ZeroStack Corp.

There have been no material changes from the risk factors disclosed in Item 1A of the 2025 Annual Report, other than as disclosed in this Quarterly Report.

Absent federal legislation or 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.

There is limited guidance as to whether Cryptocurrencies are a "security." Therefore, while (for the reasons discussed below) we believe that none of the Cryptocurrencies are a "security" within the meaning of the U.S. federal securities laws, and registration of the Company under the Investment Company Act, is therefore not required under the applicable securities laws, we acknowledge that a regulatory body or federal court may determine otherwise. Our belief, even if reasonable under the circumstances, would not preclude legal or regulatory action based on such a finding that any of the Cryptocurrencies, other than Solana, are a "security" which would require us to register as an investment company under the Investment Company Act.

We have also adapted our process for analyzing the U.S. federal securities law status of the Cryptocurrencies and other cryptocurrencies over time, as guidance and case law have evolved. As part of our U.S. federal securities law analytical process, we take into account a number of factors, including the various definitions of "security" under U.S. federal securities laws and federal court decisions interpreting the elements of these definitions, such as the U.S. Supreme Court's decisions in theHowey andReves cases, as well as court rulings, reports, orders, press releases, public statements, and speeches by the SEC Commissioners and SEC Staff providing guidance on when a digital asset or a transaction to which a digital asset may relate may be a security for purposes of U.S. federal securities laws, including the SEC's March 17, 2026 interpretation clarifying how federal securities laws apply to certain crypto assets and transactions involving crypto assets (the "SEC March Interpretation"). Our position that none of the Cryptocurrencies, other than Solana, are a "security" is premised, among other reasons, the SEC's March Interpretation and on our conclusion none of Cryptocurrencies meet the elements of theHowey test. Among the reasons for our conclusion none of Cryptocurrencies are a security, other than Solana, is that holders of the Cryptocurrencies do not have a reasonable expectation of profits from our efforts in respect of their holding of the Cryptocurrencies. Also, ownership of the Cryptocurrencies does not convey the right to receive any interest, rewards, or other returns.

We acknowledge, however, that a federal court or another relevant entity could take a different view or the SEC could change its current view. The regulatory treatment of the Cryptocurrencies is such that it has drawn significant attention from legislative and regulatory bodies. Application of securities laws to the specific facts and circumstances of digital assets is complex and subject to change. Our conclusion, even if reasonable under the circumstances, would not preclude legal or regulatory action based on a finding that any of the Cryptocurrencies is a "security." As such, we are at risk of enforcement proceedings against us, which could result in potential injunctions, cease-and-desist orders, fines, and penalties if any of the Cryptocurrencies are determined to be a security by a regulatory body or a court. Such developments could subject us to fines, penalties, and other damages, and adversely affect our business, results of operations, financial condition, and prospects.

We are required to take commercially reasonable efforts to obtain shareholder approval for the issuance of the ZeroStack Shares and ZeroStack Pre-funded Warrants issuable under the Share Exchange Agreement at a meeting of the Company's shareholder's and if we are unable to obtain such approval, then we may not be able to complete the Exchange.

Pursuant to the Share Exchange Agreement, the Company is required to take commercially reasonable efforts to convene a shareholder meeting to obtain shareholder approval for the issuance of the ZeroStack Shares and ZeroStack Pre-funded Warrants issuable under the Share Exchange Agreement and to recommend shareholders of the Company approve the issuance of such securities for the purpose of obtaining shareholder approval to allow for the issuance of the ZeroStack Shares and ZeroStack Pre-funded Warrants pursuant to the Share Exchange Agreement in accordance with applicable Nasdaq Listing Rules. If such shareholder approval is not received, the Company may be required to convene additional shareholder meetings thereafter until such approval is obtained, which could result in substantial costs and be a distraction to management.

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Not applicable.