zSpace, Inc.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could materially affect our business, financial condition, or future operating results and cash flows. We do not believe that theThe following risk factors update, and to the extent inconsistent supersede, the risk factors set forth in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Except as set forth below, there have been anyno material changes to those risk factors discl. These risks, and thosed described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The risks described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may materially adversely affect our business, financial condition, operating results and/or cash flows.

Our common stock has been suspended from trading on Nasdaq and will be delisted, which has reduced the liquidity of our common stock and may impair our ability to raise capital.

On April 21, 2026, we received a determination from Nasdaq to delist our common stock under Nasdaq Listing Rule 5810(c)(3)(A)(iii), following the closing bid price of our common stock being $0.10 or less for ten consecutive trading days. Trading in our common stock was suspended at the opening of business on April 28, 2026. We requested a hearing before a Nasdaq Hearings Panel, and on August 6, 2026 the Panel issued a decision determining to delist our common stock. We expect Nasdaq to file a Form 25 with the SEC, following which delisting will become effective ten days later, and the registration of our common stock under Section 12(b) of the Exchange Act will terminate 90 days thereafter.

Since April 28, 2026, our common stock has been quoted on the OTC Markets rather than on a national securities exchange. Quotation on the OTC Markets is generally characterized by wider spreads between bid and asked prices, lower trading volume, greater price volatility and less publicly available information than a listing on a national securities exchange. As a result, our stockholders may find it more difficult to dispose of shares of our common stock at prices they consider acceptable, or at all.

Delisting has other consequences. Our common stock will cease to be a covered security for purposes of the National Securities Markets Improvement Act, so that future issuances of our common stock will be subject to the securities laws of individual states rather than federal preemption, which may increase the cost and complexity of financing transactions. Our common stock is also likely to lose eligibility for purchase on margin, which may cause brokers to require holders who hold our shares in margin accounts to liquidate their positions. Certain institutional investors are prohibited by policy from holding securities that are not listed on a national securities exchange, and our ability to raise capital through the sale of equity securities has been and is likely to continue to be adversely affected.

We have issued a substantial number of shares of common stock, and we have limited authorized share capacity available to satisfy our obligations under our outstanding convertible securities.

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During the six months ended June 30, 2026, the number of shares of our common stock issued and outstanding increased from 1,294,142 to 37,058,212, primarily as a result of the conversion of outstanding indebtedness into common stock. This included the issuance of 30,195,786 shares on May 28, 2026 at a fixed conversion price of $0.2385 per share in connection with the conversion of principal outstanding under our loans with Fiza Investments Limited. Our existing stockholders experienced substantial dilution as a result of these issuances, and may experience further substantial dilution.

Our certificate of incorporation authorizes 100,000,000 shares of common stock. As of June 30, 2026, 37,058,212 shares were issued and outstanding, and a significant portion of the balance of our authorized common stock was reserved for or committed to issuance upon conversion of our outstanding convertible note and preferred stock, upon exercise of outstanding options and warrants, and under our equity incentive plans. We therefore have limited capacity to issue additional shares of common stock.

Both our Amended Note and our Series P and Series P-2 Preferred Stock may be settled in a variable number of shares of common stock determined by reference to the market price of our common stock. Installment payments under the Amended Note may be made in shares priced at the lesser of the $7.00 conversion price and 95% of the lowest volume-weighted average price of our common stock during the preceding ten trading days, subject to a floor price of $1.25 per share. If the market price of our common stock declines, the number of shares issuable in respect of these obligations would increase. If we do not have a sufficient number of authorized and unreserved shares available when required, we may be obligated to settle these obligations in cash, which we may not have sufficient resources to do, or to seek stockholder approval to increase our authorized shares, which we may not be able to obtain on a timely basis or at all. A failure to deliver shares when required could constitute an event of default under the Amended Note, permitting the holder to accelerate the amounts owed and to require redemption at a premium, which would have a material adverse effect on our business, financial condition and results of operations.