QuantumSphere, Inc. announced a private placement of 10% subordinated convertible promissory notes for gross proceeds of $510,000 on May 28, 2015. The company has signed agreements with accredited investors. The notes issued will bear fixed interest at 10% per annum and shall accrue and be payable at maturity either in cash or in common stock.

The transaction included participation from six investors. The notes will mature upon the earlier of; one year from the date of issuance or closing of an equity financing of $4,000,000 or more. The default interest rate shall be 18% per annum.

The notes shall be convertible into a conversion price equal to the lesser of; 20% discount to the price per share of shares of the qualifying equity financing for $4,000,000 or more or 20% discount to the closing bid price of the company's common shares on the closing date as listed for trading on the Over The Counter Bulletin Board. The company also issued warrants equivalent to 50% of the face value of the notes issued. Each such warrant is exercisable at a price lesser of; 20% discount to the price per share of shares of a qualifying equity financing or 20% discount to the closing bid price of the company's common shares on the closing date as listed for trading on the Over The Counter Bulletin Board.

The warrants will be exercisable for a period of five years. The company issued securities pursuant to exemption provided under Regulation D. If action is instituted to collect the notes, the company promises to pay on demand all costs and expenses, including reasonable attorneys' fees and costs, incurred in connection with such action.