The Company had the following notes payable to individuals and businesses as of February 28, 2013 and May 31, 2012 respectively:

	February 28, 2013	May 31, 2012
Unsecured demand notes payable to individuals and others; interest rate fixed @ 10% ($75,000 to related party)	$ 1,262,151	$ 1,589,000

Secured demand note payable to individual; interest rate fixed @ 12%	15,000	15,000

Secured demand note payable to individuals; interest rate fixed @ 14%; secured by accounts receivable for investment advisory fees	222,000	62,000

Secured demand note payable to individuals; interest rate fixed @ 10%; secured by accounts receivable for investment advisory fees	175,000	105,000

Unsecured short-term advances to principal shareholder and chief executive officer; interest rate fixed @ 12%	(86,837)	(57,046)

Unsecured note(s) payable to individual(s) under a bridge-financing arrangement described below ($360,000 to related party)	3,500,000	3,500,000
Notes payable	$ 5,087,314	$ 5,213,954

In accordance with the terms of the first round bridge-financing of $2.5 million on March 10, 2008, the holders of such notes were paid accrued interest-to date and issued 5% of the Company's common shares. Holders of the second round of bridge-financing notes of $1.0 million received 2% of the Company's common shares. Upon retirement of the notes subsequent to consummation of a qualified equity offering, the Company shall issue to the holders of the bridge financing notes additional Company common stock that, when added to the stock initially issued to the holders of the notes, will equal the noteholder's pro rata share of the applicable percentage of the outstanding common stock of the Company as follows: If the qualified financing consists of $50 million or more, the holders of such notes will receive 28% of the common stock of the Company that would otherwise be retained by the holders of the Company's common shares immediately prior to the financing; if the qualified financing is for an amount less than $50 million, the percentage will be reduced on a sliding scale to a fraction of 28% of the amount retained by the holders of the Company's common shares (where the numerator is the amount of financing and the denominator is $50 million).

Beginning September 10, 2008, because a qualified financing had not been completed, the Company became required under the terms of the bridge financing to issue 2.80% of the Company's outstanding common shares and shall issue 2.80% of the Company's outstanding common shares upon each six-month anniversary date thereof until retirement of the notes. The following table summarizes the common shares issued to those note holders.

Date of Issuance	Shares Issued
September 10, 2008	4,870,449
March 10, 2009	5,010,640
September 10, 2009	5,354,642
March 10, 2010	6,005,925
September 10, 2010	6,213,285
March 10, 2011	6,738,900
September 10, 2011	7,043,710
March 10, 2012	7,430,017
September 10, 2012	8,573,594
	57,241,162

Pursuant to the terms of the Promissory Notes, the first two of 20 equal quarterly installments of principal and interest payable thereunder were to have been paid on December 10, 2008 and March 10, 2009 (the “Initial Amortization Payments”). As the result of upheavals and dislocations in the capital markets, the Company was unable to either refinance the indebtedness evidenced by the Promissory Notes or make the Initial Amortization Payments to the Holders when due; and an Event of Default (as defined in the Promissory Notes) occurred under the Promissory Notes as a result of the Company’s failure to pay the Initial Amortization Payments within 14 days after same became due and payable.

On June 5, 2009 the Company entered into an agreement with the bridge lenders to forbear from exercising their rights and remedies arising from the Acknowledged Events of Default. As consideration for the forbearance, the Company issued 5,171,993 shares of Common stock, and pledged the stock of the Company’s subsidiary, Crystal Mountain Water (CMW), as security for repayment of the loans. The original repayment schedule called for quarterly payments of $224,515. The Holders agreed that under the forbearance the Company may satisfy its obligation by increasing the quarterly payments by $67,185, (to a total of $291,700) for eight consecutive quarters beginning September 10, 2009 to satisfy the arrearage. In addition, the interest rate was increased to 17%. Although the Company has failed to make the payment that was due September 10, 2009 and the payments that were due in the ensuing quarters, management has remained in close contact with the bridge lenders, providing reports regarding its efforts to refinance or otherwise repay the bridge loans. To date, none of the bridge lenders has elected to pursue legal remedies.

In anticipation of a proposed financing and as a condition thereof, the Company and each of the bridge lenders entered into a Loan Modification Agreement dated February 25, 2012 which provided for modification of the Promissory Notes, including an extension of the term of the Promissory Notes, and Subscription Agreements in exchange for a partial cash payment to each bridge lender. To date, the proposed financing has not closed, and the Company has been unable to remit the partial payment. On August 10, 2012, the Company entered into an agreement with the bridge lenders, pursuant to which the bridge lenders formally agreed to forbear from exercising their rights and remedies arising from the accumulated acknowledged events of default with respect to the bridge loans until such date. As consideration for this forbearance, the Company entered into an Amended and Restated General Hypothecation and Pledge Agreement dated August 9, 2012 (the “August 2012 Pledge”), but effective September 23, 2011, granting to the bridge lenders as security for the repayment of the loans a lien and security interest in all of the Company’s shares of capital stock of First Surety Corporation. Under the August 2012 Pledge, the bridge lenders acknowledge that the effectiveness of certain of the rights and remedies provided by such agreement may be subject to prior approval by the Office of the Commissioner of Insurance for the State of West Virginia. To date, none of the bridge lenders has elected to pursue legal remedies under the Promissory Notes or the August 2012 Pledge.

During the three and nine months ended February 28, 2013 and the year ended May 31, 2012, a company owned by a board member provided consulting services. This company provided services totaling $15,525 and $46,575 in the three and nine months ended February 28, 2013 and $15,525 and $46,575 in the three and nine months ended February 29, 2012. Amounts owed to this company are treated as related party payables in the amounts $122,384 and $109,309 at February 28, 2013 and May 31, 2012.

Advances have been made to the Company by its principal shareholder and chief executive officer to fund ongoing operations under a pre-approved unsecured financing arrangement bearing interest at the rate of 12%. The following table summarizes the activity under such arrangement for the three and nine month periods ended February 28, 2013.

	Three month period ended February 28, 2013	Nine month period ended February 28, 2013

Balance owed, beginning of period	$ (214,162)	$ (57,046)
Proceeds from borrowings	168,110	610,915
Assumption of company debt	97,785	319,654
Accrued payroll offsetting repayments	85,250	85,250
Repayments	(223,820)	(1,045,610)
Balance owed, end of period	$ (86,837)	$ (86,837)

Scheduled maturities and principal payments for each of the next five years ending May 31 are as follows:

Note D – Notes Payable and Advances from Related Party