ZSTK: Fake Cannabis Utopia to Worthless Meme Coin Buffoonery – Fugazi Research

In 2021, an investigator sent to inspect Flora Growth's flagship Colombian cannabis farm says he could reach it only by motorcycle over unpaved mountain terrain, was denied a promised tour twice, and fled after the site manager allegedly tried to grab his phone when he began recording.

That company is now ZeroStack Corp. (ZSTK), rebranded in January 2026 as a decentralized-AI treasury built around a token called 0G, whose value has since collapsed roughly 91% and triggered a going-concern warning. Fugazi Research, which holds a short position in ZSTK, argues the same pattern of unverifiable claims, insider-linked deals, and shareholder dilution that defined Flora Growth's cannabis era has simply repeated itself under a new name.

Ticker: ZSTK (ZeroStack Corp.)
Research Firm: Fugazi Research
Report URL: https://www.fugaziresearch.com/p/zstk-fake-cannabis-utopia-to-worthless?ref=shortreport.fyi
Position Disclosure: Short position. Fugazi Research states ZSTK is "uninvestable at any price above zero." The report does not provide further detail on the size or structure of the position.

Thesis

Fugazi Research, a short-focused research firm, argues that ZeroStack's AI and crypto-treasury identity is a rebrand of the same Flora Growth cannabis company whose promotional history, financial losses, and related-party dealings it says are repeating under a new name.

• Rebrand, Not Rebuild: Flora Growth sold its legacy cannabis and hemp business on September 26, 2025, changed its name to ZeroStack Corp. on January 29, 2026, and now presents itself as a decentralized-AI treasury built around the 0G token, per its FY2025 Form 10-K.
• Serial Reverse Splits: The company completed a 20-for-1 reverse split in 2023 and a 39-for-1 split in 2025, a cumulative 780-for-1 consolidation, alongside a $158.1 million accumulated deficit by FY2024 and a $46.7 million loss from continuing operations in 2023.
• Unverified Flagship, Timed Promotion: A 2021 field investigation found Flora's Colombian cultivation site reachable only by motorcycle, could not secure a promised tour, and found no functioning company presence at its SEC-filed Colombian office or its auditor's listed address; the same period saw Flora engage paid stock promoters in the weeks before its first share-lockup expiration.
• Going-Concern Trigger: ZeroStack's June 30, 2026 Form 10-Q reported a $61.3 million six-month net loss, $2.6 million cash, and negative working capital of $600,000, with management unable to conclude its plans would resolve substantial doubt about its ability to continue operating, attributed to the plunge in 0G's fair value.
• Doubling Down: About a month after disclosing going-concern doubt, ZeroStack entered a second, larger token transaction involving MemeCore, priced at a premium to its trading price.
• Insiders on Both Sides: CEO Daniel Reis-Faria and CFO Dany Vaiman formed and controlled Texas Blocker, the private vehicle that received 0G tokens before being exchanged into ZeroStack, while Reis-Faria personally contributed 50 million of the 71.77 million tokens in the deal, valued at $150 million; Executive Chairman Michael Heinrich simultaneously serves as CEO of Zero Gravity Labs, a major counterparty.
• Dilution and Voting Lock-In: Shares outstanding rose from about 2.43 million on June 30, 2026 to roughly 21.8 million by August 23, 2026, while MemeCore investors entered a ten-year irrevocable proxy directing their votes to a company-designated proxyholder.
• Self-Published NAV Discount: An August 24, 2026 press release valued the combined 0G and MemeCore treasury at about $1.06 billion, implying a 74.1% discount to its $4.71 trading price, using a metric the release itself said was affected by volatility and limited liquidity.

Catalysts

• Shareholder vote (date not specified): required before 36,198,294 MemeCore warrant shares can become exercisable; the outcome determines the scope of near-term dilution.
• Next quarterly filing: will show updated fair-value marks on the 0G and MemeCore holdings, indicating whether losses have stabilized or deepened.
• Twelve months from the July 31, 2026 Form 10-Q: the window management has to resolve its disclosed substantial doubt about continuing as a going concern.
• Ongoing resale under the August 21, 2026 Form S-3: covers 54,609,992 shares, including CEO Reis-Faria's warrant-exercise shares, which could pressure the stock as sold.
• Stock price versus VWAP thresholds of $7.65 to $17.85: tied to executive options granted May 5, 2026 to Reis-Faria, Vaiman, and Heinrich; vesting depends on sustained price recovery.

Company Response

The report does not indicate that Fugazi Research sought comment from ZeroStack, and it describes no company response to the allegations. It does cite the company's own filings and statements: management called the September 2025 0G financing a "cornerstone" of its strategy, said the company would be "operated debt free" after settling its convertible note in March 2026, and attributed its going-concern reversal in the June 2026 filing to the "steep decline in the reported fair value of the 0G holdings."

Notable Details

• The investigator reportedly could not find Flora's flagship farm through ordinary map searches and located it only by matching an Instagram photo of a hand-lettered farm sign to satellite imagery.
• ZSTK's five-year total return was reported at negative 99.81% as of February 23, 2026, compared with a positive 76.17% return for the S&P 500 over the same period, per Yahoo Finance.
• Over the first six months of 2026, ZeroStack recorded an $82.5 million fair-value loss on digital assets against just $3.8 million of staking revenue from its 0G holdings.
• The executive appointed President concurrent with the MemeCore closing, described in the company's own 8-K as "a significant source of the Digital Assets contributed," received a $500,000 base salary, 125,000 restricted shares, and severance of up to 30 months of base salary in a qualifying change-in-control.

"The balance sheet looks cleaner because the company handed over the thing that was supposed to be the whole investment thesis."

Fugazi Research uses this line to describe ZeroStack's transfer of 50 million 0G tokens to settle its convertible note, eliminating debt by giving up the treasury assets central to its rebrand.

FAQs

What is ZSTK stock?

ZSTK is the Nasdaq ticker for ZeroStack Corp., formerly Flora Growth Corp. (FLGC), which changed its name on January 29, 2026. The company now describes itself as a decentralized-AI treasury and asset-management firm centered on holding 0G, a token tied to the Zero Gravity blockchain.

What is ZeroStack Corp. and what did it used to be?

ZeroStack Corp. was previously Flora Growth Corp., an international cannabis, CBD, and hemp company that sold its legacy cannabis and hemp businesses on September 26, 2025, per its FY2025 Form 10-K filed February 27, 2026. It retains a German pharmaceutical-distribution subsidiary, Phatebo, but its current narrative centers on AI-related crypto treasury holdings.

What did Fugazi Research say about ZeroStack?

Fugazi Research, which holds a short position in ZSTK, published a report concluding the stock is "uninvestable at any price above zero," arguing that ZeroStack's AI and crypto rebrand repeats patterns from Flora Growth's cannabis-era promotional and financial history.

What is the 0G token and why did its value collapse?

0G is described as the native token of the Zero Gravity blockchain and was ZeroStack's primary treasury asset. Per the company's Form 10-Q for the quarter ended June 30, 2026, its 75.1 million 0G tokens had fallen from a $163.4 million cost basis to a $15.2 million fair value, a decline of about 91%, contributing to an $82.5 million fair-value loss against only $3.8 million of staking revenue over the first half of 2026.

Why did ZeroStack issue a going-concern warning?

Per the June 30, 2026 Form 10-Q, ZeroStack reported a $61.3 million six-month net loss, $2.6 million in cash, and negative working capital of $600,000, and management said it could not conclude its plans would alleviate substantial doubt about its ability to continue operating over the following twelve months. The filing attributed this to the steep decline in the fair value of its 0G holdings.

What is the MemeCore transaction?

MemeCore was ZeroStack's second major token acquisition, entered roughly one month after the company disclosed going-concern doubt over its 0G treasury. The August 19, 2026 Form 8-K and August 21, 2026 Form S-3 describe a transaction reported as larger than the original 0G deal and priced at a premium to ZeroStack's trading price, alongside the appointment of a new company President described as a significant contributor of the digital assets involved.

How much has ZeroStack diluted shareholders?

Shares outstanding rose from about 2.43 million on June 30, 2026 to roughly 21.8 million by August 23, 2026, a nearly ninefold increase, following the Texas Blocker exchange, the MemeCore private placement, and warrant exercises including by CEO Daniel Reis-Faria. An August 21, 2026 Form S-3 registered 54,609,992 shares for resale, including 36,198,294 MemeCore warrant shares.

What was the 2021 investigation into Flora Growth's cannabis farm?

White Diamond Research's August 26, 2021 report, later expanded in David Capablanca's book Short Selling Master, describes an investigator who traveled by motorcycle to Flora Growth's Colombian cultivation site, was denied a promised tour twice, and said the site manager tried to take his phone after seeing recording equipment. The same account says Flora's SEC-filed Colombian office address and its auditor's listed address showed no functioning presence connected to the company.

Disclaimer: This summary is not primary research and does not constitute investment advice. It is a brief overview of a detailed equity research report authored by the firm, organization, or source referenced in this article or at https://www.fugaziresearch.com/p/zstk-fake-cannabis-utopia-to-worthless, which contains extensive evidence, regulatory filings, and analysis; readers are encouraged to review the full report there for a comprehensive understanding. The content provided in this publication is not authored or originated by us — we act solely as a distributor and do not endorse, verify, or take responsibility for the accuracy, completeness, or reliability of the information presented. This publication is for informational purposes only and should not be construed as legal, business, investment, or tax advice. Always conduct independent due diligence and consult qualified professionals before making any decisions based on the information contained herein. We disclaim all liability for any loss or damage arising from reliance on third-party content, and the views expressed are solely those of the respective source and do not necessarily reflect our own.