CONVERTIBLE DEBT

6 Months Ended

Nov. 30, 2013

NOTE 6 - CONVERTIBLE DEBT

Convertible debt consisted of the following:

	November 30, 2013		May 31, 2013
Six-month secured convertible debentures	$	275,000	$	275,000
One-year term debentures		832,000		832,000
180-day promissory notes		150,000		150,000
60-day promissory notes		20,000		-
	$	1,277,000		1,257,000
Less - Debt discount		(- )		(51,648)
	$	1,277,000	$	1,208,352

Convertible debt – related party	$	32,000	$	31,508
Convertible debt – third party		1,245,000		1,173,844
	$	1,277,000	$	1,205,352

During the six months ended November 30, 2013, the Company issued a 60-day promissory note to a third party investor for $20,000. This note matured on August 6, 2013, and carries interest at a rate of 8% per annum and a 10% debt discount of $2,000 due on its maturity date. As of November 30, 2013, this note and 180-day promissory notes totaling to $100,000 are currently in default.

As of November 30, 2013, the balance of all convertible debentures was $1,277,000 (including related party debentures totaling $32,000) which are all currently in default, of which $782,000 carries a default interest rate ranging from 20% to 24%.

For the six months ended November 30, 2013 and 2012, debt discount amortization recorded to interest amounted to $53,648 and $247,311, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details

Zinco do Brasil, Inc. 10-Q/A