December 20, 2019
Bradley Nattrass
Principal Executive Officer
urban-gro, Inc.
1751 Panorama Point, Unit G
Lafayette, CO 80026
Re: urban-gro, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2018
Response Dated December 17, 2019
File No. 000-55966
Dear Mr. Nattrass:
We have reviewed your December 17, 2019 response to our comment letter
and have the
following comments. In some of our comments, we may ask you to provide us with
information
so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments. Unless we note otherwise, our references to prior comments are to
comments in our
December 2, 2019 letter.
Form 10-K for the Fiscal Year Ended December 31, 2018
Audited Financial Statements
Note 6 - Investments, page F-13
1. We read your response to Comment 4 and reissue our comment in part.
Please show us
how your reconciliation was derived from the disclosures contained in
this note to your
financial statements and revise your disclosure accordingly. Further,
please provide
descriptions of the cash investments to enable users to more fully
understand your
quantitative disclosures. Refer to ASC 321-10-50.
Bradley Nattrass
FirstName Inc.
urban-gro, LastNameBradley Nattrass
Comapany20, 2019
December Nameurban-gro, Inc.
December 20, 2019 Page 2
Page 2
FirstName LastName
2. As it relates to your investment in Edyza, please clarify and
reconcile the following
disclosure:
You previously disclosed in your Form S-1 that in August 2017
Edyza issued the
Company a convertible note in the principal amount of $400,000,
which is
convertible into a 5% interest in Edyza, at your election. Please
revise to clarify if
the Simple Agreement for Future Equity was an agreement in
addition to the
convertible note or if the Simple Agreement is the convertible
note you previously
disclosed. In this regard, we note the 442,685 shares issued to
you at a conversion
price of $0.09 equates to $40,000 and not the principal amount of
the convertible note
of $400,000 you received in exchange for your cash investment of
$400,000
disclosed on the statement of cash flows for the year ended
December 31, 2017.
We note your disclosure that your purchased an additional 442,685
shares for
$400,000 or approximately $0.90 per share of which only $325,000
had been paid as
of December 31, 2018. Please tell us and disclose the nature and
amounts other than
the $325,000 paid to Edyza during the year ended December 31,
2018 comprising the
remaining cash investment of $87,833.
You indicate cash investments of $205,250 were made for the nine
months ended
September 30, 2019. Please disclose the nature and amounts of
these investments
including whether you acquired additional ownership over the 10%
as of December
31, 2018.
3. As it relates to your investment in TGH, please clarify and reconcile
the following
disclosure:
Your note disclosure indicates you purchased an initial 5%
interest in TGH in
February 2018 for $125,000 and another 5% under the first option
for $150,000 in
July 2018. Please explain the nature and amounts of the
additional cash investments
of $173,766 in deriving your cash outflows of $448,766. In this
regard, your
disclosure indicates the second option of an additional 15%
interest for $525,000 was
not exercisable until 2019.
We note in January 2019 the Company and TGH negotiated the terms
of the second
option of 15% for $525,000; however, your disclosure indicates
you had already paid
$158,000 as of December 31, 2018 with future payments of $36,000
due every two
weeks through May 2019 until the remaining balance of $367,000
has been paid.
Please clarify why payments appear to have been made on the
second option before it
was exercisable and before you entered into negotiations with
regard to the second
option.
We note beginning in May 2019 you have disclosed you account for
your investment
under the equity method. Please tell us the amount of the
Company's share of
Bradley Nattrass
urban-gro, Inc.
December 20, 2019
Page 3
earnings or losses from its investment from May through September
30, 2019 and
what consideration was given to providing the disclosures
required by ASC 323-10-
50-3.
You may contact Donna Di Silvio at (202) 551-3202 or Bill Thompson at
(202) 551-3344
if you have questions.
FirstName LastNameBradley Nattrass Sincerely,
Comapany Nameurban-gro, Inc.
Division of
Corporation Finance
December 20, 2019 Page 3 Office of Trade &
Services
FirstName LastName