ZeroStack, a crypto treasury company listed on the Nasdaq, has sounded an alarm regarding its future, stating that "substantial doubt exists about its ability to continue operating" over the next twelve months. The declaration marks a significant reversal from the more confident outlook the company presented just three months prior.

Dire Financial Standing

The warning was part of a Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC) on Friday. According to the filing, the company's financial position as of June 30 was precarious, with only $2.6 million in cash on hand. The report also detailed negative working capital of $600,000 and a substantial accumulated deficit reaching $339.1 million.

Furthermore, ZeroStack disclosed an $82.5 million fair value loss on its digital assets for the first half of 2026. During that same period, the company recorded a total net loss of $61.3 million.

Devaluation of Core Crypto Holdings

At the heart of the company's struggles is the dramatic decline in the value of its primary asset. ZeroStack stated that its holdings of 75.1 million Zero Gravity (0G) tokens, which were acquired at an aggregate cost of $163.3 million, had a fair value of only $15.2 million as of June 30. This represents a staggering 91% drop from their recorded costs.

A Business Model Under Pressure

The company's operational funding is heavily dependent on the performance of these assets. ZeroStack's business model relies on generating revenue through staking rewards and the sale of its tokens. Consequently, its capacity to generate cash is directly tied to the market price and trading liquidity of the 0G token.

In the first half of the year, ZeroStack generated $3.8 million in revenue from staking activities, which yielded approximately 6.6 million 0G tokens after accounting for validator commissions. To cover its operational expenses, the company sold almost 4.9 million of these tokens, raising $2.4 million.

Management's Uncertain Outlook

Despite the challenges, ZeroStack anticipates that its available cash combined with sales from staking rewards will be sufficient to meet its forecasted operating costs. The company also noted it has the option to sell portions of its treasury holdings if necessary.

However, management conceded that it could not definitively conclude that these measures would be enough to mitigate the significant doubts surrounding the firm's ability to remain a going concern. This latest assessment is a direct contradiction to the company's position in its two preceding reports. In its first-quarter filing, for instance, ZeroStack had affirmed that its cash and staking rewards would be adequate to satisfy its working capital needs and other obligations for at least the next year.

From Cannabis to Crypto

The company has a history of transformation, having previously operated as Flora Growth, a firm focused on cannabis and CBD products. The pivot to cryptocurrency occurred after an announcement on September 19, when Flora Growth revealed a $401 million funding initiative for a 0G treasury strategy. This funding included $35 million in cash and equivalent commitments, along with over $366 million in in-kind digital assets. Following this move, the company rebranded to its current name, ZeroStack, while maintaining its listing on the Nasdaq exchange.