FLZH 10-K & 10-Q changes, risk factors and insider trading

We have a limited operating history under the Flash Sports & Media platform and may not be able to successfully execute our business plan.

The Company completed the Merger with Flash on February 17, 2026. Flash was incorporated on August 7, 2023 and had not generated any revenue prior to the Merger. While IPG, which is now a wholly owned subsidiary of Flash and therefore of the Company, has generated revenue from cricket-related operations since 2020, the combined entity has a limited operating history as a publicly traded sports and media company. There can be no assurance that we will be able to successfully integrate the operations of Flash, IPG, and the Company, or that we will achieve profitability. Our prospects must be considered in light of the risks and uncertainties encountered by companies in the early stages of development in rapidly evolving markets.

We are substantially dependent on a single contractual relationship with Sri Lanka Cricket for a significant majority of our revenue.

Substantially all of IPG’s revenue is derived from the commercialization of rights granted under the Master Event Rights Agreement with SLC for the Lanka Premier League. The loss, non-renewal, or material modification of this agreement would have a material adverse effect on our business, financial condition, and results of operations. The Event Rights Agreement requires annual payment of an Event Rights Fee or provision of a bank guarantee by March 15 of each year; failure to make timely payment could result in termination of the Company’s rights for that year. Although the agreement provides for automatic one-year renewals, IPG’s rights must be secured annually, and there can be no assurance that the agreement will be renewed on favorable terms, or at all.

We have a going concern qualification and a history of net losses and accumulated deficits.

Both IPG and Flash have received going concern qualifications from their respective auditors. As of December 31, 2024, IPG had an accumulated deficit of approximately $4.6 million and a working capital deficit of approximately $1.9 million. Flash had an accumulated deficit of $500,000 as of December 31, 2024 and had never generated revenue. The Company (legacy urban-gro) had an accumulated deficit of approximately $120.6 million and a stockholders’ deficit of approximately $40.9 million as of December 31, 2025. There can be no assurance that the combined entity will achieve or sustain profitability.

Our revenue is concentrated among a limited number of customers and geographies.

For the year ended December 31, 2024, approximately 82% of IPG’s total revenue was generated from customers based in Sri Lanka, with the remaining 18% derived from Zimbabwe. In 2023, sales to four customers individually exceeded 10% of IPG’s total revenue, collectively representing approximately 53% of total revenue. The loss of any significant customer or a significant reduction in business from Sri Lanka or Zimbabwe could have a material adverse effect on our financial performance. The Company continues to focus on efforts to diversify its customer base to mitigate such risks.

Our business is dependent on the continued popularity and growth of cricket, particularly T20 cricket, in our target markets.

Our revenue is substantially derived from the commercialization of T20 cricket league rights. Any decline in the popularity of cricket or T20 cricket in Sri Lanka, or in international markets where we distribute media content, could reduce demand for media rights, sponsorships, franchise ownership, and ticketing, which would materially and adversely affect our business, financial condition, and results of operations.

We are subject to risks associated with international operations.

The Company conducts operations in the United Arab Emirates, Sri Lanka, Zimbabwe, and other international markets, and is subject to risks inherent in international operations, including political and economic instability, currency fluctuation risk, regulatory uncertainty, foreign tax regimes (including the recently enacted UAE Corporate Tax), sanctions and trade restrictions, cultural and legal differences, and challenges in enforcing contractual rights across jurisdictions. Any of these factors could materially and adversely affect our operations and financial results.

We depend on key personnel, including the founder and chairman of IPG.

The Company’s success depends in significant part on the continued services and leadership of key individuals, including Anil Mohan Sankhdhar, the founder and chairman of IPG, who has been instrumental in building the Company’s relationships with SLC, franchise owners, sponsors, and broadcast partners, and Bradley Nattrass, the Company’s Chairman and Chief Executive Officer. The loss of any of these individuals’ services could have a material adverse effect on our business and operations. We do not currently maintain key-person life insurance on any of our executives.

Force majeure events, including pandemics, natural disasters, terrorism, and political unrest, could disrupt our tournament operations.

The LPL and our other cricket events are live, in-person sporting events that are subject to disruption or cancellation due to force majeure events. Under the Event Rights Agreement, the full Event Rights Fee remains payable by the Event Rights Partner to SLC even if the whole or any part of the Tournament is curtailed, cancelled, or abandoned due to any Force Majeure event, after the date of commencement of the Tournament. Force Majeure events include, but are not limited to, acts of God, war, riot, strike, civil commotion, terrorism, pandemics, epidemics, fire, earthquake, storm, flood, tsunami, explosion, and acts of Government. Any such disruption could materially and adversely affect our revenue, reputation, and operations.

Our expansion into new markets and new business verticals involves significant risks and uncertainties.

We have announced expansion plans for T20 cricket league operations in Malaysia, Zimbabwe, Bangladesh, and the United Arab Emirates. We are also pursuing potential strategic combinations and partnerships in the esports and entertainment sectors, including a potential combination with Infinity Esports & Gaming, a Latin American esports organization that operates gaming centers across multiple countries and holds branded intellectual properties, and the potential development of Dune Bridge Capital, an investment and strategic capital deployment vertical focused on film, television, sports, and digital media. Each of these initiatives involves significant execution risk, including the need to negotiate and execute definitive agreements, secure regulatory approvals, recruit qualified local personnel, obtain adequate financing, and build local infrastructure. As of the date of this Report, no definitive agreements have been entered into with respect to the esports or entertainment verticals. There can be no assurance that any of these expansion or diversification initiatives will be completed on the terms anticipated, or at all, or that they will generate the revenue or returns expected.

We face significant competition in the sports media and entertainment industry.

The sports media and entertainment industry is highly competitive. We compete for viewership, sponsorship dollars, franchise investment, media rights fees, and talent with larger, better-capitalized companies and established cricket leagues, including the IPL, BBL, CPL, PSL, and SA20. Many of our competitors have significantly greater financial, technical, marketing, and other resources than we do. There can be no assurance that we will be able to compete effectively.

Risks Related to the Merger and Integration

The Merger may not achieve its intended benefits, and integration of the combined businesses involves significant risks.

The success of the Merger depends on, among other things, our ability to successfully integrate the operations, technologies, and personnel of Flash, IPG, and the legacy urban-gro business, achieve anticipated revenue growth, realize cost synergies, and retain key customers, partners, and employees. Integration may be more difficult, time-consuming, or costly than expected, and there can be no assurance that we will realize the expected benefits of the Merger.

Following the Merger, former Flash stockholders are expected to own a minimum of 90% of the combined company, resulting in significant dilution to existing stockholders.

Under the terms of the Merger Agreement, Flash stockholders received shares of UGRO common stock equal to 19.99% of the outstanding shares immediately prior to certain prior issuances, as well as shares of newly created non-voting convertible preferred stock that, upon stockholder approval of the conversion, would result in former Flash stockholders owning approximately 90% of the combined company on a fully-converted basis. This represents substantial dilution to the Company’s existing stockholders.

The Company changed its independent auditor in connection with the Merger, which may increase the risk of accounting errors or restatements.

On March 03, 2026, the Company dismissed Sadler, Gibb & Associates, LLC as its independent registered public accounting firm and appointed Suri and Co., Chartered Accountants of Chennai, India to audit the Company’s financial statements for the year ended December 31, 2025. The transition to a new auditor during a period of significant business transformation increases the risk of accounting errors, delays in financial reporting, or the need for restatements.

Risks Related to Nasdaq Listing and Capital Structure

We have a history of non-compliance with Nasdaq listing standards and may be unable to maintain our Nasdaq listing.

The Company has experienced multiple instances of non-compliance with Nasdaq listing standards, including the minimum bid price requirement, timely filing of periodic reports, minimum stockholders’ equity requirement, and annual meeting requirement. While the Company regained compliance with these requirements as of March 2026, Nasdaq has placed the Company on a one-year Discretionary Panel Monitor under Listing Rule 5815(d)(4)(A). Any future non-compliance could result in delisting, which would materially and adversely affect the liquidity and trading price of our common stock.

We have limited liquidity and may require additional financing to fund our operations.

As of December 31, 2025, the Company had cash of approximately $10,000 and negative working capital of approximately $42.7 million. Our ability to continue operations is dependent on our ability to generate sufficient revenue and/or obtain financing. There can be no assurance that additional financing will be available on acceptable terms, or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition, and operating results.

We have significant outstanding liabilities and legal proceedings that could adversely affect our financial condition.

The Company has significant accounts payable, contract liabilities, notes payable, and accrued expenses. Additionally, the Company is subject to various legal proceedings, including lawsuits by creditors, equipment suppliers, and former contractors. Adverse outcomes in any of these proceedings could materially affect our financial position and results of operations.

Risks Related to Regulatory and Legal Matters

We are subject to anti-corruption, anti-bribery, and sports integrity laws and regulations.

The Company and its subsidiaries, sub-licensees, franchise holders, and team owners are required to comply with anti-corruption and anti-bribery laws in all jurisdictions in which we operate, as well as ICC anti-corruption codes. Any violation of these laws or codes could result in criminal penalties, fines, suspension, or termination of our Event Rights, any of which could have a material adverse effect on our business.

Changes in tax laws or regulations, including the recently enacted UAE Corporate Tax, could increase our tax burden.

IPG is subject to the UAE Corporate Tax Law effective January 1, 2024, which imposes a 9% tax on taxable income exceeding the exemption threshold. Changes in applicable tax laws or their interpretation, or the enactment of new taxes in jurisdictions where we operate, could increase our effective tax rate and adversely affect our financial results.

The Event Rights Agreement is governed by Sri Lankan law and disputes are subject to international arbitration, which may be costly and time-consuming.

The Event Rights Agreement is governed by the laws of Sri Lanka, and disputes are subject to arbitration in Colombo under the Rules of the International Chamber of Commerce. The number of arbitrators shall be three, and each party shall be entitled to select one arbitrator each, with the third selected jointly to act as Chairman of the Arbitral Tribunal. Enforcing contractual rights through international arbitration may be more costly, time-consuming, and uncertain than litigation in U.S. courts, and arbitral awards may be difficult to enforce in other jurisdictions.

The fiscal year ended December 31, 2025 was a period of significant strategic transformation for the Company. During the first three quarters of 2025, the Company continued to operate its legacy Controlled Environment Agriculture (“CEA”) design-build and equipment reselling businesses while pursuing the wind-down of its core operations. In the third quarter of 2025, the Company made the decision to exit its core business sectors due to changing market conditions and its inability to raise significant funds due to its filing status and compliance with the Nasdaq. The Company began selling assets, reducing its workforce, and preparing for a subsequent merger.

On October 14, 2025, the Company entered into a binding letter of intent with Flash Sports & Media, Inc. (“Flash”) regarding the proposed Merger. During the fourth quarter of 2025, the Company wound down its remaining services businesses and furloughed the associated employees. The Merger with Flash was completed on February 17, 2026, subsequent to the fiscal year end covered by this Report. As such, the financial results presented herein for the fiscal year ended December 31, 2025 reflect the legacy urban-gro operations only and do not include any revenue or expenses of Flash or IPG. For a description of the Company’s post-Merger operations, see “Item 1 — Business.”

Revenue. For the year ended December 31, 2025, the Company generated revenue of $17.4 million compared to $31.2 million for the year ended December 31, 2024, a decrease of $13.8 million, or approximately 44%. This decrease was driven primarily by a $10.1 million decrease in construction design-build revenue and a $3.5 million decrease in equipment systems revenue, reflecting the Company’s ongoing wind-down of legacy operations.

Cost of Revenue. For the year ended December 31, 2025, cost of revenue was $17.2 million compared to $31.6 million for the year ended December 31, 2024, a decrease of $14.3 million, or approximately 45%. Gross profit was approximately $174,000 for the year ended December 31, 2025, compared to gross loss of $388,000 for the comparable prior-year period. The improvement in gross margin from a gross loss to a gross profit reflects the Company’s cost reduction efforts outpacing the revenue decline during the wind-down period.

Operating Expenses. Operating expenses decreased by $9.8 million, or approximately 35%, to $18.1 million for the year ended December 31, 2025, compared to $28.0 million for the comparable prior-year period. This decrease resulted from a $3.7 million decrease in general and administrative expenses, a $0.7 million decrease in depreciation and amortization and $6.0 million decrease in impairment of goodwill and intangibles, reflecting headcount reductions and asset dispositions undertaken as part of the wind-down.

Non-Operating Expenses. Non-operating expenses increased significantly for the year ended December 31, 2025 compared to the prior-year period, primarily due to a $2.4 million loss recognized on the foreclosure of UG Construction assets in connection with the Gemini Finance Corp. settlement, as well as increased interest expense of $0.6 million.

The Company’s ability to continue as a going concern is dependent on its ability to generate sufficient revenue and/or obtain financing sufficient to meet current and future obligations. The Company has produced multiple consecutive years of net losses and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a 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.

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Our most significant estimates for FY2025 relate to: Revenue Recognition (ASC 606) — For construction design-build contracts, revenue is recognized over time using the cost-to-cost input method, requiring estimates of total contract costs. Impairment of Long-Lived Assets and Goodwill (ASC 360-10-35 / ASC 350) — We evaluate recoverability whenever events indicate the carrying amount may not be recoverable; during 2025 impairment charges were recorded in connection with the wind-down. Allowance for Credit Losses (ASC 326-20) — Estimated based on historical loss experience, aging, current conditions, and forecasts; significant judgment was required given the wind-down. Stock-Based Compensation — Measured at grant date fair value using the Black-Scholes model. Income Taxes (ASC 740) — We maintain a full valuation allowance against net deferred tax assets. Significant judgment is required in evaluating realizability and estimating provisions.

Background

Because the Company owns the underlying league rights and also performs the production, it retains economics at both ends of the value chain rather than paying away a distribution or production margin to third parties. The Company’s strategy is to extend that same operating model — one production platform, one talent pool, one sponsorship network — across additional markets, so that each incremental league is added without a proportionate increase in fixed infrastructure.

Launch of Direct-to-Consumer Application

On July 16, 2026, the Company announced the commercial launch of FLASHSM, a direct-to-consumer mobile application offering live and on-demand cricket content and interactive fan engagement features, initially available in North America.

Seasonality

Our revenue is highly seasonal and is concentrated in the fiscal quarter in which a league season is staged. A season is played over an approximately three-to-four-week window once per year, and franchise, sponsorship, ground sponsorship and media rights revenue is recognized as that season is delivered. The costs of securing and preparing a season — league rights fees, media rights fees, player draft and production mobilization costs — are incurred in advance of the season and are carried as deferred contract costs until the related revenue is recognized. As a result, quarters in which no season is staged reflect the operating cost base of the business without the offsetting revenue, and results for any interim period are not indicative of results for a full year. As we add additional leagues in other markets with different seasonal windows, we expect revenue to become distributed across more than one quarter of the year.

Corporate Name Change and Nasdaq Status

On June 12, 2026, following stockholder approval, we changed our corporate name from “urban-gro, Inc.” to “Flash Sports & Media Holdings, Inc.” and our common stock began trading under the ticker symbol “FLZH.” We regained compliance with the Nasdaq minimum bid price requirement on March 9, 2026 following the reverse stock split. Continued listing remains subject to our satisfying Nasdaq’s continued listing standards, and no assurance can be given that we will continue to do so.

Board Reconstitution

Effective July 12, 2026, Bradley Nattrass resigned as Chairman and as a director and continues to serve as Chief Executive Officer, and David Hsu and James Lowe resigned as directors. Effective July 14, 2026, Gary Herman, Rahul Johri and Surendra Ajjarapu were elected as directors. Mr. Ajjarapu was appointed Chairman of the Board and Mr. Herman was appointed Chair of the Audit Committee. In each case the Company reported that no disagreement with the Company, its management or the Board was involved.

Non-Binding Term Sheets

We have entered into three non-binding arrangements that remain under evaluation. In connection with Mr. Johri’s appointment, we entered into a non-binding term sheet with Mr. Johri and Super Entertainment Network Private Limited, of which he is Managing Director and Chief Executive Officer, contemplating a potential investment by the Company in Super Entertainment Network in connection with a proposed channel business transaction, together with a potential future exchange right.

On June 27, 2026 we entered into a confidential, non-binding Letter of Intent to acquire a 51% controlling interest in the assets of Nooa Holdings Ltd, a Dubai-based hospitality group, through a newly incorporated subsidiary, with the stated purchase price payable entirely in newly created Series A Preferred Stock. The Series A Preferred Stock is expected to carry voting rights and to become convertible beginning 365 days after closing or upon a contemplated spin-out, subject to Nasdaq rules including stockholder approval to the extent required. The Letter of Intent also contemplates a potential future spin-out and separate listing of that subsidiary.

On August 3, 2026 we entered into a separate non-binding term sheet contemplating the acquisition of a 51% controlling interest in Bongo Holdings Pte Ltd.

Each of these arrangements is non-binding other than as to provisions relating to confidentiality, exclusivity and negotiation procedures. Completion of any transaction would be subject to satisfactory due diligence, definitive agreements, adequate financing and all required board, stockholder, regulatory and third-party approvals. No amounts have been recognized in these financial statements in respect of any of these arrangements.

Total operating expenses were $6,528,254 for the three months ended June 30, 2026, consisting of $2,805,816 in general and administrative expenses and $3,722,438 in amortization of acquired intangibles. For the six months ended June 30, 2026, total operating expenses were $8,653,490, consisting of $3,213,004 in general and administrative expenses and $5,440,486 in amortization of acquired intangibles. Amortization for the six-month period covers the period from the Acquisition Date of February 17, 2026 through June 30, 2026. Total operating expenses were nil for the three months ended June 30, 2025 and $618,901 for the six months ended June 30, 2025, consisting of general and administrative expenses incurred before the Merger.

Total non-operating expense was $1,548,560 for the three months ended June 30, 2026, consisting of $2,522,745 in interest expense and $1,454,690 of loss on issuance of derivatives, partly offset by a $2,426,791 gain from the change in fair value of derivative liabilities and $2,084 of other income. For the six months ended June 30, 2026, total non-operating expense was $1,772,897, consisting of $2,540,808 in interest expense and $1,663,348 of loss on issuance of derivatives, partly offset by a $2,429,175 gain from the change in fair value of derivative liabilities and $2,084 of other income. Interest expense for the three months ended June 30, 2026 reflects the one-time interest charges and amortization of debt discount on the notes drawn during the quarter, including the April 2026 AHP facility tranches and the May 2026 Agile term loan. The loss on issuance of derivatives relates to the Day-1 fair value of the bifurcated conversion features and warrants in excess of net proceeds received. We had no non-operating activity from continuing operations for the three or six months ended June 30, 2025. The gain on settlement related to the Agile Forbearance Agreement is reported within the loss from discontinued operations.

Why the Reported Periods Reflect a Transition

Three factors drive substantially all of the change in our results, and understanding them is essential to reading the discussion that follows.

First, the Merger established a new basis of reporting. Our continuing operations did not exist in their current form before February 17, 2026, so prior-year comparatives for continuing operations are minimal and are not meaningful measures of the business we operate today.

Second, cricket revenue is highly seasonal and no league season fell within the reported periods. The LPL is staged over an approximately three-to-four-week window once per year, and franchise, sponsorship and media rights revenue is recognized as that season is delivered. No LPL season was staged during the three or six months ended June 30, 2026. Amounts invoiced in advance of the forthcoming season are carried as contract liabilities, and the costs of securing and preparing that season are carried as deferred contract costs, with both released to the statement of operations in the period the season is delivered.

Third, a substantial portion of our loss is non-cash. Amortization of the intangible assets recognized in the Merger, the initial recognition and remeasurement of derivative liabilities, and the accretion of debt discount on our financings together account for the majority of the loss from continuing operations. These items do not represent operating cash costs of the business.

Contractual Obligations and Commitments

Our material cash requirements over the next twelve months comprise the scheduled principal and interest payments on our notes payable, the weekly instalments due under the Agile term loan, the monthly amortization payments due under the FirstFire note commencing 180 days after issuance, the cash consideration due to the IPG sellers, our operating lease commitments, and the working capital commitment to IPG. In addition, we are obligated to secure our LPL rights annually by payment of the Event Rights Fee to Sri Lanka Cricket, or the furnishing of an irrevocable unconditional bank guarantee, by March 15 of each year. That obligation arises only upon our election to conduct the relevant season and is therefore not recognized as a liability until triggered. We are also obligated to share with Sri Lanka Cricket a percentage of ground sponsorship and international media rights revenues, recognized only in the period such revenues are earned.

We had no off-balance sheet arrangements at June 30, 2026 other than the contingent commitments described above and in Note 14 — Commitments and Contingencies.