ZeroStack Corp. (ZSTK) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the period ended June 30, 2026. ZeroStack Corp. operates as a decentralized AI treasury company investing in the 0G Chain (0G Tokens) and a global pharmaceutical distributor via its subsidiary, Phatebo GmbH. The company recently completed a strategic pivot, selling its legacy hemp and cannabis business in September 2025. As of July 20, 2026 (subsequent to the reporting period), the company completed an exchange with Texas Blocker Corp., significantly increasing its 0G token holdings and reclassifying as a U.S. domestic corporation.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | Value (in thousands) |
|---|---|
| Total Revenue | $20,932 |
| Gross Profit | $4,764 |
| Operating Loss | $(86,887) |
| Net Loss | $(61,275) |
| Cash and Restricted Cash | $2,965 |
| Total Debt | $2,413 |
| Working Capital | $(559) |
| Digital Assets (Fair Value) | $15,218 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 26% to $20.9 million from $16.6 million in the prior year period. This was driven by a 3% increase in pharmaceutical revenue ($17.1M vs $16.6M) and the introduction of $3.8 million in digital asset staking revenue.
- Significant Losses: Net loss widened dramatically to $61.3 million from $3.2 million in the prior year. The primary driver was an $82.5 million unrealized loss from changes in the fair value of digital assets (0G Tokens), compared to a $0.1 million gain in the prior year.
- Debt Reduction: Total debt decreased significantly from $53.5 million to $2.4 million. This reduction was achieved by settling the Zero Gravity Convertible Note (valued at $50.7M at year-end 2025) using 50 million 0G Tokens in March 2026.
- Discontinued Operations: The legacy cannabis business was sold in September 2025; therefore, no discontinued operations loss was recorded in the current period, compared to a $1.3 million loss in the prior year.
Guidance, Outlook, and Risks
- Going Concern Warning: Management has raised substantial doubt about the company's ability to continue as a going concern for the next 12 months. This is due to negative working capital, an accumulated deficit of $339.1 million, and reliance on the monetization of volatile digital assets to fund operations.
- Liquidity Strategy: The company relies on staking rewards (currently generating ~$3.8M/6 months) and the potential sale of its 0G token treasury to meet obligations. Following the July 2026 Texas Blocker acquisition, the company holds approximately 223 million 0G tokens.
- Key Risks:
- Asset Volatility: 60% of total assets are held in 0G cryptocurrency, exposing the balance sheet to significant market price fluctuations.
- Regulatory Uncertainty: Risks regarding the classification of 0G tokens as securities and potential delisting from Nasdaq.
- Legal Contingencies: A provision of $1.3 million has been recorded for a lease dispute in California.
Investor Verification Checklist
- 0G Token Valuation: Verify the current market price of 0G tokens and the company's ability to liquidate holdings without significant slippage, given the concentration risk.
- Staking Yield Sustainability: Assess the stability of staking rewards and the impact of network participation changes on future revenue.
- Debt Settlement Terms: Confirm the final accounting treatment of the Zero Gravity Note settlement and ensure no hidden liabilities remain.
- Legal Exposure: Monitor the status of the $1.3 million California lease dispute and any potential additional legal claims.
- Cash Burn Rate: Evaluate the runway provided by current cash ($2.6M) and staking inflows against operating expenses, considering the "substantial doubt" disclosure.