tZERO Proposes Conversion of TZROP Tokens to Preferred Equity, Aims to Unlock Capital and Strategic Flexibility

tZERO Group, Inc., an innovator in blockchain-powered multi-asset infrastructure, announced a proposal to amend the terms of its TZROP security tokens to enable conversion into tokenized Series B preferred stock. Each TZROP token would convert into three shares of Series B preferred stock. This restructuring aims to enhance long-term participation for existing token holders in the company's future growth by positioning tZERO to pursue additional capital formation and strategic opportunities. The proposal includes unlocking up to $10 million in additional capital through a potential convertible note financing led by Bed Bath & Beyond, Inc., tZERO's largest shareholder, to underpin development.

The proposed conversion is subject to approval by a majority of TZROP holders, Series B preferred shareholders, and common shareholders. Bed Bath & Beyond, the largest TZROP investor and largest equity owner in tZERO, has expressed support. The holder representing the majority interest in the Series B preferred shares has also communicated support for the conversion and related amendments. Bill Fleckenstein, a long-time TZROP investor, fund manager, and the second largest TZROP holder, will join tZERO's board of directors as the Series B preferred stock representative, subject to formal appointment.

tZERO believes the existing TZROP structure has constrained the company's ability to raise capital and pursue strategic transactions. Value creation by new investors is subordinated to an uncertain future redemption price of TZROP shares, creating minority investor and dividend overhang risks. By simplifying its capital structure, tZERO expects to be better positioned to raise capital, continue operations, and execute on exit and other strategic opportunities. The constraint has also impacted TZROP holders' ability to recognize the value of their contribution by limiting tZERO's ability to finance sustainable operations and growth post its 2025 leadership reset.

The proposed conversion is designed to enable TZROP holders to have a clearer path to sharing in future company growth as equity holders, with stronger downside protection through enhanced liquidation preference and real governance rights. It aims to enhance alignment between TZROP holders and the company's long-term growth trajectory by allowing transition from a non-convertible instrument into preferred equity that can participate alongside common stock in full equity value at an exit event. Furthermore, it seeks to streamline tZERO's capital structure and remove constraints that have historically limited the company's ability to pursue capital-raising opportunities and strategic transactions by replacing the current redemption-based instrument with preferred equity participation.

In connection with the proposed conversion, tZERO entered into a letter of intent with Bed Bath & Beyond, Inc., which indicated its intention to lead up to $10 million in additional capital to tZERO through a convertible note financing. This would be funded over time in tranches tied to specified operational and financial metrics. The proposed financing would provide tZERO with incremental capital to support near-term operations and strategic execution. The convertible note would accrue interest at a market rate. If the company raises $25.0 million or more in a qualified financing before maturity, the debt will automatically convert into the securities issued in the qualified financing at a 20% discount to the new investors' price. In a liquidity event, note holders would receive the greater of their total principal plus interest or the equivalent value in common stock. Further details are set out in the shareholder documentation available on the company's website at https://tzero.com/tzrop-amendment.

Marcus Lemonis, Executive Chairman and CEO of Bed Bath & Beyond, Inc., stated the proposal removes a significant hurdle to the company's ability to drive its strategy as the core connective tissue in the tokenization industry. Alan Konevsky, CEO of tZERO Group, Inc., said the conversion reflects commitment to aligning early supporters with the company's long-term growth, providing more clarity around the value path for their investment and strengthening strategic flexibility. Bill Fleckenstein, the Series B director-designate, expressed looking forward to joining the tZERO board to capture the opportunity presented by the secular adoption of tokenization technology.

Upon completion, the newly converted shares would collectively account for approximately 31% of the then-outstanding Series B shares and approximately 11% of tZERO's total capitalization on a fully diluted basis. Following conversion, the resulting Series B shares are expected to be fully tokenized and custodied on-chain within tZERO's regulated wallet infrastructure. tZERO also intends to conduct semi-annual auction-based liquidity opportunities using its Private Markets Auction platform. Consistent with its partnership with Voatz, tZERO will conduct the TZROP voting using Voatz's blockchain-based voting system to showcase the transparency, integrity and speed of on-chain voting. Holders of TZROP shares as of March 24, 2026 will be eligible to vote on the proposal. Additional details regarding the proposal and approval process will be provided to eligible holders through formal shareholder communications. Holders of TZROP can access the secure voting portal at https://tzrop.consent.vote.