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Exhibit 99.1 zSpace Reports Second Quarter 2026 Financial Results Margin Expansion Drives Profitability ; Strategic Alternatives Review Remains Ongoing SAN JOSE , Calif . , August 13 , 2026 - zSpace , Inc. ( OTC : ZSPC ) ( " zSpace " or the " Company " ) , a leading provider of augmented and virtual reality ( AR / VR ) solutions for education and workforce development , is announcing its financial results for the three and six months ended June 30 , 2026 . - " Our second quarter results reflect the impact of the actions our management team has taken across the business , which drove net income of $ 0.3 million this quarter compared to a net loss of $ 6.1 million a year ago even as our core K - 12 markets continue to work through funding and macro disruption , " said Paul Kellenberger , CEO of zSpace . " Revenue was $ 5.4 million , compared to $ 7.5 million in the prior year , though we are encouraged by early signs that demand is beginning to normalize as customers resume purchasing decisions that were paused earlier in the year . Underlying this improvement in profitability is a structural shift in our business : gross margin expanded 1,380 basis points year - over - year to 56 % , driven by the continued move toward higher- margin software and services revenue , growth in Company - owned software content , and a leaner hardware cost profile . These are efforts our team has been driving for some time and that we believe should continue to support margins as they take fuller effect . Results this quarter also benefited from actions to strengthen our balance sheet , including a one - time gain recognized in connection with converting a portion of outstanding debt to equity , which will not recur in future periods . Taken together , we believe these results demonstrate our ability to execute with discipline and control what we can control , even in a K - 12 environment that remains uneven . At the same time , we recognize that our current valuation does not fully reflect the strength of our platform , which is why the Board continues its ongoing formal review of strategic alternatives to ensure we are doing everything we can to maximize long - term value for our shareholders . " Second Quarter 2026 Financial Summary vs. Same Year - Ago Period Revenue of $ 5.4 million vs. $ 7.5 million Software and services comprised 47 % of revenue vs. 42 % Gross margin of 56 % vs. 43 % Net income of $ 0.3 million vs. net loss of ( $ 6.1 ) million • Adjusted EBITDA of ( $ 0.9 ) million vs. ( $ 4.5 ) million Recent Business Highlights • zSpace announced that its technology powered breakthrough 3D thyroid reconstruction research in Italy , with partner L'ABCD Edutainment using the zSpace platform to visualize Al- generated 3D anatomical models from 2D ultrasound images . zSpace appointed VR Expert as its first master reseller in Europe , expanding distribution of its Al - enhanced immersive learning platform to schools and institutions across the continent and accelerating adoption in STEM , CTE and workforce preparation . • zSpace eliminated over $ 12 million in debt through agreements with its lenders , converting outstanding principal and interest into equity to strengthen the Company's balance sheet and support long - term growth .