Litigation

From time to time, the Company may be involved in lawsuits, claims, investigations, and proceedings consisting of intellectual property, commercial, employment, and other matters, which arise in the ordinary course of business. In accordance with ASC Topic 450, Contingencies, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

On May 16, 2022, we entered into a merger agreement (the “EdtechX Merger Agreement”) with EdtechX Holdings Acquisition Corp II (“EdtechX”), a Special Purpose Acquisition Company (“SPAC”). The Original Merger Agreement with EdtechX was terminated on June 21, 2023. On July 12, 2024, EdtechX filed a complaint in the Superior Court of the State of Delaware in connection with the termination of the EdtechX Merger Agreement, claiming breaches of contract and the implied covenant of good faith and fair dealing. A trial date has been set for January 20, 2027. The Company believes this lawsuit is without merit and intends to vigorously defend itself against these allegations. The Company has not accrued any amount related to this matter based on the belief that the amount of liability is not currently probable or estimable.

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 arising from a Software Resale License Agreement, dated July 24, 2019, alleging breach of contract related to unpaid revenue share invoices totaling $557,940 plus interest. The Company denied the allegations and asserted counterclaims for breach of contract and trade secret theft. On June 9, 2026, the parties filed a joint stipulation of dismissal with prejudice, and the court dismissed all claims and counterclaims with prejudice on June 10, 2026. No consideration was exchanged by either party, and each party bore its own fees and costs. The Company’s account payable of $0.6 million as of March 31, 2026 and December 31, 2025 was extinguished in connection with the dismissal, and is included in gain from settlement of vendor claims in the accompanying condensed consolidated statement of operations and comprehensive income (loss). Accordingly, this matter is concluded and no further disclosure is expected in future periodic reports.

Purchase Obligations

The Company has agreements with hardware suppliers to purchase inventory. As of June 30, 2026, the Company had $16.5 million in purchase obligations outstanding.