UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025

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

Commission File Number: 001-39933

URBAN-GRO, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-5158469
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1751 Panorama Point, Unit G, Lafayette, CO		80026		(720) 390-3880
(Address of principal executive office)		(Zip Code)		(Registrant’s telephone number, Including area code)

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

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

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

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

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

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

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

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

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

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

Explanatory Note

Urban-gro, Inc. (the “Company”) is filing this Amendment No. 1 (this “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 15, 2026 (the “Original Filing”), solely to (1) include a copy of the Company’s Clawback Policy (the “Clawback Policy”) as Exhibit 97.1 hereto, (2) to make corrections to the cover page, and (3) to restate Note 19 – Subsequent Events in the Notes to Consolidated Financial Statements to correct a clerical error where the name Hudson Global Ventures, LLC was incorrectly stated instead of the correct name, Agile Capital Funding, LLC. This Amendment contains only the cover page, this explanatory note, the exhibit index, the signature page and Item 8. Financial Statements and Supplementary Data.

Except for the foregoing, this Amendment does not alter or update any information contained in the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, and the Company has not updated the disclosures contained therein to reflect any events that have occurred as of a date subsequent to the date of the Original Filing.

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.

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

EXHIBIT INDEX

Exhibit No.		Exhibit Description

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

2.2		Agreement and Plan of Merger, dated February 17, 2026 by and between urban-gro, Inc., Flash Sports & Media, Inc., and UGRO Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed February 18, 2026)

2.3		Stock and Asset Purchase Agreement, dated as of August 27, 2025, by and among 2WR Holdco, LLC, 2WR of Georgia, Inc., urban-gro Architect Holdings, LLC, 2WR of Colorado, Inc., and 2WR of Mississippi, P.C. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September 2, 2025)

3.1		Amended and Restated Certificate of Incorporation of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed June 21, 2023)

3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 5, 2026)

3.3		Bylaws of urban-gro, Inc. (incorporated by reference to Exhibit 3.4 to Form 8-K filed October 30, 2020)

3.4		Amendment No. 1 to Bylaws of urban-gro, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed January 12, 2021).

3.5		Certificate of Designation of Series B Convertible Preferred Stock, as filed with the Delaware Secretary of State on February 17, 2026 (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 18, 2026)

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

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

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

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

10.5		urban-gro, Inc. 2021 Stock Incentive Plan, as amended (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 20, 2026)

10.6		Bill of Sale, Assignment and Assumption, and Purchase Agreement by and among 2WR of Georgia, Inc., UG Architecture, Inc f/k/a 2WR of Colorado, Inc., and urban-gro Architect Holdings, LLC, dated November 3, 2025 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 12, 2025).

10.7		Settlement Agreement and Mutual General Release, dated September 26, 2025, by and among urban-gro, Inc., UG Construction, Inc., Gemini Finance Corp., and the other parties thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 3, 2025).

10.8		Settlement and Release Agreement, August 8, 2025, by and among urban-gro, Inc., J Brrothers LLC and Herb-a-More LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 13, 2025).

10.9		Promissory Note, dated August 8, 2025, issued by urban-gro, Inc. to J Brrothers LLC (incorporated by reference to Exhibit 4.1 to Form 8-K filed on August 13, 2025).

10.10		Loan Agreement, dated June 24 2025 between urban-gro, Inc. and Agile Lending, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 2, 2025).

10.11		Promissory Note, dated June 24 2025 between urban-gro, Inc. and Agile Lending, LLC (incorporated by reference to Exhibit 10.2 to Form 8-K filed on July 2, 2025).

10.12		Forbearance Agreement, dated as of February 19, 2026, by and among Agile Capital Funding, LLC, Agile Lending, LLC, urban-gro, Inc., and urban-gro Canada Technologies Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 25, 2026)

10.13		Exchange Agreement, dated as of February 19, 2026, by and among Agile Capital Funding, LLC, Agile Lending, LLC, and urban-gro, Inc. (incorporated by reference to Exhibit 10.2 to Form 8-K filed on February 25, 2026)

19		Insider Trading Policy. (incorporated by reference to Exhibit 19 to Form 10-K filed on April 15, 2026)

21.1		Subsidiaries of the Registrant. (incorporated by reference to Exhibit 21.1 to Form 10-K filed on April 15, 2026)

23.1		Consent of Suri and Co. (incorporated by reference to Exhibit 23.1 to Form 10-K filed on April 15, 2026)

24.1		Power of Attorney. (incorporated by reference to the signature page to Form 10-K filed on April 15, 2026)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to Exhibit 31.1 to Form 10-K filed on April 15, 2026)

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to Exhibit 31.2 to Form 10-K filed on April 15, 2026)

31.3		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to Exhibit 31.3 to Form 10-K filed on April 15, 2026)

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (incorporated by reference to Exhibit 32.1 to Form 10-K filed on April 15, 2026)

97.1		Clawback Policy. (incorporated by reference to Exhibit 97.1 to Form 10-K filed on January 16, 2026)

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Schema Document.

101.CAL		Inline XBRL Calculation Linkbase Document.

101.DEF		Inline XBRL Definition Linkbase Document.

101.LAB		Inline XBRL Label Linkbase Document.

101.PRE		Inline XBRL Presentation Linkbase Document.

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

*	Denotes a management contract or compensatory plan or arrangement.

ITEM 16. FORM 10-K SUMMARY

None.

SIGNATURES

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

	URBAN-GRO, INC.

Date: April 21, 2026	By:	/s/ Bradley Nattrass
		Bradley Nattrass Chairperson of the Board of Directors and Chief Executive Officer

INDEX TO FINANCIAL STATEMENTS

		Page No.
Report of Independent Registered Accounting Firm (PCAOB ID NO:)		F-2
Report of Independent Registered Accounting Firm (PCAOB ID NO: 3627)		F-3
Consolidated Balance Sheets as of December 31, 2025 and 2024		F-6
Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025 and 2024		F-7
Consolidated Statement of Changes in Shareholders’ Equity for the Years ended December 31, 2025 and 2024		F-8
Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024		F-9
Notes to the Consolidated Financial Statements		F-10

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

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

Basis for Opinion

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

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

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

/s/ Sadler, Gibb & Associates, LLC

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

Draper, UT

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

F-2

Report of Independent Registered Public Accounting Firm

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

Opinion on the Consolidated Financial Statements

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

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

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

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

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

How the Critical Audit Matter Was Addressed in the Audit

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

●

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

●

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

●

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

●

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

F-3

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; 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 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.

F-4

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

How the Critical Audit Matter Was Addressed in the Audit

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

Equipment Systems

▪

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 operations)

▪

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 since 2026.

Place: Chennai, India

Date: April 15, 2026

F-5

urban-gro, Inc.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2025			2024

ASSETS
Current assets:
Cash	$	10,644		$	819,050
Accounts receivable, net		-			6,104,926
Contract receivables		-			4,132,817
Prepaid expenses and other current assets		-			2,479,262
Current assets of discontinued operations		-			2,271,793
Total current assets		10,644			15,807,848
Non-current assets:
Property and equipment, net		-			813,452
Operating lease right-of-use assets		321,303			550,175
Non-current assets of discontinued operations		-			2,322,308
Total non-current assets		321,303			3,685,935
Total assets	$	331,947		$	19,493,783

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	18,202,851		$	13,518,626
Contract liabilities		13,457,357			14,094,176
Accrued expenses		5,708,526			4,017,145
Customer deposits		2,695,435			2,628,463
Notes payable, current		3,533,255			5,968,145
Operating lease liabilities, current		222,870			235,223
Current liabilities of discontinued operations		1,561,807			1,837,709
Total current liabilities		45,382,101			42,299,487
Non-current liabilities
Notes payable, long-term		-			795,531
Deferred tax liability		-			14,608
Operating lease liabilities, long-term		115,080			336,255
Non-current liabilities of discontinued operations		-			690,444
Total non-current liabilities		115,080			1,836,838
Total liabilities		45,497,181			44,136,325

Commitments and contingencies

Stockholders’ deficit:
Preferred stock, $0.10 par value; 3,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2025 and 2024		-			-
Common stock, $0.001 par value 200,000,000 shares authorized; 710,025 issued and 652,032 outstanding as of December 31, 2025, and 562,855 issued and 504,862 outstanding as of December 31, 2024		711			563
Additional paid-in capital		91,746,837			90,170,645
Treasury shares, cost basis: 57,993 shares as of December 31, 2025 and 2024		(12,045,542	)		(12,045,542	)
Accumulated deficit		(124,867,240	)		(102,768,208	)
Total stockholders’ deficit		(45,165,234	)		(24,642,542	)
Total liabilities and stockholders’ deficit	$	331,947		$	19,493,783

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

F-6

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years Ended
	December 31,
	2025			2024
Revenues
Equipment	$	8,751,226		$	12,245,675
Construction design-build		8,467,451			18,604,827
Other		180,761			352,798
Total revenues		17,399,438			31,203,300
Cost of revenue
Equipment		8,344,998			10,582,731
Construction design-build		8,730,918			20,782,689
Other		148,968			226,611
Total cost of revenue		17,224,884			31,592,031
Gross profit (loss)		174,554			(388,731	)
Operating expenses:
General and administrative		17,270,657			21,006,685
Depreciation and amortization		349,364			1,067,219
Impairment of goodwill and intangibles		-			5,958,632
Impairment of property and equipment		566,609			-
Total operating expenses		18,186,630			28,032,536

Loss from operations		(18,012,076	)		(28,421,267	)

Non-operating income (expense):
Interest expense		(1,675,713	)		(1,021,947	)
Interest income		526			2,420
Gain on extinguishment of debt		7,476			-
Loss on settlement		(62,850	)		(205,000	)
Loss on assets foreclosure		(2,473,501	)		-
Other income (expense)		522,193			256,811
Total non-operating income (expense)		(3,681,869	)		(967,716	)

Loss before income taxes		(21,693,945	)		(29,388,983	)
Income tax benefit		14,608			29,705
Net loss from continuing operations		(21,679,337	)		(29,359,278	)
Net income loss from discontinued operations, net of tax		(419,695	)		(7,136,548	)
Net loss	$	(22,099,032	)	$	(36,495,826	)

Net loss per share attributable common stockholders:
Net loss from continuing operations	$	(41.04	)	$	(58.83	)
Net loss from discontinued operations, net of taxes	$	(0.79	)	$	(14.30	)
Net loss per share	$	(41.83	)	$	(73.12	)

Weighted average common shares outstanding - basic and diluted		528,270			499,089

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

F-7

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

					Additional									Total
	Common Stock				Paid-in			Accumulated			Treasury			Stockholders’
	Shares		Amount		Capital			Deficit			Stock			Deficit

Balance at December 31, 2023		540,906	$	541	$	88,402,738		$	(66,272,382	)	$	(12,045,542	)	$	10,085,355
Stock-based compensation		-		-		1,426,877			-			-			1,426,877
Stock issued for contingent consideration		2,848		3		129,133			-			-			129,136
Stock grant program vesting		19,101		19		(19	)		-			-			-
Issuance of warrants		-		-		211,916.00			-			-			211,916
Net loss		-		-		-			(36,495,826	)		-			(36,495,826	)
Balance at December 31, 2024		562,855		563		90,170,645			(102,768,208	)		(12,045,542	)		(24,642,542	)
Stock-based compensation						826,471			-			-			826,471
Stock grant program vesting		20,649		21		(21	)		-			-			-
Issuance of common stock for loan modification		6,000		6		109,494			-			-			109,500
Issuance of common stock for loan settlement		90,000		90		372,460			-			-			372,550
Issuance of common stock for services		30,521		31		267,788			-			-			267,819
Net loss		-		-		-			(22,099,032	)		-			(22,099,032	)
Balance at December 31, 2025		710,025	$	711	$	91,746,837		$	(124,867,240	)	$	(12,045,542	)	$	(45,165,234	)

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

F-8

urban-gro, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended
	December 31,
	2025			2024
Cash flows from operating activities:
Net loss from continuing operations	$	(21,679,337	)	$	(29,359,278	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		349,364			1,023,845
Stock-based compensation expense		826,471			1,426,877
Amortization of the right-of-use		228,585			229,754
Amortization of debt discount		155,958			65,958
Impairment of property and equipment		566,609			-
Impairment of goodwill and intangibles		-			5,958,632
Bad debt expense		1,130,760			-
Prepaid expenses and other current assets write off		1,366,953			-
Contract receivables write off		4,034,280			-
Inventory write-off		172,920			-
Non-cash interest expense		529,213			-
Deferred income tax benefit		(14,608	)		(29,705	)
Loss on assets foreclosure		2,473,501			-
Loss on disposal of assets					3,274
Changes in operating assets and liabilities:
Accounts receivable and contract receivables		4,506,094			15,739,183
Inventories		49,663			-
Prepaid expenses and other assets		1,112,309			49,550
Accounts payable, contract liabilities, and accrued expenses		5,738,787			(379,723	)
Customer deposits		66,972			2,039,100
Operating lease liability, net		(233,528	)		(237,578	)
Net cash provided by (used in) operating activities of continuing operations		1,380,966			(3,470,111	)
Net cash (used in) provided by operating activities of discontinued operations		(540,170	)		648,924
Net cash provided by (used in) operating activities		840,796			(2,821,187	)

Cash flows from investing activities:
Proceeds from the sale of property and equipment		-			25
Purchase of property and equipment		(298,215	)		(131,387	)
Net cash used in investing activities of continuing operations		(298,215	)		(131,362	)
Net cash provided by investing activities of discontinued operations		2,130,548			-
Net cash provided by (used in) in investing activities		1,832,333			(131,362	)

Cash flows from financing activities:
Proceeds from promissory notes		1,700,932			8,107,685
Repayments of notes payable		(5,143,270	)		(5,270,343	)
Repayment of finance lease liability		(27,437	)		(108,775	)
Net cash (used in) provided by financing activities of continuing operations		(3,469,775	)		2,728,567
Net cash used in financing activities of discontinued operations		(11,760	)		(31,810	)
Net cash (used in) provided by financing activities		(3,481,535	)		2,696,757

Net change in cash		(808,406	)		(255,792	)
Cash at beginning of year		819,050			1,074,842
Cash at end of year	$	10,644		$	819,050

Supplemental disclosure of cash flow information:
Cash paid for interest	$	454,624		$	735,379
Cash paid for income taxes	$	4,611		$	20,846

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued for services and debt modification	$	749,869		$	-
Stock issued for contingent consideration	$	-		$	129,136
Stock grant program vesting	$	-		$	477
Warrants issued in connection with notes payable	$	-		$	211,916
Prepaid expenses financed by notes payable	$	-		$	807,190
Recording of Operating lease assets and liabilities	$	-		$	221,880
Recording of Financing lease assets and liabilities	$	-		$	89,128
Debt discount on notes payable	$	-		$	100,000

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

F-9

urban-gro, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Organization

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

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

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

Dispositions

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

See Note 4 for further detail on the dispositions.

Discontinued Operations Classification

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

Impairment and write-offs

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

Nature	Amount written off
Property and equipment	$	566,609
Trade receivables	$	1,130,760
Contract receivables	$	4,034,280
Inventory	$	172,920
Prepaid expenses and other current assets	$	1,366,953

F-10

Merger

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

Liquidity and Going Concern

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation, Principles of Consolidation and Business Combinations

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

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

Reverse Stock Split

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

Use of Estimates

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

Balance Sheet Classifications

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

Contract Assets and Liabilities

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

Functional and Reporting Currency and Foreign Currency Translation

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

F-11

Fair Value of Financial Instruments

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

●

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

●

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

●

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

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

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

Cash

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

Accounts Receivable, Net

Trade Accounts Receivable

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

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

Property and Equipment, net

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

F-12

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

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

Operating Lease Right of Use Assets

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

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

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

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

Intangible Assets

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

Goodwill

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

F-13

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

Impairment of Long-lived Assets

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

Investments

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

Revenue Recognition

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

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

Customer Deposits

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

Cost of Revenues

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

F-14

Stock-Based Compensation

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

Warrants

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

Income Taxes

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

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

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

Loss per Share

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

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

Recently Issued Accounting Pronouncements

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

F-15

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

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

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

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

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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

	Years ended December 31,
	CEA						Commercial						Total
	2025			2024			2025			2024			2025			2024
Equipment systems	$	8,860,619		$	12,245,675		$	70,607		$	—			8,751,226			12,245,675
Construction design-build		2,709,642			3,230,037			5,757,810			15,374,790			8,467,451			18,604,827
Other		76,673			352,798			104,088			—			180,761			352,798
Total revenues and other income	$	11,466,934		$	15,828,510		$	5,932,505		$	15,374,790		$	17,399,438		$	31,203,300
Relative percentage		66	%		51	%		34	%		49	%		100	%		100	%

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

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

F-16

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

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

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

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

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

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

F-17

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

	December 31,
	2025			2024
Contract assets
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage	$	4,034,280		$	3,757,641

Retainage included in contract assets due to being conditional on something other than solely passage of time		-			375,176
Less:-Contract receivable write-off		(4,034,280	)		-
Total contract assets	$	-		$	4,132,817

Contract liabilities
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage	$	13,353,976		$	13,930,251

Retainage included in contract liabilities due to being conditional on something other than solely passage of time		103,381			163,925
Total contract liabilities	$	13,457,357		$	14,094,176

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

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

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

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

NOTE 4 – DISCONTINUED OPERATIONS

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

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

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

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

F-18

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

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

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

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

		2WRGA			2WRCO			2WRMS		UGENG		Total
Carrying amount of assets and liabilities:
Cash	$	12,452		$	-		$	-	$	-	$	12,452
Accounts receivable, net		408,368			196,199			20,052		74,099		698,718
Prepaid expenses and other current assets		2,263			2,855			1,356		4,879		11,353
Property and equipment, net		-			10,211			-		60,667		70,878
Operating lease right-of-use assets		54,576			9,876			-		39,991		104,443
Goodwill		-			1,080,638			-		-		1,080,638
Intangible assets, net		52,031			71,799			-		-		123,830
Accounts payable		(483,352	)		-			-		-		(483,352	)
Accrued expenses		-			(2,816	)		-		141,102		138,286
Customer deposits		-			-			-		8,500		8,500
Operating lease liabilities, current		(43,308	)		-			-		-		(43,308	)
Operating lease liabilities, long-term		(3,506	)		-			-		-		(3,506	)
Total carrying amount (net)		(476	)		1,368,762			21,408		329,238		1,718,932

Less: Consideration from sale of shares of stock and assets												(2,000,000	)
Less: Consideration from sale of customer list												(143,000	)
Gain on sale or discontinuation of subsidiary companies											$	(424,068	)

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

F-19

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

	Years Ended
	December 31,
	2025			2024
Revenues
Services	$	3,471,947		$	8,805,550
Total revenues		3,471,947			8,805,550
Cost of revenue
Services		2,773,820			5,548,438
Total cost of revenue		2,773,820			5,548,438
Gross profit		698,127			3,257,112
Operating expenses:
General and administrative		1,449,440			4,735,926
Depreciation and amortization		92,450			306,591
Impairment of goodwill and intangibles		-			5,323,447
Total operating expenses		1,541,890			10,365,964

Loss from discontinued operations		(843,763	)		(7,108,852	)

Non-operating income (expense):
Gain on sale of subsidiaries and assets		424,068			-
Interest expense		-			(2,802	)
Other income (expense)		-			(24,894	)
Total non-operating income (expense)		424,068			(27,969	)

Income (loss) before income taxes		(419,695	)		(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	$	(0.79	)	$	(14.30	)
Weighted average common shares outstanding - basic and diluted		528,270			499,089

NOTE 5 – RELATED PARTY TRANSACTIONS

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

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

The table below presents the revenues from related parties:

	Years Ended
	December 31,
	2025		2024
Potco	$	-	$	120,751
Total Revenue	$	-	$	120,751

F-20

NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

	December 31,
	2025		2024
Vendor prepayments	$	-	$	1,355,929
Prepaid services and fees		-		877,469
Inventories		-

Amendment: SEC Form 10-K/A filed by urban-gro Inc.