For Release: August 24, 2006

OMT Reports Results for Three Months Ended June 30, 2006

• New Retail Radio customers including Holt Renfrew and the University of Toronto Bookstore joined the growing list of in-store music and messaging service customers 

• OMT successfully completed the first major milestone in the American Forces Radio and Television Service system project, which included factory testing of iMediaTouch within the large scale system

• OMT previewed its new radio broadcast products at the National Association of Broadcasters
  show in April including HDNow, audio content for high definition radio, and the newest
  release of iMediaTouch

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 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 consolidated financial statements for the six months ended June 30, 2006 and the associated notes.
 
The unaudited consolidated financial statements provide a comparison of the six months ended June 30, 2006 to the six months ended June 30, 2005.

Eight Quarter Review (numbers shown in ‘000s) (unaudited)                                                

Sales in the second quarter were 3% higher than the previous year, as a result of the Commercial custom projects revenue, which increased by $197,000 from $58,000 in the previous year to $255,000 this year.  Excluding custom projects, both the Commercial and Retail segments experienced lower new sales in the second quarter of this year as compared to last year, while recurring revenue from both the Commercial and Retail segments increased by a total of $102,000 (59%) in the second quarter.

Gross profit in the second quarter was up 9% or $57,000 over the same quarter last year. This gross profit increase was a direct result of the positive nature of OMT’s higher recurring revenues. The increase in recurring revenue also supports the increase in overall gross margin of 5%, from 58% in 2005 to 62% in 2006. While gross margins were higher than the same period last year, they were lower than the first quarter of this year, due to higher software sales in the first quarter. Gross margins will always vary
based on the mix of hardware and software sales in that period.
 
Overall, operating expenses have remained substantially consistent when compared to previous quarters. However, the Company has invested in additional sales and marketing employees in the Retail and Commercial segments this year to support our revenue growth objectives, which have been offset by reduced administration expenses.
 
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. In the second quarter of 2006, EBITDA was $69,000, as compared to ($22,000) in the same period last year. This improvement was achieved through higher gross profit and ongoing expense containment. Both the first and second quarters of 2006 were EBITDA positive providing a positive EBITDA of $112,000 in the first half of 2006 compared to $67,000 in the first half of 2005.
 

Cash Flow
Cash flow in the second quarter was negative $302,000 mainly due to several large customer accounts that were outstanding as at June 30, resulting in the Company drawing $30,000 of its existing bank line. The accounts receivable are in good standing and with the collection of these large accounts, the bank line will again be reduced to zero.
 

Changes in Accounting Policies
No changes in accounting policies were contemplated or implemented in 2006. Details of significant accounting policies are fully disclosed in the financial statements.

Liquidity
Current assets less current liabilities results in a working capital balance of $132,000 as of June 30, 2006, which represents a decrease of $38,000 over the beginning of the year. When current liabilities are adjusted to remove deferred revenue of $348,000, the working capital is actually $480,000. Total accounts payable and accrued liabilities are $73,000 lower than the beginning of the year.  As of June 30, 2006, the Company had borrowings on its operating line of credit of $30,000.
Related Party Transactions

In October 2005, ENSIS Growth Fund Inc. provided a guarantee for $400,000 to the Bank of Nova Scotia in support of 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.

During the quarter ended June 30, 2006, the Company made interest payments to three major shareholders, ENSIS Growth Fund Inc., ENSIS Investment Limited Partnership and Renaissance Capital Manitoba Ventures Fund Limited Partnership in the amounts of $34,000, $5,000 and $20,000 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 approximately $600,000. At June 30, 2006 the project is partially completed and $255,000 had been invoiced. The project is projected for completion in the fourth quarter of 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.

Change in Officer
Effective August 18, 2006, Scott Farr was no longer an appointed Officer of the Company, but he continues on as an employee.

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

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