds at which the warrant fee are to be paid changed as follows: 50% at placement of the line of credit; and the remainder when 60% or more is drawn on the line of credit.

Equity Issuances After September 30, 2024

Subsequent to the period ended September 30, 2024, 170,000 RSUs were granted to employees, directors, and consultants with various vesting periods.

Settlement of Pullar Lawsuit

On May 5, 2022, Robert Pullar (“Pullar”) filed a lawsuit against urban-gro and Bradley Nattrass, in his capacity as the Company’s CEO, relating to a prior settlement agreement the Company had entered into with Pullar. On Friday, January 31, 2025, the parties entered a settlement agreement, without any admission of liability or wrongdoing, to settle all claims associated with the litigation in exchange for a cash payment by the Company to Pullar of $250,000 and an issuance of a warrant to purchase up to 75,000 shares of common stock with an exercise price per share of $1.00.

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Pay vs Performance Disclosure - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net loss	$ (3,757,808)	$ (2,964,728)	$ (2,560,563)	$ (3,822,122)	$ (5,763,909)	$ (5,251,201)	$ (9,283,099)	$ (14,837,232)

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Unaudited Condensed Consolidated Financial Statements

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.

Use of Estimates

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.

Reclassification and Balance Sheet Classifications

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

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

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.

Recently Issued Accounting Standards

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. 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.

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Revenue, by Source

The table below presents the revenue by source for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	3,720,174		$	3,035,758		$	—		$	—		$	3,720,174		$	3,035,758
Services	764,890			468,872			1,148,356			2,429,869			1,913,246			2,898,741
Construction design-build	(1,105,670)			1,739,867			5,277,780			11,726,226			4,172,110			13,466,093
Other	83,727			186,337			—			—			83,727			186,337
Total revenues and other income	$	3,463,121		$	5,430,834		$	6,426,136		$	14,156,095		$	9,889,257		$	19,586,929
Relative percentage	35		%	28		%	65		%	72		%	100		%	100		%

	Nine Months Ended September 30,
	CEA						Commercial						Total
	2024			2023			2024			2023			2024			2023
Equipment systems	$	9,624,514		$	10,629,327		$	—		$	—		$	9,624,514		$	10,629,327
Services	2,530,200			3,282,025			4,874,643			6,117,943			7,404,843			9,399,968
Construction design-build	9,416,279			2,526,427			16,498,739			31,727,473			25,915,018			34,253,900
Other	291,161			509,981			—			—			291,161			509,981
Total revenues and other income	$	21,862,154		$	16,947,760		$	21,373,382		$	37,845,416		$	43,235,536		$	54,793,176
Relative percentage	51		%	31		%	49		%	69		%	100		%	100		%

Schedule of Contract Assets and Contract Liabilities from Contracts with Customers

The following table provides information about contract assets and contract liabilities from contracts with customers:

	September 30, 2024		December 31, 2023
Contract assets:
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage	$	3,551,396	$	7,729,531
Retainage included in contract assets due to being conditional on something other than solely passage of time	943,239		707,036
Total contract assets	$	4,494,635	$	8,436,567
	September 30, 2024		December 31, 2023
Contract liabilities:
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability)	$	5,479,049	$	3,895,826
Retainage included in contract liabilities due to being conditional on something other than solely passage of time	103,381		54,307
Total contract liabilities	$	5,582,430	$	3,950,133

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

Schedule of Related Party Transactions on Financial Statements

The table below presents the revenues for these related party entities for the three and nine months ended September 30, 2024, and 2023:

	Three Months Ended September 30, 2024				Nine Months Ended September 30, 2024
	2024		2023		2024		2023
Revenue - Cloud 9	$	—	$	—	$	—	$	462
Revenue - Potco	—		139,031		3,266		987,268
Revenue - CEA Consortium	$	—	$	245,000	$	—	$	245,000
Total revenues from related party transactions	$	—	$	384,031	$	3,266	$	1,232,730

The table below presents the accounts receivable from these related party entities as of September 30, 2024, and December 31, 2023:

	September 30, 2024		December 31, 2023
Accounts receivable - Cloud 9	$	—	$	—
Accounts receivable - Potco	163,088		163,088
Accounts receivable - CEA Consortium	$	245,000	$	245,000
Total accounts receivable due from related party transactions	$	408,088	$	408,088

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PREPAID EXPENSES AND OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Assets

These amounts are summarized as follows:

	September 30, 2024		December 31, 2023
Vendor prepayments	$	3,255,901	$	130,522
Prepaid services and fees	609,721		1,168,309
Inventories	221,676		228,858
Other assets	23,196		223,875
Total Prepaid expenses and other assets	$	4,110,494	$	1,751,564

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PROPERTY AND EQUIPMENT, NET (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment Balances

Property and equipment balances are summarized as follows:

	September 30, 2024		December 31, 2023
Computers and technology equipment	$	360,191	$	294,322
Furniture and fixtures	325,485		325,485
Leasehold improvements	228,759		228,760
Vehicles	432,823		432,823
Software	1,119,278		1,087,569
Other equipment	145,950		145,950
Total property and equipment	2,612,486		2,514,909
Accumulated depreciation	(1,566,932)		(1,095,516)
Total property and equipment, net	$	1,045,554	$	1,419,393

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GOODWILL & INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

Intangible assets as of September 30, 2024 and December 31, 2023 consisted of the following:

	As of September 30, 2024
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,323,003)	$	1,946,198
Trademarks and trade names	1,778,000		(930,117)		847,883
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,976,957)		2,794,081
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,976,957)	$	2,866,648

	December 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,004,743)	$	2,264,458
Trademarks and trade names	1,778,000		(663,417)		1,114,583
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,391,997)		3,379,041
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,391,997)	$	3,451,608

Schedule of Indefinite-Lived Intangible Assets

Intangible assets as of September 30, 2024 and December 31, 2023 consisted of the following:

	As of September 30, 2024
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,323,003)	$	1,946,198
Trademarks and trade names	1,778,000		(930,117)		847,883
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,976,957)		2,794,081
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,976,957)	$	2,866,648

	December 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Finite-lived intangible assets:
Customer relationships	$	3,269,201	$	(1,004,743)	$	2,264,458
Trademarks and trade names	1,778,000		(663,417)		1,114,583
Backlog	707,400		(707,400)		—
Licenses	16,437		(16,437)		—
Total finite-lived intangible assets:	5,771,038		(2,391,997)		3,379,041
Indefinite-lived intangible assets:
Trade name	28,291		—		28,291
Patents	44,276		—		44,276
Total indefinite-lived intangible assets	72,567		—		72,567
Total intangible assets, net	$	5,843,605	$	(2,391,997)	$	3,451,608

Schedule of Future Amortization Expenses of Intangible Assets

The estimated future amortization expense for intangible assets subject to amortization as of September 30, 2024 is summarized below:

For the years ending December 31,	Estimated Future Amortization Expense
Remainder of 2024	$	194,995
2025	779,948
2026	738,364
2027	513,714
2028	405,306
2029	161,754
Total estimated future amortization expense	$	2,794,081

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ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses are summarized as follows:

	September 30, 2024		December 31, 2023
Accrued operating expenses	$	73,835	$	277,987
Accrued wages and related expenses	1,103,290		1,349,195
Business development accrual	113,620		376,816
Accrued interest expense	73,359		26,000
Accrued 401(k)	16,736		66,642
Accrued sales tax payable	3,115,387		3,187,638
Total accrued expenses	$	4,496,227	$	5,284,278

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NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of Outstanding Notes Payable

The table below shows outstanding notes payable amounts as of September 30, 2024 and December 31, 2023.

	As of
	September 30, 2024		December 31, 2023
Line of credit	$	4,400,137	$	2,500,000
DVO note	133		575,240
Other financing agreements	139,395		129,600
Total	$	4,539,665	$	3,204,840
Less current maturities	(4,539,665)		(3,204,840)
Long Term	—		–

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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Summary of Operating Lease Liabilities

The following is a summary of operating lease liabilities:

	September 30, 2024		December 31, 2023
Operating lease liabilities related to right of use assets	$	1,899,601	$	2,087,503
Less current portion	(694,425)		(707,141)
Long term	$	1,205,176	$	1,380,362

Schedule of Future Minimum Rental Payments for Operating Leases

The following is a schedule showing total future minimum lease payments:

For the years ending December 31,	Minimum Lease Payments
Remainder of 2024	$	185,076
2025	678,835
2026	488,751
2027	346,812
2028	253,415
Thereafter	82,489
Total minimum lease payments	2,035,378
Less: Amount representing interest	(135,777)
Net lease obligations	$	1,899,601

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RISKS AND UNCERTAINTIES (Tables)

9 Months Ended

Sep. 30, 2024

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risks

The table below shows customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts receivable for the periods presented:

Customers exceeding 10% of revenue

	Three Months Ended September 30,				Nine Months Ended September 30,
Company Customer Number	2024		2023		2024		2023
C000001462	40	%	—	%	11	%	*
C000002187	13	%	22	%	22	%	23	%
C000002607	13	%	*		*		*
C000002552	*		*		24	%	*
*Amounts less than 10%

Customers exceeding 10% of accounts receivable

	As of September 30,		As of December 31,
Company Customer Number	2024		2023
C000002187	23	%	57	%
C000002552	22	%	*
*Amounts less than 10%

The table below shows vendors who account for 10% or more of the Company’s total purchases and 10% or more of the Company’s accounts payable for the periods presented:

Vendors exceeding 10% of purchases

	Three Months Ended September 30,			Nine Months Ended September 30,
Company Vendor Number	2024		2023	2024		2023
V000002275	*		*	*		*
V000002198	14	%	*	11	%	*
V000002503	51	%	*	40	%	*
*Amounts less than 10%

Vendors exceeding 10% of accounts payable

	As of September 30,		As of December 31,
Company Vendor Number	2024		2023
V000002275	10	%	13	%
V000002503	25	%	*
V000002198	*		*
*Amounts less than 10%

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Grants Activity

The following schedule shows RSU activity for the nine months ended September 30, 2024:

	Number of Shares
Grants of RSUs unvested as of December 31, 2023	580,292
Grants of RSUs	1,081,051
Forfeiture/cancelled	(68,350)
Grants of RSUs vested	(517,149)
Grants of RSUs unvested as of September 30, 2024	1,075,844

Schedule of Vesting Periods

The following table summarizes the vesting time periods of these unvested RSUs:

Number of Shares	Vesting Time Period
2,621	Remainder of 2024
419,088	2025
296,020	2026
355,615	2027
2,500	2028
1,075,844

Schedule of Stock Option Activity

The following schedule shows stock option activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price
Stock options outstanding as of December 31, 2023	501,829	4.67	$	6.81
Issued	—	0	$	—
Forfeited	(43,279)	0	$	6.78
Exercised	—	0	$	—
Stock options outstanding as of September 30, 2024	458,550	3.78	$	6.81
Stock options exercisable as of September 30, 2024	444,888	0	$	6.79

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WARRANTS (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of Warrant Activity

The following table shows warrant activity for the nine months ended September 30, 2024.

	Number of Shares	Weighted Average Exercise Price
Warrants outstanding as of December 31, 2023	511,681	$	8.74
Issued	—	$	—
Exercised	—	$	—
Expired	(25,650)	$	14.46
Warrants outstanding as of September 30, 2024	486,031	$	8.44
Warrants exercisable as of September 30, 2024	486,031	$	8.44

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REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Total revenues and other income	$ 9,889,257	$ 19,586,929	$ 43,235,536	$ 54,793,176
Relative percentage	100.00%	100.00%	100.00%	100.00%
CEA
Disaggregation of Revenue [Line Items]
Total revenues and other income	$ 3,463,121	$ 5,430,834	$ 21,862,154	$ 16,947,760
Relative percentage	35.00%	28.00%	51.00%	31.00%
Commercial
Disaggregation of Revenue [Line Items]
Total revenues and other income	$ 6,426,136	$ 14,156,095	$ 21,373,382	$ 37,845,416
Relative percentage	65.00%	72.00%	49.00%	69.00%
Equipment systems
Disaggregation of Revenue [Line Items]
Total revenues and other income	$ 3,720,174	$ 3,035,758	$ 9,624,514	$ 10,629,327
Equipment systems | CEA
Disaggregation of Revenue [Line Items]
Total revenues and other income	3,720,174	3,035,758	9,624,514	10,629,327
Equipment systems | Commercial
Disaggregation of Revenue [Line Items]
Total revenues and other income	0	0	0	0
Services
Disaggregation of Revenue [Line Items]
Total revenues and other income	1,913,246	2,898,741	7,404,843	9,399,968
Services | CEA
Disaggregation of Revenue [Line Items]
Total revenues and other income	764,890	468,872	2,530,200	3,282,025
Services | Commercial
Disaggregation of Revenue [Line Items]
Total revenues and other income	1,148,356	2,429,869	4,874,643	6,117,943
Construction design-build
Disaggregation of Revenue [Line Items]
Total revenues and other income	4,172,110	13,466,093	25,915,018	34,253,900
Construction design-build | CEA
Disaggregation of Revenue [Line Items]
Total revenues and other income	(1,105,670)	1,739,867	9,416,279	2,526,427
Construction design-build | Commercial
Disaggregation of Revenue [Line Items]
Total revenues and other income	5,277,780	11,726,226	16,498,739	31,727,473
Other
Disaggregation of Revenue [Line Items]
Total revenues and other income	83,727	186,337	291,161	509,981
Other | CEA
Disaggregation of Revenue [Line Items]
Total revenues and other income	83,727	186,337	291,161	509,981
Other | Commercial
Disaggregation of Revenue [Line Items]
Total revenues and other income	$ 0	$ 0	$ 0	$ 0

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REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Contract Assets and Liabilities (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Contract assets:
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage	$ 3,551,396	$ 7,729,531
Retainage included in contract assets due to being conditional on something other than solely passage of time	943,239	707,036
Total contract assets	4,494,635	8,436,567
Contract liabilities:
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability)	5,479,049	3,895,826
Retainage included in contract liabilities due to being conditional on something other than solely passage of time	103,381	54,307
Total contract liabilities	$ 5,582,430	$ 3,950,133

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RELATED PARTY TRANSACTIONS - Schedule of Related Party Revenues (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Related Party Transaction [Line Items]
Total revenues from related party transactions	$ 9,889,257	$ 19,586,929	$ 43,235,536	$ 54,793,176
Cloud 9 Support, PotCo LLC, and CEA Consortium
Related Party Transaction [Line Items]
Total revenues from related party transactions	0	384,031	3,266	1,232,730
Revenue - Cloud 9
Related Party Transaction [Line Items]
Total revenues from related party transactions	0	0	0	462
Revenue - Potco
Related Party Transaction [Line Items]
Total revenues from related party transactions	0	139,031	3,266	987,268
Revenue - CEA Consortium
Related Party Transaction [Line Items]
Total revenues from related party transactions	$ 0	$ 245,000	$ 0	$ 245,000

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RELATED PARTY TRANSACTIONS - Schedule of Related Party Accounts Receivable (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Related Party Transaction [Line Items]
Total accounts receivable due from related party transactions	$ 24,040,022	$ 21,648,901
Cloud 9 Support, PotCo LLC, and CEA Consortium
Related Party Transaction [Line Items]
Total accounts receivable due from related party transactions	408,088	408,088
Accounts receivable - Cloud 9
Related Party Transaction [Line Items]
Total accounts receivable due from related party transactions	0	0
Accounts receivable - Potco
Related Party Transaction [Line Items]
Total accounts receivable due from related party transactions	163,088	163,088
Accounts receivable - CEA Consortium
Related Party Transaction [Line Items]
Total accounts receivable due from related party transactions	$ 245,000	$ 245,000

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PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Vendor prepayments	$ 3,255,901	$ 130,522
Prepaid services and fees	609,721	1,168,309
Inventories	221,676	228,858
Other assets	23,196	223,875
Total Prepaid expenses and other assets	$ 4,110,494	$ 1,751,564

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PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,612,486	$ 2,514,909
Accumulated depreciation	(1,566,932)	(1,095,516)
Total property and equipment, net	1,045,554	1,419,393
Computers and technology equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	360,191	294,322
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	325,485	325,485
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	228,759	228,760
Vehicles
Property, Plant and Equipment [Line Items]
Total property and equipment	432,823	432,823
Software
Property, Plant and Equipment [Line Items]
Total property and equipment	1,119,278	1,087,569
Other equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 145,950	$ 145,950

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PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation	$ 188,316	$ 131,138	$ 584,289	$ 385,185

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INVESTMENTS (Details)			1 Months Ended	3 Months Ended
	Aug. 30, 2023 USD ($)	Oct. 30, 2021 USD ($) shares	Aug. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares	Oct. 30, 2021 $ / shares
Debt and Equity Securities, FV-NI [Line Items]
Class of warrant or right, outstanding (in shares) | shares					486,031	511,681
Exercise price of warrants or rights (in dollars per share) | $ / shares					$ 8.44	$ 8.74
XS Financial, Inc.
Debt and Equity Securities, FV-NI [Line Items]
Class of warrant or right, outstanding (in shares) | shares		1,250,000
Exercise price of warrants or rights (in dollars per share) | $ / shares							$ 0.45
XS Financial, Inc. | Prior to Any NASDAQ Listing
Debt and Equity Securities, FV-NI [Line Items]
Debt, interest rate		9.50%
Debt, cash interest, interest rate		7.50%
Debt instrument, interest paid in kind, interest rate		2.00%
XS Financial, Inc. | Post Any Listing
Debt and Equity Securities, FV-NI [Line Items]
Debt, interest rate		8.00%
XS Financial, Inc. | Convertible Notes Payable | Convertible Debt
Debt and Equity Securities, FV-NI [Line Items]
Debt instrument, face amount		$ 43,500,000
Option to extend maturity date, period		1 year
XS Financial, Inc.
Debt and Equity Securities, FV-NI [Line Items]
Investments		$ 2,500,000
Sale of investment			$ 2,300,000
Proceeds from sale of investment	$ 2,300,000
Impairment loss				$ 300,000

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GOODWILL & INTANGIBLE ASSETS - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 9,688,975		$ 9,688,975		$ 9,688,975
Goodwill, impairment	0	$ 0	0	$ 0
Depreciation and Amortization	$ 239,332	$ 241,831	$ 584,960	$ 816,016

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GOODWILL & INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Cost	$ 5,771,038	$ 5,771,038
Accumulated Amortization	(2,976,957)	(2,391,997)
Total estimated future amortization expense	2,794,081	3,379,041
Indefinite-lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	72,567	72,567
Cost	5,843,605	5,843,605
Net Book Value	2,866,648	3,451,608
Trade name
Indefinite-lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	28,291	28,291
Patents
Indefinite-lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	44,276	44,276
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Cost	3,269,201	3,269,201
Accumulated Amortization	(1,323,003)	(1,004,743)
Total estimated future amortization expense	1,946,198	2,264,458
Trademarks and trade names
Finite-Lived Intangible Assets [Line Items]
Cost	1,778,000	1,778,000
Accumulated Amortization	(930,117)	(663,417)
Total estimated future amortization expense	847,883	1,114,583
Backlog
Finite-Lived Intangible Assets [Line Items]
Cost	707,400	707,400
Accumulated Amortization	(707,400)	(707,400)
Total estimated future amortization expense	0	0
Licenses
Finite-Lived Intangible Assets [Line Items]
Cost	16,437	16,437
Accumulated Amortization	(16,437)	(16,437)
Total estimated future amortization expense	$ 0	$ 0

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GOODWILL & INTANGIBLE ASSETS - Schedule of Future Amortization Expenses of Intangible Assets (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2024	$ 194,995
2025	779,948
2026	738,364
2027	513,714
2028	405,306
2029	161,754
Total estimated future amortization expense	$ 2,794,081	$ 3,379,041

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ACCRUED EXPENSES (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued operating expenses	$ 73,835	$ 277,987
Accrued wages and related expenses	1,103,290	1,349,195
Business development accrual	113,620	376,816
Accrued interest expense	73,359	26,000
Accrued 401(k)	16,736	66,642
Accrued sales tax payable	3,115,387	3,187,638
Total accrued expenses	$ 4,496,227	$ 5,284,278

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NOTES PAYABLE - Schedule of Debt (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Schedule of Long-Term and Short-Term Debt Instruments [Line Items]
Total	$ 4,539,665	$ 3,204,840
Less current maturities	(4,539,665)	(3,204,840)
Long Term	0	0
Other financing agreements
Schedule of Long-Term and Short-Term Debt Instruments [Line Items]
Short-term debt	139,395	129,600
DVO note | DVO
Schedule of Long-Term and Short-Term Debt Instruments [Line Items]
Long-term debt	133	575,240
Revolving Facility | Line of credit
Schedule of Long-Term and Short-Term Debt Instruments [Line Items]
Long-term debt	$ 4,400,137	$ 2,500,000

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NOTES PAYABLE - Narrative (Details)			3 Months Ended
	Dec. 13, 2023 USD ($) tradingDay tranche	Nov. 01, 2022 USD ($) quarter	Mar. 31, 2024	Sep. 30, 2024
Other financing agreements
Line of Credit Facility [Line Items]
Debt, average interest rate				13.60%
Bancroft Capital, LLC
Line of Credit Facility [Line Items]
Cash and warrant compensation, number of separate tranches | tranche	2
Cash and warrant compensation, payout criteria, line of credit drawn by borrower, amount to exceed	$ 4,500,000
Bancroft Capital, LLC | Tranche One
Line of Credit Facility [Line Items]
Value of warrants to be issued, if circumstances met	$ 200,000
Warrants to be issued if criteria met, price of warrant, percent of daily volume weighted average closing price, if trading day criteria met	110.00%
Warrants to be issued if criteria met, price of warrant, percent of daily volume weighted average closing price criteria, number of consecutive trading days | tradingDay	10
Warrants to be issued if criteria met, exercise period, number of months from the date of issuance	6 months
Bancroft Capital, LLC | Tranche Two
Line of Credit Facility [Line Items]
Cash and warrant compensation, payout criteria, line of credit drawn by borrower, amount to exceed	$ 4,500,000
Value of warrants to be issued, if circumstances met	$ 200,000
Warrants to be issued if criteria met, price of warrant, percent of daily volume weighted average closing price, if trading day criteria met	110.00%
Warrants to be issued if criteria met, price of warrant, percent of daily volume weighted average closing price criteria, number of consecutive trading days | tradingDay	10
Bancroft Capital, LLC | Tranche One
Line of Credit Facility [Line Items]
Cash and warrant compensation, cash fee earned	$ 200,000
Bancroft Capital, LLC | Tranche Two
Line of Credit Facility [Line Items]
Cash and warrant compensation, additional cash fee earned, If borrowing criteria met	$ 200,000
Secured Promissory Note | UG Construction, Inc. | Gemini Finance Corp.
Line of Credit Facility [Line Items]
Maximum number of days draws due and payable (on or before)	180 days
Debt, interest rate	1.75%
DVO note | DVO
Line of Credit Facility [Line Items]
Debt, face amount		$ 3,806,250
Debt, payment terms, number of consecutive quarters | quarter		4
Debt, payment terms, remaining three payments, number of days following end of each fiscal quarter		10 days
Debt, interest rate during period			10.00%
Revolving Facility | Loan Agreement | Line of credit | UG Construction, Inc. | Gemini Finance Corp.
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity (not to exceed)	$ 10,000,000
Extension period following initial term	9 months
Debt, covenant, lender non-renewal written notice, minimum number of days prior to initial term expiration	60 days

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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES - Narrative (Details)		3 Months Ended			9 Months Ended
	Sep. 07, 2023 USD ($)	Sep. 30, 2024 USD ($) lease	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) lease	Sep. 30, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Number of operating leases | lease		7			7
Number of finance leases | lease		1			1
Operating lease, interest rate		8.00%			8.00%
Finance lease, interest rate		8.00%			8.00%
Loss on settlement | $		$ 0	$ 0		$ 0	$ 1,500,000
Crest Ventures, LLC Litigation | Settled Litigation
Lessee, Lease, Description [Line Items]
Loss contingency, damages paid | $	$ 1,500,000
Loss on settlement | $				$ 1,500,000
Minimum
Lessee, Lease, Description [Line Items]
Finance lease, term of contract (minimum less than a year)		1 year			1 year
Operating lease, term of contract (minimum less than a year)		1 year			1 year
Maximum
Lessee, Lease, Description [Line Items]
Finance lease, term of contract (minimum less than a year)		6 years			6 years
Operating lease, term of contract (minimum less than a year)		6 years			6 years
2WR, Emerald, and DVO Acquisitions
Lessee, Lease, Description [Line Items]
Number of operating leases acquired via business combinations | lease		5			5

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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES - Schedule of Operating Lease Liabilities (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Leases [Abstract]
Operating lease liabilities related to right of use assets	$ 1,899,601	$ 2,087,503
Less current portion	(694,425)	(707,141)
Long term	$ 1,205,176	$ 1,380,362

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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Leases [Abstract]
Remainder of 2024	$ 185,076
2025	678,835
2026	488,751
2027	346,812
2028	253,415
Thereafter	82,489
Total minimum lease payments	2,035,378
Less: Amount representing interest	(135,777)
Net lease obligations	$ 1,899,601	$ 2,087,503

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RISKS AND UNCERTAINTIES (Details)			3 Months Ended		9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Purchases | Supplier Concentration Risk | V000002198
Concentration Risk [Line Items]
Concentration risk, percentage			14.00%		11.00%
Purchases | Supplier Concentration Risk | V000002503
Concentration Risk [Line Items]
Concentration risk, percentage			51.00%		40.00%
Accounts Payable | Supplier Concentration Risk | V000002275
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%	13.00%
Accounts Payable | Supplier Concentration Risk | V000002503
Concentration Risk [Line Items]
Concentration risk, percentage	25.00%
C000001462 | Revenue Benchmark | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage			40.00%	0.00%	11.00%
C000002187 | Revenue Benchmark | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage			13.00%	22.00%	22.00%	23.00%
C000002187 | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	23.00%	57.00%
C000002607 | Revenue Benchmark | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage			13.00%
C000002552 | Revenue Benchmark | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage					24.00%
C000002552 | Accounts Receivable | Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	22.00%

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STOCK-BASED COMPENSATION - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 343,884	$ 722,647	$ 1,461,245	$ 1,824,835
Unrecognized stock-based compensation expense	0		0
Stock options outstanding, aggregate intrinsic value	0		0
Stock options exercisable, aggregate intrinsic value	$ 0		$ 0
Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value assumptions, expected volatility rate			100.00%
Stock Grants | Minimum | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting employment period (in years)			1 year
Stock Grants | Maximum | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting employment period (in years)			3 years
Stock Options | Minimum | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting employment period (in years)			1 year
Stock Options | Maximum | Omnibus Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting employment period (in years)			3 years

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STOCK-BASED COMPENSATION - Schedule of RSU Activity (Details) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2024 shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance (in shares)	580,292
Grants of RSUs (in shares)	1,081,051
Forfeiture/cancelled (in shares)	(68,350)
Grants of RSUs vested and issued (in shares)	(517,149)
Ending balance (in shares)	1,075,844

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STOCK-BASED COMPENSATION - Schedule of RSU Vesting Periods (Details) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2024 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	1,075,844
Vesting Period One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	2,621
Vesting Period Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	419,088
Vesting Period Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	296,020
Vesting Period Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	355,615
Vesting Period Five
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares (in shares)	2,500

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STOCK-BASED COMPENSATION - Schedule of Stock Option Activity (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Number of Shares
Stock options outstanding, beginning balance (in shares)	501,829
Issued (in shares)	0
Forfeited (in shares)	(43,279)
Exercised (in shares)	0
Stock options outstanding, ending balance (in shares)	458,550	501,829
Stock options exercisable (in shares)	444,888
Weighted Average Remaining Life (Years)
Stock options outstanding (in years)	3 years 9 months 10 days	4 years 8 months 1 day
Issued (in years)	0 years
Forfeited (in years)	0 years
Exercised (in years)	0 years
Stock options exercisable, end of period (in years)	0 years
Weighted Average Exercise Price
Stock options outstanding, beginning balance (in dollars per share)	$ 6.81
Issued (in dollars per share)	0
Forfeited (in dollars per share)	6.78
Exercised (in dollars per share)	0
Stock options outstanding, ending balance (in dollars per share)	6.81	$ 6.81
Stock options exercisable (in dollars per share)	$ 6.79

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STOCKHOLDERS’ EQUITY (Details) - USD ($)		1 Months Ended	3 Months Ended	9 Months Ended	40 Months Ended
	May 24, 2021	Feb. 28, 2021	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2024	Sep. 12, 2022	Feb. 02, 2022	Jan. 18, 2022
Equity [Abstract]
Stock repurchase program, authorized amount (up to)	$ 5,000,000.0					$ 10,500,000	$ 8,500,000	$ 7,000,000.0
Stock repurchase program, period in force	12 months
Stock repurchase program, increased authorized amount						$ 2,000,000	$ 1,500,000	$ 2,000,000.0
Stock repurchased (in shares)		350,000	0	0	1,099,833
Stock repurchased, average price per share (in dollars per share)		$ 8.50			$ 8.25
Stock repurchased during period		$ 3,000,000.0			$ 9,100,000
Stock repurchase program, amount remaining under program				$ 1,400,000	$ 1,400,000

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WARRANTS - Schedule of Warrant Activity (Details)	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Shares
Warrants outstanding, beginning balance (in shares) | shares	511,681
Issued (in shares) | shares	0
Exercised (in shares) | shares	0
Expired (in shares) | shares	(25,650)
Warrants outstanding, ending balance (in shares) | shares	486,031
Warrants exercisable (in shares) | shares	486,031
Weighted Average Exercise Price
Warrants outstanding, beginning balance (in dollars per share) | $ / shares	$ 8.74
Issued (in dollars per share) | $ / shares	0
Exercised (in dollars per share) | $ / shares	0
Expired (in dollars per share) | $ / shares	14.46
Warrants outstanding, ending balance (in dollars per share) | $ / shares	8.44
Warrants exercisable (in dollars per share) | $ / shares	$ 8.44

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WARRANTS - Narrative (Details)	Sep. 30, 2024 USD ($)
Equity [Abstract]
Warrants, outstanding, intrinsic value	$ 22,233
Warrants, exercisable, intrinsic value	$ 22,233

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SUBSEQUENT EVENTS (Details)			5 Months Ended
	Jan. 31, 2025 USD ($) $ / shares shares	Oct. 01, 2024 USD ($) $ / shares	Feb. 18, 2025 shares	Oct. 02, 2024	Sep. 30, 2024 $ / shares	Dec. 31, 2023 $ / shares
Subsequent Event [Line Items]
Exercise price of warrants or rights (in dollars per share) | $ / shares					$ 8.44	$ 8.74
Grow Hill Promissory Note | Secured Debt
Subsequent Event [Line Items]
Debt, interest rate					15.00%
Subsequent Event
Subsequent Event [Line Items]
Value of warrants to be issued, if circumstances met		$ 160,000
Exercise price of warrants or rights (in dollars per share) | $ / shares	$ 1.00	$ 2.50
Term of warrants		5 years
Percent of payout at placement (as a percent)				0.50
Percent of payout at line of credit draw (as a percent)				0.1123
Grants of RSUs (in shares) | shares			170,000
Payment for litigation settlement	$ 250,000
Shares available for purchase through warrant (in shares) | shares	75,000
Subsequent Event | Minimum
Subsequent Event [Line Items]
Line of credit draw threshold (as a percent)				0.45
Subsequent Event | Maximum
Subsequent Event [Line Items]
Line of credit draw threshold (as a percent)				0.60
Subsequent Event | October 2024 Term Loan | Secured Debt
Subsequent Event [Line Items]
Debt instrument, face amount		$ 2,100,000
Debt instrument, term		24 months
Loan origination fee		$ 100,000
Minimum interest to be paid if prepayment occurs		$ 150,000