Spotlight Innovation Inc. (OTCPK:STLT) announced that it has entered into a subscription agreement for a private placement of convertible promissory notes for gross proceeds of $2,500,000 on August 31, 2016. The company will also issue warrants to purchase common shares equal to 30% of the amount invested based upon the exercise price equal to 110% of the closing bid price of the common shares of the company on the six-month anniversary of the date of the issuance. The warrants will expire in 2019. The notes have a term of 24 months and will bear interest at a fixed rate of 7.5% per annum, computed on a 365-day basis. The interest is payable upon conversion of the convertible note at the applicable conversion price. The notes are convertible into common shares of the company at a conversion price equal to 90% of the closing bid price of the common shares during the 20 consecutive trading days immediately preceding such conversion. The notes will automatically convert into common shares of the company at a per share price equal to 80% of the closing bid price of the common shares during the 20 consecutive trading days immediately preceding the maturity date, if not converted before maturity. The company will issue securities pursuant to exemption provided under Regulation D. The investors will share in a royalty during years two, three, and four, in the revenues, including, aggregate 5% of net revenue. Royalties will cease once the investor has received twice the amount invested. The notes will be offered for sale until the earlier of the date upon which subscriptions for the maximum amount has been accepted or July 31, 2017, or the date upon which the company elects to terminate the offering. On the same date, Ralph Arthur purchased a note for proceeds of $20,000 and Sanjeev Agarwal purchased a note for $250,000 in its first tranche. The company also issued 81,000 warrants exercisable at $0.497 per share to both the investors.