Cloudastructure Eliminates Variable Conversion Feature, Issues $1.3M Note for 1,170 Shares
CSAI•Cloudastructure eliminated the variable conversion feature of its Series 2 Convertible Preferred Stock and filed an amended certificate to support permanent equity classification with non-cash accounting. It exchanged 1,170 Series 2 shares for a $1.29987 million unsecured promissory note at 9.5% interest maturing July 30, 2027.
1. Elimination of Variable Conversion Feature
On June 29, 2026, the company amended its Series 2 Convertible Preferred Stock to remove the variable conversion price and embedded derivative accounting treatment. The amendment also eliminated change-of-control liquidation triggers and restricts liquidation preferences to voluntary or involuntary liquidations, positioning the shares for permanent equity classification.
2. Exchange of Series 2 Shares for Promissory Note
On June 30, 2026, Cloudastructure exchanged 1,170 Series 2 shares for an unsecured promissory note valued at $1,299,870, which bears 9.5% annual interest and matures on July 30, 2027. The agreement allows monthly redemptions up to $108,332.50 from July 30, 2026, and includes standard trigger events that could accelerate repayment upon default.
3. Non-Cash Accounting Impact
The accounting changes are presentation-only and non-cash in nature, affecting only the balance sheet classification of the preferred securities. There is no impact on the company's liquidity, operations, total assets, total liabilities, or net assets, and the revised classification will appear in the Q1 2026 Form 10-Q.
4. Conference Call Announcement
Cloudastructure will host a conference call to review first quarter 2026 financial results and outline the effects of the accounting classification changes. Specific details for accessing the call will be provided in advance.
