WINNIPEG, MANITOBA -- (MARKET WIRE) -- 04/28/06 -- OMT Inc. (TSX VENTURE:OMT) announced today the Company's consolidated results for the year ended December 31, 2005.

Description of Business

OMT Inc. (TSX VENTURE:OMT) is a digital media content and technology solution provider to radio broadcasters and retailers with two business units. Intertain Media, the digital entertainment division, offers background music and messaging services as well as media previewing systems to major retailers. The OMT Technologies division delivers radio automation systems to over 1,500 domestic and international clients. OMT's broadcasting, multi-media technology, and content are heard daily by over 50 million people worldwide through radio, satellite, television and Internet delivered broadcasts. To learn more about the Company, its products and services, visit its website at www.omt.net.

Management's Discussion and Analysis

Certain statements made in the following Management's Discussion and Analysis contain forward-looking statements including, but not limited to, statements concerning possible or assumed future results of operations of the Company. Forward-looking statements represent the Company's intentions, plans, expectations and beliefs, and are not guarantees of future performance. Such forward-looking statements represent our current views based on information as at the date of this report. They involve risks, uncertainties and assumptions and the Company's actual results could differ, which in some cases may be material, from those anticipated in these forward-looking statements. Unless otherwise required by applicable securities law, we disclaim any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. The Company cautions investors not to place undue reliance upon forward-looking statements.

Results of Operations

This review contains Management's discussion of the Company's operational results and financial condition, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2005 and the associated notes.

The audited consolidated financial statements provide a comparison of the year ended December 31, 2005 to the year ended December 31, 2004.

Annual Review (numbers shown in '000s)

                             December 31   December 31   December 31
                           ------------------------------------------
                                    2005          2004          2003
                           ------------------------------------------
Total Sales                       $4,176        $3,482        $5,095
Gross Profit                      $2,595        $2,217        $2,299
Gross Profit %                      62.1%         63.7%         45.1%
Total Operating Expenses          $2,392        $2,378        $2,529
Other Expenses                       872           723           825
Net Income (Loss)                  ($669)        ($884)      ($1,155)
Net Income (Loss) per share
 (basic & diluted)                ($0.02)       ($0.07)       ($0.10)
Dividends declared                   Nil           Nil           Nil

Total Assets                      $1,594        $2,395        $1,605
Total Long-term liabilities       $3,222        $2,981        $2,362

Results for the year ended December 31, 2005 reflect the total business of the OMT Technologies and Intertain Media divisions. Overall sales were 20% higher in 2005, as compared to 2004. The OMT Technologies division represented $480,000 or 69% of the increased sales in 2005, while the Intertain division contributed $214,000 or 31% of the increased sales.

Sales in 2003 were higher than 2004 due to revenues from large custom solutions projects in 2003, as well as sales from Oakwood Broadcast (an equipment distribution division sold in July 2003). In 2003, revenue from large custom projects amounted to approximately $1,540,000. Sales from Oakwood Broadcast were approximately $875,000. In 2004, there were no large custom solutions projects or Oakwood Broadcast sales. Without these two revenue areas, comparative sales in 2004 were higher by $802,000 over 2003.

The 2004 and 2005 sales results reflect the Company's strategy to build stronger recurring revenues and higher gross profit sales. As a result of this focus, recurring revenues increased from approximately $389,000 in 2003 to $636,000 in 2004 and $789,000 in 2005, representing 19% of total revenues. This growth reflects the positive change in the Company's shift towards higher margin, recurring subscription revenue from core OMT Technologies and Intertain Media products. Core products for the two divisions include Radio Automation Systems, in store Retail Preview Systems and Retail Radio Systems.

Gross profit increased by $378,000 from $2,217,000 in 2004 to $2,595,000 in 2005. The OMT Technologies division represented $275,000 or 73% of the increased gross profit in 2005 over 2004 while the Intertain division represented $103,000 or 27% of the increase. As a percentage of total sales, gross profit declined slightly from 63.7% in 2004 to 62.1% in 2005. The decrease in gross profit is attributed to an increase of lower margin hardware sales across both divisions from 2004 to 2005.

Operating expenses were reduced by 6% from $2,529,000 in 2003 to $2,378,000 in 2004. The operating expense saving in 2004 was primarily due to a reduction in salaries and related expenses. Selling and administrative expenses increased from $2,067,000 in 2004 to $2,170,000 in 2005, an increase of $103,000. The change is due to increases in professional fees and salaries. Research and development expenses declined from $310,000 in 2004 to $222,000 in 2005. Savings in this area are a result of high reliability levels of the Company's technologies and improved efficiencies in the ongoing process of developing new software products and technologies.

Other expenses were $102,000 higher in 2003 as compared to 2004. The 2003 expense included severance costs of $252,000 and foreign exchange losses of $132,000. In 2004, interest expenses increased by $85,000 and previously capitalized financing costs of $65,000 were written off. Other expenses increased from $723,000 in 2004 to $872,000 in 2005, which included $259,000 of non-cash amortized interest as a result of debt financing requirements on the $4,000,000 of convertible debt secured in December, 2004. Payments on this debt are for interest only, and no principal payments are required until December, 2008. Many of the Company's assets are almost fully depreciated and this resulted in a decrease of $77,000 in amortization expense.

The net loss in 2005 was $669,000, an improvement of $215,000 over 2004. The net loss in 2004 of $884,000 was an improvement of $271,000 over 2003 when the loss was $1,155,000. In both years, this improvement was mainly due to increased gross profit. Improved gross profit is offset by interest expenses which have increased from $322,000 in 2003 to $386,000 in 2004 and to $592,000 in 2005. Loss per share of $0.02 in 2005 is calculated on an average of 28,901,131 shares issued as compared to $0.07 in 2004 calculated on an average of 12,357,418 shares issued.

Eight Quarter Review (numbers shown in '000s)

                                                   2005
                                -------------------------------------
                                    Q4        Q3        Q2        Q1
                                -------------------------------------

Total Sales                     $1,139    $1,105    $1,044      $888
Gross Profit                      $661      $695      $611      $628
Gross Profit %                      58%       63%       58%       70%
Operating Expenses                $622      $598      $633      $539
EBITDA                             $39       $97      ($22)      $89
Other Expenses                    $229      $214      $214      $215
Net Income (Loss)                ($190)    ($117)    ($236)    ($126)
Net Income (Loss) per share
 (basic & diluted)             ($0.007)  ($0.004)  ($0.008)  ($0.004)


                                                   2004
                                -------------------------------------
                                    Q4        Q3        Q2        Q1
                                -------------------------------------

Total Sales                     $1,072      $645      $849      $916
Gross Profit                      $616      $435      $572      $594
Gross Profit %                      57%       67%       67%       65%
Operating Expenses                $698      $544      $570      $566
EBITDA                            ($82)    ($109)       $2       $28
Other Expenses                    $242      $175      $141      $165
Net Income (Loss)                ($324)    ($284)    ($139)    ($137)
Net Income (Loss) per share
 (basic & diluted)              ($0.03)   ($0.02)   ($0.01)   ($0.01)

Sales by quarter increased throughout the current year. Early in the year the increase was due to OMT Technologies sales. In the fourth quarter, the increase was largely the result of increased Intertain hardware sales resulting from the continued expansion of a major retail customer as well as the first major retail chain deployment of the Retail Radio product. This increase in hardware sales explains why the gross margins in the fourth quarter were down by 4.9% when compared to the third quarter.

The Company operates with tight control on expenses, and as a result, operating expenses in 2005 have remained fairly consistent with those in 2004. While the revenue increase in 2005 was achieved with similar expense levels as 2004, management expects to incur increased expenses in 2006, especially in the sales and service areas to support increases in revenues.

EBITDA is defined as Earnings before interest, tax, depreciation and amortization and is a measure that has no standardized meaning under Canadian GAAP and is considered a non-GAAP earnings measure. Therefore this measure may not be comparable to similar measures reported by other companies. EBITDA can be used to compare the Company's operating performance on a consistent basis. It is presented in this MD&A to provide the reader with additional information regarding the Company's liquidity and ability to generate funds to finance its operations. EBITDA was positive in three quarters in 2005 and amounted to $206,000 for the year. This is an improvement of $355,000 over 2004 when EBITDA was a loss of $149,000 and both of the last two quarters of 2004 were negative.

Other expenses that reduce EBITDA to arrive at net loss include:

                                                  2005          2004
                                               ----------------------

Interest, finance and related expense             $658          $435
Amortization                                      $195          $272
Other                                             $ 19          $ 16
                                               ----------------------
Total                                             $872          $723
                                               ----------------------

The Company has incurred losses in the last eight quarters of operation. However, the quarterly losses in 2005 showed improvement over the comparable quarters in 2004 with the exception of the second quarter.

Fourth Quarter

Fourth quarter revenue at $1,139,000 was $67,000 higher than the same quarter last year and $34,000 higher than the third quarter this year. The increased sales over the third quarter this year were due to hardware which is a low margin product, and as a result the gross profit for the quarter was actually lower than the third quarter even though sales were higher. The gross margin in this quarter in 2005 was similar to 2004 resulting in an increase in gross profit because of the increase in sales.

Operating expenses at $622,000 remained flat compared to previous quarters in 2005. Fourth quarter 2004 had operating expenses of $698,000, which were $76,000 higher than 2005. Last year's expenses included a one-time charge of $60,000 related to the financing initiative.

Cash flow in the fourth quarter of 2005 was negative $74,000. This compares to a positive cash flow in the fourth quarter of 2004 of $1,111,000. In 2004, the Company had raised $1,430,000 through new financing. No additional financing occurred in 2005 and none is anticipated in 2006.

Changes in Accounting Policies

No changes in accounting policies were contemplated or implemented in 2005. Details of significant accounting policies are fully disclosed in the financial statements.

Liquidity

OMT was in compliance with its financial covenants with all lenders as at December 31, 2005.

OMT had a working capital balance of $170,000 as of December 31, 2005, which represents a decrease of $186,000 since December 31, 2004. The current working capital ratio, at 1.17:1, is slightly less than the 1.25:1 at December 31, 2004. However, total current liabilities are down $396,000 from a year ago and more than 50% of the current liabilities are a result of deferred income, which does not affect cash. Management does not expect to require any new funding for its operations in the coming year. At the time of writing (April 28, 2006), the Company had no borrowings on its operating line of credit of $400,000.

Related Party Transactions

In October 2005, ENSIS Growth Fund Inc. provided a guarantee for $400,000 to the Bank of Nova Scotia in support the Company's Line of Credit. This guarantee is ongoing and requires payments of a monthly administration fee of $1,000 as well as a monthly standby fee of $1,000. If the Company actually draws down on the guarantee, then the interest rate would be 20% of the amount received. The Company needed to consummate this related party transaction to support the operating Line of Credit with the Bank.

During the year, the Company made interest payments to its three major shareholders, ENSIS Growth Fund Inc., ENSIS Investment Limited Partnership and Renaissance Capital Manitoba Ventures Fund Limited Partnership in the amounts of $140,000, $20,000 and $80,000 respectively.

The Company has contracted to supply Radio Automation Software and Services to a corporation in which one of OMT's directors is also an officer and director. The amount of the contract is for approximately $600,000. At December 31, 2005 the project was partially completed and $60,000 had been invoiced. The project is scheduled for completion in October, 2006.

Disclosure Controls

Under new rules, which became effective on December 31, 2005, all public companies are required to certify that certain procedures have been put in place to ensure that information required to be disclosed is reported in a timely and appropriate manner. The President and CFO have evaluated the effectiveness of the procedures and disclosure controls and are satisfied that the procedures are, in fact, in place and they have reviewed such procedures and find them adequate and effective.

Risks and Uncertainties

We are confident about OMT Inc.'s long-term prospects. However, the risks and uncertainties discussed below must be taken into account, as they may affect our ability to achieve our strategic goals. Investors are therefore advised to consider the following items in assessing the Company's future prospects as an investment.

Competition and technological obsolescence

Our products' markets experience ongoing technological changes and apart from the fact that OMT Inc. must compete with existing technology and service providers, new companies and advancing technologies remain a competitive fact. In order to remain fully competitive in our target markets, OMT must continue to innovate and respond with advanced generations of software, products and services. The inability to react in a timely fashion to technological and competitive changes could have an impact on the value of the Company's intangible assets and our ability to attract and retain our customers. Moreover, the highly competitive market in which we operate could cause the Company to reduce its prices and offer other favorable terms in order to compete successfully with its rivals. These practices could, over time, limit the prices that OMT can charge for its products. If we were unable to offset such potential price reductions by a corresponding increase in sales or to lower expenses, such a decline in revenues from software sales and related products could negatively impact our profit margins and operating results.

Growth management and market development

There can be no assurance that OMT Inc. will be able to significantly develop its market, which would affect its profitability. On the other hand, rapid growth would put significant pressure on management, operations and technical resources. To manage growth, the Company would have to increase its technical and operational complement and manage its staff while effectively maintaining numerous relationships with third parties.

Capital requirements

OMT Inc. would need to find the necessary funds to execute its strategic goals if net revenues from operations were insufficient to do so. In the event that financing were required, there can be no assurance that additional capital will be available under acceptable conditions for OMT and according to terms favorable to its growth.

Additional Information

Additional information related to the Company, including all public filings, is available on SEDAR (www.sedar.com).

      Consolidated Financial Statements of

      OMT INC.


      Years ended December 31, 2005 and 2004


OMT INC.

Consolidated Balance Sheets

December 31, 2005 and 2004

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                                                  2005          2004
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Assets (notes 5 and 7)

Current assets:
 Cash                                    $     186,214  $  1,121,662
 Accounts receivable                           720,704       473,001
 Inventory                                     175,352       105,011
 Prepaid expenses                               99,335        63,848
 Current portion of lease receivable             7,000         7,000
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 Total current assets                        1,188,605     1,770,522

Lease receivable                                14,000        21,000
Property and equipment (note 2)                137,252       237,840
Software and other intangible
 assets (note 3)                                54,203        98,935
Deferred financing costs (note 4)              199,958       266,610
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Total assets                             $   1,594,018  $  2,394,907
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Liabilities and Shareholders' Deficiency

Current liabilities:
 Bank demand loan (note 5)               $           -  $    328,000
 Accounts payable and accrued
  liabilities                                  483,495       529,211
 Deferred revenue (note 6)                     527,267       336,898
 Current portion of long-term debt
  (note 7)                                           -       179,762
 Current portion of obligation under
  capital lease (note 8)                         7,453        40,297
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 Total current liabilities                   1,018,215     1,414,168

Deferred revenue (note 6)                        2,204        10,028
Long-term debt (note 7)                      3,216,297     2,960,430
Obligation under capital lease (note 8)          3,560        11,013
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Total liabilities                            4,240,276     4,395,639
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Commitments and contingency (notes 9 and 16)

Shareholders' deficiency:
 Capital stock (note 10)                     1,278,458     1,274,622
 Other paid-in capital (note 11)               693,579       693,579
 Contributed surplus (note 10)                 178,225       158,150
 Deficit                                    (4,796,520)   (4,127,083)
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 Total shareholders' deficiency             (2,646,258)   (2,000,732)
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Total liabilities and shareholders'
 deficiency                              $   1,594,018  $  2,394,907
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See accompanying notes to consolidated financial statements.

On behalf of the Board:


"Bill Baines"       Director     "Laurie Goldberg"   Director



OMT INC.

Consolidated Statements of Operations and Deficit

Years ended December 31, 2005 and 2004

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                                                  2005          2004
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Sales                                    $   4,175,804  $  3,481,656

Cost of sales                                1,580,723     1,264,488
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Gross profit                                 2,595,081     2,217,168

Selling and administrative                   2,170,405     2,067,652
Research and development                       221,458       310,266
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                                             2,391,863     2,377,918

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Income (loss) before the undernoted            203,218      (160,750)

Other expenses (income):
 Amortization                                  195,446       272,021
 Long term interest                            331,987       150,143
 Dividends on preferred shares                       -       155,833
 Non-cash interest accretion (note 7)          259,703        79,750
 Foreign exchange loss (gain)                   (2,816)       13,003
 Stock-based compensation (note 10(d))          20,075         4,954
 Gain on sale of property and equipment              -       (15,255)
 Write-off of deferred financing costs               -        64,626
 Amortization of deferred financing
  costs (note 4)                                66,652             -
 Miscellaneous expense (income)                  1,608        (1,546)
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                                               872,655       723,529

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Loss for the year                             (669,437)     (884,279)

Deficit, beginning of year:                 (4,127,083)   (3,242,804)

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Deficit, end of year                     $  (4,796,520) $ (4,127,083)
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Basic and diluted loss per share
 (note 10(f))                            $       (0.02) $      (0.07)
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See accompanying notes to consolidated financial statements.

OMT INC.

Consolidated Statements of Cash Flows

Years ended December 31, 2005 and 2004

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                                                  2005          2004
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Cash provided by (used in):

Operations:
 Loss for the year                       $    (669,437)  $  (884,279)
 Items not involving cash:
  Amortization                                 195,446       272,021
  Accrued dividends on preferred shares              -       155,833
  Non-cash interest accretion                  259,703        79,750
  Stock-based compensation                      20,075         4,954
  Gain on sale of property and equipment             -       (15,255)
  Amortization and write-off of deferred
   financing costs                              66,652        64,626
 Change in non-cash operating working
  capital                                     (209,702)      436,369
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                                              (337,263)      114,019

Financing:
 Decrease in bank demand loan                 (328,000)     (222,000)
 Principal payments on capital lease           (40,297)      (37,911)
 Proceeds from long-term debt (note 7)               -     1,429,884
 Principal payments on long-term debt         (179,762)     (153,793)
 Deferred financing costs                            -      (246,610)
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                                              (548,059)      769,570

Investments:
 Additions to property and equipment           (24,858)      (53,168)
 Proceeds on disposal of property
  and equipment                                      -        26,644
 Additions to software and other
  intangible assets                            (25,268)      (25,781)
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                                               (50,126)      (52,305)

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Increase (decrease) in cash                   (935,448)      831,284

Cash, beginning of year                      1,121,662       290,378

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Cash, end of year                        $     186,214  $  1,121,662
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Supplementary information:
 Interest paid                           $     312,076  $    140,402
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See accompanying notes to consolidated financial statements.


OMT INC.
Notes to Consolidated Financial Statements

Years ended December 31, 2005 and 2004

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General:

OMT Inc (TSX:OMT) (the company), through its subsidiaries, OMT Technologies Inc. (OMT) and Intertain Media Inc., provides media delivery systems and technology and solutions to the media and broadcast industry.

1. Significant accounting policies

(a) Basis of presentation and financial restructuring:

These consolidated financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles. The going concern basis of presentation assumes that the company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. There is significant doubt about the appropriateness of the use of the going concern assumption because the company has experienced significant losses in the last three years. The company is not in violation of any of its covenants at December 31, 2005.

The ability of the company to carry on as a going concern is dependant upon achieving profitable operations which cannot be predicted at this time and the ability of the Company to obtain additional financing from other sources when its existing financing becomes due. The financial statements do not reflect adjustments that would be necessary if the going concern assumptions were not appropriate. If the going concern basis was not appropriate for these financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

(b) Basis of consolidation:

The consolidated financial statements include the accounts of the company and its two wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated on consolidation.

(c) Inventory:

Inventory consists of custom projects in process and computers and sound cards held for resale. Custom projects in process are recorded at the lower of cost, which includes direct project expenses, and net realizable value. Computers and sound cards held for resale are valued at the lower of cost, determined on a specific item basis, and net realizable value.

(d) Property and equipment:

Assets included in property and equipment are stated at cost less accumulated amortization. Amortization is provided for over the estimated useful lives of the assets using the following annual basis and rates:

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Asset                              Basis                        Rate
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Computer hardware                  Straight-line             3 years
Furniture and equipment            Straight-line             5 years
Assets under capital lease         Straight-line             3 years

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(e) Software and other intangible assets:

Software and other intangible assets are stated at cost less accumulated amortization and are amortized on a straight-line basis over their estimated useful lives as follows:

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Asset                                                           Term
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Purchased intellectual properties                        4 - 5 years
Other software                                               2 years
Other intangibles                                            5 years

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Impairment of property and equipment and finite life intangible assets:

Impairment of property and equipment and finite life intangible assets is recognized when an event or change in circumstances causes the asset's carrying value to exceed the total undiscounted cash flows expected from its use and eventual disposition. The impairment loss is calculated by deducting the estimated fair value of the asset from its carrying value.

(f) Deferred financing costs:

Deferred financing costs represent the cost of the issuance of the long-term debt. Amortization is provided on a straight-line basis over the term of the debt. Costs associated with debt that has been settled is written-off in the year of settlement.

(g) Income taxes:

The company uses the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the substantively enacted tax rates expected to apply to taxable earnings in the year in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the date of enactment or substantive enactment.

(h) Revenue recognition:

The Company recognizes revenue when there is evidence a sales arrangement exists, the sales price is fixed and determinable, collectibility is reasonably assured and title has passed. For software, computer hardware and other product sales, these criteria are usually met upon delivery or shipment of the product. Provision is made at the time revenue is recognized for estimated product returns and warranties based on historical experience.

A system sale often includes four elements: hardware, software, training and future support fees. Hardware and software revenue are normally recognized after delivery. Training revenue is recognized when completed. Support fees are deferred and recognized over the term of the contract.

Custom software sales are recognized pursuant to the contract terms and on a percentage of completion basis. Service revenues are recognized over the contract life on a straight-line basis.

Revenue billed in advance of its recognition is reflected as deferred revenue.

(i) Government assistance:

Government assistance in connection with research activities is recognized as an expense reduction in the year that the related expenditure is incurred. Government assistance in connection with capital expenditures is treated as a reduction of the cost of the applicable asset.

(j) Stock-based compensation plan:

The company has a stock option plan as described in note 10. Under the fair-value-based method, compensation cost is measured at fair value at the date of grant using the Black- Scholes option pricing model with assumptions described in note 10. Compensation cost is expensed over the award's vesting period. Any consideration paid by option holders upon exercise of stock options is recorded as an increase in share capital.

(k) Foreign currency:

Monetary items denominated in foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at rates of exchange in effect when the assets were acquired or obligations incurred. Revenues and expenses are translated at rates in effect at the time of the transactions. Foreign exchange gains and losses are included in income.

(l) Use of estimates:

The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

(m) Research and development expenses:

Research expenses are charged to income in the year they are incurred, net of related tax credits. Development costs are charged to operations in the period of the expenditure, unless a development project meets the criteria under Canadian generally accepted accounting principles for deferral and amortization. As of December 31, 2005 and 2004, no development costs have been deferred.

(n) Earnings (loss) per share:

The calculation of earnings (loss) per share is based on net income divided by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflect the assumed conversion of all dilutive securities using the treasury stock method. Under the treasury stock method, the weighted-average number of common shares outstanding is calculated assuming that the proceeds from the exercise of options and warrants are used to repurchase common shares at the average price during the year. For the year ended December 31, 2005, 2,219,500 options (2004 - 733,500) were excluded from the calculation of diluted earnings per share because the effect of including these shares would be to reduce the loss per share.

(o) Leases:

Leases are classified as either capital or operating. Leases which transfer substantially all the benefits and risks of ownership of the asset to the company are accounted for as capital leases. Capital lease obligations reflect the present value of future lease payments, discounted at the appropriate interest rate. All other leases are accounted for as operating leases whereby rental payments are expensed as incurred.

2.     Property and equipment:

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                                             Accumulated    Net book
2005                               Cost     amortization       value
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Computer hardware           $   561,924    $     467,597  $   94,327
Furniture and equipment         165,624          131,255      34,369
Assets under capital lease       22,000           13,444       8,556

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                            $   749,548    $     612,296  $  137,252
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                                             Accumulated    Net book
2004                               Cost     amortization       value
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Computer hardware           $   542,266    $     379,449  $  162,817
Furniture and equipment         162,915          111,063      51,852
Assets under capital lease      121,984           98,813      23,171

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                            $   827,165    $     589,325  $  237,840
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3.     Software and other intangible assets:

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                                             Accumulated    Net book
2005                               Cost     amortization       value
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Purchased intellectual
 properties                $  1,255,570    $   1,252,983  $    2,587
Other software                  128,309           78,780      49,529
Other intangibles                58,696           56,609       2,087

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                           $  1,442,575    $   1,388,372  $   54,203
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                                             Accumulated    Net book
2004                               Cost     amortization       value
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Purchased intellectual
 properties                 $ 1,442,316    $   1,399,146  $   43,170
Other software                  103,041           61,963      41,078
Other intangibles                65,246           50,559      14,687

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                            $ 1,610,603    $   1,511,668  $   98,935
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During the year, software and other intangible assets amortization of $67,737 (2004 - $73,977) was included in amortization expense.

4. Deferred financing costs:

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                                                  2005          2004
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Financing costs                          $     266,610  $    266,610
Accumulated amortization                        66,652             -

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                                         $     199,958  $    266,610
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Deferred financing costs, relating to the issuance of the long-term debt proceeds raised in December 2004 in the amount of $266,610, has been reflected above.

5. Bank demand loan:

The bank demand loan, which bears interest at bank prime rate plus 1.25 percent, is limited to a maximum of $400,000 against which a general security agreement covering all present and future assets as well as an assignment of book debts and inventory is pledged as collateral, as well as a letter of guarantee in favor of the bank by ENSIS Growth Fund Inc.

6. Deferred revenue:

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                                                  2005          2004
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Deferred revenue                          $    529,471  $    346,926

Current portion of deferred revenue            527,267       336,898

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                                          $      2,204  $     10,028
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7.     Long-term debt:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                                  2005          2004
---------------------------------------------------------------------

Convertible loans (face value at maturity
 of $3,000,000 - 2004 - $3,000,000),
 interest only at 8%, payable monthly, due
 December 20, 2008                         $ 2,415,242   $ 2,220,323
Convertible debentures (face value at
 maturity of $995,000 - 2004 -$1,000,000),
 interest only at 8%, payable monthly, due
 December 20, 2008                             801,055       740,107
Western Economic Diversification Canada
 loan, non- interest bearing as long as
 principal payments are met                          -        48,096
Loans payable to Business Development
 Bank of Canada, interest at the bank
 rate plus 3% to 3.5%, repayable in
 monthly installments of $4,500 plus
 interest, secured by the intellectual
 properties of the company                           -        45,000
Severance agreement                                  -        86,666
---------------------------------------------------------------------
                                             3,216,297     3,140,192

Current portion of long-term debt                    -       179,762
---------------------------------------------------------------------

                                           $ 3,216,297  $  2,960,430
---------------------------------------------------------------------
---------------------------------------------------------------------
Scheduled principal payments to maturity
 are as follows:
---------------------------------------------------------------------
---------------------------------------------------------------------

2005                                       $         -  $    179,762
2008                                         3,216,297     2,960,430

---------------------------------------------------------------------
---------------------------------------------------------------------

Convertible debentures/convertible loans (the "subordinated debt"):

On December 20, 2004, OMT obtained new financing and also completed a financial restructuring, which was comprised of the issuance of $4,000,000 in subordinated debt and the issuance of 17,027,840 common shares at a deemed price of $0.10 per common share, which amounted to $1,702,784. The recorded amount of $1,191,950 for the common shares is derived by using a fair value of $0.07 per common share for the equity component (note 10).

Subordinated debt is convertible into common shares at a price equal to $0.10 per share until December 20, 2006, $0.11 per share up to December 20, 2007 and $0.12 per share to December 20, 2008.

The private placement portion of the restructuring raised $1,000,000 in convertible debentures. Costs associated with these debentures included a $70,000 commission and the issuance of 1,000,000 broker warrants. Each broker warrant entitles the holder thereof to purchase one common share of OMT at a price of $0.10 until December 20, 2006. During the year, debentures with a face value of $5,000 were converted to common shares (see note 10(b)).

ENSIS Growth Fund Inc. invested $1,000,000 into convertible loans as follows: $429,884 in cash and $570,116 from the conversion of an existing 18 percent interest bearing subordinated loan.

Prior to December 20, 2004, the company had voting, convertible, cumulative preferred shares outstanding which were due August 2006 for proceeds of $2,000,000. The preferred shares had a dividend rate of 8.5 percent. These preferred shares were recorded, on a discounted basis, in the amount of $1,565,000 calculated using an estimated fair value dividend rate of 15 percent, the dividend rate that would have been applicable to non-convertible preferred shares at the date of issue. The amount attributable to the value of the conversion right on the preferred shares in the amount of $435,000 was reflected in shareholders' deficiency as "other paid-in capital." The $435,000 discounted liability was being amortized to interest expense over five years.

The company repurchased the 5,000,000 preferred shares that were held by ENSIS Investment Limited Partnership, ENSIS Growth Fund Inc., and Renaissance Capital Manitoba Ventures Fund Limited Partnership for a total value of $3,702,784 as part of the financing. The repurchase of the preferred shares included $2,000,000 in principal of convertible loans and the issuance of 17,027,840 common shares. The total value recorded for the shares and convertible loans totaled $3,191,949, which exceeded the value of the preferred shares including accrued unpaid dividends and non-cash accretion by $780,991. This difference was charged to other paid in capital (note 11).

The subordinated debt was recorded on the balance sheet at its combined discounted values of $2,960,430. The difference between the discounted value of the debt and its face value was credited as other paid-in capital of $1,039,570 (note 11), representing the equity portion of the subordinated debt. The subordinated debt will be accreted over time on a straight-line basis over the four year term of the loan for imputed interest and at maturity will be equal to the face value of the debentures and loans. In 2005, imputed interest on the redeemable debt amounted to $259,703. In the prior year non-cash interest accretion on the preferred shares was $79,750. Monthly interest payments of 8 percent are paid on the subordinated debt. No principal repayments are required.

The subordinated debt is collaterized by a general security agreement covering all assets and by an assignment of all of the book debts of the Company in at least the second position, subordinate only to the bank (see note 5).

Long-term debt owing to Western Economic Diversification, Business Development Bank and the Severance Agreement amounting to a total of $179,762 at December 31, 2004 were all due in 2005 and have been paid in full.

8. Obligations under capital lease:

---------------------------------------------------------------------
---------------------------------------------------------------------

Year ending:

2006                                                           8,817
2007                                                           3,708
---------------------------------------------------------------------
Total minimum lease payments                                  12,525

Less amount representing interest at 9.5% and 7.25%            1,512

---------------------------------------------------------------------
Present value of minimum lease payments                       11,013

Current portion of obligations under capital lease             7,453

---------------------------------------------------------------------
                                                         $     3,560
---------------------------------------------------------------------
---------------------------------------------------------------------

Interest of $2,568 (2004 - $8,847) relating to capital lease obligations has been included in interest expense.

9. Commitments:

The company has entered into an operating lease for premises which calls for lease payments of $51,000 per year in 2006, 2007, 2008, and $21,000 in 2009. Total commitment is $174,000.

10. Capital stock:

(a) Authorized:

Authorized share capital consists of an unlimited number of common voting shares with no par value and an unlimited number of redeemable, cumulative, convertible 81/2% preferred voting shares issuable in series.

(b) Issued common shares are summarized below:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                      Number of shares        Amount
---------------------------------------------------------------------

Balance at December 31, 2003                11,844,250  $     82,672

Common shares issued in conjunction
 with the redemption of the
 preferred shares (Note 7)                  17,027,840    $1,191,950
                                     --------------------------------

Balance at December 31, 2004                28,872,090    $1,274,622

Common shares issued on conversion of
 Convertible debentures at the
  discounted value                              50,000   $     3,836

---------------------------------------------------------------------

Balance at December 31, 2005                28,922,090    $1,278,458
---------------------------------------------------------------------
---------------------------------------------------------------------

Holders of the $1,000,000 of convertible, 8% debentures (note 7) may choose to convert them to common shares at the authorized rate then in effect. During the year, debentures with a face value of $5,000 were converted to common shares at the rate of $0.10 which amounted to 50,000 common shares.

(c) Warrants:

In August 2001, the company issued 2,500,000 warrants to purchase common shares. The warrants are exercisable at $0.50 until August 2006 at which time they will expire. None have been exercised to date.

As stated in note 7, a total of 1,000,000 warrants were issued to brokers in conjunction with the financing activities that closed on December 20, 2004. Each broker warrant entitles the holder thereof to purchase one common share of the company at a price of $0.10 for a period of two years from the date of issuance. None have been exercised to date.

(d) Options:

At the annual general meeting of shareholders a new stock option plan was ratified. Under the new plan 4,330,813 options for purchase of common shares are reserved. Terms of the options will be determined by the Board of Directors, but in any case, must expire no more than 5 years from the date of the grant. Normal vesting is one third upon issue and one third in each of the following two years.

The company has stock options outstanding to directors and officers to purchase up to 2,175,000 common shares and to employees to purchase up to 44,500 common shares.

Information related to the stock options outstanding at December 31, 2005 is presented below:

                                  2005                  2004
                    -------------------------------------------------
                          Number       Weighted-   Number  Weighted-
                              of         average       of    average
                          shares  exercise price   shares   exercise
                                               $                   $
---------------------------------------------------------------------

Outstanding at
 beginning of year       733,500            0.20  817,000       0.20
Granted                1,848,500            0.10        -
Exercised                      -                        -
Cancelled               (362,500)           0.16  (83,500)      0.20
---------------------------------------------------------------------
Outstanding at
 end of year           2,219,500            0.14  733,500       0.20
---------------------------------------------------------------------
---------------------------------------------------------------------

Options exercisable
 at end of year          962,166            0.18  600,000       0.20
---------------------------------------------------------------------
---------------------------------------------------------------------

The following table summarizes information about share options
outstanding at December 31, 2005:

         Options Outstanding                 Options Exercisable
---------------------------------------------------------------------
                             Weighted-
                               average Weighted-            Weighted-
          Year      Number   remaining   average              average
Exercise    of       out-  contractual  exercise      Number exercise
price    grant   standing         life     price outstanding    price
$                               (years)        $                    $
---------------------------------------------------------------------

0.40      2002    200,000          1.6      0.40     200,000     0.40
0.25      2003    100,000          2.0      0.25      75,000     0.25
0.12      2003     35,000          2.4      0.12      35,000     0.12
0.12      2003     36,000          2.7      0.12      36,000     0.12
0.11      2005    448,500          4.1      0.11     149,500     0.11
0.11      2005  1,400,000          4.8      0.11     466,666     0.11
---------------------------------------------------------------------
$0.14           2,219,500          4.2      0.14     962,166     0.18
---------------------------------------------------------------------
---------------------------------------------------------------------

Stock based compensation has been calculated on the options vested to employees, officers and directors. During the year, the number of options vested used to calculate Stock Based Compensation was 664,835. The value of options granted is based on the price at the date of the grant, volatility of price in the future (based on volatility over the past twelve months), and the risk free interest rate at that time. Stock prices at the dates of the grants were $0.06, $0.06 and $0.05 respectively. Option price was $0.10 in each case. Volatility is estimated at 75% and the interest rate used was 3%.

Stock based compensation in the amount of $57,304 has been calculated for the options issued in 2005, with $20,075 expensed in the current year. Amount of the expense is added to contributed surplus.

(e) Escrowed shares:

On February 16 and on August 16, 2005, 681,842 shares were released in accordance with the Surplus Security Escrow Agreement. As at December 31, 2005, an aggregate of 2,727,366 (December 31, 2004 - 4,091,050) of the common shares remain held in escrow. While these common shares are held in escrow, the holder has full voting rights. The remaining common shares will be released at a rate of 681,842 shares semiannually on August 16th and February 16th.

(f) Per share amounts:

The weighted average number of common shares outstanding for the year ended December 31, 2005 was 28,901,131 (2004 - 12,357,418).

11. Other paid-in capital:

---------------------------------------------------------------------
---------------------------------------------------------------------

Balance at December 31, 2003                           $     435,000
Repurchase of preferred shares and related interest,
 net of $519,784 of paid-in capital relating to the
 convertible loans issued as consideration                  (261,207)
Convertible debentures/loans                                 519,786

---------------------------------------------------------------------
Balance at December 31, 2004 and December 31, 2005     $     693,579
---------------------------------------------------------------------
---------------------------------------------------------------------

12. Segment Information:

The company manages its business and evaluates performance based on two operating segments. The commercial segment is primarily intended for automation of commercial radio stations. The retail segment is primarily intended to enhance the shopping experience of customers in retail businesses. The accounting policies of the company's operating segments are the same as those described in note 1. There are no significant inter-segment transactions. The following presents identifiable assets at December 31, 2005 and December 31, 2004 and segment operating results for the years then ended.

                                                  2005
                         --------------------------------------------
                         --------------------------------------------
                            Commercial    Retail    Common     Total
                                     $         $         $         $
---------------------------------------------------------------------
                                                (000's)
---------------------------------------------------------------------

Revenues                         3,027     1,149         -     4,176
---------------------------------------------------------------------
Expenses
 Cost of sales                   1,015       566         -     1,581
 Selling, general and
  administrative                 1,241       223       725     2,189
 Research & development             89       132         -       221
 Amortization                      104        91         -       195
 Interest                            -         -       592       592
 Deferred financing costs                               67        67
---------------------------------------------------------------------
                                 2,449     1,012     1,384     4,845
---------------------------------------------------------------------
Net income for the year            578       137    (1,384)     (669)
---------------------------------------------------------------------
---------------------------------------------------------------------

Tangible assets                     39        98         -       137
Intangible assets                    7        47         -        54
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to property, plant
 and equipment, intangible
 assets, and goodwill               16        34         -        50
---------------------------------------------------------------------

---------------------------------------------------------------------


                                                  2004
                         --------------------------------------------
                         --------------------------------------------
                            Commercial    Retail    Common     Total
                                     $         $         $         $
---------------------------------------------------------------------
                                                (000's)
---------------------------------------------------------------------

Revenues                         2,547       935         -     3,482
---------------------------------------------------------------------
Expenses
 Cost of sales                     809       455         -     1,264
 Selling, general and
  administrative                 1,139       237       849     2,225
 Research & development            181       102        27       310
 Amortization                      186        86         -       272
 Interest                            -         -       230       230
 Deferred financing costs                               65        65
---------------------------------------------------------------------
                                 2,315       880     1,171     4,366
---------------------------------------------------------------------
Net income for the year            232        55    (1,171)     (884)
---------------------------------------------------------------------
---------------------------------------------------------------------

Tangible assets                     70       168         -       238
Intangible assets                   63        36         -        99
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to property,
 plant and equipment,
 intangible assets, and goodwill    46        33         -        79
---------------------------------------------------------------------
---------------------------------------------------------------------

Geographic information about the company's revenue is based on the product shipment destination or the location of the contracting organization. Assets are based on their physical location as at December 31, 2005.

                              2005                       2004
             --------------------------------------------------------
                         Property, plant             Property, plant
                          and equipment,              and equipment,
               Revenue      and goodwill   Revenue      and goodwill
                     $ (000's)         $         $  (000's)        $
---------------------------------------------------------------------

Canada           1,891               191     1,426               337
United States    2,285                 -     2,056                 -
---------------------------------------------------------------------
                 4,176               191     3,482               337
---------------------------------------------------------------------
---------------------------------------------------------------------

Sales to one Retail customer represent 94% (2004 - 89%) of the
revenue of Retail Sales.

13. Income taxes:

Income tax expense differs from the amount that would be computed by applying the federal and provincial statutory income tax rates of 37.1% (2004 - 37.1%) to income before income taxes. The reasons for the differences are as follows:

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Published Apr. 29, 2006— Reads 259 
 

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