urban-gro, Inc. Goodwill & Intangibles Disclosure
NOTE 8 – GOODWILL & INTANGIBLE ASSETS
Goodwill
The Company has recorded goodwill in conjunction with acquisitions it has completed. The goodwill balances as of December 31, 2024 and 2023 were $1,080,638 and $9,688,975. Goodwill is not amortized, but tested for impairment annually. The Company recorded a charge of $8,608,337 for the year ended December 31, 2024.
Intangible Assets
Intangible assets as of December 31, 2024 and 2023 consisted of the following:
| As of December 31, 2024 | ||||||||||||
| Cost | Accumulated Amortization | Net Book Value | ||||||||||
| Finite-lived intangible assets: | ||||||||||||
| Licenses | 16,437 | (16,437 | ) | |||||||||
| Trademarks and trade names | 499,000 | (350,220 | ) | 148,780 | ||||||||
| Backlog and other | 429,400 | (429,400 | ) | |||||||||
| Total finite-lived intangible assets: | 944,837 | (796,057 | ) | 148,780 | ||||||||
| As of December 31, 2023 | ||||||||||||
| Cost | Accumulated Amortization | Net Book Value | ||||||||||
| Finite-lived intangible assets: | ||||||||||||
| Customer relationships | $ | 3,269,201 | $ | (1,004,743 | ) | $ | 2,264,458 | |||||
| Trademarks and trade names | 1,778,000 | (663,417 | ) | 1,114,583 | ||||||||
| Backlog and other | 707,400 | (707,400 | ) | |||||||||
| Licenses | 16,437 | (16,437 | ) | |||||||||
| Total finite-lived intangible assets: | 5,771,038 | (2,391,997 | ) | 3,379,041 | ||||||||
| Indefinite-lived intangible assets: | ||||||||||||
| Trade name | 28,291 | 28,291 | ||||||||||
| Patents | 44,276 | 44,276 | ||||||||||
| Total indefinite-lived intangible assets | 72,567 | 72,567 | ||||||||||
| Total intangible assets, net | $ | 5,843,605 | $ | (2,391,997 | ) | $ | 3,451,608 | |||||
The Company recorded an of $2,673,742 related to intangible assets for the year ended December 31, 2024.
Amortization expense for intangible assets subject to amortization for the years ended December 31, 2024 and 2023 was $629,086 and $1,056,180, respectively.
The estimated future amortization expense for intangible assets subject to amortization at December 31, 2024, is summarized below:
| Estimated Future | ||||
| Year ending December 31, | Amortization Expense | |||
| 2025 | $ | 145,499 | ||
| 2026 | 3,281 | |||
| 2027 | ||||
| 2028 | ||||
| Total estimated future amortization expense | $ | 148,780 | ||
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.