ZeroStack Corp.

ZeroStack Corp. (ZSTK), formerly Flora Growth Corp., has undergone a significant strategic transformation, shifting from a legacy hemp and cannabis business to a decentralized AI treasury and AI-focused asset management company, while maintaining its global pharmaceutical distribution through its wholly-owned subsidiary, Phatebo GmbH ¹. The company's mission is to become a leading Nasdaq-listed, AI-focused, asset management company ¹. This strategic pivot involved the sale of all Colombian entities in July 2023 and the disposition of its legacy hemp and cannabis business on September 26, 2025 ¹.

ZeroStack's core business model now revolves around two pillars: Digital Assets and AI, and Commercial & Wholesale ¹. The Digital Assets and AI segment focuses on identifying and pursuing growth opportunities within the global digital asset market, with a primary objective to accumulate 0G Tokens for long-term holding and increasing shareholder value ¹. The company's treasury strategy involves allocating its principal holding to cryptocurrency, specifically 0G and/or other blockchain-linked cryptocurrencies, with a significant amount of holdings in 0G ¹. The Commercial & Wholesale pillar is anchored by Phatebo, a German-based wholesale pharmaceutical distribution company with import and export capabilities across 28 countries, primarily in Europe, but also extending to Asia, Latin America, and North America ¹. Phatebo distributes a wide range of pharmaceutical goods, including drugs for cancer therapies, ADHD, multiple sclerosis, and anti-depressants ¹.

The Digital Assets and AI segment's strategy includes leveraging 0G's decentralized operating system, investing in proof-of-stake digital assets focused on AI compute power, technology companies, fee-earning opportunities on deployed capital, private companies in the AI ecosystem, and staking validators within the 0G ecosystem ¹. The 0G ecosystem is described as a modular Layer 1 blockchain optimized for decentralized AI workloads, combining compute, storage, and data availability into a unified, verifiable system ¹. This architecture aims to address limitations of traditional centralized cloud and AI platforms by offering scalability, cost efficiency, and enhanced trust through cryptographic proofs ¹. The 0G protocol operates as a Decentralized AI Operating System ("dAIOS") ¹.

For the fiscal year ended December 31, 2025, ZeroStack reported total revenue of $35,676 thousand ², a slight decrease from $35,865 thousand in the prior year ². Gross profit for the period was $1,649 thousand ², down from $2,196 thousand in 2024 ², resulting in a gross margin of 5% in 2025 compared to 6% in 2024 ². The company experienced a significant operating loss of $(154,652) thousand ², primarily driven by a $(142,997) thousand loss from changes in the fair value of digital assets ². Net loss for the period was $(119,732) thousand ², a substantial increase from a net loss of $(15,907) thousand in 2024 ². Basic and diluted loss per share attributable to ZeroStack Corp. was $(43.49) ² for 2025, compared to $(50.02) in 2024 ². Cash and cash equivalents stood at $5,596 thousand ³ as of December 31, 2025, with total assets of $130,235 thousand ³ and total liabilities of $59,683 thousand ³. Long-term debt was $50,767 thousand ³.

Year-over-year, revenue remained relatively flat, decreasing by $189 thousand ². Gross profit declined by $547 thousand ², and gross margin contracted by 1 percentage point ². Operating expenses surged from $11,121 thousand in 2024 to $156,301 thousand in 2025 ², predominantly due to the $142,997 thousand loss from changes in the fair value of digital assets ². Consulting and management fees increased to $5,239 thousand from $3,972 thousand ², attributed to severance payments to the former CEO ¹. Share-based compensation decreased from $2,779 thousand to $1,208 thousand ², due to immediate vesting of RSAs in 2024 ¹. Non-operating income saw a significant positive swing to $39,301 thousand in 2025 from a $399 thousand expense in 2024 ², driven by a $37,900 thousand gain from the revaluation of the Zero Gravity Convertible and PIPE Notes and a $1,600 thousand gain on the settlement of the PIPE Note ².

During the reported period, ZeroStack completed several significant operational developments. In early 2025, the company initiated its expansion strategy into the global digital asset market ¹. On May 2, 2025, it completed a private placement, raising approximately $1,100 thousand in net proceeds, which were used to purchase Solana, Ethereum, Sui, and Ripple ¹. On September 19, 2025, the company executed a PIPE Offering, raising $13,500 thousand in gross cash proceeds and receiving 71,766,135 0G Tokens ¹. Additionally, it entered into a convertible note agreement with Zero Gravity Labs Inc. on September 22, 2025, receiving 50,000,000 0G Tokens on October 23, 2025 ¹. The company also sold its legacy hemp and cannabis business on September 26, 2025, in exchange for the cancellation of promissory notes totaling approximately $2,200 thousand ¹. Management changes occurred on October 1, 2025, with Mr. Clifford Starke resigning as CEO and Mr. Sammy Dorf as Executive Chairman, and Mr. Daniel Reis-Faria and Mr. Michael Heinrich being appointed as CEO and Executive Chairman, respectively ¹.

ZeroStack's management believes that its current level of cash and cash equivalents, along with staking rewards from its unrestricted digital assets, will be sufficient to meet its working capital requirements and future obligations for at least one year after the issuance date of the consolidated financial statements ¹. The company's continued existence is dependent on its ability to generate positive cash flows through operational synergies, expanding production capacity and geographic footprint, exploring strategic partnerships, and pursuing accretive acquisitions to supplement organic growth ¹.

A major growth area for ZeroStack is its Digital Assets and AI segment, with a near-term objective to accumulate 0G Tokens to increase treasury holdings and shareholder value, intending to hold 0G for the long-term ¹. The company plans to explore and expand the use of the native AI functionality of the 0G Token to enhance its business ¹. This strategy also contemplates periodically selling cryptocurrency for general corporate purposes, including debt repayment, share repurchases, acquisitions, or tax benefits, and entering into capital raising transactions collateralized by cryptocurrency holdings ¹. The 0G ecosystem is positioned as a modular Layer 1 blockchain optimized for decentralized AI workloads, aiming to provide scalability, cost efficiency, and enhanced trust through cryptographic proofs ¹.

Another growth vector is the Commercial & Wholesale pillar, anchored by Phatebo, its German pharmaceutical distribution subsidiary ¹. Phatebo is focused on distributing pharmaceutical products within 28 countries globally, primarily in Europe, but also with sales to Asia, Latin America, and North America ¹. The European pharmaceutical market is projected to grow at a CAGR of 6.3% between 2023 and 2028, reaching total sales of $290 billion by 2028 ¹. Germany, where Phatebo has principal operations, was the leading pharmaceutical market in the European Union with total revenue of $69 million in 2024 ¹.

Operationally, the company expects changes in the market value of 0G to materially impact its results due to the volatility of 0G and its substantial holdings ¹. The adoption of ASU 2023-08 on January 1, 2025, requires subsequent increases or decreases in the fair value of 0G to be recognized in the Consolidated Statements of Loss and Comprehensive Loss ¹. The company's sources of cash are currently focused on its pharmaceutical distribution business, with revenues concentrated primarily in Germany ¹. ZeroStack has assembled a team with deep knowledge of the regulatory and governance environments in which it operates to ensure compliance with product approvals, import/export permits, and distribution licenses ¹.

Regarding capital allocation, ZeroStack plans to use a portion of its capital not required for working capital to acquire 0G ¹. The company may also issue debt or equity securities or engage in other capital raising transactions, using a significant portion of the proceeds to purchase cryptocurrency ¹. The company has access to credit facilities totaling €2.4 million, or $2.8 million ⁴, with three German banks through its Phatebo subsidiary, with an outstanding amount of €2.3 million, or $2.7 million ⁴, as of December 31, 2025. The company also has an "at the market" (ATM) sales agreement allowing it to sell common shares, with aggregate compensation payable to the agent ranging from 3.00% for the first $150 million in gross proceeds to 1.25% for proceeds exceeding $500 million ¹. Additionally, ZeroStack entered into a share purchase agreement with White Lion Capital LLC on November 28, 2025, for White Lion to purchase up to an aggregate of $25.0 million of Common Shares, which may be increased to $50.0 million ¹.

ZeroStack faces material risks including the high volatility of 0G Tokens and other digital assets, which can significantly influence financial results and the market price of its securities ¹. There is a possibility that 0G Tokens may be classified as a "security" by regulatory bodies, which would subject the company to additional regulation and could materially impact its business operations ¹. If deemed an investment company under the Investment Company Act of 1940, applicable restrictions would likely make it impractical to continue segments of its business as currently contemplated ¹. The company's 0G treasury strategy subjects it to enhanced regulatory oversight, with increasing focus on digital assets for illicit activities, potentially leading to restrictions or prohibitions on transactions ¹. Competition from other digital assets and blockchain protocols, accelerated by advancements in AI and blockchain technology, could negatively impact the price of 0G and the value of its holdings ¹. The 0G holdings are less liquid than cash and cash equivalents, posing a risk during market instability when the company may be unable to sell 0G at favorable prices or at all ¹. Advancements in AI and generative AI bring risks such as system failures, vulnerabilities to adversarial attacks, and potential data breaches if sensitive information is inadvertently provided to AI models ¹. The reliance of AI technology on third-party data introduces risks if such data is lost, limited, or inaccurate ¹. The company has a limited operating history and has incurred net losses of $119.7 million ² in 2025 and an accumulated deficit of $277.8 million ³, raising concerns about its ability to continue as a going concern without access to additional liquidity ¹. Cybersecurity risks are significant, especially given the company's digital asset holdings, with potential for loss or destruction of private keys, cyberattacks, and smart contract vulnerabilities ¹. The company may incur additional liability from the insolvency of subsidiaries, as seen with the deconsolidation of certain entities in March 2025 ¹. Changes in management, as occurred on October 1, 2025, could impair key business relationships, affect employee retention, or reduce investor confidence ¹.

Management's message to shareholders emphasizes a strategic pivot towards becoming a decentralized AI treasury and AI-focused asset management company, while maintaining its pharmaceutical distribution business. They highlight the significant investment in 0G Tokens and the exploration of its native AI functionality as a core strategic priority for enhancing the business. Management believes that the current cash and cash equivalents, combined with staking rewards from unrestricted digital assets, are sufficient to meet working capital requirements and future obligations for at least one year. The company's strategic priorities include accumulating 0G Tokens for long-term holding to increase shareholder value, leveraging the 0G decentralized operating system for AI opportunities, and expanding the use of 0G's native AI functionality. They also acknowledge the highly regulated nature of their markets and the importance of regulatory proficiency. The company is committed to achieving sustained growth to offset overhead costs and attain profitability.