JMG Exploration, Inc., previously announced that the share exchange with Newco Group Ltd., a company organized under the laws of the British Virgin Islands, had failed to repay a $3 million loan and accrued interest that was due December 31, 2007 and that the loan was in default.
JMG and Newco entered into an extension agreement allowing Newco until April 30, 2008 to repay the $3 million loan and accrued interest. In the event the note is not paid by that time, Newco agreed to have the 1,427,684 shares of Iris which secure the loan immediately transferred to JMG as payment in full of the outstanding obligations. Both parties also released the other from any liability resulting from the failure of the Share Exchange Agreement to be consummated.
In the event Newco does not repay the loan and JMG transfers the pledged Iris shares into JMG's name, JMG would have effective majority control of Iris because of the 39% equity interest in Iris represented by the pledged Iris shares and JMG's irrevocable proxy from ESAPI representing an additional 14.5% equity interest in Iris. If Newco does not repay the loan and the pledged Iris shares are transferred into the name of JMG, the intent of JMG's Board of Directors' would be to either: (1) sell the investment; or (2) explore retaining, and perhaps increasing, the investment in Iris.
The company also reported that the Fellows project was sold effective January 31, 2008 at approximately book value for $385,000.
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