Coates International, Ltd. (OTCPK:COTE) announced that it entered into a security purchase agreement for private placement of one 8% convertible redeemable note due October 18, 2018 and one back-end 8% convertible redeemable note due October 18, 2018 for gross proceeds of $40,000 each for total gross proceeds of $80,000 with GS Capital Partners LLC on October 18, 2017. Each note carries a fixed coupon of 8% per annum, would mature on October 18, 2018, and is being issued at par. The notes will be convertible into common shares any time beginning 180 days after the date of the note, at the option of the investor. The conversion price shall be equal to 65% multiplied by the market price equal to the lowest closing daily Volume Weighted Average Price of the common stock on the OTC Pink Sheets during the 12 trading-day period ending one trading day prior to the date of conversion by the investor. The back end note is collateralized by a $40,000 promissory note issued by investor to the company dated October 18, 2017. If funded, the back-end note may be converted at any time commencing six months after October 19, 2017. The convertible redeemable notes may be prepaid with a prepayment penalty equal to 15% during the first 60 days, 20% during the next 90 days and 30% during the next 30 days the note is outstanding. The company has reserved 820,512,000 shares of its unissued common stock for potential conversion of the convertible note. During the first 180 days, the company may redeem the note by paying to an amount equal to 115% of the sum of principal plus any accrued interest if the redemption occurs within the first sixty days of issuance, 120% of the sum of principal plus any accrued interest if the redemption occurs after the 60th daily anniversary but before the 151st daily anniversary, and 130% of the sum of principal plus any accrued interest if the redemption occurs after the 150th daily anniversary but before the 181st daily anniversary. The note may not be prepaid after the 180th daily anniversary.