OMT Reports Annual Results for 2004.

WINNIPEG, Manitoba -- OMT Inc. (TSX VENTURE:OMT) announced today the Company's consolidated results for the year ended December 31, 2004.

Description of Business

OMT Inc. (TSXV: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 iMediaTouch division delivers radio automation systems with over 1,200 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, 2004 and the associated notes.

The audited consolidated financial statements provide a comparison of the year ended December 31, 2004 to the year ended December 31, 2003.

Annual Review (numbers shown in '000s)

                          December 31    December 31      December 31
                          -------------------------------------------
                                 2004           2003             2002
                          -------------------------------------------
Total Sales                    $3,482         $5,095           $5,560
Gross Profit                   $2,217         $2,299           $2,469
Gross Profit %                  63.7%          45.1%            44.4%
Total Operating Expenses       $2,378         $2,529           $2,209
Net Income (Loss)              ($884)       ($1,155)           ($627)
Net Income (Loss) per share
 (basic & diluted)            ($0.07)        ($0.10)          ($0.05)
Dividends declared                Nil            Nil              Nil

Total assets                   $2,395         $1,605           $2,011
Total Long-term liabilities    $2,981         $2,362           $2,133

Results for the year ended December 31, 2004 reflect the base business of the iMediaTouch and Intertain Media divisions. Total sales in previous years were higher than the $3,482,000 in 2004 due to revenues from large custom solutions projects in 2003 and 2002, as well as sales from Oakwood Broadcast (an equipment distribution division sold in July 2003). In 2003 and 2002, large custom projects amounted to approximately $1,540,000 and $730,000 respectively. Sales from Oakwood Broadcast were approximately $875,000 in 2003 and $1,750,000 in 2002. 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 and by $402,000 over 2002. The sales results also reflect the company's strategy to build stronger recurring revenues in 2004. As a result of this focus, recurring revenues increased from $389,000 in 2003 to $636,000 in 2004. As a percentage of total sales, these recurring revenues increased from 8% in 2003 to 18% in 2004. This growth reflects the positive change in the company's shift towards higher margin, recurring subscription revenue from core iMediaTouch and Intertain Media products.

As a percentage of total sales, gross profit improved considerably in 2004, which reflects the focus on the higher margin business of both iMediaTouch and Intertain Media divisions. The gross profit percentage of sales in 2004 was 63.7% as compared to 45.1% in 2003 and 44.4% in 2002. Overall, gross profits were relatively constant for the three years at $2,217,000 in 2004, as compared to slightly higher results of $2,299,000 in 2003 and $2,469,000 in 2002.

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 salary and related expenses.

The net loss was $884,000 in 2004 ($0.07/share), as compared to $1,155,000 in 2003 ($0.10/share), an improvement of 23%. This improvement was mainly the result of increased gross margins in 2004, reduced operating expenses in 2004, and reduced one-time expenses that occurred in 2003.

Total assets increased by 49% in 2004 to $2,395,000 over 2003 at $1,605,000 which reflects the successful completion of the company's convertible debenture financing initiative that closed in 2004. Long-term liabilities increased by 26% in 2004 to $2,981,000 over 2003 at $2,362,000 which was also a result of the financing. The convertible debt of $4,000,000 (shown at its discounted value of $2,960,430) bears an 8% interest coupon, and accounts for the majority of the long term debt in 2004.

Eight Quarter Review (numbers shown in '000s)

                                                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
Net Income (Loss)        ($324)       ($284)       ($139)      ($137)
Net Income (Loss) per
 share (basic &
 diluted)               ($0.03)      ($0.02)      ($0.01)     ($0.01)


                                                2003
                     ------------------------------------------------
                             Q4           Q3           Q2          Q1
                     ------------------------------------------------
Total Sales                $942         $500       $1,293      $2,360
Gross Profit               $480         $317         $502      $1,001
Gross Profit %              51%          63%          39%         42%
Operating Expenses         $728         $621         $576        $605
Net Income (Loss)        ($404)       ($711)       ($287)        $247
Net Income (Loss) per
 share (basic &
 diluted)               ($0.04)      ($0.06)      ($0.02)       $0.02

The eight quarter review shows the impact of a large custom solution sale and the Oakwood Broadcast divestiture in 2003. In the first half of 2003, the majority of this large custom solution project was recognized and sales of broadcast equipment through Oakwood Broadcast were included.

iMediaTouch sales account for the majority of total sales in the last half of 2003, while 2004 includes both iMediaTouch and new Intertain Media sales. Sales from these products increased in 2004 over the comparable periods in 2003. This trend is most clearly visible in the third and fourth quarters where sales increased from $500,000 in 2003 to $645,000 in 2004 and from $942,000 in 2003 to $1,072,000 in 2004 respectively. The strong fourth quarter results in 2004 included the delivery of 58 Intertain Retail Preview kiosks to 12 new Best Buy Canada and Future Shop stores bringing the total number of stores to 70 by year-end, as well as significant sales of iMediaTouch to major broadcasters.

With the exception of the first quarter, gross profit levels in 2004 improved quarter over quarter over 2003. As a percentage of sales, every quarter in 2004 showed improvement over the comparable quarter in 2003 due to the shift towards higher margin core iMediaTouch and new Intertain Media sales.

Traditionally, operating expenses in the fourth quarter are higher than prior quarters and 2004 results also included one-time costs of approximately $60,000 related to the company's financing initiative. Operating expenses in the first quarter of 2005 are expected to return to pre-fourth quarter levels.

While the company incurred losses in the last seven quarters of operation, with the exception of the first quarter, the quarterly losses in 2004 showed improvement over the comparable quarters in 2003.

Liquidity

OMT was in compliance with its financial covenants with all lenders as at December 31, 2004.

OMT had a working capital balance of $356,000 as of December 31, 2004, which represents an increase of $1,170,000 since December 31, 2003. The current ratio has improved to 1.25:1 in 2004 as compared to 0.5:1 in 2003. The improvement is a result of the financing that closed in December 2004, which resulted in a cash position of $1,122,000. The company has borrowings of $328,000, as at December 31, 2004, on the operating credit line of $600,000.

New Financing

On December 20, 2004, OMT obtained new financing and also completed a financial restructuring. This amounted to $4,000,000 in subordinate convertible redeemable debt as well as the issuance of 17,027,840 common shares at a deemed price of $0.10 per common share.

The four-year 8% subordinate convertible redeemable debt is convertible into common shares at a price equal to $0.10 per share for two years, $0.11 in year three and $0.12 in year four. The debentures were subject to a four month hold period pursuant to applicable securities law and the policies of the TSX Venture Exchange.

The private placement portion raised $1,000,000 in principal. 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 for a period of two years from the date of issuance.

ENSIS Growth Fund Inc. invested $1,000,000 into a subordinate loan with substantially the same terms as the debentures as follows: $429,884 in cash and $570,116 from the conversion of an existing 18% interest bearing subordinated loan.

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 as part of the financing. The repurchase of the preferred shares included $2,000,000 in principal of convertible loans on substantially the same terms as the debentures and the issuance of 17,027,840 common shares at a deemed price of $0.10 per common share.

The convertible debentures and the convertible loans are recorded on the Balance Sheet at their discounted values of $2,960,430. The difference between the discounted value of the debt and its face value is recorded as Other Paid-In Capital of $1,039,570 and will be amortized on a straight-line basis over the four year term of the loan. Monthly interest payments of 8% are paid on the convertible instruments. No principal repayments are required.

The financing transaction that was concluded by the company in December 2004 involved the outstanding preferred shares, and was initially described as a redemption of preferred shares. The intent of all parties was to repurchase the preferred shares on a tax neutral basis. Unfortunately, the wording used did not support the original intent and could result in a possible tax liability. Correcting this required a rectification order (the "Order"), with the proper wording, to be issued by the Manitoba Court of Queen's Bench. The rectification order with the proper wording has been issued in our favor. It is possible that Canada Revenue Agency (CRA) might appeal the Order, but management does not expect this to happen because the original intent was for the transaction to be tax neutral. If CRA were to appeal the order or the revised transaction and, if such appeals were successful, the company could face a potential income tax liability of approximately $600,000.00. If such appeals were filed by CRA, the company would vigorously defend its position.

Related Party Transactions

The Company has made operating lease payments for equipment amounting to $1,133 plus taxes to Capron Leases (Ron Paley), a company owned by a shareholder, for the year ended December 31, 2004. There were no new related party lease financings during the period and there were no leases remaining at the end of the year. These operating leases were on normal commercial terms.

In July 2004, Renaissance Capital Inc. provided a guarantee for $100,000 to the Bank of Nova Scotia to support the Company's bank demand loan, which was no longer required as at December 31, 2004.

OMT Inc. (TSX VENTURE:OMT)