Cloudastructure has strengthened its balance sheet by eliminating the variable conversion feature of its Series 2 Convertible Preferred Stock. The company exchanged 1,170 Series 2 shares for an unsecured promissory note, positioning the remaining shares for permanent equity classification. These actions simplify the capital structure and financial reporting without affecting the company's underlying economics, cash position, or operations.

On June 29, 2026, Cloudastructure filed an Amended and Restated Certificate of Designations of Preferences and Rights of its Series 2 Convertible Preferred Stock with the Secretary of State of the State of Delaware. The amendment removes the variable conversion price feature that previously required derivative accounting treatment. It also eliminates a provision that could have triggered liquidation payments upon certain change-of-control transactions outside the company’s control. The liquidation preference is now limited to actual voluntary or involuntary liquidation, dissolution, or winding up of the company.

The following day, on June 30, 2026, the company entered into an Exchange Agreement with Streeterville Capital, LLC, the sole holder of all outstanding Series 2 shares. Streeterville exchanged 1,170 Series 2 shares for an unsecured promissory note with an original principal amount of $1,299,870. The Exchange Note bears interest at 9.5% per annum and matures on July 30, 2027. Beginning July 30, 2026, the note may be redeemed at a rate of up to $108,332.50 per month, plus accrued interest. The exchanged Series 2 shares were cancelled.

Key Details of Exchange Agreement

In preparing its Quarterly Report on Form 10-Q for the first quarter of 2026, the company identified accounting classification matters related to its Series 1 and Series 2 Convertible Preferred Stock. The upcoming filing will reflect a revised, non-cash accounting presentation that affects only the balance sheet classification of these instruments. There is no impact on total assets, total liabilities, or net assets.

"These actions represent another important step in simplifying our capital structure and financial reporting," said James McCormick, Chief Executive Officer of Cloudastructure. "By establishing a fixed conversion price and exchanging a portion of the preferred shares for a promissory note, we’ve simplified these securities and positioned the remaining Series 2 Preferred Stock for permanent equity classification."

Cloudastructure, Inc. (NASDAQ: CSAI) has been selected by a leading multifamily development group to deploy its AI Surveillance and Remote Guarding platform across two communities undergoing rehabilitation in the greater Arizona market. This strategic move establishes a framework for potential expansion across the developer's portfolio spanning Arizona, Texas, California, and Hawaii. The deployment marks the first properties within the developer’s portfolio to implement Cloudastructure’s full security platform from the outset of occupancy, reflecting a broader trend where operators standardize technology infrastructure across geographically distributed portfolios.

The developer selected Cloudastructure based on the platform’s flexibility, cost efficiency, and ability to integrate with existing infrastructure. Its camera-agnostic architecture is compatible with approximately 99% of commercial-grade IP cameras, allowing owners to modernize security without replacing existing hardware. The combination of AI-powered surveillance and live remote guarding helps identify, verify, and deter threats in real time. Cloudastructure believes AI-powered security is evolving from a site-level expense into a core operational platform that supports resident satisfaction, property performance, and long-term asset value.

Both communities are existing multifamily properties being repositioned for new ownership, a growing segment of the housing market where operators are increasingly focused on improving resident experience, operational efficiency, and long-term asset performance. According to the National Apartment Association’s 2024 State of Tenant Safety & Satisfaction report, 69% of renters rank safety as their most important amenity, while 70% indicate they would pay more to live in a safer community.

Chief Revenue Officer Lauren O’Brien commented that the relationship is significant because it establishes a security platform capable of scaling across an entire portfolio. She noted that multifamily operators are increasingly seeking technology infrastructure that can be deployed consistently across multiple properties. O’Brien highlighted that security is increasingly influencing leasing performance, resident retention, and property reputation.

Cloudastructure recently expanded its commercial organization by increasing the size of its direct sales team by more than 30% over the past 30 days to capture growing enterprise demand. This investment strengthens the company's ability to pursue opportunities and support customers in multifamily housing, logistics, transportation, and commercial properties. The expanded team manages the full customer lifecycle, including lead development, solution design, implementation support, and customer growth initiatives, supporting a land-and-expand strategy.

The company's platform features cloud video surveillance with proprietary AI/ML analytics and a remote guarding solution. It offers contract-free, month-to-month pricing and unlimited 24/7 support, aiming to provide up to a 75% lower Total Cost of Ownership compared to other systems. Cloudastructure currently maintains a customer retention rate of approximately 99%, reflecting strong customer satisfaction and growing adoption across the sector.