One mile of Ocean Front, One Incredible Real Estate Development

Multi-Billion Dollar Agreement Signed With Oman

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Message: Form 10-K - December 31, 2016

Dear Omagine Shareholders,

 

Omagine, Inc. has today filed with the SEC its annual report on Form 10-K (the “10-K Report”).

 

Below are certain excerpts from the 10-K Report. The excerpts do not purport to be or represent the full filing. Please use the following link to view the complete text of the 10-K Report:

https://www.sec.gov/Archives/edgar/data/820600/000121390017003771/f10k2016_omagineinc.htm

 

Selected Excerpts from the 10-K Report:

 

All efforts to date to conclude the CCC-Contract and CCC’s required investment were fruitless. On April 3, 2017 Omagine exercised its option to purchase all of the shares of LLC owned by CCC-Oman and CCC-Panama. After the closing of the option purchase LLC will then have only two shareholders – Omagine and RCA.

The only matter preventing forward progress on the Omagine Project is securing an agreement with an investor to replace the CCC investment. As previously reported, management has a signed written agreement (an “Investment Agreement”) with one such investor.

The Investment Agreement is for an amount in excess of the aggregate investment which was to be made by CCC-Oman and CCC-Panama. This binding Investment Agreement was signed by LLC and the investor in November 2016 and contemplated the funding of the investment in January 2017. Subsequent to entering into this Investment Agreement, the investor unfortunately and unexpectedly passed away. 

The investor’s heirs have acknowledged the validity of the Investment Agreement and have agreed to fulfil their father’s commitment pursuant to it as soon as his estate (which we understand to be quite substantial and complicated) is settled. LLC management has been dealing with the investor’s heirs since December 2016 and our understanding from them is that their father’s estate will be settled “soon”. Management cannot say with certainty what the term “soon” means in this case as the heirs have frequently indicated to us that the estate settlement was imminent – but delays have ensued. Management is continuing its efforts to close the investment transaction memorialized by the Investment Agreement but no assurance can be given to investors and shareholders that such investment transaction will actually occur until it actually does occur.

Also as previously disclosed, management has been holding discussions in parallel with several other potential LLC investors. As of the date hereof, we are awaiting the conclusion of the estate settlement mentioned above and we are in final discussions with two European investment funds. Notwithstanding the foregoing, shareholders and investors are again cautioned that until an investment transaction as generally described above actually closes LLC will not have the funding sufficient to begin work on the Omagine Project and no assurance can be given at this time that any such investment transaction will be finally consummated.

 

RCA and Omagine intend to amend the Shareholder Agreement as necessary to memorialize any such new investment by a new investor when and if it occurs (an “Amended and Restated Shareholder Agreement”). Serious design, development and construction activities on the Omagine Project can begin only after such Amended and Restated Shareholder Agreement is signed by the parties.

 

Management has also been conducting parallel project finance discussions with a bank and we expect a successful conclusion to that discussion to occur soon after we close an investment with a new investor and the Amended and Restated Shareholder Agreement is executed.

 

As these matters unfold, management will report all material developments and agreements to its shareholders in a timely manner.

_____________________________

 

In order to bring the Omagine Project to its present state, Omagine, Inc. (as of December 31, 2016), has:

 

 

(i)

invested 300,000 Omani Rials ($780,000) in cash into Omagine LLC, and

 

 

(ii)

expended $17.9 million of Pre-Development Expenses on behalf of the Omagine Project through the October 2, 2014 DA signing date consisting of both cash and non-cash expense items as Omagine, Inc. had promised to do pursuant to the SHA, and

 

(iii)

single-handedly kept the Omagine Project and Omagine LLC financially afloat after the October 2, 2014 DA signing date by expending an additional $11.7 million (as of December 31, 2016) on behalf of the Omagine Project via cash loans from Omagine, Inc. to Omagine LLC (“Loans”) and the direct payment by Omagine, Inc. of Omagine LLC liabilities and accounts payable consisting of both cash and non-cash items (“Advances”), neither of which Loans nor Advances Omagine, Inc. had any obligation whatsoever to do pursuant to the SHA.

___________________________

 

The construction contract with CCC-OMAN was not signed and the investments required pursuant to the Shareholder Agreement from CCC-Oman and CCC-Panama were not received by LLC. CCC was obligated – but failed to make its Deferred Cash Investment into LLC in the aggregate amount of OMR 18,987,500 [$49,367,500].  On April 3, 2017 Omagine exercised its option to purchase all of the shares of LLC owned by CCC-Oman and CCC-Panama.

LLC has suffered many delays as a result of the CCC matters and we are presently assured by Government officials that the Operative Date will be extended by MOT provided we are able to close the necessary investment with a replacement investor for CCC. No assurance can be given at this time however that the Operative Date will be so extended.

The masterplanning of the Omagine Project will not begin until a new investor to replace CCC is secured and an Amended and Restated Shareholder Agreement is signed. No further feasibility study is presently required or planned for the project as our financial model adequately demonstrates the project’s financial feasibility.

___________________________

 

LLC nevertheless presently expects, based on current assumptions and market activity that such residential selling prices during the Omagine Project’s planned multiple sales releases will be at least equal to the prices that are presently budgeted by LLC and that total construction costs will be somewhat lower.

We expect that this sudden business cycle change will eventually right itself as all market participants adapt to the new realities but we are of the present opinion, provided our Investment Agreement with our proposed new investor or with one of the European funds with which we are presently in discussions results in the closing of an investment transaction to replace CCC, that the Company will succeed in creatively making a path where none had apparently previously existed. Because of the significant delays in developing the Omagine Project to date however, tensions are high both in the local market and the Government and no assurance can presently be given that our present plans will succeed. 

The failure to ultimately secure a new equity investor or to secure project financing via the closing of a Financing Agreement will have a materially significant adverse effect on LLC’s and the Company’s ability to continue operations. 

___________________________

 

Management cautions that future events rarely develop exactly as forecast and the best estimates routinely require adjustment. Investors and shareholders are cautioned not to place undue reliance on any forward-looking statement or forecast, which speaks only as of the date hereof.

 

Regards,

AGORACOM

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