KonaRed Corporation (OTCPK:KRED) announced a private placement of subordinated promissory notes with two accredited lenders for gross proceeds of $225,000 on September 30, 2015. The company signed a securities purchase agreements with the lenders. The company granted the lenders a five-year warrant to purchase an aggregate of 3,125,000 common shares at an exercise price of $0.08 per share.

The warrants include cashless exercise rights. The transaction included participation from new lenders, Black Mountain Equities Inc., which invested $90,000 and received up to 1,250,000 warrants and Gemini Master Fund, a fund managed by Gemini Investment Strategies, LLC, which invested $135,000 and received up to 1,875,000 warrants. The promissory notes bear interest at the fixed rate of 8% per annum, which shall accrue in full as of the issuance date.

The interest rate shall be 18% upon the occurrence of an event of default and repayment of the note at an amount equal to 120% of the outstanding principal and interest due. The notes are not secured and subordinated to existing notes issued by the company. The notes will mature on September 30, 2016.

The promissory notes were issued at discount of 10%, which is $25,000. The company issued securities pursuant to exemption provided under Regulation D. The principal and interest is due and payable in full on maturity with monthly prepayments of 3% of the original principal on the fourth through sixth monthly anniversaries of the issuance date and monthly prepayments or 10% of the original principal on the seventh through eleventh monthly anniversaries of the issuance date.