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March 11, 2024
Paul Kellenberger
Chief Executive Officer
zSpace, Inc.
65 Nicholson Lane
San Jose, CA 95134
Re:zSpace, Inc.
Amendment No. 1 to Draft Registration Statement on Form S-1
Submitted February 15, 2024
CIK No. 0001637147
Dear Paul Kellenberger:
            We have reviewed your draft registration statement and have the following comments.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR. If you do not believe a comment applies to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to this letter and your amended
draft registration statement or filed registration statement, we may have additional comments.
Amendment No. 1 to Draft Registration Statement on Form S-1 Submitted on February 15, 2024
Prospectus Summary, page 1
1.You discuss the total addressable market in several international regions but note
your disclosure elsewhere that your customer base is primarily in the United States.
Please disclose the percentage of revenue that you generate internationally and clarify
whether you have generated a material amount of revenue in any specific region or
country, including China.  In this regard, we note that you have included specific risk
factors regarding business activities in the PRC.
2.We note that in connection with this offering, each currently outstanding share of
preferred stock will convert into a number of shares of common stock.  Please disclose the
terms of the conversion in the prospectus summary and the effect of the conversion on
investors in this offering.

 FirstName LastNamePaul Kellenberger
 Comapany NamezSpace, Inc.
 March 11, 2024 Page 2
 FirstName LastName
Paul Kellenberger
zSpace, Inc.
March 11, 2024
Page 2
Summary Financial Data
Consolidated Statements of Operations, page 10
3.We note your placeholder for pro forma net loss per share. Please revise to explain the
nature of the adjustments to arrive at pro forma net loss per share and consider including a
reconciliation of the numerator and denominators. Confirm that you will include an
adjustment to pro forma net loss per share to eliminate the interest expense and debt
discount amortization on loans that were converted into NCNV preferred stock as part of
the recapitalization transaction. Also, confirm that the unrecognized stock-based
compensation expense for the September 2022 grant will be reflected in pro forma net loss
per share, as if it were recognized as of the beginning of the earliest period presented.
Consolidated Balance Sheet Data, page 11
4.Please revise to address the following:
•Footnote (1) indicates that the pro forma balance sheet gives effect the
recapitalization that occurred on December 30, 2023. Considering this transaction
will be reflected in the balance sheet as of December 31, 2023, revise to remove this
adjustment from footnote (1).
•In footnote (1) you disclose that the unrecognized stock-based compensation expense
to be recorded in connection with the offering will result in a decrease in additional
paid in capital. Please explain to us why recording the stock compensation expense
results in a decrease in additional paid in capital rather than an increase.
•We note that note (2) is included in the pro forma column header; however, the
description refers to the pro forma as adjusted column. Please revise accordingly and
ensure your presentation is consistent with your presentation in the capitalization
table on page 51.
•Revise to include the conversion of the Series A preferred stock into common stock
in the pro forma column.
•Lastly, consider revising to include line items for common stock and preferred stock
in the pro forma balance sheet.
Risk Factors, page 13
5.Please include risk factor disclosure that discusses the effect, risks and uncertainties of
being designated a controlled company, including but not limited to, the result that you
may elect not to comply with certain corporate governance requirements.
6.Please add a risk factor regarding the reliance on a limited number of significant
customers.  We note that you had one customers that accounted for 16% of your total
revenue in 2022.  Disclose the terms of any material agreements with your significant
customer, including term and termination provisions.

 FirstName LastNamePaul Kellenberger
 Comapany NamezSpace, Inc.
 March 11, 2024 Page 3
 FirstName LastName
Paul Kellenberger
zSpace, Inc.
March 11, 2024
Page 3
We have a history of net losses..., page 13
7.Please disclose that the auditors have raised substantial doubt about the company's ability
to continue as a going concern based on recurring losses from operations, negative cash
flows from operations, non-compliance with certain debt covenants and has a net working
capital deficiency.
We were involved in a SPAC transaction that was terminated..., page 17
8.In connection with the termination of the merger agreement with EdtechX Holdings
Acquisition Corp., you state that EdtechX is alleging certain breaches.  Please discuss the
nature of the allegations against the company.
Risks Related to Financial and Accounting Matters
We have identified material weaknesses in our internal control over financial reporting..., page
25
9.We note your material weakness in internal control over financial reporting. Revise to
disclose how long you estimate it will take to complete your plan and any associated
material costs that you have incurred, or expect to incur.
Capitalization, page 51
10.Please revise to include a pro forma adjustment for the stock-based compensation expense
to be recorded in connection with the offering, as described in footnote (1) to the
consolidated pro forma balance sheet data on page 11. Also, revise to include an
adjustment to pro forma net loss per share to eliminate the interest expense and debt
discount amortization on loans that were converted into NCNV preferred stock as part of
the recapitalization transaction. Lastly, revise to give effect to the automatic conversion of
Series A preferred stock into common stock, as disclosed on page 92.
Dilution, page 53
11.Please explain to us why you reduce the historical net tangible book value (deficit) for
the preferred stock that is not included in equity. As part of your response, please provide
us with a sample calculation using amounts as of December 31, 2022. Also, revise your
calculation to subtract deferred offering costs.
Zspace Management's Discussion and Analysis of Financial Condition and Results of Operations
Non-GAAP Financial Measures, page 59
12.We note that you exclude inventory write-offs from Adjusted EBITDA. Please tell how
you determined this non-GAAP adjustment is consistent with Question 100.01 of the Non-
GAAP C&DIs. In this regard, it would appear that inventory charges are a normal,
recurring operating expense.

 FirstName LastNamePaul Kellenberger
 Comapany NamezSpace, Inc.
 March 11, 2024 Page 4
 FirstName LastName
Paul Kellenberger
zSpace, Inc.
March 11, 2024
Page 4
Factors Affecting Our Performance, page 60
13.You state that there is "significant 'stickiness' and utilization" of your applications and
solutions.  Please tell us how you measure "stickiness" and what retention and/or other
customer metrics management uses to monitor your ability to retain and grow your
customers.  To the extent material, revise to include a quantified discussion of such
measures.
Liquidity and Capital Resources, page 66
14.Please revise to disclose the minimum period of time that you will be able to conduct
planned operations using only currently available capital resources. We refer you to FRC
501.03(a) and Section IV of SEC Interpretive Release 33-8350.
Management, page 79
15.You disclose that two of your directors, Pankaj Gupta and Amit Jain, are affiliated with
dSpace Investments Ltd, the controlling stockholder of the company.  Please disclose
whether there are any agreements or arrangements for representatives of dSpace to serve
on the board.  If so, disclose the terms of those agreements or understandings.
Executive Compensation, page 85
16.You disclose that you will enter into new employment agreements with your senior
management personnel following the closing. Please discuss the terms of the current
compensation arrangements of the executive officers. File the employment agreements
with your executive officers as exhibits to your registration statement. Refer to Item
601(b)(10)(iii)(A) of Regulation S-K.
Principal Stockholders, page 90
17.Please revise to identify the natural person or persons who exercise the voting and/or
dispositive powers with respect to the securities owned by bSpace Investments Ltd,
dSpace Investments Ltd and KIA.
Underwriting, page 104
18.Please disclose the exceptions to the lock-up agreements with your officers, directors and
principal stockholders.

 FirstName LastNamePaul Kellenberger
 Comapany NamezSpace, Inc.
 March 11, 2024 Page 5
 FirstName LastName
Paul Kellenberger
zSpace, Inc.
March 11, 2024
Page 5
Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Accounting Pronouncements Issued, But Not Yet Adopted, page F-17
19.Please revise to disclose that, as a result of your election to use the extended transition
period for complying with new or revised accounting standards, your financial statements
may not be comparable to companies that comply with public company effective dates.
Note 7. Stock-based Compensation Expense
Determination of fair value of stock options, page F-27
20.We note your disclosure that the weighted-average grant-date fair value of options granted
in the year ended December 31, 2022 was nil.  Please tell us the fair value of the
underlying common stock for the options granted in 2022 and explain why the resulting
grant-date fair value was nil.
September 2022 Stock Option Issuance, page F-28
21.Please explain to us why an expected term of 0.5 years was used for the September 2022
grant. In this regard, we note from the table on page F-27 that the expected term of options
granted in 2022 was between 5.2 years and 6.1 years.  Also, explain why the volatility
used for this grant was not consistent with the range disclosed on page F-27.
Exhibits
22.Please file the agreements with the two PC Original Equipment Manufacturers with which
you partner.  We note that you rely on these third parties to produce your hardware and
software in connection with your platform and solutions and any termination of the
partnerships would have an adverse material impact on the company.
General
23.Please supplementally provide us with copies of all written communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf,
present to potential investors in reliance on Section 5(d) of the Securities Act, whether or
not they retain copies of the communications.

 FirstName LastNamePaul Kellenberger
 Comapany NamezSpace, Inc.
 March 11, 2024 Page 6
 FirstName LastName
Paul Kellenberger
zSpace, Inc.
March 11, 2024
Page 6
            Please contact Dave Edgar at 202-551-3459 or Chris Dietz at 202-551-3408 if you have
questions regarding comments on the financial statements and related matters. Please contact
Uwem Bassey at 202-551-3433 or Jan Woo at 202-551-3453 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Technology
cc:       Daniel E. Larkin