ZeroStack Corp.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number 001-40397

ZeroStack Corp.

(Exact name of registrant as specified in its charter)

Province of Ontario	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

40 King St W Suite 2400
Toronto, ON, Canada	M5H 3Y2
(Address of principal executive offices)	(Zip Code)

(954) 842-4989

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	ZSTK	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of April 27, 2026, the registrant had 2,430,471 shares of its common shares, no par value ("Common Shares") outstanding.

Table of Contents

	Page

Cautionary Statement Regarding Forward-Looking Statements	2

PART I
Item 1. Financial Statements	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
Item 4. Controls and Procedures	37

PART II
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3. Defaults Upon Senior Securities	39
Item 4. Mine Safety Disclosures	39
Item 5. Other Information	39
Item 6. Exhibits	40

Signatures

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements may include projections and estimates concerning our possible or assumed future results of operations, financial condition, business strategies and plans, market opportunity, competitive position, industry environment, and potential growth opportunities. In some cases, you can identify forward-looking statements by terms such as "may", "will", "should", "believe", "expect", "could", "intend", "plan", "anticipate", "estimate", "continue", "predict", "project", "potential", "target," "goal" or other words that convey the uncertainty of future events or outcomes. You can also identify forward-looking statements by discussions of strategy, plans or intentions. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, because forward-looking statements relate to matters that have not yet occurred, they are inherently subject to significant business, competitive, economic, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including, among others, those discussed in this Quarterly Report, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this Quarterly Report. Risks and uncertainties, the occurrence of which could adversely affect our business, include, but are not limited to, the following:

the satisfaction of customary closing conditions related to the Exchange (as defined below) and to complete the Financing (as defined below);
the date on which the Exchange is expected to close;
our ability to obtain shareholder approval for the Exchange and/or planned redomicile from the province of Ontario to the State of Texas;
Texas Blocker Corp.'s ("Texas Blocker") ability to obtain stockholder approval by written consent for the Exchange.
our limited operating history and net losses;
fluctuations in the market price of $0G, the native token of the 0G Chain, a layer-1 blockchain designed to enable users to deploy and operate decentralized artificial intelligence ("AI") applications and data ("0G Tokens", each a "0G Token"or "0G") or any other digital assets we might hold;
the possibility that any one of the 0G Tokens and any other assets we might hold (collectively, the "Cryptocurrencies") may be classified as a "security";
decrease in liquidity of 0G Tokens or any other digital assets we might hold;
our ability to continue as a going concern absent access to sources of liquidity;
damage to our reputation as a result of negative publicity;
exposure to product liability claims, actions and litigation;
risks associated with product recalls;
our ability to successfully integrate businesses that we acquire;
our ability to achieve economies of scale;
our ability to fund overhead expenses, including costs associated with being a publicly-listed company
maintenance of effective quality control systems;
risks associated with expansion into new jurisdictions;
regulatory compliance risks;
potential delisting resulting in reduced liquidity of our Common Shares;
risks associated with cybersecurity and the protection of confidential information;
the possibility that we are deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and become subject to applicable restrictions that make it impractical for us to continue segments of our business as currently contemplated;
risks associated with our use of AI;
competition from the emergence or growth of other digital assets accelerated by advancements in AI and blockchain technology;
the reliance of our AI technology on the use of third-party data;
the negative impact on the value the Cryptocurrencies caused by disruptions in the Cryptocurrencies' networks;
risks related to the custody of the Cryptocurrencies, including the loss or destruction of private keys required to access our Cryptocurrencies and cyberattacks or other data loss relating to our Cryptocurrencies; and

the other risks described under Part I, Item 1A, "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on February 27, 2026, as well as described from time to time in our other filings with the SEC.

Given the foregoing risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements in this Quarterly Report. The forward-looking statements contained in this Quarterly Report are not guarantees of future performance and our actual results of operations and financial condition may differ materially from such forward-looking statements. In addition, even if our results of operations and financial condition are consistent with the forward-looking statements in this Quarterly Report, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of this Quarterly Report. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.

PART I

Item 1. Financial Statements

ZeroStack Corp.

Table of Contents

Unaudited Condensed Interim Consolidated Financial Statements:		Page

Unaudited Condensed Interim Consolidated Statements of Financial Position as of March 31, 2026 and December 31, 2025		5

Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss for the Three Months Ended March 31, 2026 and 2025		6

Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2026 and 2025		7

Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025		8

Notes to Unaudited Condensed Interim Consolidated Financial Statements		9

ZeroStack Corp.

Unaudited Condensed Interim Consolidated Statements of Financial Position

(in thousands of United States dollars, except share amounts which are in thousands of shares)

As at:		March 31, 2026			December 31, 2025
ASSETS
Current
Cash	$	1,978		$	5,596
Restricted cash		325			25
Trade and amounts receivable, net of $318 allowance ($327 at December 31, 2025)		783			799
Prepaid expenses and other current assets		1,562			323
Inventory		1,612			1,897
Current digital assets		4,988			76
Total current assets		11,248			8,716
Non-current
Property, plant and equipment		120			128
Operating lease right of use assets		350			386
Restricted digital assets		-			49,000
Digital assets		33,417			71,950
Other assets		55			55
Total assets	$	45,190		$	130,235
LIABILITIES
Current
Trade payables	$	2,480		$	2,328
Contingencies		1,271			1,167
Current portion of debt		3,119			2,722
Current portion of operating lease liability		139			163
Other accrued liabilities		1,095			2,248
Total current liabilities		8,104			8,628
Non-current
Long-term debt		38			50,767
Non-current operating lease liability		251			279
Deferred tax		-			9
Total liabilities		8,393			59,683
SHAREHOLDERS' EQUITY
Share capital, no par value, unlimited authorized, 2,430 issued and outstanding (1,046 at December 31, 2025)		-			-
Additional paid-in capital		351,058			348,160
Accumulated other comprehensive loss		187			180
Deficit		(314,448	)		(277,788	)
Total shareholders' equity		36,797			70,552
Total liabilities and shareholders' equity	$	45,190		$	130,235

Commitments and contingencies - see Note 14.

Going concern - see Note 2.

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

ZeroStack Corp.

Unaudited Condensed Interim Consolidated Statements of Loss and
Comprehensive Loss

(in thousands of United States dollars, except per share amounts which
are in thousands of shares)

		For the three months ended March 31, 2026			For the three months ended March 31, 2025
Revenue	$	7,274		$	6,866
Cost of sales		4,128			6,331
Gross profit		3,146			535
Operating expenses
Loss from changes in fair value of digital assets		60,742			-
Salaries and consulting fees		965			705
Professional fees		653			534
Share based compensation		2,771			172
Asset impairment		-			46
Other expenses, net		668			697
Total operating expenses		65,799			2,154
Operating loss		(62,653	)		(1,619	)
Interest expense		(66	)		(23	)
Foreign exchange (loss) gain		(23	)		1
Gain on disposal of Insolvent Entities		-			1,119
Changes in financial instruments fair value		26,073			269
Net loss before income taxes and discontinued operations		(36,669	)		(253	)
Income tax benefit (expense)		9			(88	)
Net loss from continuing operations		(36,660	)		(341	)
Loss from discontinued operations, net of taxes		-			(417	)
Net loss for the period	$	(36,660	)	$	(758	)

Basic loss per share from continuing operations	$	(3.68	)	$	(0.69	)
Diluted loss per share from continuing operations	$	(3.68	)	$	(0.69	)
Basic loss per share	$	(3.68	)	$	(1.54	)
Diluted loss per share	$	(3.68	)	$	(1.54	)
Weighted average number of common shares outstanding - basic		9,958			492
Weighted average number of common shares outstanding - diluted		9,958			492
Other comprehensive loss
Net loss for the period	$	(36,660	)	$	(758	)
Derecognition of equity related to Insolvent Entities, net of income taxes of $nil ($nil in 2025)		-			(595	)
Gain (loss) on foreign currency translation, net of income taxes of $nil ($nil in 2025)		7			620
Comprehensive loss	$	(36,653	)	$	(733	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

ZeroStack Corp.

Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

(in thousands of United States dollars, except for share amounts which are in thousands of shares)

	Common Shares				Additional paid-in Capital		Accumulated other comprehensive income (loss)			Accumulated deficit			Total shareholders' equity
	#
For the three months ended March 31, 2026
Balance, December 31, 2025	1,046	$	-	$	348,160	$	180		$	(277,788	)	$	70,552
Equity offerings	18		-		115		-			-			115
Exercise of pre-funded warrants	1,366		-		-		-			-			-
Options issued	-		-		2,754		-			-			2,754
Restricted stock vested	-		-		4		-			-			4
SARs issued	-		-		13		-			-			13
Share issuance costs	-		-		12		-			-			12
Other comprehensive loss - exchange differences	-		-		-		7			-			7
Net loss	-		-		-		-			(36,660	)		(36,660	)
Balance, March 31, 2026	2,430	$	-	$	351,058	$	187		$	(314,448	)	$	36,797
For the three months ended March 31, 2025
Balance, December 31, 2024	478	$	-	$	162,871	$	(221	)	$	(158,140	)	$	4,510
Equity issued for business combinations	24		-		813		-			-			813
Restricted stock vested	-

SEC Form 10-Q filed by ZeroStack Corp.