ZeroStack Reverses Viability Outlook Amid $82.5M Loss

Woofun AI reports that ZeroStack has issued a formal warning regarding substantial doubt about its ability to continue operating, a strategic reversal from its stance three months prior. This critical update, detailed in a Form 10-Q filed with the SEC, marks a sharp departure for the Nasdaq-listed entity, formerly known as Flora Growth, which now anchors its operational viability on the volatile Zero Gravity (0G) ecosystem.

Financial metrics reveal severe distress, with cash reserves depleted to $2.6 million and negative working capital of $600,000 as of June 30. The company reported an accumulated deficit of $339.1 million, compounded by an $82.5 million fair value loss on digital assets and a net loss of $61.3 million for the first half of 2026.

Woofun AI data shows that 75.1 million Zero Gravity (0G) tokens, held at an aggregate cost of $163.3 million, plummeted to a fair value of $15.2 million, representing a 91% decline below recorded costs.

Operational funding relies heavily on staking rewards and token sales, tying liquidity directly to 0G’s price and trading liquidity. In the first half of the year, the firm generated $3.8 million in staking revenue, accruing 6.6 million 0G tokens after validator commissions, while selling nearly 4.9 million tokens for $2.4 million to cover operating expenses. Although management claims cash and staking reward sales will meet forecast operating costs, this contradicts the first-quarter filing where sufficient working capital was assured. The entity, rebranded from Flora Growth after a Sept. 19 announcement of $401 million in funding—including $35 million in cash commitments and $366 million in in-kind digital assets—retains its Nasdaq listing despite these shifts.

The current assessment underscores persistent doubts about the ability to continue operating, reversing the optimism of previous reports. This volatility highlights the precarious nature of treasury strategies dependent on single-asset performance.