Note 8 — Debt

Agile Capital Term Loan and Forbearance

On June 24, 2025, the Company issued a Confessed Judgment Secured Promissory Note to Agile Capital Funding, LLC and Agile Lending, LLC (collectively, “Agile”) in the aggregate principal amount of $972,200. On February 19, 2026, the Company entered into a Forbearance Agreement with Agile that increased the outstanding principal balance from $972,200 to $1,380,524 (a 42% increase) in exchange for Agile’s agreement to forbear from exercising its rights and remedies under the original note. The Company accounted for the Forbearance Agreement as a substantial modification under ASC 470-50 and recognized a loss on debt extinguishment of $408,324 during the six months ended June 30, 2026, representing the increase in principal.

Agile Debt-for-Equity Exchanges

Between February 27, 2026 and March 25, 2026, the Company and Hudson Global Ventures, LLC (“Hudson Global”), as assignee of Agile, entered into eight exchange agreements pursuant to which Hudson Global accepted an aggregate of 331,640 shares of common stock in full satisfaction of the $1,380,524 outstanding under the Forbearance Agreement. The Company accounted for each exchange under ASC 470-50, with the reacquisition price of the debt measured at the fair value of the common stock issued. As of March 25, 2026, the Agile term loan has been fully satisfied.

Agile Hudson Partners Convertible Note

On March 23, 2026, the Company entered into a Securities Purchase Agreement with Agile Hudson Partners LLC (“AHP”) providing for the issuance of a Senior Secured Original Issue Discount Convertible Promissory Note in an aggregate principal amount of $1,395,000, issued at a purchase price of $1,260,000 (the “AHP Note”), together with related warrants. On March 23, 2026, the Company drew the first tranche of $465,000 (net cash proceeds of $420,000 after a $45,000 original issue discount). The AHP Note bears interest at 12% (one-time) and is convertible into shares of common stock at a conversion price equal to the lower of (i) $2.50 per share and (ii) 75% of the average of the three lowest traded prices of the Company’s common stock on the principal market during the ten trading days immediately preceding the respective conversion date. The conversion option and the related warrants have been bifurcated from the host debt instrument and are accounted for as derivative liabilities (see Note 9).

Agile Capital February 2026 Term Loan

On February 3, 2026, the Company, together with its subsidiary urban-gro Canada Technologies Inc. as guarantor, entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC (as Collateral Agent) and Agile Lending, LLC (as Lead Lender) and issued a Confessed Judgment Secured Promissory Note in the principal amount of $105,000, with net cash proceeds to the Company of $100,000 after a $5,000 administrative agent fee. The loan is evidenced by a Confessed Judgment Secured Promissory Note, is governed by Virginia law, and is secured by a springing security interest in substantially all assets of the Company that perfects upon the occurrence of an Event of Default. The total repayment amount, inclusive of all interest and fees and assuming all payments are made on time, is $152,250, reflecting a payment multiplier of 1.45 and a total interest and fee charge of $47,250. The loan is repayable in 20 equal weekly installments of $7,612.50 commencing April 8, 2026 and maturing on August 19, 2026. Upon an Event of Default, the interest rate is subject to an increase of 5.00 percentage points above the then-applicable rate. On May 12, 2026, the remaining balance of $152,250 under this loan was repaid in full out of the proceeds of the Agile BLSA described below.

On May 12, 2026, the Company entered into a Business Loan and Security Agreement (the “Agile BLSA”) with Agile Capital Funding, LLC, as collateral agent, and Agile Lending, LLC, as lead lender, with the Company’s subsidiaries urban-gro Canada Technologies Inc. and Flash Sports and Media, Inc. as guarantors. The Agile BLSA provides for a term loan in the principal amount of $1,625,000, which includes a $125,000 administrative agent fee. Net cash proceeds to the Company at the first advance were $1,047,750, after deduction of the $125,000 administrative agent fee, the payoff of the $152,250 outstanding balance of the Company’s February 2026 Agile loan,, and a $300,000 holdback of the first six weekly payments. The loan is evidenced by a Secured Promissory Note and is governed by Virginia law.

The loan results in a total repayment amount of $2,340,000, representing a payment multiplier of 1.44 times the principal amount and a total interest and fee charge of $715,000. The stated maturity date is 38 weeks from the May 12, 2026 effective date. The Company is required to make weekly payments commencing May 20, 2026, consisting of six initial weekly payments of $50,000 withheld at funding, followed by weekly payments of $65,000 through January 27, 2027 and a final payment of $25,000 on February 3, 2027. Voluntary prepayments are permitted, subject to a make-whole premium equal to the interest that would otherwise have been paid through maturity. The Agile BLSA grants the collateral agent a springing security interest in substantially all of the Company’s assets, effective automatically upon an Event of Default, and the collateral agent has no right to file financing statements until an Event of Default occurs. Upon an Event of Default, outstanding obligations bear interest at a rate 5.00 percentage points above the then-applicable rate.

Gemini Finance Corp. Line of Credit

In December 2023, UG Construction, Inc. d/b/a Emerald Construction Management, Inc., a wholly owned subsidiary of the Company, entered into an asset-based revolving line of credit with Gemini Finance Corp. (“Gemini”) in an amount not to exceed $10,000,000, secured by UG Construction’s accounts receivable. In March 2025, the line of credit was amended to extend the term to January 1, 2026, with interest accruing at 1.75% per month. In connection with the amendment, the Company issued 6,000 shares of common stock (post-split) to Gemini as an amendment fee. Between October and December 2025, the Company entered into a settlement agreement with Gemini to extinguish the outstanding balance of $1,158,522 through the issuance of 72,000 shares (post-split) of common stock in two tranches with aggregate consideration of $347,644. The transactions were accounted for under ASC 470-50-40, with the difference between the carrying amount of the debt and the fair value of equity issued recognized as a gain on debt extinguishment. As of June 30, 2026, the Gemini line of credit has been fully settled.

Grow Hill, LLC Secured Term Loan

On October 1, 2024, the Company entered into a secured term loan with Grow Hill, LLC (“Grow Hill”) with an original principal amount of $2,000,000, bearing interest at 15% per annum, with an origination fee of $100,000 (5% of the loan amount). The loan required monthly payments of interest and principal over a 24-month term maturing in October 2026. The loan is secured by a first-priority security interest in substantially all assets of the Company. As of December 31, 2025, the outstanding balance was $1,370,531. The Company is currently in default under the terms of the loan, and the balance of $1,443,745 is classified within discontinued operations as of June 30, 2026. In April 2026, the loan was assigned by Grow Hill to Hudson Global Ventures, LLC, the parties entered into a Forbearance Agreement and Exchange Agreement that settled the obligation, and the related Colorado litigation was dismissed.

On or about April 20, 2026, Grow Hill, LLC assigned its rights under the Company’s $2,000,000 secured term loan to Hudson Global Ventures, LLC (“Hudson”) pursuant to an Assignment and Assumption Agreement. As of April 10, 2026, outstanding obligations under the loan were approximately $1.94 million and the Company was in default. Concurrently with the assignment, the Company entered into a Forbearance Agreement with Hudson, under which the principal balance was increased to $2,800,000 to capitalize a forbearance fee, and an Exchange Agreement under which Hudson agreed to reduce a portion of the loan balance in exchange for shares of the Company’s common stock.

On May 19, 2026, the Company and its wholly-owned subsidiary urban-gro Canada Technologies Inc. entered into Amendment No. 1 to the Forbearance Agreement. The Amendment extended the forbearance period to the earlier of August 17, 2026 or the occurrence of a Forbearance Default, and provided for an additional forbearance fee of $1,106,992.21 payable as an increase in the principal balance of the underlying promissory note. After giving effect to the Amendment, the outstanding principal balance as of the date of the Amendment was $1,487,850.10; upon termination of the Amendment for any reason, the principal balance will increase to $2,800,000.

From April 21, 2026 through June 17, 2026, the Company and Hudson entered into a series of exchange agreements pursuant to which the Company issued an aggregate of 520,964 shares of common stock in exchange for reductions in the note balance totalling $2,241,223, reducing the balance to $608,777. On June 24, 2026, the Company entered into a further exchange agreement pursuant to which it issued 60,000 shares of common stock, valued at $2.66 per share and having an aggregate value of $159,600, in exchange for a corresponding reduction in the note balance. Following that exchange, the remaining balance under the note was $608,777.45. Each exchange was made in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act, and the holding period of the shares issued tacks to the original issuance date of the note.

J Brothers LLC Settlement Note

On August 8, 2025, the Company entered into a Settlement and Release Agreement with J Brothers LLC and Herb-a-More LLC relating to a dispute arising from amounts due for certain HVAC equipment. Pursuant to the settlement, the Company issued a promissory note with an original principal amount of $395,556, bearing simple interest at 12% per annum with a maturity date of March 18, 2026, and agreed to issue 6,000 shares of common stock (post-split). The note required monthly installments of $50,000 for the first seven months and a final payment of $64,047. As of June 30, 2026, the note has matured and the remaining balance of $320,962 is unpaid. The noteholder has not delivered a notice of default, and the Company is in discussions with the noteholder regarding a payment plan or conversion of the outstanding balance into equity. Under the terms of the note, a default interest rate of 17% per annum would apply upon a declared event of default. This obligation is classified within discontinued operations.

Bluecap Ventures Promissory Note

On February 18, 2026, the Company issued a Promissory Note to Bluecap Ventures LLC (“Bluecap”) in the principal amount of $100,000, bearing simple interest at 10% per annum, with a maturity date of August 18, 2026. The principal and accrued interest are due and payable in a single balloon payment on the Maturity Date. The note is unsecured and may be prepaid without premium or penalty. A late charge of 2% of the amount then due applies to any payment not received within 10 calendar days of its due date. Upon an event of default, the interest rate may be increased by 5 percentage points above the then-applicable rate. As of June 30, 2026, the outstanding principal balance of $100,000 remains outstanding and is classified as a current note payable.

April 2026 AHP Facility

On April 7, 2026, the Company entered into a separate Securities Purchase Agreement with Agile Hudson Partners LLC providing for the issuance of a 12% secured promissory note (the “April 2026 AHP Note”) in an aggregate principal amount of up to $2,775,000 for an aggregate purchase price of up to $2,525,000, in one or more tranches. On the same date, the Company drew a first tranche with original principal of $2,225,495.05 for a purchase price of $2,025,000, net of $25,000 of buyer legal fees. A second tranche was funded on April 30, 2026 for a purchase price of $500,000, adding $549,504.95 of principal and $65,940.60 of accrued interest. Aggregate net cash proceeds to the Company from the two tranches were $2,500,000. Each tranche matures twelve months after funding, with default interest at the lesser of 18% per annum and the maximum rate permitted by law. The note is secured, pursuant to a Security Agreement dated April 7, 2026, by substantially all assets of the Company and certain subsidiaries, junior to the Company’s existing senior secured indebtedness.

In connection with the April 2026 AHP Facility, the Company issued two warrants to the holder: a first warrant to purchase 154,166 shares of common stock at an exercise price of $18.00 per share, and a second, pre-funded warrant to purchase 26,000 shares of common stock at an exercise price of $0.01 per share. Both warrants have five-year terms expiring on April 7, 2031, and had fair values of $96,424 and $40,801, respectively, as of June 30, 2026. The April 2026 AHP Note is also convertible, at the holder’s election, into shares of common stock at a conversion price that varies with the market price of the common stock, subject to a floor equal to 75% of the average of the three lowest traded prices of the common stock during the ten trading days preceding the conversion date and a cap of $2.50 per share. Because the conversion price is not fixed, the conversion option is not considered indexed to the Company’s own stock and has been bifurcated and accounted for as a derivative liability under ASC 815. The warrants are likewise classified as derivative liabilities. See Note 9 — Derivative Liabilities for additional information.

June 2026 FirstFire Promissory Note

On June 17, 2026, the Company issued a promissory note to FirstFire Global Opportunities Fund, LLC in the principal amount of $880,000 for a purchase price of $800,000, reflecting an original issue discount of $80,000. The note bears interest at 10% per annum, and the first twelve months of interest, equal to $88,000, was guaranteed and earned in full as of the issue date. The note matures on June 17, 2027. Amounts not paid when due bear default interest at the lesser of 18% per annum and the maximum rate permitted by law. The note may not be prepaid except as expressly permitted by its terms.

The note is convertible at the holder’s election into shares of common stock at a fixed conversion price of $5.00 per share, subject to customary adjustments for stock splits, combinations and similar transactions. Upon an event of default, or upon the Company’s failure to pay an amortization payment when due, the conversion price becomes the lesser of $5.00 per share and 85% of the lowest volume-weighted average price of the common stock on any trading day during the five trading days preceding the conversion date. Conversion is subject to a 4.99% beneficial ownership limitation and, absent shareholder approval, to an exchange cap. The holder is entitled to deduct $1,750 from the conversion amount in respect of each notice of conversion.

At the fixed conversion price of $5.00 per share, the note is convertible into 193,600 shares of common stock. Because the conversion price resets upon an event of default or a missed amortization payment, settlement is not in all circumstances for a fixed number of shares in exchange for a fixed monetary amount, and the conversion option, together with the contingent reset, has been bifurcated and accounted for as a single compound embedded derivative liability under ASC 815 (see Note 9 — Derivative Liabilities). The Day-1 fair value of the bifurcated derivative of $133,476, together with the original issue discount of $80,000, was recorded as a debt discount of $213,476, with $666,524 of the proceeds allocated to the debt host. The discount is accreted to interest expense over the term of the note using the effective interest method at an effective rate of 71.3%. Interest expense of $12,898 was recognized from June 17, 2026 through June 30, 2026 and accrued interest payable of $3,134 is included in accrued expenses. At June 30, 2026 the note had an unamortized debt discount of $203,712 and a net carrying amount of $676,288, which is included in Notes payable, current. The note requires six cash amortization payments of $161,333.33 (with a final payment of $160,000) on days 180, 210, 240, 270, 300 and 330 following issuance, with the remaining balance due at maturity.