Material Agreement (Form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, on December 13, 2023, UG Construction, Inc. d/b/a Emerald Construction Management, Inc. ("UG Construction"), a wholly owned subsidiary of urban-gro, Inc. (the "Company"), entered into an asset based revolving Loan Agreement (the "Line of Credit") with Gemini Finance Corp. ("Lender"), pursuant to which Lender extended to UG Construction a secured line of credit in an amount not to exceed $10,000,000. Also as previously disclosed, on July 31, 2025, the Lender issued a notice of default to UG Construction claiming that UG Construction was in default under the Line of Credit, and on August 21, 2025, the Company received a notification from the Lender stating that the Lender would proceed with a foreclosure and private sale of substantially all of the assets of UG Construction in an Article 9 sale process, pursuant to Section 9601 et seq. of the California Commercial Code (the "Asset Sale"). The Asset Sale occurred on September 4, 2025, at which the Lender acquired the assets constituting the collateral under the Line of Credit for $450,000.

On August 29, 2025, the Lender commenced a lawsuit captioned Gemini Finance Corp. v. UG Construction, Inc. et al., case number 25CV2259 W SBC, in the U.S. District Court for the Southern District of California, which lawsuit (the "Lawsuit") included the Company and certain of its officers as defendants and pursuant to which the Lender claimed it was owed $1,486,189 (the "Claim Amount").

On September 26, 2025, the Company entered into a Settlement and Mutual General Release (the "Settlement Agreement") with the Lender. Pursuant to the terms of the Settlement Agreement, among other things, the Company agreed to file a joint motion requesting an expedited fairness hearing under Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"), which motion was filed on September 30, 2025. Following such fairness hearing, and subject to the satisfaction of all applicable conditions and requirements of Section 3(a)(10) of the Securities Act, the Company will issue to the Lender shares of the Company's common stock (the "Common Stock") that, upon sale by the Lender, would result in net proceeds to the Lender equal to the Claim Amount, provided that the Lender shall at no time be issued shares if it would beneficially own more than 4.99% of the Common Stock, and the aggregate number of shares issued to the Lender shall not exceed 19.99% of the outstanding Common Stock as of immediately prior to the signing of the Settlement Agreement to the extent required by Nasdaq Listing Rule 5635. Additionally, the Lender agreed to use its best efforts to not sell Common Stock exceeding 10% of the Company's daily volume on any given trading day. Upon the issuance of the last tranche of shares under the Settlement Agreement, the Lender will dismiss the Lawsuit with prejudice. The Settlement Agreement also includes a customary mutual release of claims by the parties.

The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 3.02 Unregistered Sale of Equity Securities.