Vape Holdings, Inc. (OTCPK:VAPE) announced that it has entered into a securities purchase agreement with new investor, Redwood Management, LLC for a private placement of an unsecured convertible promissory note for gross proceeds of $1,818,000 on February 10, 2015. The note has principal amount of $2,000,000 and has been issued at an original issue discount of $182,000. The company paid transaction expense of $10,000.

The note bears interest at the fixed rate of 10% per annum and will mature after 12 months from issue date. The note is convertible into common shares of the company at a conversion price equal to 70% of the lowest daily volume weighted average price in the 10 trading days before the conversion. The conversion price will not be less than $0.50 per share.

The company will repay the notes in twelve bi-monthly installments, commencing approximately six months from issuance. The company may repay the notes in cash by paying 25% premium or in common shares valued at the conversion price. The company issued securities pursuant to exemption provided under Regulation D. The transaction has been approved by the board of directors.