Note 14 — Commitments and Contingencies

IPG Working Capital Commitment

Pursuant to the IPG MIPA, Flash committed to fund $10,000,000 in working capital to IPG for league and business operations, payable in tranches over the twelve months following the February 17, 2026 closing. As of June 30, 2026, no tranches had been funded. The commitment is contingent and is not recognized on the unaudited condensed consolidated balance sheet.

Sri Lanka Cricket Event Rights Fee

The Company’s obligation to pay the ERF for any given season arises only upon its annual election to conduct that season through payment or guarantee. Future ERF commitments are accordingly contingent upon this annual election and are not recognized as liabilities until triggered. The Company is obligated to share with SLC 15% of Ground Sponsorship and International Media Rights revenues for Seasons 6 through 8 (2025–2027) and 20% for Seasons 9 through 10 (2028–2030), in each case recognized only in the period such revenues are earned. No revenue sharing obligation has been triggered as of June 30, 2026, as no LPL season was held during the year.

The Master Event Rights Agreement, as amended by five addendums (collectively, the “ERA”), provides for a 10-season term. Pursuant to the Fifth Addendum dated April 5, 2022, the term of the ERA was extended by five years, commencing on March 15, 2025 and ending on March 14, 2030, and covers Seasons 6 through 10 of the Lanka Premier League. The annual Event Rights Fee is payable to Sri Lanka Cricket only upon IPG’s annual election to conduct the LPL season; if IPG does not elect to conduct a season, no Event Rights Fee is payable for that season.

Witness Sports Alliance Advances

As of June 30, 2026, IPG had received advances of $799,995 from Witness Sports Alliance LLC in respect of the Lanka Premier League Season 6. These advances are classified in Other Current Liabilities on the unaudited condensed consolidated balance sheet, and no revenue has been recognized in respect of these amounts as of June 30, 2026. Recognition of revenue from these advances is dependent on the execution of definitive Season 6 agreements with Witness Sports Alliance LLC and the exercise of related extension rights by the parties.

Share Reserve — Agile Hudson Partners

In connection with the April 2026 AHP Facility, the Company delivered irrevocable instructions to its transfer agent dated April 7, 2026 directing the reservation of 3,000,000 shares of common stock for issuance upon conversion of the April 2026 AHP Note and/or exercise of the related warrants. The number of reserved shares may be increased from time to time upon written instruction of the Company or the holder, subject to the availability of authorized and unissued shares, and any shares remaining in the reserve are to be released to the Company once the note has been extinguished and the warrants have been exercised in full. The reservation does not of itself result in the issuance of shares; shares are issued from the reserve only upon a conversion or exercise notice delivered by the holder.

Operating Leases

The Company has operating leases primarily related to IPG’s office facilities in Dubai. As of June 30, 2026, total operating lease right-of-use assets were $293,001, with corresponding lease liabilities of $309,573 ($194,494 current and $115,079 long-term). The weighted-average remaining lease term is 1.3 years and the weighted-average discount rate is 8.0%.

Legal Proceedings

Grow Hill, LLC v. urban-gro, Inc. — In December 2025, Grow Hill, LLC filed suit against the Company in the District Court for Adams County, Colorado (Case No. 2025CV33546) seeking enforcement of a $1,371,000 secured term loan. In April 2026, in connection with the assignment of the loan to Hudson Global Ventures, LLC and the related forbearance and exchange transactions described in Note 15 — Subsequent Events, the matter was settled and the action was dismissed.

J Brothers LLC — A $321,000 settlement note matured on March 18, 2026 and remains 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.

India Basketball League Operations

The Company’s professional basketball league operations in India remain subject to ongoing legal and regulatory matters involving recognition and approvals from the Basketball Federation of India. The league previously received a favorable ruling from the Delhi High Court; however, operations remain on hold pending further resolution and regulatory clearance. Management, in consultation with legal counsel, is unable to predict the ultimate outcome or timing of these matters. No loss contingency has been recorded as of June 30, 2026, as management does not believe a loss is probable or reasonably estimable. The resolution of these matters may impact the ability of the league to resume operations and the recoverability of related assets.

LPL Franchise Agreement Dispute

On March 17, 2026, the Dubai International Financial Centre Courts granted a default judgment in favor of the Company against Innovation Factory Royal Investment Group LLC (Claim No. CFI 054/2025) following the defendant’s failure to file a defense. The judgment awards principal of $2,883,407, comprising the outstanding Season 4 franchise balance of $339,202, unpaid Season 5 fees of $1,600,000, amounts remitted to Sri Lanka Cricket on the defendant’s behalf of $849,364, and outstanding surcharges of $94,841, together with accrued interest of $699,194 to January 9, 2026 and continuing interest at 9% per annum thereafter until payment, and legal costs of AED 1,020,048.

The principal judgment amount of $2,883,407 exceeds the carrying value of the related receivable on the balance sheet of $1,699,201 by $1,184,206, representing surcharges and other amounts claimed in the proceedings not previously recognized on the balance sheet. No amounts in excess of the $1,699,201 carrying value have been recognized in the financial statements as of June 30, 2026. Management reversed the allowance for credit losses of $169,920 previously recognized against this receivable, as the receipt of the default judgment supports the recoverability of the carrying amount. The Company is actively pursuing enforcement of the judgment and recovery of all awarded amounts. See Notes 6 and 11.

Earn-Out Contingent Consideration

See Note 4 — Business Combination for description of the contingent earn-out payable to the IPG sellers.

AHP Note Tranche Commitments

Under the Securities Purchase Agreement with Agile Hudson Partners LLC, the Company has the right (but not the obligation) to draw additional tranches up to a remaining commitment of $2,310,000.

Hudson Global Equity Line of Credit

Under the Equity Line of Credit Agreement with Hudson Global Ventures LLC, the Company has access to up to $54,000,000 in equity financing through the issuance of common stock at the Company’s election, subject to market conditions, beneficial ownership limitations, and SEC registration of the underlying shares.

MJ’s Market, Inc

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

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

RK Mechanical- complaint filed

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

Substantially all of UG Construction’s operating assets were foreclosed upon by Gemini Finance Corp. on September 4, 2025 in an Article 9 foreclosure sale conducted following the Company’s default under the UG Construction line of credit, and UG Construction retains no assets with which to satisfy the judgment. UG Construction’s activities are presented within discontinued operations. The Company assesses the outcome as reasonably possible but not probable under ASC 450-20. The range of potential loss is not estimable at this time. No accrual has been recorded.

Action Equipment- complaint filed

On April 21, 2025, Action Equip. & Scaffold Co. (“Action”) filed a complaint against UG Construction in the Superior Court of Arizona for Maricopa County (Case No. CV2025-014165). The complaint alleged that UG Construction owed Action $380,932 plus interest and attorneys’ fees in connection with a contract pursuant to which Action leased equipment to UG Construction, and alleged breach of contract, breach of covenant of good faith and fair dealing, and unjust enrichment. Substantially all of UG Construction’s operating assets were foreclosed upon by Gemini Finance Corp. on September 4, 2025 in an Article 9 foreclosure sale, and UG Construction retains no assets. UG Construction’s activities are presented within discontinued operations. The Company assesses the outcome as reasonably possible but not probable under ASC 450-20. No accrual has been recorded.

Cullens - Complaint Filed & Company Filed Answer and Counter Suit

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

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

On March 30, 2026, UG filed a counter suit against Mr. Cullens (“Counterclaim Defendant”) alleging Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, and Unjust Enrichment.   On or about March 13, 2022, UG entered into the Acquisition Agreement and Plan of Merger with Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC (the “Acquisition Agreement”).  The Acquisition Agreement sets forth the terms and conditions of UG’s business relationship with Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC. Under Article VIII of the Acquisition Agreement Indemnification, Emerald Merger Sub, Inc., Emerald Construction Management, Inc., Christopher Cullens, Charles Cullens, and Green Stone Property LLC will indemnify and hold UG harmless under prescribed.  On or about August 10, 2023, UG and Counterclaim Defendant entered into the Amended and Restated Indemnification Claim Agreement, and effective the date of this counter suit, the Defendant failed to pay UG as required under the Amended Indemnification Agreement and the Acquisition Agreement.  UG has requested that the court award UG its losses and damages, costs, pre- and post-judgment interest, and attorneys’ fees and costs pursuant to the Acquisition Agreement and the Amended Indemnification Agreement and otherwise allowed under Colorado law, in addition to any other relief this Court deems proper. The matter is currently set for trial in September 2027.

Other – Trade Vendors

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

The Colorado litigation captioned Grow Hill, LLC v. urban-gro, Inc. was dismissed in April 2026 in connection with the assignment of the Grow Hill secured term loan and the related forbearance and exchange transactions described in Note 8 — Debt.

Other than the foregoing, the Company is not a party to any material legal proceedings.