urban-gro's Non-Binding Letter of Intent for Sale of 2WR Subsidiary.

Urban-gro, Inc. has entered into a non-binding letter of intent with CM Capital Management for the sale of its architectural design subsidiary, 2WR of Georgia, Inc. The transaction remains subject to negotiation and execution of definitive agreements, completion of customary closing conditions, and final due diligence by both parties. The sale reflects the Company's focus on streamlining operations and aligning resources with its strategic growth priorities.

Lafayette, CO - Urban-gro, Inc. (NASDAQ: UGRO), a micro-cap company valued at $5.83 million, has entered into a non-binding letter of intent with CM Capital Management to sell its architectural design subsidiary, 2WR of Georgia, Inc. [1]. The transaction is subject to negotiation and execution of definitive agreements, completion of customary closing conditions, and final due diligence by both parties.

Under the letter of intent, Urban-gro has received a $500,000 refundable deposit, with additional cash payments expected at closing and upon achievement of certain pre-defined earn-out milestones. The sale reflects the company's strategy to streamline operations and refocus on the Controlled Environment Agriculture (CEA) sector. 2WR of Georgia focuses on designing civil, municipal, post-secondary, and healthcare projects primarily in Georgia.

Bradley Nattrass, Chairman and CEO of Urban-gro, stated that the proposed sale aligns with the company's strategy to streamline operations and refocus on its core CEA business. "We are confident that CM Capital Management is well-positioned to build on 2WR’s legacy, and we look forward to finalizing terms that benefit all stakeholders," said Nattrass. The transaction remains preliminary, and there is no guarantee a binding agreement will be reached.

The move comes as Urban-gro faces significant headwinds, with revenue declining 16.83% over the last twelve months and an EBITDA of -$11.06 million. The company also recently encountered a compliance issue with Nasdaq due to delays in its financial reporting, highlighting potential liquidity challenges and concerns about financial transparency.

The proposed sale of 2WR is part of a broader operational streamlining initiative. By shedding this non-core asset, Urban-gro can reallocate resources toward its CEA operations where it likely sees greater growth potential and competitive advantage. The inclusion of earnouts in the deal suggests confidence in 2WR's standalone business prospects under new ownership.

Investors should note that this represents a strategic realignment rather than a simple asset sale, potentially signaling Urban-gro's response to changing market conditions in both the architecture and CEA sectors. The financial terms beyond the initial deposit remain undisclosed, but the structure including earnout provisions suggests a deal designed to capture 2WR's future value while immediately improving Urban-gro's financial flexibility and operational focus.

References:
[1] https://www.investing.com/news/company-news/urbangro-plans-to-sell-architectural-design-subsidiary-2wr-93CH-4192072
[2] https://www.stocktitan.net/news/UGRO/urban-gro-inc-enters-into-non-binding-letter-of-intent-for-sale-of-d0yllorsamy7.html