ZeroStack raises going-concern warning after $82.5 million crypto asset loss

The Nasdaq-listed digital asset treasury company depends heavily on staking rewards and token sales for liquidity, while the value of its 0G holdings had fallen roughly 91% below their recorded cost as of June 30.

ZeroStack has warned that substantial doubt exists over its ability to remain in operation for the next 12 months as declining digital asset values and limited available cash place pressure on the company’s finances.

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The Nasdaq-listed company disclosed the warning in a Form 10-Q filed with the US Securities and Exchange Commission on July 31. The assessment marks a reversal from the position presented in its previous quarterly report, when management said it expected its cash and staking rewards to cover its obligations for at least another year.

As of June 30, 2026, ZeroStack held approximately $2.6 million in cash and reported negative working capital of $600,000. Its accumulated deficit had reached $339.1 million.

The company recorded a net loss of $61.3 million during the first six months of 2026, including an $82.5 million fair-value loss related to its digital assets. The fair-value charge reflects an accounting adjustment resulting from changes in asset prices rather than an equivalent cash outflow.

0G holdings suffer steep valuation decline

ZeroStack’s treasury was heavily concentrated in 0G, the native token of the Zero Gravity blockchain network.

At the end of June, the company held approximately 75.1 million 0G tokens with an aggregate recorded cost of $163.3 million. Those holdings had a fair value of just $15.2 million at the reporting date, representing a decline of roughly 91% from their recorded cost.

The difference highlights the risks associated with corporate digital asset treasury strategies, particularly when reserves are concentrated in a token with limited market liquidity.

ZeroStack depends primarily on income generated from staking its 0G holdings and selling the resulting token rewards to finance its operations. Its capacity to generate cash is therefore closely tied to the token’s market price, liquidity and broader trading conditions.

During the first half of 2026, the company recognized approximately $3.8 million in digital asset revenue after earning around 6.6 million 0G tokens through staking, net of validator commissions.

ZeroStack sold nearly 4.9 million tokens from its staking rewards for approximately $2.4 million. The proceeds were used to help fund operating expenses.

Management cannot eliminate liquidity concerns

ZeroStack said it expects its existing cash, combined with proceeds from the sale of staking rewards, to cover its forecast operating expenses. Management also said it could sell a portion of the company’s underlying digital asset treasury if additional liquidity is required.

However, the company said it could not conclude that these measures would probably be sufficient to address the conditions creating substantial doubt over its ability to continue as a going concern.

The assessment differs from ZeroStack’s first-quarter filing. At that time, the company said its available cash and expected staking rewards should be sufficient to meet its working capital requirements and financial obligations for at least 12 months.

After the end of the second quarter, ZeroStack completed its acquisition of Texas Blocker Corp. on July 20. The transaction added approximately 148 million 0G tokens to its treasury, bringing its total holdings to around 223 million tokens. Most of those assets are being staked, according to the filing.

ZeroStack previously operated as Flora Growth, a company with cannabis, hemp and pharmaceutical distribution businesses. Flora announced a $401 million financing package in September 2025 to establish a treasury centred on 0G.

The announced financing included more than $366 million in digital asset contributions and $35 million in cash and equivalent commitments. The company later changed its name to ZeroStack while retaining its Nasdaq listing and FLGC ticker.