Key Highlights

  • The exchange note carries an annual interest rate of 9.5% and matures in mid-2027.
  • Streeterville Capital may redeem up to $108,332.50 monthly under the agreement.
  • The Series 2 Preferred Stock terms were updated to allow conversion into common stock at a fixed price per share.

Cloudastructure Inc. (NASDAQ: CSAI) has finalized a key exchange agreement with Streeterville Capital, LLC, marking a strategic financial move completed on June 30, 2026. Through this transaction, Cloudastructure issued an exchange note in the original principal amount of $1,299,870 in return for 1,170 shares of its Series 2 Convertible Preferred Stock. As part of the deal, Streeterville agreed to surrender the preferred shares, which were subsequently canceled upon completion of the exchange.

Terms of the Agreement

The newly issued exchange note bears interest at a rate of 9.5% per annum and is scheduled to mature on July 30, 2027. The note is unsecured and was structured under applicable securities regulations to ensure compliance while supporting Cloudastructure’s financial strategy.

Redemption Provisions

The agreement grants Streeterville Capital the right to redeem up to $108,332.50 per calendar month, which may include any unpaid accrued interest. This monthly redemption option provides Streeterville with a predictable mechanism for liquidity, aligning with broader market practices for structured financing arrangements. The terms also outline specific conditions tied to trading prices that could influence future redemptions.

Trigger Events Defined

The exchange note includes standard trigger events that could heighten the investment’s risk profile. These events encompass failure to make timely payments, bankruptcy proceedings, or breaches of covenants under the note or the exchange agreement. Should any such event occur, Streeterville retains the option to increase the outstanding balance of the exchange note by 10% as a one-time adjustment.

Implications of Non-Compliance

If a trigger event remains unresolved within five trading days after formal notice, it escalates to an Event of Default. At this stage, Streeterville may accelerate the note, at which point default interest would apply at a significantly higher rate. This provision emphasizes the importance of adherence to the agreement’s terms, reinforcing protections for Streeterville’s investment.

Amended Terms for Series 2 Preferred

On June 29, 2026, Cloudastructure filed an Amended and Restated Certificate of Designations for its Series 2 Convertible Preferred Stock. The update refines the classification of these shares under U.S. Accounting standards, positioning them more clearly as equity.

The amendment establishes a fixed conversion price for conversions into Class A common stock, along with investor protections designed to maintain value in the event of future corporate actions.

Equity Rights Adjustments

A notable change in the amended terms removes the "Deemed Liquidation Event" clause, which previously activated specific rights during major corporate transactions. Under the revised terms, if Cloudastructure undergoes a merger or asset sale where it is not the surviving entity, the Series 2 preferred shares will convert into preferred equity of the successor entity. This adjustment aims to simplify shareholder rights while preserving equity value in potential restructuring scenarios.

The move reflects broader trends in corporate finance, where flexibility in equity terms can enhance investor confidence during transitions.

FAQs

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.