Urban-gro Faces Delisting Challenges Amid $2.1 Million Lawsuit

Urban-gro Inc. (Nasdaq: UGRO) is grappling with significant legal and financial challenges as it faces a lawsuit over an unpaid loan while simultaneously navigating the risk of delisting from the Nasdaq exchange. The Denver District Court is now the setting for a lawsuit filed by Grow Hill LLC, which claims that Urban-gro defaulted on a loan amounting to $2.1 million.

The complaint, lodged on October 2, 2025, alleges that Urban-gro breached the terms of a promissory note secured by a lien on all of its tangible and intangible assets. Grow Hill contends that the company failed to honor the agreement, asserting that Urban-gro “did not, and does not, own all of the receivables it pledged as collateral for the Note.” This allegation is characterized as fraudulent behavior within the lawsuit.

Grow Hill is seeking damages for breach of the promissory note, including unpaid interest, attorney fees, and compensation for the alleged fraud. The amounts will be determined at trial, and the company is also requesting further relief deemed appropriate by the court.

In response to the lawsuit, Urban-gro Chairman and CEO Bradley Nattrass filed a notice with the U.S. Securities and Exchange Commission (SEC) detailing the allegations. Nattrass stated that the lender claims Urban-gro is in default for failing to make timely payments. Consequently, Grow Hill has accelerated all amounts due under the promissory note, including a default fee of 1% of the outstanding principal.

Urban-gro is currently assessing its options to address the lawsuit and plans to “vigorously defend” against the fraud allegations, according to Nattrass.

Recent Legal Challenges and Merger Plans

This lawsuit is not Urban-gro’s only legal concern. On September 26, 2025, the company settled another lawsuit initiated by Gemini Finance Corp. in the U.S. District Court for the Southern District of California. In this case, Gemini claimed that Urban-gro’s subsidiary, UG Construction Inc., defaulted on a $10 million line of credit. Following a foreclosure on UG Construction’s assets, Gemini acquired those assets for $450,000, while asserting that Urban-gro still owed approximately $1.49 million. The settlement allowed Gemini to receive common stock in Urban-gro.

Despite ongoing legal troubles, Urban-gro is pursuing a merger with Flash Sports & Media Inc., with plans to rebrand as Flash Sports & Media Holdings Inc. This binding letter of intent, signed on October 14, 2025, stipulates that Flash will pay Urban-gro $200,000 within 15 days of finalizing the merger agreement. Following the merger, former stockholders of Flash are expected to control around 90% of the new entity.

The company faces the imminent threat of delisting from Nasdaq after receiving a notice in February indicating that its stock price had fallen below $1 per share for 30 consecutive business days. As of October 2, 2025, Urban-gro’s stock closed at $0.37. The company had earlier requested a hearing regarding the delisting, which was originally set for October 7 but has since been postponed to October 14.

Urban-gro specializes in controlled-environment agricultural systems, catering primarily to the cannabis market. The outcome of the lawsuit and the status of the merger could significantly influence the company’s future.

The lawsuit against Urban-gro is officially recorded as Grow Hill LLC v. Urban-Gro Inc., Case No. 25CV33056, in the Denver District Court.