zSpace, Inc. 8-K

What Happened
zSpace, Inc. announced on May 28, 2026 (filed in an 8‑K on June 1, 2026) a set of agreements that restructure approximately $12.0 million of outstanding debt owed to two holders (3i, LP and Fiza Investments Limited). The transactions convert portions of that debt into shares of common stock and a newly created Series P-2 Convertible Preferred, amend an existing 3i note, and modify the Company’s Series P preferred terms.

Key Details

• Total debt restructured: approximately $12.0 million. Closing date: May 28, 2026.
• 3i, LP: converted $2,000,000 into common stock (includes $789,110 from an earlier note). Conversion price: $0.2385 per share (150% of the OTC closing price on the prior trading day). Remaining 3i note amended: 9‑month conversion moratorium, then repayment in nine equal monthly installments with final payment 18 months after closing. 3i beneficial ownership limited to 4.99% (can elect 9.99 after June 20, 2026).
• Fiza Investments Limited: held $10,003,915.76 (principal $7,201,694.89; interest $2,802,220.87). Principal converted into common stock at $0.2385/share; accrued interest converted into Series P-2 Preferred (2,802,221 shares issued at $1.00 stated value).
• Series P amendments: Series P authorized shares reduced from 5,000,000 to 2,000,000 and Series P conversion price reduced to $1.00. New Series P-2: up to 3,000,000 shares authorized; $1.00 stated value; cumulative 18% annual dividends (compounded), payable only in Series P-2 shares; convertible into common beginning on the third anniversary (conversion price initially $1.00), with 4.99% (or 9.99%) beneficial ownership limits.
• Securities issued in reliance on exemptions from registration (Section 4(a)(2) / Reg D); holders represented as accredited investors.

Why It Matters

• Balance sheet impact: The transactions materially reduce outstanding cash debt (~$12M) by converting obligations to equity and preferred stock, which lowers near‑term cash repayment needs but increases equity and preferred claims on the company.
• Dilution and capital structure: Issuance of common shares and creation of Series P-2 preferred will dilute existing common holders now (common issued for conversions) and potentially later if Series P-2 converts into common (convertible after three years). Series P-2 holders also rank senior to common for dividends and liquidation and accrue substantial non‑cash (share) dividends at 18% annually.
• Investor considerations: The amended 3i note delays conversions for nine months and sets defined repayment terms, limiting short‑term dilution from that holder; beneficial ownership caps limit immediate control shifts. Investors should watch outstanding share counts, potential future dilution from Series P-2 conversion, and the growing dividend obligation in shares.