ZSPC Zspace, Inc. - 8-K

Item 1.01

Entry into a Material Definitive Agreement .

Overview

On May 28, 2026, zSpace, Inc. (the “Company”),
entered into a series of related agreements and corporate actions to restructure approximately $12.0 million of outstanding indebtedness
owed to two noteholders: 3i, LP, a Delaware limited partnership (“3i”), and Fiza Investments Limited, a Cayman Islands entity
(“Fiza” and, together with 3i, the “Holders”). The transactions consist of (i) the conversion of a portion
of the amounts owed to 3i and all amounts owed to Fiza into shares of the Company’s common stock, par value $0.00001 per share (“Common
Stock”), and a newly created series of preferred stock designated as Series P-2 Convertible Preferred Stock (“Series P-2
Preferred”), (ii) the amendment of 3i’s remaining senior convertible note, (iii) the amendment of the Certificate
of Designations of the Company’s Series P Convertible Preferred Stock, and (iv) the creation of the new Series P-2
Preferred, each as described in more detail below.

3i Debt Restructuring Agreement

On May 28, 2026 (the “Closing Date”),
the Company entered into a Debt Restructuring Agreement (the “3i Agreement”) with 3i. Pursuant to the 3i Agreement, 3i agreed
to convert an aggregate of $2,000,000 of outstanding principal and other owed amounts under its senior secured convertible notes into
shares of Common Stock. Specifically, the converted amount consists of (i) $789,110 (the “First Note Converted Amount”)
of outstanding principal and other owed amounts under a senior secured convertible note originally issued on April 11, 2025 in the
original principal amount of $13,978,495 (the “First Note”), and (ii) an amount of interest and Make-Whole Amounts (as
defined in the Second Note) equal to $2,000,000 minus the First Note Converted Amount, drawn from a senior secured convertible note issued
on March 16, 2026 in the original principal amount of $4,301,075 (the “Second Note”). Conversion of the First Note Converted
Amount fully satisfies and discharges all obligations under the First Note.

The conversion price for the shares of Common Stock
issuable to 3i pursuant to the 3i Agreement is $0.2385 per share, a fixed price equal to 150% of the closing price of the Common Stock
on the OTC Markets on the trading day immediately preceding the Closing Date. The number of shares of Common Stock issuable to 3i pursuant
to the 3i Agreement is equal to $2,000,000 divided by such conversion price, rounded up to the nearest whole share.

Simultaneously, the Second Note (as reduced by
the converted amounts described above) was amended effective as of the Closing Date (as so amended, the “Amended Note”). Under
the Amended Note, 3i will be subject to a nine (9)-month conversion moratorium during which it may not exercise any conversion right.
Commencing on the date that is nine (9) months after the Closing Date, the Company will be obligated to repay the Amended Note in
nine (9) equal consecutive monthly installments of combined principal, interest and Make-Whole Amounts (as defined in the Amended
Note), with the final installment due eighteen (18) months after the Closing Date.

The 3i Agreement also includes customary representations
and warranties of the parties, a limitation on the beneficial ownership of 3i in the Company’s Common Stock of 4.99% of the total
outstanding Common Stock immediately after giving effect to such issuance (increasing to 9.99% on or after June 20, 2026), and a
60-day standstill on 3i’s ability to declare an Event of Default (as defined in the Amended Note) as a result of the Company’s
Common Stock being suspended from trading on Nasdaq.

Fiza Debt Conversion Agreement

On May 28, 2026, the Company also entered
into, and consummated the transactions contemplated by, a Debt Conversion Agreement (the “Fiza Agreement”) with Fiza. Fiza
held outstanding debt owed by the Company in the aggregate amount of $10,003,915.76, consisting of $7,201,694.89 in principal (the “Principal”)
and $2,802,220.87 in accrued interest (the “Interest”), evidenced by one or more promissory notes or loan agreements.

Pursuant to the Fiza Agreement, Fiza agreed to
convert: (i) the Principal into shares of Common Stock at a fixed conversion price equal to $0.2385 per share, 150% of the closing
price of the Common Stock on the OTC Markets on the trading day immediately preceding the Closing Date; and (ii) the Interest into
shares of the newly created Series P-2 Preferred at a fixed conversion price of $1.00 per share, resulting in the issuance of 2,802,221
shares of Series P-2 Preferred to Fiza. The Fiza Agreement includes customary representations, warranties and covenants of the parties.

Amendment to Series P Convertible Preferred Stock

In connection with the foregoing transactions,
on May 28, 2026, the Board of Directors of the Company (the “Board”), with the prior written consent of the holder of
all of the outstanding shares of Series P Convertible Preferred Stock, approved, and directed the Company to file with the Secretary
of State of the State of Delaware, a Certificate of Amendment to the Certificate of Designations of Series P Convertible Preferred
Stock of zSpace, Inc. (the “Series P Amendment”). The Series P Amendment: (i) reduces the authorized number
of shares of Series P Convertible Preferred Stock from 5,000,000 to 2,000,000 shares; and (ii) reduces the current Conversion
Price of the Series P Convertible Preferred Stock to $1.00 per share. All other terms of the Certificate of Designations of Series P
Convertible Preferred Stock were not affected by the Series P Amendment.

Certificate of Designations of Series P-2 Convertible Preferred
Stock

On May 28, 2026, the Board approved a Certificate
of Designations of Series P-2 Convertible Preferred Stock of zSpace, Inc. (the “Series P-2 COD”), creating
a new series of preferred stock designated as “Series P-2 Convertible Preferred Stock” upon filing with the Secretary
of State of the State of Delaware. The principal terms of the Series P-2 Preferred are as follows:

Designation and Amount . Up to 3,000,000
shares of Series P-2 Preferred are authorized, par value $0.00001 per share, with a stated value of $1.00 per share. Series P-2
Preferred ranks pari passu with the Series P Convertible Preferred Stock and senior to Common Stock and all other junior shares as
to payment of dividends, distribution of assets upon liquidation, and redemption rights.

Dividends . Each share of Series P-2
Preferred is entitled to cumulative dividends at a rate of 18% per annum, payable annually, compounding annually from the original issue
date. Dividends are payable only in shares of Series P-2 Preferred. No dividends may be paid on shares junior to the Series P-2
Preferred unless dividends on Series P-2 Preferred have first been paid in full.

Voting Rights . Series P-2 Preferred
votes on an as-converted basis together with the Common Stock. So long as any shares of Series P-2 Preferred remain outstanding,
the Company may not, without the affirmative vote of a majority of the outstanding shares of Series P-2 Preferred, (a) alter
or change the powers, preferences or rights of the Series P-2 Preferred, (b) authorize or create any class of stock ranking
senior to or pari passu with the Series P-2 Preferred (other than Series P), (c) amend the Certificate of Incorporation
in any manner adversely affecting Series P-2 Preferred holders, (d) increase the authorized shares of preferred stock, or (e) enter
into any agreement with respect to the foregoing.

Liquidation . Upon any liquidation, dissolution,
winding-up, or Change of Control Transaction (as defined in the Series P-2 COD), holders of Series P-2 Preferred are entitled
to receive, for each share, before any distribution to holders of junior shares, an amount equal to the greater of (a) the stated
value plus accrued and unpaid dividends and other amounts due, or (b) the amount such holder would receive if the share had been
converted into Common Stock at the then-applicable conversion price immediately prior to such event.

Conversion . Each share of Series P-2
Preferred is convertible into Common Stock at the option of the holder beginning on the third anniversary of the original issue date.
The conversion price is equal to the stated value ($1.00) plus accrued dividends, divided by the then-applicable conversion price (initially
$1.00 per share of Common Stock, subject to customary anti-dilution adjustments). Conversion is subject to a 4.99% (or 9.99% at the holder’s
election) beneficial ownership limitation.

Exemption from Registration

The shares of Common Stock and Series P-2
Preferred issued or to be issued in connection with the transactions described above are being issued in reliance upon exemptions from
registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, as transactions
not involving a public offering. Each of the Holders has represented that it is an “accredited investor” within the meaning
of Rule 501 under the Securities Act.

The foregoing descriptions of the 3i Agreement,
the Fiza Agreement, the Series P Amendment, and the Series P-2 COD are summaries only, do not purport to be complete, and are
qualified in their entirety by reference to the full text of each of these agreements and corporate documents, copies of which are filed
as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.

Item 1.02

Termination of a Material Definitive Agreement.

The information provided in Item 1.01 of this Current
Report on Form 8-K is incorporated by reference into this Item 1.02.

As described in Item 1.01 above, upon the consummation
of the debt restructuring transaction with 3i, all obligations of the Company under the First Note were fully satisfied, discharged, and
cancelled without further action. The First Note will be deemed null and void and of no further force or effect, and 3i will have no further
right, title, or interest in or to the First Note or any amounts previously owed thereunder.

In addition, upon the consummation of the debt
conversion transaction with Fiza, all obligations of the Company under the promissory notes and loan agreements evidencing the Fiza debt
were fully satisfied, discharged, and cancelled. Upon closing, all obligations of the Company under the Fiza notes were extinguished in
their entirety, and Fiza has no further claims against the Company arising out of or relating to those notes or any amounts previously
owed thereunder.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information
provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 3.02

Unregistered Sales of Equity Securities.

The information
provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information
provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03.

Item 9.01

Financial Statements and Exhibits .

(d) Exhibits

The
following documents are attached as exhibits to this Current Report on Form 8-K:

Exhibit

No.

Exhibit Description

3.1

Certificate of Amendment to the Certificate of Designations of Series P Convertible Preferred Stock of zSpace, Inc.

3.2

Certificate of Designations of Series P-2 Convertible Preferred Stock of zSpace, Inc.

10.1

Debt Restructuring Agreement, dated May 28, 2026, between zSpace, Inc. and 3i, LP.

10.2

Debt Conversion Agreement, dated May 28, 2026, between zSpace, Inc. and Fiza Investments Limited.

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