Cloudastructure Strengthens Balance Sheet with Elimination of Variable Conversion Debt Feature and Provides Update on First Quarter 2026 Filing

Provides Update on Non-Cash Accounting Classification in Upcoming Q1 2026 Filing

Cloudastructure, Inc. (NASDAQ: CSAI), a provider of AI-powered surveillance, remote monitoring, and cloud-based security analytics, today announced strengthening its balance sheet and capitalization structure with elimination of variable conversion feature of its Series 2 Convertible Preferred Stock. The Company will host a conference call to discuss first quarter 2026 financial results, and the details will be provided in due course.

Key Highlights:

• Eliminated the variable conversion price feature that previously required derivative accounting treatment, positioning the shares for permanent equity classification going forward.
• Exchanged 1,170 Series 2 shares for an unsecured promissory note.
• The accounting changes are presentation-related only and have no impact on liquidity, operations, or the Company’s underlying economics.
• The Company’s upcoming Q1 2026 filing will reflect a revised accounting classification of its preferred stock.
• The revised presentation is non-cash in nature and has no effect on the Company’s cash position, operations, 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. Importantly, the accounting presentation reflected in our upcoming filing is non-cash in nature and does not change the underlying economics of our business. With these matters behind us, we can remain focused on executing our growth strategy and creating long-term value for shareholders.”

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Series 2 Preferred Stock Amendment

On June 29, 2026, the Company filed an Amended and Restated Certificate of Designations of Preferences and Rights of its Series 2 Convertible Preferred Stock (the “Amended Certificate”) with the Secretary of State of the State of Delaware, following approval by the Company’s Board of Directors and by Streeterville Capital, LLC (“Streeterville”), the sole holder of all outstanding Series 2 shares. The Amended Certificate eliminates the variable conversion price feature that had previously required the instrument to be accounted for as an embedded derivative, removes a provision that could have triggered liquidation payments upon certain change-of-control transactions outside the Company’s control, and limits the liquidation preference to apply only in the event of an actual voluntary or involuntary liquidation, dissolution, or winding up of the Company. The Company expects the amended terms to support classification of the Series 2 shares within permanent stockholders’ equity going forward.

Exchange Agreement with Streeterville

On June 30, 2026, the Company entered into an Exchange Agreement with Streeterville under which Streeterville exchanged 1,170 Series 2 shares for an unsecured promissory note in the original principal amount of $1,299,870 (the “Exchange Note”), issued without any additional consideration paid by Streeterville. The Exchange Note bears interest at 9.5% per annum, matures on July 30, 2027, and, beginning July 30, 2026, may be redeemed by Streeterville at a rate of up to $108,332.50 per month, plus accrued interest. The Exchange Note contains customary trigger events, and if a trigger event is not timely cured, it becomes an event of default under which Streeterville may accelerate repayment of the Note. The 1,170 Series 2 shares exchanged under the agreement were cancelled.

Q1 2026 Financial Results

In preparing its Quarterly Report on Form 10-Q for the first quarter of 2026, the Company identified two accounting classification matters related to its Series 1 Convertible Preferred Stock (fully converted in 2025) and its Series 2 Convertible Preferred Stock. The terms of both securities were fully disclosed at issuance, and the Company’s original accounting treatment was based on third-party analysis that was reviewed by its then-independent auditors. The upcoming filing will reflect a revised, non-cash accounting presentation that affects only the balance sheet classification of these instruments, with no impact on the Company’s cash position, operations, total assets, total liabilities, or net assets.

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