Dear Omagine Shareholders,

Omagine, Inc. has today filed with the SEC its quarterly report on Form 10-Q for the period ended June 30, 2013 (the “10-Q Report”).

Below are certain excerpts from the 10-Q 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-Q Report:

http://www.sec.gov/Archives/edgar/data/820600/000101376213000996/form10q.htm

Excerpts from the 10-Q Report:

The Development Agreement

The contract between the Government and Omagine LLC which will govern the design, development, construction, management and ownership of the Omagine Project and the Government’s and Omagine LLC’s rights and obligations with respect to the Omagine Project, is the “Development Agreement” (the “DA”). In order to begin the development of the Omagine Project, it is first necessary that Omagine LLC and the Ministry of Tourism of Oman (“MOT”) sign the DA.

Background

Although the DA has been approved by all the required Ministries of the Government of Oman, the Company has to date experienced numerous DA signing delays with the MOT. For a detailed description of these delays, please see the Registrant’s prior reports filed with the SEC.

Readers of local and international press accounts over the past few years and of our prior SEC reports are aware of the fiasco and public controversy surrounding the ill-fated, poorly conceived, badly located and mismanaged multi-billion dollar Blue City project approved by MOT around six years ago. Just as Oman had begun its tourism drive with the newly created and inexperienced Ministry of Tourism, the predictable financial and public relations disaster that was the Blue City project began to unfold in full public view. And it continued to play out over the next several years. This was followed on closely by the worldwide financial crisis which triggered another high-profile failure in Oman. An OMRAN/MOT project backed by Sama-Dubai, an overly aggressive and now defunct Dubai real estate company, failed – again very publicly. Subsequently the Eurozone sovereign debt crises emerged with its attendant knock-on effects on financial and other markets in the MENA Region and beyond.

Looking back on these events, it is definitively not an overstatement to say that their occurrence - and the long and painful public witnessing of them by MOT and others - literally froze the decision making capacity of MOT and many other Omani Government agencies. Fear of being blamed for failure flourished rapidly throughout the already creaky Government bureaucracy and avoiding responsibility for any decision (by continually delaying or not making them) was raised to a high art. This effect from these two high profile project failures has only recently begun to dissipate.

In the case of MOT, this frozen decision-making process was further exacerbated by the long illness and unfortunate demise in February 2011 of Her Excellency Rajha Ali, Oman’s first Minister of Tourism, with whom the Company had conducted the majority of its DA negotiations, and with whom it had concluded an approved Development Agreement just prior to her untimely passing.

A new Minister of Tourism was appointed in March 2011 and was replaced 2 months later in May 2011 by a third Minister of Tourism who in turn was replaced 9 months later by a fourth Minister of Tourism - the present Minister of Tourism, His Excellency Ahmad bin Nasser Al Mehrzi, who has been in that office for the past year and one-half since March 1, 2012.

Since January 2011, the historic and tumultuous rush of events surrounding the Arab Spring uprisings in the MENA Region have seized the world’s (and the MENA Region’s) attention. While no significant turmoil occurred in politically stable Oman, these events did result in an almost complete replacement of His Majesty’s government. During 2011 and 2012, a major ministry was abolished and many new ministers (including several Ministers of Tourism) were appointed resulting predictably in slowdowns as new people took time to get up to speed.

Our informal communications over the past several years with other business people in Oman, with ambassadors at the U.S. and other embassies in Oman, and with Omani Government officials themselves, unmistakably validate this conclusion with respect to the frozen decision making capacity of the Government. All have indicated that they have experienced similar difficulties with MOT and with several other Government ministries and governmental authorities.

While MOT has undertaken a few inconsequential (and therefore easy to approve) projects over the last few years, management is reliably informed that over 70 projects (including Omagine) have been languishing at MOT for several years now. Despite the frequent re-cycling of old press releases and local news accounts hailing pre-2008 tourism projects (the Oman Convention Center being a prime example), no project of any consequence or significance – none - zero – has been undertaken by MOT for the past many years. We believe however, that this is now finally changing.

The more ordinary, normal and usual business rivalries and difficulties we expected to and did encounter in Oman along the way have all been overcome, and management now believes that the negative effects emanating from the aforementioned extraordinary, abnormal and unusual events are dissipating.

While all difficulties have not fully vanished, the new Minister of Tourism is quite supportive of the Omagine Project and engaged in the DA signing process (See: “Recent Events” below). The business environment in Oman is now more clear and settled. As the worldwide financial crisis has eased, land and real estate prices have recovered and project financing is much more readily available. The Omani economy has improved and, as the path of local development has migrated towards the airport/ Seeb area as we expected, the location and value of the Omagine Site has only become more exceptional. The Omagine Project concept is admired by important Ministers and Government officials and Omagine LLC has superb world-class shareholder partners, consultants and financial advisers.

We think it is instructive to recall where the Company was - as well as where it intends on going. While we have been nimble in handling the delays encountered to date, often finding or making a path forward (See: “Liquidity and Capital Resources” below), management is not unmindful of the opportunities created by the Company’s reorientation of its business activities toward the Omagine Project and away from past activities. While the rewards for the Company and its shareholders are likely to be quite substantial if the DA is signed, management is also not unmindful of the risks, uncertainties and sacrifices endured by its loyal shareholders and employees as they have steadfastly soldiered-on through it all in order to make the present state of affairs possible. Our loyal shareholders and employees have boldly seized the potential for a remarkable victory from the ashes of bitter setbacks and have thereby created the present reality of possibilities. Without doubt they are to be applauded for such confidence, courage, foresight and tenacity - and if the DA is signed – the victory will be theirs. Our Company’s present business plan does not envision slow and steady incremental improvements – we seek dynamic, sudden and rapid growth. Although we believe our business plan is well conceived, careful and as conservative as possible given our circumstances, and that our partners, financial advisers, consultants and the Omagine Project itself are all first rate – our business plan is not and has never been for the faint of heart. The Company marches to the drumbeat of the ancient Roman slogan “Amat victoria curam” (Victory favors those who take pains), and, although the road is not without its difficulties and victory is not yet certain, we fully expect to prevail.

Subject always to its cautionary affirmation that it cannot predict future events, management believes its present assessments as detailed in this report of the Omagine Project’s prospects, its value to the Company and its shareholders and, in spite of past reversals, the likelihood of signing the DA, are cold-eyed, clear-headed and reasonable assessments.

Between January and April 2013, discussions were held between and among the Minister of Tourism - His Excellency Ahmed Al-Mahrizi, the Under-Secretary of Tourism - Her Excellency Maitha Al Mahrouqi, the MOT staff, other interested parties, and the shareholders of and attorneys for Omagine LLC. The Omagine LLC shareholders are (i) Omagine, Inc.; (ii) The Office of Royal Court Affairs ("RCA"); (iii) Consolidated Contracting Company S.A. (“CCC-Panama”) and (iv) Consolidated Contractors (Oman) Company LLC (“CCC-Oman”).

On April 23, 2013, the Company’s president - Frank Drohan - telephoned the Minister of Tourism, His Excellency Ahmed Al-Mahrizi to determine the status of the Omagine Project and of the DA. During that conversation, the Minister again confirmed to Mr. Drohan that MOT was delighted with the Omagine Project and that “we would be going forward very soon”. He also acknowledged the many delays in the DA signing but said that he had wanted to make certain that the proper planning for the surrounding government provided infrastructure (roads, utilities, etc.) was being undertaken by the Municipality of Muscat before he “gave us the green light”. When pressed, the Minister said that “we will be signing the DA shortly after your return to Oman in May”.

On April 25, 2013, Mr. Drohan wrote a letter to His Excellency confirming their conversation and on May 8, 2013 our attorneys delivered two printed and bound copies the final DA to His Excellency the Minister of Tourism for his review and approval.

Recent Events

On May 22, 2013, management returned to Oman.

On May 26, 2013, Mr. Drohan, Mr. Sam Hamdan, Mr. Suleiman Al-Yahyai and our attorney, Mr. Sean Angle met with the most senior executive at Royal Court Affairs - His Excellency Nasser Al-Kindi, the Secretary General (a Ministerial level position) of Royal Court Affairs. At the meeting, we briefed H.E. Al-Kindi on the foregoing dialogue with the Minister of Tourism and advised him of the numerous previous delays we had experienced (of which he was aware). Expressing our concern that such delays might again be encountered, Mr. Drohan requested that H.E. Al-Kindi speak with H.E. Al-Mahrizi in order to avoid the previous pattern of delays.

His Excellency Al-Kindi informed us that he had already spoken to the Minister of Tourism “in the past 2 weeks” and that H.E. Al-Mahrizi had told him essentially the same thing regarding the DA that he had told Mr. Drohan in April, i.e. “that MOT very much wanted the Omagine project and MOT would conclude and sign the DA with Omagine very soon”. H.E. Al-Kindi further stated that he requested of H.E. Mahrizi that if there were any “small points” that H.E. Mahrizi wanted to discuss with us, that he should meet with Omagine management and resolve them with us. H.E. Al-Kindi stated that both he and H.E. Al-Mahrizi are in complete agreement regarding the desirability of beginning the development of the Omagine Project as soon as possible, and both praised the project concept and agreed it would be a wonderful project for the Sultanate.

We informed H.E. Al-Kindi about the “government infrastructure planning issue” raised by the Minister of Tourism (which we all agreed was an Oman Government issue, not an Omagine LLC issue) - and he indicated that he knew about it and understood that it was being handled and resolved.

The meeting lasted about an hour and was extremely friendly, up-beat and positive. In concluding, His Excellency confirmed that he would be speaking with the Minister of Tourism again within a week or 10 days to follow up. His Excellency Al-Kindi went on to inform Mr. Drohan on behalf of Royal Court Affairs: “we are with you” and “we will support you”.

In May the Minister of Tourism wrote a letter to the Supreme Council for Planning regarding the infrastructure & utilities for the Omagine project (and several other projects) and requesting the SC to approve and provide the budget for such infrastructure and utilities.

On June 10, the Minister of Tourism called Mr. Drohan and informed him that the MOT had not yet heard from the Supreme Council for Planning regarding the government provided infrastructure.

The Chairman of the Supreme Council for Planning is His Majesty, Sultan Qaboos and H.E. Sultan Al-Habsi, the Secretary General of the Supreme Council is effectively its chief operating officer.

On June 25, 2013 management spoke to H.E. Sultan Al-Habsi (who was outside of Oman at the time) and we were informed that the matter of the Omagine Project (and other MOT projects) had been brought before the Supreme Council and that the Supreme Council had:

(i) agreed and communicated to the Minister of Tourism that he (the Minister of Tourism, not the SC) must approve or disapprove MOT projects, and

(ii) approved the provision of all necessary and required infrastructure and utilities for the Omagine Project and other projects approved by the Minister of Tourism (the “SC Approval”), and

(iii) agreed that the Supreme Council would verify this SC Approval in writing to the Minister of Tourism (the “SC Approval Letter”).

On June 25, 2013, Mr. Drohan wrote a note to the Minister of Tourism which stated in relevant part: “…….We were so pleased to hear today that the Supreme Council for Planning has approved the provision of the infrastructure for the Omagine Project. I look forward to your guidance on when the DA can be signed so our work developing Oman’s best tourism project may begin ….”.

On June 27, the Minister of Tourism, H.E. Mahrizi, called Mr. Drohan and informed him that we will sign the Omagine DA promptly after he receives the SC Approval Letter, and he mentioned that he had spoken recently with both the Minister of Finance, (H.E. Darwish Al-Balushi) and with the minister of Royal Court Affairs (H.E. Nasser Al-Kindi), both of whom are great supporters of the Omagine Project. Given H.E. Al-Kindi’s statement during the May 26th meeting mentioned above that - “if there were any “small points” that H.E. Mahrizi wants to discuss with us, that he should meet with Omagine management and resolve them with us” – Mr. Drohan took this opportunity to clarify this issue by asking H.E. Mahrizi if, in fact, there were any such “small points” which needed to be discussed. H.E. Mahrizi stated that “there are no other issues outstanding and we will be signing the DA in the coming days”.

On July 15, 2013 management spoke to H.E. Al-Balushi, the Minister of Finance and a member of the Supreme Council for Planning, who advised us that it is certain that the Government will provide the necessary infrastructure for the Omagine Project after the DA is signed. The Minister of Finance indicated that he would communicate this to the Minister of Tourism. Management scheduled a meeting with H.E. Al-Habsi soon after his recent return to Oman to determine the status of the SC Approval Letter.

On July 21, 2013, the Investment Adviser at Royal Court Affairs advised us that he had recently spoken to H.E. Al-Kindi and was informed by him that all the relevant ministers (Tourism, Finance, Royal Court Affairs and Supreme Council) had all spoken to each other regarding this issue and all were informed that the Supreme Council had approved the relevant government infrastructure and that the SC Approval Letter would be sent to MOT in due course by the Supreme Council.

In a July 25, 2013 note to the Minister of Tourism, Mr. Drohan mentioned this news saying “it would be a blessing for our patient shareholders if we sign the DA during Ramadan”.

On July 27, 2013, the Minister of Tourism, H. E, Al-Mahrizi responded in a note to Mr. Drohan saying: “Good Afternoon – we are still waiting to hear from the SC. It is a pleasure for me to sign as soon as possible. Regards”

On July 28, 2013 we met with H.E. Sultan Al-Habsi, the Secretary General of the Supreme Council for Planning who informed us that, after returning to Oman in July, he wrote to the head of Muscat Municipality and to the heads of the government owned utility providers (water, electricity, etc.) advising them of the MOT projects (including the Omagine Project) and requesting them to confirm their commitments in writing to the Supreme Council (the “I&U Confirmation Letters”) to provide and include in their current plans the necessary infrastructure & utilities for the MOT projects. His Excellency Habsi informed us that after he receives the I&U Confirmation Letters, he will send the SC Approval Letter to H. E. Mahrizi, the Minister of Tourism.

On August 1, 2013, Mr. Drohan wrote a letter to the Minister of Tourism on behalf of Omagine LLC confirming the MOT’s possession for the past several years of all the necessary and required details with respect to the requirements for Government provided infrastructure and utilities for the Omagine Project.

Management is optimistic that the DA will be signed soon but given our past experience, we will not be surprised to encounter some “small points” yet to be discussed (notwithstanding MOT’s avowal to the contrary). So therefore, although we believe it to be imminent, we are reluctant to forecast any target date for the DA signing other than that we expect it to be signed before the end of 2013.

The matter of transforming the corporate structure of Omagine LLC from a limited liability company into a joint-stock company (the “Transformation”) prior to signing the DA appears to have been resolved. Although it has not been (and probably will not be) confirmed to us, management believes that the Transformation is now a settled issue and will be done as originally planned and agreed subsequent to the DA signing.

Past experience indicates that great caution should be exercised in making any assumptions until the DA is actually signed. Management has no reason to believe any other issues presently exist and is confident that we are nearing a successful conclusion of the long delayed DA signing process. Other matters however, unknown to management at this time, may yet cause further delays. We strongly caution investors that we cannot give any assurance whatsoever that the DA will be signed by MOT and Omagine LLC until it is actually signed by them.



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Liquidity and Capital Resources

In order to provide financing for its recent activities, the Company has relied on the proceeds from sales of its Common Stock pursuant to (i) private placement sales, (ii) the Standby Equity Distribution Agreement discussed below, and (iii) the Rights Offering discussed below. In addition the Company has entered into a loan agreement dated as of July 26, 2013 (the “YA Loan Agreement”) as discussed below.

The significant expenses incurred during the many extended delays by the Government of Oman in signing the DA have strained and continue to strain the Company’s resources. Because the Company financed such expenses and its continuing operations during such delays via sales of new shares of its Common Stock, these delays by the Government of Oman have resulted in a material increase in the number of issued and outstanding shares of the Company’s Common Stock. This point is illustrated by the fact that between January 1, 2008 and the date hereof the Company has issued and sold 4,821,288 shares of its Common Stock to investors, vendors, officers and consultants. All or most of such shares would likely not have been issued and sold had the DA been signed in a timely manner as promised frequently by the MOT.
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Standby Equity Distribution Agreement

Pursuant to the terms of the SEDA, Omagine, Inc. may in its sole discretion, and upon giving written notice to YA (an “Advance Notice”), periodically sell shares of its Common Stock to YA (“Shares”) at a per Share price (“Purchase Price”) equal to 95% of the lowest daily volume weighted average price for a share of Common Stock as quoted by Bloomberg, L.P. during the five (5) consecutive Trading Days (as such term is defined in the SEDA) immediately subsequent to the date of the relevant Advance Notice (the “Pricing Period”). Omagine, Inc. is not obligated to sell any Shares to YA but may, over the term of the SEDA and in its sole discretion, sell to YA that number of Shares valued at the Purchase Price from time to time in effect that equals up to $10,000,000 in the aggregate. YA is obligated under the SEDA to purchase such Shares from Omagine, Inc. subject to certain conditions including (i) Omagine, Inc. filing a registration statement with the Securities and Exchange Commission (the “SEC”) to register the resale by YA of the Shares sold to YA under the SEDA (“Registration Statement”), ….

The Company has over the past many years relied on the proceeds from sales of Omagine, Inc.'s equity securities made in private placements, the Rights Offering and pursuant to the SEDA to generate the necessary cash needed to sustain our ongoing operations. Management believes that it has been quite judicious and conservative in its use to date of the SEDA in this regard, but nonetheless our periodic sales of Common Stock to YA pursuant to the SEDA have been dilutive to all shareholders and YA’s resales of such shares of Common Stock in the public market has from time to time inflicted downward pressure on our stock price. The Company intends to continue to utilize the SEDA to fund its ongoing operations, as and if necessary.

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The YA Loan Agreement

The Company and YA, the investment fund which is a party to the SEDA with the Company, entered into a loan agreement dated July 26, 2013 (the “YA Loan Agreement”). Pursuant to the YA Loan Agreement, Omagine, Inc. will borrow two hundred thousand dollars ($200,000) from YA (the “YA Loan”) for a term of one year at an annual interest rate of 10%.

Although it is not a condition of the YA Loan Agreement, the Company anticipates that, absent a DA signing, the YA Loan will be repaid from proceeds of sales of Common Stock made pursuant to the SEDA.

It is management’s opinion however that if and after the DA is signed, such dilution and downward pressure on our stock price will be substantially alleviated with respect to sales of Common Shares made pursuant to the SEDA. Management’s original intent with respect to the SEDA was to use it only after the DA was signed. The continued delays by the Omani Government in signing the DA however have necessitated that we utilize the SEDA (and now the YA Loan) to finance our current operations.

Management believes that the various financing mechanisms the Company has employed to date have been judiciously utilized, but the longer the Government of Oman delays the DA signing, the longer the Company’s human and financial resources will be strained, and the greater will be the amount of shareholder dilution and downward pressure on our stock price from the utilization of these various financing mechanisms.