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SUBSEQUENT EVENTS | 12 Months Ended
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Dec. 31, 2025
SUBSEQUENT EVENTS |
SUBSEQUENT EVENTS |
15. | SUBSEQUENT EVENTS
Management has evaluated subsequent events and has determined that there were no subsequent events that required recognition or disclosure in the financial statements as of and for the period ending December 31, 2025, except as disclosed below. Senior Secured Convertible Note Financing Amendment On January 8, 2026, the Company entered into an Amendment #2 to the Senior Secured Convertible Note (the “Note Amendment”) with the Note Investor, which amended the terms of the Senior Secured Convertible Note. The Note Amendment revised the definition of “Floor Price” as set forth in the Senior Secured Convertible Note from $0.60 per share to $0.22 per share, subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions. In addition, the Note Amendment revised the definition of “Equity Conditions,” the satisfaction of which is generally a prerequisite to the Company's ability to make installments payments in shares of common stock. The Note Amendment modified the definition of “Equity Conditions” to reduce the required minimum VWAP of the common stock over the 20 trading days prior to the applicable date from $0.75 to $0.30. Except as specifically set forth in the Note Amendment, all other terms, covenants, and conditions of the Senior Secured Convertible Note remain in full force and effect. Preferred Stock Agreement On January 23, 2026, the Company entered into a Securities Purchase Agreement (the “SPA”) with an institutional investor (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser shares of the Company’s Series P Preferred Stock (as defined below), and five-year warrants (the “Series P Warrants”) to purchase shares of the Company’s common stock in one or more closings. At the initial closing held on January 27, 2026 (the “Initial Closing”), the Purchaser purchased 1,500,000 shares of Series P Preferred Stock and Series P Warrants to purchase 1,000,000 shares of common stock for an aggregate purchase price of $3,000,000. The initial purchase price per share of Series P Preferred Stock was $2.00. The initial exercise price for the Series P Warrants is $3.00 per share, subject to standard and customary adjustments. The Company and the Purchaser may mutually agree to additional closings within one year of the Initial Closing, up to an aggregate limit of $10,000,000 for all purchases under the SPA. The SPA contains customary representations, warranties and indemnification provisions.
Amendments to Articles of Incorporation or Bylaws
On January 27, 2026, the Company filed a Certificate of Designations of Series P Convertible Preferred Stock (the “Series P COD”) with the Secretary of State of the State of Delaware. The Series P COD establishes a new series of preferred stock designated as “Series P Convertible Preferred Stock” (the “Series P Preferred Stock”) and authorizes the issuance of up to 5,000,000 shares of Series P Preferred Stock, par value $0.00001 per share. Each share of Series P Preferred Stock has a stated value of $2.00, subject to adjustment as set forth in the Series P COD (the “Stated Value”). Holders of Series P Preferred Stock are entitled to receive cumulative dividends at a rate of eighteen percent (18%) per annum, payable annually. Dividends accrue and compound annually and are payable solely in additional shares of Series P Preferred Stock. In the event of any liquidation, dissolution, or winding-up of the Company, or a Change of Control Transaction (as defined in the Series P COD), holders of Series P Preferred Stock are entitled to receive, prior to any distribution to holders of junior securities, an amount per share equal to the Stated Value plus any accrued and unpaid dividends. The Series P Preferred Stock votes together with the Company’s common stock on an as-converted basis. Additionally, as long as any shares of Series P Preferred Stock remain outstanding, the Company cannot take certain actions without the affirmative vote of the holders of a majority of the outstanding Series P Preferred Stock. These actions include, among others: (a) adversely altering the rights of the Series P Preferred Stock; (b) creating any class of stock senior to or pari passu with the Series P Preferred Stock; or (c) amending the Company’s Certificate of Incorporation in a manner that adversely affects the holders. Beginning on the third anniversary of the Original Issue Date (as defined in the Series P COD), holders may opt to convert their shares of Series P Preferred Stock into shares of common stock. The conversion rate is determined by dividing the Stated Value (plus accrued unpaid dividends) by the “Conversion Price.” The initial “Conversion Price” is the Stated Value ($2.00) and is subject to adjustment for stock splits, stock dividends, and similar events. All outstanding shares of Series P Preferred Stock will automatically convert into shares of common stock on the fifth anniversary of the Original Issue Date. For the automatic conversion occurring on the fifth anniversary of the Original Issue Date, the conversion rate is the lower of (y) the Conversion Price and (z) 80% of the 90-Day VWAP of the Company’s common stock. The Series P Preferred Stock may not be converted if such conversion would result in the holder (together with its affiliates) beneficially owning in excess of 4.99% of the Company’s outstanding common stock. A holder may increase or decrease this limitation upon notice to the Company, up to a maximum of 9.99%, provided that any increase will not be effective until the 61st day after such notice. The Company is prohibited from issuing shares of common stock upon conversion of the Series P Preferred Stock if such issuance would breach the Company’s obligations under the rules of Nasdaq, unless shareholder approval is obtained. Litigation On February 9, 2026, Jiangxi Kmax Industrial Co., Ltd. (“KMax”) filed a complaint against zSpace in the United States District Court for the Northern District of California. The complaint arises from a Software Resale License Agreement, dated July 24, 2019, and alleges breach of contract related to unpaid revenue share invoices totaling $557,940 plus interest. We have recorded an account payable of $0.6 million as of December 31, 2025 in connection with this matter, however, we intend to assert counterclaims, including for violation of confidentiality agreements and infringement of our intellectual property rights. Our initial response to the complaint is due March 19, 2026. On March 11, 2026, Kmax filed a second complaint against the Company and certain of its current and former officers in the U.S. District Court for the Southern District of New York. The complaint alleges violations of federal securities laws as well as various state common law claims. The allegations arise from Kmax's $15 million investment in the Company’s pre-IPO private placement financings between 2017 and 2019. Kmax seeks compensatory and rescissory damages, interest, and costs. The Company believes the claims are without merit and intends to defend itself vigorously against these allegations. Reverse stock split On March 13, 2026, stockholders of the Company, holding shares of outstanding common stock of the Company, par value $0.00001 per share, representing in excess of a majority of the outstanding votes of the capital stock of the Company (the “Consenting Stockholders”) as of the record date of March 12, 2026 (the “Record Date”), took action by written consent and without a meeting pursuant to Section 228 of the Delaware General Corporation Law and the Company’s Amended and Restated Certificate of Incorporation and Bylaws (the “Written Consent”). The Written Consent: (i) authorized the Company’s board of directors to effect a reverse split of the Company’s issued and outstanding Common Stock (the “Reverse Stock Split”) in a ratio of no less than 1-for-15 and no more than 1-for-25 (the “Range”); (ii) authorized the Board to determine whether or not to effect the Reverse Stock Split and to determine the exact ratio of any Reverse Stock Split within the Range, each as determined by the Board in its discretion at any time prior to the one year anniversary of the filing of a Definitive Information Statement on Schedule 14C with the U.S. Securities and Exchange Commission (the “SEC”) pertaining to the Reverse Stock Split; and (iii) approved the form of amendment to the Amended and Restated Certificate of Incorporation effecting the Reverse Stock Split and the subsequent filing thereof with the Secretary of State for the State of Delaware. Pursuant to rules adopted by the SEC under the Securities Exchange Act of 1934, a Definitive Information Statement on Schedule 14C was filed with the SEC on March 23, 2026 and will be sent or provided to the stockholders of the Company. The Written Consent will be effective 20 days after the Definitive Information Statement on Schedule 14C relating to such consent is mailed to stockholders. On the Record Date, there were issued and outstanding shares of the Company’s capital stock representing 37,142,955 votes. As of the Record Date, the Consenting Stockholders held, in the aggregate, capital stock entitled to 18,694,538 votes (on an as converted basis), representing 50.33% of the outstanding voting power of the Company’s stockholders. As the Reverse Stock Split was approved by the Written Consent, there were no votes against, abstaining or broker non-votes in relation to these matters. Additional Senior Secured Convertible Note Financing On March 16, 2026, the Company entered into an amendment to the Securities Purchase Agreement (the “Amendment”) providing for, among other things, multiple closings pursuant to the Securities Purchase Agreement, rather than a total of two closings. In addition, the Company and the Investor agreed in the Amendment to conduct a second closing pursuant to the Securities Purchase Agreement, which occurred on March 16, 2026 (the “Second Closing”). On the Second Closing, the Company issued an additional Note in the original principal amount of $4,301,075 (the “Senior Secured Additional Convertible Note”). The Company intends to use the net proceeds from the issuance of the Senior Secured Additional Convertible Note to repay approximately $2,000,000 of existing debt owed to the Investor, and for working capital and general corporate purposes. The Senior Secured Additional Convertible Note is substantially similar to the form of the original Senior Secured Convertible Note issued by the Company on April 11, 2025, except that the maturity date of the Senior Secured Additional Convertible Note is March 15, 2028, the Initial Conversion Price is $0.28 per share, and the Additional Note is subject to a floor price of $0.05 per share. See Note 5 for additional information regarding the Senior Secured Convertible Note. Itria Refinancing On March 19, 2026, the Company, entered into a new Loan and Security Agreement the (“New Loan Agreement”) with Itria Ventures LLC (the “Lender”) in connection with the refinancing of all of its outstanding debt with the Lender. Pursuant to the New Loan Agreement, the Lender agreed to provide the Company with a term loan in the principal amount of $1,344,500 (the “New Loan”) at an interest rate of 18.99% per year. The New Loan is payable on a monthly basis in 24 equal installments, maturing on the 24-month anniversary of the funding date. The proceeds of the New Loan were used to refinance and pay off in full the two existing Loan and Security Agreements dated August 20, 2025, which had original principal amounts of $1,000,000 each. In connection with this refinancing, the Company, the Lender, and the Company’s existing Senior Lender, entered into an amended intercreditor agreement (the “Intercreditor Agreement”) to maintain the subordinated status of the New Loan, pursuant to which, among other things, Itria subordinated its security interest in the assets of the Company to the security interest of the Senior Lender and agreed to certain covenants limiting its ability to declare an event of default under the New Loan Agreement The Company may prepay the New Loan in full at any time after the first month of the term, subject to a prepayment fee equal to 1.5% of the unpaid principal balance if the New Loan is prepaid within the first 12 months of the term. The New Loan is secured by a second priority lien on substantially all of the Company’s assets and is guaranteed by the Company’s two wholly owned subsidiaries -- zSpace Technologies (Shanghai) Ltd. and zSpace K.K. The New Loan Agreement contains standard representations, warranties and affirmative covenants, including relating to use of proceeds and information rights. In addition, the New Loan Agreement contains certain customary negative covenants, including that the Company may incur no additional indebtedness other than certain permitted indebtedness. The New Loan Agreement also contains customary events of default, including, but not limited to, upon non-payment, the occurrence of material adverse changes to the Company’s business, or bankruptcy. Upon the occurrence of an event of default, the applicable interest rate would increase by five percentage points and the Lender may declare the outstanding principal and accrued interest immediately due and payable. Fiza Amendment On March 22, 2026, the Company and Fiza entered into an Amendment No. 4 (the “Fiza Amendment”) to Loan and Security Agreement dated July 11, 2024 (as amended, the “Fiza Loan Agreement”). Pursuant to the Fiza Amendment, the parties agreed to a moratorium on the payment of interest by the Company pursuant to the Fiza Loan Agreement until December 31, 2026 (the “Moratorium Period”). During the Moratorium Period, interest will continue to accrue on the outstanding principal balance at the applicable interest rate and will be deferred and capitalized (added to the outstanding principal balance) on each corresponding accrual date. Following the Moratorium Period, the Company shall continue monthly interest-only payments to Fiza pursuant to the terms of the Fiza Loan Agreement. ​

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/855/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483399/855-10-50-2 + Details
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