10-K: Cloudastructure's 2025 Annual Report: Growth Amidst Losses

Cloudastructure, an AI-powered security solutions provider, reported significant revenue growth in 2025 but continued to incur substantial net losses, facing Nasdaq delisting concerns.

Summary

• Cloudastructure is an award-winning innovator in cloud-native, AI-powered security solutions, delivering comprehensive, real-time situational awareness to enterprises.
• The company offers cloud video surveillance, proprietary AI/ML analytics, and a seamless remote guarding platform with accompanying services.
• Cloudastructure went public on the Nasdaq under ticker symbol CSAI in January 2025.
• As of December 31, 2025, the company has contracts with six of the top ten property management companies on the National Multifamily Housing Council's (NMHC's) 2025 NMHC 50 list.
• Net revenues increased by 271% to $5,065,529 in 2025 from $1,364,293 in 2024.
• Net loss increased by 29% to approximately $8.5 million in 2025 from $6.5 million in 2024, resulting in an accumulated deficit of approximately $49.3 million.
• The company received a Nasdaq non-compliance letter on February 17, 2026, for failing to maintain a minimum bid price of $1.00 per share, risking delisting.
• Remote Guarding services deterred an average of over 98% of all threatening activity for customers in 2025.
• The AI platform processes over 9 million video feeds per day, combining human oversight with intelligent automation.
• Secured financing arrangements, including preferred stock sales, an Equity Line, and an ATM Facility, are expected to fund operations through at least June 30, 2027.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report with significant growth overshadowed by increasing losses and a critical Nasdaq compliance issue, indicating high operational and financial risk despite strategic financing efforts.

Positives

• Significant revenue growth of 271% in 2025, reaching $5,065,529, driven by increased customer adoption and expanded deployments.
• Strong customer acquisition and expansion, including contracts with six of the top ten property management companies on the NMHC's 2025 NMHC 50 list.
• Remote Guarding services demonstrated high effectiveness, deterring over 98% of threatening activity for customers in 2025.
• Successful public listing on Nasdaq in January 2025.
• Gross profit increased significantly to $1,489,000 in 2025 from $374,000 in 2024.
• Secured substantial financing through preferred stock sales ($17.25 million in 2025) and established an Equity Line ($50.0 million) and ATM Facility ($9.0 million) to ensure liquidity through at least June 30, 2027.
• Introduction of a financing partner in 2025 to enable customers to upgrade networks and cameras, reducing sales friction and improving cash flow predictability.
• Hardware agnosticism allows layering proprietary AI atop various security hardware, including mobile surveillance units and drones, in 2025.
• Advanced video processing technology dramatically reduces bandwidth requirements and lowers CPU utilization on Cloud Video Recorders (CVRs).

Negatives

• Continued and increased net losses, reaching approximately $8.5 million in 2025, up 29% from $6.5 million in 2024.
• Accumulated deficit of approximately $49.3 million as of December 31, 2025, indicating persistent unprofitability.
• Received a Nasdaq non-compliance letter on February 17, 2026, due to failure to maintain a minimum bid price of $1.00 per share, risking delisting.
• High customer concentration, with Hasta Capital and RV Mobile Power each accounting for approximately 17% of revenues in 2025.
• Operating expenses significantly increased across all categories: sales and marketing up 59%, general and administrative up 97%, and research and development up 49%.
• Net cash used in operating activities increased to $6,917,000 in 2025 from $3,277,000 in 2024, reflecting higher cash burn.
• Limited operating history as a public company, making future success difficult to evaluate.
• Does not have any patents or trademarks on which its business relies, depending instead on confidentiality procedures and contractual commitments.
• The market price of Class A common stock has declined significantly since its initial listing in January 2025.
• Founder sold over 1,300,000 shares of Class A common stock since January 2025, which may cause further downward pressure on the stock price.
• Class B common stock has super voting rights (20 votes per share), concentrating voting power and potentially affecting Class A common stock's eligibility for certain market indices.

Risks

• Class A common stock may be delisted from the Nasdaq Capital Market due to non-compliance with the minimum bid price requirement, which is likely to reduce liquidity and inhibit the ability to raise additional financing.
• Technology continues to be developed, and it is unlikely that the company will ever develop its technology to a point at which no further development is required.
• Security measures breaches or unauthorized access to individually identifiable biometric or other personally identifiable information (PII) could harm reputation and incur significant liabilities.
• Collection, processing, use, and disclosure of PII is subject to evolving and expanding privacy and security regulations (e.g., CCPA, CPRA), which could require business changes, impose additional costs, and reduce demand for software solutions.
• Success is highly dependent on the ability to attract and retain highly skilled executive officers and employees, facing significant competition for experienced personnel.
• Issues raised by the use of artificial intelligence (including machine learning) in platforms may result in reputational harm or liability or affect the ability to operate profitably and sustainably.
• Operates in a highly competitive industry that is dominated by multiple very large, well-capitalized market leaders and is constantly evolving.
• Successful infringement claims against the company could result in significant monetary liability or prevent the sale of some products.
• Relies on other companies to provide certain hardware and software solutions for its products, and problems with these parties could adversely affect business operations.
• Incurs increased costs as a public company, and management is required to devote substantial time to compliance initiatives.
• Intellectual property rights do not necessarily address all potential threats to competitive advantage, and the company does not have patents or trademarks on which its business relies.
• Limited operating history may make it difficult to evaluate current business and predict future success and viability.
• Historically operated at a loss, which has resulted in an accumulated deficit, and anticipates sustaining operating losses for the foreseeable future.
• Requires substantial additional capital to finance operations, and if unable to raise such capital when needed or on acceptable terms, may be forced to delay, reduce, or eliminate programs.
• Raising additional capital may cause dilution to existing stockholders.
• Substantial customer concentration, with a limited number of customers accounting for a significant portion of revenue, could adversely affect business if these customers reduce purchases or terminate contracts.
• An active trading market for Class A common stock may not be sustained, and the market price of shares may be volatile.
• Reports published by analysts, including projections that differ from actual results, could adversely affect the price and trading volume of Class A common stock.
• Internal computer systems, or those of third parties, may fail or suffer security or data privacy breaches, resulting in additional costs, loss of revenue, significant liabilities, harm to brand, and material disruption of operations.
• Operations are vulnerable to interruption by fire, severe weather conditions, power loss, telecommunications failure, terrorist activity, pandemics/epidemics, and other events beyond control.
• Future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences, or other economic terms favorable to preferred stockholders could adversely affect the market price for Class A common stock.
• The charter provides that, unless the company consents in writing to an alternative forum, the Court of Chancery of the State of Delaware and federal district courts will be exclusive forums for certain disputes, which could limit stockholders' ability to choose the judicial forum.
• The uncertainty associated with the fact that few companies have undertaken direct listings to date may lead to increased volatility and pricing challenges for Class A common stock.
• Claims for indemnification by directors and officers may reduce the amount of money available to the company.

Future Outlook

Cloudastructure anticipates sustaining operating losses for the foreseeable future as it expands its team, continues research and development, and strives to gain customers and market share. The company expects operating expenses to continue to increase. It aims to expand within existing top-tier customer locations and acquire additional customers in the property management (proptech) space, with plans to enter additional new markets in 2026. The company believes its financing arrangements will fund operations through at least June 30, 2027, and it plans to integrate emerging security technologies like access control, sensors, robotic systems, and electric security fences, layering its AI.

Management Comments

• Our mission is to empower businesses to see and respond to events as they happen, turning video data into actionable intelligence and deterrence into measurable results.
• We believe AI security delivers multiple benefits for many property owners, including, without limitation: Deter crime and improve overall safety by leveraging AI-driven monitoring and rapid-response remote guarding; Improve occupancy and rental rates by creating a safer, more attractive environment for residents and tenants; and Reduce losses, lower onsite guard costs, and decrease insurance rates by streamlining security operations and mitigating incidents before they escalate.
• We believe that our full stack solution is more affordable, offers greater accountability, and is easier to use than the various solutions that our competitors offer.
• We believe our ability to sell additional shares of our Series 2 Preferred stock to Streeterville and our ability to sell shares of our Class A common stock to Atlas and through our agreement with Maxim, in each case subject to the respective terms and conditions of those agreements, will provide us with, and allow us to maintain, stockholders equity in excess of the required minimum under Nasdaq Listing Rule 5505(b) as well as enable us to fund our operations through at least the next 12 months.
• We believe that our facilities are adequate for our current and anticipated near-term needs and that suitable additional or substitute space would be available if needed.

Industry Context

StockSavvy.ai notes that Cloudastructure operates within a rapidly expanding global physical security market, projected to grow from approximately $182.5 billion in 2025 to $366.2 billion by 2034 (implying an 8% compound annual growth rate). The AI-enabled video surveillance segment, a core focus for Cloudastructure, is expected to significantly outpace this, growing from approximately $3.9 billion in 2024 to roughly $12.5 billion by 2030 (a 21.3% compound annual growth rate). The company's primary focus on the proptech market aligns with its estimated growth from approximately $44.9 billion in 2025 to $119.5 billion by 2032 (a 15% compound annual rate), driven by digitization and demand for operational efficiency. Cloudastructure's cloud-based, AI-driven remote guarding solution positions it to capture market share from traditional on-site guarding, reflecting a broader industry shift towards technology-enabled monitoring. However, the industry is highly competitive, dominated by large players like Avigilon (a Motorola Solutions subsidiary), Tyco Integrated Security (a Johnson Controls business unit), and Verkada, Inc., posing significant challenges for market penetration and sustained profitability.

Comparison to Industry Standards

• Cloudastructure's Remote Guarding service can oversee up to 50 cameras per guard, which is approximately eight times more than the typical six cameras a guard can manage with traditional static surveillance, indicating a significant efficiency advantage.
• The company's AI security solution aims to achieve security guard-level pricing for Remote Guarding services, which can be 400% or more than its surveillance service alone, suggesting a competitive pricing model compared to traditional manned guarding.
• The company's reliance on third-party suppliers for standard, off-the-shelf computers, cameras, and speakers (e.g., Amazon.com Inc., Exxact Corporation, Newegg Commerce, Inc., Shenzhen Sunell Technology Corporation) is a common practice in the tech industry to manage costs and supply chain flexibility, similar to many hardware-agnostic software providers.
• The company's use of cloud platforms like Google Cloud and Amazon Web Services for hosting services aligns with industry best practices for scalability, reliability, and data security, comparable to other cloud-native solution providers.

Management Changes

Corporate Governance

Legal Proceedings

• As of December 31, 2025, the company is not subject to any material legal proceedings, nor are any material legal proceedings pending or threatened against it.
• An outstanding obligation to the SEC pursuant to the terms of a final settlement was paid in full on August 9, 2024.

Related Party Transactions

• **Aircraft Lease**: On September 1, 2023, the company entered into a dry lease agreement for a Cessna T210N Turbo Centurion plane with Cloud Transport Operations LLC, in which Richard Bentley (former CEO) has an indirect ownership interest. The lease cost was $350 per hour plus insurance and maintenance. A side agreement with Hydro Hash, Inc. (HH), where Mr. Bentley is Chairman and a significant stockholder, had HH cover 40% of insurance and maintenance costs. The company exercised its right to cancel the dry lease on March 25, 2025, with 120 days' notice.
• **Issuance of Shares for Note Receivable**: On February 20, 2020, the company issued 250,000 shares of Class A common stock to Mr. Bentley for a promissory note with a principal amount of $6,000. The note was repaid in full on November 12, 2025, including cumulative interest of $639.93.
• **Data Center Lease**: On January 1, 2024, the company entered into a month-to-month lease agreement with Hydrohash (HH) for additional data center space. The company pays fixed monthly base rent of approximately $5,000 and approximately $3,000 to reimburse HH for third-party bandwidth services.

Stakeholder Impact

• **Shareholders**: Face potential dilution from future equity raises (preferred stock conversions, Atlas Equity Line, ATM Facility). The risk of delisting from Nasdaq could significantly reduce the liquidity and market price of Class A common stock. The existence of Class B common stock with super voting rights concentrates voting power, potentially affecting governance. No dividends are planned for the foreseeable future, limiting returns to stock appreciation.
• **Employees**: Benefit from equity incentive plans (stock options) designed for retention and alignment with company performance. Experienced salary reductions in 2024, which were compensated with bonuses in 2025.
• **Customers**: Benefit from enhanced security, crime deterrence, improved occupancy/rental rates, and reduced operational costs (on-site guards, insurance) through the company's AI-driven solutions. Face potential risks related to privacy and data security breaches, which could impact trust and service reliability.
• **Suppliers/Partners**: The company relies on third-party suppliers for hardware components and cloud platforms, indicating ongoing business for these partners. A new financing partner was introduced to facilitate customer upgrades, potentially increasing demand for related services.
• **Creditors**: The company's balance sheet is currently debt-free, which provides additional flexibility for potential future debt instruments, making it an attractive borrower.

Next Steps

• Monitor the closing bid price of Class A common stock and consider available options to regain Nasdaq compliance, including effecting a reverse stock split if necessary and approved by stockholders.
• Expand relationships with existing top-tier customer accounts with the goal of becoming the standardized AI security solution across their entire portfolios.
• Acquire additional customers in the property management (proptech) space.
• Anticipate entering into additional new markets in 2026.
• Continue to invest in building out sales and marketing teams, and maintain a robust engineering and development team.
• Integrate emerging security technologies, such as access control, sensors, robotic systems, and electric security fences, by layering AI.
• Selectively evaluate strategic acquisition opportunities that would allow expansion of footprint, broadening of client base, and deepening of product and service offerings.
• Move more services to company-owned computers in co-location facilities to achieve lower costs.

Key Dates

Recommendation

Cloudastructure demonstrates strong revenue growth and strategic customer wins in a high-growth market, indicating significant potential. However, the company's increasing net losses, substantial cash burn from operations, and the immediate threat of Nasdaq delisting due to minimum bid price non-compliance introduce considerable risk. While recent financing efforts provide liquidity for the near term, the long-term path to profitability and sustained market presence remains uncertain. A 'hold' recommendation reflects the balance between the company's promising technology and market position against its significant financial challenges and regulatory hurdles.

Keywords

Cloudastructure, CSAI, Annual Report, AI Security, Cloud Video Surveillance, Remote Guarding, Proptech, Property Management, Financial Results, Net Loss, Revenue Growth, Nasdaq Delisting, Equity Financing, Stock Options, Corporate Governance, Risk Factors, Artificial Intelligence, Machine Learning, Data Privacy, Cybersecurity