Financial Data and Key Metrics Changes - For the full year 2024, revenues were $38 million, down 13% year-on-year due to capital constraints prior to the IPO, which limited the ability to fulfill orders from backlog [28] - Gross margins for the year improved to 40.9% from 38.5% in the prior year, an increase of 240 basis points, primarily due to a shift in revenue mix from hardware to software and services [31] - Fourth quarter revenues were $8.5 million, down 29% year-on-year, attributed to similar capital constraints and backlog fulfillment issues [33] Business Line Data and Key Metrics Changes - The annualized contract value (ACV) of renewable software revenue was $11.3 million, up 6% compared to the previous year [29] - Bookings for the year were $41.5 million, up 1% year-on-year, with U.S. and rest of world bookings (excluding China) at $39.9 million, up 7% year-on-year [30] - In the fourth quarter, bookings were $5.3 million, down 3% year-on-year, but U.S. bookings were up 21% while international bookings (excluding China) saw a decline of 92% [34][30] Market Data and Key Metrics Changes - The K-12 education and career and technical education (CTE) markets exceed $69 billion globally, with the global ed tech market valued at over $142 billion in 2023, projected to grow at a CAGR of 13.6% through 2030 [11] - The AR VR education segment is expected to reach $14.2 billion by 2028, growing at a 30% CAGR [12] - The company is currently implemented in over 3,500 of the approximately 13,000 public school districts in the U.S., including over 80% of the largest 100 school districts [12] Company Strategy and Development Direction - The company aims to increase penetration within existing K-12 STEM and CTE markets, expand international presence through a network of over 25 resellers, and invest in R&D to enhance its platform [17][19] - The recent acquisition of BlocksCAD is intended to strengthen immersive learning solutions with a 3D design platform for STEM education [21] - The company plans to focus on acquiring complementary software solutions to accelerate software revenue growth [20] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the education market affecting decision-making among customers, leading to potential lengthening of sales cycles [38] - Despite the uncertainty, there is confidence in capturing demand for CTE solutions due to significant state-level funding announcements [39] - The company anticipates Q1 2025 revenues slightly above $5 million, with expectations of continued growth in the full year [39][40] Other Important Information - The company has over 80 issued patents, reinforcing its position in the education technology space [17] - Operating expenses for the year were $33.2 million, an increase of 30% year-on-year, but flat when normalized for stock-based compensation [32] Q&A Session Summary Question: Impact of IPO timing on bookings - Management explained that the timing of the IPO affected the availability of new products for sales launches, which in turn impacted bookings [44][46] Question: Inventory availability for sales demos - Inventory for the Inspire 2 product became available late in Q4, while the Imagine product inventory is available in Q1 [48] Question: Lengthening of sales cycles in K-12 - Management indicated that the average sales cycle has increased from 60-75 days to 75-90 days due to uncertainty in funding sources [82][83] Question: Gross margin trends - Management highlighted that gross margin improvements are expected from the new hardware mix and increased software content [66][70] Question: Recent debt instrument - The company took on a $2 million debt line to maintain liquidity amid market turbulence [118]

Market Overview - The total addressable market (TAM) for the K-12 market in the United States is approximately $21.4 billion, with a global TAM exceeding $68 billion[32]. - The global education technology market was valued at $142.4 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030[33]. - The global AR, VR, and mixed reality market is expected to grow at a 37% CAGR to $252 billion by 2028[33]. Revenue and Financial Performance - For the year ended December 31, 2023, revenue in the United States was $38.7 million, representing 88% of total revenue, while revenue outside the United States was $5.2 million, representing 12%[34]. - Consolidated revenue for the year ended December 31, 2023 increased over 22% compared to the year ended December 31, 2022, but decreased 13% for the year ended December 31, 2024 compared to 2023[75]. - The company reported a net loss of approximately $(20.8) million for the year ended December 31, 2024, and $(13.0) million for the year ended December 31, 2023, with an accumulated deficit of $(290.4) million as of December 31, 2024[92]. - A significant portion of the company's revenue is derived from K-12 schools, which are heavily dependent on federal, state, and local government funding, making them vulnerable to budget cuts and funding difficulties[125]. Product Development and Innovation - The Inspire 2 laptop, launched in late 2024, features a 20-22% boost in processing and graphics performance compared to its predecessor[42]. - The Imagine laptop, launched in early 2025, is 41% smaller and 30% lighter than the Inspire, designed specifically for young learners[42]. - The company has developed a scalable go-to-market strategy utilizing a multi-channel sales approach, combining direct sales and channel partners to reach potential customers effectively[54]. - The company has a large content library and pioneering AR/VR capabilities, which it intends to expand to meet the needs of current and future customers[54]. Customer Base and Market Strategy - The company has implemented its platform in over 3,500 of the approximately 13,000 public school districts in the United States, with K-12 solutions deployed in over 80% of the largest 100 districts[27]. - The CTE solutions have been deployed in approximately 73% of the public school districts served, and in about 2% of community and technical colleges in the United States[27]. - The company has partnered with over 25 resellers and expanded its customer network into over 50 countries, indicating significant international growth potential[27]. - The company expects to continue to drive growth by increasing marketing efforts and expanding use cases within the United States education market, particularly focusing on K-12 and CTE users[54]. Competition and Market Risks - The company faces significant competition in the education technology market, with potential buyers often evaluating funding for various educational products[55]. - The company faces increased competition from new entrants and established companies, which may pressure pricing and market share[82]. - The company relies on a limited number of significant customers, which poses a risk to revenue stability[93]. - The company may not achieve market acceptance for new products, which could adversely affect business and financial condition[100]. Operational Challenges - The company has experienced interruptions in platform performance, which could damage reputation and result in customer loss[88]. - The company relies on third-party suppliers for hardware production, including agreements with major PC OEMs for laptop manufacturing[53]. - The company relies on limited source suppliers for product components, and any disruptions in the supply chain could materially affect manufacturing and financial results[106]. - The company faces intense competition for qualified personnel, and failure to attract and retain skilled employees could adversely affect business operations[117]. Financial and Tax Considerations - The company has an accumulated deficit of approximately $(290.4) million as of December 31, 2024, raising substantial doubt about its ability to continue as a going concern[144]. - The company reported United States federal net operating loss (NOL) carryforwards of approximately $200.8 million and state NOL carryforwards of approximately $167.4 million as of December 31, 2024[150]. - The company has recorded a full valuation allowance related to its U.S. federal and state NOL carryforwards due to uncertainty in realizing future benefits[152]. - Changes in tax rates or new tax legislation could result in higher effective tax rates and reduced cash flows[153]. Legal and Compliance Issues - The company identified five material weaknesses in its internal control over financial reporting, which could lead to material misstatements in financial statements[140]. - The company is involved in litigation to protect its intellectual property rights, which may divert resources and management attention[174]. - The company is facing potential legal challenges regarding intellectual property claims, which could significantly increase operating expenses and harm business operations[178]. - The company is subject to various U.S. and international laws and regulations that could change and impact its business operations[169]. Cybersecurity and Data Privacy - Cybersecurity risks, including potential breaches and disruptions, could materially impact the company's reputation and financial condition[212]. - The company has experienced attempted cyber-attacks in the past, which could lead to operational disruptions and damage to its brand[215]. - Compliance with data privacy and security regulations is critical, and any failure could result in significant liabilities or penalties[172]. Stock Performance and Governance - The price of the company's common stock may be volatile due to fluctuations in user growth, revenue, and market conditions[219]. - dSpace Investments Limited currently controls a majority of the voting power of the company's outstanding common stock, classifying it as a "controlled company" under Nasdaq Listing Rules[222]. - The board of directors is not required to have a majority of independent directors due to its controlled company status[224]. - Key factors influencing stock performance include additional shares sold into the market, changes in capital structure, and user engagement levels[223].

Financial Performance - Fourth quarter 2024 revenue was $8.5 million, down 29.8% from $12.1 million in Q4 2023[5] - Full year 2024 revenue totaled $38.1 million, a decrease of 13.2% compared to $43.9 million in 2023[5] - The net loss for Q4 2024 was $(3.6) million, an improvement from $(4.1) million in Q4 2023; full year net loss was $(20.8) million compared to $(13.0) million in 2023[10] - Bookings in Q4 2024 were $5.3 million, down 3% from $5.5 million in Q4 2023; full year bookings reached $41.5 million, up 1% from $41.1 million in 2023[8] Gross Margin - Gross margin improved to 40.7% in Q4 2024 from 34.7% in Q4 2023, and for the full year, it increased to 40.9% from 38.5%[5][8] Contract Value - Annualized Contract Value (ACV) of renewable software increased by 6% to $11.3 million as of December 31, 2024, from $10.6 million a year ago[7] Customer Acquisition - zSpace secured a $5 million deal with St. Louis Public Schools, marking its largest customer win to date[5] Product Development - The company launched the Career Readiness Solution featuring an AI Career Coach, which has been well-received and addresses the demand for education-to-workforce solutions[5] Cash Position - As of December 31, 2024, zSpace had approximately $4.9 million in cash and cash equivalents, up from $3.1 million a year earlier[11] Growth Strategy - The company aims to drive growth through deeper penetration in K-12 STEM and CTE markets, international expansion, and strategic investments in R&D and software acquisitions[3]

Core Points - zSpace has announced a change in the date for its fourth quarter and full year 2024 earnings conference call, now scheduled for March 28, 2025, at 8:00 a.m. ET [1] - A live webcast of the earnings call will be available on zSpace's investor relations website, and participants are encouraged to join 15 minutes early to avoid delays [2] - zSpace is a leader in augmented and virtual reality solutions for education, serving over 3,500 educational institutions and holding over 70 patents [3] Company Overview - zSpace, Inc. specializes in AR/VR experiences that enhance learning in STEM, CTE, and career readiness programs [3] - The company's solutions have been shown to improve student test scores, as evidenced by a study published in the Journal of Computer Assisted Learning in 2021 [3]

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on November 25, 2024 No. 333-280427 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 6 TO Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 35-2284050 (I.R.S. Employer Identification No.) zSpace, Inc. 55 Nicholson Lane San Jose, California 95134 (408) 498-4050 (Address, including zip code, and telephone number, including area code, ...

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on October 25, 2024 No. 333-280427 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZSPACE, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Paul K ...

As filed with the Securities and Exchange Commission on October 15, 2024 No. 333-280427 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 4 TO TABLE OF CONTENTS FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZSPACE, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 35-2284050 (I.R.S. Employer Identification No.) zSpace, Inc. 5 ...

AMENDMENT NO. 3 TO FORM S-1 TABLE OF CONTENTS As filed with the Securities and Exchange Commission on September 9, 2024 No. 333-280427 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZSPACE, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 35-2284050 (I.R.S. Employer Identification No.) zSpace, Inc. ...

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on August 9, 2024 No. 333-280427 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZSPACE, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 35-2284050 (I.R.S. Employer Identification No.) zSpace, Inc. 55 ...

TABLE OF CONTENTS As filed with the Securities and Exchange Commission on July 22, 2024 No. 333-280427 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZSPACE, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 6770 (Primary Standard Industrial Classification Code Number) 35-2284050 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (I.R.S. Employer Identification No.) zSpace, Inc. 55 N ...