Key Takeaways:
ZeroStack Corp. reported a $61.3 million net loss for the first half of 2026, driven by an $82.5 million fair value decline on its 0G token holdings.
"The company's ability to generate liquidity from digital assets is subject to significant market price volatility and market liquidity conditions," management said in the Form 10-Q filed with the SEC on July 31.
The Nasdaq-listed crypto treasury firm held 75.1 million 0G tokens with a cost basis of $163.3 million and fair value of $15.2 million as of June 30 — roughly 91 percent below cost. Total revenue reached $20.9 million, combining $17.1 million from its German pharmaceutical subsidiary Phatebo and $3.8 million in staking rewards from 6.6 million 0G tokens earned after validator commissions.
ZeroStack ended the quarter with $2.6 million in cash and negative working capital of $600,000, relying on staking reward monetization to fund operations. The company completed its Texas Blocker acquisition on July 20, adding roughly 148 million 0G tokens to bring total holdings to 223.8 million tokens valued at $40.5 million as of July 27 — yet management still concluded substantial doubt exists about its ability to continue as a going concern.
The company also recorded a $24.4 million realized loss from using 0G tokens to settle the Zero Gravity convertible note in March, alongside a $26.1 million gain from the note's revaluation and settlement. Share-based compensation jumped to $4.4 million from $344,000 a year earlier, reflecting option grants to executives in December 2025 and May 2026.
ZeroStack sold 4.9 million 0G tokens for $2.4 million during the period to fund operating expenses, with staking rewards held in a separate hot wallet designated for operating liquidity. The company's digital asset segment posted a $60.9 million net loss before taxes, while its pharmaceutical segment lost $337,000.
The former Flora Growth Corp., which pivoted from cannabis to a 0G treasury strategy in September 2025, now faces a concentrated asset risk: 0G tokens represent roughly 60 percent of total assets. The company's share count expanded to 17.5 million as of July 27, with 5.95 million PIPE pre-funded warrants exercised after June 30 and an additional 1.25 million options approved on July 20, further diluting existing holders.
Management expects existing cash balances and staking reward sales to cover forecast operating costs over the next twelve months, and said it could monetize a portion of its treasury holdings if needed. However, the company could not conclude those plans are probable of mitigating the conditions that raise substantial doubt, reversing its more optimistic assessment from the first quarter.
This article is for informational purposes only and does not constitute investment advice.
