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Urban-gro (NASDAQ: UGRO) issues 12% secured convertible note with warrants

Filing Impact
(Very High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Urban-gro, Inc. entered into a financing deal with Agile Hudson Partners LLC involving a 12% secured, convertible promissory note with aggregate principal of up to $2,775,000 and related stock warrants. The buyer initially funded a first tranche of $2,225,495.05 in principal for a $2,025,000 purchase price, less $25,000 of legal fees.

The note is convertible into common stock at the lesser of a fixed $36.00 per share (subject to adjustment) or 80% of the average of the three lowest traded prices over a specified 10‑day period, subject to a 4.99% beneficial ownership cap and an exchange cap. Urban-gro also issued warrants to buy 154,166 shares at $18.00 per share and pre-funded warrants for 26,000 shares at $0.01, and granted the investor a junior security interest in substantially all assets, behind $2,000,000 of existing senior secured debt.

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Insights

Urban-gro adds high-cost secured, convertible debt with equity-linked features.

Urban-gro arranged a 12% secured promissory note of up to $2,775,000, with an initial funded tranche of $2,225,495.05 for a purchase price of $2,025,000 reflecting original issue discount. This brings new cash while increasing leverage.

The note is convertible at the lower of a fixed $36.00 per share or 80% of the average of the three lowest trading prices in a 10‑day window, with a 4.99% beneficial ownership cap and an exchange cap tied to Nasdaq rules. Attached warrants cover 154,166 shares at $18.00 plus 26,000 pre-funded warrants at $0.01, adding potential future dilution.

The debt is secured by substantially all assets but is contractually junior to an existing $2,000,000 senior secured loan. The agreement allows a potential second tranche of $500,000 in purchase price, contingent on conditions including filing the Form 10‑K for the year ended December 31, 2025. Actual impact will depend on conversion behavior, share price levels, and the company’s ability to manage covenant and repayment requirements over the 12‑month tranche maturities.

Item 1.01 Entry into a Material Definitive Agreement Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02 Unregistered Sales of Equity Securities Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Maximum note principal $2,775,000 Aggregate principal amount of secured promissory note
Aggregate purchase price $2,525,000 Total purchase price across all tranches for the note
First tranche principal $2,225,495.05 Original principal amount funded in first tranche
First tranche purchase price $2,025,000 Cash purchase price paid for first tranche before $25,000 fees
Interest rate 12% One-time interest charge on principal for each tranche
Fixed conversion price $36.00/share Fixed leg of conversion price for the note, subject to adjustment
First warrant coverage 154,166 shares Common stock warrant exercisable at $18.00 per share
Pre-funded warrant coverage 26,000 shares Pre-funded common stock warrant at $0.01 exercise price
original issue discount financial
"The Note has an aggregate principal amount of up to $2,775,000, with an aggregate purchase price of up to $2,525,000 and an original issue discount of up to $250,000."
Original issue discount (OID) is the difference between a debt security’s face value and the lower price at which it is first sold, treated as additional interest that accrues over the life of the instrument. For investors it matters because OID raises the effective yield and changes taxable income and the holding’s cost basis over time — think of buying a $100 voucher for $90 and recognizing the $10 gain as earned interest as the voucher approaches maturity.
beneficial ownership limitation financial
"The Note is convertible into shares ... subject to certain limitations, including a beneficial ownership limitation of 4.99% and an exchange cap"
A beneficial ownership limitation is a rule that caps the percentage of a company’s shares an investor can be treated as owning or controlling for voting, regulatory or tax purposes. It matters to investors because it can restrict how many shares a person or group can buy or vote, affect takeover chances, and influence share liquidity and value — like a speed limit that prevents any single driver from taking over the whole road.
pre-funded Common Stock purchase warrant financial
"a pre-funded Common Stock purchase warrant to purchase up to 26,000 shares of Common Stock at an initial exercise price of $0.01 per share"
security interest financial
"The Security Agreement grants the Buyer a security interest in substantially all of the assets of the Company and the subsidiary parties thereto"
A security interest is a legal claim a lender or creditor holds on a borrower's asset as collateral to secure repayment; if the borrower fails to pay, the creditor can seize or sell that asset to recover money owed. Think of it like a pawnshop tag on an item that gives the pawnbroker the right to sell it if the loan isn't repaid. For investors, security interests matter because they change how safely lenders and bondholders can recover funds and affect the hierarchy of claims if a company faces financial trouble.
accredited investor financial
"The Buyer represented that it is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act."
An accredited investor is an individual or entity that meets certain financial criteria, such as having a high income or significant net worth, allowing them to invest in private or less regulated investment opportunities. This status matters because it grants access to investments that are often riskier or less available to the general public, reflecting a higher level of financial knowledge or resources.
Rule 506(b) regulatory
"in reliance on Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder."
Rule 506(b) is a U.S. securities exemption that lets companies sell shares or debt privately without full public registration, provided sales are primarily to accredited investors, up to 35 non‑accredited but financially knowledgeable buyers, and there is no public advertising or solicitation. It matters to investors because offerings under 506(b) usually include less public disclosure than registered securities—like buying from a private seller rather than a retail store—so buyers must do more of their own fact‑checking and rely on their financial sophistication.
Understanding 8-K Material Events →
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): April 13, 2026

 

URBAN-GRO, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-39933   46-5158469

(State or other jurisdiction

of incorporation)

   (Commission File Number)  

(IRS Employer

Identification No.)

 

1751 Panorama Point, Unit G

Lafayette, Colorado 80026

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: (720) 390-3880

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
  ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
  ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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, par value $0.001 per share   UGRO   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

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. ☐

 

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On April 7, 2026, Urban-gro, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Agile Hudson Partners LLC (the “Buyer”), pursuant to which the Buyer agreed to purchase, and the Company agreed to issue and sell to the Buyer, a 12% secured promissory note (the “Note”) in an aggregate principal amount of up to $2,775,000, at an aggregate purchase price of up to $2,525,000, in one or more tranches.

 

Pursuant to the Purchase Agreement, the Buyer funded the first tranche in the original principal amount of $2,225,495.05 (the “First Tranche”) for a purchase price of $2,025,000 (the “Purchase Price”). The Buyer withheld $25,000 from the Purchase Price to cover the Buyer’s legal fees in connection with the First Tranche.

 

The Note is convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), subject to certain limitations, including a beneficial ownership limitation of 4.99% and an exchange cap, unless the Company obtains stockholder approval as required by applicable Nasdaq rules. The conversion price is equal to the lesser of (i) a fixed price of $36.00 per share (subject to adjustment) and (ii) 80% of the average of the three lowest traded prices of the Common Stock on the Company’s principal market during the ten trading days immediately preceding the applicable conversion date (subject to adjustment).

 

In connection with the funding of the First Tranche, the Company issued to the Buyer (i) a Common Stock purchase warrant to purchase up to 154,166 shares of Common Stock at an initial exercise price of $18.00 per share (the “First Warrant”) and (ii) a pre-funded Common Stock purchase warrant to purchase up to 26,000 shares of Common Stock at an initial exercise price of $0.01 per share (the “Second Warrant,” and together with the First Warrant, the “Warrants”). The First Warrant is exercisable for a period ending five (5) years after April 7, 2026, and contains customary provisions regarding, among other things, cashless exercise (in certain circumstances), beneficial ownership limitations and adjustments upon certain corporate events.

 

The Purchase Agreement also provides for a potential second tranche funding. Subject to satisfaction of certain conditions, including (among other things) the absence of defaults, compliance with covenants, and the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2025 with audited financial statements (the “10-K Filing Condition”), the Buyer agreed to fund an additional $500,000 purchase price under the Note (the “Second Tranche”). At the closing of the Second Tranche, the principal amount outstanding under the Note would increase by $549,504.95 (including the prorated portion of original issue discount), and the accrued interest charge would increase by $65,940.60.

 

In connection with the Purchase Agreement and Note, the Company and certain of its subsidiaries entered into a Security Agreement dated April 7, 2026 (the “Security Agreement”), in favor of the Buyer. The Security Agreement grants the Buyer a security interest in substantially all of the assets of the Company and the subsidiary parties thereto, including, among other things, accounts, equipment, inventory, general intangibles (including intellectual property), deposit accounts, investment property, and equity interests in subsidiaries, in each case, subject to certain customary exclusions and limitations, and subject to the seniority of certain existing indebtedness as described below.

 

The foregoing descriptions of the Purchase Agreement, Note, Warrants and Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference.

 

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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 above is incorporated herein by reference.

 

The Note has an aggregate principal amount of up to $2,775,000, with an aggregate purchase price of up to $2,525,000 and an original issue discount of up to $250,000. The Note provides for a one-time interest charge equal to 12% of the principal amount with respect to each tranche (up to $333,000 in the aggregate). The maturity date for each tranche is twelve (12) months from the date the applicable purchase price for such tranche is funded. Amounts not paid when due bear default interest at the lesser of 18% per annum and the maximum amount permitted by law.

 

The Note contains customary (and certain non-customary) covenants and events of default. Among other things, the Note provides that if the Company or its subsidiaries receives cash proceeds from certain sources, the Company must, within one business day, inform the Buyer of or publicly disclose such receipt, and the Buyer may require the Company to apply up to 50% of such proceeds to repay outstanding principal and interest then due under the Note.

 

The Company’s obligations under the Note are secured by the Security Agreement. The Security Agreement provides that the Buyer’s security interest is junior in priority to the security interest(s) securing the Company’s senior secured debt, which is described in the Note as a loan in the original principal amount of $2,000,000 issued by the Company to Grow Hill, LLC on October 1, 2024.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 above is incorporated herein by reference.

 

The Note and the Warrants (and the shares of Common Stock issuable upon conversion of the Note and exercise of the Warrants, as applicable) were offered and sold in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder. The Buyer represented that it is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act. The securities issued in the transaction have not been registered under the Securities Act or applicable state securities laws, and may not be offered or sold absent registration or an applicable exemption from the registration requirements.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

The following exhibits are filed as part of, or incorporated by reference into, this Report.

 

Exhibit No.   Description
10.1   Securities Purchase Agreement, dated April 7, 2026, by and between Urban-gro, Inc. and Agile Hudson Partners LLC
10.2   Secured Promissory Note, dated April 7, 2026, issued by Urban-gro, Inc. in favor of Agile Hudson Partners LLC
10.3   Common Stock Purchase Warrant, dated April 7, 2026, issued by Urban-gro, Inc. in favor of Agile Hudson Partners LLC
10.4   Pre-Funded Common Stock Purchase Warrant, dated April 7, 2026, issued by Urban-gro, Inc. in favor of Agile Hudson Partners LLC
10.5   Security Agreement, dated April 7, 2026, among Urban-gro, Inc., certain subsidiary parties thereto, and Agile Hudson Partners LLC
104*   Cover Page Interactive Data File (formatted as Inline XBRL)

 

2

 

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 hereunto duly authorized.

 

Date: April 13, 2026 URBAN-GRO, INC.
     
  By: /s/ Bradley Nattrass
    Name: Bradley Nattrass
    Title: Chairman and Chief Executive Officer

 

3

 

Source: View Original Filing on SEC EDGAR

FAQ

What financing did Urban-gro (UGRO) secure with Agile Hudson Partners?

Urban-gro entered a Securities Purchase Agreement for a 12% secured, convertible note up to $2,775,000 in principal. The initial tranche funded $2,225,495.05 in principal for a $2,025,000 purchase price, providing new cash but adding secured, interest-bearing debt to the capital structure.

How does the Urban-gro (UGRO) convertible note conversion price work?

The note converts at the lesser of a fixed $36.00 per share or 80% of a 10‑day price-based formula. Specifically, it uses 80% of the average of the three lowest traded prices over ten trading days before conversion, subject to adjustments, ownership limits, and an exchange cap.

What stock warrants were issued by Urban-gro (UGRO) in this transaction?

Urban-gro issued two warrants with the first tranche: a standard warrant and a pre-funded warrant. The first covers 154,166 shares at $18.00 per share for five years, while the pre-funded warrant covers 26,000 shares at a $0.01 exercise price, both subject to beneficial ownership limits.

What security interest did Urban-gro (UGRO) grant to Agile Hudson Partners?

Urban-gro granted a security interest in substantially all of its and certain subsidiaries’ assets. This includes accounts, equipment, inventory, intellectual property and equity interests, subject to exclusions, and is expressly junior to an existing $2,000,000 senior secured loan described in the note.

Is there a potential second tranche under Urban-gro’s (UGRO) note financing?

Yes, the agreement contemplates a potential second tranche with a $500,000 purchase price. If conditions are met, outstanding principal would increase by $549,504.95 and accrued interest charge by $65,940.60, with the same 12% one-time interest structure and 12‑month maturity from funding.

How was Urban-gro’s (UGRO) note and warrants offering structured under securities laws?

The note, warrants, and related shares were sold in a private placement exempt from registration. The company relied on Section 4(a)(2) and Rule 506(b) of the Securities Act, with the buyer representing accredited investor status; the securities remain unregistered and restricted from public resale absent registration or an exemption.

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