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Item 9A. Controls and Procedures

2026-04-15 compared with 2026-01-16 · 2072 added, 1888 removed, 694 unchanged (85% of the section changed)

CONTROLS AND PROCEDURES

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.

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

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position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America

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.

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

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

There were no changes in

our internal control over financial reporting during our fiscal year ended December 31, 2024, 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.

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

● 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.

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;

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,

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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.

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

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The material weaknesses identified include:

of sufficient technical accounting expertise within the accounting function to appropriately

address complex technical accounting issues;

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.

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

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

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an attestation report of our registered public accounting firm regarding internal control over financial reporting.

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.

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, 2024, 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:

personnel resources within the accounting function have technical accounting expertise and

experience commensurate with our operations;

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;

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.

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;

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.

OTHER INFORMATION

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND

CORPORTE GOVERNANCE

The following table and text set forth the name, age, position with

the Company, and terms of service of each director as of January 13, 2026:

of the Board and Chief Executive Officer

Member of the Corporate Governance

and Nominating Committee.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORTE GOVERNANCE

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:

Director Since

Chairperson of the Board and Chief Executive Officer

David Hsu (2)(3)

Sonia Lo (2)(3)

Donald Fell (1)(2)

Member of the Corporate Governance and Nominating Committee.

Member of the Audit Committee.

Member of the Compensation

Information with respect

to the securities beneficially owned by each of the directors can be found under the heading “Security Ownership of Certain Beneficial

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”.

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These views add important insights within discussions of the Board.

was appointed as a director of our Company in June 2021.

Britt served as the Chief Financial Officer for Perry Ellis International,

from 2009 to 2017 and held senior financial leadership positions at Jones Apparel Group and Urban Brands.

She currently serves on

the board of directors for VSE Corporation, and Smith & Wesson Brands, Inc.

Britt is a Certified Public Accountant;

Leadership Fellow as designated by the National Association of Corporate Directors;

and holds a Carnegie Mellon Cybersecurity Oversight

Certification and a Harvard Kennedy School Executive Education Certificate in Cybersecurity:

The Intersection of Policy and Technology.

As part of her key qualifications and skills, Mrs.

Britt has extensive corporate finance, wall street and capital markets experience

in both public and private sectors.

She brings board and business leadership experience.

Britt is a member of the American Institute

of Certified Public Accountants.

David Hsu was

appointed as a director of our Company in June 2021.

Hsu previously served as the Chief Operating Officer of The Cronos Group, a

leading global cannabinoid company (“Cronos”), from 2016 to 2019.

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

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.

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.

Hsu also received a Certification in Financing and Deploying Clean Energy from Yale University, which he received

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.

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.

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.

Hsu also received a Certification in Financing and Deploying Clean Energy from Yale University, which he received in 2021.

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.

appointed as a director of our Company in October 2021.

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From May 2020 to May 2021, Ms.

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.

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

Lo has a Bachelor’s degree in Political Science & Mathematics from Stanford University and an MBA from Harvard

Business School.

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.

Lo has a Bachelor’s degree in Political Science & Mathematics from Stanford University and an MBA from Harvard Business School.

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.

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

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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.

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

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.

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

(2021–2023), Oceantech Acquisition Corp.

(2022–2023), Semper Paratus Acquisition Corp.

(2023–2024), Kernel Group

Holdings Corp.

(2023–2024), and Powerup Acquisitions Corp.

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).

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

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.

Sherb previously served as Chief Financial Officer of Flash Sports and Media, Inc.

and of Crown Reserve Acquisition Corp.

with 16 years of experience in accounting advisory, auditing, and mergers and acquisitions.

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,

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.

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.

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

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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.

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.

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Our Board has established

an Audit Committee, which consists of three independent directors, Mrs.

Britt (Chairperson), Ms.

The Audit Committee

held six meetings during 2024.

an Audit Committee, which consists of three independent directors, Mr.

Hsu (Chairperson), 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

● 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;

● 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

Britt 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.

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;

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

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 2024, consisted of three independent directors (as defined under the general independence standards

of the Nasdaq listing standards and our Corporate Governance Guidelines):

Wilks (Chairperson), Mrs.

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):

Wilks (Chairperson, until his resignation on August 26, 2025),

Britt, and Mr.

and Hsu and Mrs.

Britt are each a “non-employee director” (within the meaning of Rule 16b-3 of the Exchange Act).

The Compensation

Committee held two meetings during 2024.

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;

Following Mr.

Wilks’ resignation, the committee consisted of Mrs.

Britt and Mr.

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;

● Administer our stock plan.

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The Compensation Committee may not delegate its authority to any other person, other than to a subcommittee.

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.

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 2024, consisted of three independent directors, Mr.

a Corporate Governance and Nominating Committee, which, in 2025, consisted of independent directors, Mr.

Lowe (Chairperson), Mr.

Wilks and Mrs.

(until his resignation on August 26, 2025) and Mrs.

Following Mr.

Wilks’ resignation, the committee consisted of Mr.

Lowe and Mrs.

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;

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;

● Develop, recommend and oversee our

corporate governance principles, including our Code of Business Conduct and Ethics and our

Corporate Governance Guidelines.

● Recommend actions to increase the Board’s effectiveness;

● 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.

Our Board had established an ESG Committee, which

consisted of three independent directors, Mr.

Hsu (Chairperson), Mr.

The ESG Committee held

four meetings during 2024.

The Board decided to dissolve the ESG Committee on November 21, 2025.

The committee’s primary duties

● 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;

● Review stockholder proposals relating

to ESG issues and recommend responses to the Board.

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;

● Review stockholder proposals relating to ESG issues and recommend

responses to the Board.

Director Independence

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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.

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

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

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

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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.

The Company intends to file these

delinquent reports on or before the annual shareholder meeting.

EXECUTIVE COMPENSATION

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number of shares of common stock that equate to the RSU Value of $80,000 is determined each year by the Compensation Committee.

2024 grants, a price of $5.00 per share was used to determine the number of shares to be issued for the RSU Value of $80,000.

per share resulted in each director receiving a grant of 16,000 shares of common stock.

The closing market price of the Company’s

common stock on the day of the grant was $1.34, indicating that the actual value received by each director for their 16,000 share grant

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 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

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Nattrass is reported in the Summary Compensation Table.

($) (3)(4)(5)

Non-equity incentive plan

Change in pension value and nonqualified

deferred compensation earnings

All other compensation ($)

are scheduled to be paid quarterly to the directors.

Total fourth quarter 2024 fees of $80,000 have not yet been paid.

compensation ($)

pension value

compensation ($)

Fees were accrued, but not paid quarterly to the directors in 2025.

Additionally, fourth quarter 2024 fees have not yet been paid.

Wilks resigned as a director on August 26, 2025.

represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

chart below shows the aggregate number of outstanding stock options and restricted stock units held by each non-employee director as

of December 31, 2024.

Amounts represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

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.

(5) 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.

Stock Options

Restricted Stock Units

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

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.

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executive officers for 2025, consisting of Bradley J.

Nattrass, our Chairperson and Chief Executive Officer, and our two other most highly

compensated executive officers as of December 31, 2024, Richard A.

Akright, Chief Financial Officer, and Jason T.

Archer, Chief Operating

We have a Compensation Committee that, in 2024,

was comprised of Messrs.

Wilks and Hsu and Ms.

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.

Nattrass, our Chairperson and Chief Executive Officer, and the two other individuals

who served as executive officers during 2025:

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

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

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Name and Principal Position

Incentive/ Bonus

Other Compensation ($) (4)

Chairperson of the Board and Chief Executive Officer

Retention Incentive/ Bonus

All Other Compensation ($) (4)

Chairperson of the Board and CEO

Chief Operating Officer

Chief Financial Officer

represent cash salaries paid in each year plus the following stock compensation taken in lieu of salaries in 2023:

Nattrass - $68,197;

Archer - $16,597;

Akright - $15,806.

reflect actual cash payments made during the fiscal year and represent payments under a Retention Incentive Plan that was put in place

in 2023 with payments made in 2023 and 2024.

There were no bonus payments related to 2024 or 2023 performance.

represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

(4) Represents

amounts paid to Mr.

Amounts represent cash salaries paid in each year.

On September 1,

Nattrass voluntarily reduced his annual salary from $450,000 to $350,000.

Beginning on September 11, 2025, Mr.

salary started being accrued, but not paid.

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.

Amounts represent the aggregate fair value of stock grants based on the closing stock price on the date of the grant.

Represents amounts paid to Mr.

Nattrass, Mr.

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Akright for health insurance premiums paid on their behalf.

Nattrass received a stock grant of 135,000 shares in June of 2024.

Nattrass received a stock grant of 106,804 shares in January of

Archer received a stock grant of 78,750 shares in June of 2024.

Archer was promoted to Chief Operating Officer on January 11, 2023.

Archer received stock grants of 62,302 shares and 20,000 shares in January 2023.

Archer resigned on February 14, 2025.

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.

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.

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.

Akright received a stock grant of 47,468 shares on January 1, 2023.

Akright resigned on February 18, 2025.

Archer for six months of

Akright resigned on

February 18, 2025.

The Company and Mr.

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.

Akright entered into a consulting and transition agreement that was to pay Mr.

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 2024.

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

are a party to an employment agreement with Mr.

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Pursuant to the Nattrass Agreement, he receives 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 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).

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 severance payments equal to 12 months of regular base salary and target annual incentive pay and a lump sum payment for 12 months

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.

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,

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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.

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

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In connection with his resignation, the Company entered into a severance agreement with Mr.

Archer that was to pay him six

months of severance.

Archer that was to pay him six months

of severance.

We were a party to an employment agreement with Mr.

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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.

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,

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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

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.

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.

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

Akright resigned on February

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financial and accounting officer.

The agreement has an initial term of three months and will subsequently extend on a month-to-month

basis unless either party gives notice to terminate.

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.

Of this grant, 27,000 shares vest on each of January 1, 2025 and January 1, 2026 and 81,000 shares vest on January

In January 2023, Mr.

Nattrass received a restricted common stock grant of 106,805 shares.

Of this grant, 21,361 shares vest on

each of January 1, 2024 and January 1, 2025, and 64,083 shares vest on January 1, 2026.

Nattrass received a restricted common stock grant of 135,000 shares (5,400 shares on a post–1-for-25 reverse stock split

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,

In December 2025, Mr.

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.

Of this grant, 15,750 shares vest on each of January 1, 2025 and January 1, 2026 and 47,250 shares vest on January 1, 2027.

In January 2023, Mr.

Archer received a restricted common stock grant of 62,302 shares.

Of this grant, 12,460 shares vest on each of January

1, 2024 and January 1, 2025 and 37,382 shares vest on January 1, 2026.

In January 2023, Mr.

Archer received a restricted common stock

grant of 20,000 shares that vested on January 1, 2024.

In January 2023, Mr.

received a restricted common stock grant of 47,468 shares.

Of this grant, 9,494 shares vest on each of January 1, 2024 and January 1,

2025 and 28,480 shares vest on January 1, 2026.

received a restricted common stock grant of 78,750 shares (3,150 shares on a post–1-for-25 reverse stock split basis).

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.

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

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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.

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%

The Company matches 100% up to 4%.

Outstanding Equity Awards at Fiscal Year-End

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all of the outstanding stock awards held on December 31, 2025 by each of the Company’s named executive officers:

Number of shares or

stock that have

Market value of shares

of stock that

have not vested

Equity incentive plan

unearned shares, units

or other rights that

have not vested

Equity incentive plan

unearned shares, units

or other rights that

have not vested

The following table lists all of the outstanding

option awards held on December 31, 2024 by each of the Company’s named executive officers:

The following table lists

all of the outstanding option awards held on December 31, 2025 by each of the Company’s named executive officers:

Option Awards

unexercised options

unexercisable

Equity incentive

unearned options

exercise price

expiration date

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

January 13, 2026 by (i) each current director;

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 January 13, 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.

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 16,300,807 shares of common stock outstanding on January 13, 2026.

Unless otherwise indicated, the address for

each stockholder listed below is urban-gro, Inc., 1751 Panorama Point, Unit G, Lafayette, Colorado 80026.

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 (1)

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Named Executive Officers and Directors:

Anita Britt (former)

All current executive officers and directors as a group (6 persons)

(1) 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.

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 January 13, 2026 and that

will vest within 60 days of January 13, 2026.

Shares of common stock subject to stock options exercisable and restricted stock units that

will vest within 60 days after January 13, 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.

Nattrass has his vested common stock pledged as security

for a personal line of credit facility.

beneficial ownership of less than 1%

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.

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, 2024,

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.

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.

All outstanding awards relate to our

common stock.

Plan Category

Number of securities to be issued

upon vesting of grants and exercise of outstanding options, warrants and rights

Weighted- average exercise

of outstanding options, warrants

Number of securities remaining available

for future issuance under equity compensation plans

available for

Equity compensation plan approved by stockholders

Equity compensation plan not approved by stockholders

CERTAIN RELATIONSHIPS

AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS AND DIRECTOR INDEPENDENCE

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.

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

A director of the Company,

6 unchanged sentences

related party entities for the twelve months ended December 31, 2025 and 2024:

Twelve Months Ended

Revenues - Cloud 9

2 unchanged sentences

Total revenues from related party transactions

The table below presents

the accounts receivable from these related party entities as of December 31, 2024 and December 31, 2023:

Accounts receivable - Cloud 9

Accounts receivable - Potco

Accounts receivable - CEA Consortium

Total accounts receivable due from related party transactions

ACCOUNTING FEES AND SERVICES

Fees Paid to Sadler, Gibb and Associates,

LLC and BF Borgers CPA PC

PRINCIPAL ACCOUNTING FEES AND SERVICES

Fees Paid to Sadler, Gibb and Associates, LLC

The Company records professional

4 unchanged sentences

All Other Fees

Fees paid to Sadler, Gibb

and Associates, LLC for 2024 include fees related to the re-audit of the 2023 and re-reviews of the three quarters in 2023 and first

quarter of 2024 financial statements.

The following table shows

the aggregate fees for professional services provided to the Company by BF Borgers CPA PC for 2024 and 2023:

Audit-Related Fees

All Other Fees

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.

This category

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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 and BF Borgers

CPA PC with respect to 2024 and 2023 were pre-approved by the Audit Committee.

EXHIBITS, FINANCIAL

STATEMENTS SCHEDULES.

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.

EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.

A list of financial statements

7 unchanged sentences

Exhibit Description

Purchase Agreement (incorporated by reference to Exhibit 2.1 to Form 8-K filed June 28, 2021), by and between 2WR Entities, urban-gro,

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.

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)

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)

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)

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)

Bylaws of urban-gro, Inc.

(incorporated by reference to Exhibit 3.4 to Form 8-K filed October 30, 2020)

Amendment No.

1 to Bylaws of urban-gro, Inc.

(incorporated by reference to Exhibit 3.1 to Form 8-K filed January 12, 2021).

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

Description of urban-gro, Inc.’s Common Stock (incorporated by reference to Exhibit 4.1 to Form 10-K filed March 28, 2024).

of Secured Promissory Note (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 18, 2023).

of Security Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed on December 18, 2023).

of Continuing Guaranty (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 18, 2023).

Form of Secured Promissory Note (incorporated by reference to Exhibit 10.2 to Form 8-K filed on December 18, 2023).

Form of Security Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed on December 18, 2023).

Form of Continuing Guaranty (incorporated by reference to Exhibit 10.4 to Form 8-K filed on December 18, 2023).

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)

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).

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).

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).

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).

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).

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).

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)

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)

Insider Trading Policy

Subsidiaries of the Registrant.

Consent of Sadler, Gibb & Associates, LLC

Power of Attorney (included

on signature page).

Consent of Suri and Co.

Power of Attorney (included on signature page).

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

urban-gro, Inc.

Clawback Policy

Inline XBRL Instance Document.

4 unchanged sentences

Inline XBRL Presentation Linkbase Document.

Cover Page Interactive Data File (embedded within

the Inline XBRL document).

Cover Page Interactive Data File (embedded within the Inline XBRL document).

Denotes a management contract or compensatory plan or arrangement.

FORM 10-K SUMMARY

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.

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.

January 16, 2026

April 15, 2026

/s/ Bradley Nattrass

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Chairperson of the Board of Directors and

Chief Executive Officer

January 16, 2026

April 15, 2026

Bradley Nattrass

Chief Executive Officer

(Principal Executive Officer)

/s/ Richard A.

Fractional Chief Financial Officer

January 16, 2026

Financial Officer)

Co-Chief Financial Officer

April 15, 2026

(Principal Accounting Officer)

/s/ Eric Sherb

Co-Chief Financial Officer

April 15, 2026

(Principal Financial Officer)

/s/ David Hsu

January 16, 2026

/s/ Anita Britt

January 16, 2026

April 15, 2026

/s/ Donald Fell

April 15, 2026

/s/ James Lowe

January 16, 2026

INDEX TO FINANCIAL STATEMENTS

April 15, 2026

TO FINANCIAL STATEMENTS

Report of Independent Registered Accounting Firm (PCAOB ID NO:) F-2

Report of Independent Registered Accounting Firm (PCAOB ID NO:

4 unchanged sentences

Notes to the Consolidated Financial Statements F-10

of Independent Registered Accounting Firm

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

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of urban-gro,

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of urban-gro, Inc.

(“the Company”) as of December 31, 2024 and 2023, the related consolidated statements of

operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period 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

2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity

with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has

suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue

as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

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.

Basis for Opinion

6 unchanged sentences

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

We conducted our audit in accordance with the

standards of the PCAOB.

3 unchanged sentences

to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

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

1 unchanged sentence

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

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

1 unchanged sentence

Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

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 audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters

communicated below are matters arising from the current period audits of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements,

and (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 matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Goodwill Impairment

Critical Audit Matter

The Company designated

its annual goodwill impairment assessment date as October 1.

The Company has two reporting units for impairment testing purposes, and

as a result of such assessments, the Company recognized a goodwill impairment charge of approximately $8.6 million, leaving a goodwill

balance of approximately $1.1 million.

As described in Note 2 to the financial statements, the Company tests goodwill for impairment annually

at the reporting unit level, or more frequently if events or circumstances indicate it is more likely than not that the fair value of

a reporting unit is less than it’s carrying amount.

The Company’s evaluation of goodwill for impairment involves the comparison

of the fair value of each reporting unit to its carrying value.

The Company’s estimate of fair value for each reporting unit is

based on the present value of estimated future cash flows attributable to the respective reporting unit.

The Company utilized a third-party

valuation specialist to assist in the preparation of the impairment assessments.

The determination of the fair value requires management

to make significant estimates and assumptions.

We identified the evaluation

of the impairment analysis for goodwill as a critical audit matter because of the significant estimates and assumptions management made

in determining the fair value of its reporting units.

This required a high degree of auditor judgment and an increased extent of effort

when performing audit procedures to evaluate the reasonableness of such estimates and assumptions.

In addition, the audit effort involved

the use of professionals with specialized skills and knowledge.

How the Critical Audit

Matter Was Addressed in the Audit

Our audit procedures

related to the following:

management’s processes for estimating the fair value of its reporting units.

the Company’s discounted cash flow models and evaluating the valuation analysis for mathematical accuracy.

whether the valuation techniques applied were appropriate.

the significant assumptions provided by management or developed by the third-party valuation specialist related to revenues, earnings

before interest, taxes, depreciation, and amortization (“EBITDA”), income taxes, long term growth rates, and discount rates

to discern whether they are reasonable considering (i) the current and past performance of the entity;

(ii) the consistency with external

market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

In addition, professionals

with specialized skills and knowledge were utilized by the Firm to assist in the performance of these procedures.

Long-Lived Asset Impairment

Critical Audit Matter

As described in Note

2 to the consolidated financial statements, the Company reviews its long-lived asset group, including finite-lived intangible assets,

for impairment when events or changes in circumstances indicate that the carrying amount of such long-lived asset group may not be recoverable.

The Company tested its long-lived asset group for impairment on October 1, 2023, which resulted in the recognition of impairment charges

of approximately $2.7 million related to the Company’s intangible assets.

The Company utilized a third-party valuation specialist

to assist in the preparation of the impairment assessment.

The determination of the fair value requires management to make significant

estimates and assumptions.

We identified the evaluation

of the impairment analysis for long-lived assets as a critical audit matter because of the significant estimates and assumptions management

used in the fair value models.

Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required

a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit

Matter Was Addressed in the Audit

Our audit procedures

related to the following:

management’s process for developing the recoverability value and fair value estimates.

the appropriateness of the valuation models used.

the completeness and accuracy of underlying data used in the fair value estimates.

for reasonableness the significant assumptions used by management and the valuation specialist in the recoverability test including revenues,

EBITDA, and discount rates.

◾ Evaluating the significant assumptions provided by management or developed

by the third-party valuation specialist in the fair value models related to revenues, earnings before interest, taxes, depreciation, and

amortization (“EBITDA”), income taxes, long term growth rates, and discount rates to discern whether they are reasonable considering

(i) the current and past performance of the entity;

(ii) the consistency with external market and industry data;

and (iii) whether these

assumptions were consistent with evidence obtained in other areas of the audit.

In addition, the Firm

utilized professionals with specialized skills and knowledge to assist in the performance of these procedures.

Revenue Recognition

Critical Audit Matter

As described further

in Note 3 to the financial statements, revenues derived from certain contracts in the Services and Construction design-build segments

are recognized as performance obligations are satisfied over time.

The Company uses a ratio of project costs incurred to estimated total

costs for each contract to recognize revenue.

Under the cost-to-cost measure, the determination of progress towards completion requires

management to prepare estimates of the costs to complete.

In addition, the Company’s contracts may include variable consideration

related to contract modifications, and management must also estimate the variable consideration the Company expects to receive in order

to estimate the total contract revenue.

We identified revenue recognized over time to be a critical audit matter.

The principal consideration

for our determination that revenue recognized over time is a critical audit matter is that auditing management’s estimate of the

progress toward completion of its projects was complex and subjective.

Considerable auditor judgment was required to evaluate management’s

determination of the forecasted costs to complete its contracts as future results may vary significantly from past estimates due to changes

in facts and circumstances.

In addition, auditing the Company’s measurement of variable consideration is complex and highly judgmental

and can have a material effect on the amount of revenue recognized.

How the Critical Audit

Matter Was Addressed in the Audit

Our audit procedures

related to revenue recognized over time included the following, among others.

◾ We obtained an understanding

of the Company’s process related to the initial and ongoing monitoring of changes in the contract cost-to-cost estimates.

◾ We agreed a sample of costs allocated to contracts to supporting documentation

and recalculated revenues recognized based on the percentage of completion.

◾ For a selection of contracts,

we tested the Company’s cost-to-cost estimates by evaluating the appropriate application of the cost-to-cost method, testing the

significant assumptions used to develop the estimated cost to complete and testing the completeness and accuracy of the underlying data.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2024.

January 16, 2026

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

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.

of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

urban-gro, Inc.

CONSOLIDATED BALANCE SHEETS

As of December 31,

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

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

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:

(1) relate to accounts or disclosures that are material to the

financial statements;

(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.

Revenue Recognition

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 th 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

Our audit procedures related to revenue recognition

included the following, among others:

Equipment Systems

▪ We tested samples of revenue transactions by inspecting customer

agreements or sales orders.

▪ We tested completeness of revenue by mapping vendor purchase

orders to customer invoices for bill-to ship-to transactions.

▪ We performed analytical procedures, including variance analysis,

and evaluated related disclosures.

Construction Revenue

▪ We obtained contract-wise schedules for construction contracts

with revenue activity during the year.

▪ 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.

▪ 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

▪ 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.

▪ We inspected supporting documentation to test whether performance

obligations were satisfied and revenue was recognized in the appropriate period.

▪ 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.

Going Concern Assessment

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

Chennai, India

April 15, 2026

BALANCE SHEETS

Current assets:

2 unchanged sentences

Prepaid expenses and other current assets

Current assets of discontinued operations

Total current assets

2 unchanged sentences

Operating lease right-of-use assets

Intangible assets, net

Non-current assets of discontinued operations

Total non-current assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

3 unchanged sentences

Customer deposits

Contingent consideration

Notes payable, current

Operating lease liabilities, current

Current liabilities of discontinued operations

Total current liabilities

3 unchanged sentences

Operating lease liabilities, long-term

Non-current liabilities of discontinued operations

Total non-current liabilities

Total liabilities

Commitments and contingencies (Note 12)

SHAREHOLDERS’ EQUITY (DEFICIT)

Commitments and contingencies

Stockholders’ deficit:

Preferred stock, $ 0.10 par value;

1 unchanged sentence

0 shares issued and outstanding as of December 31, 2025 and 2024

Common stock, $ 0.001 par value:

30,000,000 shares authorized;

15,521,223 issued and 14,071,390 outstanding as of December 31, 2024, and 30,000,000 shares authorized;

13,522,669 issued and 12,072,836 outstanding as of December 31, 2023

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

Additional paid-in capital

6 unchanged sentences

( 102,768,208 )

Total shareholders’ equity (deficit)

Total stockholders’ deficit

( 45,165,234 )

Total liabilities and shareholders’ equity (deficit)

The accompanying notes are an integral part of

these consolidated financial statements

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

the Years Ended

and administrative

and amortization

of goodwill and intangibles

( 24,642,542 )

Total liabilities and stockholders’ deficit

accompanying notes are an integral part of these consolidated financial statements

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Construction design-build

Total revenues

Cost of revenue

Construction design-build

Total cost of revenue

Gross profit (loss)

Operating expenses:

from operations

General and administrative

Depreciation and amortization

Impairment of goodwill and intangibles

Impairment of property and equipment

Total operating expenses

Loss from operations

( 18,012,076 )

( 28,421,267 )

Non-operating

income (expense)

Non-operating income (expense):

Interest expense

( 1,675,713 )

in fair value of contingent consideration

of investment

on litigation settlement

( 1,021,947 )

income (expense)

non-operating income (expenses)

Interest income

Gain on extinguishment of debt

Loss on settlement

Loss on assets foreclosure

( 2,473,501 )

before income tax

Other income (expense)

Total non-operating income (expense)

( 3,681,869 )

Loss before income taxes

( 21,693,945 )

tax benefit (expense)

( 29,388,983 )

Income tax benefit

Net loss from continuing operations

( 21,679,337 )

Comprehensive

( 29,359,278 )

Net income loss from discontinued operations, net of tax

( 7,136,548 )

loss per share – basic and diluted

average shares - basic and diluted

The accompanying notes are an integral part of

these consolidated financial statements

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

Shareholders’

Balance, December 31, 2022

$ ( 22,099,032 )

$ ( 36,495,826 )

Net loss per share attributable common stockholders:

Net loss from continuing operations

Net loss from discontinued operations, net of taxes

Net loss per share

Weighted average common shares outstanding - basic and diluted

accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

Stockholders’

Balance at December 31, 2023

$ ( 66,272,382 )

$ ( 12,045,542 )

Stock-based compensation

4 unchanged sentences

( 36,495,826 )

Balance, December 31, 2023

Balance at December 31, 2024

( 102,768,208 )

( 12,045,542 )

( 24,642,542 )

Stock-based compensation

Stock issued for contingent consideration

Stock grant program vesting

Issuance of warrants

Issuance of common stock for loan modification

Issuance of common stock for loan settlement

Issuance of common stock for services

( 22,099,032 )

Balance, December 31, 2024

Balance at December 31, 2025

$ ( 124,867,240 )

1 unchanged sentence

$ ( 45,165,234 )

The accompanying notes are an integral part of

these consolidated financial statements

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

accompanying notes are an integral part of these consolidated financial statements

STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net loss from continuing operations

$ ( 21,679,337 )

2 unchanged sentences

Depreciation and amortization

Stock-based compensation expense

Amortization of the right-of-use

Amortization of debt discount

Stock-based compensation expense

Loss on litigation settlement

Loss on legal settlement

Impairment of investment

Impairment of property and equipment

Impairment of goodwill and intangibles

Change in fair value of contingent consideration

Change in contingent consideration from indemnification

Interest income on investments

Bad debt expense

Prepaid expenses and other current assets write off

Contract receivables write off

Inventory write-off

Non-cash interest expense

Deferred income tax benefit

Loss on assets foreclosure

Loss on disposal of assets

Changes in operating assets and liabilities (net of acquired amounts):

Changes in operating assets and liabilities:

Accounts receivable and contract receivables

( 11,948,620 )

Prepaid expenses and other assets

Accounts payable, contract liabilities, customer deposits and accrued expenses

Operating lease liability

Deferred tax liability

Net cash used in operating activities

Accounts payable, contract liabilities, and accrued expenses

Customer deposits

Operating lease liability, net

Net cash provided by (used in) operating activities of continuing operations

( 3,470,111 )

Net cash (used in) provided by operating activities of discontinued operations

Net cash provided by (used in) operating activities

( 2,821,187 )

Cash flows from investing activities:

Proceeds from sale of property and equipment

Purchases of property and equipment

Net cash provided by (used in) investing activities

Proceeds from the sale of property and equipment

Purchase of property and equipment

Net cash used in investing activities of continuing operations

Net cash provided by investing activities of discontinued operations

Net cash provided by (used in) in investing activities

Cash flows from financing activities:

Additions to notes payable

Repayment of finance lease ROU liability

Payments to settle contingent consideration

Proceeds from promissory notes

Repayments of notes payable

1 unchanged sentence

( 5,270,343 )

Net cash provided by (used in) financing activities

Repayment of finance lease liability

Net cash (used in) provided by financing activities of continuing operations

( 3,469,775 )

Net change in cash

Net cash used in financing activities of discontinued operations

Net cash (used in) provided by financing activities

( 3,481,535 )

Cash at beginning of period

Cash at end of period

The accompanying notes are an integral part of

these consolidated financial statements

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

For the Years Ended

Supplemental cash flow information:

Net change in cash

Cash at beginning of year

Cash at end of year

Supplemental disclosure of cash flow information:

Cash paid for interest

Net cash paid for income taxes

Cash paid for income taxes

Supplemental disclosure of non-cash investing and financing activities:

Common stock issued for services and debt modification

Stock issued for contingent consideration

Stock grant program vesting

Warrants issued in connection with line of credit

Warrants issued in connection with notes payable

3 unchanged sentences

Debt discount on notes payable

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

accompanying notes are an integral part of these consolidated financial statements

TO CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY

(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”.

2025, urban-gro, Inc.

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.

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 2024, 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.

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.

Liquidity and Going Concern

The Company has produced

multiple consecutive years of net losses and negative cash flows.

The financial results described in these financial statements and our

financial position as of December 31, 2024 raise substantial doubt about our ability to continue as a going concern.

Company has recently taken actions to strengthen its liquidity, including decreasing headcount and operating expenses to expedite the

Company’s path to cash flow positive results.

If necessary, the Company will seek to raise capital by issuing additional equity

shares either through a private placement or on the open market.

The Company may also seek to obtain additional debt financing for which

there can be no guarantee.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation, Principles of Consolidation

and Business Combinations

These consolidated financial statements include the accounts of urban-gro,

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.

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.

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”).

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.

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

Amount written off

Property and equipment

Trade receivables

Contract receivables

Prepaid expenses and other current assets

February 17, 2026, the Company completed its merger (the “Merger”) with Flash Sports and Media, Inc.

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”),

As a result of the Merger, Merger Sub merged with and into Flash, with Flash surviving as a wholly owned subsidiary of the

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.

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.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation, Principles of Consolidation and Business Combinations

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.

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”)

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.

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.

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

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.

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.

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

Trading on a split-adjusted basis commenced on February 9, 2026.

All shares and per share amounts have been presented retroactively.

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, inventory write-offs, allowance for deferred tax assets and deferred tax liabilities, and

allowance for bad debt.

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:

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.

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.

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.

Sheet Classifications

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

A one-year period is used to classify all other current assets and liabilities when not otherwise prescribed by the applicable

accounting principles.

Assets and Liabilities

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

and Reporting Currency and Foreign Currency Translation

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).

Value of Financial Instruments

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.

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

Quoted prices in active

markets for identical assets or liabilities that the entity has the ability to access.

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

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, 2024 and 2023.

in non-marketable equity securities are carried at cost less other-than-temporary impairments as of December 31, 2024 and 2023.

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, 2024 and 2023.

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, 2024 and 2023, 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

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:

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

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.

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.

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

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.

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,

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.

Receivable, Net

Accounts Receivable

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.

The Company’s allowance for expected credit losses for the years ended December 31, 2024

and 2023 was $ 3,277,083 and $ 284,745 , respectively.

Non-trade Accounts Receivable

Non-trade accounts receivable represents amounts owed to the Company

that arise outside of its regular operating activities.

Non-trade accounts receivable as of December 31, 2024 and 2023 were comprised

of the remaining Indemnified Loss receivable from the majority shareholder of Emerald further detailed in Note 1 – Organization,

Acquisitions, Business Plan, and Liquidity .

On March 27, 2023, the Company entered into an agreement to settle litigation and received

a cash payment of $ 2,400,000 related to the non-trade accounts receivable involving fraudulent wire transactions of $ 2,400,000 included

in the December 31, 2022 balance.

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.

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

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.

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.

and Equipment, net

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

4 unchanged sentences

The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.

No impairment charges were recorded for the years ended December 31, 2024 and 2023.

The estimated useful lives

for significant property and equipment categories are as follows:

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

Computer and technology equipment 3 years

4 unchanged sentences

Software 3 years

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

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 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

Lease Right of Use Assets

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

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.

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.

Company does not recognize ROU assets and lease liabilities for short-term leases that have an initial term of 12 months or less.

Company recognizes the lease payments associated with short-term leases as an expense on a straight-line basis over the lease term.

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 %.

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

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

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 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;

are reported in the “Intangible Asset” line on the balance sheet.

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.

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.

of Long-lived Assets

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.

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.

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

(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

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

(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.

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

For equipment systems contracts,

the Company’s policy is to collect deposits from customers 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.

Advertising Costs

The Company recognizes advertising costs in the periods the costs are

Prepayments made under contracts are included in prepaid expenses and expensed when the advertisement is run.

Total advertising

expenses incurred for the years ended December 31, 2024 and 2023 were $ 53,050 and $ 516,522 , respectively.

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.

The Company estimates the

fair value of warrants at the respective balance sheet dates using the Black-Scholes option-pricing model based on the estimated market

value of the underlying common stock at the valuation measurement date, the remaining contractual term, risk-free interest rate, and

expected volatility of the price of the underlying common stock.

There is a moderate degree of subjectivity involved when using option

pricing models to estimate the warrants and the assumptions used in the Black-Scholes option-pricing model are moderately judgmental.

The Company files income

tax returns in the United States, Canada, and the Netherlands, and state and local tax returns in applicable jurisdictions.

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.

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

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.

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.

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.

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.

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

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.

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.

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.

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

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.

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.

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.

treasury stock method would be used to calculate diluted earnings per share for potentially dilutive stock options and share purchase

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.

Issued Accounting Pronouncements

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”).

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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.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic

Improvements to Income Tax Disclosures (ASU 2023-09), 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.

This guidance will be effective for fiscal years beginning after December 15, 2024.

The Company is

evaluating the impact of this ASU on its consolidated financial statements.

There are other various

updates recently issued by the FASB, most of which represented technical corrections to the accounting literature or application to specific

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.

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

The Company recognizes

revenue predominantly from the sale of equipment systems, services, 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,

2024 and 2023:

For the twelve months ended December 31, 2024

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.

3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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:

Years ended December 31,

Equipment systems

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Relative percentage

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.

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.

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.

systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified

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

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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 for 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

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.

The Company recognizes

equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied.

satisfaction of equipment system revenues, the Company recognizes revenue when control of the promised good transfers to the customer,

which predominately occurs at the time of shipment.

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.

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

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

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.

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.

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.

6 unchanged sentences

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.

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.

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;

2 unchanged sentences

time are included in contract assets and contract liabilities.

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:

As of December 31,

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

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.

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

Contract assets

Revenue recognized in excess of amounts paid

or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage

Retainage included in contract assets

due to being conditional on something other than solely passage of time

Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage

Retainage included in contract assets due to being conditional on something other than solely passage of time

Less:-Contract receivable write-off

( 4,034,280 )

Total contract assets

As of December 31,

Contract liabilities

Payments received or receivable (contract receivables)

in excess of revenue recognized on uncompleted contracts (contract liability)

Retainage included in contract liabilities

due to being conditional on something other than solely passage of time

Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage

Retainage included in contract liabilities due to being conditional on something other than solely passage of time

Total contract liabilities

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.

NOTE 4 – 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”).

CEA Consortium contracts services from the Company related to their business model.

The table below presents

the revenues from related parties:

For the years ended

CEA Consortium

Total revenues from related party transactions

The table below presents

the accounts receivable from related parties as of December 31, 2024, and December 31, 2023:

CEA Consortium

Total accounts receivable due from related party transactions

NOTE 5 – 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

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.

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.

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.

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 .

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.

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

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 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

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..

Carrying amount of assets and liabilities:

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment, net

Operating lease right-of-use assets

Intangible assets, net

Accounts payable

Accrued expenses

Customer deposits

Operating lease liabilities, current

Operating lease liabilities, long-term

Total carrying amount (net)

Consideration from sale of shares of stock and assets

Consideration from sale of customer list

Gain on sale or discontinuation of subsidiary companies

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.

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.

of the discontinued operations for the years ended December 31, 2025 and 2024 consist of the following:

Total revenues

Cost of revenue

Total cost of revenue

Operating expenses:

General and administrative

Depreciation and amortization

Impairment of goodwill and intangibles

Total operating expenses

Loss from discontinued operations

( 7,108,852 )

Non-operating income (expense):

Gain on sale of subsidiaries and assets

Interest expense

Other income (expense)

Total non-operating income (expense)

Income (loss) before income taxes

( 7,136,548 )

Income tax benefit

Net loss from discontinued operations, net of tax

$ ( 419,695 )

$ ( 7,136,548 )

Net loss per share from discontinued operations-basic and diluted

Weighted average common shares outstanding - basic and diluted

5 – RELATED PARTY TRANSACTIONS

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.

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

table below presents the revenues from related parties:

Total Revenue

6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

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:

Vendor prepayments

Prepaid services and fees

Deferred financing cost (See Note 10 - Debt)

Total prepaid expenses and other current assets

Inventories, consisting

primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined using the weighted-average

Other current assets

Prepaid expenses and other assets

decrease in prepaid expenses includes amounts disposed of in connection with the August 27, 2025 sale of certain subsidiaries.

4 – disposition

consisting primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined using the weighted-average

The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based

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Once written down, inventories are carried at this lower basis until sold or scrapped.

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and Equipment, net balances are summarized as follows:

As of December 31,

Computer and Technology Equipment

the year ended December 31, 2025, the Company recorded an inventory write-down of $ 172,920 to reflect the net realizable value of its

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.

7 – PROPERTY AND EQUIPMENT, NET

and Equipment, net balances are summarized as follows:

Computers and technology equipment

Furniture and fixtures

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Other equipment

Impairment of property and equipment

Accumulated depreciation

1 unchanged sentence

( 1,507,854 )

Total Property and equipment, net

Total Property and equipment,

The total depreciation expense for the years ended December 31, 2025

and 2024 was $ 349,364 and $ 607,466 , respectively.

NOTE 7 – INVESTMENTS

On October 30, 2021,

the Company participated in a convertible note offering of Xtraction Services, Inc., a/k/a XS Financial Inc.

(“XSF”), a specialty finance company providing capital expenditure financing solutions, including equipment leasing, to CEA

companies in the United States.

The Company invested $ 2,500,000 of a total $ 43,500,000 raised by XSF.

Prior to any Nasdaq listing, the

investment incurs 9.5 % interest payable, of which, 7.5 % is cash interest and 2.0 %.

is interest paid in kind.

Subsequent to any Nasdaq

listing, the investment incurs 8.0 % interest.

The debt matured on October 28, 2023, with a one-year option at the sole discretion

of XSF to extend the maturity date.

In addition, the Company received 1.25 million warrants denominated in Canadian dollars (“C$”)

with a C$ 0.45 share price as subject to the warrant instrument.

No value was attributed to the warrants at the time of the investment.

In August 2023, the Company entered into an agreement to sell back its investment to XSF for $ 2.3 million and cancel the warrants.

The Company received the $ 2.3 million in proceeds on August 30, 2023.

In connection with the agreement to sell the investment, the

Company recorded an impairment loss of $ 0.3 million for the year ended December 31, 2023.

NOTE 8 – GOODWILL & INTANGIBLE ASSETS

The Company has recorded goodwill in conjunction with acquisitions

it has completed.

The goodwill balances as of December 31, 2024 and 2023 were $ 1,080,638 and $ 9,688,975 .

Goodwill is not amortized,

but tested for impairment annually.

The Company recorded a goodwill impairment charge of $ 8,608,337 for the year ended December 31,

Intangible Assets

Intangible assets as of

December 31, 2024 and 2023 consisted of the following:

As of December 31, 2024

Finite-lived intangible assets:

Trademarks and trade names

Backlog and other

Total finite-lived intangible assets:

As of December 31, 2023

Finite-lived intangible assets:

Customer relationships

$ ( 1,004,743 )

Trademarks and trade names

Backlog and other

Total finite-lived intangible assets:

( 2,391,997 )

Indefinite-lived intangible assets:

Total indefinite-lived intangible assets

intangible assets, net

$ ( 2,391,997 )

The Company recorded an impairment charge of $ 2,673,742 related to

intangible assets for the year ended December 31, 2024.

Amortization expense for intangible assets subject to amortization

for the years ended December 31, 2024 and 2023 was $ 629,086 and $ 1,056,180 , respectively.

The estimated future amortization

expense for intangible assets subject to amortization at December 31, 2024, is summarized below:

Estimated Future

Year ending December 31,

Amortization Expense

Total estimated future amortization expense

NOTE 9 – ACCRUED EXPENSES

Accrued expenses are summarized

As of December 31,

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.”

8 – GOODWILL & INTANGIBLE ASSETS

Company had recorded goodwill and intangibles in conjunction with the acquisitions it had completed.

Goodwill was not amortized.

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.

9 – ACCRUED EXPENSES

expenses are summarized as follows:

Accrued operating expenses

4 unchanged sentences

Accrued sales tax payable

Total accrued expenses

Accrued sales tax payable

is comprised of amounts due to various states and Canadian provinces for 2017 through 2023.

NOTE 10 – NOTES PAYABLE

The table below presents amounts due for notes payable as of December 31,

2024 and 2023.

Line of credit

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.

the full accrued liability is reflected in the accompanying consolidated balance sheet at the amount recorded in the Company’s books.

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.

10 – NOTES PAYABLE

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

Gemini line of credit

Grow hill note, net

Agile capital

Other financing agreements

3 unchanged sentences

Notes payable, long-term

On December 13, 2023, UG

Construction, Inc.

d/b/a Emerald Construction Management, Inc.

(“UG Construction”), 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.

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”), subject 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.

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 hundredths percent ( 1.75 %).

In connection with entering

in the Line of Credit, the Company has 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 will be due

if and when UG Construction draws more than $ 4,500,000 from the Line of Credit.

Line of Credit with Gemini Finance Corp.

On December 13, 2023, UG Construction,

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”).

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 %).

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:

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 will issue 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

The Placement Agent’s Warrants will be 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 will 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.).

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

As part of the Asset Purchase

Agreement of DVO, a non-negotiable promissory note in the aggregate principal amount of $ 3,806,250 , payable to DVO was issued effective

November 1, 2022 (the “DVO Promissory Note”).

The principal amount, together with the simple interest accrued on the unpaid

principal amount outstanding was to be paid by the Company on a quarterly basis for the first four consecutive quarters, with the first

payment paid in January 2023, and the remaining three payments due ten days following the end of each subsequent fiscal quarter thereafter

until the earlier of the end of the fourth full fiscal quarter following the closing date December 31, 2023 or the payment in full of

all amounts due.

In the third quarter of 2023, a portion of that quarter’s note payment was extended to the first quarter of 2024.

The DVO Promissory Note may be prepaid in whole or in part at any time without premium or penalty;

provided, that each payment shall

be accompanied by payment of all unpaid costs, fees and expenses, if any, which are due plus all accrued and unpaid interest due as of

the date of such prepayment.

The outstanding principal

balance under the DVO Promissory Note shall bear simple interest at a variable rate per annum equal to the rate of interest most recently

published by JP Morgan Chase & Co.

as the “prime rate” (the “Prime Rate”).

Initially, interest will accrue

at the Prime Rate as of the date of the DVO Promissory Note.

The interest rate will be adjusted on a quarterly basis as of the first

day of each full fiscal quarter following the first full fiscal quarter after the closing date to the then current Prime Rate.

In connection

with the extension of the DVO Promissory Note payment to the first quarter of 2024, the interest rate was revised to a fixed rate of

10 %, with principal and interest to be paid on a weekly basis.

On October 1, 2024, the Company,

entered into a loan with Grow Hill, LLC, a Washington limited liability company (“Grow Hill”).

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.).

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.

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

This resulted in an expense of $ 109,500 , which is included in interest expense on the condensed consolidated statement of

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 )

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

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

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.

Agreement with Grow Hill, LLC

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:

12 unchanged sentences

Prepayment requires at least one Business Day’s notice.

Required if the Company fails to meet the Receivable Ratio negative covenants

or events of default.

Collateral and Security

● Collateral:

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

Defined in the Security Agreement.

The Company grants a perfected security interest in the Collateral to the Grow

The loan became effective on October 1, 2025, when the Company issued Warrants to the Grow Hill for 160,000 shares of Borrower’s common stock at $ 2.50 /share, exercisable immediately and valid for five years .

● Affirmative

The Company grants a perfected security interest in the Collateral to the Grow Hill.

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.

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

with all applicable laws and regulations, including tax payments.

with audits of accounts receivable (the Company pays audit fees unless an Event of Default

◾ 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 :

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

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

a Receivable Ratio of at least 2.00 :

1.00 , calculated monthly.

Events of Default

failure to pay principal or interest, breach of covenants, misrepresentation, insolvency,

or legal challenges to the validity of the Loan Documents.

● Consequences:

Grow Hill may accelerate repayment, enforce security interests, or exercise other remedies.

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, 2024 and 2023, the Company has seven operating

type leases with an imputed annual interest rate of 11 %.

Each of the Company’s operating type leases are utilized as office space

with one lease also including a warehouse for inventory.

Five of the leases were acquired by the Company in connection with the acquisitions

of 2WR, Emerald, and DVO.

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.

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.

Loan and Security Agreement with Agile Entities

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,

and urban-gro Architect Holdings, LLC, each a wholly owned subsidiary of the Company (individually, collectively, jointly and severally,

the “Guarantors”).

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.

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.

Line of Credit

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.

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.

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.

Agreement and Promissory Note with J Brrothers LLC

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

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

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

other financing agreements relate to short-term financing of the Company’s insurance policies and are at an average interest rate

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.

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.

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.

As of December 31,

2024 and 2023, right of use assets were $ 1,534,560 and $ 2,041,217 , respectively, and for the years ended December 31, 2024 and 2023

lease expense was $ 730,339 and $ 460,347 , respectively.

The following is a summary

of finance and operating lease liabilities :

As of December 31,

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

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.

following is a summary of finance and operating lease liabilities :

Operating lease liabilities related to right of use assets

1 unchanged sentence

Less current portion

The following is a schedule

showing total future minimum lease payments for the Company’s operating leases:

For the years ending December 31,

Lease Payments

Total minimum lease payments

Amount representing interest

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

Period Ended December 31,

Total lease payments

Less imputed interest

Net lease obligations

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.

12 – COMMITMENTS AND CONTINGENCIES

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.

Loan Agreement Amendment and Default

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.

(“UG Construction”)

entered into (i) an interest only asset based revolving loan agreement (the “Loan Agreement”) with Gemini Finance Corp.

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

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”).

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

In connection with the execution of the Amendment, we issued to Gemini, as an amendment fee, 150,000 shares of our common stock

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.

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.

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.

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.

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

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

2 unchanged sentences

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.

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:

Gross receivables of Emerald

Less:-Notes payable

Loss on assets foreclosure

August 29, 2025, Gemini commenced a lawsuit captioned Gemini Finance Corp.

UG Construction, Inc.

, 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,

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.

, 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”).

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

Additionally, Gemini agreed to use its best efforts to not sell common stock exceeding 10 % of our daily volume on any given trading

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

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

2025CV33546) alleging breach of contract and fraud.

Pursuant 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 intends 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.

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 issued 150,000 unregistered shares of our common stock 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.

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.

MJ’s Market, Inc

MJ’s Market, Inc.

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.

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

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.

Brrothers Settlement

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

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.

Urban-Gro, Inc.

et al, pending in the Suffolk

County Superior Court in Massachusetts as Civil Action No.

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;

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.

Breach of the Covenant of Good Faith and Fair Dealing;

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.

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.

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

For the Year Ended

Customers Exceeding 10% of Revenue/$:

C000001462 21 % *

C000002187 18 % 28 %

C000002463 * 15 %

Customers exceeding 10% of accounts receivable

For the Year Ended

Customers exceeding 10 % of accounts receivable

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

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.

Mechanical- complaint filed

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

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.

accrual has been recorded.

Equipment- complaint filed

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

Cullens - Complaint Filed & Company

Filed Answer and Counter Suit

On December 25, 2025, Christopher

Cullens (“Mr.

Cullens”) filed a complaint against urban-gro, Inc.

(“UG”) and Bradley Nattrass (“Mr.

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

Cullens is entitled to a severance package that includes nine (9) months of his base salary and nine (9) months of COBRA premium

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.

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

The amounts due to these vendors are included in accounts payable in the consolidated balance sheet as of December 31, 2025.

13 – RISKS AND UNCERTAINTIES

Concentration

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:

exceeding 10% of revenue

Company Customer Number

exceeding 10% of accounts receivable

Company Customer Number

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

For the Years Ended

Company Vendor Number

* Amounts less than 10%

Vendors exceeding 10% of accounts payable:

As of December 31,

Company Vendor Number

* 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.

Exchange Risk

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.

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

However, even if we develop a hedging program, it may not mitigate currency risks.

NOTE 14 – STOCK-BASED COMPENSATION

14 – STOCK-BASED COMPENSATION

Stock-based compensation expense for the years ended December 31, 2025

2024 and 2023 was $ 1,426,877 and $ 2,199,046 , respectively based on the vesting schedule of the RSUs and Stock Options (“Options”).

During the year ended December 31, 2024, 477,574 RSUs vested and were issued to employees and directors.

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,

1 unchanged sentence

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.

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 %.

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, 2024 and 2023:

The Omnibus Incentive Plan is administered by the Company’s

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.

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.

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

Grants unissued as of December

2 unchanged sentences

Grants vested and issued

Grants vested unissued at year-end

Grants unissued as of December 31, 2024

3 unchanged sentences

Grants unissued as of December 31, 2025

The following table summarizes

grants of RSU vesting periods:

Unrecognized Stock

Compensation Expense

As of December 31,

The following schedules show

stock option activity for the years ended December 31, 2024 and 2023:

Stock options outstanding as of December 31, 2022 601,427 5.49 $ 6.84

following table summarizes grants of RSU vesting periods:

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

Options Weighted

Life (Years) Weighted

Outstanding as of December 31, 2023 20,073 4.67 $ 170.25

Exercised - - -

Forfeited ( 1,784 ) - 169.50

Stock options outstanding at December 31, 2023 501,829 4.67 $ 6.81

Stock options exercisable at December 31, 2023 471,288 0.00 $ 6.70

Weighted Average

Stock options outstanding as of December 31, 2023 501,829 4.67 $ 6.81

Issued 0 0.00 $ —

Outstanding as of December 31, 2024 18,289 7.85 169.25

Granted - - -

Exercised - - -

Forfeited - - -

Stock options outstanding at December 31, 2024 457,220 7.85 $ 6.77

Stock options exercisable at December 31, 2024 454,452 7.85 $ 6.82

The following table summarizes stock option vesting

periods under the Incentive Plans:

Unrecognized Stock

Outstanding as of December 31, 2025 18,289 6.85 $ 169.25

Exercisable as of December 31, 2025 18,289 6.85 $ 169.25

Exercisable as of December 31, 2024 18,178 7.85 $ 170.50

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

Compensation Expense

As of December 31,

The aggregate intrinsic value

of the stock options outstanding and exercisable at December 31, 2024 is $ 0 .

NOTE 15 – SHAREHOLDERS’ EQUITY

The Company is authorized

to issue 30,000,000 shares of common stock at $ 0.001 par value.

The holders of the Company’s common stock are entitled

to one vote for each share held.

At December 31, 2024 and 2023, there were 14,071,390 and 12,072,836 shares of

common stock outstanding, respectively.

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.

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

NOTE 15 – STOCKHOLDERS’ DEFICIT

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

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 ;

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, 2024 and 2023, there were no shares of preferred

stock outstanding.

Treasury Stock

For the years ended December 31,

2024 and 2023, the Company did not purchase any treasury stock.

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.

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, 2024 and 2023 are as follows (in thousands):

As of December

31, 2025 and 2024, there were no shares of preferred stock outstanding.

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.

16 – INCOME TAXES

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.

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.

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

Total current

Total deferred

Total income tax expense (benefit)

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:

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:

Statutory Federal income tax rate

State income taxes, net of federal benefit

Research and development tax credits

State and local income taxes, net of federal benefit

Stock-based compensation

Impairment of property and equipment

Change in valuation allowance

Change in Tax Rate

Permanent differences

Change in state effective tax rate

Permanent differences - other

Goodwill impairment

The tax effects of significant items comprising

the Company’s deferred taxes as of December 31, 2024 and 2023 are as follows (in thousands):

Effective income tax rate

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

Deferred tax assets:

3 unchanged sentences

Share-based compensation

Interest Expense

Interest expense limitation (§163(j))

Total deferred tax assets

Valuation allowance

( 21,287,239 )

( 17,829,000 )

Net deferred tax assets

1 unchanged sentence

Intangible assets

Total deferred tax liabilities

Net deferred tax asset (liability)

At December 31, 2024, the Company had $ 58.0 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

Below is a table showing the gross net operating

loss carryovers available at December 31, 2024 and their respective expiration:

Federal Net Operating Losses with expiration

Federal Net Operating Losses with indefinite life

Total Federal Net Operating Losses

Various State Net Operating Losses

Canada Net Operating Losses

Netherlands Net Operating Losses

Valuation Allowance Rollforward:

Beginning balance

( 17,829,000 )

( 9,786,000 )

Change in valuation allowance

( 3,458,239 )

( 8,043,000 )

Reductions for dispositions/write-offs

Ending balance

$ ( 21,287,239 )

$ ( 17,829,000 )

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.

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

Federal NOL — with expiration

Federal NOL — indefinite life

Total Federal NOL

Various State NOL

Netherlands NOL

In assessing the realizability

7 unchanged sentences

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 $ 8.0 million during 2024.

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.

of December 31, 2025 and 2024, the company has not recorded any unrecognized tax benefits related to uncertain tax positions.

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, 2024,

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.

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.

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.

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

NOTE 17 – WARRANTS

The following table shows

warrant activity for the years ended December 31, 2024 and 2023:

Warrants outstanding as of December 31, 2022

Issued for line of credit

Expired loan extension

Warrants outstanding as of December 31, 2023

Warrants exercisable as of December 31, 2023

Warrants outstanding as of December 31, 2023

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.

17 – WARRANTS

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

Outstanding as of December 31, 2023

Terminated/Expired

Warrants outstanding as of December 31, 2024

Warrants exercisable as of December 31, 2024

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

The CODM utilizes this financial information to decide how to allocate resources to, and in assessing performance of, the operating

Outstanding as of December 31, 2024

Terminated/Expired

Outstanding as of December 31, 2025

Exercisable as of December 31, 2025

Exercisable as of December 31, 2024

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.

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 operating segments related to fiscal years 2024 and 2023:

● 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.

● Services - Operating segment that

generates revenue by providing clients with design-build service offerings that include architectural,

interior, and engineering design, construction management, as well as services for the operational

stages of the facility.

The Company’s in-house architectural, interior design, engineering,

construction and cultivation design services integrate design with pre-construction services

and thereby reduce project schedule and capital investments.

● 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

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.

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, 2024 and 2023:

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.

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.

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

3 unchanged sentences

Gross profit %

Intangible asset amortization

Income (Loss) before income taxes

3 unchanged sentences

$ ( 21,693,945 )

$ ( 36,525,531 )

Year ended December 31, 2024

1 unchanged sentence

Cost of revenues

Gross profit %

Intangible asset amortization

Income (Loss) before income taxes

Gross profit (loss)

$ ( 2,177,862 )

$ ( 388,731 )

Gross profit (loss) %

Income (Loss) before income taxes

$ ( 10,978,807 )

1 unchanged sentence

$ ( 1,307,616 )

Total assets (liabilities)

$ ( 29,388,983 )

NOTE 19 – SUBSEQUENT EVENTS

Settlement of Pullar Lawsuit

On May 5, 2022, Robert Pullar

(“Pullar”) filed a lawsuit against the Company and Bradley Nattrass, in his capacity as the Company’s CEO, relating

to a prior settlement agreement the Company had entered into with Pullar.

On January 31, 2025, the parties entered into a settlement

agreement, without any admission of liability or wrongdoing, to settle all claims associated with the litigation in exchange for a cash

payment by the Company to Pullar of $ 250,000 and an issuance of a warrant to purchase up to 75,000 shares of the Company’s common

stock at an exercise price per share of $ 1.00 .

Nasdaq Deficiencies

The Company has received

the following communications from The Nasdaq Stock Market LLC (“Nasdaq”) and, where required, responded as indicated:

● January 29, 2025

– Nasdaq granted the Company an extension to regain compliance with Nasdaq Listing

Rule 5250(c)(1) (the “Filing Requirement”) by February 18, 2025.

regained compliance with the Filing Requirement Rule on February 18, 2025.

● February 24, 2025:

o The Listing Qualifications Department of Nasdaq notified the Company that, for the last 30 consecutive business days, the bid price for the Company’s 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 “Minimum Bid Requirement”).

The notice had no immediate effect on the listing of the Company’s common stock on Nasdaq.

In accordance with Nasdaq Listing Rule 58100(c)(3)(H), the Company had 180 calendar days to regain compliance with the Minimum Bid Requirement.

To regain compliance with the Minimum Bid Requirement, the closing bid price of the Company’s common stock must be at least $ 1.00 per share for a minimum of the consecutive trading days during this 180 -day compliance period, unless the Nasdaq Staff (the “Staff”) exercises its discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).

The time period for the Company to regain compliance with the Minimum Bid Requirement expired on August 25, 2025.

In the event that the Company does not regain compliance within the 180-day compliance period, the Company may be eligible for an additional 180 calendar day compliance period.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, with the exception of the Minimum Bid Requirement, and provide written notice to the Staff of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Staff that the Company will not be able to cure the deficiency, or if the Company does not meet the other listing standards, the Staff could provide notice that the Common Stock will become subject to delisting.

In the event the Company receives notice that the Common Stock is being delisted, the Nasdaq Listing Rules permit the Company to appeal any such delisting determination by the Staff to a Hearings Panel.

o The Listing Qualifications Department of Nasdaq notified the Company that, because the stockholder’s equity of the Company was below $ 2.5 million as reported on the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, the Company no longer meet 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 “Minimum Stockholders’ Equity Requirement”).

The notice of the Company’s failure to meet the Minimum Stockholders’ Equity Requirement had no immediate effect on the listing of the Common Stock on Nasdaq.

In accordance with Nasdaq Marketplace Rule 5810(c)(2)(C), the Company had 45 calendar days, or until April 10, 2025, to submit a plan to regain compliance.

If the plan was accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the original notice to evidence compliance, or until August 25, 2025, to regain compliance with the Minimum Stockholders’ Equity Requirement.

In the event the plan was not accepted by Nasdaq, or in the event the plan was accepted by Nasdaq and the 180-day extension period was granted, but the Company fails to regain compliance within such plan period, the Company would have the right to a hearing before a Hearings Panel.

The hearing request would stay any suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted by the Hearings Panel following the hearing.

● April 16, 2025

– Nasdaq sent the Company a notice (the “April 16 Notice”) stating that

because the Company had not yet filed its Annual Report on Form 10-K for the fiscal quarter

ended December 31, 2024 (the “Form 10-K”), the Company was no longer in compliance

with Nasdaq Listing Rule 5250(c)(1).

Nasdaq Listing Rule 5250(c)(1) requires listed companies

to timely file all required periodic financial reports with the Securities and Exchange Commission.

The April 16 Notice stated that the Company had 60 calendar days from April 16, 2025, or

until June 16, 2025, to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing

The Company intended to file the Form 10-K as soon as practicable and, if necessary,

to submit a plan with Nasdaq to regain compliance.

If Nasdaq accepted the Company’s

plan, then Nasdaq may, at its discretion, grant the Company up to 180 days from the prescribed

due date for filing the Form 10-K, or until October 13, 2025, to regain compliance.

did not accept the Company’s plan, then the Company had an opportunity to appeal that

decision to a Nasdaq Hearings Panel.

The April 16 Notice had no immediate effect on the listing

of the Company’s common stock on The Nasdaq Capital Market.

● May 21, 2025 –

Nasdaq sent the Company a notice (the “May 21 Notice”) stating that because the

Company had not yet filed its Quarterly Report on Form 10-Q for the fiscal quarter ended

March 31, 2025 (the “March 31 Form 10-Q”) or its Annual Report on Form 10-K for

the fiscal year ended December 31, 2024 (the “Form 10-K”), the Company continues

to be out of compliance with Nasdaq Listing Rule 5250(c)(1).

Nasdaq Listing Rule 5250(c)(1)

requires listed companies to timely file all required periodic financial reports with the

Securities and Exchange Commission.

The May 21 Notice stated that the Company had 60 calendar

days from April 16, 2025, or until June 16, 2025, to submit to Nasdaq a plan to regain compliance

with the Nasdaq Listing Rules.

The Company intended to file the Form 10-K as soon as practicable

and, if necessary, to submit a plan with Nasdaq to regain compliance.

If Nasdaq accepted

the Company’s plan, then Nasdaq may, at its discretion, grant the Company up to 180

days from the prescribed due date for filing the Form 10-K, or until October 13, 2025, to

regain compliance.

If Nasdaq did not accept the Company’s plan, then the Company had

the opportunity to appeal that decision to a Nasdaq Hearings Panel.

The May 21 Notice had

no immediate effect on the listing of the Company’s common stock on The Nasdaq Capital

● August 18, 2025 – Nasdaq sent the Company a determination letter (the “August 18 Determination”) stating that Nasdaq had determined that the Company did not file the Form 10-K and the March 31 Form 10-Q by August 15, 2025, the date required for the delinquent filings by an exception previously received from Nasdaq staff.

The August 18 Determination stated that, as a result, unless that Company timely requests an appeal, the trading of the Company’s common stock (the “Common Stock”) would be suspended at the opening of business on August 27, 2025 and (iii) a Form 25-NSE will be filed with the SEC, which would remove the Company’s securities from listing and registration on Nasdaq.

The August 18 Determination also stated that the Company was not in compliance (i) with Listing Rule 5250(c)(1) due to the Company’s delay in filing its Quarterly Report on Form 10-Q for the period ended June 30, 2025, and (ii) with Listing Rule 5550(b)(1), which requires the Company to maintain minimum stockholders’ equity of $ 2.5 million.

As previously reported, on February 24, 2025, Nasdaq notified the Company that it was not in compliance with Listing Rule 5550(b)(1) due to having stockholders’ equity of less than $ 2.5 million.

The Determination informed the Company that it may appeal the decision to a Hearings Panel (the “Panel”).

If the Company chose to appeal, the request must be received by Nasdaq no later than 4:00 p.m.

Eastern Time on August 25, 2025.

The Company requested a hearing before the Panel and a preliminary date of October 7, 2025 was set for the hearing.

On October 7, 2025, the Company announced that the hearing was postponed to October 14, 2025.

This request stayed the suspension of the Company’s Common Stock for a period of 15 days from the date of the request.

In connection with this request, the Company also requested a stay of the suspension pending the hearing (the “Additional Stay”).

● August 28, 2025 – Nasdaq sent the Company a determination letter (the “August 28 Determination”) stating that Nasdaq had determined that the Company did not regain compliance with the Minimum Bid Requirement by August 25, 2025.

The August 28 Determination stated that the failure to comply with the Minimum Bid Requirement during the compliance period would serve as an additional basis for delisting the Company’s securities from the Nasdaq Capital Market and would be considered by a Hearings Panel (the “Panel”), in addition to the Company’s failure to comply with (i) Nasdaq Listing Rule 5250(c)(1) due to the Company’s delay in filing its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30, 2025 (the “Timely Filing Requirement”), and (ii) Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain minimum stockholders’ equity of $ 2.5 million (the “Stockholders’ Equity Requirement”).

● October 14, 2025

– The Company presented to the Panel.

● October 30, 2025

– Nasdaq sent the Company a notice notifying the Company that the Panel had determined

to grant the Company’s request to continue its listing on The Nasdaq Capital Market,

subject to certain conditions.

Specifically, the Panel conditioned the Company’s continued

listing on the Company 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, the Company is required

to provide prompt notification to the Panel of any significant event that may affect the

Company’s compliance with Nasdaq requirements.

Any documentation evidencing the Company’s

compliance will be subject to review by the Panel, which may, in its discretion, request

additional information before determining whether the Company has regained compliance.

● November 18, 2025 – Nasdaq sent the Company a notice (the “November

18 Notice”) stating that because the Company had not yet filed its Quarterly Report on Form 10-Q for the fiscal quarter ended September

30, 2025 (the “September 30 Form 10-Q”) or its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the

“Form 10-K”), the Company continues to be out of compliance with Nasdaq Listing Rule 5250(c)(1).

Nasdaq Listing Rule 5250(c)(1)

requires listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.

● 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

19 – SUBSEQUENT EVENTS

of the Merger

February 17, 2026, the Company completed the Merger with Flash Sports and Media, Inc.

pursuant to the Merger Agreement dated February

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.

and Management Changes

Following the Merger, Anita Britt resigned from the Board of Directors

effective February 17, 2026.

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

The Company appointed Richard Akright and Eric Sherb to serve as Co-Chief Financial Officers.

Akright previously served

as Chief Financial Officer of urban-gro, Inc.

and brings deep public company financial reporting, compliance, and operational finance

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.

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

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.

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 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.

Company intends to make a submission to the Panel by the requested date, and has requested an additional extension to comply with the

Bid Price Rule, the Stockholders’ Equity Requirement and the Timely Filing Requirement.

Gemini Line of Credit – Loan Amendment;

Notice of Default;

Foreclosure and Article 9 Sale Process;

Loan Amendment – On

March 18, 2025, UG Construction, a wholly owned subsidiary of the Company, entered into an agreement with Gemini Finance Corp.

(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, one hundred and fifty thousand ( 150,000 ) shares (the “Fee Shares”) of the Company’s

common stock, par value $ 0.001 per share.

Notice of Default –

On July 31, 2025, the Lender 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

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 the Lender, and that

the Lender intended to pursue legal action if full payment was not received by August 8, 2025.

Foreclosure and Article 9

Sale Process – On August 21, 2025, the Company received a notification from the Lender stating that the Lender 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

of the California Commercial Code (the “Asset Sale”).

The Asset Sale occurred on September 4, 2025, at which

the Lender acquired the assets constituting the collateral under the Line of Credit for $ 450,000 .

Lawsuit – On August

29, 2025, the Lender commenced a lawsuit captioned Gemini Finance Corp.

UG Construction, Inc.

et al., case number 25CV2259 W SBC,

District Court for the Southern District of California, which lawsuit (the “Lawsuit”) included the Company and

certain of its officers as defendants and pursuant to which the Lender claimed it was owed $ 1,486,189 (the “Claim Amount”).

On September 26, 2025, the Company entered into a Settlement and Mutual General Release (the “Settlement Agreement”) with

Pursuant to the terms of the Settlement Agreement, among other things, the Company 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, the Company would issue to the Lender shares of the Company’s common

stock (the “Common Stock”) that, upon sale by the Lender, would result in net proceeds to the Lender equal to the Claim Amount,

provided that the Lender shall at no time be issued shares if it would beneficially own more than 4.99 % of the Common Stock, and the

aggregate number of shares issued to the Lender shall not exceed 19.99 % of the outstanding Common Stock as of immediately prior to the

signing of the Settlement Agreement to the extent required by Nasdaq Listing Rule 5635.

Additionally, the Lender agreed to use its best

efforts to not sell Common Stock exceeding 10 % of the Company’s daily volume on any given trading day.

Upon the issuance of the

last tranche of shares under the Settlement Agreement, the Lender will dismiss the Lawsuit with prejudice.

The Settlement Agreement also

includes a customary mutual release of claims by the parties.

Business Loan and Security Agreement with Agile

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 $ 1,050,000.00 (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

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.

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 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.

(“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.

A default judgment was subsequently entered against UG Construction, and Action filed a writ of garnishment

on October 21, 2025.

Settlement with Vendor

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.

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 issued 150,000 unregistered shares of the Company’s common stock 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 .

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.

Services – Sale of 2WR Georgia, Inc.;

of Customer Lists:

Remaining Services

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.

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.

The purchase price paid by

the Buyer for the Acquisition consisted of $ 2.0 million in cash and by any assumed indebtedness.

The August 27 Purchase Agreement includes

non-competition and non-solicitation restrictions applicable to the Seller Parties and customary representations and warranties and covenants

of the parties.

Subject to certain limitations, (i) the Seller Parties will indemnify the Buyer and its affiliates and representatives

against certain losses related to, among other things, breaches of the Seller Parties’ representations, warranties or covenants,

any liabilities other than those assumed by the Buyer under the August 27 Purchase Agreement, assets excluded from the Acquisition, pre-closing

taxes, operation of the CEA business and pre-closing employment matters, and (ii) the Buyer will indemnify the Seller Parties and their

respective affiliates and representatives against certain losses related to breaches of the Buyer’s representations, warranties

or covenants, and any losses related to any asset acquired by the Buyer or any liability assumed by the Buyer under the August 27 Purchase

On November 5, 2025, the

Seller Parties entered into a Bill of Sale, Assignment and Assumption, and Purchase Agreement (the “November 5 Purchase Agreement”)

Pursuant to the November 5 Purchase Agreement, 2WRGA acquired (the “Follow On Acquisition”) certain customer

lists of the Seller Parties.

The purchase price paid by

2WRGA for the Follow On Acquisition consisted of $ 143,000 in cash.

Additionally, pursuant to the November 5 Purchase Agreement, the parties

agreed to waive and terminate the non-solicitation provision applicable to 2WRGA that was contained in the August 27 Purchase Agreement

among the Seller Parties, the Company and the other parties thereto.

During the fourth quarter

of 2025, the Company began winding down the remaining services businesses and furloughed those employees.

Binding Letter of Intent with Flash Sports &

On October 14, 2025, the

Company entered into a binding letter of intent (the “LOI”) with Flash Sports & Media, Inc.

(“Flash”) regarding

a proposed transaction pursuant to which the parties intend to merge Flash with and into a newly formed wholly-owned subsidiary of the

Company, which would then merge with and into a second wholly-owned subsidiary of the Company (collectively, the “Merger”).

Pursuant to the LOI, the

parties have 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.

The LOI provides that Flash would pay to the Company a cash deposit of $ 200,000 within fifteen days

of its execution.

In connection with the Merger, the stockholders of Flash would receive (i) unregistered shares of the Company’s

common stock, par value $ 0.001 per share (“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 that would be economically

equivalent to Common Stock (the “Preferred Stock”) and would automatically convert into Common Stock upon receipt of approval

by the Company’s stockholders.

The LOI contemplates that

the former stockholders of Flash would own approximately 90 % of the Company following the Merger, assuming full conversion of the Preferred

Upon closing of the Merger, the Company would change its name to Flash Sports & Media Holdings, Inc.

or a similar name.

Company would be required to obtain approval of its stockholders for conversion of the Preferred Stock as soon as reasonably practicable

following the Merger.

The LOI provides that following

the Merger, the board of directors (the “Board”) of the Company would be reconstituted such that four members of the Board

would be designated by the Board prior to the Merger and one member of the Board would be designated by the former stockholders of Flash.

Upon approval of the Company’s stockholders for the conversion of the Preferred Stock, the Board would be further reconstituted

such that one member of the Board would be designated by the Board prior to the Merger and four members of the Board would be designated

by the former stockholders of Flash.

The LOI provides for an exclusivity

period of 90 days following the execution of the LOI.

During that period, the Company agreed that neither it nor its affiliates will,

among other things, solicit, provide any information or enter into any agreement with any other party concerning a transaction similar

to the Merger.

Equity Issuances After December 31, 2024

Subsequent to the year ended

December 31, 2024, inclusive of RSU vesting, an additional 3,679,250 shares of common stock were issued.

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.

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.

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

Trading on a split-adjusted basis commenced on February 9, 2026.

Meeting and Shareholder Approvals

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).

Purchase Agreement

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.

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”).

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).

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).

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.

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

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.

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.

earlier terminated as provided in the ELOC Purchase Agreement, the ELOC Purchase Agreement will terminate automatically on the earliest

(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.

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.

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.

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.

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.

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.

term loan is evidenced by a confessed judgment secured promissory note issued by the Company to the Lenders (the “ Promissory

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.

Placement of Common Stock

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.

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.

Settlement Share Issuances

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.

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.

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.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures