Business Context and Reporting Period
Company: Cloudastructure, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 29, 2026 (Event Date: June 30, 2026)
Context: The Company entered into a material definitive agreement to exchange Series 2 Convertible Preferred Stock for a Promissory Note and amended its Certificate of Designations to reclassify the Series 2 Preferred shares as equity under U.S. GAAP.
Key Financial Metrics and Obligations
- New Debt Instrument: Promissory Note ("Exchange Note") issued to Streeterville Capital, LLC.
- Principal Amount: $1,299,870.
- Interest Rate: 9.5% per annum, compounded daily (360-day year).
- Maturity Date: July 30, 2027 (13 months from issue).
- Redemption Rights: Holder may redeem up to $108,332.50 plus accrued interest per calendar month starting July 30, 2026.
- Default Interest: 15% per annum upon Event of Default.
- Prepayment Restriction: Company cannot prepay the Note while Streeterville holds any Series 2 Preferred Stock.
Material Changes and Corporate Actions
- Stock Exchange: 1,170 shares of Series 2 Convertible Preferred Stock held by Streeterville were surrendered and cancelled in exchange for the Promissory Note.
- Accounting Reclassification: The Amended Series 2 Certificate of Designations was filed to ensure Series 2 Preferred shares are classified as equity rather than liability under U.S. GAAP.
- Conversion Terms: Series 2 Preferred now converts to Class A Common Stock at a fixed price of $0.40 per share with full-ratchet anti-dilution protection.
- Liquidation Rights: The "Deemed Liquidation Event" concept was eliminated. In a merger or sale where the Company is not the surviving entity, shares convert to preferred equity of the surviving entity with equivalent rights rather than triggering a cash liquidation payment.
- Default Remedies: Holder-initiated forced redemption upon default was eliminated. Remedies are now limited to a one-time 10% increase in stated value, equitable remedies, and injunctive relief.
Guidance, Risks, and Contingencies
- Trigger Events: The Note includes triggers for failure to pay, bankruptcy, fundamental transactions without repayment, covenant breaches, Nasdaq delisting, or Series 2 Events of Default.
- Acceleration Risk: Upon a Trigger Event, the outstanding balance may increase by 10%. If uncured within five trading days, it becomes an Event of Default, allowing acceleration of the Note and accrual of 15% default interest.
- Liquidity Constraints: The Company faces a potential monthly cash outflow of approximately $108,332.50 plus interest if the holder exercises redemption rights.
- Prepayment Limitation: The Company's ability to manage its debt load is restricted as it cannot prepay the Note as long as the holder retains Series 2 Preferred Stock.
Investor Verification Checklist
- Verify the current outstanding balance of the $1,299,870 Promissory Note and accrued interest.
- Confirm the Company's current cash position to assess ability to meet the $108,332.50 monthly redemption cap if exercised.
- Review the full text of the Amended Series 2 Certificate of Designations (Exhibit 3.1) to understand the specific mechanics of the equity reclassification.
- Monitor the Company's compliance with Nasdaq listing standards to avoid triggering the delisting event of default.
- Check for any subsequent filings regarding the status of the Series 2 Preferred Stock held by Streeterville Capital, LLC.