Universal Security Instruments reworks deal for $2.5M in convertible notes

What's the deal? Universal Security InstrumentsDealroom has a profile for this one. Try Dealroom →, a Maryland-based safety and security products maker, has amended its convertible financing agreement with SJC Lending to secure $2.5 million in funding. The revised deal, signed October 9, 2026, replaces a June 12 accord and provides for up to $2.65 million in convertible promissory notes across three tranches.

The terms: The notes carry 8% interest with stepped-up default rates and original issue discounts. Conversion pricing is anchored by a $1.00 floor and an 80% of lowest VWAP mechanism capped at $10.00.

Why now? The first two tranches closed on June 12 and July 29, 2026. The final tranche hinges on SEC effectiveness of a resale registration and NYSE American approval of a supplemental listing for conversion shares.

What's the endgame? The arrangement could reach $10.6 million in aggregate notes if SJC fully exercises its additional investment rights. The deal also bars Universal from variable rate financings for a year and grants SJC a right of first refusal on future equity or convertible debt offerings — deepening the lender relationship.

What could go wrong? Conversions above 19.99% of outstanding shares need renewed stockholder approval, and the VWAP-based pricing raises the prospect of future dilution. The company carries a market cap of $15.78 million and, per TipRanks' AI analyst, faces revenue contraction, negative profitability, and ongoing cash burn.

The signal: At $2.5 million, this is a small, tightly structured raise — landing in the bottom tenth of deals by size. For a company leaning on convertible debt to fund operations, the terms reflect how much leverage lenders can extract when capital access is thin.

Read more: TipRanks

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