# EDGAR Filing Document

**Accession Number:** 0001706524
**File Stem:** 0001213900-26-044091
**Filing Date:** 2026-4
**Character Count:** 377502
**Document Hash:** 8ac3c80456ac39d8ad47542298e3f1bd
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-044091.hdr.sgml**: 20260415

**ACCESSION NUMBER**: 0001213900-26-044091

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 108

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260415

**DATE AS OF CHANGE**: 20260415

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** urban-gro, Inc.
- **CENTRAL INDEX KEY:** 0001706524
- **STANDARD INDUSTRIAL CLASSIFICATION:** WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 465158469
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39933
- **FILM NUMBER:** 26864523

**BUSINESS ADDRESS:**
- **STREET 1:** 1751 PANORAMA PT
- **STREET 2:** UNIT G
- **CITY:** LAFAYETTE
- **STATE:** CO
- **ZIP:** 80026
- **BUSINESS PHONE:** 720-390-3880

**MAIL ADDRESS:**
- **STREET 1:** 1751 PANORAMA PT
- **STREET 2:** UNIT G
- **CITY:** LAFAYETTE
- **STATE:** CO
- **ZIP:** 80026

?xml version='1.0' encoding='ASCII'?

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-K**

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED **DECEMBER 31, 2025**

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: **<u>001-39933</u>**

**<u>URBAN-GRO, INC.</u>**

(Exact name of registrant as specified in its charter)

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| | |
|:---|:---|
| **Delaware** | **46-5158469** |
| (State or other jurisdiction of <br> incorporation or organization) | (IRS Employer <br> Identification No.) |

---

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| | | |
|:---|:---|:---|
| **1751 Panorama Point, Unit G, <br> Lafayette, CO** | **80026** | **(720) 390-3880** |
| (Address of principal executive office) | (Zip Code) | (Registrant's telephone number,<br> Including area code) |

---

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| **Common Stock, $0.001 par value** | **UGRO** | **NASDAQ Capital Market** |

---

Securities registered pursuant to Section 12(g) of the Act: **None** 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller Reporting Company ☒ <br> 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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter on June 30, 2025 was approximately $3,068,244.

As of April 15, 2026, the registrant had 1,128,140 shares of Common Stock outstanding.

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| **Item No.** |  | **Page No.** |
|  | [Cautionary Information about Forward-Looking Statements](#a_001) | ii |
| [PART I](#a_002) |  | 1 |
| Item 1. | [Business](#a_003) | 1 |
| Item 1A. | [Risk Factors](#a_004) | 12 |
| Item 1B. | [Unresolved Staff Comments](#a_005) | 23 |
| Item 1C. | [Cybersecurity](#a_006) | 23 |
| Item 2 | [Properties](#a_007) | 24 |
| Item 3. | [Legal Proceedings](#a_008) | 25 |
| Item 4. | [Mine Safety Disclosures](#a_009) | 27 |
| [PART II](#a_010) |  | 28 |
| Item 5. | [Market for the Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities](#a_011) | 28 |
| Item 6. | [\[Reserved\]](#a_012) | 30 |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_013) | 30 |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#a_014) | 31 |
| Item 8. | [Financial Statements and Supplementary Data](#a_015) | 31 |
| Item 9. | [Changes in and Disagreements on Accounting and Financial Disclosure](#a_016) | 31 |
| Item 9A. | [Controls and Procedures](#a_017) | 32 |
| Item 9B. | [Other Information](#a_018) | 33 |
| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#a_019) | 33 |
| [PART III](#a_020) |  | 34 |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#a_021) | 34 |
| Item 11. | [Executive Compensation](#a_022) | 39 |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#a_023) | 44 |
| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#a_024) | 45 |
| Item 14. | [Principal Accounting Fees and Services](#a_025) | 46 |
| [PART IV](#a_026) |  | 47 |
| Item 15. | [Exhibits, Financial Statement Schedules](#a_027) | 47 |
| Item 16. | [Form 10-K Summary](#a_028) | 48 |
|  | [Signatures](#a_029) | 49 |
|  | [Index to Financial Statements](#a_030) | F-1 |

---

i

**Cautionary Information about Forward-Looking Statements**

This Annual Report on Form 10-K ("Form 10-K" or this "Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements related to: future events; challenges we may face; growth strategy; expansion and future operations; the ability to recognize backlog as revenue; financial position; estimated or projected revenues, losses, costs, gross profit, earnings or other financial items; business strategy, prospects, plans and objectives of management; anticipated or pending investigations, legal claims, proceedings or litigation that may involve or affect us; implementation of ESG initiatives; industry-specific trends, events or regulations and the impact of those trends, events and regulations on us or our financial performance; and updates to regulations and the impact of those regulations on us. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek," "anticipate," "plan," "continue," "estimate," "expect," "may," "will," "project," "predict," "potential," "target," "intend," "could," "might," "should," "believe" and variations of such words or their negative and similar expressions. Forward-looking statements should not be read as a guarantee of future performance or results and may not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management's belief, based on currently available information, as to the outcome and timing of future events

Important factors known to us that could cause such material differences are identified in this Report, including the factors described in Part I, Item 1A, "Risk Factors," and other cautionary statements described in this Report on Form 10-K. These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in the forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. urban-grow, Inc. is under no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the Securities and Exchange Commission ("SEC").

ii

**PART I**

**<u>ITEM 1. BUSINESS</u>**

**Background**

urban-gro, Inc. ("we," "us," "our," the "Company," or "urban-gro") was originally formed on March 20, 2014, as a Colorado limited liability company. On March 10, 2017, we converted to a Colorado corporation and exchanged shares of our common stock for every member's interest issued and outstanding on the date of conversion. On October 29, 2020, we reincorporated as a Delaware corporation. On December 31, 2020, we effected a 1-for-6 reverse stock split with respect to our common stock. On February 12, 2021, we completed an uplisting to the Nasdaq Capital Market ("Nasdaq") under the ticker symbol "UGRO." On February 9, 2026, we effected a 1-for-25 reverse stock split with respect to our common stock. All information in this Report gives effect to these reverse stock splits, including restating prior period reported amounts.

On February 17, 2026, the Company completed its merger (the "Merger") with Flash Sports and Media, Inc. ("Flash"), a Delaware corporation, pursuant to an Agreement and Plan of Merger dated February 17, 2026 (the "Merger Agreement"), by and among the Company, UGRO Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"), and Flash. As a result of the Merger, Merger Sub merged with and into Flash, with Flash surviving as a wholly owned subsidiary of the Company. Following the closing of the Merger, the Company began operating as a diversified sports, media, and experiential marketing platform under the Flash Sports & Media brand. The Company intends to change its name to Flash Sports & Media Holdings, Inc. or a similar name, subject to receipt of stockholder approval, which the Company intends to seek as soon as reasonably practicable.

**Overview**

Following the completion of the Merger, the Company is a diversified sports, media, and experiential marketing platform focused on the creation, production, and monetization of live events, original content, and branded fan experiences. The Company operates across multiple sports and entertainment verticals, leveraging proprietary intellectual property, strategic partnerships, and high-impact experiential activations to engage global audiences and deliver measurable value for brands, sponsors, and media partners. The Company's platform integrates content creation, event execution, and media distribution to build scalable businesses within the global sports and entertainment ecosystem. Flash Sports & Media maintains corporate offices in the United Arab Emirates (headquarters), India, the United States, South Africa, and Singapore.

Through its subsidiaries, the Company holds exclusive commercial and media rights to professional cricket leagues, produces international-standard broadcast content, manages franchise operations, and monetizes sponsorship, ticketing, and digital media opportunities across multiple geographies. The Company's core operating subsidiary, Innovative Production Group FZ LLC ("IPG"), founded in 2015 and headquartered in Fujairah, United Arab Emirates, is a global sports marketing, league management, ground sponsorship, and production company with more than 30 years of collective cricket industry experience and deep expertise in international cricket properties and sports media. IPG is headquartered in the UAE with branch offices in Sri Lanka, Singapore, India, Malaysia, and Zimbabwe, and has executed projects across 14 countries, including the United States, Ireland, Scotland, South Africa, Saudi Arabia, Pakistan, Hong Kong, and Afghanistan. IPG has produced more than 5,000 hours of live sporting event broadcasts over the past seven years and has established working relationships with numerous national cricket boards, including Cricket South Africa, the Pakistan Cricket Board, Cricket Ireland, Sri Lanka Cricket, the Afghanistan Cricket Board, Zimbabwe Cricket, Cricket Scotland, the Emirates Cricket Board, Abu Dhabi Cricket, Malaysia Cricket, Kuwait Cricket, and the Asian Cricket Council. IPG is the exclusive Event Rights Partner for the Lanka Premier League ("LPL") under a Master Event Rights Agreement with Sri Lanka Cricket ("SLC") dated October 14, 2020.

**Flash Business and Revenue Streams**

The Company derives revenue from multiple streams, primarily related to the production, commercialization, and management of professional cricket leagues and international cricket events. The Company's significant revenue streams are described below:

**Production Fee Income.** Production income represents revenue earned from providing end-to-end live broadcast production services for cricket events, including international bilateral series and T20 tournaments. Services include pre-event planning, live camera operations (utilizing a minimum of 26 cameras per match, including Hawk-Eye DRS, super slow-motion, spider cam, drone, and 6 DOF robotic "Buggy Cam" technology), broadcasting infrastructure, technical staffing, satellite uplink and SNG distribution, and post-production. For the year ended December 31, 2024, production fee income represented approximately 42% of IPG's total revenue, or approximately $5.1 million.

**Franchise Fees.** The Company enters into agreements with third-party franchisees that operate individual teams in the LPL. The LPL currently features five franchise teams, each of which pays franchise fees in exchange for team ownership and naming rights, jersey sponsorship rights, merchandising and local sponsorship rights, stadium activation rights, and additional commercial and promotional rights including dugout branding, mascot rights, post-match ceremony participation, big screen branding, and perimeter board branding. Each team features a squad of up to 16 players, including a maximum of six international players from ICC Full/Associate Member Countries. For the year ended December 31, 2024, franchise fees represented approximately 29% of IPG's total revenue, or approximately $3.5 million.

**Broadcast and Streaming Rights.** The Company earns licensing fees by granting third-party broadcasters and digital platforms the right to air or stream live cricket content. The Company's international media rights cover television, radio, digital, pay television, betting, gaming, in-flight, mobile, and internet rights on an exclusive basis throughout the world excluding Sri Lanka, where terrestrial media rights are granted on an exclusive basis. For the year ended December 31, 2024, broadcast rights represented approximately 5% of IPG's total revenue, or approximately $608,000.

**Betting Data Rights.** The Company licenses exclusive rights to collect and distribute real-time match data for betting purposes, including delivery of live, ball-by-ball statistical feeds for LPL tournaments, subject to compliance with applicable laws including ICC guidelines and regulations and the laws of the countries in which the broadcast takes place.

**Other Revenue.** The Company also earns revenue from team jersey sponsorship sales, ticketing income from the sale of match tickets to spectators attending live events, franchisee box catering, ground branding and on-ground sales at match venues, and reimbursement income. For the year ended December 31, 2024, other revenue collectively represented approximately 4% of IPG's total revenue.

**The Lanka Premier League**

The Lanka Premier League is a professional franchise T20 cricket league established in 2020 in Sri Lanka, bringing together top Sri Lankan cricketers and leading international stars. The LPL is intellectual property owned by Sri Lanka Cricket; IPG holds the exclusive global commercial and media rights (excluding certain Sri Lankan domestic rights reserved by SLC) under the Master Event Rights Agreement dated October 14, 2020 (the "Event Rights Agreement"). Matches are played in the Twenty20 format by five franchise teams named after Sri Lankan cities: the Colombo Strikers, Dambulla Sixers, Jaffna Kings, Galle Marvels, and Kandy Falcons. Each team features a squad of up to 100 local and 50 international players selected through an annual player auction process. As of the completion of the 2024 season, there have been five editions of the tournament.

Since its inaugural season in 2020, the LPL has demonstrated consistent growth in audience reach and sponsorship media valuation. Season 1 (2020) achieved a TV audience of approximately 155 million, a digital audience of approximately 218 million, and a sponsorship media valuation of approximately $54.5 million. Season 2 (2021) grew to a TV audience of approximately 168 million, a digital audience of approximately 228 million, and a sponsorship media valuation of approximately $82.5 million. Season 3 (2022) reached a TV audience of approximately 212 million, a digital audience of approximately 261 million, and a sponsorship media valuation of approximately $114.7 million. Season 4 (2023) expanded to a TV audience of approximately 315 million, a digital audience of approximately 282 million, and a sponsorship media valuation of approximately $149.5 million. The most recent completed season, Season 5 (2024), achieved a TV audience of approximately 380 million, a digital audience of approximately 293 million, and a total sponsorship media valuation of approximately $176.5 million, representing year-over-year growth of approximately 18%. The cumulative sponsorship media valuation across all five LPL seasons from 2020 through 2024 was approximately $510.2 million. For Season 5 (2024), the sponsorship media valuation was comprised of approximately $100.9 million attributable to TV, $37.8 million to OTT/digital platforms, $26.2 million to social media, and $11.6 million to press coverage. LPL content has been distributed through major global broadcasters including Star Sports, Sony LIV, Sony Pictures Networks, A Sports HD, Kayo, Willow Live, Fox Sports, T Sports, Ten Cricket, beIN Sports, Free Sports, SportsMax, and Sony Six, among others.

The sixth edition of the LPL was staged from December 1 to December 23, 2025, across three premier venues in Sri Lanka — Colombo, Dambulla, and Kandy — featuring 24 matches over 24 days with five competing franchises. All match venues are International Cricket stadia owned by SLC.

Under the Event Rights Agreement, IPG holds four categories of exclusive rights: (A) Team Franchise / Team Ownership Rights — the right to select, engage, and manage franchise team owners for the LPL; (B) International Media Rights and Terrestrial Media Rights — exclusive rights to license television, radio, digital, pay television, betting, gaming, in-flight, mobile, and internet broadcasting of LPL matches globally; (C) Ground Sponsorship Rights — rights to manage and sell in-venue branding, including LED boards, boundary signage, stump branding, presentation ceremonies, and related activations; and (D) AV Production Rights — the right and obligation to produce all live and highlights content for LPL matches to internationally recognized ICC standards.

The Event Rights Agreement has an initial term of five annual tournaments commencing in 2020, with automatic one-year renewals subject to the timely payment of the Event Rights Fee or provision of a bank guarantee to SLC. The Company's rights must be secured annually through the payment of an Event Rights Fee or the furnishing of an Irrevocable Unconditional Bank Guarantee by March 15 of each year. Failure to make timely payment or furnish the required guarantee could result in termination of the Company's rights for that year. IPG also holds a first right of refusal to extend the agreement for an additional five-year term (through 2029), subject to mutually agreed terms.

In consideration for the Event Rights, IPG pays SLC a minimum guaranteed annual Event Rights Fee. The minimum guaranteed fee for the launch year was USD 1,500,000 for a 13-match format and USD 1,925,000 for a 23-match format. The Event Rights Fee escalates at approximately 10.5% to 11% per year for years two through five. For the addition of teams beyond the initial five teams, an additional fee of USD 300,000 per team is payable. Additionally, SLC is entitled to a revenue share of 10% of ground sponsorship and international media rights revenue during the first two years of the agreement, increasing to 20% for years three through five. SLC also receives USD 20,000 per year in consideration for terrestrial media rights. The Event Rights Fee is payable net of all taxes, withholdings, and bank charges.

SLC is responsible for all costs related to the Match Control Team including per diems, catering for match officials and staff, cricket balls, venue costs, security, janitorial and marketing communications costs, certain administrative expenses, and a component of the prize money. SLC releases to the Event Rights Partner the entirety of the ticket sales revenue generated from all LPL matches during the term of the agreement. The Event Rights Partner bears all costs and responsibility for printing, marketing, and the sale of tickets, subject to SLC's prior approval of ticket design. SLC reserves the President's and Minister's Boxes, a VIP Box, 100 grand stand tickets, and 50 complimentary tickets on each tier, at no cost to SLC.

**Geographic Expansion**

In addition to the LPL in Sri Lanka, IPG holds or has secured exclusive league management and commercial rights for several additional cricket properties in various stages of development. IPG holds exclusive 10-year rights to the Singapore T10 League, awarded by the Singapore Cricket Association, which encompasses TV and digital broadcasting rights, production rights, franchise sales rights, and league management rights for what is expected to be the first T10 cricket league featuring both men's and women's competitions, with six teams in the initial year expanding to eight from the third year. IPG holds exclusive 10-year rights to the Malaysian T20 League under a long-term agreement with the Malaysian Cricket Association on an exclusive basis, covering linear TV, digital, operations, marketing, and commercial rights. IPG holds exclusive 20-year rights to the Zimbabwe T20 Cricket League under an agreement with Zimbabwe Cricket, encompassing full league management, broadcasting, sponsorship, and franchise rights. IPG also holds exclusive 20-year rights to Kuwait's T20 League, T10 League, and Legends League under an agreement with Kuwait Cricket. These expansion initiatives are in various stages of development and are expected to extend the Company's footprint across high-growth emerging cricket markets. There can be no assurance that any of these expansion initiatives will be completed on the terms anticipated, or at all, or that they will generate the revenue or returns expected. For the year ended December 31, 2024, approximately 82% of IPG's total revenue was generated from customers based in Sri Lanka, with the remaining 18% derived from Zimbabwe.

**Technology and Live Production Capabilities**

The Company operates at the intersection of cutting-edge broadcast engineering and experiential digital entertainment. Our infrastructure enables seamless content delivery across television, live streaming, and in-person activations from international cricket stadia and other venues. For purposes of ensuring that the production quality conforms to internationally recognized standards in keeping with ICC regulations as well as ensuring the brand image of SLC and of the LPL is duly maintained and built, the Company and its sub-licensees are required to meet minimum audio-visual production standards as set out in the Event Rights Agreement.

Key production capabilities include: live broadcast engineering utilizing 26 cameras per match (including 6 DOF robotic dolly Buggy Cam, Hawk-Eye DRS with minimum specifications, super slow-motion cameras (Sony HDC-4300 4K / LDX86 or similar), ultra-slow-motion cameras (NAC or similar), stump cameras with Zing LED technology, spider cam, drone, and standard Sony HDC 2500/3500 / HDK97 cameras); Grass Valley Kayak HD 3.5 M/E vision mixing; EVS XT3 8/12-channel replay systems; Canon/Fujinon Super Wide lens arrays; satellite uplink and SNG distribution capabilities; and Hotspot technology for Decision Review System at the discretion of SLC. The Company is required to commit to broadcast/stream the feed live in full, covering every ball of each game, and to deliver a Clean Feed in High Definition in 16:9 aspect ratio, fully edited, completed, titled and synchronized as to dialogue, music and effects.

The Company also maintains studio and event production capabilities for the production of multiplatform content, branded formats, and digital programming, including comprehensive studio shows aired before, during, and after each day's play. IPG's broadcast technology platform includes Hawkeye DRS, spider cameras, drone cameras, buggy cameras, 3D HD cameras, and AR/VR graphics capabilities. IPG partners with leading cricket graphics solution providers, including aegraphics.tv and wTVision, which maintain long-standing working relationships with many of the world's leading broadcasters, production houses, and sports governing bodies. IPG's production crew includes experienced and world-renowned directors, skilled producers, cameramen, EVS operators, and broadcast engineers. Recent live broadcast productions (2023–2025) include the Bangladesh Tour of Sri Lanka, the West Indies Tour of Sri Lanka, the India Tour of Sri Lanka, LPL Seasons 4 and 5, the Legends Cricket Trophy, the Afghanistan Tour of Sri Lanka, the Zimbabwe Tour of Sri Lanka, ACC Men's Under 19 Asia Cup, and the Ireland Tour of Zimbabwe, among others. These capabilities have also been applied to production for international cricket bilateral series across multiple continents since 2015.

**Growth Strategy — Planned Verticals and Strategic Initiatives**

Beyond the core IPG cricket operations, the Company is evaluating and pursuing a number of strategic initiatives to expand the Flash Sports & Media platform into adjacent verticals. These initiatives are in early stages and are subject to the negotiation and execution of definitive agreements, regulatory approvals, and the availability of sufficient capital. There can be no assurance that any of these initiatives will be consummated on the terms described below, or at all.

**Our Competition**

The Company operates in a competitive landscape that includes other sports media, event management, and rights-holding companies. In the T20 cricket league space, the Company competes for viewership, sponsorship, and franchise investment with established leagues including the Indian Premier League (IPL), Big Bash League (BBL), Caribbean Premier League (CPL), Pakistan Super League (PSL), and SA20, among others. In the broader sports media and experiential marketing space, we compete with global sports marketing agencies, broadcast production houses, and digital entertainment companies. Many of our competitors have significantly greater financial, technical, marketing, and other resources than we do. We believe our competitive advantages include our exclusive long-term contractual rights to the LPL and multiple other emerging cricket leagues, our vertically integrated model spanning rights ownership, production, franchise management, sponsorship sales, and media distribution, our track record of more than 5,000 hours of live broadcast production and established relationships with numerous national cricket boards, our demonstrated ability to grow the LPL's sponsorship media valuation from approximately $54.5 million in Season 1 to approximately $176.5 million in Season 5, our global footprint with offices in six countries and operational experience across 14 countries, and our multi-market expansion strategy targeting high-growth emerging cricket markets.

**Our Clients**

The Company's clients and commercial counterparties include franchise team owners, corporate sponsors, broadcasters and digital streaming platforms, sports governing bodies, and media distribution agencies. IPG maintains working relationships with leading sports media agencies, including Sunset+Vine, ITW, and IMG Reliance, which facilitate the distribution and monetization of IPG's broadcast and media content globally. In 2023, sales to four customers individually exceeded 10% of the Company's total revenue. Collectively, these customers represented approximately 53% of total revenue. The Company's reliance on these major customers presents a concentration risk. The loss of any of these customers or a significant reduction in their orders could have a material adverse effect on the Company's financial performance. The Company continues to focus on efforts to diversify its customer base and geographic reach to mitigate such risks.

**Intellectual Property**

The Company's intellectual property consists primarily of its contractual rights under the Event Rights Agreement with SLC, which grants exclusive commercial exploitation rights for the LPL. All intellectual property related to the LPL brand, including without limitation the LPL name, logo, trade names, trademarks, and marks (collectively, "SLC's IP"), remains at all times vested in, and the sole and exclusive property of, SLC absolutely. At SLC's request, the Event Rights Partner shall forthwith discontinue use of and return or destroy any material containing any of SLC's IP. Nothing contained in the Event Rights Agreement shall have the effect of assigning or otherwise transferring any SLC intellectual property rights or marks to the Event Rights Partner or third party. All proprietary rights and intellectual property rights in respect of the Clean Feed and Highlights produced by the Event Rights Partner and/or its licensees for purposes of AV Production Rights vest absolutely with SLC.

The Company also holds proprietary intellectual property related to its production processes, technical know-how, and operational methodologies for live broadcast production of cricket and other sporting events. The Company may hold trademarks related to the Flash Sports & Media brand and associated sub-brands, which are in the process of being formalized.

**Human Capital**

As of December 31, 2025, the Company has approximately 5 employees, representing the core values and objectives of the Company.

Our employees are our most important assets, and they set the foundation for our ability to achieve our strategic objectives. Our employees play a central role in the success of our long-term strategy. Our values direct the management of our company and are built on the foundation that our people and the way we treat one another promote inclusion, creativity, innovation, and productivity, which drives the Company's success. We believe we offer fair, competitive compensation and benefits that support our employees' overall well-being and foster their growth and development.

**Regulation**

The Company's operations are subject to a variety of laws and regulations across the jurisdictions in which it operates, including the United States, the United Arab Emirates, Sri Lanka, and other countries where it holds or exploits media and commercial rights.

**International Cricket Council (ICC) Regulations.** The Company's operations in connection with the LPL are subject to ICC requirements, guidelines, and codes of conduct, including anti-corruption codes, anti-doping regulations, and broadcast production standards. The Event Rights Partner and/or any of its sub-licensees and/or any Team Franchise Holder/Team Owner shall be governed by the relevant ICC requirements, guidelines and codes of conduct and any documents with regard to such requirements, guidelines and codes of conduct are developed by SLC for the SLC, LPL keeping in line with the relevant ICC documents on same. Team Franchise Holders/Team Owners shall not be engaged in any betting, wagering, or similar activity and/or be involved in products such as alcohol and tobacco products as would constitute any actual or perceived conflict with the anti-corruption codes and best practices applicable to the game of cricket in Sri Lanka.

**Sri Lankan Law.** The Event Rights Agreement is governed by and construed in all aspects in accordance with the laws of Sri Lanka. Any disputes arising in relation to the agreement shall be resolved by arbitration in accordance with the Rules of the International Chamber of Commerce in Colombo, Sri Lanka, with proceedings conducted in English.

**United Arab Emirates Law.** IPG is incorporated in the Fujairah Media Free Zone under UAE law. Effective January 1, 2024, the United Arab Emirates introduced a federal Corporate Tax regime under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Under this law, taxable income exceeding the exemption threshold is subject to corporate tax at a standard rate of 9%. In accordance with Article 37 of the UAE Corporate Tax Law, tax losses incurred in a financial year may be carried forward and utilized to offset up to 75% of the taxable income in subsequent financial years.

**Securities Regulation.** As a public company listed on the Nasdaq Capital Market, the Company is subject to the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and the rules and regulations of the SEC and Nasdaq.

**Anti-Corruption and Anti-Bribery.** The Company's operations in multiple international jurisdictions subject it to anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices Act. The Event Rights Agreement includes specific representations and covenants by the Event Rights Partner that it, its sub-licensees, affiliates, officers, directors, employees and agents, and the Team Franchise Holders/Team Owners shall at all times comply with all anti-corruption and/or anti-bribery laws of Sri Lanka, the laws applicable in the whole of or any part of the Territory, and as are or may be applicable in the performance of the agreement.

**Betting and Gaming Regulations.** The Company licenses betting data rights in connection with LPL matches. Advertising in respect of tobacco, liquor, and gambling would not be permitted in Sri Lanka, including any other prohibitions as stipulated by local laws and regulations and ICC from time to time. In respect of the rest of the world, the Event Rights Partner shall ensure that the laws and regulations applicable to the countries in which the broadcast takes place are adhered to and that ICC rules and regulations should always be complied with in respect of advertising of tobacco, liquor, and gambling.

**Legacy Operations — Controlled Environment Agriculture**

Prior to the Merger, the Company historically operated as an integrated professional services and design-build firm offering value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture ("CEA"), industrial, healthcare, and other commercial sectors. After making the decision to exit its core business sectors in the third quarter of 2025 due to changing market conditions and the Company's inability to raise significant funds due to its filing status and compliance with the Nasdaq, the Company began the process of selling assets, reducing its workforce, and preparing for the Merger. The wind-down of legacy operations proceeded as follows: In mid-July 2025, the Board of Directors commenced discussions regarding the disposition of the Services business, and on July 30, 2025 the Board voted to proceed with the sale. On August 14, 2025, the Company entered into a non-binding letter of intent to sell substantially all of the assets of 2WR of Georgia, Inc. On August 27, 2025, the transaction was consummated as a sale of the stock of 2WR of Georgia, Inc. On August 21, 2025, Gemini Finance Corp. foreclosed on the assets of UG Construction, Inc. ("UG Construction") in connection with a default under the terms of its loan to UG Construction. On September 4, 2025, Gemini acquired the assets of UG Construction in connection with an Article 9 sale, effectively shutting down the Construction business; all Construction assets were written off as of September 30, 2025. On November 5, 2025, the Company sold certain customer lists of 2WR of Colorado, Inc. to the same counterparty that acquired 2WR of Georgia, Inc. for $143,000 in cash. The Company ceased operations of UG Engineering during the third/fourth quarter of 2025, effectively discontinuing all remaining Services operations. Due to cash flow issues, the Company laid off all of its sales team, including those targeting equipment sales, during the third quarter of 2025, resulting in virtually no equipment revenue in the fourth quarter of 2025. During the fourth quarter of 2025, the Company wound down its remaining services businesses and furloughed those employees. The Services business was presented as discontinued operations in the Company's Form 10-Q for September 30, 2025, and prior period balances were reclassified for comparative purposes in accordance with ASC 205-20.

As of December 31, 2025, the legacy CEA business had been substantially wound down. The Company's equipment reselling division, which historically operated as a value-added reseller of equipment systems to the CEA sector working with a select group of manufacturers and vendor partners, generated virtually no revenue in the fourth quarter of 2025 following the layoff of the entire sales team during the third quarter. The historical financial results for the fiscal year ended December 31, 2025 presented elsewhere in this Report reflect the legacy urban-gro operations, as the Merger closed subsequent to the period end on February 17, 2026. For an overview of additional developments in the business since December 31, 2025, see "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Subsequent Events."

**Binding Letter of Intent and Merger with Flash Sports & Media, Inc.**

On October 14, 2025, we entered into a binding letter of intent (the "LOI") with Flash Sports & Media, Inc. ("Flash"), led by Chief Executive Officer Suren Ajjarapu, regarding a proposed transaction pursuant to which the parties intended to merge Flash with and into a newly formed wholly-owned subsidiary of us, which would then merge with and into a second wholly-owned subsidiary of us (collectively, the "Merger"). Pursuant to the LOI, Flash was valued at $180 million for purposes of the transaction. The parties agreed, subject to satisfaction of certain conditions, to negotiate and execute a definitive merger agreement in accordance with the terms set forth in the LOI. Flash paid us a cash deposit of $200,000 within fifteen days following the date of the LOI.

In connection with the Merger, the stockholders of Flash would receive (i) unregistered shares of our common stock equal to 19.99% of the outstanding shares of common stock as of immediately prior to the Merger, and (ii) unregistered shares of a newly-created series of non-voting preferred stock (the "Preferred Stock") that would be economically equivalent to common stock and would automatically convert into common stock upon receipt of approval by our stockholders. The LOI contemplated that the former stockholders of Flash would own approximately 90% of the resulting company following the Merger, assuming full conversion of the Preferred Stock. Upon closing of the Merger, we would change our name to Flash Sports & Media Holdings, Inc. or a similar name, subject to stockholder approval. The Merger was completed on February 17, 2026. For further details on the terms of the Merger, see "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Subsequent Events."

**Recent Developments**

***Gemini Loan Agreement Amendment and Default***

On December 13, 2023, our wholly-owned subsidiary UG Construction, Inc. d/b/a Emerald Construction Management, Inc. ("UG Construction") entered into (i) an interest only asset based revolving loan agreement (the "Loan Agreement") with Gemini Finance Corp. ("Gemini") pursuant to which Gemini extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and us with cash management, and (ii) a Secured Promissory Note - Revolving issued by UG Construction to Gemini (the "Promissory Note"). Pursuant to the Promissory Note, each draw was due and payable on or before 180 days after such draw is funded to UG Construction, subject to a mandatory pre-payment upon UG Construction's receipt of payment for any invoice previously submitted and approved for financing by Gemini.

On March 18, 2025, UG Construction entered into an amendment to the Loan Agreement and Promissory Note and waiver with Gemini (the "Amendment"). Pursuant to the Amendment, Gemini waived any potential or perceived events of default arising under certain circumstances, which events did not constitute specified events of default under the Promissory Note or the Loan Agreement.

Pursuant to the Amendment, the Promissory Note was amended to provide that (i) the term during which Gemini may consider advances under the Loan Agreement has been extended to January 1, 2026, and (ii) the interest applied on the outstanding principal amount of the Promissory Note will accrue interest at an annual rate of 12%, and all accrued and unpaid interest shall be paid to Gemini on the first business day of each month for the prior month. The Amendment also amended the Loan Agreement to require monthly reporting of certain accounts receivable and to include a covenant that such accounts receivable equal or exceed 125% of the sum of the total amount drawn down under the Promissory Note, plus outstanding interest, as of the applicable measurement date. In connection with the execution of the Amendment, we issued to Gemini, as an amendment fee, 150,000 shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split.

On July 31, 2025, Gemini issued a notice of default to UG Construction claiming that UG Construction was in default under the line of credit due to a failure to submit receivables calculations and failing to maintain sufficient eligible accounts and to forward accounts receivable. The notice indicated that the remaining outstanding amount due under the line of credit of approximately $1.76 million was immediately due and payable with default of 1% per week accruing from the June 16, 2025 date of default claimed by Gemini, and that Gemini intended to pursue legal action if full payment was not received by August 8, 2025.

On August 21, 2025, we received a notification from Gemini stating that Gemini would proceed with a foreclosure and private sale of substantially all of the assets of UG Construction in an Article 9 sale process, pursuant to Section 9601 et seq. of the California Commercial Code (the "Asset Sale"). The Asset Sale occurred on September 4, 2025, at which Gemini acquired the assets constituting the collateral under the line of credit for $450,000. This Gemini foreclosure event (UG Construction assets) is separate from the August 27, 2025 Stock and Asset Purchase Agreement relating to 2WR of Georgia, Inc.; both events are components of the Company's broader wind-down of legacy CEA operations and are each discussed in Note 4 – Discontinued Operations. The foreclosure was a non-cash transaction: the assets were derecognized at their carrying value, a loss on foreclosure was recognized in the consolidated statements of operations, and the transaction is reflected as a non-cash adjustment in the consolidated statements of cash flows.

On August 29, 2025, Gemini commenced a lawsuit captioned *Gemini Finance Corp. v. UG Construction, Inc. et al.*, case number 25CV2259 W SBC, in the U.S. District Court for the Southern District of California, which lawsuit (the "Lawsuit") included us and certain of our officers as defendants and pursuant to which Gemini claimed it was owed $1,486,189 (the "Claim Amount").

On September 26, 2025, we entered into a Settlement and Mutual General Release (the "Gemini Settlement Agreement") with Gemini. Pursuant to the terms of the Gemini Settlement Agreement, among other things, we agreed to file a joint motion requesting an expedited fairness hearing under Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"), which motion was filed on September 30, 2025. Following such fairness hearing, and subject to the satisfaction of all applicable conditions and requirements of Section 3(a)(10) of the Securities Act, we agreed to issue to Gemini shares of our common stock that, upon sale by Gemini, would result in net proceeds to Gemini equal to the Claim Amount, provided that Gemini shall at no time be issued shares if it would beneficially own more than 4.99% of our common stock, and the aggregate number of shares issued to Gemini may not exceed 19.99% of our outstanding common stock as of immediately prior to the signing of the Gemini Settlement Agreement to the extent required by Nasdaq Listing Rule 5635. Additionally, Gemini agreed to use its best efforts to not sell common stock exceeding 10% of our daily volume on any given trading day. Upon the issuance of the last tranche of shares under the Gemini Settlement Agreement, Gemini will dismiss the Lawsuit with prejudice. The Gemini Settlement Agreement also included a customary mutual release of claims by the parties. The fairness hearing occurred on October 14, 2025.

 **

***Agile Term Loan***

 **

On June 26, 2025, we and certain of our subsidiaries entered into a business loan and security agreement (the "Agile Loan Agreement") with Agile Capital Funding, LLC and Agile Lending LLC (together, "Agile").

Pursuant to the Agile Loan Agreement, Agile extended to us a term loan of $1,050,000.00 (the "Term Loan") to be used to fund our general business requirements. The Agile Loan Agreement is for a term of twenty-eight weeks from its effective date and includes an administrative agent fee of $50,000.00 to be remitted to Agile, which was added to the amount of the loan. We could make a full prepayment or partial prepayment of the Term Loan, however, upon the prepayment of any principal amount, we would be obligated to pay a premium payment of principal, which would be equal to the aggregate and actual amount of interest that would be paid through the maturity date. The Agile Loan Agreement contains standard events of default and representations and warranties by us and Agile including a mandatory prepayment, and an additional five (5%) percent interest rate following the occurrence of an event of default. The term loan is evidenced by a secured promissory note issued by us to Agile. Pursuant to the Agile Loan Agreement, upon an event of default, Agile will receive a security interest in certain of our assets, subject to certain exceptions.

***Grow Hill Default***

 ****

On October 1, 2024, we entered into an asset-based term Loan Agreement with Grow Hill, LLC ("Grow Hill") pursuant to which Grow Hill extended to us a secured loan of $2,100,000 with an origination fee of $100,000, which was added to the amount of the loan. The loan is evidenced by a Secured Promissory Note issued by us to Grow Hill. Grow Hill received a security interest in certain of our assets pursuant to a security agreement between us and Grow Hill (the "Security Agreement"), which does not include any assets of our subsidiaries.

On October 14, 2025, we received service of process for a lawsuit filed by Grow Hill against us in the District Court for the City and County of Denver, Colorado (Case No. 2025CV33546) alleging breach of contract and fraud. Pursuant to the complaint, Grow Hill stated that we were in default under the Secured Promissory Note due to a failure to timely make payments, and elected to accelerate all amounts due under the Secured Promissory Note, including a default fee equal to 1% of the outstanding principal amount. We are currently investigating available options to resolve the complaint and intend to vigorously defend the allegation of fraud.

 **

***As of December 31, 2025, the Company was in default under the Grow Hill Secured Promissory Note. Monthly payments of $87,500 plus interest ceased after the April 2025 payment. The outstanding balance was approximately $1,487,500 at December 31, 2025. Subsequent to year-end, the Company is in discussions for the Grow Hill debt to be acquired by a third party.***

 

***The Grow Hill loan agreement contained a covenant requiring the Company to maintain a Receivable Ratio of at least 2.00:1.00, calculated monthly. The Company failed to maintain the required ratio, which constituted an event of default.***

***J Brrothers Settlement***

 ****

On August 8, 2025, we entered into a Settlement and Release Agreement (the "Settlement Agreement") with J Brrothers LLC ("J Brrothers") and Herb-a-More LLC relating to a dispute arising from amounts due for certain heating, ventilation and air conditioning equipment. Pursuant to the terms of the Settlement Agreement, among other things, we issued a promissory note to J Brrothers with an original principal amount of $395,556 and agreed to issue 150,000 unregistered shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split, to J Brrothers. The note accrues simple interest at an annual rate of 12% and has a maturity date of March 18, 2026. The note must be repaid in monthly installments over a period of eight months, with the first seven payments being $50,000 per month and the final monthly payment being $64,047. Any remaining principal and accrued but unpaid interest will become due and payable on the maturity date, and the note may be prepaid without penalty. The note includes customary representations and warranties, customary events of default and a 17% default interest rate.

As of December 31, 2025, the Company had made only the initial partial payment of $25,000 on August 27, 2025. The required $50,000 monthly payments for September through December 2025 were not made. The outstanding balance was approximately $374,512 at December 31, 2025, inclusive of accrued interest. The note matured on March 18, 2026.

 **

***2WR of Georgia Sale***

 **

On August 27, 2025, certain of our subsidiaries entered into a Stock and Asset Purchase Agreement (the "2WR Purchase Agreement") with 2WR Holdco, LLC (the "Buyer"). Pursuant to the 2WR Purchase Agreement, the Buyer acquired all of the outstanding shares of stock of 2WR of Georgia, Inc. and certain assets of our other subsidiaries relating to those entities' business of providing commercial, industrial and municipal architectural and construction administration services for projects not involving CEA. The purchase price paid by the Buyer consisted of $2.0 million in cash, offset by a previous deposit of $500,000 and by any assumed indebtedness.

***Nasdaq Deficiencies***

On August 20, 2024, we received a notice from The Nasdaq Stock Market LLC ("Nasdaq") stating that because we had not yet filed our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024, we were no longer in compliance with Nasdaq Listing Rule 5250(c)(1) (the "Timely Filing Requirement"). On November 21, 2024, we received a notice from Nasdaq stating that because we had not yet filed our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. We continued to not be in compliance with the Timely Filing Requirement. On February 18, 2025, we filed each of our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2024 and September 30, 2024 and an amendment to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and on February 19, 2025 we filed an amendment to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, which amendments included restated financial statements for the periods covered therein. As a result of these filings, on February 24, 2025, the Listing Qualifications Department of Nasdaq notified us that we had regained compliance with the Timely Filing Requirement.

On February 24, 2025, we received a deficiency letter from Nasdaq notifying us that (i) for the last 30 consecutive business days, the bid price for our common stock had closed at a price of below $1.00 per share, which is the minimum closing price required to maintain continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule"), and (ii) because our stockholder's equity was below $2.5 million as reported on our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, we no longer met the minimum stockholders' equity requirement for continued listing on The Nasdaq Capital Market under Nasdaq Rule 5550(b)(1), requiring a minimum stockholders' equity of $2.5 million (the "Stockholders' Equity Requirement").

On April 16, 2025, we received a notice from Nasdaq stating that because we had not yet filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "Form 10-K"), we were no longer in compliance the Timely Filing Requirement. On May 21, 2025, we received a notice from Nasdaq stating that because we had not yet filed our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025 or our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we continued to be out of compliance with the Timely Filing Requirement.

On August 18, 2025, we received a determination letter from Nasdaq stating that Nasdaq had determined that we did not file the Form 10-K and the Form 10-Q by August 15, 2025, the date required for the delinquent filings by an exception previously received from Nasdaq staff. The letter stated that, as a result, unless we timely requested an appeal, the trading of our common stock would be suspended at the opening of business on August 27, 2025 and a Form 25-NSE will be filed with the SEC, which would remove our common stock securities from listing and registration on Nasdaq. The letter also stated that we were not in compliance the Bid Price Rule and the Stockholders' Equity Requirement. We timely requested an appeal to a Nasdaq Hearings Panel (the "Panel").

On October 14, 2025, we attended a hearing before the Panel in connection with the determination letter. On October 30, 2025, we received a notice from Nasdaq notifying us that the Panel had determined to grant our request to continue our listing on The Nasdaq Capital Market, conditioned on us regaining compliance with the Timely Filing Requirement and the Stockholders' Equity Requirement on or before December 31, 2025 and regaining compliance with the Bid Price Rule on or before January 28, 2026. During the exception period, we are required to provide prompt notification to the Panel of any significant event that may affect our compliance with Nasdaq requirements. Any documentation evidencing our compliance will be subject to review by the Panel, which may, in its discretion, request additional information before determining whether we have regained compliance.

On November 18, 2025, we received a determination letter from Nasdaq stating that because we did not timely file our Quarterly Report on Form 10-Q for the period ended September 30, 2025, the resulting filing delinquency would be an additional basis for delisting our securities pursuant to the Timely Filing Requirement. The letter notified us that the Panel would consider the matter in their decision regarding our continued listing on the Nasdaq Capital Market, and requested that we present our views with respect to the additional deficiency in writing by November 25, 2025. We made a submission to the Panel by the requested date.

On January 6, 2026, the Company received a determination letter (the "January 6, 2026 Determination") from Nasdaq stating that because the Company did not hold an annual meeting of stockholders within twelve months from the Company's prior fiscal year end as required by Nasdaq Listing Rule 5620(a), the resulting non-compliance would be an additional basis for delisting the Company's securities. The January 6, 2026 Determination notified the Company that the Panel would consider the matter in their decision regarding the Company's continued listing on the Nasdaq Capital Market, and requested that the Company present its views with respect to the additional deficiency in writing by January 9, 2026. The Company made a submission to the Panel by the requested date and requested an additional extension to comply with the Bid Price Rule, the Stockholders' Equity Requirement, and the Timely Filing Requirement.

On January 13, 2026, the Panel notified us that it had granted a further extension to regain compliance with the Stockholders' Equity Requirement, the Annual Meeting Requirement, and the Timely Filing Requirement on or before February 17, 2026 and with the Bid Price Rule on or before February 24, 2026. On January 30, 2026, we held our 2025 Annual Meeting. On February 9, 2026, we effected a 1-for-25 reverse stock split. On February 17, 2026, we completed the Merger and filed all delinquent reports. On March 4, 2026, Nasdaq confirmed we had regained compliance and placed us on a one-year Discretionary Panel Monitor under Listing Rule 5815(d)(4)(A). Although we regained compliance, there can be no assurance that we will maintain compliance with applicable Nasdaq Listing Rules. If we fail to meet the conditions set forth in our compliance plan or if Nasdaq delists our securities from trading for any other reason, we could face significant material adverse consequences, including:

● a limited availability of market quotations for our securities;

● reduced liquidity with respect to our securities;

● a determination that our common stock is a "penny stock" which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

● a limited amount of news and analyst coverage for our company; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

**Available Information**

Our internet address is www.urban-gro.com and our investor relations internet address is ir.urban-gro.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports can be found on our investor relations website, free of charge, as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC. Information contained on our website is not incorporated by reference into this Form 10-K. The SEC maintains a public website, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that that file electronically with the SEC.

**<u>ITEM 1A. RISK FACTORS</u>**

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition, or results of operations could suffer materially. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.

**Risks Related to Our Business and Operations**

***We have a limited operating history under the Flash Sports & Media platform and may not be able to successfully execute our business plan.***

The Company completed the Merger with Flash on February 17, 2026. Flash was incorporated on August 7, 2023 and had not generated any revenue prior to the Merger. While IPG, which is now a wholly owned subsidiary of Flash and therefore of the Company, has generated revenue from cricket-related operations since 2020, the combined entity has a limited operating history as a publicly traded sports and media company. There can be no assurance that we will be able to successfully integrate the operations of Flash, IPG, and the Company, or that we will achieve profitability. Our prospects must be considered in light of the risks and uncertainties encountered by companies in the early stages of development in rapidly evolving markets.

***We are substantially dependent on a single contractual relationship with Sri Lanka Cricket for a significant majority of our revenue.***

Substantially all of IPG's revenue is derived from the commercialization of rights granted under the Master Event Rights Agreement with SLC for the Lanka Premier League. The loss, non-renewal, or material modification of this agreement would have a material adverse effect on our business, financial condition, and results of operations. The Event Rights Agreement requires annual payment of an Event Rights Fee or provision of a bank guarantee by March 15 of each year; failure to make timely payment could result in termination of the Company's rights for that year. Although the agreement provides for automatic one-year renewals, IPG's rights must be secured annually, and there can be no assurance that the agreement will be renewed on favorable terms, or at all.

***We have a going concern qualification and a history of net losses and accumulated deficits.***

Both IPG and Flash have received going concern qualifications from their respective auditors. As of December 31, 2024, IPG had an accumulated deficit of approximately $4.6 million and a working capital deficit of approximately $1.9 million. Flash had an accumulated deficit of $500,000 as of December 31, 2024 and had never generated revenue. The Company (legacy urban-gro) had an accumulated deficit of approximately $120.6 million and a stockholders' deficit of approximately $40.9 million as of December 31, 2025. There can be no assurance that the combined entity will achieve or sustain profitability.

***Our revenue is concentrated among a limited number of customers and geographies.***

For the year ended December 31, 2024, approximately 82% of IPG's total revenue was generated from customers based in Sri Lanka, with the remaining 18% derived from Zimbabwe. In 2023, sales to four customers individually exceeded 10% of IPG's total revenue, collectively representing approximately 53% of total revenue. The loss of any significant customer or a significant reduction in business from Sri Lanka or Zimbabwe could have a material adverse effect on our financial performance. The Company continues to focus on efforts to diversify its customer base to mitigate such risks.

***Our business is dependent on the continued popularity and growth of cricket, particularly T20 cricket, in our target markets.***

Our revenue is substantially derived from the commercialization of T20 cricket league rights. Any decline in the popularity of cricket or T20 cricket in Sri Lanka, or in international markets where we distribute media content, could reduce demand for media rights, sponsorships, franchise ownership, and ticketing, which would materially and adversely affect our business, financial condition, and results of operations.

***We are subject to risks associated with international operations.***

The Company conducts operations in the United Arab Emirates, Sri Lanka, Zimbabwe, and other international markets, and is subject to risks inherent in international operations, including political and economic instability, currency fluctuation risk, regulatory uncertainty, foreign tax regimes (including the recently enacted UAE Corporate Tax), sanctions and trade restrictions, cultural and legal differences, and challenges in enforcing contractual rights across jurisdictions. Any of these factors could materially and adversely affect our operations and financial results.

***We depend on key personnel, including the founder and chairman of IPG.***

The Company's success depends in significant part on the continued services and leadership of key individuals, including Anil Mohan Sankhdhar, the founder and chairman of IPG, who has been instrumental in building the Company's relationships with SLC, franchise owners, sponsors, and broadcast partners, and Bradley Nattrass, the Company's Chairman and Chief Executive Officer. The loss of any of these individuals' services could have a material adverse effect on our business and operations. We do not currently maintain key-person life insurance on any of our executives.

***Force majeure events, including pandemics, natural disasters, terrorism, and political unrest, could disrupt our tournament operations.***

The LPL and our other cricket events are live, in-person sporting events that are subject to disruption or cancellation due to force majeure events. Under the Event Rights Agreement, the full Event Rights Fee remains payable by the Event Rights Partner to SLC even if the whole or any part of the Tournament is curtailed, cancelled, or abandoned due to any Force Majeure event, after the date of commencement of the Tournament. Force Majeure events include, but are not limited to, acts of God, war, riot, strike, civil commotion, terrorism, pandemics, epidemics, fire, earthquake, storm, flood, tsunami, explosion, and acts of Government. Any such disruption could materially and adversely affect our revenue, reputation, and operations.

***Our expansion into new markets and new business verticals involves significant risks and uncertainties.***

We have announced expansion plans for T20 cricket league operations in Malaysia, Zimbabwe, Bangladesh, and the United Arab Emirates. We are also pursuing potential strategic combinations and partnerships in the esports and entertainment sectors, including a potential combination with Infinity Esports & Gaming, a Latin American esports organization that operates gaming centers across multiple countries and holds branded intellectual properties, and the potential development of Dune Bridge Capital, an investment and strategic capital deployment vertical focused on film, television, sports, and digital media. Each of these initiatives involves significant execution risk, including the need to negotiate and execute definitive agreements, secure regulatory approvals, recruit qualified local personnel, obtain adequate financing, and build local infrastructure. As of the date of this Report, no definitive agreements have been entered into with respect to the esports or entertainment verticals. There can be no assurance that any of these expansion or diversification initiatives will be completed on the terms anticipated, or at all, or that they will generate the revenue or returns expected.

***We face significant competition in the sports media and entertainment industry.***

The sports media and entertainment industry is highly competitive. We compete for viewership, sponsorship dollars, franchise investment, media rights fees, and talent with larger, better-capitalized companies and established cricket leagues, including the IPL, BBL, CPL, PSL, and SA20. Many of our competitors have significantly greater financial, technical, marketing, and other resources than we do. There can be no assurance that we will be able to compete effectively.

**Risks Related to the Merger and Integration**

***The Merger may not achieve its intended benefits, and integration of the combined businesses involves significant risks.***

The success of the Merger depends on, among other things, our ability to successfully integrate the operations, technologies, and personnel of Flash, IPG, and the legacy urban-gro business, achieve anticipated revenue growth, realize cost synergies, and retain key customers, partners, and employees. Integration may be more difficult, time-consuming, or costly than expected, and there can be no assurance that we will realize the expected benefits of the Merger.

***Following the Merger, former Flash stockholders are expected to own a minimum of 90% of the combined company, resulting in significant dilution to existing stockholders.***

Under the terms of the Merger Agreement, Flash stockholders received shares of UGRO common stock equal to 19.99% of the outstanding shares immediately prior to certain prior issuances, as well as shares of newly created non-voting convertible preferred stock that, upon stockholder approval of the conversion, would result in former Flash stockholders owning approximately 90% of the combined company on a fully-converted basis. This represents substantial dilution to the Company's existing stockholders.

***The Company changed its independent auditor in connection with the Merger, which may increase the risk of accounting errors or restatements.***

On March 03, 2026, the Company dismissed Sadler, Gibb & Associates, LLC as its independent registered public accounting firm and appointed Suri and Co., Chartered Accountants of Chennai, India to audit the Company's financial statements for the year ended December 31, 2025. The transition to a new auditor during a period of significant business transformation increases the risk of accounting errors, delays in financial reporting, or the need for restatements.

**Risks Related to Nasdaq Listing and Capital Structure**

***We have a history of non-compliance with Nasdaq listing standards and may be unable to maintain our Nasdaq listing.***

The Company has experienced multiple instances of non-compliance with Nasdaq listing standards, including the minimum bid price requirement, timely filing of periodic reports, minimum stockholders' equity requirement, and annual meeting requirement. While the Company regained compliance with these requirements as of March 2026, Nasdaq has placed the Company on a one-year Discretionary Panel Monitor under Listing Rule 5815(d)(4)(A). Any future non-compliance could result in delisting, which would materially and adversely affect the liquidity and trading price of our common stock.

***We have limited liquidity and may require additional financing to fund our operations.***

As of December 31, 2025, the Company had cash of approximately $10,000 and negative working capital of approximately $42.7 million. Our ability to continue operations is dependent on our ability to generate sufficient revenue and/or obtain financing. There can be no assurance that additional financing will be available on acceptable terms, or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition, and operating results.

***We have significant outstanding liabilities and legal proceedings that could adversely affect our financial condition.***

The Company has significant accounts payable, contract liabilities, notes payable, and accrued expenses. Additionally, the Company is subject to various legal proceedings, including lawsuits by creditors, equipment suppliers, and former contractors. Adverse outcomes in any of these proceedings could materially affect our financial position and results of operations.

**Risks Related to Regulatory and Legal Matters**

***We are subject to anti-corruption, anti-bribery, and sports integrity laws and regulations.***

The Company and its subsidiaries, sub-licensees, franchise holders, and team owners are required to comply with anti-corruption and anti-bribery laws in all jurisdictions in which we operate, as well as ICC anti-corruption codes. Any violation of these laws or codes could result in criminal penalties, fines, suspension, or termination of our Event Rights, any of which could have a material adverse effect on our business.

***Changes in tax laws or regulations, including the recently enacted UAE Corporate Tax, could increase our tax burden.***

IPG is subject to the UAE Corporate Tax Law effective January 1, 2024, which imposes a 9% tax on taxable income exceeding the exemption threshold. Changes in applicable tax laws or their interpretation, or the enactment of new taxes in jurisdictions where we operate, could increase our effective tax rate and adversely affect our financial results.

***The Event Rights Agreement is governed by Sri Lankan law and disputes are subject to international arbitration, which may be costly and time-consuming.***

The Event Rights Agreement is governed by the laws of Sri Lanka, and disputes are subject to arbitration in Colombo under the Rules of the International Chamber of Commerce. The number of arbitrators shall be three, and each party shall be entitled to select one arbitrator each, with the third selected jointly to act as Chairman of the Arbitral Tribunal. Enforcing contractual rights through international arbitration may be more costly, time-consuming, and uncertain than litigation in U.S. courts, and arbitral awards may be difficult to enforce in other jurisdictions.

***We had negative cash flow from operations for the fiscal years ended December 31, 2025 and December 31, 2024.***

We had negative cash flow from operations of $0.1 million and $2.8 million for the years ended December 31, 2025 and 2024, respectively. To the extent that we have negative cash flow from operations in future periods, we may need to allocate a portion of our cash reserves to fund such negative cash flow. We may also be required to raise additional funds through the issuance of equity or debt securities. We may not be able to generate positive cash flow from our operations and additional capital or other types of financing may not be available when needed or on terms favorable to us.

***We may continue to incur losses in the near future, which may impact our ability to implement our business strategy and adversely affect our financial condition.***

While we are focused significantly on controlling our operating expenses by managing variable expenses, employee count, and marketing activities in order to become cash flow positive, these measures may adversely affect our future operating results if we are unable to support the business effectively. In turn, this would have a negative impact on our financial condition and potentially our share price.

We may not become profitable or generate sufficient profits from operations in the future. If our revenues do not continue to grow or our gross profits deteriorate substantially, we are likely to continue to experience losses in future periods. Collectively, this may impact our ability to implement our business strategy and adversely affect our financial condition. This potentially would have a negative impact on our share price.

 ****

***We may be forced to litigate to defend our intellectual property rights, or to defend against claims by third parties against urban-gro relating to intellectual property rights.***

We may be forced to litigate to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of other parties' proprietary rights. Any such litigation could be very costly and could distract our management from focusing on operating our business. The existence and/or outcome of any such litigation could harm our business.

***We may not be able to successfully identify, consummate or integrate acquisitions or to successfully manage the impacts of such transactions on our operations.***

Part of our business strategy includes pursuing synergistic acquisitions. We have expanded, and plan to continue to expand, our business by making strategic acquisitions and regularly seeking suitable acquisition targets to enhance our growth. Material acquisitions, dispositions and other strategic transactions involve a number of risks, including: (i) the potential disruption of our ongoing business; (ii) the distraction of management away from the ongoing oversight of our existing business activities; (iii) incurring indebtedness; (iv) the anticipated benefits and cost savings of those transactions not being realized fully, or at all, or taking longer to realize than anticipated; (v) an increase in the scope and complexity of our operations; and (vi) the loss or reduction of control over certain of our assets.

The pursuit of acquisitions may pose certain risks to us. We may not be able to identify acquisition candidates that fit our criteria for growth and profitability. Even if we are able to identify such candidates, we may not be able to acquire them on terms or financing satisfactory to us. We will incur expenses and dedicate attention and resources associated with the review of acquisition opportunities, whether or not we consummate such acquisitions.

Additionally, even if we are able to acquire suitable targets on agreeable terms, we may not be able to successfully integrate their operations with ours. Achieving the anticipated benefits of any acquisition will depend in significant part upon whether we integrate such acquired businesses in an efficient and effective manner. We may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions within the anticipated timing or at all. The benefits from any acquisition will be offset by the costs incurred in integrating the businesses and operations. We may also assume liabilities in connection with acquisitions to which we would not otherwise be exposed. An inability to realize any or all of the anticipated synergies or other benefits of an acquisition as well as any delays that may be encountered in the integration process, which may delay the timing of such synergies or other benefits, could have an adverse effect on our business, results of operations and financial condition.

**Risks Related to Ownership of Our Common Stock**

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***Our failure to meet the continued listing requirements of Nasdaq could result in the delisting of our Common Stock.***

Although we regained compliance with Nasdaq's continued listing requirements in March 2026, we are currently subject to a one-year Discretionary Panel Monitor. If we fail to maintain compliance during the monitoring period, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair stockholders' ability to sell or purchase our common stock when they wish to do so, as well as adversely affect our ability to issue additional securities and obtain additional financing in the future.

There can be no assurance that we will be able to regain compliance with the Bid Price Rule, the Timely Filing Requirement, or the Stockholders' Equity Requirement, or will otherwise be in compliance with other applicable Nasdaq Listing Rules. If we fail to meet the conditions set forth in our compliance plan or if Nasdaq delists our securities from trading for any other reason, we could face significant material adverse consequences, including:

● a limited availability of market quotations for our securities;

● reduced liquidity with respect to our securities;

● a determination that our common stock is a "penny stock" which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

● a limited amount of news and analyst coverage for our company; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

***Our stock price could be extremely volatile. As a result, shareholders may not be able to re-sell their shares at or above the price they paid for them.***

The market price of our common stock may be highly volatile and could be subject to wide fluctuations. Volatility in the market price of our common stock, as well as general economic, market or political conditions, may prevent shareholders from being able to sell their shares at or above the price they paid for their shares and may otherwise negatively affect the liquidity of our common stock. Shareholders may experience a decrease, which could be substantial, in the value of their stock, including decreases unrelated to our operating performance or prospects, and shareholders could lose part or all of their investment. The price of our common stock has been, and could continue to be, subject to wide fluctuations in response to a number of factors, including those described elsewhere in this Report and others such as:

● our ability to generate sufficient revenues to achieve profitability and positive cash flow;

● competition in our industry and our ability to compete effectively;

● our ability to attract, recruit, retain and develop key personnel and qualified employees;

● reliance on significant clients and third-party suppliers;

● our ability to successfully identify and complete acquisitions and effectively integrate those acquisitions into our operations;

● our actual or anticipated operating and financial results, including how those results vary from the expectations of management, securities analysts and investors;

● changes in financial estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to us or other industry participants;

● developments in our business or operations or our industry sectors generally;

● any future offerings by us of our common stock;

● any coordinated trading activities or large derivative positions in our common stock, for example, a "short squeeze" (a short squeeze occurs when a number of investors take a short position in a stock and have to buy the borrowed securities to close out the position at a time that other short sellers of the same security also want to close out their positions, resulting in a surge in stock prices, i.e., demand is greater than supply for the stock sold short);

● legislative or regulatory changes affecting our industry generally or our business and operations specifically;

● the operating and stock price performance of companies that investors consider to be comparable to us;

● announcements of strategic developments, acquisitions, restructurings, dispositions, financings and other material events by us or our competitors;

● actions by our current shareholders, including future sales of common shares by existing shareholders, including our directors and executive officers;

● proposed or final regulatory changes or developments;

● anticipated or pending regulatory investigations, proceedings, or litigation that may involve or affect us; and

● the other factors described under *Risk Factors* in *Part I, Item 1A* of this Report.

In response to any one or more of these events, the market price of shares of our common stock could decrease significantly. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources and could also require us to make substantial payments to satisfy judgments or to settle litigation.

***Shareholders may be diluted by future issuances of preferred stock or additional common stock in connection with our incentive plans, acquisitions or otherwise; future sales of such shares in the public market, or the expectations that such sales may occur, could lower our stock price.***

Our certificate of incorporation authorizes us to issue shares of our common stock and options, rights, warrants and appreciation rights relating to our common stock for the consideration and on the terms and conditions established by our Board in its sole discretion. We could issue a significant number of shares of common stock in the future in connection with investments or acquisitions. Any of these issuances could dilute our existing shareholders, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of our common stock.

The future issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of shares of our common stock, either by diluting the voting power of our common stock if the preferred stock votes together with the common stock as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote, even if the action were approved by the holders of our shares of our common stock.

The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price, causing economic dilution to the holders of common stock.

***We do not anticipate paying any cash dividends on our common stock in the foreseeable future.***

We currently intend to retain our future earnings, if any, for the foreseeable future, to fund the development and growth of our business. We do not intend to pay any dividends to holders of our common stock in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion, any legal or contractual limitations on our ability to pay dividends under our loan agreements or otherwise. As a result, if our Board does not declare and pay dividends, the capital appreciation in the price of our common stock, if any, will be our shareholders only source of gain on an investment in our common stock, and shareholders may have to sell some or all of their common stock to generate cash flow from their investment.

***If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, its trading price and volume could decline.***

We expect the trading market for our common stock to be influenced by the research and reports that industry or securities analysts publish about us, our business or our industry. If no additional securities or industry analysts commence coverage of our company, the trading price for our stock may be negatively impacted. If one or more of our covering analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline and our common stock to be less liquid. Moreover, if one or more of the analysts who cover us downgrades our stock or publishes inaccurate or unfavorable research about our business, or if our results of operations do not meet their expectations, our stock price could decline.

***Provisions of our certificate of incorporation and bylaws may delay or prevent a take-over that may not be in the best interests of our shareholders.***

Provisions of our certificate of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt.

In addition, our certificate of incorporation authorizes the issuance of up to 3,000,000 shares of preferred stock with such rights and preferences determined from time to time by our Board. None of our preferred shares are currently issued or outstanding. Our Board may, without shareholder approval, issue preferred shares with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.

***The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain executive management and qualified Board members.***

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations involves significant legal and financial compliance costs, may make some activities more difficult, time-consuming or costly and may increase demand on our systems and resources, particularly after we are no longer an "emerging growth company," as defined in the JOBS Act. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management's attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

As a result of disclosure of information in this Report and in filings required of a public company, our business and financial condition are highly visible, which may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

***We are subject to ongoing regulatory burdens resulting from our public listing.***

We continually work with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial management control systems to manage our obligations as a public company listed on Nasdaq. These areas include corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas, including our internal controls over financial reporting. However, these and other measures that we might take may not be sufficient to allow us to satisfy our obligations as a public company listed on Nasdaq on a timely basis. In addition, compliance with reporting and other requirements applicable to public companies listed on Nasdaq creates additional costs for us and requires the time and attention of management. The additional costs that we incur, the timing of such costs and the impact that management's attention to these matters may adversely affect our business and operating results.

***We have identified material weaknesses in our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results and prevent fraud. As a result, current and potential shareholders could lose confidence in our financial statements, which would harm the trading price of our common shares.***

Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404. SOX 404 requires management to establish and maintain a system of internal control over financial reporting and annual reports on Form 10-K filed under the Exchange Act to contain a report from management assessing the effectiveness of a company's internal control over financial reporting. Separately, under SOX 404, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, public companies that are large accelerated filers or accelerated filers must include in their annual reports on Form 10-K an attestation report of their regular auditors attesting to and reporting on management's assessment of internal control over financial reporting. Non-accelerated filers and smaller reporting companies, like us, are not required to include an attestation report of their auditors in annual reports.

A report of our management is included under Item 9A. "Controls and Procedures." We are a smaller reporting company and, consequently, are not required to include an attestation report of our auditor in our annual report. However, if and when we become subject to the auditor attestation requirements under SOX 404, we can provide no assurance that we will receive a positive attestation from our independent auditors.

During its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2025, management identified material weaknesses as described under Item 9A. "Controls and Procedures." We are undertaking remedial measures, which measures will take time to implement and test, to address these material weaknesses. There can be no assurance that such measures will be sufficient to remedy the material weaknesses identified or that additional material weaknesses or other control or significant deficiencies will not be identified in the future. If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports. Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline in our share price.

**General Risk Factors**

***We are highly dependent on our management team, and the loss of our executive officers or other key employees could harm our ability to implement our strategies, impair our relationships with clients and adversely affect our business, results of operations and growth prospects.***

***Our insurance may not adequately cover our operating risk.***

We have insurance to protect our assets, operations and employees. While we believe our insurance coverage addresses all material risks to which we are exposed and is adequate and customary in our current state of operations, such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which we are exposed. In addition, such insurance may not be adequate to cover our liabilities or may not be generally available in the future or, if available, premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur such liability at a time when we are not able to obtain liability insurance, our business, results of operations and financial condition could be materially adversely affected.

***We may be exposed to currency fluctuations.***

Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, there can be no assurance that it will effectively mitigate currency risks.

***Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.***

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U.S. generally accepted accounting principles ("U.S. GAAP") and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, revenue recognition, stock-based compensation, trade promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.

***Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our business and the value of our common stock.***

Our reputation is a valuable component of our business. Threats to our reputation can come from many sources, including adverse sentiment about our industry generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, and questionable or fraudulent activities of our clients. Negative publicity regarding our business, employees, or clients, with or without merit, may result in the loss of clients, investors and employees, costly litigation, a decline in revenues and increased governmental regulation. If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results and the value of our common stock may be materially adversely affected.

**<u>ITEM 1B. UNRESOLVED STAFF COMMENTS</u>**

None.

**<u>ITEM 1C. CYBERSECURITY</u>**

 

*Cybersecurity Risks*

 

We rely on information technology systems and networks to process, transmit, and store electronic information in our operations, including our proprietary business information and that of our customers, suppliers, and employees. We use various information technology systems and networks to manage our operations and maintain effective internal control over financial reporting. We also collect and store sensitive data, including intellectual property, proprietary business information, and personal information of our customers, suppliers, and employees, in our data centers and on our networks. The secure operation of these information technology systems and networks, and the processing and maintenance of this information, are critical to our business operations and strategy.

Despite our security measures, our information technology systems and networks may be subject to damage, disruption, or unauthorized access due to a variety of factors, including cyberattacks by computer hackers, computer viruses, ransomware, phishing, denial-of-service attacks, physical or electronic break-ins, employee error or malfeasance, power outages, natural disasters, or other catastrophic events. Any such damage, disruption, or unauthorized access could compromise our networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations, damage to our reputation, loss of customers, potential harm to our competitive position, and additional costs to remediate the issue.

*Cybersecurity Practices*

 

We have implemented various measures to manage our risk of information technology systems and networks damage, disruption, or unauthorized access, including employee training, monitoring of our systems and networks, maintenance of backup and protective systems, and use of modern endpoint detection and response tools which are integrated into urban-gro's risk management systems and processes. We also operate in a fully cloud-based environment, which enhances our scalability, flexibility, and resilience and utilize 3rd parties to perform early internal and external vulnerability assessment and risk identification. We have established extensive backup and recovery procedures to ensure the continuity of our operations in a cyber incident. We also maintain cyber liability insurance coverage as part of our comprehensive risk management program. However, these measures may not be sufficient to prevent, detect, or mitigate the impact of such damage, disruption, or unauthorized access. Moreover, the regulatory environment related to information security, data protection, and privacy is increasingly demanding and complex, and compliance with applicable laws and regulations may result in significant costs or require changes in our business practices that could adversely affect our operations.

*Cybersecurity Leadership*

 

Our Board of Directors is actively involved in overseeing our cybersecurity risk management. Our Board of Directors receives quarterly updates on our cybersecurity posture, threats, and incidents from our Senior Vice President of Technology, who now serves in a consulting role with the Company. Our Board of Directors also delegates certain oversight functions to our Audit Committee, which reviews our cybersecurity policies, procedures, controls, and audit results. Our Board of Directors and our Audit Committee regularly assess the adequacy of our cybersecurity risk management framework and the effectiveness of our mitigation strategies.

Our cybersecurity operations are led by our consulting Senior Vice President of Technology, who has over 20 years of experience in the field of cybersecurity. He is responsible for developing and implementing our cybersecurity strategy, policies, standards, and practices. He also oversees our cybersecurity team, which includes a staff member who recently completed his master's degree in cybersecurity. Our cybersecurity team monitors, detects, responds, and reports on cybersecurity threats and incidents, and coordinates with our internal and external stakeholders to ensure the security of our information assets.

urban-gro adheres to the NIST Cybersecurity Framework 2.0, which provides a set of standards, guidelines, and best practices to manage cybersecurity-related risks. We have developed and documented our systems disaster recovery plan, which outlines the roles, responsibilities, and procedures for restoring our critical systems and data in the event of a cyber incident. We have also crafted over 12 internal policies to help maintain a secure environment, such as our information security policy, our data classification policy, our incident response policy, and our password policy. We regularly conduct phishing simulations, vulnerability scans, penetration tests, and audits to test the effectiveness of our controls and backups, and to identify and remediate any gaps or weaknesses in our cybersecurity posture.

*Cybersecurity Incidents*

 

Despite our efforts to prevent and mitigate cybersecurity incidents, we cannot guarantee that we will not experience any breaches, disruptions, or unauthorized access to our information technology systems and networks. We have experienced, and may continue to experience, cybersecurity incidents that could have a material adverse effect on our business, financial condition, results of operations, and prospects.

**<u>ITEM 2. PROPERTIES</u>**

Our principal place of business is located at 1751 Panorama Point, Unit G, Lafayette, Colorado, 80026. This location is leased and consists of approximately 10,000 square feet, including approximately 3,500 square feet of office space and 6,500 square feet of warehouse space. We currently do not own any property.

**<u>ITEM 3. LEGAL PROCEEDINGS</u>**

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. Other than below, there are no other legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company's results of operations and cash flows.

***Gemini Loan Agreement Amendment and Default***

On December 13, 2023, our wholly-owned subsidiary UG Construction, Inc. d/b/a Emerald Construction Management, Inc. ("UG Construction") entered into (i) an interest only asset based revolving loan agreement (the "Loan Agreement") with Gemini Finance Corp. ("Gemini") pursuant to which Gemini extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and us with cash management, and (ii) a Secured Promissory Note - Revolving issued by UG Construction to Gemini (the "Promissory Note"). Pursuant to the Promissory Note, each draw was due and payable on or before 180 days after such draw is funded to UG Construction, subject to a mandatory pre-payment upon UG Construction's receipt of payment for any invoice previously submitted and approved for financing by Gemini.

On March 18, 2025, UG Construction entered into an amendment to the Loan Agreement and Promissory Note and waiver with Gemini (the "Amendment"). Pursuant to the Amendment, Gemini waived any potential or perceived events of default arising under certain circumstances, which events did not constitute specified events of default under the Promissory Note or the Loan Agreement.

Pursuant to the Amendment, the Promissory Note was amended to provide that (i) the term during which Gemini may consider advances under the Loan Agreement has been extended to January 1, 2026, and (ii) the interest applied on the outstanding principal amount of the Promissory Note will accrue interest at an annual rate of 12%, and all accrued and unpaid interest shall be paid to Gemini on the first business day of each month for the prior month. The Amendment also amended the Loan Agreement to require monthly reporting of certain accounts receivable and to include a covenant that such accounts receivable equal or exceed 125% of the sum of the total amount drawn down under the Promissory Note, plus outstanding interest, as of the applicable measurement date. In connection with the execution of the Amendment, we issued to Gemini, as an amendment fee, 150,000 shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split.

On July 31, 2025, Gemini issued a notice of default to UG Construction claiming that UG Construction was in default under the line of credit due to a failure to submit receivables calculations and failing to maintain sufficient eligible accounts and to forward accounts receivable. The notice indicated that the remaining outstanding amount due under the line of credit of approximately $1.76 million was immediately due and payable with default of 1% per week accruing from the June 16, 2025 date of default claimed by Gemini, and that Gemini intended to pursue legal action if full payment was not received by August 8, 2025.

On August 21, 2025, we received a notification from Gemini stating that Gemini would proceed with a foreclosure and private sale of substantially all of the assets of UG Construction in an Article 9 sale process, pursuant to Section 9601 et seq. of the California Commercial Code (the "Asset Sale"). The Asset Sale occurred on September 4, 2025, at which Gemini acquired the assets constituting the collateral under the line of credit for $450,000.

On August 29, 2025, Gemini commenced a lawsuit captioned *Gemini Finance Corp. v. UG Construction, Inc. et al.*, case number 25CV2259 W SBC, in the U.S. District Court for the Southern District of California, which lawsuit (the "Lawsuit") included us and certain of our officers as defendants and pursuant to which Gemini claimed it was owed $1,486,189 (the "Claim Amount").

On September 26, 2025, we entered into a Settlement and Mutual General Release (the "Gemini Settlement Agreement") with Gemini. Pursuant to the terms of the Gemini Settlement Agreement, among other things, we agreed to file a joint motion requesting an expedited fairness hearing under Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"), which motion was filed on September 30, 2025. Following such fairness hearing, and subject to the satisfaction of all applicable conditions and requirements of Section 3(a)(10) of the Securities Act, we agreed to issue to Gemini shares of our common stock that, upon sale by Gemini, would result in net proceeds to Gemini equal to the Claim Amount, provided that Gemini shall at no time be issued shares if it would beneficially own more than 4.99% of our common stock, and the aggregate number of shares issued to Gemini may not exceed 19.99% of our outstanding common stock as of immediately prior to the signing of the Gemini Settlement Agreement to the extent required by Nasdaq Listing Rule 5635. Additionally, Gemini agreed to use its best efforts to not sell common stock exceeding 10% of our daily volume on any given trading day. Upon the issuance of the last tranche of shares under the Gemini Settlement Agreement, Gemini will dismiss the Lawsuit with prejudice. The Gemini Settlement Agreement also included a customary mutual release of claims by the parties. The fairness hearing occurred on October 14, 2025.

 **

***Grow Hill Default***

 **

On October 1, 2024, we entered into an asset-based term Loan Agreement with Grow Hill, LLC ("Grow Hill") pursuant to which Grow Hill extended to us a secured loan of $2,100,000 with an origination fee of $100,000, which was added to the amount of the loan. The loan is evidenced by a Secured Promissory Note issued by us to Grow Hill. Grow Hill received a security interest in certain of our assets pursuant to a security agreement between us and Grow Hill (the "Security Agreement"), which does not include any assets of our subsidiaries.

On October 14, 2025, we received service of process for a lawsuit filed by Grow Hill against us in the District Court for the City and County of Denver, Colorado (Case No. 2025CV33546) alleging breach of contract and fraud. Pursuant to the complaint, Grow Hill stated that we were in default under the Secured Promissory Note due to a failure to timely make payments, and elected to accelerate all amounts due under the Secured Promissory Note, including a default fee equal to 1% of the outstanding principal amount. We are currently investigating available options to resolve the complaint and intend to vigorously defend the allegation of fraud.

 ****

***J Brrothers Settlement***

On August 8, 2025, we entered into a Settlement and Release Agreement (the "Settlement Agreement") with J Brrothers LLC ("J Brrothers") and Herb-a-More LLC relating to a dispute arising from amounts due for certain heating, ventilation and air conditioning equipment. Pursuant to the terms of the Settlement Agreement, among other things, we issued a promissory note to J Brrothers with an original principal amount of $395,556 and agreed to issue 150,000 unregistered shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split, to J Brrothers. The note accrues simple interest at an annual rate of 12% and has a maturity date of March 18, 2026. The note must be repaid in monthly installments over a period of eight months, with the first seven payments being $50,000 per month and the final monthly payment being $64,047. Any remaining principal and accrued but unpaid interest will become due and payable on the maturity date, and the note may be prepaid without penalty. The note includes customary representations and warranties, customary events of default and a 17% default interest rate. ****

 ****

As of December 31, 2025, the Company had made only the initial partial payment of $25,000 on August 27, 2025. The required $50,000 monthly payments for September through December 2025 were not made. The outstanding balance was approximately $374,512 at December 31, 2025, inclusive of accrued interest. The note matured on March 18, 2026.

 ****

 ****

***MJ's Market, Inc***

MJ's Market, Inc. v. Urban-Gro, Inc. et al, pending in the Suffolk County Superior Court in Massachusetts as Civil Action No. 2384-cv-02794. The original complaint, filed by MJ's Market, Inc, alleged that the Corporation prepared deign drawings for the plaintiff and subsequently sold those drawings to a competitor. The original complaint asserted claims for Breach of Contract; violation of M.G.L. c. 93A; Breach of the Covenant of Good Faith and Fair Dealing; Trademark Infringement; and Interference with Contractual Relations against the Corporation. An amended complaint has been filed which names 2WR of Colorado, Inc., which is characterized as a subsidiary or affiliate of the Corporation, in place of the Corporation. The lawsuit is ongoing.

***RK Mechanical- complaint filed***

On June 27, 2025, RK Mechanical LLC ("RK") filed a complaint against UG Construction and certain other defendants, with SVC Manufacturing Inc. as cross-claimant and UG Construction as cross-defendant, in the Superior Court of Arizona for Maricopa County (Case No. CV2025-022680). The complaint alleged that UG Construction served as general contractor for the construction of a PepsiCo plant in Tolleson, Arizona, and that as a result of work completed by RK, UG Construction owed $1,522,716 to RK as a result of alleged breach of contract, breach of implied covenant of good faith and fair dealing, violation of the Arizona Prompt Payment Act, and lien foreclosure. On or about October 2025, a default judgment was entered against UG Construction for $1,511,716, plus prejudgment interest of $288,346 and post-judgment interest at 8.25% plus $10,057 in attorney fees.

***Action Equipment- complaint filed***

On April 21, 2025, Action Equip. & Scaffold Co. ("Action") filed a complaint against UG Construction in the Superior Court of Arizona for Maricopa County (Case No. CV2025-014165). The complaint alleged that UG Construction owed Action $380,932 plus interest and attorneys' fees in connection with a contract pursuant to which Action leased equipment to UG Construction, and alleged breach of contract, breach of covenant of good faith and fair dealing, and unjust enrichment.

***Cullens v. Urban-Gro, Inc. et al.***

 ****

On December 24, 2025, Christopher W. Cullens ("Mr. Cullens"), a former employee of urban-gro, Inc. (the "Company"), filed a complaint against the Company and Bradley Nattrass, the Company's Chief Executive Officer, in the District Court, Boulder County, State of Colorado (Case No. 2025CV31164). Mr. Cullens served as Vice President of Construction Operations pursuant to a written employment agreement and was terminated without cause on November 14, 2025, following an unpaid furlough that began in August 2025.

The complaint asserts claims for: (i) violation of the Colorado Wage Claim Act, C.R.S. § 8-4-101, et seq. (the "CWA"), against the Company and Mr. Nattrass; (ii) breach of contract against the Company; and (iii) unjust enrichment against the Company, pleaded in the alternative. Mr. Cullens alleges that, at the time of his termination, he had earned and was vested in commissions totaling $650,000, which he contends constitute earned, vested, and determinable wages due and payable immediately upon discharge under the CWA. Mr. Cullens further alleges that he is entitled to a severance package consisting of nine months of his base salary and nine months of COBRA premium payments pursuant to the terms of his employment agreement. Mr. Cullens seeks, among other relief, payment of the unpaid commissions, statutory penalties of up to three times the unpaid wages under the CWA, the full value of the severance package, reasonable attorney's fees and costs, and such other relief as the court deems just and proper.

On March 30, 2026, the Company and Mr. Nattrass filed their answer to the complaint, generally denying the material allegations or asserting that they lack sufficient information or knowledge to admit or deny certain allegations. Among other defenses, the Company asserts that Mr. Cullens has been paid for his time worked, that all compensation considered earned, vested, and determinable has been paid, that Mr. Nattrass is not an "employer" under the CWA, and that Mr. Cullens may have failed to mitigate his damages.

Concurrently with the answer, the Company filed counterclaims against Mr. Cullens asserting: (i) breach of contract; (ii) breach of the implied covenant of good faith and fair dealing; and (iii) unjust enrichment, pleaded in the alternative. The counterclaims arise out of an Acquisition Agreement and Plan of Merger entered into on or about March 13, 2022, among the Company, Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC (the "Acquisition Agreement"), and an Amended and Restated Indemnification Claim Agreement entered into on or about August 10, 2023, between the Company and Mr. Cullens (the "Amended Indemnification Agreement"). The Company alleges that, under Article VIII of the Acquisition Agreement and the Amended Indemnification Agreement, Mr. Cullens is obligated to indemnify the Company for certain pre-closing losses and specified project-related losses, including losses related to a project in Olathe, Kansas, and legal fees associated with at least six pending indemnification claims. The Company alleges that Mr. Cullens has failed to make the required indemnification payments. The Company seeks an award of its losses and damages, costs, pre- and post-judgment interest, and attorneys' fees and costs.

This litigation is in its preliminary stages. The Company believes the claims asserted in Mr. Cullens' complaint are without merit and intends to vigorously defend against them while pursuing its counterclaims. The outcome of this matter is inherently uncertain, and the Company is unable to predict the ultimate outcome or estimate the amount or range of loss, if any, that may result from this matter.

***Other – Trade Vendors***

 ****

Due to cash flow and working capital issues, the Company has been delinquent in paying vendors, some of which have filed lawsuits seeking judgment for payment. The amounts due to these vendors are included in accounts payable in the consolidated balance sheet as of December 31, 2025.

**<u>ITEM 4. MINE SAFETY DISCLOSURES</u>**

Not applicable.

**PART II**

**<u>ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</u>**

**Market Information**

On February 17, 2021, we completed a public offering of 6,210,000 shares of our common stock (248,400 shares on a post–1-for-25 reverse stock split basis), inclusive of the underwriters' full overallotment, at $10.00 per share ($250.00 per share on a post-split basis), for total gross offering proceeds of $62,100,000. In connection with the offering, we received approval to list our common stock on Nasdaq Capital Market under the symbol "UGRO." Prior to the offering, shares of our common stock were quoted on the OTC Markets Group, Inc. OTCQX Marketplace under the symbol "UGRO." Although our shares were quoted on the OTCQX Marketplace from October 7, 2019 through February 11, 2021, because trading on the OTCQX Marketplace was infrequent and limited in volume, the prices at which such transactions occurred did not necessarily reflect the price that would have been paid for our common stock in a more liquid market.

The trading price of our common stock has been, and may continue to be, subject to wide price fluctuations in response to various factors, many of which are beyond our control, including those described in Part I, Item 1A, "Risk Factors."

**HOLDERS**

As of April 15, 2026, we had approximately 65 holders of record of our Common Stock. The number of shareholders of record does not include beneficial owners of our common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

**DIVIDENDS**

Since our inception, we have not paid any dividends on our common stock, and we currently expect that, for the foreseeable future, all earnings, if any, will be retained for use in the development and operation of our business. In the future, our Board may decide, at its discretion, whether dividends may be declared and paid to holders of our common stock.

**REPORTS**

We are subject to certain reporting requirements and furnish annual financial reports to our shareholders, certified by our independent accountants, and furnish unaudited quarterly financial reports in our quarterly reports filed electronically with the SEC. All reports and information filed by us can be found at the SEC website, www.sec.gov.

**UNREGISTERED SALES OF EQUITY SECURITIES**

During the year ended December 31, 2025, we issued the following securities that were not registered under the Securities Act:

● The Company issued the following shares of the Company's common stock to satisfy contingent consideration purchase price liabilities for acquisitions as follows (pre-split):

● Gemini amendment fee: 150,000 shares (6,000 shares on a post–1-for-25 reverse stock split basis)

● Gemini 3(a)(10) first tranche: 700,000 shares (28,000 shares on a post–1-for-25 reverse stock split basis)

● J Brothers settlement: 150,000 shares (6,000 shares on a post–1-for-25 reverse stock split basis)

● One Eyed Jack: 1,000,000 shares in January 2026 (40,000 shares on a post–1-for-25 reverse stock split basis) in January 2026

The foregoing issuances of restricted shares of common stock were issued under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Company believes the issuance of the foregoing restricted shares was exempt from registration as a privately negotiated, isolated, non-recurring transaction not involving a public solicitation. No commissions were paid regarding the share issuances, and the share certificates were issued with a Rule 144 restrictive legend.

**Purchase of Equity Securities by Issuer and Affiliated Purchasers**

During the year ended December 31, 2025, the Company did not repurchase common stock. As of December 31, 2025, we have $1.4 million remaining under the repurchase program.

**<u>ITEM 6. [RESERVED]</u>**

**<u>ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</u>**

 

*The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Report. In addition, see "Cautionary Information about Forward-Looking Statements" included in this Report. When applicable, all share and per share amounts presented herein have been restated to reflect the implementation of the 1-for-25 reverse stock split as if it had occurred at the beginning of the earliest period presented.*

**Overview**

The fiscal year ended December 31, 2025 was a period of significant strategic transformation for the Company. During the first three quarters of 2025, the Company continued to operate its legacy Controlled Environment Agriculture ("CEA") design-build and equipment reselling businesses while pursuing the wind-down of its core operations. In the third quarter of 2025, the Company made the decision to exit its core business sectors due to changing market conditions and its inability to raise significant funds due to its filing status and compliance with the Nasdaq. The Company began selling assets, reducing its workforce, and preparing for a subsequent merger.

On October 14, 2025, the Company entered into a binding letter of intent with Flash Sports & Media, Inc. ("Flash") regarding the proposed Merger. During the fourth quarter of 2025, the Company wound down its remaining services businesses and furloughed the associated employees. The Merger with Flash was completed on February 17, 2026, subsequent to the fiscal year end covered by this Report. As such, the financial results presented herein for the fiscal year ended December 31, 2025 reflect the legacy urban-gro operations only and do not include any revenue or expenses of Flash or IPG. For a description of the Company's post-Merger operations, see "Item 1 — Business."

**Results of Operations**

**Revenue.** For the year ended December 31, 2025, the Company generated revenue of $17.4 million compared to $31.2 million for the year ended December 31, 2024, a decrease of $13.8 million, or approximately 44%. This decrease was driven primarily by a $10.1 million decrease in construction design-build revenue and a $3.5 million decrease in equipment systems revenue, reflecting the Company's ongoing wind-down of legacy operations.

**Cost of Revenue.** For the year ended December 31, 2025, cost of revenue was $17.2 million compared to $31.6 million for the year ended December 31, 2024, a decrease of $14.3 million, or approximately 45%. Gross profit was approximately $174,000 for the year ended December 31, 2025, compared to gross loss of $388,000 for the comparable prior-year period. The improvement in gross margin from a gross loss to a gross profit reflects the Company's cost reduction efforts outpacing the revenue decline during the wind-down period.

**Operating Expenses.** Operating expenses decreased by $9.8 million, or approximately 35%, to $18.1 million for the year ended December 31, 2025, compared to $28.0 million for the comparable prior-year period. This decrease resulted from a $3.7 million decrease in general and administrative expenses, a $0.7 million decrease in depreciation and amortization and $6.0 million decrease in impairment of goodwill and intangibles, reflecting headcount reductions and asset dispositions undertaken as part of the wind-down.

**Non-Operating Expenses.** Non-operating expenses increased significantly for the year ended December 31, 2025 compared to the prior-year period, primarily due to a $2.4 million loss recognized on the foreclosure of UG Construction assets in connection with the Gemini Finance Corp. settlement, as well as increased interest expense of $0.6 million.

**Net Loss.** Net loss from continuing operations was $21.6 million for the year ended December 31, 2025, compared to $29.4 million for the comparable prior-year period. Total net loss, including discontinued operations, was $22.1 million for the year ended December 31, 2025, compared to $36.5 million for the comparable prior-year period.

**Liquidity and Capital Resources**

As of December 31, 2025, the Company had cash of approximately $10,000 and negative working capital of approximately $44.8 million, compared to negative working capital of $26.5 million as of December 31, 2024, a decrease of $18.3 million. This deterioration in working capital was primarily attributable to a decrease in accounts receivable of $6.1 million, as well as increases in accounts payable and customer deposits of $4.7 million.

Net cash provided by operating activities was $0.8 million for the year ended December 31, 2025. This source of cash is the net effect of the net loss of $21.6 million, offset by non-cash expenses of $11.8 million, and an increase in net operating assets and liabilities of $11.2 million, offset by net cash used in operating activities of discontinued operations of $0.5 million.

Net cash used in investing activities was $1.8 million, primarily from purchase of property and equipment and discontinued operations.

Net cash used in financing activities was $3.5 million for the year ended December 31, 2025. Cash provided from financing activities during the year ended December 31, 2025 primarily relates to additions to notes payable for $1.7 million, partially offset by $5.1 million of payments made on notes payable.

The Company's ability to continue as a going concern is dependent on its ability to generate sufficient revenue and/or obtain financing sufficient to meet current and future obligations. The Company has produced multiple consecutive years of net losses and negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Following the completion of the Merger on February 17, 2026, the Company believes that the combined entity's operations, including IPG's revenue-generating cricket commercialization business, will provide improved liquidity and a path toward sustainable operations. The Company may also seek to raise additional capital through equity or debt financing to support integration and growth initiatives. There can be no assurance that the Company will be able to raise capital on terms acceptable to the Company. If it is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results.

**Critical Accounting Estimates**

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Our most significant estimates for FY2025 relate to: Revenue Recognition (ASC 606) — For construction design-build contracts, revenue is recognized over time using the cost-to-cost input method, requiring estimates of total contract costs. Impairment of Long-Lived Assets and Goodwill (ASC 360-10-35 / ASC 350) — We evaluate recoverability whenever events indicate the carrying amount may not be recoverable; during 2025 impairment charges were recorded in connection with the wind-down. Allowance for Credit Losses (ASC 326-20) — Estimated based on historical loss experience, aging, current conditions, and forecasts; significant judgment was required given the wind-down. Stock-Based Compensation — Measured at grant date fair value using the Black-Scholes model. Income Taxes (ASC 740) — We maintain a full valuation allowance against net deferred tax assets. Significant judgment is required in evaluating realizability and estimating provisions.

**<u>ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</u>**

As a smaller reporting company, we are not required to provide this information.

**<u>ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</u>**

The financial statements and supplementary financial information required by this Item are set forth immediately following the signature page and are incorporated herein by reference.

**<u>ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</u>**

On February 27, 2026, the Company dismissed Sadler, Gibb & Associates, LLC ("Sadler") as the Company's independent registered public accounting firm. The decision to dismiss Sadler was approved by the audit committee of the Company's board of directors on February 27, 2026. Sadler had been retained by the Company on May 29, 2024. Sadler's reports on the Company's consolidated financial statements as of and for the fiscal years ended December 31, 2022, 2023 and 2024 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

From the date Sadler was engaged by the Company through the date of dismissal, there were no disagreements with Sadler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Sadler, would have caused them to make reference thereto in their report on the financial statements. From the date Sadler was engaged by the Company through the date of dismissal, there were no reportable events, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

On March 3, 2026, Suri and Co., Chartered Accountants ("Suri"), Certified Public Accountants of Chennai, India, were appointed by the Company to audit the Company's financial statements for the year ended December 31, 2025. During the Company's two most recent fiscal years and the subsequent interim periods preceding their appointment, neither the Company nor anyone on its behalf consulted Suri regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, nor has Suri provided to the Company a written report or oral advice regarding such principles or audit opinion, or (2) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).

**<u>ITEM 9A. CONTROLS AND PROCEDURES</u>**

**DISCLOSURE CONTROLS AND PROCEDURES**

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report.

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were not effective as of December 31, 2025 because of the material weaknesses in our internal control over financial reporting described below.

Notwithstanding the ineffective disclosure controls and procedures as a result of the identified material weaknesses, our CEO and CFO have concluded that the consolidated financial statements, included in this Annual Report on Form 10-K present fairly, in all material respects, the Company's financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP).

Our management, including our CEO and CFO, do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the reality that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

**Changes in Internal Control over Financial Reporting**

There were no changes in our internal control over financial reporting during our fiscal year ended December 31, 2025, which were identified in conjunction with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 ****

**MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that:

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified deficiencies that resulted in material weaknesses in our internal control over financial reporting. The material weaknesses identified include:

● Lack of sufficient technical accounting expertise within the accounting function to appropriately address complex technical accounting issues; and

● Failure to maintain a sufficient complement of personnel in our accounting and reporting department to ensure adequate segregation of duties such that appropriate review and monitoring of its financial records are executed.

The material weaknesses described above could result in material misstatements to financial statements or disclosures that would not be prevented or detected.

This Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this Report.

***Management's Plan to Remediate the Material Weaknesses***

As it relates to the material weaknesses that existed as of December 31, 2025, we are currently in the process of designing and implementing remediation plans and taking steps to address the root cause of the material weaknesses described above. Such plans include, but may not be limited to, the following:

● Ensure personnel resources within the accounting function have technical accounting expertise and experience commensurate with our operations;

● Engage external consultants to provide support and to assist us in our evaluation of more complex applications of GAAP where technical accounting expertise within the accounting function is considered insufficient; and

● Improve control processes to ensure adequate review by individuals with sufficient technical accounting expertise to prevent disclosure and financial reporting misstatements.

While we believe these efforts will improve our internal controls and address the root cause of the material weaknesses, such material weaknesses will not be remediated until our remediation plan has been fully implemented and we have concluded, through testing, that our controls are operating effectively for a sufficient period of time. The completion of the Merger with Flash Sports and Media, Inc. on February 17, 2026 has provided the Company with access to additional accounting and financial reporting resources, including experienced personnel with technical accounting expertise. Management believes these additional resources, combined with the remediation steps described above, will enable the Company to address and remediate the identified material weaknesses. However, there can be no assurance as to the timing of such remediation or that additional material weaknesses will not be identified in the future.

**<u>ITEM 9B. OTHER INFORMATION</u>**

None.

**<u>ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</u>**

Not applicable.

**PART III**

**<u>ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORTE GOVERNANCE</u>**

**Directors**

The following table and text set forth the name, age, position with the Company, and terms of service of each director as of April 15, 2026:

---

| | | | |
|:---|:---|:---|:---|
| **Name** | **Age** | **Position** | **Director Since** |
| Bradley J. Nattrass | 53 | Chairperson of the Board and Chief Executive Officer | 2017 |
| James R. Lowe <sup>(1)</sup> | 45 | Director | 2018 |
| David Hsu <sup>(2)(3)</sup> | 44 | Director | 2021 |
| Sonia Lo<sup>(2)(3)</sup> | 58 | Director | 2021 |
| Donald Fell <sup>(1)(2)</sup> | 84 | Director | 2026 |

---

<sup>(1)</sup> Member of the Corporate Governance and Nominating Committee.

<sup>(2)</sup> Member of the Audit Committee.

<sup>(3)</sup> Member of the Compensation Committee.

Information with respect to the securities beneficially owned by each of the directors can be found under the heading "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters". The following sets forth the biographical background information for each director. In addition, the biographies of the directors include a brief description of the specific experience, qualifications, attributes, or skills that led to the conclusion that each person should serve as a director. In addition to the specific experience, qualifications, attributes, and skills described below, all of the directors have the professional experience and personal character that make them highly qualified directors for the Company and collectively comprise an experienced board that works well together as a whole.

***Bradley J. Nattrass*** is one of our founders and has been our Chief Executive Officer and Chairperson of our Board since March 2017. Mr. Nattrass was our Managing Member from March 2014 until March 2017 when we converted to a corporation. From October 2015 to August 2016, he was the Managing Member of enviro-glo, LLC, a Colorado limited liability company engaged in the manufacturing and branding of commercial lighting products. Previously, from January 2012 through August 2016, he was the Managing Member of Bravo Lighting, LLC, a Colorado limited liability company engaged in the distribution of commercial lighting products. Mr. Nattrass received a Bachelor of Commerce degree from the University of Calgary in marketing in 1995 and a Master of Business Administration from the University of Phoenix in 2001. Mr. Nattrass brings executive leadership experience, organizational experience, and extensive experience in the industry to the Board. Mr. Nattrass is familiar with the Company's day-to-day operations and performance and the controlled environment agriculture industry in general. Mr. Nattrass' insight into the Company's operations and performance is critical to Board discussions.

***James R. Lowe*** was appointed as a director of our Company in August 2018. Mr. Lowe cofounded MJardin Group in 2014 where he served as President of Cultivation, overseeing all cultivation operations through 2017. Mr. Lowe left MJardin Group to become EVP of Operations of GrowForce, a spinout from MJardin Group based in Canada focusing on international cannabis opportunities. Mr. Lowe is no longer an officer of GrowForce. Mr. Lowe has served as a director of MJardin Group (CSE: MJAR) (OTCQX: MJARF) from March 2014 to September 2018, and again from January 2020 to March 2021. Since December 2015, he has also been an owner of Potco LLC, one of the highest grossing single site medical cannabis dispensary and grow facilities in Colorado. He has also been a cultivation advisor for Lightshade Labs, LLC, where he has provided guidance on cultivation operations since 2012. Mr. Lowe is also the owner of Next1 Labs, a vertically integrated extraction and concentrate business with a multi-acre outdoor farm complex and the one of the largest producers of live resin products in the state of Colorado. Lastly, Mr. Lowe entered the legal cannabis market in 2009 as the owner of Cloud9 Support LLC, a retail horticulture supplies and design company that was responsible for over 50 design projects and construction assists. Mr. Lowe brings to the Board significant experience in the CEA sector and prior public company director experience within the sector. Mr. Lowe's extensive knowledge of the industry brings valuable insights to the Board regarding customer demand and product offerings. These views add important insights within discussions of the Board.

***David Hsu*** was appointed as a director of our Company in June 2021. Mr. Hsu previously served as the Chief Operating Officer of The Cronos Group, a leading global cannabinoid company ("Cronos"), from 2016 to 2019. While at Cronos, Mr. Hsu's primary duties included overseeing all of Cronos's operations including construction, cultivation, and manufacturing. Prior to joining Cronos, from 2006 to 2016, Mr. Hsu served in various roles with CRG Partners ("CRG"), and later Deloitte & Touche LLP ("Deloitte") upon Deloitte's acquisition of CRG in 2012, including as Vice President, where he operated and managed distressed companies with revenues of more than $500 million. Mr. Hsu received his Bachelor of Science in Business Management from Babson College in 2003 and holds a Certification in Artificial Intelligence: Business Strategies and Applications from the University of California Berkeley, which he received in 2020. Mr. Hsu also received a Certification in Financing and Deploying Clean Energy from Yale University, which he received in 2021. Mr. Hsu brings valuable experience to the Board through his prior business and management experience. His business understanding, education, and management background provide the Board with important insights regarding the Company's operations, strategy and business development.

***Sonia Lo*** was appointed as a director of our Company in October 2021. Ms. Lo brings over two decades of combined agriculture, technology, and business experience to urban-gro. From July 2022 to Present, Ms. Lo has been the CEO of Unfold Bio, Inc. a joint venture between Bayer Group and Temasek Holdings Limited, focused on developing the next generation of seeds for vertical farmers. From May 2020 to May 2021, Ms. Lo was CEO of Sensei Ag Holdings, Inc. During her tenure, she led the building of four farms across North America, ranging from low-tech aquaponics and high dome poly to high-tech glasshouse facilities. From April 2013 to April 2020, Ms. Lo was CEO of Crop One Holdings, Inc., a vertical farming company that owns FreshBoxFarms in Millis, MA. She is the first woman to serve as CEO of a major vertical farming company. Ms. Lo has a Bachelor's degree in Political Science & Mathematics from Stanford University and an MBA from Harvard Business School. Ms. Lo brings valuable experience to the Board through her management and controlled environment agriculture experience. Her business understanding, education, and controlled environment agriculture background provide the Board with important insights regarding the Company's operations, product offering and business development.

To the best of the Company's knowledge, there are no arrangements or understandings between any director or executive officer and any other person pursuant to which any person was selected as a director or executive officer. There are no family relationships between any of the Company's directors or executive officers. To the Company's knowledge, there have been no material legal proceedings as described in Item 401(f) of Regulation S-K during the last ten years that are material to an evaluation of the ability or integrity of any of the Company's directors or executive officers. Members of the Board and executive officers of the Company do not have any substantial interest, direct or indirect, in any of the matters currently anticipated to be acted upon at the Annual Meeting.

**Changes in Directors and Executive Officers Subsequent to Year-End**

The following changes in directors and executive officers occurred during the year ended December 31, 2025 and subsequent to year-end through the date of this Report:

Effective February 17, 2026, Anita Britt resigned from the Board of Directors. At the time of her resignation, Ms. Britt served as Chair of the Audit Committee and as a member of both the Compensation and Corporate Governance Committees. Ms. Britt did not advise the Company of any dispute or disagreement with the Company on any matter relating to the Company's operations, policies, or practices.

Effective February 18, 2026, Donald Fell was elected to the Board of Directors by unanimous written consent of the remaining Board members under Section 141(f) of the DGCL. Mr. Fell was appointed to serve as a member of the Audit Committee and the Nominating Committee and is an "independent" director as defined under applicable rules of Nasdaq and the SEC. Mr. Fell's career has spanned over 40 years with a variety of academic and business organizations. He has served as an independent director of TRxADE HEALTH, INC. (2014–2024), Aesther Healthcare Acquisition Corp. (2021–2023), Oceantech Acquisition Corp. (2022–2023), Semper Paratus Acquisition Corp. (2023–2024), Kernel Group Holdings Corp. (2023–2024), and Powerup Acquisitions Corp. (2023–2024). He presently serves as independent director for Integrated Wellness Acquisition Corp. (since 2023), Scienture Holdings, Inc. (since 2024), Aspire Biopharma Holdings, Inc. (since 2025), Crown Reserve Acquisition Corp. (since 2025), and Wellgistics Health, Inc. (since 2025), serving on audit, compensation, governance, and nominations committees for those companies. From 1992 to 2025, Mr. Fell served as Professor and Institute Director for the Foundation for Teaching Economics (Davis, California) and adjunct graduate professor of economics at the University of Colorado, Colorado Springs. He previously held positions with the University of South Florida as a member of the Executive MBA faculty, Director of Executive and Professional Education, and Senior Fellow of the Public Policy Institute (1995–2012). Mr. Fell holds undergraduate and graduate degrees in economics from Indiana State University and has completed all but dissertation (ABD) in economics from Illinois State University. As a director, Mr. Fell receives annual compensation of $45,000, plus $5,000 each for serving on the Audit Committee and Nominating Committee, and restricted stock units having a value of $80,000 annually. David Hsu was designated Chair of the Audit Committee effective February 18, 2026, replacing Ms. Britt.

Following the completion of the Merger on February 17, 2026, the Company appointed Dick Akright and Eric Sherb, age 38, to serve as Co-Chief Financial Officers. Mr. Sherb previously served as Chief Financial Officer of Flash Sports and Media, Inc. and of Crown Reserve Acquisition Corp. I. He is a CPA with 16 years of experience in accounting advisory, auditing, and mergers and acquisitions. Mr. Sherb began his career at PricewaterhouseCoopers in New York City across a variety of industries including hedge funds, manufacturing, and healthcare. Following his time at PricewaterhouseCoopers, Mr. Sherb served as Audit Manager at RBSM LLP and Senior Manager at CFGI. Since October 2018, Mr. Sherb has been a founder and owner of EMS Consulting Services, LLC. Mr. Sherb has extensive experience in financial reporting and governance within the capital markets, including IPOs, direct listings, SPAC and de-SPAC transactions, and has served as chief financial officer and provided financial consultancy services for several Nasdaq and OTC clients, most recently Scienture Holdings, Inc. (Nasdaq: SCNX). As Co-Chief Financial Officer, Mr. Sherb receives an annual salary of $150,000. Bradley Nattrass continues to serve as Chairman and Chief Executive Officer of the combined company.

**Board Committees and Meetings**

The Board had established four standing committees, the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee, and the ESG Committee, to assist it with the performance of its responsibilities. Effective November 21, 2025, the Board dissolved the ESG Committee. The Board designates the members of these committees and the committee chairs based on the recommendation of the Corporate Governance and Nominating Committee. The Board has adopted written charters for each of these committees, which can be found at the investor relations section of the Company's website at https://ir.urban-gro.com/. Copies are also available in print to any stockholder upon written request to urban-gro, Inc., 1751 Panorama Point, Unit G, Lafayette, Colorado 80026, Attention: Corporate Secretary. The chair of each committee develops the agenda for that committee and determines the frequency and length of committee meetings.

The Board held five meetings during 2025. Directors are expected to attend Board meetings, the Annual Meeting of Stockholders and meetings of the committees on which they serve, with the understanding that on occasion a director may be unable to attend a meeting. During 2025, each director attended 75% or more of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which such director then served. Every director then serving attended the 2025 Annual Meeting of Stockholders.

*Audit Committee*

 

Our Board has established an Audit Committee, which consists of three independent directors, Mr. Hsu (Chairperson), Ms. Lo, and Mr. Fell. Ms. Britt was Chairperson through February 2026. The Audit Committee held six meetings during 2025. The committee's primary duties are to:

● Review and discuss with management and our independent auditor our annual and quarterly financial statements and related disclosures, including disclosure under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the results of the independent auditor's audit or review, as the case may be;

● Review our financial reporting processes and internal control over financial reporting systems and the performance, generally, of our internal audit function, if applicable;

● Oversee the audit and other services of our independent registered public accounting firm and be directly responsible for the appointment, independence, qualifications, compensation and oversight of the independent registered public accounting firm, which reports directly to the Audit Committee;

● Oversee the Company's cybersecurity plan, business continuity program, information protection management strategy and related risks to all of these areas;

● Provide an open means of communication among our independent registered public accounting firm, management, our internal auditing function and our Board;

● Review any disagreements between our management and the independent registered public accounting firm regarding our financial reporting;

● Prepare the Audit Committee report for inclusion in our proxy statement for our annual stockholder meetings;

● Establish procedures for complaints received regarding our accounting, internal accounting control and auditing matters; and

● Approve all audit and permissible non-audit services conducted by our independent registered public accounting firm.

The Board has determined that each of our Audit Committee members is independent of management and free of any relationships that, in the opinion of the Board, would interfere with the exercise of independent judgment and are independent, as that term is defined under the enhanced independence standards for audit committee members in the Exchange Act and the rules promulgated thereunder.

The Board has determined that Mr. Hsu is an "audit committee financial expert," as that term is defined in the rules promulgated by the Securities and Exchange Commission (the "SEC") pursuant to the Sarbanes-Oxley Act of 2012. The Board has further determined that each of the members of the Audit Committee shall be financially literate and that at least one member of the committee has accounting or related financial management expertise, as such terms are interpreted by the Board in its business judgment.

*Compensation Committee*

 

Our Board has established a Compensation Committee, which, in 2025, consisted of independent directors (as defined under the general independence standards of the Nasdaq listing standards and our Corporate Governance Guidelines): Mr. Wilks (Chairperson, until his resignation on August 26, 2025), Mrs. Britt, and Mr. Hsu. Following Mr. Wilks' resignation, the committee consisted of Mrs. Britt and Mr. Hsu. Each member is a "non-employee director" (within the meaning of Rule 16b-3 of the Exchange Act). The Compensation Committee held two meetings during 2025. The committee's primary duties are to:

● Approve corporate goals and objectives relevant to executive officer compensation and evaluate executive officer performance in light of those goals and objectives;

● Determine and approve executive officer compensation, including base salary and incentive awards;

● Make recommendations to the Board regarding compensation plans; and

● Administer our stock plan.

Our Compensation Committee determines and approves all elements of executive officer compensation. It also provides recommendations to the Board with respect to non-employee director compensation. The Compensation Committee may not delegate its authority to any other person, other than to a subcommittee. Mr. Nattrass, as the Chairperson of the Board, is the only executive officer that participates in recommending the amount or form of executive and director compensation.

*Corporate Governance and Nominating Committee*

 

Our Board has established a Corporate Governance and Nominating Committee, which, in 2025, consisted of independent directors, Mr. Lowe (Chairperson), Mr. Wilks (until his resignation on August 26, 2025) and Mrs. Britt. Following Mr. Wilks' resignation, the committee consisted of Mr. Lowe and Mrs. Britt. The Corporate Governance and Nominating Committee held two meetings during 2025. The committee's primary duties are to:

● Recruit new directors, consider director nominees recommended by stockholders and others and recommend nominees for election as directors;

● Review the size and composition of our Board and committees;

● Oversee the evaluation of the Board;

● Recommend actions to increase the Board's effectiveness; and

● Develop, recommend and oversee our corporate governance principles, including our Code of Business Conduct and Ethics and our Corporate Governance Guidelines.

*Environment, Social and Governance Committee*

Our Board had established an ESG Committee, which consisted of three independent directors, Mr. Hsu (Chairperson), Mr. Lowe and Ms. Lo. The ESG Committee held four meetings during 2025 prior to its dissolution. The Board dissolved the ESG Committee on November 21, 2025. The committee's primary duties were to:

● Identify, review and determine the effectiveness of the Company's ESG metrics and goals;

● Review emerging risks and opportunities regarding ESG issues and matters relative to the Company;

● Recommend to the Board ESG plans and strategies; and

● Review stockholder proposals relating to ESG issues and recommend responses to the Board.

*Director Independence*

The Nasdaq marketplace rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and nominations committees be independent, or, if a listed company has no nominations committee, that director nominees be selected or recommended for the board's selection by independent directors constituting a majority of the board's independent directors. The Nasdaq marketplace rules further require that audit committee members satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act and that compensation committee members satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act.

Our Board has reviewed the independence of our directors and considered whether any director has a material relationship with us that could compromise that director's ability to exercise independent judgment in carrying out that director's responsibilities. Our Board has affirmatively determined that each of Messrs. Lowe, Wilks and Hsu and Mses. Britt and Lo qualify as an independent director, as defined under the applicable corporate governance standards of Nasdaq. Please see "Certain Relationships and Related Transaction**s"** in this proxy statement for a transaction that the Board considered for determining Mr. Lowe's and Ms. Lo's independence.

**Anti-Hedging Policy**

Under our insider trading policy, our directors, officers and employees may not at any time buy or sell options, puts or calls on company securities, security futures, or other derivative securities that reference company securities and may not enter into hedging, monetization transactions or similar transactions with respect to Company securities. In addition, our directors and executive officers are prohibited from engaging in short sales of our stock.

Code of Business Conduct and Ethics

We have adopted a written code of business ethics and conduct (the "Code of Conduct") that applies to all of our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer. The objective of the Code of Conduct is to provide guidelines for maintaining our and our subsidiaries integrity, reputation, honesty, objectivity and impartiality. The Code of Conduct addresses conflicts of interest, protection of our assets, confidentiality, fair dealing with stockholders, competitors and employees, insider trading, compliance with laws and reporting any illegal or unethical behavior. As part of the Code of Conduct, any person subject to the Code of Conduct is required to avoid or fully disclose interests or relationships that are harmful or detrimental to our best interests or that may give rise to real, potential or the appearance of conflicts of interest. Our Board will have ultimate responsibility for the stewardship of the Code of Conduct, and it will monitor compliance through our Corporate Governance and Nominating Committee. Directors, officers and employees will be required to annually certify that they have not violated the Code of Conduct. Our Code of Business Conduct and Ethics reflects the foregoing principles. The full text of our Code of Business Conduct and Ethics is published on our website at https://ir.urban-gro.com/investors/.

**Delinquent Section 16(a) Reports**

Section 16(a) of the Exchange Act requires the Company's directors, executive officers, and any persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the SEC. SEC regulations require executive officers, directors, and greater than 10% stockholders to furnish us with copies of all Section 16(a) forms they file. Based solely on the Company's review of the copies of such forms furnished or available to the Company, the Company believes that its directors, executive officers, and 10% stockholders complied with all Section 16(a) filing requirements for the year ended December 31, 2025, except for certain Form 4s relating to annual vesting of stock grants and tax withholdings related to those vested stock grants. The Company intends to file these delinquent reports on or before the annual shareholder meeting.

**ITEM 11: EXECUTIVE COMPENSATION**

**Elements of Director Compensation**

Beginning in January 2020, non-employee directors were granted restricted shares of common stock as an annual retainer and for serving as a member of a standing committee. Beginning in May 2021, non-employee directors were granted restricted shares of common stock and cash compensation as an annual retainer and for serving as a member of a standing committee. The following table below summarizes the 2025 Director Compensation:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Member** | **Member** | **Member** | **Member** | |
| **Position** | **Cash** | **RSU Value** | **Total** | **Chair** <br> **(additional,**<br>**all cash)** |
| Board of Director | $45000 | $80000 | $125000 | $— |
| Independent Lead Director | $10000 | $— | $10000 | NA |
| Audit Committee | $5000 | $— | $5000 | $10000 |
| Compensation Committee | $5000 | $— | $5000 | $5000 |
| Nominating & Governance Committee | $5000 | $— | $5000 | $5000 |
| ESG Committee | $5000 | $— | $5000 | $5000 |
| Special Committee | $7500 | $— | $7500 | $7500 |

---

The price per share and corresponding number of shares of common stock that equate to the RSU Value of $80,000 is determined each year by the Compensation Committee.

Each director will be required to attend a minimum of 75% of all Board meetings per year in person or telephonically. Directors are reimbursed for travel and other expenses directly associated with Company business. Directors that are also employees of the Company do not receive any additional compensation for their role as a director at this time.

**Director Compensation Table**

The following table provides information regarding director compensation during 2025. The compensation of Mr. Nattrass is reported in the Summary Compensation Table.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Name** | **Fees Earned <br> ($)<sup>(1)</sup>** | **Stock Awards<br> ($)<sup>(3)(4)(5)</sup>** | **Non-equity incentive plan<br> compensation ($)** | **Change in<br> pension value<br> and<br> nonqualified<br> deferred<br> compensation<br> earnings** | **All other<br> compensation ($)** | **Total ($)** |
| Anita Britt | 70000 | 21440 | – |  | – | 91440 |
| David Hsu | 65000 | 21440 | – |  | – | 86440 |
| James R. Lowe | 60000 | 21440 | – |  | – | 81440 |
| Lewis O. Wilks<sup>(2)</sup> | 70000 | 21440 | – |  | – | 91440 |
| Sonia Lo | 55000 | 21440 | – |  | – | 76440 |

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<sup>(1)</sup> Fees were accrued, but not paid quarterly to the directors in 2025. Additionally, fourth quarter 2024 fees have not yet been paid.

<sup>(2)</sup> Mr. Wilks resigned as a director on August 26, 2025.

<sup>(3)</sup> Amounts represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

<sup>(4)</sup> The chart below shows the aggregate number of outstanding stock options and restricted stock units held by each non-employee director as of December 31, 2025.

<sup>(5)</sup> In December 2025, Ms. Britt received a restricted common stock grant of 175,000 shares (representing 7,000 shares post the 1:25 reverse split) that were to vest upon the successful closing of the merger with Flash Sports & Media, Inc.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Director** | **Stock Options** | **Stock Options** | **Restricted<br> Stock Units** | **Restricted<br> Stock Units** |
| Anita Britt |  |  |  | 2157 |
| David Hsu |  |  |  | 2153 |
| James Lowe |  | 933 |  | 17555 |
| Lewis Wilks |  | 866 |  | 4042 |
| Sonia Lo |  |  |  | 2234 |

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We are a "smaller reporting company" under applicable SEC rules and are providing disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means that we are not required to provide a compensation discussion and analysis and certain other disclosures regarding our executive compensation. The following discussion relates to the compensation of our named executive officers for 2025, consisting of Bradley J. Nattrass, our Chairperson and Chief Executive Officer, and the two other individuals who served as executive officers during 2025: Richard A. Akright, who served as Chief Financial Officer (transitioning to fractional CFO on February 18, 2025), and Jason T. Archer, who served as Chief Operating Officer until his resignation on February 14, 2025.

We have a Compensation Committee that, in 2025, was comprised of Messrs. Wilks (until his resignation on August 26, 2025 whereon Mr. James Lower was added) and Hsu and Ms. Britt. Under our Compensation Committee charter, our Compensation Committee determines and approves all elements of executive officer compensation. The Compensation Committee's primary objectives in determining executive officer compensation are (i) developing an overall compensation package that is at market levels and thus fosters executive officer retention and (ii) aligning the interests of our executive officers with our stockholders by linking a significant portion of the compensation package to performance.

**Summary Compensation Table**

The following Summary Compensation Table contains information regarding compensation that the Company paid to Mr. Nattrass and its two other most highly compensated executive officers for each of the periods indicated.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Age** | **Year** | **Salary<br> ($)<sup>(1)</sup>** | **Retention Incentive/ Bonus<br> ($)<sup>(2)</sup>** | **Stock Awards<br> ($)<sup>(3)</sup>** | **All Other Compensation ($)<sup>(4)</sup>** | **Total <br> ($)** |
| Bradley J. Nattrass<sup>(5)</sup> | 53 | 2025 | 416067 |  |  | 25281 | 441348 |
| *Chairperson of the Board and CEO* |  | 2024 | 450000 | 76800 | 159300 | 25281 | 711381 |
| Jason T. Archer <sup>(6)</sup> | 50 | 2025 | 217500 |  |  | 21345 | 238845 |
| *Chief Operating Officer* |  | 2024 | 315000 | 20166 | 92925 | 25281 | 453372 |
| Richard A. Akright <sup>(7)</sup> | 66 | 2025 | 150118 |  |  | 2976 | 153094 |
| *Chief Financial Officer* |  | 2024 | 288462 | 35000 |  | 17605 | 341067 |

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<sup>(1)</sup> Amounts represent cash salaries paid in each year. On September 1, 2025, Mr. Nattrass voluntarily reduced his annual salary from $450,000 to $350,000. Beginning on September 11, 2025, Mr. Nattrass's salary started being accrued, but not paid.

<sup>(2)</sup> Amounts reflect actual cash payments made during the fiscal year and represent payments under a Retention Incentive Plan that was put in place in 2023.

 

<sup>(3)</sup> Amounts represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

<sup>(4)</sup> Represents amounts paid to Mr. Nattrass, Mr. Archer, and Mr. Akright for health insurance premiums paid on their behalf.

<sup>(5)</sup> Mr. Nattrass received a stock grant of 135,000 shares (5,400 shares on a post–1-for-25 reverse stock split basis) in June of 2024.

<sup>(6)</sup> Mr. Archer received a stock grant of 78,750 shares (3,150 shares on a post–1-for-25 reverse stock split basis) in June of 2024. Mr. Archer resigned on February 14, 2025. The Company and Mr. Archer entered into a severance agreement that was to pay Mr. Archer for six months of severance.

<sup>(7)</sup> Mr. Akright resigned on February 18, 2025. The Company and Mr. Akright entered into a consulting and transition agreement that was to pay Mr. Akright for five months of severance and $185 per hour for ongoing consulting services, with a term ending December 31, 2025.

**Employee Agreements**

The following discussion relates to compensation arrangement on behalf of, and compensation paid by us to, Messrs. Nattrass, Archer, and Akright and that were in place during 2025.

*Bradley J. Nattrass.* We are a party to an employment agreement with Mr. Nattrass (the "Nattrass Agreement"), whereby he serves as our Chief Executive Officer. Pursuant to the Nattrass Agreement, he receives compensation pursuant to our standard programs in effect from time to time. In connection with cost-saving measures during 2025, Mr. Nattrass voluntarily reduced his annual salary from $450,000 to $350,000, and is eligible to receive stock options, restricted stock, stock units or other equity awards from time to time at the sole discretion of the Board in accordance with our 2021 Incentive Stock Option Plan or other equity plans that we may adopt. He is also entitled to participate in our group benefit plans.

Under certain circumstances, the Nattrass Agreement also provides for severance benefits following a termination without "cause" or related to a "change of control" (as such terms are defined in the Nattrass Agreement). In the event of a termination without "cause," Mr. Nattrass is entitled to severance payments equal to 12 months of regular base salary and target annual incentive pay and a lump sum payment for 12 months of COBRA premiums. In the event of termination in connection with a "change in control," Mr. Nattrass is entitled to a lump sum payment equal to twice the sum of his annual salary and his target annual incentive pay, and a lump sum payment for 12 months of COBRA premiums. All other additional benefits and stock incentive rights (if any) would cease and expire upon termination of employment, unless otherwise provided in the Nattrass Agreement or by the separate written terms of such benefits or incentives. The Nattrass Agreement includes indemnification, confidentiality and non-compete provisions.

*Jason T. Archer.* We were a party to an employment agreement with Mr. Archer (the "Archer Agreement"), whereby he served as our Chief Operating Officer. Pursuant to the Archer Agreement, he received compensation pursuant to our standard programs in effect from time to time, and is eligible to receive stock options, restricted stock, stock units or other equity awards from time to time at the sole discretion of the Board in accordance with our 2021 Incentive Stock Option Plan or other equity plans that we may adopt. He was also entitled to participate in our group benefit plans.

Under certain circumstances, the Archer Agreement also provided for severance benefits following a termination without "cause" or related to a "change of control" (as such terms are defined in the Archer Agreement). In the event of a termination without "cause," Mr. Archer was entitled to severance payments equal to six months of regular base salary and a lump sum payment for six months of COBRA premiums. In the event of termination in connection with a "change in control," Mr. Archer was entitled to a lump sum payment equal to his annual salary and his target annual incentive pay, and a lump sum payment for 12 months of COBRA premiums. All other additional benefits and stock incentive rights (if any) would cease and expire upon termination of employment, unless otherwise provided in the Archer Agreement or by the separate written terms of such benefits or incentives. The Archer Agreement included confidentiality and non-compete provisions.

Mr. Archer resigned on February 14, 2025. In connection with his resignation, the Company entered into a severance agreement with Mr. Archer that was to pay him six months of severance.

*Richard A. Akright.* We were a party to an employment agreement with Mr. Akright (the "Akright Agreement"), whereby he served as our Chief Financial Officer. Pursuant to the Akright Agreement, he received compensation pursuant to our standard programs in effect from time to time, and was eligible to receive stock options, restricted stock, stock units or other equity awards from time to time at the sole discretion of the Board in accordance with our 2021 Incentive Stock Option Plan or other equity plans that we may adopt. He was also entitled to participate in our group benefit plans.

Under certain circumstances, the Akright Agreement also provided for severance benefits following a termination without "cause" or related to a "change of control" (as such terms are defined in the Akright Agreement). In the event of a termination without "cause," Mr. Akright was entitled to severance payments equal to six months of regular base salary and a lump sum payment for six months of COBRA premiums. In the event of termination in connection with a "change in control," Mr. Akright was entitled to a lump sum payment equal to his annual salary and his target annual incentive pay, and a lump sum payment for 12 months of COBRA premiums. All other additional benefits and stock incentive rights (if any) would cease and expire upon termination of employment, unless otherwise provided in the Akright Agreement or by the separate written terms of such benefits or incentives. The Akright Agreement included confidentiality and non-compete provisions.

Mr. Akright resigned on February 18, 2025. In connection with his resignation, the Company entered into a consulting and transition agreement that was to pay him five months of severance and $185 per hour for ongoing consulting services where he would continue to serve as the Company's principal financial and accounting officer. The agreement had an initial term of three months and was extended on a month-to-month basis until it terminated on December 31, 2025. On January 1, 2026, a new consulting agreement was entered into, where he continued to serve as the Company's principal financial and accounting officer, on a month-to-month term for $280 per hour.

**Equity Incentive Awards**

In June 2024, Mr. Nattrass received a restricted common stock grant of 135,000 shares (5,400 shares on a post–1-for-25 reverse stock split basis). Of this grant, 27,000 shares (1,080 shares on a post–1-for-25 reverse stock split basis) vest on each of January 1, 2025 and January 1, 2026 and 81,000 shares (3,240 shares on a post–1-for-25 reverse stock split basis) vest on January 1, 2027.

In December 2025, Mr. Nattrass received a restricted common stock grant of 650,000 shares (representing 27,000 shares post the 1:25 reverse split) that were to vest upon the successful closing of the merger with Flash Sports & Media, Inc.

In June 2024, Mr. Archer received a restricted common stock grant of 78,750 shares (3,150 shares on a post–1-for-25 reverse stock split basis). Of this grant, 15,750 shares (630 shares on a post–1-for-25 reverse stock split basis) vest on each of January 1, 2025 and January 1, 2026 and 47,250 shares (1,890 shares on a post–1-for-25 reverse stock split basis) vest on January 1, 2027. Mr. Archer resigned on February 14, 2025.

In December 2025, Mr. Akright received a restricted common stock grant of 250,000 shares (representing 10,000 shares post the 1:25 reverse split) that were to vest upon the successful closing of the merger with Flash Sports & Media, Inc.

**Retirement Benefits**

We provide all qualifying employees with the opportunity to participate in our tax-qualified 401(k) plan. The plan allows employees to defer receipt of earned salary, up to tax law limits, on a pre-tax basis. Accounts may be invested in a wide range of mutual funds. The Company matches 100% up to 4%.

**Outstanding Equity Awards at Fiscal Year-End Table**

The following table lists all of the outstanding stock awards held on December 31, 2025 by each of the Company's named executive officers:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Stock Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** |
| <br>**Name** | **Number of<br> shares or <br> units of<br> stock that<br> have not<br> vested** | **Market<br> value of<br> shares <br> of units of<br> stock that <br> have not<br> vested** | **Equity<br> incentive<br> plan <br> awards:<br> Number of <br> unearned<br> shares,<br> units <br> or other<br> rights that<br> have not<br> vested** | **Equity<br> incentive<br> plan<br> awards:<br> Market or <br> payout <br> value of <br> unearned<br> shares,<br> units <br> or other<br> rights that<br> have not<br> vested** |
| Bradley J. Nattrass | 6883 | $162617 |  |  |
| Richard A. Akright | 1139 | $26915 |  |  |

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The following table lists all of the outstanding option awards held on December 31, 2025 by each of the Company's named executive officers:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** |
| <br>**Name** | **Number of <br> securities <br> underlying <br> unexercised<br> options <br> exercisable** | **Number of <br> securities <br> underlying <br> unexercised<br> options <br> unexercisable** | **Equity incentive <br> plan awards: <br> Number of <br> securities <br> underlying <br> unexercised <br> unearned<br> options** | **Option <br> exercise price** | **Option <br> expiration<br> date** |
| Bradley J. Nattrass |  |  |  | $— |  |
| Richard A. Akright | 33 |  |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 180 | March 2029 |

---

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The Company's only outstanding class of voting securities is its common stock. The following table sets forth information known to the Company about the beneficial ownership of its common stock on April 15, 2026 by (i) each current director; (ii) each current named executive officer; and (iii) all of the Company's current executive officers and directors as a group. Other than as set forth below, no person known to us beneficially owns 5% or more of the outstanding common stock as of April 15, 2026. Unless otherwise indicated in the footnotes, each person listed in the following table has sole voting power and investment power over the common stock listed as beneficially owned by that person. Percentages of beneficial ownership are based on 1,128,140 shares of common stock outstanding on April 15, 2026. Unless otherwise indicated, the address for each stockholder listed below is urban-gro, Inc., 1751 Panorama Point, Unit G, Lafayette, Colorado 80026.

---

| | | |
|:---|:---|:---|
| | **Shares Beneficially Owned<sup>(1)</sup>** | **Shares Beneficially Owned<sup>(1)</sup>** |
| <br>**Name and Address of Beneficial Owner** | **Number** | **Percent** |
| **5% Stockholder:** | | |
| NA |  | NA |
| **Named Executive Officers and Directors:** |  |  |
| Bradley J. Nattrass <sup>(2)</sup> | 45230 | 4.0% |
| Richard A. Akright | 5342 | \* |
| James R. Lowe | 17554 | 1.6% |
| Anita Britt (former) | 2157 | \* |
| Sonia Lo | 2233 | \* |
| David Hsu | 2152 | \* |
| Eric Sherb | 0 | \* |
| All current executive officers and directors as a group (6 persons) | 74668 | 6.6% |

---

<sup>(1)</sup> Beneficial ownership as reported in the table has been determined in accordance with Rule 13d-3 under the Exchange Act and is not necessarily indicative of beneficial ownership for any other purpose. The number of shares of common stock shown as beneficially owned includes shares of common stock which may not be beneficially owned but over which a person would be deemed to exercise control or direction. The number of shares of common stock shown as beneficially owned includes shares of common stock subject to stock options exercisable and restricted stock units that were outstanding on April 15, 2026 and that will vest within 60 days of April 15, 2026. Shares of common stock subject to stock options exercisable and restricted stock units that will vest within 60 days after April 15, 2026 are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person.

 

<sup>(2)</sup> Mr. Nattrass has his vested common stock pledged as security for a personal line of credit facility.

\* Indicates beneficial ownership of less than 1%

**Equity Incentive Plans**

As of December 31, 2025, our equity compensation plans consisted of the Company's 2021 Equity Incentive Plan, which was adopted by the Board and approved by the stockholders in May 2021, the 2019 Equity Incentive Plan, which was adopted by the Board in March 2019 and approved by our stockholders in May 2019, and the Company's 2018 Equity Incentive Plan, which was adopted by the Board in January 2018 and was not approved by our stockholders. The following table summarizes information about our equity compensation plans. All outstanding awards relate to our common stock.

---

| | | | |
|:---|:---|:---|:---|
| **Plan Category** | **Number of<br> securities<br> to be issued<br> upon<br> vesting of<br> grants and<br> exercise of<br> outstanding<br> options,<br> warrants<br> and rights** | **Weighted-<br> average<br> exercise<br> price of<br> outstanding<br> options,<br> warrants <br> and rights** | **Number of<br> securities<br> remaining<br> available for<br> future<br> issuance<br> under equity<br> compensation<br> plans** |
| Equity compensation plan approved by stockholders | 41832 | $169.25 | 46002 |
| Equity compensation plan not approved by stockholders | 8430 | $158.75 | 7260 |
| Total | 50262 | $183.50 | 53262 |

---

**<u>ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE</u>**

**Certain Relationships and Related Transactions**

Following is a description of transactions since January 1, 2023, including currently proposed transactions to which we have been or are to be a party in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or beneficial holders of more than 5.0% of our capital stock, or their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest. We believe the terms and conditions set forth in such agreements are reasonable and customary for transactions of this type.

A director of the Company, James Lowe, is an owner of Cloud 9 Support, LLC ("Cloud 9") and Potco LLC ("Potco"). Cloud 9 purchases materials from the Company for use with its customers and Potco purchases equipment from the Company for use in its cultivation facility. Another director of the Company, Sonia Lo, is working on a vertical farming innovation model with a group of CEA experts ("the CEA Consortium"). The CEA Consortium contracts services from the Company related to their business model. The table below presents the revenues for these related party entities for the twelve months ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> December 31,** | **Year Ended<br> December 31,** |
|  | **2025** | **2024** |
| Revenues - Cloud 9 | $— | $— |
| Revenues - Potco |  | 120571 |
| Revenues - CEA Consortium |  |  |
| Total revenues from related party transactions | $— | $120571 |

---

**<u>ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES</u>**

**Fees Paid to Sadler, Gibb and Associates, LLC**

The Company records professional service fees for principal accounting fees and services in the period that the services are performed.

The following table shows the aggregate fees for professional services provided to the Company by Sadler, Gibb and Associates, LLC for 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Audit Fees | $90000 | $297500 |
| Audit-Related Fees |  | 75000 |
| Tax Fees |  |  |
| All Other Fees |  |  |
| **Total** | $**90000** | $**372500** |

---

**Fees Paid to Suri and Co., Chartered Accountants**

On March 03, 2026, the Company appointed Suri and Co., Chartered Accountants as its independent registered public accounting firm for the fiscal year ended December 31, 2025.

As Suri and Co. was appointed on March 03, 2026, no fees were incurred with Suri and Co. during the fiscal year ended December 31, 2025.

*Audit Fees.* This category includes the audit of the Company's annual consolidated financial statements, reviews of the Company's financial statements included in the Company's Quarterly Reports on Form 10-Q, and services that are normally provided by its independent registered public accounting firm in connection with its engagements for those years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of the Company's interim financial statements.

*Audit-Related Fees.* This category consists of assurance and related services by its independent registered public accounting firm that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported above under "Audit Fees." The services for the fees disclosed under this category include audit-related work regarding acquisitions, divestitures, the incurrence of additional indebtedness, and debt covenant compliance.

*Tax Fees.* This category consists of professional services rendered by the Company's independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and statutory tax audit services and tax compliance services.

*All Other Fees.* This category consists of fees for other miscellaneous items.

Our Audit Committee is responsible for approving all audit, audit-related, tax and other fees. The Audit Committee pre-approves all auditing services and permitted non-audit services, including all fees and terms to be performed for us by our independent auditor at the beginning of the fiscal year. Non-audit services are reviewed and pre-approved by project at the beginning of the fiscal year. Any additional non-audit services contemplated by us after the beginning of the fiscal year are submitted to the Audit Committee Chairperson for pre-approval prior to engaging the independent auditor for such services. Such interim pre-approvals are reviewed with the full Audit Committee at its next meeting for ratification. All of the audit, audit-related fees, tax fees, and other fees paid to Sadler, Gibb and Associates, LLC with respect to 2025 and 2024 were pre-approved by the Audit Committee.

**PART IV** 

**ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.**

A list of financial statements filed herewith is contained is set forth on page F-1 of the financial statements that immediately follow the signature page of this Report and is incorporated by reference herein. The financial statement schedules have been omitted because they are not required, not applicable or the information has been included in our financial statements. The exhibits required by this Item are contained in the Exhibit Index beginning on the following page of this Annual Report on Form 10-K and are incorporated herein by reference.

**<u>EXHIBIT INDEX</u>**

---

| | |
|:---|:---|
| **Exhibit No.** | **Exhibit Description** |
| 2.1 | [Stock Purchase Agreement (incorporated by reference to Exhibit 2.1 to Form 8-K filed June 28, 2021), by and between 2WR Entities, urban-gro, Inc. and urban-gro Architect Holdings, LLC.](http://www.sec.gov/Archives/edgar/data/1706524/000149315221018256/ex2-1.htm) |
| 2.2 | [Agreement and Plan of Merger, dated February 17, 2026 by and between urban-gro, Inc., Flash Sports & Media, Inc., and UGRO Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed February 18, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026017587/ea027730201ex2-1_urban.htm) |
| 2.3 | [Stock and Asset Purchase Agreement, dated as of August 27, 2025, by and among 2WR Holdco, LLC, 2WR of Georgia, Inc., urban-gro Architect Holdings, LLC, 2WR of Colorado, Inc., and 2WR of Mississippi, P.C. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September 2, 2025)](http://www.sec.gov/Archives/edgar/data/1706524/000121390025083451/ea025557301ex2-1_urban.htm) |
| 3.1 | [Amended and Restated Certificate of Incorporation of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed June 21, 2023)](http://www.sec.gov/Archives/edgar/data/1706524/000170652423000068/exhibit31-amendedandrestat.htm) |
| 3.2 | [Certificate of Amendment to Amended and Restated Certificate of Incorporation of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 5, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026012533/ea027565601ex3-1_urban.htm) |
| 3.3 | [Bylaws of urban-gro, Inc. (incorporated by reference to Exhibit 3.4 to Form 8-K filed October 30, 2020)](http://www.sec.gov/Archives/edgar/data/1706524/000168316820003602/urbangro-ex0304.htm) |
| 3.4 | [Amendment No. 1 to Bylaws of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed January 12, 2021).](http://www.sec.gov/Archives/edgar/data/1706524/000168316821000117/urbangro_ex0301.htm) |
| 3.5 | [Certificate of Designation of Series B Convertible Preferred Stock, as filed with the Delaware Secretary of State on February 17, 2026 (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 18, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026017587/ea027730201ex3-1_urban.htm) |
| 4.1 | [Description of urban-gro, Inc.'s Common Stock (incorporated by reference to Exhibit 4.1 to Form 10-K filed March 28, 2024).](http://www.sec.gov/Archives/edgar/data/1706524/000170652424000014/a123123-ex41.htm) |
| 10.2 | [Form of Secured Promissory Note (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 18, 2023).](http://www.sec.gov/Archives/edgar/data/1706524/000149315223045198/ex10-2.htm) |
| 10.3 | [Form of Security Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed on December 18, 2023).](http://www.sec.gov/Archives/edgar/data/1706524/000149315223045198/ex10-3.htm) |
| 10.4 | [Form of Continuing Guaranty (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 18, 2023).](http://www.sec.gov/Archives/edgar/data/1706524/000149315223045198/ex10-4.htm) |
| 10.5 | [urban-gro, Inc. 2021 Stock Incentive Plan, as amended (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 20, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026005270/ea0270276-02.htm) |
| 10.6 | [Bill of Sale, Assignment and Assumption, and Purchase Agreement by and among 2WR of Georgia, Inc., UG Architecture, Inc f/k/a 2WR of Colorado, Inc., and urban-gro Architect Holdings, LLC, dated November 3, 2025 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 12, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025108604/ea026472301ex10-1_urban.htm) |
| 10.7 | [Settlement Agreement and Mutual General Release, dated September 26, 2025, by and among urban-gro, Inc., UG Construction, Inc., Gemini Finance Corp., and the other parties thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 3, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025095792/ea025979701ex10-1_urban.htm) |
| 10.8 | [Settlement and Release Agreement, August 8, 2025, by and among urban-gro, Inc., J Brrothers LLC and Herb-a-More LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 13, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025075804/ea025292601ex10-1_urban.htm) |
| 10.9 | [Promissory Note, dated August 8, 2025, issued by urban-gro, Inc. to J Brrothers LLC (incorporated by reference to Exhibit 4.1 to Form 8-K filed on August 13, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025075804/ea025292601ex4-1_urban.htm) |

---

---

| | |
|:---|:---|
| 10.10 | [Loan Agreement, dated June 24 2025 between urban-gro, Inc. and Agile Lending, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 2, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025061085/ea024806801ex10-1_urban.htm) |
| 10.11 | [Promissory Note, dated June 24 2025 between urban-gro, Inc. and Agile Lending, LLC (incorporated by reference to Exhibit 10.2 to Form 8-K filed on July 2, 2025).](http://www.sec.gov/Archives/edgar/data/1706524/000121390025061085/ea024806801ex10-2_urban.htm) |
| 10.12 | [Forbearance Agreement, dated as of February 19, 2026, by and among Agile Capital Funding, LLC, Agile Lending, LLC, urban-gro, Inc., and urban-gro Canada Technologies Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 25, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026020416/ea027834701ex10-1.htm) |
| 10.13 | [Exchange Agreement, dated as of February 19, 2026, by and among Agile Capital Funding, LLC, Agile Lending, LLC, and urban-gro, Inc. (incorporated by reference to Exhibit 10.2 to Form 8-K filed on February 25, 2026)](http://www.sec.gov/Archives/edgar/data/1706524/000121390026020416/ea027834701ex10-2.htm) |
| 19 | [Insider Trading Policy](ea028515001ex19.htm) |
| 21.1 | [Subsidiaries of the Registrant.](ea028515001ex21-1.htm) |
| 23.1 | [Consent of Suri and Co.](ea028515001ex23-1.htm) |
| 24.1 | [Power of Attorney (included on signature page).](#p_001) |
| 31.1 | [Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ea028515001ex31-1.htm) |
| 31.2 | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ea028515001ex31-2.htm) |
| 31.3 | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ea028515001ex31-3.htm) |
| 32.1 | [Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ea028515001ex32-1.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Schema Document. |
| 101.CAL | Inline XBRL Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Definition Linkbase Document. |
| 101.LAB | Inline XBRL Label Linkbase Document. |
| 101.PRE | Inline XBRL Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

\* Denotes a management contract or compensatory plan or arrangement.

**<u>ITEM 16. FORM 10-K SUMMARY</u>**

None.

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunder duly authorized.

---

| | | |
|:---|:---|:---|
|  | **URBAN-GRO, INC.** | **URBAN-GRO, INC.** |
| Date: April 15, 2026 | By: | */s/ Bradley Nattrass* |
|  |  | Bradley Nattrass <br> Chairperson of the Board of Directors and<br> Chief Executive Officer |

---

**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bradley Nattrass, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Bradley Nattrass* | Chairperson of the Board of Directors and | April 15, 2026 |
| Bradley Nattrass | Chief Executive Officer<br> (Principal Executive Officer) |  |
| */s/ Richard A. Akright* | Co-Chief Financial Officer | April 15, 2026 |
| Richard A. Akright | (Principal Accounting Officer) |  |
| */s/ Eric Sherb* | Co-Chief Financial Officer | April 15, 2026 |
| Eric Sherb | (Principal Financial Officer) |  |
| */s/ David Hsu* | Director | April 15, 2026 |
| David Hsu |  |  |
| */s/ Sonia Lo* | Director | April 15, 2026 |
| Sonia Lo |  |  |
| */s/ Donald Fell* | Director | April 15, 2026 |
| Donald Fell |  |  |
| */s/ James Lowe* | Director | April 15, 2026 |
| James Lowe |  |  |

---

**INDEX TO FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page No.** |
| [Report of Independent Registered Accounting Firm (PCAOB ID NO:)](#f_001) | F-2 |
| [Report of Independent Registered Accounting Firm (PCAOB ID NO: 3627)](#f_007) | F-3 |
| [Consolidated Balance Sheets as of December 31, 2025 and 2024](#f_002) | F-6 |
| [Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025 and 2024](#f_003) | F-7 |
| [Consolidated Statement of Changes in Shareholders' Equity for the Years ended December 31, 2025 and 2024](#f_004) | F-8 |
| [Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024](#f_005) | F-9 |
| [Notes to the Consolidated Financial Statements](#f_006) | F-10 |

---

**<u>R</u>** **<u>EPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**

To the Board of Directors and Shareholders of urban-gro, Inc.:

<u>Opinion on the Financial Statements</u>

We have audited the accompanying consolidated balance sheet of urban-gro, Inc. ("the Company") as of December 31, 2024, the related consolidated statements of operations and comprehensive loss, stockholders' deficit, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

<u>Basis for Opinion</u>

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

*/s/ Sadler, Gibb & Associates, LLC*

We served as the Company's auditor from 2024 to 2026.

Draper, UT

January 16, 2026, except for the effect of the discontinued operations classification effected August 25, 2025, described in Note 1, and the reverse stock split effected February 9, 2026, described in Note 19, as to which the date is April 15, 2026.

**Report of Independent Registered Public Accounting Firm**

To the Stockholders and Board of Directors of urban-gro, Inc.

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheet of urban-gro, Inc. (the "Company") as of December 31, 2025, the related consolidated statement of operations and comprehensive loss, consolidated statement of stockholders' deficit and consolidated statement of cash flows for year ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for year ended December 31, 2025, in conformity with Generally Accepted Accounting Principles of United States of America.

**Matters related to Going Concern - Also constituting the Critical Audit Matter communication for Going Concern (see cross-reference in Critical Audit Matters section below)**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring net losses from operations, has a net capital deficiency, has discontinued its services business and has experienced the foreclosure and Article 9 sale of the accounts receivables of its UG Construction, Inc. subsidiary by Gemini Finance Corp. in September 2025, retaining only an equipment reseller operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in response to these conditions include the completion of a reverse merger transaction with Flash Sports & Media, Inc. (as described in Note 1), pursuant to which the stockholders of Flash would receive shares representing approximately 90% of the combined entity and the Company would redirect its operations to the business of Flash Sports & Media. If the Company is unable to raise additional funds or increase its scope of operations through the reverse merger to alleviate liquidity needs, it may be required to reduce the scope of its planned development. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We identified a material uncertainty related to going concern, as management's assertion that the proposed reverse merger with Flash Sports & Media, Inc. mitigates substantial doubt involved significant judgment. This required us to assess the overall credibility and feasibility of management's plans, including the likelihood and timing of the merger and the adequacy of related disclosures in accordance with ASC 205-40.

**How the Critical Audit Matter Was Addressed in the Audit**

Our audit procedures related to the going concern assessment included the following amongst others:

● We conducted detailed inquiry procedures with management regarding the future business plans of the Company, including the intended business model of the merged entity, and the status of the merger transaction.

● We obtained and evaluated management's financial projections and budgets for the post-merger entity.

● We evaluated the appropriateness of management's going concern disclosures in the consolidated financial statements, including Note [X], against the requirements of ASC 205-40.

● We performed subsequent events procedures through the date of our report to identify any developments relevant to the going concern assessment.

**Emphasis of Matter**

As discussed in Note 1 to the consolidated financial statements, during the year ended December 31, 2025, the Company suspended its construction business and evaluated the recoverability of its assets in connection with suspension and the planned merger. Based on this assessment, management determined that certain assets were not recoverable and recorded impairments and write-offs totaling $7,271,522 million, including property and equipment, accounts receivables, contract receivables, inventory, and prepaid expenses and other current assets. These charges are included within operating expenses of continuing operations. Our opinion is not modified with respect to this matter.

As discussed in Note 12 to the consolidated financial statements, the Company's wholly-owned subsidiary, UG Construction, Inc., defaulted under its loan agreement with Gemini Finance Corp., resulting in a foreclosure and Article 9 sale of the assets consisting of the accounts receivables on September 4, 2025, for $450,000. The Company recognized a loss on foreclosure in its consolidated statement of operations amounting to $2,473,501, representing the excess of the carrying value of the net assets disposed over the value of the loan adjusted. In addition, the remaining outstanding debt obligation gave rise to further financial impact, which was subsequently resolved through a settlement agreement involving the issuance of the Company's common stock. These events had a material effect on the Company's financial position and results of operations. Our opinion is not modified with respect to this matter.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have nor we have engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

&nbsp;&nbsp;&nbsp;&nbsp;(1) relate to accounts or disclosures that are material to the
financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

**<u>Revenue Recognition</u>**

**Description of the Critical Audit Matter**

As described in Note 3 to the consolidated financial statements, the Company recognized revenue from three streams during the year ended December 31, 2025: (i) equipment systems, for which revenue is recognized at a point in time upon transfer of control to the customer, generally on a bill-to ship-to basis; and (ii) construction design-build whose operations were wound down in the 4<sup>th</sup> quarter and (iii) services, which were discontinued in the third quarter of 2025 and are presented within discontinued operations. Revenue from construction design-build contracts was recognized over time using a cost-to-cost measure of progress, which requires management to estimate total contract costs. Revenue from services contracts was recognized upon satisfaction of performance obligations, including arrangements with multiple performance obligations requiring allocation of the transaction price based on relative standalone selling prices.

We identified revenue recognition as a critical audit matter due to (i) the significant judgment required to estimate total costs to complete and measure progress toward completion for construction design-build contracts, (ii) the complexity and judgment involved in identifying performance obligations and allocating transaction price for services arrangements, (iii) the risk of incomplete revenue recognition for equipment transactions associated with the bill-to ship-to model, and (iv) the additional complexity associated with the discontinuation and presentation of services operations. These factors required significant auditor judgment and increased audit attention, including the need to evaluate subjective assumptions.

**How the Critical Audit Matter Was Addressed in the Audit**

Our audit procedures related to revenue recognition included the following, among others:

 

*Equipment Systems* 

&nbsp;&nbsp;&nbsp;&nbsp;▪ We tested samples of revenue transactions by inspecting customer
agreements or sales orders.

&nbsp;&nbsp;&nbsp;&nbsp;▪ We tested completeness of revenue by mapping vendor purchase
orders to customer invoices for bill-to ship-to transactions.

&nbsp;&nbsp;&nbsp;&nbsp;▪ We performed analytical procedures, including variance analysis,
and evaluated related disclosures.

*Construction Revenue*

&nbsp;&nbsp;&nbsp;&nbsp;▪ We obtained contract-wise schedules for construction contracts
with revenue activity during the year.

&nbsp;&nbsp;&nbsp;&nbsp;▪ For a selection of contracts, we evaluated contract terms,
including contract value, estimated total costs to complete, and costs incurred to date, and reviewed the percentage of completion and
related revenue recognized.

&nbsp;&nbsp;&nbsp;&nbsp;▪ We performed analytical procedures and cut-off testing for
transactions near and around the asset foreclosure and wound down of operations.

*Services Revenue (Part of the discontinued operations)*

&nbsp;&nbsp;&nbsp;&nbsp;▪ For a selection of service contracts, we identified performance
obligations and evaluated the allocation of transaction price based on relative standalone selling prices, including assessing the reasonableness
of those estimates.

&nbsp;&nbsp;&nbsp;&nbsp;▪ We inspected supporting documentation to test whether performance
obligations were satisfied and revenue was recognized in the appropriate period.

&nbsp;&nbsp;&nbsp;&nbsp;▪ We evaluated management's accounting analysis for discontinued
operations and assessed whether revenue, costs, and related assets and liabilities were appropriately segregated and presented in the
financial statements and disclosures.

**<u>Going Concern Assessment</u>**

Refer to the Explanatory Paragraph Regarding Going Concern in this report, which also constitutes the critical audit matter communication for this matter in accordance with AS 3101.

We determined that there are no other critical audit matters.

**/s/ Suri & Co., Chartered Accountants**

We have served as the Company's auditors since 2026.

Place: Chennai, India

Date: April 15, 2026

**urban-gro, Inc.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash | $10644 | $819050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | - | 6104926 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract receivables | - | 4132817 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | - | 2479262 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current assets of discontinued operations | - | 2271793 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 10644 | 15807848 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-current assets: |  |  |
| Property and equipment, net | - | 813452 |
| Operating lease right-of-use assets | 321303 | 550175 |
| Non-current assets of discontinued operations | - | 2322308 |
| Total non-current assets | 321303 | 3685935 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $331947 | $19493783 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $18202851 | $13518626 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 13457357 | 14094176 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 5708526 | 4017145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | 2695435 | 2628463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable, current | 3533255 | 5968145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities, current | 222870 | 235223 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current liabilities of discontinued operations | 1561807 | 1837709 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 45382101 | 42299487 |
| Non-current liabilities |  |  |
| Notes payable, long-term | - | 795531 |
| Deferred tax liability | - | 14608 |
| Operating lease liabilities, long-term | 115080 | 336255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-current liabilities of discontinued operations | - | 690444 |
| Total non-current liabilities | 115080 | 1836838 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 45497181 | 44136325 |
| Commitments and contingencies |  |  |
| Stockholders' deficit: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.10 par value; 3,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2025 and 2024 | - | - |
| &nbsp;&nbsp;&nbsp;Common stock, $0.001 par value 200,000,000 shares authorized; 710,025 issued and 652,032 outstanding as of December 31, 2025, and 562,855 issued and 504,862 outstanding as of December 31, 2024 | 711 | 563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 91746837 | 90170645 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury shares, cost basis: 57,993 shares as of December 31, 2025 and 2024 | (12045542) | (12045542) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (124867240) | (102768208) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' deficit | (45165234) | (24642542) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' deficit | $331947 | $19493783 |

---

The accompanying notes are an integral part of these consolidated financial statements

**urban-gro, Inc.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Revenues |  |  |
| &nbsp;&nbsp;&nbsp;Equipment | $8751226 | $12245675 |
| &nbsp;&nbsp;&nbsp;Construction design-build | 8467451 | 18604827 |
| &nbsp;&nbsp;&nbsp;Other | 180761 | 352798 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 17399438 | 31203300 |
| Cost of revenue |  |  |
| &nbsp;&nbsp;&nbsp;Equipment | 8344998 | 10582731 |
| &nbsp;&nbsp;&nbsp;Construction design-build | 8730918 | 20782689 |
| &nbsp;&nbsp;&nbsp;Other | 148968 | 226611 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 17224884 | 31592031 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit (loss) | 174554 | (388731) |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 17270657 | 21006685 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 349364 | 1067219 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill and intangibles | - | 5958632 |
| &nbsp;&nbsp;&nbsp;Impairment of property and equipment | 566609 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 18186630 | 28032536 |
| Loss from operations | (18012076) | (28421267) |
| Non-operating income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (1675713) | (1021947) |
| &nbsp;&nbsp;&nbsp;Interest income | 526 | 2420 |
| &nbsp;&nbsp;&nbsp;Gain on extinguishment of debt | 7476 | - |
| &nbsp;&nbsp;&nbsp;Loss on settlement | (62850) | (205000) |
| &nbsp;&nbsp;&nbsp;Loss on assets foreclosure | (2473501) | - |
| &nbsp;&nbsp;&nbsp;Other income (expense) | 522193 | 256811 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-operating income (expense) | (3681869) | (967716) |
| Loss before income taxes | (21693945) | (29388983) |
| Income tax benefit | 14608 | 29705 |
| Net loss from continuing operations | (21679337) | (29359278) |
| Net income loss from discontinued operations, net of tax | (419695) | (7136548) |
| Net loss | $(22099032) | $(36495826) |
| Net loss per share attributable common stockholders: |  |  |
| Net loss from continuing operations | $(41.04) | $(58.83) |
| Net loss from discontinued operations, net of taxes | $(0.79) | $(14.30) |
| Net loss per share | $(41.83) | $(73.12) |
| Weighted average common shares outstanding - basic and diluted | 528270 | 499089 |

---

The accompanying notes are an integral part of these consolidated financial statements

**urban-gro, Inc.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** |<br>**Treasury**<br>**Stock** | **Total**<br>**Stockholders'**<br>**Deficit** |
| **Balance at December 31, 2023** | 540906 | $541 | $88402738 | $(66272382) | $(12045542) | $10085355 |
| Stock-based compensation |  | - | 1426877 | - | - | 1426877 |
| Stock issued for contingent consideration | 2848 | 3 | 129133 | - | - | 129136 |
| Stock grant program vesting | 19101 | 19 | (19) | - | - | - |
| Issuance of warrants |  | - | 211916.00 | - | - | 211916 |
| Net loss | - | - | - | (36495826) | - | (36495826) |
| **Balance at December 31, 2024** | 562855 | 563 | 90170645 | (102768208) | (12045542) | (24642542) |
| Stock-based compensation |  |  | 826471 | - | - | 826471 |
| Stock grant program vesting | 20649 | 21 | (21) | - | - | - |
| Issuance of common stock for loan modification | 6000 | 6 | 109494 | - | - | 109500 |
| Issuance of common stock for loan settlement | 90000 | 90 | 372460 | - | - | 372550 |
| Issuance of common stock for services | 30521 | 31 | 267788 | - | - | 267819 |
| Net loss | - | - | - | (22099032) | - | (22099032) |
| **Balance at December 31, 2025** | 710025 | $711 | $91746837 | $(124867240) | $(12045542) | $(45165234) |

---

The accompanying notes are an integral part of these consolidated financial statements

**urban-gro, Inc.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| Net loss from continuing operations | $(21679337) | $(29359278) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 349364 | 1023845 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 826471 | 1426877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of the right-of-use | 228585 | 229754 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 155958 | 65958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of property and equipment | 566609 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill and intangibles | - | 5958632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense | 1130760 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets write off | 1366953 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract receivables write off | 4034280 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory write-off | 172920 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash interest expense | 529213 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax benefit | (14608) | (29705) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on assets foreclosure | 2473501 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of assets |  | 3274 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable and contract receivables | 4506094 | 15739183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 49663 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 1112309 | 49550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, contract liabilities, and accrued expenses | 5738787 | (379723) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer deposits | 66972 | 2039100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability, net | (233528) | (237578) |
| &nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities of continuing operations | 1380966 | (3470111) |
| &nbsp;&nbsp;&nbsp;Net cash (used in) provided by operating activities of discontinued operations | (540170) | 648924 |
| &nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities | 840796 | (2821187) |
| **Cash flows from investing activities:** |  |  |
| Proceeds from the sale of property and equipment |  | 25 |
| Purchase of property and equipment | (298215) | (131387) |
| &nbsp;&nbsp;&nbsp;Net cash used in investing activities of continuing operations | (298215) | (131362) |
| &nbsp;&nbsp;&nbsp;Net cash provided by investing activities of discontinued operations | 2130548 | - |
| &nbsp;&nbsp;&nbsp;Net cash provided by (used in) in investing activities | 1832333 | (131362) |
| **Cash flows from financing activities:** |  |  |
| Proceeds from promissory notes | 1700932 | 8107685 |
| Repayments of notes payable | (5143270) | (5270343) |
| Repayment of finance lease liability | (27437) | (108775) |
| &nbsp;&nbsp;&nbsp;Net cash (used in) provided by financing activities of continuing operations | (3469775) | 2728567 |
| &nbsp;&nbsp;&nbsp;Net cash used in financing activities of discontinued operations | (11760) | (31810) |
| &nbsp;&nbsp;&nbsp;Net cash (used in) provided by financing activities | (3481535) | 2696757 |
| Net change in cash | (808406) | (255792) |
| Cash at beginning of year | 819050 | 1074842 |
| Cash at end of year | $10644 | $819050 |
| **Supplemental disclosure of cash flow information:** |  |  |
| Cash paid for interest | $454624 | $735379 |
| Cash paid for income taxes | $4611 | $20846 |
| **Supplemental disclosure of non-cash investing and financing activities:** |  |  |
| Common stock issued for services and debt modification | $749869 | $- |
| Stock issued for contingent consideration | $- | $129136 |
| Stock grant program vesting | $- | $477 |
| Warrants issued in connection with notes payable | $- | $211916 |
| Prepaid expenses financed by notes payable | $- | $807190 |
| Recording of Operating lease assets and liabilities | $- | $221880 |
| Recording of Financing lease assets and liabilities | $- | $89128 |
| Debt discount on notes payable | $- | $100000 |

---

The accompanying notes are an integral part of these consolidated financial statements

**urban-gro, Inc.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY**

Organization

urban-gro, Inc. (together with its wholly owned subsidiaries, collectively "urban-gro," "we," "us," or "the Company") was originally formed on March 20, 2014, as a Colorado limited liability company. On March 10, 2017, we converted to a Colorado corporation and exchanged shares of our common stock for every member's interest issued and outstanding on the date of conversion. On October 29, 2020, we reincorporated as a Delaware corporation. On February 12, 2021, we completed an uplisting to the Nasdaq Capital Market ("Nasdaq") under the ticker symbol "UGRO".

In 2025, urban-gro, Inc. was an integrated professional services and design-build firm. We offered value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture ("CEA"), industrial, healthcare, and other commercial sectors. Innovation, collaboration, and a commitment to sustainability drove our team to provide exceptional customer experiences. To serve our horticulture clients, we engineered, designed and managed the construction of indoor CEA facilities and then integrate complex environmental equipment systems into those facilities. Through this work, we created high-performance indoor cultivation facilities for our clients to grow specialty crops, including leafy greens, vegetables, herbs, and plant-based medicines. Our custom-tailored approach to design, construction, procurement, and equipment integration provided a single point of accountability across all aspects of indoor growing operations. We also helped our clients achieve operational efficiency and economic advantages through a full spectrum of professional services and programs focused on facility optimization and environmental health which established facilities that allowed clients to manage, operate and perform at the highest level throughout their entire cultivation lifecycle once they are up and running. Further, we served a broad range of commercial and governmental entities, providing them with planning, consulting, architectural, engineering and construction design-build services for their facilities. We aimed to work with our clients from the inception of their project in a way that provided value throughout the life of their facility. We are a trusted partner and advisor to our clients and offer a complete set of engineering and managed services complemented by a vetted suite of select cultivation equipment systems.

During the third quarter of 2025, the Company made the strategic decision to wind down its legacy CEA operations due to changing market conditions, its inability to raise capital, and the proposed merger with Flash Sports and Media, Inc. The wind-down included the sale of the 2WR of Georgia subsidiary (August 27, 2025), the foreclosure of UG Construction assets by Gemini Finance Corp. (September 4, 2025), workforce reductions, and cessation of new project pursuits. As of December 31, 2025, substantially all legacy operations have been winding down. Certain operating leases remain on the balance sheet as the Company continues to evaluate subletting, early termination, or expiration of those non-cancellable obligations.

Dispositions

 ****

On August 27, 2025, the Company announced that certain subsidiaries (the "Seller Parties") of the Company entered into a Stock and Asset Purchase Agreement (the "August 27 Purchase Agreement") with 2WR Holdco, LLC (the "Buyer"). Pursuant to the August 27 Purchase Agreement, the Buyer acquired (the "Acquisition") all of the outstanding shares of stock of 2WR of Georgia, Inc. ("2WRGA") and certain assets of other subsidiaries of the Company relating to those entities' business of providing commercial, industrial and municipal architectural and construction administration services for projects not involving CEA, with such CEA business being retained by the Company.

See Note 4 for further detail on the dispositions.

*Discontinued Operations Classification*

The Services segment (2WR of Georgia, Inc., 2WR of Colorado customer lists, and UG Engineering) was classified as discontinued operations effective August 27, 2025, as this disposal was the result of a Board-authorized sale constituting a strategic shift under ASC 205-20-45-1B. The CEA equipment and construction operations (including UG Construction, Inc. d/b/a Emerald Construction Management, Inc.) are NOT classified as discontinued operations and remain in continuing operations. The construction entity's assets consisting of receivables were involuntarily foreclosed upon by Gemini Finance Corp. on September 4, 2025 — a creditor enforcement action, not a volitional management decision to exit the business. Following the foreclosure, management temporarily suspended the remaining construction operations pending determination of an appropriate course of action, including the possibility of raising independent capital and restarting operations if the pending merger with Flash Sports and Media, Inc. did not proceed. Flash Sports and Media had not determined, prior to the merger closing on February 17, 2026, whether it intended to continue the construction component. Accordingly, no definitive, irrevocable decision to permanently exit the CEA or construction business was made during fiscal year 2025. The strategic shift from legacy operations to International Premier Gaming (IPG) was confirmed only upon the closing of the Merger on February 17, 2026, which is a fiscal year 2026 event.

Impairment and write-offs

In continuation to the above explained suspension of construction business and the planned merger the company evaluated the recoverability of the assets and to the extent deemed appropriate and not recoverable the company has impaired or written of the following assets within the operating expenses of continuing operations

---

| | |
|:---|:---|
| Nature | Amount written off |
| Property and equipment | $566609 |
| Trade receivables | $1130760 |
| Contract receivables | $4034280 |
| Inventory | $172920 |
| Prepaid expenses and other current assets | $1366953 |

---

Merger

On February 17, 2026, the Company completed its merger (the "Merger") with Flash Sports and Media, Inc. ("Flash"), a Delaware corporation, pursuant to an Agreement and Plan of Merger dated February 17, 2026 (the "Merger Agreement"), by and among the Company, UGRO Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"), and Flash. As a result of the Merger, Merger Sub merged with and into Flash, with Flash surviving as a wholly owned subsidiary of the Company. Following the closing of the Merger, the Company began operating as a diversified sports, media, and experiential marketing platform under the Flash Sports & Media brand. The Company intends to change its name to Flash Sports & Media Holdings, Inc. or a similar name, subject to receipt of stockholder approval, which the Company intends to seek as soon as reasonably practicable.

Liquidity and Going Concern

Following the completion of the Merger on February 17, 2026, the Company believes that the combined entity's operations, including IPG's revenue-generating cricket commercialization business, will provide improved liquidity and a path toward sustainable operations. The Company may also seek to raise additional capital through equity or debt financing to support integration and growth initiatives. There can be no assurance that the Company will be able to raise capital on terms acceptable to the Company. If it is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results. These factors raise substantial doubt about the Company's ability to continue as a going concern.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Basis of Presentation, Principles of Consolidation and Business Combinations

These consolidated financial statements include the accounts of urban-gro, Inc. and its wholly owned subsidiaries. They are presented in United States dollars and have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC for financial reporting. All intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements. The consolidated financial statements are audited and, in the Company's opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company's consolidated balance sheets, consolidated statements of operations and comprehensive loss, consolidated statements of shareholders' equity and consolidated statements of cash flows for the periods presented.

Acquisitions of businesses are accounted for using the acquisition method of accounting (Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805-10-225). The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the former owners of the acquired entities and the equity interests issued in exchange for control of the acquired entities. Acquisition-related costs are recognized in net income (loss) as incurred.

*Reverse Stock Split*

 

On February 9, 2026, the Company effected a 1-for-25 reverse stock split of its common stock, as approved by stockholders on January 30, 2026. Trading on a split-adjusted basis commenced on February 9, 2026. All shares and per share amounts have been presented retroactively.

Use of Estimates

In preparing consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported periods. Actual results could differ from those estimates. Significant estimates include estimated revenues earned under percentage of completion construction contracts, professional service contracts, estimated useful lives and potential impairment of long-lived assets and goodwill, together with the write-off of prepaid expenses and other current assets, contract receivables, accounts receivables, inventory, allowance for deferred tax assets and deferred tax liabilities, and allowance for bad debts.

Balance Sheet Classifications

The Company includes in current assets and liabilities the following amounts that are in connection with construction contracts that may extend beyond one year: contract assets and contract liabilities (including retainage invoiced to customers contingent upon anything other than the passage of time), capitalized costs to fulfill contracts, retainage payable to sub-contractors and accrued losses on uncompleted contracts. A one-year period is used to classify all other current assets and liabilities when not otherwise prescribed by the applicable accounting principles.

Contract Assets and Liabilities

The timing when the Company collects cash from its construction design-build customers can create a contract asset or contract liability. Please refer to *Note 3 - Revenue from Contracts with Customers* for further discussion of the Company's contract assets and liabilities.

Functional and Reporting Currency and Foreign Currency Translation

The functional and reporting currency of the Company and its subsidiaries is US dollars. All transactions in currencies other than US dollars are translated into US dollars on the date of the transaction. Any exchange gains and losses related to these transactions are recognized in the current period earnings as other income (expense).

Fair Value of Financial Instruments

The Company's financial instruments consist principally of cash, accounts receivable, accounts payable, promissory note and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

● Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

● Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated with observable market data.

● Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

The carrying amount of our cash, accounts receivable, accounts payable, promissory note, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments as of December 31, 2025 and 2024.

There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the years ended December 31, 2025 and 2024.

Cash

The Company considers all highly liquid short-term cash investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2025 and 2024, the Company did not maintain any cash equivalents. The Company maintains cash with financial institutions that may from time to time exceed federally-insured limits. The Company has Insured Cash Sweep programs in place with its financial institutions to ensure that these excess funds are also federally insured. There are no restricted or compensating cash balances as of December 31, 2025.

Accounts Receivable, Net

*Trade Accounts Receivable*

 

Trade accounts receivable are carried at the original invoiced amounts less an estimate of expected credit losses. The Company estimates its allowance for credit losses and the related expected credit loss based upon the Company's historical credit loss experience and the age of the account adjusted for asset-specific risk characteristics, current economic conditions, relationship with the customer, and reasonable forecasts. Credit is generally extended on a short-term basis; thus current receivables do not bear interest. The Company reviews a customer's credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, an increase in the expected credit losses balance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. Occasionally, the Company will write off bad debt directly to the bad-debt expense account when the balance is determined to be uncollectible.

During the year ended December 31, 2025, the Company recorded bad debt expense of $1,130,760 related to the write-off of accounts receivable deemed uncollectible. In connection with the Company's planned merger in the first quarter of 2026, management performed a comprehensive review of outstanding receivables and determined that certain balances no longer meet the criteria for recognition as assets based on their estimated collectability. The write-off has been recorded through the allowance for doubtful accounts and is reflected within general and administrative expenses in the accompanying consolidated statement of operations in accordance with ASC 310-10 and ASC 326.

Property and Equipment, net

Property and equipment is stated at cost less accumulated depreciation and impairment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.

The estimated useful lives for significant property and equipment categories are as follows:

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| | |
|:---|:---|
| Computer and technology equipment | 3 years |
| Furniture and equipment | 5 years |
| Leasehold improvements | Lease term |
| Vehicles | 3 years |
| Other equipment | 3 or 5 years |
| Software | 3 years |

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Operating Lease Right of Use Assets

The Company accounts for leases in accordance with ASC 842. The Company determines whether a contract is a lease at contract inception or for a modified contract at the modification date. At inception or modification, the Company recognizes right-of-use ("ROU" assets and related lease liabilities on the Consolidated Balance Sheets for all leases greater than one-year in duration. Lease liabilities and their corresponding ROU assets are initially measured at the present value of the unpaid lease payments as of the lease commencement date. If the lease contains a renewal and/or termination option, the exercise of the option is included in the term of the lease if the Company is reasonably certain that a renewal or termination option will be exercised. As the Company's leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate ("IBR") based on the information available at the commencement date of the respective lease to determine the present value of the future payments. The IBR is determined by estimating what it would cost the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of the lease and the location of the leased asset.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in later years. The difference between rent expense recognized and actual rental payments is typically represented as the spread between the ROU asset and lease liability.

The Company does not recognize ROU assets and lease liabilities for short-term leases that have an initial term of 12 months or less. The Company recognizes the lease payments associated with short-term leases as an expense on a straight-line basis over the lease term.

Operating lease right-of-use assets are recorded at cost, net of accumulated depreciation, amortization, and impairment. The Company has various operating and finance equipment and office leases with an imputed annual interest rate of 11%.

Intangible Assets

The Company's intangible assets consist of legal fees for application of patents and trademarks, as well as customer relationships, trademarks and trade names and backlog from the acquisitions of DVO, 2WR and Emerald. Our patents and trademarks are recorded at cost, while the intangibles from our acquisitions are recorded at fair value and are amortized using the straight-line method over an estimated life, generally 5 years for patents, 5 years for trademarks and trade names, and 7 years for customer relationships. Intangible assets are reported in the "Intangible Asset" line on the balance sheet.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually and at any time when events or circumstances suggest impairment may have occurred.

The testing for impairment consists of a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit, including goodwill, exceeds the fair value, an impairment will be recognized equal to the difference between the carrying value of the reporting unit's goodwill and the implied fair value of the goodwill. In testing goodwill for impairment, we determine the estimated fair value of our reporting units based upon a discounted future cash flow analysis. Goodwill, trade names and patents are our only indefinite-lived intangible assets. Definite-lived intangible assets are amortized using the straight-line method over the shorter of their contractual term or estimated useful lives.

Impairment of Long-lived Assets

The Company evaluates potential impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment will be recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

Investments

Investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, *Revenue from Contracts with Customers,* which requires that five basic steps be followed to recognize revenue: (1) a legally enforceable contract that meets criteria standards as to composition and substance is identified; (2) performance obligations relating to provision of goods or services to the customer are identified; (3) the transaction price, with consideration given to any variable, noncash, or other relevant consideration, is determined; (4) the transaction price is allocated to the performance obligations; and (5) revenue is recognized when control of goods or services is transferred to the customer with consideration given to whether that control happens over time or not. Determination of criteria (3) and (4) are based on judgments regarding the fixed nature of the selling prices of the services and products delivered and the collectability of those amounts.

The Company derives revenue predominately from the sale of equipment systems, services, construction design-build, and from other various immaterial contracts with customers. Please refer to *Note 3 - Revenue from Contracts with Customers* for additional discussion.

Customer Deposits

The Company's policy is to collect deposits from customers in equipment and construction segment at the beginning of the contract. Please refer to *Note 3 - Revenue from Contracts with Customers* for further discussion of the Company's customer deposits.

Cost of Revenues

The Company's policy is to recognize cost of revenues in the same manner as, and in conjunction with, revenue recognition. The Company's cost of revenues includes the costs directly attributable to revenue recognized and includes expenses related to the purchasing of products and providing services, costs related to construction design-build contracts, fees for third-party commissions, and shipping costs.

Stock-Based Compensation

The Company periodically issues restricted stock units ("RSUs") and stock options to employees, directors, and consultants in non-capital raising transactions for fees and services. The Company accounts for stock grants and stock options issued to employees and directors with the award being measured at its fair value at the date of grant and amortized ratably over the estimated service period. The Company accounts for stock issued to consultants with the value of the stock compensation based upon the measurement date as determined at the grant date of the award.

Warrants

The Company classifies warrants as equity instruments in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity's Own Equity, as the warrants are indexed to the Company's own stock and meet the criteria for equity classification. Warrants classified as equity are recorded within additional paid-in capital at their relative fair value on the date of issuance and are not subsequently remeasured. The proceeds from issuances involving warrants are allocated between the host instrument and the warrants using the relative fair value method. The cost of warrants is amortized over the vesting period or the period of benefit, as applicable, and is recognized as a component of general and administrative expense in the consolidated statements of operations.

Income Taxes

The Company files income tax returns in the United States, Canada, and the Netherlands, and state and local tax returns in applicable jurisdictions. Provisions for current income tax liabilities, if any, would be calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings, if any, would also include deferred income tax provisions.

Deferred income tax assets and liabilities, if any, would be computed on differences between the financial statement bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities would be included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates would be charged or credited to income tax expense in the period of enactment. Valuation allowances would be established for certain deferred tax assets when realization is not likely.

Assets and liabilities would be established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the judgment of the Company, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Valuation allowances would be established for certain deferred tax assets when realization is not likely.

Loss per Share

The Company computes net loss per share by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share would be computed by dividing net loss by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The diluted earnings per share calculation is not presented as it results in an anti-dilutive calculation of net loss per share.

The treasury stock method would be used to calculate diluted earnings per share for potentially dilutive stock options and share purchase warrants. This method assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants would be used to purchase common shares at the average market price for the period.

Recently Issued Accounting Pronouncements

From time to time, the Financial Accounting Standards Board (the "FASB") or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company's financial statements upon adoption.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires greater disaggregation of information in the effective tax rate reconciliation, income taxes paid disaggregated by jurisdiction, and certain other amendments related to income tax disclosures. The Company adopted this guidance effective January 1, 2025. The adoption did not have a material impact on the Company's consolidated financial statements or disclosures, as the Company maintains a full valuation allowance against its net deferred tax assets and had minimal income tax activity during the year ended December 31, 2025.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregation of certain income statement expense line items. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

There are other various updates recently issued by the FASB, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company's financial position, results of operations or cash flows.

Management has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company's financial condition or the results of our operations.

**NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS**

The Company recognizes revenue predominantly from the sale of equipment systems, construction design-build, and from other various immaterial contracts with customers from its CEA and Commercial sectors. The table below presents the revenue by source for the years ended December 31, 2025 and 2024:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years ended December 31,** | **Years ended December 31,** | **Years ended December 31,** | **Years ended December 31,** | **Years ended December 31,** | **Years ended December 31,** |
|  | **CEA** | **CEA** | **Commercial** | **Commercial** | **Total** | **Total** |
|  | **2025** | **2024** | **2025** | **2024** | **2025** | **2024** |
| Equipment systems | $8860619 | $12245675 | $70607 | $— | 8751226 | 12245675 |
| Construction design-build | 2709642 | 3230037 | 5757810 | 15374790 | 8467451 | 18604827 |
| Other | 76673 | 352798 | 104088 |  | 180761 | 352798 |
| &nbsp;&nbsp;&nbsp;Total revenues and other income | $11466934 | $15828510 | $5932505 | $15374790 | $17399438 | $31203300 |
| Relative percentage | 66% | 51% | 34% | 49% | 100% | 100% |

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Under ASC Topic 606, *Revenue from Contracts with Customers*, a performance obligation is a promise in a contract with a customer, to transfer a distinct good or service to the customer. Equipment systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified amount. Service revenue contracts, which include both architectural and engineering designs, generally contain multiple performance obligations which can span across multiple phases of a project and are generally set forth in the contract as distinct milestones. The majority of construction design-build contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design and construction).

The transaction price for service contracts and construction design-build contracts is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. When there are multiple performance obligations under the same service contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. In general, payment is fixed at the time of the contract and are not subject to discounts, incentives, payment bonuses, credits, and penalties, unless negotiated in an amendment.

When establishing the selling price to the customer, the Company uses various observable inputs. For equipment systems, the stand-alone selling price is determined by forecasting the expected costs of the products, and then adding in the appropriate margins established by the contract. For service revenues and construction design-build revenues, the Company estimates the selling price by reference to certain physical characteristics of the project, which include the facility size, the complexity of the design, and the mechanical systems involved, which are indicative of the scope and complexity of those services. Significant judgments are typically not required with respect to the determination of the transaction price based on the nature of the selling prices of the products and services delivered and the collectability of those amounts. Accordingly, the Company does not consider estimates of variable consideration to be constrained. Warranty in respect of equipment are directly handled by the manufacturers of the equipment and company does not incur any warranty cost. There are no warranties in respect of the other segments of operations.

The Company recognizes equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied. For satisfaction of equipment system revenues the control of the promised good happens either on shipment or on delivery of goods at the delivery point identified by the customer, the Company recognizes revenue when the shipment is made unless a notice of non delivery is received from the customer within the agreed time. For service revenues, satisfaction occurs as the services related to the distinct performance obligations are rendered or completed in exchange for consideration in an amount for which the Company is entitled. The time period between recognition and satisfaction of performance obligations is generally within the same reporting period; thus, there are no material unsatisfied or partially unsatisfied performance obligations for product or service revenues at the end of the reporting period.

Construction design-build revenues are recognized as the Company's obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer's site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used for our construction design-build contracts because management considers it to be the best available measure of progress on these contracts.

Contract modifications through change orders, claims and incentives are routine in the performance of the Company's construction design-build contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of approved contract prices that the Company seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs.

The timing of when the Company bills customers on long-term construction design-build contracts is generally dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized; the result is unbilled revenue, which is included in contract assets. Additionally, the Company may receive advances or deposits from customers before revenue is recognized; the result is deferred revenue, which is included in contract liabilities. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities. The payment terms are predominantly based on a standard credit period of 30 days on submission of the proof of completion of work. The contract in certain cases also provides for advances being received which are dealt with in the manner discussed herein.

Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts. Contract liabilities represent the Company's obligation to perform on uncompleted contracts with customers for which the Company has received payment or for which contract receivables are outstanding.

The following table provides information about contract assets and contract liabilities from contracts with customers:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *Contract assets* |  |  |
| Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage | $4034280 | $3757641 |
| Retainage included in contract assets due to being conditional on something other than solely passage of time | - | 375176 |
| Less:-Contract receivable write-off | (4034280) | - |
| Total contract assets | $- | $4132817 |
| *Contract liabilities* |  |  |
| Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage | $13353976 | $13930251 |
| Retainage included in contract liabilities due to being conditional on something other than solely passage of time | 103381 | 163925 |
| Total contract liabilities | $13457357 | $14094176 |

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Of the $14,094,176 in total contract liabilities at December 31, 2024, $2,102,857 related to one customer that was recognized as revenue in 2025.

For equipment systems contracts, the Company's predominant policy is to collect deposits from customers at the beginning of the contract and the balance of the contract payment prior to shipping. The Company does, in some cases, collect deposits or retainers as down payments on service contracts. Consumable products orders may be paid for in advance of shipment or for recurring customers with credit, payment terms of 30 days or less may be extended by the Company. Customer payments that have been collected prior to the performance obligation being recognized are recorded as customer deposit liabilities on the balance sheet. When the performance obligation is satisfied and all the criteria for revenue recognition are met, revenue is recognized. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company is entitled to keep the deposit and recognize revenue. Customer deposits are non-interest-bearing and do not accrue interest payable to customers.

During the year ended December 31, 2025, the Company recognized an impairment loss of $4,034,280 on contract assets arising from contracts with customers primarily arising out of work having been completed and revenue recognized in line with the accounting policy but the certainty of collection or right to adjust with advances received not established. The impairment was determined based on management's assessment of the estimated recoverable amounts considering the Company's planned merger in the first quarter of 2026, which indicated that the carrying value of certain contract assets was no longer recoverable. The impairment loss has been recognized in general and administrative expenses in the accompanying consolidated statement of operations in accordance with ASC 340-40.

During the year ended December 31, 2025, the Company discontinued its service operations, including architectural and engineering design services, as part of the disposition and wind-down of its Services segment. As a result, service revenues are not anticipated in future periods. Refer to Note 4 – Discontinued Operations for further details.

**NOTE 4 – DISCONTINUED OPERATIONS**

During the year ended December 31, 2025, the Company completed the disposition and wind-down of its discontinued operations. Accordingly, the assets and liabilities previously classified as discontinued operations have been fully disposed of and are no longer reflected on the consolidated balance sheet as of December 31, 2025.

As of December 31, 2024, assets of discontinued operations consisted of current assets of $2,319,074 and non-current assets of $2,322,308. Liabilities of discontinued operations consisted of current liabilities of $1,837,709 and non-current liabilities of $690,444.

The results of operations, including any gain or loss on disposal, and cash flows of the discontinued operations have been reported separately in the consolidated financial statements for all periods presented in accordance with ASC 205-20, *Discontinued Operations*.

On August 27, 2025, the Company announced that certain subsidiaries (the "Seller Parties") of the Company entered into a Stock and Asset Purchase Agreement (the "August 27 Purchase Agreement") with 2WR Holdco, LLC (the "Buyer"). Pursuant to the August 27 Purchase Agreement, the Buyer acquired (the "Acquisition") all of the outstanding shares of stock of 2WR of Georgia, Inc. ("2WRGA") and certain assets of other subsidiaries (2WR Colorado "2WRCO", 2WR Missippi "2WRMS") of the Company relating to those entities' business of providing commercial, industrial and municipal architectural and construction administration services for projects not involving CEA, with such CEA business being retained by the Company.

The total purchase price for the transaction was $2,000,000.

The Purchase Agreement includes customary representations and warranties, covenants, and mutual indemnification provisions between the parties. The agreement also contains non-competition and non-solicitation provisions applicable to the Seller Parties for a specified period following the closing. The Company recorded the disposition in the third quarter of 2025.

In connection with the August 27, 2025 Stock and Asset Purchase Agreement, 2WR Holdco, LLC also acquired the customer list of 2WR of Colorado, Inc. for $143,000 in cash.

In connection with the sales described above, the Company discontinued the operations of the remaining Services companies - Urban Grow Engineering "UGENG". The table below outlines the loss (gain) on sale or discontinuation of the Services companies comprising of assets taken over and written off pursuant to the sale..

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2WRGA** | **2WRCO** | **2WRMS** | **UGENG** | **Total** |
| **<u>Carrying amount of assets and liabilities:</u>** |  |  |  |  |  |
| Cash | $12452 | $- | $- | $- | $12452 |
| Accounts receivable, net | 408368 | 196199 | 20052 | 74099 | 698718 |
| Prepaid expenses and other current assets | 2263 | 2855 | 1356 | 4879 | 11353 |
| Property and equipment, net |  | 10211 |  | 60667 | 70878 |
| Operating lease right-of-use assets | 54576 | 9876 |  | 39991 | 104443 |
| Goodwill |  | 1080638 |  |  | 1080638 |
| Intangible assets, net | 52031 | 71799 |  |  | 123830 |
| Accounts payable | (483352) |  |  |  | (483352) |
| Accrued expenses |  | (2816) |  | 141102 | 138286 |
| Customer deposits |  |  |  | 8500 | 8500 |
| Operating lease liabilities, current | (43308) |  |  |  | (43308) |
| Operating lease liabilities, long-term | (3506) | - | - | - | (3506) |
| **Total carrying amount (net)** | **(476)** | **1368762** | **21408** | **329238** | **1718932** |
| Less: Consideration from sale of shares of stock and assets |  |  |  |  | (2000000) |
| Less: Consideration from sale of customer list |  |  |  |  | (143000) |
| **Gain on sale or discontinuation of subsidiary companies** |  |  |  |  | $**(424068)** |

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The net gain on sale or discontinuance of subsidiaries is included as a component of discontinued operations, net of tax and reflected in the table below.

In accordance with the provisions of ASC 205-20, the Company has excluded the results of discontinued operations from its results of continuing operations in the accompanying consolidated statements of operations for the years ended December 31, 2025 and 2024. The results of the discontinued operations for the years ended December 31, 2025 and 2024 consist of the following:

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| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Revenues |  |  |
| &nbsp;&nbsp;&nbsp;Services | $3471947 | $8805550 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 3471947 | 8805550 |
| Cost of revenue |  |  |
| &nbsp;&nbsp;&nbsp;Services | 2773820 | 5548438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenue | 2773820 | 5548438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 698127 | 3257112 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 1449440 | 4735926 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 92450 | 306591 |
| &nbsp;&nbsp;&nbsp;Impairment of goodwill and intangibles | - | 5323447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 1541890 | 10365964 |
| Loss from discontinued operations | (843763) | (7108852) |
| Non-operating income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Gain on sale of subsidiaries and assets | 424068 | - |
| &nbsp;&nbsp;&nbsp;Interest expense | - | (2802) |
| &nbsp;&nbsp;&nbsp;Other income (expense) | - | (24894) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-operating income (expense) | 424068 | (27969) |
| Income (loss) before income taxes | (419695) | (7136548) |
| Income tax benefit | - | - |
| Net loss from discontinued operations, net of tax | $(419695) | $(7136548) |
| Net loss per share from discontinued operations-basic and diluted | $(0.79) | $(14.30) |
| Weighted average common shares outstanding - basic and diluted | 528270 | 499089 |

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**NOTE 5 – RELATED PARTY TRANSACTIONS**

A director of the Company is an owner of Cloud 9 Support, LLC ("Cloud 9") and Potco LLC ("Potco"). Cloud 9 purchases materials from the Company for use with its customers and Potco purchases equipment from the Company for use in its cultivation facility. Another director of the Company is working on a vertical farming innovation model with a group of CEA experts (the "CEA Consortium"). The CEA Consortium contracts services from the Company related to their business model.

There were no revenues from related party entities for the years ended December 31, 2025 and 2024.

The table below presents the revenues from related parties:

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| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Potco | $- | $120751 |
| Total Revenue | $- | $120751 |

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**NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepayments and other assets are comprised of prepayments paid to vendors to initiate orders and prepaid services and fees. The prepaid balances are summarized as follows:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Vendor prepayments | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $1355929 |
| Prepaid services and fees | - | 877469 |
| Inventories |  | 222581 |
| Other current assets | - | 23283 |
| Total Prepaid expenses and other assets | $- | $2479262 |

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The decrease in prepaid expenses includes amounts disposed of in connection with the August 27, 2025 sale of certain subsidiaries. See note 4 – disposition

Inventories

Inventories, consisting primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined using the weighted-average cost method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold at the realization of change in value. Once written down, inventories are carried at this lower basis until sold or scrapped.

During the year ended December 31, 2025, the Company recorded an inventory write-down of $172,920 to reflect the net realizable value of its inventory. The write-down was primarily driven by management's evaluation of inventory that is not expected to be utilized or recovered in connection with the Company's planned merger in the first quarter of 2026. The write-down has been included in cost of revenue in the accompanying consolidated statement of operations in accordance with ASC 330-10.

**NOTE 7 – PROPERTY AND EQUIPMENT, NET**

Property and Equipment, net balances are summarized as follows:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Computers and technology equipment | $326959 | $321421 |
| Furniture and fixtures | 209805 | 209805 |
| Leasehold improvements | 133426 | 133426 |
| Vehicles |  | 417644 |
| Software | 1259016 | 383857 |
| R&D Assets | 87425 |  |
| Other equipment | 34064 | 121489 |
| Impairment of property and equipment | (566609) | - |
| Accumulated depreciation | (1484086) | (1507854) |
| Total Property and equipment, net | $- | $813452 |

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The total depreciation expense for the years ended December 31, 2025 and 2024 was $349,364 and $607,466, respectively.

During the year ended December 31, 2025, the Company performed an impairment assessment of its long-lived assets in accordance with ASC 360-10. As a result of the planned merger in the first quarter of 2026, certain property, plant and equipment were determined to have carrying values in excess of their estimated recoverable amounts. The impairment charge has been presented as a separate line item within operating expenses in the accompanying consolidated statement of operations."

**NOTE 8 – GOODWILL & INTANGIBLE ASSETS**

The Company had recorded goodwill and intangibles in conjunction with the acquisitions it had completed. Goodwill was not amortized. The Company did not record any impairment charges related to goodwill for the years ended December 31, 2025 and 2024. The Company's goodwill and intangible assets were fully written off in connection with the August 27, 2025 sale of certain subsidiaries and related assets and discontinuing the operations of the Services segment. As a result, the balances of goodwill and intangible assets were $0 as of December 31, 2025 and 2024. See Note 4 – Dispositions for further details.

**NOTE 9 – ACCRUED EXPENSES**

Accrued expenses are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Accrued operating expenses | $415096 | $666624 |
| Accrued wages and related expenses | 300996 | 414869 |
| Business development accrual | - | - |
| Accrued interest expense | 529313 | 68115 |
| Accrued 401(k) | 18191 | 17138 |
| Accrued sales tax payable | 4728074 | 2850399 |
|  | $5708526 | $4017145 |

---

Accrued sales tax payable is comprised of amounts due to various U.S. states and Canadian provinces for the years 2017 through current. The Company has been accruing estimated interest and penalties on these outstanding amounts. Periodically, certain U.S. states have contacted the Company regarding amounts owed; however, no state has taken formal enforcement or collection action against the Company to date. Canadian tax authorities have not contacted the Company with respect to the Canadian amounts reflected herein. The Company intends to proactively reach out to all relevant taxing authorities to negotiate payment plans and settlements once sufficient funds are available. Management believes it may be possible to settle these liabilities for amounts less than the total accrued balance; however, no assurance can be given as to the ultimate settlement amounts. Accordingly, the full accrued liability is reflected in the accompanying consolidated balance sheet at the amount recorded in the Company's books.

Certain accrued liabilities were settled or transferred in connection with the August 27, 2025 sale of certain subsidiaries and related assets. See Note 4 – Dispositions for further details.

**NOTE 10 – NOTES PAYABLE**

The table below presents amounts due for notes payable as of December 31, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Gemini line of credit | $1158522 | $4405402 |
| DVO note | - | 135 |
| Grow hill note, net | 1370531 | 1652071 |
| Agile capital | 675000 | - |
| J brothers | 320962 | - |
| Other financing agreements | 8240 | 706068 |
| Total | 3533255 | 6763676 |
| Less current portion | (3533255) | (5968145) |
| Notes payable, long-term | $- | $795531 |

---

*Revolving Line of Credit with Gemini Finance Corp.*

On December 13, 2023, UG Construction, Inc. d/b/a Emerald Construction Management, Inc.("Emarald"), a wholly owned subsidiary of the Company, entered into an interest only asset based revolving Loan Agreement (the "Line of Credit") with Gemini Finance Corp. ("Lender") pursuant to which Lender extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and the Company with cash management. Lender will consider requests for advances under the Line of Credit, which Lender may accept or reject in its discretion, until September 12, 2024 (the "Initial Term"), sutbject to an automatic extension for an additional nine-month term until May 12, 2025, provided that UG Construction is in compliance with all the terms of the applicable loan documents and Lender has not sent a written notice of non-renewal at least 60 days prior to expiration of the Initial Term. The Line of Credit contains standard events of default and representations and warranties by UG Construction and the Lender and the Company have entered into a Continuing Guaranty pursuant to which the Company will guarantee repayment of the loans associated with the Line of Credit (the "Guaranty Agreement").

Loans made under the Line of Credit shall be evidenced by a Secured Promissory Note - Revolving issued by UG Construction to the Lender (the "Promissory Note"), and each draw on the Promissory Note shall be due and payable on or before 180 days after such draw is funded to UG Construction; provided that, such draw is also subject to a mandatory prepayment upon UG Construction's receipt of payment for any invoice previously submitted and approved for financing by Lender. Lender will receive a security interest in UG Construction's Collateral (as defined in the "Security Agreement" entered into as part of the Line of Credit). The Promissory Note earns interest at a monthly rate of one and seventy-five hundredth percent (1.75%).

In connection with entering in the Line of Credit, the Company agreed to issue to Bancroft Capital, LLC (the "Placement Agent") cash and warrant compensation in two separate tranches, the first being earned upon closing of the Line of Credit and the remainder of which would be due if and when UG Construction draws more than $4,500,000 from the Line of Credit. Both instances are detailed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. At closing of the Line of Credit, the Placement Agent earned a cash fee of $200,000. In addition to the cash fee, the Company issued to the Placement Agent or its designees, $200,000 worth of warrants (the "Placement Agent's Warrants") to purchase the Company's common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company's common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the Closing. The Placement Agent's Warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing six (6) months from the date of issuance. The Placement Agent's Warrants provide for registration rights (including a one-time demand registration right and unlimited piggyback rights), cashless exercise and customary anti-dilution provisions (for stock dividends and splits) and anti-dilution protection (adjustment in the number and price of such warrants and the shares underlying such warrants) resulting from corporate events (which would include dividends, reorganizations, mergers, etc.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. If and when Emerald draws more than $4,500,000 from the Line of Credit, the Placement Agent will earn an additional cash fee of $200,000, and an additional $200,000 worth of Placement Agent's Warrants to purchase the Company's common stock at a price per share equal to 110% of the daily volume weighted average closing price of the Company's common stock on the Nasdaq exchange for a period consisting of ten (10) consecutive trading days ending on and inclusive of the trading day of the date that the draws exceeding $4,500,000 were to take place.

Line of Credit Amendment – On March 18, 2025, UG Construction entered into an agreement with the "Lender") to amend the terms of the original Loan Agreement and Promissory Note and waiver (the "Amendment") between UG Construction and the Lender. Pursuant to the Amendment, the Lender waived any potential or perceived events of default arising under certain circumstances, which events did not constitute specified events of default under the Promissory Note or the Loan Agreement. Pursuant to the Amendment, the Promissory Note was amended to provide that (i) the term during which the Lender may consider advances under the Loan Agreement has been extended to January 1, 2026, and (ii) the interest applied on the outstanding principal amount of the Promissory Note will accrue interest at a monthly rate of 1.75%, and all accrued by unpaid interest shall be paid to the Lender on the first business day of each month for the prior month. The Amendment also amended the Loan Agreement to require monthly reporting of certain accounts receivable and to include a covenant that such accounts receivable equal or exceed 125% of the sum of the total amount drawn down under the Promissory Note, plus outstanding interest, as of the applicable measurement date. In connection with the execution of the Amendment, the Company issued to the Lender, as an amendment fee, 150,000 share of the Company's common stock, par value $0.001 per share, or 6,000 shares after giving effect to a 1-for-25 reverse stock split (the "Fee Shares") of the Company's common stock, par value $0.001 per share. This resulted in an expense of $109,500, which is included in interest expense on the condensed consolidated statement of operations.

Between October and December 2025, the Company entered into a settlement agreement with Gemini to extinguish the outstanding debt through the issuance of equity in three tranches:

● Tranche 1 (October 2025): 28,000 shares issued for total consideration of $159,500

● Tranche 2 (November 2025): 28,000 shares issued for total consideration of $159,500

● Tranche 3 (December 2025): 28,000 shares issued with no stated consideration ($0)

Total shares issued under the settlement agreement were 84,000 shares, with aggregate consideration of $319,000.

The Company accounted for these transactions in accordance with ASC 470-50-40. The debt was derecognized and replaced with equity based on the fair value of the shares issued (or the carrying value of the debt, if more reliably measurable).

The transactions were measured at the fair value of the equity instruments issued (shares of common stock at the quoted market price on the date of issuance) per ASC 470-50-40. The difference between the carrying amount of the debt extinguished and the fair value of equity issued was recognized as a gain or loss on debt extinguishment in the consolidated statement of operations.

*Loan Agreement with Grow Hill, LLC*

 

On October 1, 2024, the Company, entered into a loan with Grow Hill, LLC, a Washington limited liability company ("Grow Hill"). The terms are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Loan
 Details

● Principal Amount: $2,000,000.

● Interest Rate: 15% per annum, applied to the outstanding principal amount.

● Origination Fee: $100,000 (5% of the loan amount), considered as debt issuance costs under GAAP and amortized over the loan term.

● Repayment Terms: Monthly payments of interest and principal as per the Promissory Note. Ther term of the loan is 2 years.

● Optional Prepayment: Allowed if the Grow Hill has received $150,000 or more in interest payments. If less, the Company must pay the difference to reach $150,000. Prepayment requires at least one Business Day's notice.

● Mandatory Prepayment: Required if the Company fails to meet the Receivable Ratio negative covenants or events of default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Collateral
 and Security

● Collateral: Defined in the Security Agreement.

● Security Agreement: The Company grants a perfected security interest in the Collateral to the Grow Hill.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The loan became effective on October 1, 2024, when the Company issued Warrants to the Grow Hill for 160,000 shares of Borrower's common stock at $2.50/share, or 6400 shares after giving effect to a 1-for-25 reverse stock split, exercisable immediately and valid for five years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Covenants:

● Affirmative Covenants:

Provide regular financial reports, compliance certificates, and notices of defaults or legal actions.

Comply with all applicable laws and regulations, including tax payments.

Cooperate with audits of accounts receivable (the Company pays audit fees unless an Event of Default occurs).

● Negative Covenants:

Restrictions on creating liens, incurring additional debt, or guaranteeing third-party obligations without Grow Hill's consent.

Maintain a Receivable Ratio of at least 2.00:1.00, calculated monthly. The Company was unable to maintain this ratio and was accordingly in breach of this covenant, constituting an event of default under the Grow Hill Secured Promissory Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Events
 of Default

● Include failure to pay principal or interest, breach of covenants, misrepresentation, insolvency, or legal challenges to the validity of the Loan Documents.

● Consequences of default under the Grow Hill Secured Promissory Note: Grow Hill may accelerate repayment, enforce security interests, or exercise other remedies available under the agreement.

*Business Loan and Security Agreement with Agile Entities*

On June 26, 2025, the Company entered into a business loan and security agreement (the "Loan Agreement") with an effective date of June 24, 2025(the "Effective Date") by and among, Agile Capital Funding, LLC, Agile Lending , LLC, a Virginia limited liability company and each assignee that becomes a party pursuant to Section 12.1 of the Loan Agreement (the "Lenders"), the Company and 2WR Of Colorado Inc., UG Construction, Inc., 2WR of Georgia, Inc., urban-gro Canada Technologies Inc., urban-gro Engineering, Inc. and urban-gro Architect Holdings, LLC, each a wholly owned subsidiary of the Company (individually, collectively, jointly and severally, the "Guarantors").

Pursuant to the Loan Agreement, the Lenders extended to the Company a term loan of $1,050,000 (the "Term Loan") to be used to fund the Company's general business requirements. The Loan Agreement is for a term of twenty-eight weeks from the Effective Date (the "Maturity Date") and includes an administrative agent fee of $50,000 to be remitted to Agile Capital Funding, LLC which was added to the amount of the loan. The Company may make a full prepayment or partial prepayment of the Term Loan, however, upon the prepayment of any principal amount, the Company shall be obligated to pay a premium payment of such principal so paid, which shall be equal to the aggregate and actual amount of interest that would be paid through the Maturity Date (the "Prepayment Fee"); provided however that, if the Company made a prepayment within 60 calendar days after the Effective Date, the Company would receive the discounted Prepayment Fee that is included in Exhibit E to the Loan Agreement.

The Loan contains standard events of default and representations and warranties by the Company and the Lenders including a mandatory prepayment, and an additional five (5%) percent interest rate following the occurrence of an event of default. The term loan is evidenced by a secured promissory note issued by the Company to the Lenders (the "Promissory Note"). Pursuant to the Loan Agreement, upon an event of default, the Lenders will receive a security interest in certain of the Company's assets, subject to certain exceptions.

*Truist Line of Credit*

 

2WR of Georgia, Inc. ("2WR GA"), a subsidiary of the Company, maintained a line of credit with Truist Bank (the "Truist Line of Credit") that was established prior to the Company's acquisition of the architectural firm on July 30, 2021.

In May 2025, the Company became aware of the Truist line of credit and subsequently borrowed $197,500 under the facility. The proceeds were deposited into a Truist Bank account and subsequently transferred to another Company account for general corporate purposes.

In the third quarter of 2025, in connection with the sale of 2WR GA to CM Capital for $2.0 million, the Truist line of credit was repaid in full using a portion of the transaction proceeds.

*Settlement Agreement and Promissory Note with J Brrothers LLC*

On August 8, 2025, the Company entered into a Settlement and Release Agreement (the "Settlement Agreement") with J Brrothers LLC ("J Brrothers") and Herb-a-More LLC relating to a dispute arising from amounts due for certain heating, ventilation and air conditioning equipment. Pursuant to the terms of the Settlement Agreement, among other things, the Company issued a promissory note to J Brrothers with an original principal amount of $395,556 (the "Note") and agreed to issue 150,000 unregistered shares of the Company's common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split, to J Brrothers (the "Shares"). The Note will accrue simple interest at an annual rate of 12% and has a maturity date of March 18, 2026. The Note will be repaid in monthly installments over a period of eight months, with the first seven payments being $50,000 per month and the final monthly payment being $64,047. Any remaining principal and accrued but unpaid interest will become due and payable on the maturity date, and the Note may be prepaid without penalty. The Note includes customary representations and warranties, customary events of default and a 17% default interest rate.

The Company is currently in a payment default under the terms of the Note.

*Other* 

 

The other financing agreements relate to short-term financing of the Company's insurance policies and are at an average interest rate of 13.6%.

**NOTE 11 – RIGHT OF USE ASSETS AND LIABILITIES**

As of December 31, 2025 and 2024, the Company has four operating type leases with an imputed annual interest rate of 11%. The remaining lease terms range from less than one year to 3 years, as of December 31, 2025.

In connection with the divestiture described in Note 4, certain operating leases previously associated with the divested entities and operations were transferred to the Buyer and are no longer reflected in the Company's consolidated balance sheet as of December 31, 2025.

As a result of the divestiture, the number of operating leases decreased from seven as of December 31, 2024 to 4 as of December 31, 2025. The remaining lease terms range from less than one year to 3 years as of December 31, 2025. The CEA-related operations and their associated leases were retained by the Company and continue to be reflected in the accompanying consolidated financial statements. As the Company has wound down its CEA operations, the remaining four leases are under non-cancellable terms. The Company is currently evaluating its options with respect to these obligations, including subletting, negotiating early termination, or allowing the leases to expire at the end of their respective terms.

As of December 31, 2025 and 2024, right of use assets were $321,303 and $550,175, respectively, and for the years ended December 31, 2025 and 2024 lease expense was $277,997 and $277,997, respectively.

The following is a summary of finance and operating lease liabilities:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Operating lease liabilities related to right of use assets | $286188 | $497053 |
| Finance lease liability | 51762 | 74425 |
| Less current portion | (222870) | (235223) |
| Long term | $115080 | $336255 |

---

The following is a schedule showing total future minimum lease payments for the Company's operating leases:

---

| | |
|:---|:---|
| <br>**Period Ended December 31,** | **Minimum**<br>**Lease**<br>**Payments** |
| 2026 | 218700 |
| 2027 | 91348 |
| Total lease payments | 310048 |
| Less imputed interest | (23860) |
| Net lease obligations | $286188 |

---

**NOTE 12 – COMMITMENTS AND CONTINGENCIES**

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. Other than below, there are no other legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company's results of operations and cash flows.

***Gemini Loan Agreement Amendment and Default***

On December 13, 2023, our wholly-owned subsidiary UG Construction, Inc. d/b/a Emerald Construction Management, Inc. ("UG Construction") entered into (i) an interest only asset based revolving loan agreement (the "Loan Agreement") with Gemini Finance Corp. ("Gemini") pursuant to which Gemini extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000, to be used to assist UG Construction and us with cash management, and (ii) a Secured Promissory Note - Revolving issued by UG Construction to Gemini (the "Promissory Note"). Pursuant to the Promissory Note, each draw was due and payable on or before 180 days after such draw is funded to UG Construction, subject to a mandatory pre-payment upon UG Construction's receipt of payment for any invoice previously submitted and approved for financing by Gemini.

On March 18, 2025, UG Construction entered into an amendment to the Loan Agreement and Promissory Note and waiver with Gemini (the "Amendment"). Pursuant to the Amendment, Gemini waived any potential or perceived events of default arising under certain circumstances, which events did not constitute specified events of default under the Promissory Note or the Loan Agreement.

Pursuant to the Amendment, the Promissory Note was amended to provide that (i) the term during which Gemini may consider advances under the Loan Agreement has been extended to January 1, 2026, and (ii) the interest applied on the outstanding principal amount of the Promissory Note will accrue interest at an annual rate of 12%, and all accrued and unpaid interest shall be paid to Gemini on the first business day of each month for the prior month. The Amendment also amended the Loan Agreement to require monthly reporting of certain accounts receivable and to include a covenant that such accounts receivable equal or exceed 125% of the sum of the total amount drawn down under the Promissory Note, plus outstanding interest, as of the applicable measurement date. In connection with the execution of the Amendment, we issued to Gemini, as an amendment fee, 150,000 shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split.

On July 31, 2025, Gemini issued a notice of default to UG Construction claiming that UG Construction was in default under the line of credit due to a failure to submit receivables calculations and failing to maintain sufficient eligible accounts and to forward accounts receivable. The notice indicated that the remaining outstanding amount due under the line of credit of approximately $1.76 million was immediately due and payable with default of 1% per week accruing from the June 16, 2025 date of default claimed by Gemini, and that Gemini intended to pursue legal action if full payment was not received by August 8, 2025.

On August 21, 2025, we received a notification from Gemini stating that Gemini would proceed with a foreclosure and private sale of substantially all of the assets of UG Construction in an Article 9 sale process, pursuant to Section 9601 et seq. of the California Commercial Code (the "Asset Sale"). The Asset Sale consisting of the receivables occurred on September 4, 2025, at which Gemini acquired the assets constituting the collateral under the line of credit for $450,000. The following table summarizes the assets and liabilities of UG Construction transferred in connection with the Asset Sale:

---

| | |
|:---|:---|
|  | **Amount** |
| Gross receivables of Emerald | $2923501 |
| Less:-Notes payable | 450000 |
| Loss on assets foreclosure | $2473501 |

---

On August 29, 2025, Gemini commenced a lawsuit captioned *Gemini Finance Corp. v. UG Construction, Inc. et al.*, case number 25CV2259 W SBC, in the U.S. District Court for the Southern District of California, which lawsuit (the "Lawsuit") included us and certain of our officers as defendants and pursuant to which Gemini claimed it was owed $1,486,189 (the "Claim Amount").

On September 26, 2025, we entered into a Settlement and Mutual General Release (the "Gemini Settlement Agreement") with Gemini. Pursuant to the terms of the Gemini Settlement Agreement, among other things, we agreed to file a joint motion requesting an expedited fairness hearing under Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"), which motion was filed on September 30, 2025. Following such fairness hearing, and subject to the satisfaction of all applicable conditions and requirements of Section 3(a)(10) of the Securities Act, we agreed to issue to Gemini shares of our common stock that, upon sale by Gemini, would result in net proceeds to Gemini equal to the Claim Amount, provided that Gemini shall at no time be issued shares if it would beneficially own more than 4.99% of our common stock, and the aggregate number of shares issued to Gemini may not exceed 19.99% of our outstanding common stock as of immediately prior to the signing of the Gemini Settlement Agreement to the extent required by Nasdaq Listing Rule 5635. Additionally, Gemini agreed to use its best efforts to not sell common stock exceeding 10% of our daily volume on any given trading day. Upon the issuance of the last tranche of shares under the Gemini Settlement Agreement, Gemini will dismiss the Lawsuit with prejudice. The Gemini Settlement Agreement also included a customary mutual release of claims by the parties. The fairness hearing occurred on October 14, 2025.

 ****

 **

***Grow Hill Default***

 **

On October 1, 2024, we entered into an asset-based term Loan Agreement with Grow Hill, LLC ("Grow Hill") pursuant to which Grow Hill extended to us a secured loan of $2,100,000 with an origination fee of $100,000, which was added to the amount of the loan. The loan is evidenced by a Secured Promissory Note issued by us to Grow Hill. Grow Hill received a security interest in certain of our assets pursuant to a security agreement between us and Grow Hill (the "Security Agreement"), which does not include any assets of our subsidiaries.

 ****

On October 14, 2025, we received service of process for a lawsuit filed by Grow Hill against us in the District Court for the City and County of Denver, Colorado (Case No. 2025CV33546) alleging breach of contract and fraud. Pursuant to the complaint, Grow Hill stated that we were in default under the Secured Promissory Note due to a failure to timely make payments, and elected to accelerate all amounts due under the Secured Promissory Note, including a default fee equal to 1% of the outstanding principal amount. We are currently investigating available options to resolve the complaint and intend to vigorously defend the allegation of fraud.

The Company has accrued the outstanding note balance of $1,370,531 (net of warrant discount) as of December 31, 2025. The Company believes additional losses beyond the accrued amount are reasonably possible but not probable under ASC 450-20. No additional accrual has been recorded for the fraud allegation. Subsequent to year-end, the Company is in discussions for the Grow Hill debt to be acquired by a third party, which is expected to resolve the litigation.

***J Brrothers Settlement***

 ****

On August 8, 2025, we entered into a Settlement and Release Agreement (the "Settlement Agreement") with J Brrothers LLC ("J Brrothers") and Herb-a-More LLC relating to a dispute arising from amounts due for certain heating, ventilation and air conditioning equipment. Pursuant to the terms of the Settlement Agreement, among other things, we issued a promissory note to J Brrothers with an original principal amount of $395,556 and agreed to issued 150,000 unregistered shares of our common stock, or 6,000 shares after giving effect to a 1-for-25 reverse stock split to J Brrothers. The note accrues simple interest at an annual rate of 12% and has a maturity date of March 18, 2026. The note must be repaid in monthly installments over a period of eight months, with the first seven payments being $50,000 per month and the final monthly payment being $64,047. Any remaining principal and accrued but unpaid interest will become due and payable on the maturity date, and the note may be prepaid without penalty. The note includes customary representations and warranties, customary events of default and a 17% default interest rate.

 ****

***MJ's Market, Inc***

MJ's Market, Inc. v. Urban-Gro, Inc. et al, pending in the Suffolk County Superior Court in Massachusetts as Civil Action No. 2384-cv-02794. The original complaint, filed by MJ's Market, Inc, alleged that the Corporation prepared deign drawings for the plaintiff and subsequently sold those drawings to a competitor. The original complaint asserted claims for Breach of Contract; violation of M.G.L. c. 93A; Breach of the Covenant of Good Faith and Fair Dealing; Trademark Infringement; and Interference with Contractual Relations against the Corporation. An amended complaint has been filed which names 2WR of Colorado, Inc., which is characterized as a subsidiary or affiliate of the Corporation, in place of the *Corporation*. The lawsuit is ongoing.

The Company believes the underlying liability transferred with the divested subsidiary pursuant to the Stock and Asset Purchase Agreement and is pursuing dismissal from the case. No accrual has been recorded as any remaining loss to the Company is assessed as remote.

***RK Mechanical- complaint filed***

On June 27, 2025, RK Mechanical LLC ("RK") filed a complaint against UG Construction and certain other defendants, with SVC Manufacturing Inc. as cross-claimant and UG Construction as cross-defendant, in the Superior Court of Arizona for Maricopa County (Case No. CV2025-022680). The complaint alleged that UG Construction served as general contractor for the construction of a PepsiCo plant in Tolleson, Arizona, and that as a result of work completed by RK, UG Construction owed $1,522,716 to RK as a result of alleged breach of contract, breach of implied covenant of good faith and fair dealing, violation of the Arizona Prompt Payment Act, and lien foreclosure. On or about October 2025, a default judgment was entered against UG Construction for $1,511,716, plus prejudgment interest of $288,346 and post-judgment interest at 8.25% plus $10,057 in attorney fees.

The Company assesses the outcome as reasonably possible but not probable under ASC 450-20. The range of potential loss is not estimable at this time. No accrual has been recorded.

***Action Equipment- complaint filed***

On April 21, 2025, Action Equip. & Scaffold Co. ("Action") filed a complaint against UG Construction in the Superior Court of Arizona for Maricopa County (Case No. CV2025-014165). The complaint alleged that UG Construction owed Action $380,932 plus interest and attorneys' fees in connection with a contract pursuant to which Action leased equipment to UG Construction, and alleged breach of contract, breach of covenant of good faith and fair dealing, and unjust enrichment. The Company assesses the outcome as reasonably possible but not probable under ASC 450-20. No accrual has been recorded.

***Cullens - Complaint Filed & Company Filed Answer and Counter Suit***

On December 25, 2025, Christopher W. Cullens ("Mr. Cullens") filed a complaint against urban-gro, Inc. ("UG") and Bradley Nattrass ("Mr. Nattrass"), an individual, in District Court, Boulder County, State of CO (Case 2025CV031164). The complaint alleged that UG Mr. Cullens had earned and was vested in commissions totaling $650,000 which, pursuant to the Colorado Wage Claim Act ("CWA"), were earned, vested, and determinable wages that were due and payable immediately upon his discharge. Further, the complaint alleged that Mr. Cullens is entitled to a severance package that includes nine (9) months of his base salary and nine (9) months of COBRA premium payments.

On March 30, 2026, the Defendants filed an answer to the complaint, responding that they either deny the allegations in the complaint, or lack sufficient information or knowledge to admit or deny the allegations as "the Agreement" is vague and undefined in the Complaint.

On March 30, 2026, UG filed a counter suit against Mr. Cullens ("Counterclaim Defendant") alleging Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, and (Unjust Enrichment). On or about March 13, 2022, UG entered into the Acquisition Agreement and Plan of Merger with Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC (the "Acquisition Agreement"). The Acquisition Agreement sets forth the terms and conditions of urban gro's business relationship with Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC. Under Article VIII of the Acquisition Agreement Indemnification, Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC will indemnify and hold urban gro harmless under prescribed. On or about August 10, 2023, UG and Counterclaim Defendant entered into the Amended and Restated Indemnification Claim Agreement, and effective the date of this counter suit, the Defendant failed to pay UG as required under the Amended Indemnification Agreement and the Acquisition Agreement. UG has requested that the court award urban gro its losses and damages, costs, pre- and post-judgment interest, and attorneys' fees and costs pursuant to the Lease and otherwise allowed under Colorado law, in addition to any other relief this Court deems proper.

***Other – Trade Vendors***

Due to cash flow constraints and working capital issues, the Company has been delinquent in paying vendors, some of which have filed lawsuits seeking judgment for payment. The amounts due to these vendors are included in accounts payable in the consolidated balance sheet as of December 31, 2025.

**NOTE 13 – RISKS AND UNCERTAINTIES**

Concentration Risk

The tables below show customers who account for 10% or more of the Company's total revenues and 10% or more of the Company's accounts receivable for the periods presented:

*Customers exceeding 10% of revenue*

---

| | | |
|:---|:---|:---|
| | **Years Ended** | **Years Ended** |
| | **December 31,** | **December 31,** |
| <br>**Company Customer Number** | **2025** | **2024** |
| C000001462 | \* | 27% |
| C000002187 | \* | 23% |
| C000002552 | 12% | \* |
| C000001462 | 10% | \* |
| C000002607 | 18% | \* |
| C000002722 | 21% | \* |
| C000002655 | 61% | 39% |

---

*Customers exceeding 10% of accounts receivable*

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| <br>**Company Customer Number** | **2025** | **2024** |
| C000002187 | \* | 19% |

---

The table below shows vendors who account for 10% or more of the Company's total purchases and 10% or more of the Company's accounts payable for the periods presented:

 *vendors exceeding 10% of purchases*

---

| | | |
|:---|:---|:---|
| | **Years Ended** | **Years Ended** |
| | **December 31,** | **December 31,** |
| <br>**Company Vendor Number** | **2025** | **2024** |
| V000002503 | \* | 16% |
| V000001029 | 15% | \* |

---

\* Amounts less than 10%

Foreign Exchange Risk

Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, it may not mitigate currency risks.

**NOTE 14 – STOCK-BASED COMPENSATION**

Stock-based compensation expense for the years ended December 31, 2025 and 2024 was $826,471 and $1,426,877 respectively, all of which relates to RSU vestings and board grants. No compensation expense was recognized from stock option activity during either year, as no options were granted or exercised in 2025 or 2024." During the year ended December 31, 2025, 20,649 RSUs vested and were issued to employees and directors. During the year ended December 31, 2024, 19,101 RSUs vested and were issued to employees and directors. No cash flow effects are anticipated for stock grants.

The Company's shareholders approved the 2021 Omnibus Stock Incentive Plan, as amended (the "Omnibus Incentive Plan"), which provides for the issuance of incentive stock options, stock grants and stock-based awards to employees, directors, and consultants of the Company to reward and attract employees and compensate the Company's Board of Directors (the "Board") and vendors when applicable, up to an aggregate 1,100,000 authorized shares of common stock. In 2023, an additional 1,200,000 shares were authorized by the shareholders. The Omnibus Incentive Plan is administered by the Company's Board. Grants of RSUs under the Omnibus Incentive Plan are valued at no less than the market price of the stock on the date of grant. The fair value of the options is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the options, risk-free interest rate and expected volatility of the price of the underlying common stock of 100%. There is a moderate degree of subjectivity involved when estimating the value of stock options with the Black-Scholes option pricing model as the assumptions used are moderately judgmental. Stock grants and stock options are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Stock grants and stock options typically require a 1 to 3 year period of continued employment or service performance before the stock grant of RSUs or stock option vests.

The following schedule shows grants of RSU activity for the years ended December 31, 2025 and 2024:

---

| | |
|:---|:---|
|  | **Number of<br> Shares** |
| **Grants unissued as of December 31, 2023** | **23176** |
| Grants awarded | 50042 |
| Forfeiture/cancelled | (3853) |
| Grants vested and issued | (19102) |
| **Grants unissued as of December 31, 2024** | **50263** |
| Grants awarded |  |
| Forfeiture/cancelled |  |
| Grants vested and issued | (20649) |
| **Grants unissued as of December 31, 2025** | **29614** |

---

The following table summarizes grants of RSU vesting periods:

---

| | | |
|:---|:---|:---|
| **Number of Shares** | **Unrecognized Stock<br> Compensation Expense** | **As of**<br> **December 31,** |
| 16158 | $172605 | 2026 |
| 12470 | 11373 | 2027 |
| 986 | - | 2028 |
| **29614** | $**183978** |  |

---

The following schedules show stock option activity for the years ended December 31, 2025 and 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **Options** | **Weighted<br> Average<br> Remaining<br> Life (Years)** | **Weighted<br> Average<br> Exercise<br> Price** |
| Outstanding as of December 31, 2023 | 20073 | 4.67 | $170.25 |
| Issued |  |  |  |
| Exercised |  |  |  |
| Forfeited | (1784) |  | 169.50 |
| Outstanding as of December 31, 2024 | 18289 | 7.85 | 169.25 |
| Granted |  |  |  |
| Exercised |  |  |  |
| Forfeited | - |  |  |
| Outstanding as of December 31, 2025 | 18289 | 6.85 | $169.25 |
| Exercisable as of December 31, 2025 | 18289 | 6.85 | $169.25 |
| Exercisable as of December 31, 2024 | 18178 | 7.85 | $170.50 |

---

The following table summarizes stock option vesting periods under the Incentive Plans:

---

| | | |
|:---|:---|:---|
| **Number of Shares** | **Unrecognized Stock <br> Compensation Expense** | **As of <br> December 31,** |
| 2768 | $1511 | 2025 |

---

The aggregate intrinsic value of the stock options outstanding and exercisable at December 31, 2025 is $0.

**NOTE 15 – STOCKHOLDERS' DEFICIT**

*Common Stock*

 

The Company is authorized to issue 200,000,000 shares of common stock at $0.001 par value. At December 31, 2025 and 2024, there were 710,025 and 562,855 shares of common stock outstanding, respectively, after giving effect to the 1-for-25 reverse stock split effective February 9, 2026.

During the year ended December 31, 2025, the Company issued the following shares of common stock (all share amounts presented on a post-reverse stock split basis):

● 20,649 shares pursuant to the vesting of restricted stock unit grants under the Company's 2021 Omnibus Stock Incentive Plan;

● 6,000 shares to Gemini Finance Corp. as an amendment fee in connection with the amendment to the Loan Agreement and Promissory Note, valued at $109,500;

● 56,000 shares to Gemini Finance Corp. pursuant to the first and second tranches of the Gemini Settlement Agreement under Section 3(a)(10) of the Securities Act, valued at $319,000;

● 28,000 shares to Gemini Finance Corp. pursuant to the third tranche of the Gemini Settlement Agreement;

● 6,000 shares to J Brothers LLC in connection with a settlement agreement, valued at $53,550;

● 30,521 shares to Hudson Global Ventures LLC, valued at $267,819;

*Preferred Stock*

 

The Company is authorized to issue 3,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company's Board of Directors. The preferred stock has a par value of $0.10. As of December 31, 2025 and 2024, there were no shares of preferred stock outstanding.

 

*Treasury Stock*

As of December 31, 2025 and 2024, there were 57,993 shares of treasury stock outstanding, after giving effect to the 1-for-25 reverse stock split that was effective on February 9, 2026.

**NOTE 16 – INCOME TAXES**

The Company accounts for income taxes in accordance with the asset and liability method prescribed in ASC 740, "Accounting for Income Taxes." The Company has adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. Tax positions that meet the more likely than not threshold are then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered to be uncertain.

The Company has experienced cumulative losses for both book and tax purposes since inception. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and any tax assets that that the Company may be entitled to have been fully reserved based on management's current estimates. Management intends to continue maintaining a full valuation allowance on the Company's deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

The income tax benefit for the years ended December 31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Current: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | - | - |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;Foreign | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current | - | - |
| Deferred: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $(14608) | $(29705) |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;Foreign | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred | $(14608) | $(29705) |
| Total income tax expense (benefit) | $(14608) | $(29705) |

---

A reconciliation between the expected income tax provision at the federal statutory tax rate and the reported income tax provision for the periods ended are approximately as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Statutory Federal income tax rate | 21.0% | 21.0% |
| State and local income taxes, net of federal benefit | 3.8% | 3.8% |
| Stock-based compensation | -1.9% | 0.0% |
| Impairment of property and equipment | -0.8% | 0.0% |
| Change in valuation allowance | -22.0% | -22.0% |
| Change in state effective tax rate | 0.0% | -1.9% |
| Permanent differences - other | -0.1% | 0.0% |
| Goodwill impairment | 0.0% | 0.0% |
| Other | 0.2% | -0.8% |
| Effective income tax rate | 0.0% | 0.0% |

---

The tax effects of significant items comprising the Company's deferred taxes as of December 31, 2025 and 2024 are as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Years Ended** | **Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Federal, state and foreign NOL carryover | $19715000 | $14980000 |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 81000 | 369000 |
| &nbsp;&nbsp;&nbsp;Bad debts and other reserves | - | 766000 |
| &nbsp;&nbsp;&nbsp;Fixed assets | - | 113000 |
| &nbsp;&nbsp;&nbsp;Investments | 20239 | 23000 |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 706000 | 532000 |
| &nbsp;&nbsp;&nbsp;Interest expense limitation (§163(j)) | 717000 | 283000 |
| &nbsp;&nbsp;&nbsp;Other | 50000 | 195000 |
| Total deferred tax assets | 21287239 | 17261000 |
| Valuation allowance | (21287239) | (17829000) |
| Net deferred tax assets | - | (568000) |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Goodwill | - | 689000 |
| &nbsp;&nbsp;&nbsp;Intangible assets | - | 223000 |
| &nbsp;&nbsp;&nbsp;ROU assets | - | (359000) |
| Total deferred tax liabilities | - | 553000 |
| Net deferred tax asset (liability) | $- | $(15000) |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Valuation Allowance Rollforward: |  |  |
| &nbsp;&nbsp;&nbsp;Beginning balance | (17829000) | (9786000) |
| &nbsp;&nbsp;&nbsp;Change in valuation allowance | (3458239) | (8043000) |
| &nbsp;&nbsp;&nbsp;Reductions for dispositions/write-offs | - | - |
| Ending balance | $(21287239) | $(17829000) |

---

At December 31, 2025, the Company had $76.7 million of federal net operating loss which are set to expire beginning in 2037. The Internal Revenue Code contains provisions that may limit the net operating loss carryovers available to be used in any year if certain events occur, including significant changes in ownership interest.

Below is a table showing the gross net operating loss carryovers available at December 31, 2025 and their respective expiration:

---

| | | |
|:---|:---|:---|
|  | **Amount** | **Expiration** |
| Federal NOL — with expiration | $1945019 | 2037 |
| Federal NOL — indefinite life | $73121000 | Indefinite |
| Total Federal NOL | $75066019 |  |
| Various State NOL | $54000000 | 2037-2043 |
| Canada NOL | $1925000 | 2042 |
| Netherlands NOL | $2246000 | Indefinite |

---

In assessing the realizability of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As the Company evaluate the reversal of deferred tax liabilities, projections of future taxable income over the periods in which the deferred tax assets are deductible, and after consideration of the history of operating losses, the Company does not believe it is more likely than not that it will realize the benefits of net deferred tax assets and, accordingly, has established a valuation allowance on the net deferred tax assets. The valuation allowance increased by $3.5 million during 2025.

As of December 31, 2025 and 2024, the company has not recorded any unrecognized tax benefits related to uncertain tax positions. The Company does not believe it is reasonably possible that its unrecognized tax benefits will significantly change in the next twelve months.

The Company monitors proposed and issued tax law, regulations, and cases to determine the potential impact of uncertain income tax positions. At December 31, 2025, the Company had not identified any potential subsequent events that would have a material impact on unrecognized income tax benefits within the next twelve months.

Federal and State tax returns are open for examination for the tax years beginning December 31, 2017 for three years and four years from the date of utilization of any net loss carryforwards.

Realization of operating loss carryforwards to offset future operating income for tax purposes are subject to various limitations including change of ownership and current year taxable income percentage limitations. The Company has no credit carryforwards for tax purposes.

The Company's primary filing jurisdictions are the United States, Canada, and the Netherlands. Due to the Company's net operating loss carryforwards, the Company's income tax returns remain subject to examination by federal, foreign and most state taxing authorities for all tax years.

**NOTE 17 – WARRANTS**

The following table shows warrant activity for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Warrants** | **Weighted<br> Average<br> Exercise<br> Price** |
| Outstanding as of December 31, 2023 | 20467 | $218.50 |
| Exercised |  |  |
| Terminated/Expired | (1026) | 361.50 |
| Issued | 6400 | 62.50 |
| Outstanding as of December 31, 2024 | 25841 | 174.25 |
| Exercised |  |  |
| Terminated/Expired |  |  |
| Issued | - |  |
| Outstanding as of December 31, 2025 | 25841 | $174.25 |
| Exercisable as of December 31, 2025 | 25841 | $174.25 |
| Exercisable as of December 31, 2024 | 25841 | $174.25 |

---

The fair value of the warrants is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date, the contractual term of the options, the risk-free interest rate at the date of grant and expected volatility of the price of the underlying common stock of 100%. There is a moderate degree of subjectivity involved when estimating the value of warrants with the Black-Scholes option pricing model as the assumptions used are moderately judgmental.

**NOTE 18 – SEGMENTS**

An operating segment is defined as a component of a reporting entity that engages in business activities from which it recognizes revenues and incurs expenses with discrete financial information available that is evaluated regularly by the Chief Operating Decision Maker ("CODM") of the operating segment. The CODM utilizes this financial information to decide how to allocate resources to, and in assessing performance of, the operating segment. Management evaluates segment performance primarily based on operating segment gross profit.

The Company has identified the following continuing operating segments for fiscal year 2025. The Services segment was classified as discontinued operations effective August 27, 2025 and its results have been excluded from the segment disclosures below. See Note 4 – Discontinued Operations for further detail.

● Equipment systems - Operating segment that acts as an experienced vendor providing value-added reselling to clients when selling vetted best-in-call commercial horticulture lighting solutions, rolling and automated container benching systems, specialty fans, fertigation/irrigation systems, environmental control systems, and microbial mitigation and odor reduction systems.

● Construction design-build - Operating segment that engages as a general contractor to provide all the additional necessary parts to deliver clients' projects, from the initial estimate and bid process, to subcontractor selection, and management of all construction details.

In addition to the operating segments identified above, the Company recognizes other revenues and incurs costs at the corporate level where it develops and oversees the implementation of company-wide strategic initiatives and provides support to our operating segments by centralizing certain administrative functions. Corporate management is responsible for, among other things: evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of the Company's operating segments. Corporate costs include general and administrative expenses related to operating our corporate headquarters.

The Company's operating segments follow the same accounting policies used for our consolidated financial statements as described in Note 1 – Summary of Significant Accounting Policies. The results of each operating segment are not necessarily indicative of the results that would have occurred had the operating segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods.

The following tables present financial information relating to our operating segments for the fiscal years ended December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year ended December 31, 2025** | **Year ended December 31, 2025** | **Year ended December 31, 2025** | **Year ended December 31, 2025** |
|  | **Equipment** | **Construction** | **Corporate/other** | **Total** |
| Revenues | $8751226 | $8467451 | $180761 | 17399438 |
| Cost of revenues | 8344998 | 8730918 | 148968 | 17224884 |
| Gross profit | $406228 | $(263467) | $31793 | $174554 |
| Gross profit % | 5% | -3% | 18% | 1% |
| Income (Loss) before income taxes | $(8102710) | $(13432133) | $(159101) | $(21693945) |
| Total assets | $141844 | $190103 | $- | $331947 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year ended December 31, 2024** | **Year ended December 31, 2024** | **Year ended December 31, 2024** | **Year ended December 31, 2024** |
|  | **Equipment** | **Construction** | **Corporate/other** | **Total** |
| Revenues | $12245675 | $18604827 | $352798 | 31203300 |
| Cost of revenues | 10582731 | 20782689 | 226611 | 31592031 |
| Gross profit (loss) | $1662944 | $(2177862) | $126187 | $(388731) |
| Gross profit (loss) % | 14% | -12% | 36% | -1% |
| Income (Loss) before income taxes | $(10978807) | $(17102560) | $(1307616) | $(29388983) |
| Total assets | $4727454 | $10036318 | $135.910 | $14899682 |

---

**NOTE 19 – SUBSEQUENT EVENTS**

***Completion of the Merger***

 ****

On February 17, 2026, the Company completed the Merger with Flash Sports and Media, Inc. pursuant to the Merger Agreement dated February 17, 2026. Under the terms of the Merger Agreement, Flash stockholders received (i) shares of UGRO Common Stock equal to 19.99% of the outstanding shares of UGRO calculated based on the outstanding shares immediately prior to the issuance of 1,000,000 shares of Common Stock on January 23, 2026 (adjusted to 40,000 shares following the reverse stock split) as disclosed in the Current Report on Form 8-K filed January 29, 2026, and (ii) shares of UGRO Non-Voting Convertible Preferred Stock to be issued pro rata in proportion to their respective stock ownership in Flash, in an aggregate amount such that, upon effectiveness of the conversion, the total number of shares of UGRO Common Stock issuable to the stockholders of Flash shall equal a number of shares determined by dividing Flash's agreed equity valuation by $3.23, representing the closing price of UGRO Common Stock on February 17, 2026. The conversion of the Preferred Stock is subject to approval by the Company's stockholders in accordance with Nasdaq Listing Rule 5635(d). As a result of the Merger, the Company believes it has stockholders' equity in excess of $2.5 million. On a pro forma basis as of December 31, 2024, the combined entity had total assets of approximately $265.4 million (including goodwill of approximately $225.5 million), total liabilities of approximately $79.3 million, and total stockholders' equity of approximately $186.1 million.

***Board and Management Changes***

 ****

Following the Merger, Anita Britt resigned from the Board of Directors effective February 17, 2026. Ms. Britt did not advise the Company of any dispute or disagreement with the Company on any matter relating to the Company's operations, policies, or practices. Effective February 18, 2026, Donald Fell was elected to the Board and appointed to serve as a member of the Audit Committee and the Nominating Committee. David Hsu was appointed Chair of the Audit Committee, replacing Ms. Britt. The Company appointed Richard Akright and Eric Sherb to serve as Co-Chief Financial Officers. Mr. Akright previously served as Chief Financial Officer of urban-gro, Inc. and brings deep public company financial reporting, compliance, and operational finance experience. Mr. Sherb previously served as Chief Financial Officer of Flash Sports and Media, Inc. and contributes significant expertise in strategic finance, growth initiatives, and capital markets. Bradley Nattrass continues to serve as Chairman and Chief Executive Officer of the combined company.

***Auditor Change***

 ****

On February 27, 2026, the Company dismissed Sadler, Gibb & Associates, LLC ("Sadler") as the Company's independent registered public accounting firm. The decision to dismiss Sadler was approved by the audit committee of the Company's board of directors. Sadler's reports on the Company's consolidated financial statements as of and for the fiscal years ended December 31, 2022, 2023 and 2024 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. From the date Sadler was engaged through the date of dismissal, there were no disagreements with Sadler on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, and there were no reportable events. On March 3, 2026, Suri and Co., Chartered Accountants of Chennai, India were appointed to audit the Company's financial statements for the year ended December 31, 2025.

***Nasdaq Compliance***

 ****

On January 6, 2026, the Company received a determination letter from Nasdaq stating that because the Company did not hold an annual meeting of stockholders within twelve months from the Company's prior fiscal year end as required by Nasdaq Listing Rule 5620(a), the resulting non-compliance would be an additional basis for delisting the Company's securities. The Panel requested that the Company present its views in writing by January 9, 2026. On January 13, 2026 the Panel notified the Company that it had granted a further extension to regain compliance with the Stockholders' Equity Requirement, the Annual Meeting Requirement, and the Timely Filing Requirement on or before February 17, 2026 and with the Bid Price Rule on or before February 24, 2026.

On March 4, 2026, the Company received written notice from the Listing Qualifications staff of Nasdaq informing the Company that it had regained compliance with the Stockholders' Equity Requirement, the Annual Meeting Requirement, and the Timely Filing Requirement. Nasdaq has placed the Company on a one-year Discretionary Panel Monitor under Listing Rule 5815(d)(4)(A) to ensure ongoing compliance.

***Reverse Stock Split***

 ****

On February 9, 2026, the Company effected a 1-for-25 reverse stock split of its common stock, as approved by stockholders on January 30, 2026. Trading on a split-adjusted basis commenced on February 9, 2026.

 ****

 ****

***Annual Meeting and Shareholder Approvals***

On January 30, 2026, the shareholders of the Company approved the following at the Company's 2025 Annual Meeting of Stockholders: (i) an amendment to the Company's 2021 Omnibus Stock Incentive Plan to increase the number of shares authorized for issuance under the plan by 5,000,000 shares (prior to any reverse stock split) and to increase the individual annual award limit to 500,000 shares (prior to any reverse stock split), or 20,000 shares after giving effect to the 1-for-25 reverse stock split; (ii) an amendment to the Company's Amended and Restated Certificate of Incorporation to effect a reverse stock split of the shares of the Company's common stock at a ratio of not less than 1-for-2 and not greater than 1-for-25, with the exact ratio, effective time, and decision to implement to be determined by the Board of Directors; and (iii) an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 200,000,000 shares (the number of authorized shares of common stock is not affected by any reverse stock split).

***ELOC Purchase Agreement***

 ****

On February 4, 2026, the Company entered into an equity purchase agreement (the "ELOC Purchase Agreement") with Hudson Global Ventures, LLC (the "Investor"), pursuant to which the Company has the right, but not the obligation, to direct the Investor to purchase up to $25,000,000 of the Company's common stock (the "ELOC Shares") upon satisfaction of certain terms and conditions contained in the ELOC Purchase Agreement. Sales of the ELOC Shares, if any, are subject to certain limitations, and may occur from time to time at the Company's sole discretion over the approximately 24-month period commencing on the date of execution of the ELOC Purchase Agreement, unless the ELOC Purchase Agreement is earlier terminated pursuant to its terms.

The Investor has no right to require any sales by the Company but is obligated to make purchases at the Company's direction subject to certain conditions. Each purchase must involve an aggregate amount of shares of the Company's common stock of at least $25,000 but not exceeding the lesser of (i) $2,000,000 or (ii) 200% of the average daily trading volume of the common stock during the three trading days immediately before the date the Company directs the Investor to purchase the shares of common stock (the "Put Notice Date").

The purchase price to be paid by the Investor for the ELOC Shares will be the lesser of (i) ninety percent (90%) of the average of the three lowest traded prices of the Company's common stock during the ten trading days immediately preceding the date of the Put Notice (as defined in the ELOC Purchase Agreement) and (ii) ninety percent (90%) of the lowest traded price of the Company's common stock on any trading day during the period beginning on the date of delivery of the Put Notice and continuing through the date that is three trading days immediately following the Clearing Date (as defined in the ELOC Purchase Agreement).

Actual sales of ELOC Shares to the Investor from time to time will depend on a variety of factors, including, without limitation, market conditions, the trading price of the Company's common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The net proceeds that the Company may receive under the ELOC Purchase Agreement, if any, cannot be determined at this time, since the amount will depend on the frequency and prices at which the Company sells ELOC Shares to the Investor, the Company's ability to meet the conditions of the ELOC Purchase Agreement, the other limitations, terms and conditions of the ELOC Purchase Agreement, and any impacts of the beneficial ownership limitation (described below).

As consideration for the Investor's execution and delivery of the ELOC Purchase Agreement, the Company issued to the Investor certain common stock purchase warrant for the purchase of 55,556 shares of the common stock at an exercise price of $12.50 per share, subject to adjustment (the "Warrant"). Under the Warrant, the Investor may exercise the Warrant during the period commencing on February 4, 2026 and ending on 5:00 p.m. eastern standard time on the date that is five (5) years after February 4, 2026. In addition, the Company will pay up to $20,000 to the Investor's legal counsel for the Investor's expenses relating to the preparation of the ELOC Purchase Agreement.

The ELOC Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations of the parties.

The Company must obtain stockholder approval to issue an aggregate number of shares of common stock to the Investor, under the ELOC Purchase Agreement, in excess of 136,845 shares of common stock outstanding immediately prior to the execution of the ELOC Purchase Agreement.

In connection with the ELOC Purchase Agreement, the Company also entered a registration rights agreement with the Investor on February 4, 2026 (the "Registration Rights Agreement"). Under the Registration Rights Agreement, the Company is obligated to file with the SEC a registration statement for the resale by the Investor of a specified number of shares of the Company's Common Stock issuable according to the ELOC Purchase Agreement. The Company agreed to file such registration statement within forty-five (45) days of the execution of the ELOC Purchase Agreement, and to file one or more additional registration statements if necessary.

Unless earlier terminated as provided in the ELOC Purchase Agreement, the ELOC Purchase Agreement will terminate automatically on the earliest to occur of: (i) twenty-four (24) months after the execution of the ELOC Purchase Agreement, (ii) the date on which the Investor shall have purchased the maximum amount of ELOC Shares issuable under the ELOC Purchase Agreement, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the ELOC Purchase Agreement.

Pursuant to the ELOC Purchase Agreement, as long as the ELOC Purchase Agreement is effective, the Company agreed not, without the prior written consent of the Investor, to enter into an agreement whereby the Company has the right to "put" its securities to an investor or underwriter over an agreed period of time and at an agreed price or price formula. Additionally, the Company agreed, without the prior written consent of the Investor, not to (i) issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock (a) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (b) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) issues securities at a future determined price (a "Variable Rate Transaction"), provided, however, that an Equity Line of Credit shall not be deemed to be a Variable Rate Transaction.

In connection with the ELOC Purchase Agreement, the Company has reserved 200,000 shares of Common Stock with the Transfer Agent for issuance in connection with a Put Notice and/or an Exercise Notice. Such Reserve Shares do not represent issued or outstanding shares and are not being registered for resale pursuant to this registration statement.

The ELOC Purchase Agreement and Warrant were executed prior to the Company's 1-for-25 reverse stock split effected on February 9, 2026. All share numbers and per-share prices in this Current Report have been adjusted to reflect the reverse stock split. Under the terms of the Warrant, the exercise price and number of shares issuable upon exercise automatically adjusted upon the reverse stock split.

 **

***Loan Agreement***

 **

On February 4, 2026, the Company entered into a business loan and security agreement (the "Loan Agreement") with an effective date of February 3, 2026 (the "Effective Date") by and among, Agile Capital Funding, LLC, Agile Lending , LLC, a Virginia limited liability company, each an existing lender to the Company and each assignee that becomes a party pursuant to Section 12.1 of the Loan Agreement (the "Lenders"), the Company and urban-gro Canada Technologies Inc., a wholly owned subsidiary of the Company (individually, collectively, jointly and severally, the "Guarantors"). The Company expects to use the proceeds for general working capital purposes, with a primary focus on vendor payments related to the Company's efforts to comply with Nasdaq requirements.

Pursuant to the Loan Agreement, the Lenders extended to the Company a term loan of $105,000 (the "Term Loan") to be used to fund the Company's general business requirements. The Loan Agreement is for a term of twenty-eight weeks from the Effective Date (the "Maturity Date") and includes an administrative agent fee of $5,000 to be remitted to Agile Capital Funding, LLC which was added to the amount of the loan. The Company may make a full prepayment or partial prepayment of the Term Loan, however, upon the prepayment of any principal amount, the Company shall be obligated to pay a premium payment of such principal so paid, which shall be equal to the aggregate and actual amount of interest that would be paid through the Maturity Date (the "Prepayment Fee"); provided however that, if the Company makes a prepayment within 90 calendar days after the Effective Date, the Company will receive the discounted Prepayment Fee that is included in Exhibit E to the Loan Agreement. The Loan contains standard events of default and representations and warranties by the Company and the Lenders including a mandatory prepayment, and an additional five (5%) percent interest rate following the occurrence of an event of default.

As of December 31, 2025, the Company had ceased making the required weekly payments of $54,000. The last payment was made on or about September 9, 2025. The outstanding principal balance was $675,000 at December 31, 2025. On February 19, 2026, the Company entered into a Forbearance Agreement with Agile, establishing total outstanding indebtedness of $1,380,524 (inclusive of accrued interest, default interest at 5%, and prepayment premiums). In satisfaction of this balance, the Company issued 331,640 shares of common stock (post-split) to Hudson Global Ventures, LLC through a series of exchanges between February 27 and March 25, 2026. The Agile indebtedness was fully satisfied as of March 25, 2026.

The term loan is evidenced by a confessed judgment secured promissory note issued by the Company to the Lenders (the "<u>Promissory Note</u>"). Pursuant to the Loan Agreement, upon an event of default, the Lenders will receive a security interest in certain of the Company's assets, subject to certain exceptions.

 ****

***Private Placement of Common Stock***

On January 19, 2026, the Company entered into a private placement transaction pursuant to a Purchase and Subscription Agreement with One Eyed Jack Enterprises LLC, an accredited investor, in a private offering exempt from registration under applicable securities laws. Under the agreement, the Company agreed to issue 1,000,000 shares of its common stock at a purchase price of $0.10 per share for total gross proceeds of $100,000, on a pre-reverse stock split basis. After giving effect to the 1-for-25 reverse stock split, this is equivalent to 40,000 shares of common stock at an adjusted price of $2.50 per share.

***Gemini Settlement Share Issuances***

Subsequent to December 31, 2025, the Company commenced issuing shares of common stock to Gemini Finance Corp. pursuant to the Gemini Settlement Agreement and the Section 3(a)(10) fairness hearing approved on October 14, 2025. Per the Company's transfer agent records, Gemini held 6,000 shares (post-split) as of February 18, 2026, representing the 150,000 shares previously issued as an amendment fee adjusted for the 1-for-25 reverse stock split. Subsequent to the reverse stock split, the Company issued additional shares to Gemini pursuant to the settlement: 36,000 shares were issued on or about March 11, 2026, and an additional 36,000 shares were issued on or about March 24, 2026, with shares being surrendered and reissued in connection with Gemini's sales of common stock on the open market. As of March 27, 2026, Gemini held 42,000 shares (post-split) on the Company's transfer agent register, including both the original amendment fee shares and shares issued under the Section 3(a)(10) settlement. All issuances remain subject to the 4.99% beneficial ownership limitation and the 19.99% aggregate issuance cap set forth in the Gemini Settlement Agreement. As of March 27, 2026, total shares of common stock outstanding on the Company's transfer agent register were approximately 1,128,140 (post-split).

***Convertible Note and Warrants — Agile Hudson Partners***

 ****

On March 23, 2026, the Company entered into a Securities Purchase Agreement with Agile Hudson Partners LLC pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of up to $1,395,000 (the "AHP Note"), with a purchase price of up to $1,260,000 and an original issue discount of up to $135,000. The AHP Note bears a one-time interest charge of 12% on the principal amount. The first tranche of $420,000 was funded at closing (resulting in an outstanding principal amount of $465,000 including the prorated OID), with net proceeds to the Company of $415,000 after deducting $5,000 in legal fees. The AHP Note is convertible into shares of the Company's common stock at a conversion price equal to the lesser of (i) $2.50 per share or (ii) 75% of the average of the three lowest traded prices of the common stock during the ten trading days immediately preceding the conversion date, subject to adjustment. In connection with the first tranche, the Company issued to the Buyer a common stock purchase warrant to purchase 186,000 shares of common stock at an exercise price of $2.50 per share, exercisable for a period of five years from the date of issuance. Additional tranches under the AHP Note remain available but have not yet been funded as of the date of this report.

 ****

On April 7, 2026, the Company entered into a Securities Purchase Agreement with Agile Hudson Partners LLC, and the Company agreed to issue and sell to Agile Hudson Partners LLC a 12% secured promissory 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. Agile Hudson Partners LLC 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. Agile Hudson Partners LLC withheld $25,000 from the purchase price to cover the its 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, 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 Agile Hudson Partners LLC (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 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 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.

 **

***Agile Debt Conversion***

 **

On February 19, 2026, the Company entered into a Forbearance Agreement with Agile Capital Funding, LLC and Agile Lending, LLC, establishing total outstanding indebtedness of $1,380,524. In satisfaction of this balance, the Company issued 331,640 shares of common stock (post-split) to Hudson Global Ventures, LLC through exchanges between February 27, 2026 and March 25, 2026. The Agile indebtedness was fully satisfied as of March 25, 2026. The total indebtedness of $1,380,524 includes the original principal of $675,000, the February 2026 loan of $110,000, and approximately $595,524 representing accrued interest, default interest (at 5%), and prepayment premiums, all of which have been charged to the consolidated statements of operations in the applicable periods.

## Ex-19

**Exhibit 19**

**Insider Trading Policy**

**[to be inserted]**

## Exhibit 21.1

**Exhibit 21.1**

**SUBSIDIARIES OF THE REGISTRANT**

---

| | |
|:---|:---|
| **Entity Name** | **Jurisdiction of Formation** |
| urban-gro Canada Technologies, Inc. | Canada |
| urban-gro Europe B.V. | Netherlands |
| urban-gro Europe OPS B.V. | Netherlands |
| UGFS, LLC | Colorado |
| Impact Engineering, Inc. | Colorado |
| urban-gro Engineering, Inc. | Colorado |
| urban-gro Architect Holdings, LLC | Colorado |
| 2WR of Colorado, Inc. | Colorado |
| 2WR of Georgia, Inc. | Georgia |
| MJ12 Design Studio, Inc. | Colorado |
| Emerald Construction Management, Inc. | Colorado |
| Flash Sports & Media, Inc. | Delaware |

---

## Exhibit 23.1

**Exhibit 23.1**

![](ea028515001_ex23-1img1.jpg)

**<u>Independent Registered Public Accounting Firm's Consent</u>**

We hereby consent to the use in this Annual Report on Form 10-K of urban-gro, Inc. of our report dated April 15, 2026, relating to the consolidated financial statements of urban-gro, Inc. as of and for the year ended December 31, 2025 appearing in this Annual Report.

**/s/ Suri & Co., Chartered Accountants**

No. 443 & 445 Guna Complex, Chennai

Date: April 15, 2026

Place: Chennai, India

![](ea028515001_ex23-1img2.jpg)

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Bradley Nattrass, certify that:

1. I have reviewed this annual report on Form 10-K of urban-gro, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: April 15, 2026 | */s/ Bradley Nattrass* |
|  | Bradley Nattrass |
|  | Chairperson of the Board of Directors<br> and Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Eric Sherb, certify that:

1. I have reviewed this annual report on Form 10-K of urban-gro, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: April 15, 2026 | */s/ Eric Sherb* |
|  | Eric Sherb |
|  | Co-Chief Financial Officer |
|  | (Principal Financial Officer) <br> (Principal Accounting Officer) |

---

## Exhibit 31.3

**Exhibit 31.3**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 302 OF THE SARBANES OXLEY ACT OF 2002**

I, Richard A. Akright, certify that:

1. I have reviewed this annual report on Form 10-K of urban-gro, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: April 15, 2026 | */s/ Richard A. Akright* |
|  | Richard A. Akright |
|  | Fractional Chief Financial Officer<br> (Principal Financial Officer)<br> (Principal Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 USC, SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with this annual report of urban-gro Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission on January 16, 2026 (the "Report"), we, the undersigned, in the capacities and on the date indicated below, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1 .The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| **Dated: April 15, 2026** | */s/ Bradley Nattrass* |
|  | Bradley Nattrass |
|  | Chairperson of the Board of Directors and<br> Chief Executive Officer |
| **Dated: April 15, 2026** | */s/ Richard A. Akright* |
|  | Richard A. Akright |
|  | Fractional Chief Financial Officer<br> (Principal Financial Officer)<br> (Principal Accounting Officer) |
| **Dated: April 15, 2026** | */s/ Eric Sherb* |
|  | Eric Sherb |
|  | Eric Sherb |
|  | Co-Chief Financial Officer |
|  | (Principal Financial Officer) <br> (Principal Accounting Officer) |

---