What changed in this filing

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Item 1. Legal Proceedings

2022-08-15 compared with 2022-05-10 · 45 added, 13 removed, 9 unchanged (87% of the section changed)

4 unchanged sentences

to the costs of litigation or the potential negative impacts to the Company should these matters not be resolved in our favor:

Ventures, LLC – We have been sued in a putative breach of contract case in the District Court for Arapahoe County, Colorado.

The allegations in the action are based on a claim that Crest Ventures, LLC is entitled to commission compensation on the February

2021 uplisting of our common stock to the Nasdaq Capital Market.

We believe we have substantial defenses to the claim asserted in

this lawsuit and intend to vigorously defend this action.

Bank – We have filed a lawsuit against Sunflower Bank related to fraudulent wire transfers

of approximately $5.1 million that were made from our accounts at Sunflower Bank in October

As of the date of this Report, $1.8 million of these funds have been returned to us.

We are suing Sunflower Bank for the remaining $3.3 million as we believe that Sunflower

Bank failed to follow industry standard procedures designed to prevent such a theft and is

therefore liable for the unrecovered balance.

We expect Sunflower Bank, Sunflower Bank’s

insurers, and/or our insurer to reimburse us for the remaining balance.

Great Green Theory – Emerald filed a lien and brought a suit in the Superior Court of Berkshire, Massachusetts

to foreclose on the lien against Great Green Theory Land, LLC and Great Green Theory Cultivation, LLC who are the owners of the land and

a construction project in Lee, Massachusetts.

Emerald is claiming breach of contract and quantum merit against Great Green Theory

for failure to pay approximately $1,326,286.28 in payment applications, of which approximately half of that amount is due and owning to

subcontractors on the project.

Great Green Theory has filed counterclaims against Emerald claiming liquidated damages of approximately

$1,010,000 for alleged unjustifiable delays on the project and alleging construction defects in the project.

Receivable of $500,000 acquired in Emerald transaction – The selling Emerald shareholders

have agreed to indemnify and defend the Company for any litigation or judgement stemming from this lawsuit.

has recorded the full $500,000 as a receivable on the opening balance sheet as of the date

of the acquisition.

Costs to collect the Account Receivable of $500,000 – The Company has agreed to split

the legal costs of this claim until the funds are recovered or until the claim of liquidated

damages is relieved.

Total estimated legal costs associated with this claim are approximately $250,000.

The Company recorded 50% of this amount as a liability on the opening balance sheet as of

the date of the acquisition.

● Pullar – urban-gro’s former Chief Financial Officer, George Pullar filed a suit in the District Court

of Boulder County, Colorado against urban-gro and Bradley Nattrass, in his capacity as urban-gro’s CEO, claiming breach of fiduciary

urban-gro has since been dismissed without prejudice from the suit.

The remaining claim stems from a settlement agreement with Mr.

Pullar and allegations that Mr.

Natrrass failed to share enough non-public material information about urban-gro’s plans for fundraising

that would have impacted Mr.

Pullar’s decision to enter into the settlement agreement.

urban-gro’s director and officer liability

insurance carrier has indicated coverage is available to Mr.

Nattrass for this suit.

We believe we have substantial defenses to the claim

asserted in this lawsuit and intend to vigorously defend this action.

● Crest Ventures, LLC – We have been sued in a putative breach of contract case in the District Court for Arapahoe

County, Colorado.

The allegations in the action are based on a claim that Crest Ventures, LLC is entitled to commission compensation on

the February 2021 uplisting of our common stock to the Nasdaq Capital Market.

We believe we have substantial defenses to the claim asserted

in this lawsuit and intend to vigorously defend this action.

Bank – We have filed a lawsuit against Sunflower Bank related to fraudulent wire transfers of approximately $5.1 million that

were made from our accounts at Sunflower Bank in October 2021.

As of the date of this Report, $1.8 million of these funds have been

returned to us.

We are suing Sunflower Bank for the remaining $3.3 million as we believe that Sunflower Bank failed to follow industry

standard procedures designed to prevent such a theft and is therefore liable for the unrecovered balance.

We expect Sunflower Bank,

Sunflower Bank’s insurers, and/or our insurer to reimburse us for the remaining balance.

are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this

3 unchanged sentences

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-Q

Item 1. Legal Proceedings