Convertible Debt

6 Months Ended

Nov. 30, 2017

Notes to Financial Statements

Note 4 - Convertible Debt

The Company had the following convertible notes payable outstanding as of November 30, 2017 and May 31, 2017:

	November 30,		May 31,
	2017		2017
JSJ Investments	$	36,818	$	73,258
		36,818		73,258
Less: debt discount and deferred financing cost		-		(11,539	)
		36,818		61,719
Less: current portion of convertible notes payable		36,818		61,719
Long-term convertible notes payable	$	-	$	-

Typenex Co

On July 24, 2015, the Company received financing in the amount of $93,000 from Typenex Co-Investment, LLC with $13,000 cash discount to the lender and incurred $8,000 in financing costs to third parties. The deferred financing cost is being amortized over the life of the note using the effective interest method. The $93,000 bears an 8% interest rate and matured in nine months. The holder shall be entitled to convert any portion of the outstanding and unpaid conversion amount in to fully paid and non-assessable shares of common stock. Conversion price is 50% of the average of the three lowest closing bid prices for the 15 previous consecutive trading days prior to the payment date. The Company may prepay the note at any time at an amount equal to 120% of the outstanding principal and the accrued and unpaid interest. The note was discounted for a derivative (see note 5 for details) and the discount is being amortized over the life of the note using the effective interest method. On July 8, 2016, the Company made a payment of 50% of the balance then due in the amount of $57,000. The payment of $57,000 was applied to an interest penalty and accrued interest. The Company entered into a Forbearance Agreement with Typenex regarding conversion of the balance of $57,000 debt into shares of common stock at an agreed upon discount and frequency of conversions. During the six months ended November 30, 2017, 27,575,932 shares of common stock were issued based on the True-Up conversion. We accounted for the issuance of the common stock as a derivative. As of November 30, 2017 and May 31, 2017, the Company had Convertible note of $0 and accrued interest of $0. During the six months ended November 30, 2017 and 2016, the Company recognized interest expense of $0 and $55,796, respectively.

JSJ Investments

On October 13, 2016, the Company received financing in the amount of $85,500 from JSJ Investments with $5,000 original issue discount and incurred $8,000 in financing costs. The original issue discount and financing costs are being amortized over the life of the note using the effective interest method. The $85,500 bears 10% interest and matured on July 13, 2017. The note is currently in default. The holder shall be entitled to convert any portion of the outstanding and unpaid conversion amount in to fully paid and non-assessable shares of common Stock. The conversion price is the 45% discount to the lowest traded price during the previous 20 trading days to the date of a conversion notice. The Company may redeem the note at rates ranging from 125% to 150% depending on the redemption date. The note was discounted for a derivative (see note 5 for details) and the discount is being amortized over the life of the note using the effective interest method. The Company amortized discount and financing costs of $11,539 for the six months ended November 30, 2017. During the year ended May 31, 2017, the note of $36,440 was converted into 98,887,236 shares of common stock. During the six months ended November 30, 2017 and 2016, the Company recognized interest expense of $3,773 and $1,124. As of November 30, 2017 and May 31, 2017, the Company had accrued interest of $9,128 and $5,355, respectively.