urban-gro Announces Financial Results for Fourth Quarter and Fiscal Year 2019 - Seite 2

- $1.6 million increase in salaries and related expenses tied to the expansion of our workforce in the first three quarters of 2019 to focus on future growth.
- $1.3 million attributed to the amortization of amounts associated with the issuance of convertible debentures, which was a non-cash charge.
- $0.8 million attributed to increased professional/consulting fees and costs tied to the Company’s public listing.
- $0.5 million attributed to the write-down of a prior investment, which was a non-cash charge.
- $0.3 million attributed to increased G&A expenses due to the expansion of our workforce in the first three quarters of 2019.

On a Non-GAAP basis, Adjusted EBITDA for 2019 was a negative $3.3 million, compared to a negative $2.4 million in the prior year period due primarily to increased salaries and related expenses.  See reconciliations of all non-GAAP to GAAP measures presented in this release in the table below.

Balance Sheet Highlights

• Accounts receivable increased by $1.1 million as a result of increasing terms with key customers.
• Goodwill increased to $0.9 million due to the acquisition of Impact Engineering.
• The Company increased its gross investments into ancillary companies by 100%, from $1.3 million in 2018 to $2.6 million in 2019.
  - Subsequent to the market downturn in Q4, we impaired one of these investments by $0.5 million, resulting in a net increase in investments of $0.8 million.
• In Q4 2019, $2.7 million of debentures and accrued interest were converted into 1,102,513 shares of Common Stock at $2.41 per share.
  - The associated outstanding 532,134 warrants are exercisable to purchase common Stock at $3.00 per share until June 24, 2021.

Company Product and Service Highlights

In 2019, the Company successfully executed the following operational initiatives:

• Secured Engineering Design Services contracts for 76 projects totaling 1.9 million square feet.
• Acquisition of Impact Engineering Inc. (d/b/a Grow2Guys), a MEP firm with related design experience in over 300 cannabis cultivation facilities. We believe this acquisition provides strategic opportunities to: 1) engage with customers earlier in the facility design process, and 2) enter the purpose-built HVAC segment.
• New IP:  In 2019, the Company was awarded its first two US Patents for use in its Soleil technology offering. Two patents tied to the Modular Sensor Architecture for Soil and Water Analysis at Various Depths from the Surface were issued on September 3, 2019, and December 3, 2019.
• To better focus on becoming cash flow positive in 2020, we began making the following cost reduction initiatives in August 2019: