Vape Holdings, Inc. (OTCPK:VAPE) announced that it has entered into a material definitive agreement for private placement of series of convertible notes for gross proceeds of $1,032,000 on August 5, 2015. The transaction will include participation from new investors, JMJ Financial, JSJ Investment Inc., and several accredited investors. The company will issue 8% unsecured convertible redeemable notes for gross proceeds of $280,000, will bear a fixed interest rate of 8% per annum, and will be issued at par value. The 8%unsecured convertible redeemable notes are convertible into common shares at a conversion price per share equal to 58% of the average of the lowest trading price of the common stock in the thirteen trading days immediately preceding the applicable conversion date. The company has the option to prepay the 8% Notes in the first 180 days from closing subject to a prepayment penalty of no more than 148% of principal plus interest depending on the timing of said prepayment as set forth in the 8% Notes. The maturity date of the 8% Notes is August 5, 2016. The company will pay investors legal fees of $4,000 in the transaction.

The company will also issue 8% convertible redeemable back end notes for gross proceeds of $280,000 to three investors. The 8% convertible redeemable back end notes are secured by Collateralized Notes issued to the company, and will be issued at par value. The maturity date of 8% convertible redeemable back end notes is August 5, 2016. The 8% convertible redeemable back end notes are convertible into common shares at a conversion price per share equal to 58% of the average of the lowest trading price of the common stock in the thirteen trading days immediately preceding the applicable conversion date.

The company will also issue 12% convertible notes I for gross proceeds of up to $360,000 at a 10% original issue discount. The 12% convertible note I will bear a fixed interest rate of 12% per annum and is convertible into common shares at a conversion price of $0.34 or 60% of the lowest trade price in the 20 trading days previous to conversion. The company has the option to prepay the 12% Note I in the first 90 days from closing without penalty. The maturity date of the 12% convertible note I is 24 months from the date of issuance.

The company will also issue 12% convertible note II for gross proceeds of up to $112,000. 12% convertible note II bears a fixed interest of 12% per annum and is convertible into common shares at a conversion price of 45% discount to the lowest trading price during the previous fifteen trading days to the date of a conversion notice. The company has the option to prepay the 12% Note II at a 140% premium in the first 90 days from closing, in the 90th day to the 120th day at a premium of 150% and after the 120th day from closing at a premium of 150% subject to consent of the Investor. The maturity date of the 12% Note II is March 5, 2016.

On the same date, the company issued 8% unsecured convertible redeemable notes for gross proceeds of $280,000, 12% convertible notes I for gross proceeds of $125,000 to JMJ Financial, and 12% convertible note II for gross proceeds of $112,000 to JSJ Investments Inc. in its first tranche. The company received $517,000 in its first tranche.