ZeroStack, a Nasdaq-listed crypto treasury company, said in a 10-Q filed Friday with the U.S. Securities and Exchange Commission that there is “substantial doubt” about its ability to continue as a going concern over the next 12 months. That assessment was the opposite of what the company had stated three months earlier.
As of June 30, ZeroStack reported cash of $2.6 million, negative working capital of $0.6 million, and accumulated losses of $339.1 million. For the first half of the year, the company posted an $82.5 million fair value loss on digital assets and a net loss of $61.3 million.
0G treasury holdings lost most of their recorded value
ZeroStack said it held 75.1 million Zero Gravity (0G) tokens with a total cost basis of $163.3 million. As of June 30, the fair value of those holdings had fallen to $15.2 million, leaving the position down about 91% from recorded cost.
The company said its operating funding relies mainly on staking rewards and token sales. That means its ability to raise cash is directly tied to the price of 0G and to market liquidity in the token.
Staking rewards and token sales funded operations
According to the filing, ZeroStack generated $3.8 million in staking revenue in the first half of the year and received about 6.6 million 0G tokens after validator commissions. To cover operating expenses, it sold nearly 4.9 million tokens for $2.4 million.
ZeroStack said its current cash balance and proceeds from selling staking rewards are expected to cover anticipated operating costs, and that it could liquidate part of its treasury holdings if needed. Even so, management said it could not conclude that those plans would be enough to remove the going-concern uncertainty.
Latest view reverses earlier company statements
The new assessment overturned the position described in the company’s prior two reports. In its first-quarter filing, ZeroStack had said that cash and staking rewards would be sufficient to meet at least the next year’s working capital needs and debt obligations.
Company was previously known as Flora Growth
ZeroStack was formerly Flora Growth, a cannabis and CBD products company. On Sept. 19 last year, Flora announced $401 million in financing for its 0G treasury strategy, including $35 million in cash and cash-equivalent commitments and more than $366 million in in-kind digital assets. The company later changed its name to ZeroStack while keeping its Nasdaq listing.
The source article described the episode as a clear example of the risks in the crypto treasury company model: the company tied both its balance sheet and its operating cash generation to a single token that it held in size, leaving both under pressure after the token’s price dropped sharply.