ZSPC zSpace, Inc.

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Executive Summary

zSpace restructured ~$12.0M of outstanding debt on May 28, 2026, converting $2.0M of 3i, LP debt and all $10.0M of Fiza Investments debt into common stock and newly created Series P-2 convertible preferred stock. The remaining 3i note was amended with a 9-month conversion moratorium and an 18-month repayment schedule. The transactions eliminate ~$12.0M of debt and associated interest, but create massive dilution: ~8.4M common shares at $0.2385/share and 2.8M Series P-2 preferred shares with 18% cumulative dividends, convertible after 3 years.

Actionable Insight

Key Facts

• Restructured ~$12.0M of outstanding debt: $2.0M from 3i, LP and $10.0M from Fiza Investments.
• 3i converted $2.0M into common stock at $0.2385/share (150% of prior closing price), resulting in ~8,385,744 common shares.
• Fiza converted $7,201,694.89 principal into common stock at $0.2385/share, resulting in ~30,196,624 common shares.
• Fiza converted $2,802,220.87 accrued interest into 2,802,221 shares of Series P-2 Preferred at $1.00/share.
• Series P-2 Preferred carries 18% cumulative annual dividends, convertible into common stock after 3 years at $1.00/share.
• The remaining 3i note (Second Note) was amended with a 9-month conversion moratorium and 9 equal monthly installments starting month 9, ending month 18.
• Series P Convertible Preferred authorized shares reduced from 5,000,000 to 2,000,000; conversion price reduced to $1.00.
• All shares issued in unregistered transactions under Section 4(a)(2) and Regulation D.
• 3i has a 4.99% beneficial ownership limitation (increasing to 9.99% after June 20, 2026).
• 60-day standstill on 3i declaring an Event of Default due to Nasdaq delisting.

Financial Impact

Eliminates ~$12.0M of debt and accrued interest, but issues ~38.6M common shares (at $0.2385) and 2.8M Series P-2 Preferred shares with 18% cumulative dividends. Massive dilution to existing common shareholders.

Risk Factors

• Massive dilution: ~38.6M common shares issued at $0.2385, likely overwhelming any positive sentiment from debt reduction.
• Series P-2 Preferred 18% cumulative dividend compounds annually, creating a large future payout obligation payable in additional preferred shares.
• Remaining 3i note requires 9 monthly installments starting month 9 — cash flow risk if revenue doesn't materialize.
• Nasdaq delisting risk: 60-day standstill on default from delisting implies the company is already non-compliant.
• All shares are restricted (Rule 144), limiting immediate selling but creating overhang once tradable.

Market Snapshot

Documents Analyzed

This report is based on 8 SEC documents filed with EDGAR.

US Market Status