ZeroStack (ZSTK) FY2025 10-K Risk Factors: 23 New, 25 Dropped

What the changes say

ZeroStack pivoted from cannabis to a decentralized AI treasury company holding 0G Tokens.
Losses surged to $119.7 million, with an accumulated deficit reaching $277.8 million.
New CEO Daniel Reis-Faria and Executive Chairman Michael Heinrich took office on October 1, 2025.

What changed since the prior 10-K

New

NewRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company may not be able to maintain an effective quality control system. The Company ascribes its early successes, in part, on its commitment to product quality and its effective quality control system
Regulatory agencies may inspect our facilities, and any failure in our quality control systems could harm our business.
NewRISKS RELATED TO OUR BUSINESS AND INDUSTRY
If we or our third-party providers fail to protect confidential information and/or experience cybersecurity incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, which would materially adversely affect our business, results of operations, and financial condition
We and our third-party cloud providers face cybersecurity threats that could expose confidential data like 0G and trade secrets.
NewRISKS RELATED TO OUR BUSINESS AND INDUSTRY
We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition and results of operations
Unclear regulations regarding crypto assets like 0G Tokens could lead to adverse enforcement actions or security classifications.
NewRISKS RELATED TO OUR BUSINESS AND INDUSTRY
There are risks relating to the sale of our legacy hemp and cannabis business
We sold our legacy hemp and cannabis business subsidiaries on September 26, 2025, but we may still face indemnification claims.
NewRISKS RELATED TO OUR BUSINESS AND INDUSTRY
We may experience difficulties due to changes in management
CEO Clifford Starke and Chairman Sammy Dorf resigned on October 1, 2025, replaced by executives with no public company experience.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
0G is a highly volatile asset, and fluctuations in the price of 0G may influence our financial results and the market price of our listed securities
The price of 0G is highly volatile and influenced by speculative trading, large holder dispositions, and government seizures.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, and the adverse impacts attributable to global conflicts, including those between Russia and Ukraine and in the Middle East
Adoption of our new cryptocurrency treasury strategy is expected to cause additional volatility in our stock price.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
We plan to use a portion of our capital that is not required to provide working capital for our ongoing operations to acquire 0G, which may adversely affect our financial results and the market price of our securities
We plan to use excess capital to acquire 0G Tokens, exposing us to regulatory uncertainty and volatile accounting valuations.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our 0G holdings
Under ASU 2023-08, we must measure our 0G holdings at fair value and recognize price changes in net income, increasing earnings volatility.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
The concentration of our 0G holdings could enhance the risks inherent in our 0G treasury strategy
Concentrating our treasury in 0G without diversification increases our financial exposure to any declines in token price.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Absent federal regulations, there is a possibility that 0G may be classified as a "security." Classification of 0G as a "security" would subject us to additional regulation and could materially impact the operation of our business
If 0G is classified as a security under federal law, we would face additional regulatory burdens and compliance costs.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplated
Holding investment securities exceeding 40% of our total assets could deem us an investment company under the Investment Company Act.
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
We face risks relating 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, including smart contract related losses and vulnerabilities
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Our 0G treasury strategy subjects us to enhanced regulatory oversight
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Competition from the emergence or growth of other digital assets, likely accelerated by advancements in AI and blockchain technology, could have a negative impact on the price of 0G and adversely affect the value of our 0G holdings
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Our 0G holdings will be less liquid than our cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Many countries and regulatory authorities are studying the impact of AI and may implement regulations on AI that may be difficult or impossible for the 0G Blockchain to implement and comply with
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
AI, including generative AI, advancements are progressing at an unprecedented pace, which brings risks that could subject us to loss through various technical, legal, and opportunistic-related risks
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Rapid and significant technological changes continue to confront the industries in which we operate, including developments in blockchain and AI, including machine learning
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
We use AI in our services which may result in operational challenges, legal liability, reputational concerns and privacy and competitive risks
NewRISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY
Our AI technology relies in part on the use of third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affected
NewRISKS RELATED TO FINANCIALS AND ACCOUNTING
There is no assurance that we will be able to continue as a going concern
NewRISKS RELATED TO OUR COMMON SHARES
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected

Dropped

DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
Cannabis laws, regulations, and guidelines are dynamic and subject to changes
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
Demand for cannabis and derivative products could be adversely affected and significantly influenced by scientific research or findings, regulatory proceedings, litigation, media attention or other research findings
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
Research regarding the medical benefits, viability, safety, efficacy, use and social acceptance of cannabis or isolated cannabinoids (such as CBD and THC) remains in early stages
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so
Cannabis laws and regulations dynamic and subject to evolving interpretations.
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs
Demand for cannabis affected by scientific research, litigation, or media.
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
We rely on third-parties for raw materials and to manufacture and compound some of our products. We have no control over these third parties and if these relationships are disrupted our results of operations in future periods will be adversely impacted
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The seasonal trends in our business create variability in our financial and operating results
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company may not be able to maintain effective quality control systems
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The cannabinoid industry faces strong opposition and may face similar opposition in other jurisdictions in which we operate
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company could face competitive risks from the development and distribution of synthetic cannabis
Clinical trials on medical benefits of cannabis are in early stages.
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The legalization of adult-use, recreational cannabis may reduce sales of medical cannabis
Growth depends on expanding customer base into additional consumer markets.
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company may be subject to cyber-security and privacy risks that could disrupt its operations and expose the Company to financial losses, contractual losses, liability, reputational damage and additional expense
Fluctuations in cost and availability of raw materials, labor, and transport.
DroppedRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company may incur significant costs to defend its intellectual property and other proprietary rights
Reliance on third parties for raw materials and cannabis manufacturing.
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
Changes to federal or state laws pertaining to industrial hemp could slow the use of industrial hemp which would materially impact our revenues in future periods
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
Uncertainty caused by potential changes to legal regulations could impact the use of CBD products
Seasonal trends in business create variability in financial results.
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
Any failure on our part to comply with applicable regulations could prevent us from being able to carry on our business, and there may be additional costs associated with any such failure
Inability to maintain effective quality control systems or GMP certification.
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
Any failure by us to comply with the applicable regulatory requirements could
Cannabinoid industry faces strong political and social opposition.
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
There can be no assurance that any future regulatory or agency proceedings, investigations or audits will not result in substantial costs, a diversion of management's attention and resources or other adverse consequences to our business
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
The FDA limits the ability to discuss the medical benefits of CBD
Competitive risks from synthetic cannabis development and distribution.
DroppedRISKS RELATED TO OUR REGULATORY FRAMEWORK
The legal cannabis market is a relatively new industry. As a result, the size of our target market is difficult to quantify, and investors will be reliant on their own estimates on the accuracy of market data
Legalization of recreational cannabis may reduce medical cannabis sales.
DroppedRISKS RELATED TO FINANCIALS AND ACCOUNTING
Restrictions on Deduction of Certain Expenses for U.S. Federal Income Tax Purposes
DroppedRISKS RELATED TO OUR COMMON SHARES
Ownership of our Common Shares may be considered unlawful in some jurisdictions and holders of our Common Shares may consequently be subject to liability in such jurisdictions
DroppedRISKS RELATED TO OUR COMMON SHARES
As of January 1, 2023, we were required to report as a U.S. domestic issuer and the benefits of a "foreign private issuer" are no longer available to us, which will likely result in additional costs and expenses for us
DroppedRISKS RELATED TO OUR COMMON SHARES
The regulated nature of our business may impede or discourage a takeover, which could reduce the market price of our Common Shares
Cybersecurity and privacy risks targeting personal health information.
DroppedRISKS RELATED TO OUR COMMON SHARES
We may be unable to implement our business strategy, which could have negative financial and reputational effects on our business

Reworded

57% rewrittenRISKS RELATED TO OUR COMMON SHARES
If we fail to meet applicable listing requirements, Nasdaq may delist our Common Shares from trading, in which case the liquidity and market price of our Common Shares could decline
Removed a specific reference to audit committee independence rule 5605(c)(2)(A) from Nasdaq continued listing standards.
50% rewrittenRISKS RELATED TO FINANCIALS AND ACCOUNTING
Changes in global and local tax laws and regulations in jurisdictions in which the Company operates may adversely impact the Company and the value of the Common Shares
Added a specific reference to the newly enacted 'One Big Beautiful Bill Act' signed on July 4, 2025.
43% rewrittenRISKS RELATED TO OUR BUSINESS AND INDUSTRY
We are an early-stage company with limited operating history and may never become profitable
Updated business description from a natural cannabis supplier to a decentralized AI treasury company investing in 0G Tokens, and updated 2025 losses to $119.7 million with an accumulated deficit of $277.8 million.
40% rewrittenRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company is subject to wholesale price volatility that could expose the Company to lower than anticipated revenues, gross margins, net income and cash flows
Removed all references to cannabis from the wholesale price volatility risk, restricting the scope solely to pharmaceutical distribution.
34% rewrittenRISKS RELATED TO FINANCIALS AND ACCOUNTING
The Company may be at a higher risk of IRS audit
Shifted IRS audit and PFIC risk wording from current cannabis operations to historical and disposed cannabis businesses.
32% rewrittenRISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company's inventory has a shelf life and may reach its expiration and not be sold
Removed specific inventory examples like cannabis flower and added a reference to potential quality control failures.
25% rewrittenRISKS RELATED TO OUR COMMON SHARES
Political uncertainty may have an adverse impact on our operating performance and results of operations
Updated political uncertainty references from the second Trump administration to the current U.S. administration.
21% rewrittenRISKS RELATED TO OUR BUSINESS AND INDUSTRY
We may not be able to establish and maintain bank accounts in certain countries
Changed the banking access risk from proceeds related to the cannabis industry to the cryptocurrency industry.

All 62 risk factors

Headings as the filing states them, in filing order.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

01We are an early-stage company with limited operating history and may never become profitable43% rewritten
02Recent and future acquisitions and strategic investments could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute shareholder value, may subject us to liability, and harm our results of operations and financial condition
03Certain conditions or events could disrupt the Company's supply chains, disrupt operations, and increase operating expenses
04Damage to the Company's reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether such publicity is accurate or not
05We are subject to the inherent risk of exposure to product liability claims, actions and litigation
06We are subject to the inherent risks involved with product recalls
07The Company's products could have unknown side effects
08The Company's inventory has a shelf life and may reach its expiration and not be sold32% rewritten
09The Company may not be able to maintain an effective quality control system. The Company ascribes its early successes, in part, on its commitment to product quality and its effective quality control systemNew
10The Company is subject to wholesale price volatility that could expose the Company to lower than anticipated revenues, gross margins, net income and cash flows40% rewritten
11The Company is reliant on third party transportation services and importation services to deliver its products to customers
12We may not be able to establish and maintain bank accounts in certain countries21% rewritten
13We may not be able to renew certain of our leases
14If we or our third-party providers fail to protect confidential information and/or experience cybersecurity incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, which would materially adversely affect our business, results of operations, and financial conditionNew
15The Company may incur additional liability as a result of the insolvency of a subsidiary
16We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition and results of operationsNew
17There are risks relating to the sale of our legacy hemp and cannabis businessNew
18We may experience difficulties due to changes in managementNew

RISKS RELATED TO ARTIFICIAL INTELLIGENCE AND INVESTING IN CRYPTOCURRENCY

190G is a highly volatile asset, and fluctuations in the price of 0G may influence our financial results and the market price of our listed securitiesNew
20changes in national and international economic and political conditions, including, without limitation, federal government policies, trade tariffs and trade disputes, and the adverse impacts attributable to global conflicts, including those between Russia and Ukraine and in the Middle EastNew
21We plan to use a portion of our capital that is not required to provide working capital for our ongoing operations to acquire 0G, which may adversely affect our financial results and the market price of our securitiesNew
22Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our 0G holdingsNew
23The concentration of our 0G holdings could enhance the risks inherent in our 0G treasury strategyNew
24Absent federal regulations, there is a possibility that 0G may be classified as a "security." Classification of 0G as a "security" would subject us to additional regulation and could materially impact the operation of our businessNew
25If we were deemed to be an investment company under the Investment Company Act, applicable restrictions likely would make it impractical for us to continue segments of our business as currently contemplatedNew
26We face risks relating 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, including smart contract related losses and vulnerabilitiesNew
27Our 0G treasury strategy subjects us to enhanced regulatory oversightNew
28Competition from the emergence or growth of other digital assets, likely accelerated by advancements in AI and blockchain technology, could have a negative impact on the price of 0G and adversely affect the value of our 0G holdingsNew
29Our 0G holdings will be less liquid than our cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalentsNew
30Many countries and regulatory authorities are studying the impact of AI and may implement regulations on AI that may be difficult or impossible for the 0G Blockchain to implement and comply withNew
31AI, including generative AI, advancements are progressing at an unprecedented pace, which brings risks that could subject us to loss through various technical, legal, and opportunistic-related risksNew
32Rapid and significant technological changes continue to confront the industries in which we operate, including developments in blockchain and AI, including machine learningNew
33We use AI in our services which may result in operational challenges, legal liability, reputational concerns and privacy and competitive risksNew
34Our AI technology relies in part on the use of third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affectedNew

RISKS RELATED TO FINANCIALS AND ACCOUNTING

35There is no assurance that we will be able to continue as a going concernNew
36We may increase our foreign sales in the future, and such sales may be subject to unexpected regulatory requirements, exchange rate fluctuations and other barriers
37Assumptions, estimates and judgments related to critical accounting matters could significantly affect our reported financial results or financial condition
38There are tax risks the Company may be subject to in carrying on business in multiple jurisdictions
39The Company may be at a higher risk of IRS audit34% rewritten
40Changes in global and local tax laws and regulations in jurisdictions in which the Company operates may adversely impact the Company and the value of the Common Shares50% rewritten
41Failure to develop our internal controls over financial reporting as we grow could have an adverse effect on our operations

RISKS RELATED TO OUR COMMON SHARES

42We will need, but may be unable to, obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business
43Holders of our Common Shares are subject to dilution resulting from the issuance of equity-based compensation by us
44We continue to incur increased costs as a result of operating as a public company and our management is required to devote substantial time to new compliance initiatives
45If we fail to meet applicable listing requirements, Nasdaq may delist our Common Shares from trading, in which case the liquidity and market price of our Common Shares could decline57% rewritten
46The Company's directors and officers may have a conflict of interest in conducting their duties
47We do not intend to pay dividends on our Common Shares in the near future, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Shares
48We cannot predict whether investors will find our Common Shares less attractive as a result of our reliance on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our stock price may be more volatile
49If the price of our Common Shares fluctuates, you could lose a significant part of your investment
50Changes to United States tariff and import/export regulations may have a negative effect on our Company and, in turn, harm us
51Political, social and geopolitical conditions can adversely affect our business
52Political uncertainty may have an adverse impact on our operating performance and results of operations25% rewritten
53The Company may become involved in legal proceedings from time to time, which could adversely affect the Company
54The Company's success will depend, in part, on its ability to continue to enhance its product and service offerings to respond to technological and regulatory changes and emerging industry standards and practices
55We are dependent upon our management and key employees, and the loss of any member of our management team or key employees could have a material adverse effect on our operations
56Our inability to retain and acquire skilled personnel could impair our business and operations
57We will need to grow the size of our organization, and we may experience difficulties in managing any growth we may achieve
58If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our share price and trading volume could decline
59We expect to incur significant ongoing costs and obligations related to our investment in infrastructure, growth, regulatory compliance and operations
60Our business is, in general, subject to different risks and hazards, including adverse weather conditions, fires, plant diseases and pest infestations, other natural phenomena, industrial accidents, labor disputes, changes in the legal and regulatory framework applicable to us and environmental contingencies
61The Company could be subject to a security breach that could result in significant damage or theft of products and equipment
62If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affectedNew

Other ZeroStack 10-Ks

FY2024 10-K risk factors
64 risks
ZeroStack faces extreme regulatory, legal, and operational volatility as an early-stage global cannabis and hemp distributor. The business remains highly vulnerable to federal tax penalties under Section 280E and shifting international cannabis laws. Supply chain disruptions, product liabilities, and banking restrictions threaten long-term viability and growth.
Filed Mar 24, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.