SPACETALK LTD — Annual Report 2007

Sep 27, 2007

2007 Annual Report

CORPORATE DIRECTORY

DIRECTORS

Mark Fortunatow Executive Chairman

Mark Hurd Executive Director

The Hon John Dawkins AO Non-Executive Director

Richard Sciano Non-Executive Director

SECRETARY

Neville Bassett

REGISTERED OFFICE

Suite 13, The Parks 154 Fullarton Road Rose Park SA 5067

PRINCIPAL OFFICE

Suite 13, The Parks 154 Fullarton Road Rose Park SA 5067

Telephone: (08) 8431 2300 Facsimile: (08) 8431 2400

AUDITOR

RSM Bird Cameron Partners 8 St George's Terrace Perth WA 6000

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level 2 45 St George's Terrace Perth WA 6000

Telephone: 1300 557 010 (08) 9323 2000 Facsimile: (08) 9323 2033

STOCK EXCHANGE

The securities of MGM Wireless Limited are listed on the Australian Securities Exchange.

ASX Codes: MWR ordinary fully paid shares MWRO options, expiring 30 November 2010

Your Directors present their report on the Company and its controlled entities for the year ended 30 June 2007.

DIRECTORS

The names of the Directors of the Company in office during the financial year and up to the date of this report are as follows. Directors were in office for the entire year unless otherwise stated.

Mark Fortunatow Mark Edwin Hurd John Sydney Dawkins – appointed 17 August 2007 Richard Salvatore Sciano

INFORMATION ON DIRECTORS

Mark Fortunatow BSc BEc – Executive Chairman

Executive Chairman Mark Fortunatow, founder and chief executive of the Company's subsidiary MGM Wireless Holdings Pty Ltd, brings more than 15 years of senior executive management experience in marketing, engineering, information systems, finance and customer support.

Mr Fortunatow previously founded three successful technology-based enterprises, Linx Computer Systems (developer and marketer of financial software), Timekeeping Australia (a leader in the Australian workforce management market) and Netline Technologies (a company designing, engineering, selling and distributing voice based mobile wireless solutions), accumulating substantial practical experience in the many disciplines required to successfully launch and sustainably grow a successful technology enterprise.

Mr Fortunatow is on the Board of Directors of the Asthma Foundation of South Australia Incorporated.

He holds a degree of Bachelor of Science and Bachelor of Economics from Adelaide University.

Director since 3 October 2003.

No other directorships in listed companies in the last 3 years.

Mark Edwin Hurd BSc(Hons) – Executive Director

Mr Hurd is co-founder and Chief Technical Officer of MGM Wireless Holdings Pty Ltd.

He holds an honours degree in Mathematical and Computer Sciences and has received numerous awards for outstanding academic and software engineering achievements. He is the chief architect of MGM's technology.

A regular active contributor to Microsoft technical forums, Mr Hurd is sought after internationally by leading software engineers and corporations for his advice and software architecture expertise.

Prior to MGM, Mr Hurd was Chief Technical Officer at Netline Technologies, and before that held positions with Logica and Coopers and Lybrand and carried out numerous academic research projects.

In 1998, Mr Hurd co-founded Netline Technologies to design, engineer, sell and distribute voice-based mobile wireless solutions. The company achievements included winning the "Most outstanding Wireless Mobile Product' trophy at Internet World 2000, for E-Fone.

Director since 3 October 2003.

No other directorships in listed companies in the last 3 years.

John Sydney Dawkins AO BEc – Non-executive Director

Mr Dawkins served in the Australian Federal Government as Treasurer and Minister for Employment, Education and Training among other posts.

Following his retirement from politics in 1994, he commenced building a career in business as a strategic advisor and board member. For nine years he was chairman of Elders Rural Bank and for nearly 10 years served on the Board of Sealcorp Holdings, now Asgard Wealth Solutions. His current appointments include Chairman of Retail Energy Market Company and Integrated Legal Holdings Ltd and Director of Genetic Technologies Ltd and Government Relations Australia.

He has maintained his interest in education policy, participating in education policy reviews for the World Bank and the OECD in five countries, including Ireland and Malaysia. In 2001 he undertook a review of Education Adelaide for the South Australian Government.

As well as holding a degree in economics, he has been awarded honorary doctorates from the University of South Australia and Queensland University of Technology.

Director since 17 August 2007.

During the past 3 years, Mr Dawkins has also served as a director of the following listed companies:

• Integrated Legal Holdings Ltd (6 October 2006 to present)
• Genetic Technologies Ltd (24 November 2004 to present)

Richard Salvatore Sciano – Non-executive Director

Mr Sciano was born and educated in Western Australia. He has been involved in the Australian property investment and development industry for over 15 years. Mr Sciano is also the Executive Director of ASX-listed minerals explorer Golden State Resources Ltd, and a director of a number of private companies whose businesses are focused on property investment and development.

Director since 2 January 2003.

During the past 3 years, Mr Sciano has also served as a director of the following listed companies:

• Golden State Resources Limited (January 2003 – present)

COMPANY SECRETARY

Neville John Bassett B.Bus, CA – Mr Bassett was appointed company secretary on 16 March 1999. A chartered accountant with over 26 years experience. Mr Bassett has been involved with a diverse range of Australian public listed companies in directorial, company secretarial and financial roles.

DIRECTORS' INTERESTS IN SHARES AND OPTIONS

The relevant interest of each Director in the shares and options of the Company at the date of this Report is as follows:

Mark Fortunatow

• 41,743,046 ordinary fully paid shares
• 2,500,000 options expiring 31 December 2007, exercisable at 3 cents each
• 1,500,000 options expiring 31 January 2010, exercisable at 7 cents each
• 1,500,000 options expiring 31 January 2010, exercisable at 9 cents each

Mark Hurd

• 12,542,500 ordinary fully paid shares
• 2,500,000 options expiring 31 December 2007, exercisable at 3 cents each
• 1,500,000 options expiring 31 January 2010, exercisable at 7 cents each
• 1,500,000 options expiring 31 January 2010, exercisable at 9 cents each

John Dawkins

• Nil

Richard Sciano

• 1,000,000 options expiring 31 December 2007, exercisable at 3 cents each
• 300,000 options expiring 31 January 2010, exercisable at 7 cents each

PRINCIPAL ACTIVITY

The principal activity and focus of the Company's operations during the period was a single source provider of mobile messaging solutions for business enterprises.

OPERATING RESULTS

The amount of the operating loss attributable to members of the Company after income tax was $783,932 (2006: $631,148 – loss).

DIVIDENDS

Since the incorporation of the Company, no dividends have been paid by the Company or are recommended to be paid by the directors.

REVIEW OF OPERATIONS AND LIKELY DEVELOPMENTS IN THE FUTURE

The Directors of MGM Wireless Limited are pleased to report a very successful year and the achievement of many significant milestones for the company, including:

• Successful completion of USA trials and opening of operations in Silicon Valley, California
• Signing of a co-marketing and co-branding agreement with USA school services leader VIP Tone
• Winning US School District contracts in California and Arizona
• Winning 'preferred tenderer' status for all WA public schools
• Signing agreement for the Indian sub-continent with Roltin Global
• Trials commenced in prestigious Indian schools
• Continued impressive growth in Australia, which includes record revenues of $2.198m for the year to end June 2007, up 10% on the previous year.
• 354% increase in market capitalisation June 30 '06 $7.2m, June 30 '07 $32.7m
• Record volumes of SMS communication traffic through our networks.
• Reinforcement of our dominant market and technology position in the school parent communication industry through ongoing R&D and establishing strong relationships with key influencers in the schools market

Net loss before tax was $783,932 after expensing the following costs:

Amortisation of original Intellectual Property	153,200
Non-capitalised R & D expenditure	220,826
USA & India expansion expenditure	231,064
Total	$ 605,090

After elimination of the above, Operating Loss would be: $178,842. The company ended the year with cash on hand of $806,000.

We are very pleased with these results, which are the result of focus and unflagging determination by MGM Wireless employees, management and directors. We are confident the momentum and enthusiasm generated in 2007 will enable us to continue to report strong results in 2008 and beyond.

US Operations

The company opened operations at Sunnyvale, Cal, in January 2007 trading as Messageyou, LLC.

Within three months, the new operation had its first large customer, the San Leandro School District in Northern California, and weeks later closed a sale to the Sahuarita School District in Tucson, Arizona, which followed from extensive trials in 2006.

The company also entered an alliance with VIP Tone, a leading school management software company in the US, to integrate the messageyou™ suite with its products and co-market the offering to existing and new customers.

With a market of more than 40,000 schools, the US continues to present opportunities for substantial growth. School funding is based on daily attendance, not enrolment, and the US Federal Government provides a substantial grants program to address the growing problem of truancy and the associated dropout rate for high school students.

Following the tragic shootings at the Virginia Tech campus, crisis communication has become a major driver for US sales.

The company has familiarised itself with local buying patterns and issues facing the Education sector and is now realising the benefits of its market research with a strong pipeline of leads and negotiations under way with School Districts in Texas, Florida and California.

Domestic Growth

In Australia, the company's progress in the WA schools market of a competitive tender for the provision of School Attendance Communication services has further consolidated its position as the leading provider of text messaging to schools.

This is a significant achievement against both local and international suppliers and is the first state-wide project of its kind in the world.

This single agreement has the potential to triple the company's customer base, with an anticipated initial order for 400 schools.

Nationally, the company continued to win significant new customers, including influential schools in the public, Catholic and independent sectors.

SMS Traffic Growth

Crisis communications was a factor in growth of SMS traffic volumes, with the company breaking the 100,000 texts-per-week barrier during the severe storms on the NSW East Coast in early 2007. In addition, the company is seeing schools use text communication for a growing diversity of applications outside attendance.

Because the company operates its own SMS communication network, increased communication becomes a more significant, valuable and reliable source of revenue growth.

Indian Joint Venture

The company entered a joint venture with Roltin Global, a well-connected, diversified group with strong relationships in the Indian schools sector. Roltin has established trials of messageyou™ in the Delhi Public School and St Xavier's Boys High School, both in Ahmedabad, the seventh largest city in India, with a population of almost 5.3 million.

India has 1 million secondary schools alone and a sophisticated technology sector. Solid growth is therefore anticipated following on the announcement of successful trials.

Board Appointments

The company is pleased to have appointed former Federal Education Minister and Treasurer John Dawkins AO as a nonexecutive director.

Mr Dawkins has provided consulting and mentoring services to MGM for the past two years during a period of strong and consistent growth. He brings his deep experience in education policy to the board and his expertise in corporate governance as a director of both unlisted and listed companies over the past 12 years.

Following his retirement from politics in 1994, Mr Dawkins commenced building a career in business as a strategic advisor and board member. For nine years he was chairman of Elders Rural Bank and for nearly 10 years served on the board of Sealcorp Holdings, now Asgard Wealth Solutions. His current appointments include Chairman of Retail Energy Market Company and Integrated Legal Holdings and Director of Genetic Technologies and Government Relations Australia.

He has maintained his interest in education policy, participating in education policy reviews for the World Bank and the OECD in five countries, including Ireland and Malaysia. In 2001 he undertook a review of Education Adelaide for the SA Government.

Corporate Capability Strengthened

The company made, and will continue to make, significant additions and improvements to our internal management information and communication systems. This has resulted in streamlined processes and the establishment of the infrastructure to support our future growth. These systems provide on-line access to data enabling timely decision making and enhanced productivity.

Recognising that our employees are our most valuable asset, we have commenced the process of expanding our human resource function to provide additional organisational and employee counselling, and enhance employee training and development programs.

DIRECTORS' REPORT

Product Developments

MGM Wireless has continued its tradition of product leadership. We believe in continuous innovation to deliver new and improved products and services to drive the company's competitiveness and revenue growth. The company delivers both evolutionary and revolutionary changes. This year, we delivered substantial advances in all our existing products with acrossthe-board new version updates that not only delivered valuable improved functionality and features, but also substantially lowered our implementation and on-going support costs. These advances will drive both top line and bottom line growth.

The company has also been developing revolutionary new products that are currently in beta testing with several influential schools. These exciting new products will further enhance and enrich school to parent communication and also deliver more rapid growth opportunities to the company.

The company plans to launch the first of these products on October 8, 2007, at the Australian School Bursars Association (ASBA) conference in Adelaide.

Summary

This has been a year of great progress for MGM Wireless. As we look to the year ahead, we believe we are very well positioned to take advantage of our growth opportunities. We will continue to invest wisely for the future and build on our many strengths to meet our customers' needs, increase shareholder value, and maintain a stimulating and productive environment for our employees.

We are optimistic about our future, and look forward to reporting to you on our progress.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year, the Company raised additional capital of $1,295,000 from the issue of:

• 8,000,000 ordinary fully paid shares at 5.5 cents per share, raising $440,000
• 6,000,000 ordinary fully paid shares at 13 cents per share, raising $780,000
• 2,500,000 ordinary fully paid shares on the exercise of unlisted options, raising $75,000

The company also issued 924,658 ordinary fully paid shares as consideration to secure the Queensland distribution rights of Messageyou.

In the opinion of the Directors, there were no other significant changes in the state of affairs of the Company that occurred during the financial year under review, not otherwise disclosed in these financial statements and Directors' report.

EVENTS SUBSEQUENT TO END OF THE FINANCIAL YEAR

Since the end of the financial year under review and the date of this report, there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to significantly affect the operations of the consolidated entity, in subsequent financial years, other than as detailed in the Review of Operations.

LIKELY DEVELOPMENTS

Comments on likely developments and expected results have been covered generally herein and in the Review of Operations.

MEETINGS OF DIRECTORS

The attendance of Directors at the meetings of the Company's Board of Directors held during the year is as follows:

Directors	Number of Meetings	Number of meetings
	Held whilst in office	Attended
M Fortunatow	16	16
M Hurd	16	16
R Sciano	16	16

REMUNERATION REPORT

This report details the nature and amount of remuneration for each director and executive of MGM Wireless Limited. The information provided in the remuneration report includes remuneration disclosures that are required under Accounting Standard AASB 124 "Related Party Disclosures". These disclosures have been transferred from the financial report and have been audited.

A. Remuneration policy (audited)

The board policy is to remunerate directors at market rates for time, commitment and responsibilities. The board determines payments to the directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of directors' fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees for non-executive directors are not linked to the performance of the consolidated entity. However, to align directors' interests with shareholders interests, the directors are encouraged to hold shares in the company.

The company's aim is to remunerate at a level that will attract and retain high-calibre directors and employees. Company officers and directors are remunerated to a level consistent with the size of the company.

The executive directors and full time executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to directors and executives is valued at the cost to the company and expensed.

Performance-based remuneration

The company does not pay any performance-based component of salaries.

B. Details of remuneration for year ended 30 June 2007 (audited)

Details of the remuneration of each Director and named executive officer of the company, including their personally-related entities, during the year was as follows:

	Year	Primary		Post Employment	ShareBased	Other
		Salary andfees	CashBonus	Superannuation	Options		Total
		$	$	$	$	$	$
Directors
M Fortunatow	2007	222,993	-	8,325	-	-	231,318
	2006	207,576	-	14,661	17,430	-	239,667
M Hurd	2007	150,000	-	13,500	-	-	163,500
	2006	146,538	-	13,188	17,430	-	177,156
R Sciano	2007	24,000	-	-	-	-	24,000
	2006	24,000	-	-	2,247	-	26,247

There were no executives of the company at any time during the year.

There were no performance related payments made during the year.

The Black and Scholes valuation was used to value the options issued as share-based payments. The following factors and assumptions were used in determining the fair value of options on grant date:

Expiry Date	Fair Value per Option	Exercise Price	Estimated Volatility	Risk Free Interest Rate
31 January 2010	$0.0075	$0.07	25%	5.19%
31 January 2010	$0.0041	$0.09	25%	5.19%

A discount factor of 30% has been applied to the determined fair value due to the lack of marketability, as the options are unlisted and are non-transferable.

C. Employment contracts of directors and senior executives (audited)

The employment arrangements of the directors are not formalised in a contract of employment.

CORPORATE GOVERNANCE PRACTICES

The Company's corporate governance practices are set out in the Corporate Governance Statement contained in this Financial Report.

OFFICERS' INDEMNITY AND INSURANCE

The Company has not, during or since the financial year, in respect of any person who is or has been an officer or auditor of the Company or a related body corporate:

• indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings; or
• paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the costs or expenses to defend legal proceedings.

SHARE OPTIONS

As at the date of this report there were the following unissued ordinary shares for which options were outstanding:

• 8,500,000 options expiring 31 December 2007, exercisable at 3 cents each
• 5,400,000 options expiring 31 January 2010, exercisable at 7 cents each
• 3,000,000 options expiring 31 January 2010, exercisable at 9 cents each
• 14,103,380 options expiring 30 November 2010, exercisable at 20 cents each
• 5,100,000 options expiring 31 December 2010, exercisable at 20 cents each

No options were granted during the year.

No person entitled to exercise these options had or has any right, by virtue of the option, to participate in any share issue of the company or of any related body corporate.

ENVIRONMENTAL REGULATION

The Company's operations are not regulated by any significant environmental regulation under a Law of the Commonwealth or of a State or Territory.

LEGAL PROCEEDINGS

No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

DIRECTORS' REPORT

AUDITOR

RSM Bird Cameron continues in office in accordance with Section 327 of the Corporations Act 2001.

NON-AUDIT SERVICES

No non-audit services have been provided by the Auditor or by another person on the Auditor's behalf during the year.

AUDITOR'S DECLARATION OF INDEPENDENCE

The auditor's independence declaration for the year ended 30 June 2007 has been received and is included as part of the financial statements.

Signed in accordance with a resolution of directors

Mark Fortunatow Executive Chairman Signed at Adelaide on 28 September 2007

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of MGM Wireless Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of MGM Wireless Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

MGM Wireless Limited's Corporate Governance Statement is structured with reference to the Corporate Governance Council's principles and recommendations, which are as follows:

• Principle 1. Lay solid foundations for management and oversight
• Principle 2. Structure the board to add value
• Principle 3. Promote ethical and responsible decision making
• Principle 4. Safeguard integrity in financial reporting
• Principle 5. Make timely and balanced disclosure
• Principle 6. Respect the rights of shareholders
• Principle 7. Recognise and manage risk
• Principle 8. Encourage enhanced performance
• Principle 9. Remunerate fairly and responsibly
• Principle 10. Recognise the legitimate interests of stakeholders

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company's activities and to ensure that it adheres to appropriate ethical standards.

The Board continues to review its current practices in light of the ASX Principles of Good Corporate Governance and Best Practice Guidelines 2004 with a view to making amendments where applicable after considering the Company's size and resources it has available. As the Company's activities develop in size, nature and scope, the size of the Board and the implementation of any additional formal corporate governance committees will be given further consideration.

During the financial year the Company has complied with each of the 10 Essential Corporate Governance Principles and the corresponding Best Practice Recommendations, other than in relation to the matters specified below:

PrincipleRef	RecommendationRef	Notification of Departure	Explanation for Departure
2	2.1	Majority of Board not independent	The size and scope of the Company'sactivitiesdoesnotjustifythecostofappointingtwoadditionalindependentdirectors.
2	2.2 & 2.3	Chairman is not independent	The Board considers that, at this stage of theCompany's development, the executive rolecarried out by the Chairman is in the bestinterests of the Company.
2	2.4	The Companydoes not have aNomination Committee	The role of the Nomination Committee hasbeen assumed by the full Board. The size andscope of the Company's activities does notjustify the establishment of such a Committee.
4	4.2, 4.3 & 4.4	The Company does not have anAudit Committee	The role of the Audit Committee has beenassumed by the full Board. The size andscope of the Company's activities does notjustify the establishment of such a Committee.
6	6.1	Formalisation of a communicationsstrategy with shareholders	InlinewithadherencetocontinuousdisclosurerequirementsofASXallshareholders are kept informed of majordevelopments affecting the company. Thisdisclosure is through regular shareholdercommunications including the Annual Report,Half-Year Report, Quarterly Reports and thedistributionofspecificreleasescoveringmajor transactions or events. The Company'sauditors attend all shareholders' meetings.

CORPORATE GOVERNANCE STATEMENT

PrincipleRef	RecommendationRef	Notification of Departure	Explanation for Departure
7	7.1	The Board or appropriate boardcommitteeshouldestablishpoliciesofriskoversightandmanagement	While the Company does not have formalisedpolicies on risk management the Boardrecognises its responsibility for identifyingareas of significant business risk and forensuring that arrangements are in place foradequately managing these risks. This issueis regularly reviewed at Board meetings.
9	9.2	The Companydoes not have aRemuneration Committee	The role of the Remuneration Committee hasbeen assumed by the full Board. The size andscope of the Company's activities does notjustify the establishment of such a Committee.No director participated in any deliberationregarding his own remuneration or relatedissues.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors' Report. Directors of MGM Wireless Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgment.

In the context of director independence, 'materiality' is considered from both the company and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the company's loyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of MGM Wireless Limited are considered to be independent:

Name	Position
John Dawkins	Non-Executive Director
Richard Sciano	Non-Executive Director

There are procedures in place, agreed by the Board, to enable directors in the furtherance of their duties to seek independent professional advice at the company's expense.

The term in office held by each director in office at the date of this report is as follows:

Name	Term in Office
Mark Fortunatow	Since 3 October 2003
Mark Hurd	Since 3 October 2003
John Dawkins	Since 17 August 2007
Richard Sciano	Since 2 January 2003

Appointments to Other Boards

Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other Boards.

Ethical Standards

All Directors and employees are expected to act with the utmost of integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

CORPORATE GOVERNANCE STATEMENT

Conflict of Interest

In accordance with the Corporations Act 2001 and the Company's Constitution, Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the Board believes that a significant conflict exists the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered.

Directors Dealings in Company Securities

The Constitution permits Directors to acquire securities in the Company. Company policy prohibits Directors from dealing in Company securities whilst in possession of price sensitive information. Directors must notify the Company Secretary once they have bought or sold shares in the Company or exercised options over ordinary shares. In accordance with the provisions of the Corporations Act 2001 and the Listing Rules of the Australian Stock Exchange, the Company on behalf of the Directors must advise the Australian Stock Exchange of any transactions conducted by them in shares and/or options in the Company.

Nomination Committee

The full Board carries out the functions of the Nomination Committee. The Board did not meet formally as the Nomination Committee during the financial year, however any relevant matters were discussed on as-required basis from time to time during regular meetings of the Board.

Audit Committee

The Company does not have an Audit Committee. The role of the Audit Committee has been assumed by the full Board. The Board as the Audit Committee meets at least bi-annually (in respect of the full year and half year reports).

Performance Evaluation of the Board and its Members

During the financial year an evaluation of the Board and its members was not formally carried out. To date, there has been no formal process in place for performance evaluation. During the reporting period an evaluation of the Board was informally carried out by the Chairman.

Company's Remuneration Policies

Remuneration levels for executives are competitively set to attract the most qualified and experienced candidates, taking into account prevailing market conditions and individual's experience and qualifications. Each of the non-executive directors receives a fixed fee for their services as directors. There is no direct link between remuneration paid to any of the directors and corporate performance such as bonus payments for achievement of certain key performance indicators.

For a full discussion on the company's remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the remuneration report, which is contained within the Directors Report.

Existence and Terms of any Schemes for Retirement Benefits for Non-Executive Directors

There are no retirement benefits for non-executive directors.

• 1. In the opinion of the directors:
  • a) The financial statements and notes are in accordance with the Corporations Act 2001, including:
    • i) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2007 and of their performance for the year then ended; and
    • ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
  • b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
• 1. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2007.

This declaration is signed in accordance with a resolution of the Board of Directors.

M Fortunatow Director

Signed at Adelaide on 28 September 2007

INCOME STATEMENT

For the year ended 30 June 2007

		Consolidated		Parent Entity
	Note	2007$	2006$	2007$	2006$
Revenue	2	2,198,029	1,991,803	2,196,379	1,903,317
Cost of salesBad and doubtful debtsBorrowing costsDepreciation and amortisation expenseAdvertising and marketingConsulting expensesCorporate and administration expensesShare based payment expenseEmployee benefit expensesNet foreign currency lossImpairment of receivablesImpairment of financial assetsLoss before income tax expense		(737,550)(22,960)(17,253)(184,255)(121,199)(151,153)(484,259)-(1,257,278)(6,054)--(783,932)	(293,005)(31,974)(89)(179,049)(324,590)(338,731)(376,407)(52,836)(1,026,115)---(630,993)	(737,550)(22,960)(17,253)(23,055)(121,199)(148,394)(480,039)-(1,257,278)-(159)(172,424)(783,932)	(247,195)(31,974)(89)(17,849)(289,144)(338,731)(370,913)(52,836)(1,025,157)-(25,323)(443,384)(939,278)
Income tax expenseLoss after tax from continuing operationsNet loss attributable to minority interestNet loss attributable to members of MGMWireless Limited	3	-(783,932)-(783,932)	-(630,993)(155)(631,148)	-(783,932)-(783,932)	-(939,278)-(939,278)
Basic loss per share (cents per share)	4	(0.46)	(0.41)
Diluted loss per share (cents per share)	4	(0.46)	(0.41)

BALANCE SHEET

As at 30 June 2007

		Consolidated		Parent Entity
	Note	2007$	2006$	2007$	2006$
ASSETS
Current Assets
Cash and cash equivalents	5	806,812	562,834	754,007	561,755
Trade and other receivables	6	475,076	329,054	440,833	329,054
Other current assets	7	1,342	5,155	1,342	5,155
Total Current Assets		1,283,230	897,043	1,196,182	895,964
Non Current Assets
Other financial assets	8	-	-	216,253	323,700
Trade and other receivables	6	-	-	65,294	40,079
Plant and equipment	9	158,557	158,723	148,557	140,723
Intangible assets	10	615,383	344,700	423,883	-
Total Non Current Assets		773,940	503,423	853,987	504,502
Total Assets		2,057,170	1,400,466	2,050,169	1,400,466
LIABILITIES
Current Liabilities
Trade and other payables	11	351,906	281,138	344,905	281,138
Provisions	12	39,758	22,818	39,758	22,818
Total Liabilities		391,664	303,956	384,663	303,956
Net Assets		1,665,506	1,096,510	1,665,506	1,096,510
EQUITY
Parent entity interest
Issued capital	13	6,016,512	4,663,584	6,016,512	4,663,584
Reserves	14	75,796	75,796	75,796	75,796
Accumulated losses		(4,426,802)	(3,637,805)	(4,426,802)	(3,642,870)
Total parent entity interest in equity		1,665,506	1,101,575	1,665,506	1,096,510
Minority interest
Issued capital		20	20	-	-
Accumulated losses		(20)	(5,085)	-	-
		-	(5,065)	-	-
Total Equity		1,665,506	1,096,510	1,665,506	1,096,510

STATEMENT OF CHANGES IN EQUITY

For the Year Ended 30 June 2007

Consolidated	IssuedCapital	AccumulatedLosses	OptionIssueReserve	OutsideEquityInterest	TotalEquity
	$	$	$	$	$
At 1 July 2005Loss attributable to members of parent	4,291,584	(3,006,657)	22,960	(5,220)	1,302,667
entity	-	(631,148)	-	-	(631,148)
Profit attributable to minority interest	-	-	-	155	155
Shares issued	372,000	-	-	-	372,000
Cost of share based payment	-	-	52,836	-	52,836
At 30 June 2006	4,663,584	(3,637,805)	75,796	(5,065)	1,096,510
At 1 July 2006Loss attributable to members of parent	4,663,584	(3,637,805)	75,796	(5,065)	1,096,510
entityTransfer of accumulated losses ofminority interest in accordance with	-	(783,932)	-	-	(783,932)
AASB 127	-	(5,065)	-	5,065	-
Shares issued	1,430,000	-	-	-	1,430,000
Share issue costs	(77,072)	-	-	-	(77,072)
At 30 June 2007	6,016,512	(4,426,802)	75,796	-	1,665,506

Parent	IssuedCapital	AccumulatedLosses	OptionIssueReserve	OutsideEquityInterest	TotalEquity
	$	$	$	$	$
At 1 July 2005Loss attributable to members of parent	4,291,584	(2,703,592)	22,960	-	1,610,952
entity	-	(939,278)	-	-	(939,278)
Shares issued	372,000	-	-	-	372,000
Cost of share based payment	-	-	52,836	-	52,836
At 30 June 2006	4,663,584	(3,642,870)	75,796	-	1,096,510
At 1 July 2006	4,663,584	(3,642,870)	75,796	-	1,096,510
Loss attributable to members of parententity	-	(783,932)	-	-	(783,932)
Shares issued	1,430,000	-	-	-	1,430,000
Share issue costs	(77,072)	-	-	-	(77,072)
At 30 June 2007	6,016,512	(4,426,802)	75,796	-	1,665,506

STATEMENT OF CASH FLOWS

For the year ended 30 June 2007

		Consolidated			Parent Entity
	Note	2007$	2006$	2007$	2006$
Cash flows from operating activitiesReceipts from customersPayments to suppliers and employeesInterest receivedInterest and other costs of finance		2,015,829(2,660,108)13,408(17,253)	1,879,817(2,284,985)23,524(89)	2,015,829(2,652,911)13,408(17,253)	1,703,044(2,134,135)23,499(89)
Net cash used in operating activities	5	(648,124)	(381,733)	(640,927)	(407,681)
Cash flows from investing activitiesPayment for investmentsPayments for plant and equipmentLoan to controlled entityLoan repaid by controlled entityPayment for research and development		-(30,889)--(288,883)	-(76,820)---	(64,977)(30,889)--(288,883)	-(76,820)-55,619-
Net cash used in investing activities		(319,772)	(76,820)	(384,749)	(21,201)
Cash flows from financing activitiesProceeds from issue of sharesExpenses of share issues		1,295,000(77,072)	372,000-	1,295,000(77,072)	372,000-
Net cash provided by financing activities		1,217,928	372,000	1,217,928	372,000
Net increase/ (decrease) in cash held		250,032	(86,553)	192,252	(56,882)
Cash held at the beginning of the financial yearEffect of exchange rate changes		562,834(6,054)	649,387-	561,755-	618,637-
Cash held at the end of the financial year	5	806,812	562,834	754,007	561,755

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001and Australian Accounting Standards (including the Australian Accounting Interpretations). The financial report has also been prepared in accordance with the historical costs convention. The following is a summary of the significant accounting policies adopted by the consolidated entity in the preparation of the financial report.

(b) Adoption of new and revised standards

In the year ended 30 June 2007, the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2006. It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

(c) Statement of Compliance

The financial report was authorised for issue on 28 September 2007.

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of MGM Wireless Limited ("Company" or "Parent Entity") and its subsidiaries as at 30 June each year (the Group).

The financial statements of the subsidiaries are prepared for the same period as the parent entity, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition.

(e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Sale of Goods

Control of the goods (at the signing of the legally enforceable contract) has passed to the buyer.

Interest

Control of a right to receive consideration for the provision of, or investment in, assets has been attained. Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

(f) Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as described above, net of outstanding bank overdrafts.

(g) Trade and other receivables

Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(h) Foreign currency translation

Functional and presentation currency

The functional currency of each of the entities in the group is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange difference arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Translation

The financial results and position of foreign operations whose functional currency is different from the presentation currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.
• Income and expenses are translated at average exchange rates for the period.
• Retained profits are translated at the exchange rates prevailing at the date of the transaction.
• Exchange differences arising on translation of foreign operations are transferred directly to the foreign currency reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

(i) Income Tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(i) Income Tax (Cont.)

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(j) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(k) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Plant and equipment – over 5 to 10 years Leasehold improvements – 10 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cashgenerating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the income statement.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(k) Plant and equipment (Cont.)

(ii) Derecognition and disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(l) Intangibles

Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

Research and development costs

Research costs are expensed as incurred.

An intangible asset arising from development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the related project.

Change in Accounting Policy

In prior years, development costs have been expensed. The financial effect of recognising development costs as an asset is a reduction of the net loss of $288,883 for this reporting period.

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.

(m) Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(m) Impairment of assets (cont.)

Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(n) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

(p) Employee leave benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date, They are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(q) Share-based payment transactions

The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

When provided, the cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a black-scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of MGM Wireless Limited (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

(q) Share-based payment transactions (Cont.)

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group's best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(r) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(s) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(t) Significant Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key Estimates – Impairment

The group assess impairment at each reporting date by evaluating conditions specific to the group that may to lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-inuse calculations performed in assessing recoverable amounts incorporate a number of key estimates.

No impairment has been recognised in respect of intangible assets, as the value-in-use calculation is greater than the carrying value of the assets.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

	Consolidated		Parent Entity
	2007$	2006$	2007$	2006$
2.REVENUE AND EXPENSES
Revenue from ordinary activitiesSales revenueInterest	2,184,62113,408	1,968,27923,524	2,182,97113,408	1,879,81823,499
Total revenue from ordinary activities	2,198,029	1,991,803	2,196,379	1,903,317
Expenses and Losses/(Gains)
Depreciation of plant and equipmentAmortisation of intangibles	31,055153,200	25,849153,200	23,055-	17,849-
Bad and doubtful debtsShare based payment expense	22,960-	31,97452,836	22,960-	31,97452,836
Auditor's remuneration:RSM Bird Cameron Partners- Audit and review of financial reports	20,182	13,000	20,182	13,000
3.INCOME TAX
(a)Income tax expenseThe income tax expense for the year differs fromthe prima facie tax as follows:
Loss for year	(783,932)	(630,993)	(783,932)	(939,278)
Prima facie tax benefit at 30% (2006 : 30%)Non-deductible itemsResearch and development expenditureDeferred tax assets not brought to account	235,180(47,904)(92,682)(94,594)	189,298(62,448)-(126,850)	235,180(51,900)(92,682)(90,598)	281,783(157,100)-(124,683)
Total income tax expense	-	-	-	-
(b)Deferred Tax AssetDeferred tax assets not brought to account arisingfrom tax losses, the benefits of which will only berealised if the conditions for deductibility set out inNote 1 (i) occur:	922,684	828,090	904,461	813,863

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

4. EARNINGS PER SHARE (EPS)

	Cents	Cents
Basic earnings per share – Continuing operations	(0.46)	(0.41)
The earnings and weighted average number ofordinary shares used in the calculation of basicearnings per share is as follows:
Reconciliation of earnings to net lossNet loss for yearAdjustment:Net loss attributable to outside equity interest	(783,932)-	(630,993)(155)
Earnings used in calculation of basic EPS	(783,932)	(631,148)
Weighted average number of ordinary shares	No of Shares	No of Shares
used in the calculation of basic EPS	168,296,113	155,347,169

There are no potential ordinary shares on issue that are considered to be dilutive, therefore basic earnings per share also represents diluted earnings per share.

			Consolidated		Parent Entity
		2007$	2006$	2007$	2006$
5.	CASH AND CASH EQUIVALENTS
Cash at bank		806,812	562,834	754,007	561,755
	Cash at bank earns interest at floating rates based on daily bank deposit rates.
(i)	Reconciliation of loss for year to net cash used inoperating activities:
	Loss for the year	(783,932)	(630,993)	(783,932)	(939,278)
	Non-cash items
	Amortisation	153,200	153,200	-	-
	Depreciation	31,055	25,849	23,055	17,849
	Bad and doubtful debts	22,960	31,973	22,960	31,973
	Provision for impairment – financial assets	-	-	172,424	443,384
	Provision for impairment - receivable	-	-	159	25,323
	Foreign exchange loss	6,054	-	-	-
	Equity settled share based payment	-	52,836	-	52,836
	Changes in assets and liabilities:
	Receivables	(168,982)	(88,462)	(160,033)	(176,774)
Tax asset		36,214	2,698	36,214	2,698
	Other assets	3,813	-	3,813	-
Payables		34,554	55,114	27,473	118,256
Provisions		16,940	16,052	16,940	16,052
	Cash flows used by operating activities	(648,124)	(381,733)	(640,927)	(407,681)

(ii) Non-cash investing and financing activities:

During the year the parent entity issued 924,658 ordinary fully paid shares at an issue price of 14.6 cents per share as the $135,000 consideration for acquisition of the Queensland distribution rights of Messageyou.

There were no other non-cash financing and investing activities during the financial year.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

	Consolidated		Parent Entity
	2007$	2006$	2007$	2006$
6.TRADE AND OTHER RECEIVABLES
CurrentTrade debtorsLess: Provision for doubtful debts	498,036(22,960)	329,054-	463,793(22,960)	329,054-
	475,076	329,054	440,833	329,054
Non-CurrentAmount owed by controlled entitiesProvision for impairment	--	--	90,776(25,482)	65,402(25,323)
	-	-	65,294	40,079

Terms and conditions relating to the above financial instruments:

(i) Trade debtors are non-interest bearing and generally on 30 day terms.

(ii) Amount receivable from controlled entities are non-interest bearing and repayable on request from the parent entity.

7. OTHER CURRENT ASSETS

Sundry debtors	1,342	5,155	1,342	5,155
8.OTHER FINANCIAL ASSETS
Shares in unlisted controlled entitiesProvision for impairment	--	--	832,061(615,808)	767,084(443,384)
	-	-	216,253	323,700

Controlled entities:

Name of entity	Date of Acquisition	Country ofIncorporation	Class ofShares	EquityHolding	Cost of ParentEntity'sInvestment
MGM Wireless (NSW) Pty Ltd	7 July 2000	Australia	Ordinary	80%	80
Ezyauto Pty Ltd	7 July 2000	Australia	Ordinary	100%	1
Ezyrealty Pty Ltd	7 July 2000	Australia	Ordinary	100%	1
Ezytours Pty Ltd	7 August 2000	Australia	Ordinary	100%	1
Land Fund Pty Ltd	31 January 2002	Australia	Ordinary	100%	1
MGM Wireless Holdings Pty Ltd	8 October 2003	Australia	Ordinary	100%	767,000
Messageyou LLC	11 September 2006	USA	Ordinary	100%	64,977
					832,061

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

		Consolidated		Parent Entity
	2007$	2006$	2007$	2006$
9.PLANT AND EQUIPMENT
Plant and equipmentAt costAccumulated depreciation and impairmentTotal plant and equipment	214,881(125,255)89,626	183,992(101,858)82,134	174,881(95,255)79,626	143,992(79,858)64,134
Leasehold improvementsAt costAccumulated amortisation and impairment	82,410(13,479)	82,410(5,821)	82,410(13,479)	82,410(5,821)
Total leasehold improvementsTotal property, plant and equipmentAt costAccumulated depreciation and impairment	68,931297,291(138,734)	76,589266,402(107,679)	68,931257,291(108,734)	76,589226,402(85,679)
Total written down value	158,557	158,723	148,557	140,723
Reconciliation of the carrying amounts of plant andequipment at the beginning and end of the currentfinancial year:
Plant and equipmentAt 1 July 2006, net of accumulated depreciationAdditionsDepreciation	82,13430,889(23,397)	77,09626,760(21,722)	64,13430,889(15,397)	51,09626,760(13,722)
At 30 June 2007, net of accumulated depreciation	89,626	82,134	79,626	64,134
Leasehold improvementsAt 1 July 2006, net of accumulated depreciationAdditionsDepreciation	76,589-(7,658)	30,65650,060(4,127)	76,589-(7,658)	30,65650,060(4,127)
At 30 June 2007, net of accumulated depreciation	68,931	76,589	68,931	76,589
10.INTANGIBLE ASSETS
Intellectual Property - MSGU™CostAccumulated amortisation and impairment	766,000(574,500)191,500	766,000(421,300)344,700	---	---
Distribution rights - QueenslandCostAccumulated amortisation and impairment	135,000-	--	135,000-	--
	135,000	-	135,000	-
Website development expenditureCostAccumulated amortisation and impairment	288,883-	--	288,883-	--
	288,883	-	288,883	-
	615,383	344,700	423,883	-

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

	Consolidated		Parent Entity
	2007$	2006$	2007$	2006$
10.INTANGIBLE ASSETS (cont.)
Reconciliationofthecarryingamountsofintangible assets at the beginning and end of thecurrent financial year:
Intellectual Property - MSGU™At 1 July 2006, net of accumulated amortisationAdditions	344,700-	497,900-	--	--
Amortisation expense	(153,200)	(153,200)	-	-
At 30 June 2007, net of accumulated amortisation	191,500	344,700	-	-
Distribution rights - QueenslandAt 1 July 2006, net of accumulated amortisationAdditionsAmortisation expense	-135,000-	---	-135,000-	---
At 30 June 2007, net of accumulated amortisation	135,000	-	135,000	-
Website development expenditureAt 1 July 2006, net of accumulated amortisationAdditionsAmortisation expense	-288,883-	---	-288,883-	---
At 30 June 2007, net of accumulated amortisation	288,883	-	288,883	-

Useful life of intangible assets are 5 years.

No amortisation has been charged to "Distribution Rights – Queensland" and "Website Development Expenditure" as the amount is immaterial for this year.

11. TRADE AND OTHER PAYABLES

Trade creditors and accruals
Other corporations	243,710	209,157	236,709	209,157
Directors and director related entities	6,600	6,600	6,600	6,600
Tax liability	101,596	65,381	101,596	65,381
	351,906	281,138	344,905	281,138

Trade creditors are non-interest bearing and are normally settled on 30 day terms.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

	Consolidated		Parent Entity
	2007$	2006$	2007$	2006$
12.PROVISIONS
CurrentEmployee benefits	39,758	22,818	39,758	22,818
Movement:Opening balanceAmounts providedAmounts used	22,81863,003(46,063)	6,76653,122(37,070)	22,81863,003(46,063)	6,76653,122(37,070)
Closing balance	39,758	22,818	39,758	22,818
Number of employees	14	11	14	11
13.ISSUED CAPITAL
(a)Issued and paid up capital
Ordinary shares, fully paid	6,016,512	4,663,584	6,016,512	4,663,584
(b)Movement in shares on issue	Number	2007$	Number	2006$
Balance at beginning of yearIssue for cash at 4 cents(i)Issue for cash at 5.5 cents(ii)Issue for cash on exercise of options(iii)	164,621,690-8,000,000500,000	4,663,584-440,00015,000	155,321,6909,300,000--	4,291,584372,000--
Issue as consideration for distribution rights(iv)Issue for cash at 13 cents(v)Issue for cash on exercise of options(vi)Expenses of issue	924,6586,000,0002,000,000-	135,000780,00060,000(77,072)	----	----
Balance at end of year	182,046,348	6,016,512	164,621,690	4,663,584

(i) On 30 June 2006, 9,300,000 ordinary shares were issued at an issue price of 4 cents per share, thereby raising $372,000.

(ii) On 2 February 2007, 8,000,000 ordinary shares were issued at a price of 5.5 cents per share, thereby raising $440,000.

(iii) On 28 May 2007, 500,000 unlisted options expiring 31 December 2007 were exercised at 3 cents each.

(iv) On 30 May 2007, 924,658 ordinary shares were issued at a price of 14.6 cents each as consideration for the distribution rights of Messageyou in Queensland.

(v) On 14 June 2007, 6,000,000 ordinary shares were issued at a price of 13 cents per share, thereby raising $780,000.

(vi) On 22 June 2007, 2,000,000 unlisted options expiring 30 June 2007 were exercised at 3 cents each.

(c) Share Options

As at 30 June 2007, there were the following unissued ordinary shares for which options were outstanding:

• 8,500,000 options expiring 31 December 2007, exercisable at 3 cents each
• 5,400,000 options expiring 31 January 2010, exercisable at 7 cents each
• 3,000,000 options expiring 31 January 2010, exercisable at 9 cents each
• 14,103,380 options expiring 30 November 2010, exercisable at 20 cents each
• 5,100,000 options expiring 31 December 2010, exercisable at 20 cents each

No options were granted during the year.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

13. ISSUED CAPITAL (cont.)

(d) Terms and conditions of contributed equity

Ordinary shares have the right to receive dividends as declared and, in the event of the winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holders to one vote, either in person or by proxy, at a meeting of the company.

			Consolidated		Parent Entity
		2007$	2006$	2007$	2006$
14.	RESERVES
	Option issue reserve	75,796	75,796	75,796	75,796

Nature and purpose of reserve

The option issue reserve is used to accumulate amounts received on the issue of options and records items recognised as expenses on valuation pf incentive based share options.

15. DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel

Directors

Mark Fortunatow	Executive Chairman
Mark Hurd	Executive Director - Technical
Richard Sciano	Director (Non-executive)
John Dawkins	Director (Non-executive) – Appointed 17 August 2007

(b) Compensation of Key Management Personnel

(i) Compensation Policy

The remuneration policy of MGM Wireless Limited as it applies to key management personnel is disclosed in the Remuneration Report contained in the Directors' Report.

(ii) Compensation of Key Management Personnel

The remuneration of key management personnel is disclosed in the Remuneration Report contained in the Directors' Report.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

15. DIRECTOR AND EXECUTIVE DISCLOSURES (Cont.)

(b) Compensation of Key Management Personnel (cont.)

(iii) Compensation by category: Key Management Personnel

		Consolidated		Parent Entity
	2007	2006	2007	2006
	$	$	$	$
Short-Term	396,993	378,294	396,993	378,294
Post Employment	21,825	27,849	21,825	27,849
Other Long-Term	-	-	-	-
Termination Benefits	-	-	-	-
Share-based Payment	-	37,107	-	37,107
	418,818	443,250	418,818	443,250

(c) Option holdings of Key Management Personnel

	Balance01/07/06	Granted asRemuneration	OptionsExercised	Net ChangeOther	Balance30/06/07
Directors
M Fortunatow
- Expiring 31 December 2007; 3 cents	2,500,000	-	-	-	2,500,000
- Expiring 31 January 2010; 7 cents	1,500,000	-	-	-	1,500,000
- Expiring 31 January 2010; 9 cents	1,500,000	-	-	-	1,500,000
M Hurd
- Expiring 31 December 2007; 3 cents	2,500,000	-	-	-	2,500,000
- Expiring 31 January 2010; 7 cents	1,500,000	-	-	-	1,500,000
- Expiring 31 January 2010; 9 cents	1,500,000	-	-	-	1,500,000
R Sciano
- Expiring 31 December 2007; 3 cents	1,000,000	-	-	-	1,000,000
- Expiring 31 January 2010; 7 cents	300,000	-	-	-	300,000

All options have vested and are exercisable.

(d) Shareholdings of Key Management Personnel

	Balance01/07/06	Received asRemuneration	OptionsExercised	Net ChangeOther	Balance30/06/07
M Fortunatow	41,743,046	-	-	-	41,743,046
M Hurd	12,542,000	-	-	-	12,542,000
R Sciano	-	-	-	-	-

All equity transactions with key management personnel have been entered into under terms and conditions no more favourable that those the Group would have adopted if dealing at arm's length.

(e) Loans with Key Management Personnel

There were no loans to key management personnel or their related entities during the financial year.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

16. SHARE BASED PAYMENTS

The following share-based payment arrangements existed at 30 June 2007:

• During the year ended 30 June 2005, 6,000,000 share options were issued to directors and 3,000,000 to employees and consultants to take up ordinary shares at an exercise price of 3 cents. The options expire on 31 December 2007. All options have vested and are exercisable. 500,000 options have been exercised at balance date.
• During the year ended 30 June 2006, 3,300,000 share options were issued to directors to take up ordinary shares at an exercise price of 7 cents. The options expire on 31 January 2010. All options have vested and are exercisable. No options have been exercised at balance date.
• During the year ended 30 June 2006, 3,000,000 share options were issued to executive directors to take up ordinary shares at an exercise price of 9 cents. The options expire on 31 January 2010. All options have vested and are exercisable. No options have been exercised at balance date.
• During the year ended 30 June 2006, 2,100,000 share options were issued to employees and consultants to take up ordinary shares at an exercise price of 7 cents. The options expire on 31 January 2010. All options have vested and are exercisable. No options have been exercised at balance date.

The Black and Scholes valuation was used to value the options issued as share-based payments. The following factors and assumptions were used in determining the fair value of options on grant date:

Expiry Date	Fair Value per Option	Exercise Price	Estimated Volatility	Risk Free Interest Rate
31 December 2007	$0.0029	$0.03	25%	5.21%
31 January 2010	$0.0075	$0.07	25%	5.19%
31 January 2010	$0.0041	$0.09	25%	5.19%

A discount factor of 30% has been applied to the determined fair value due to the lack of marketability, as the options are unlisted and are non-transferable.

The weighted average exercise price of share based payment options that were outstanding was $0.0534.

Included as an expense in the income statement is $Nil (2006: $52,836) and relates, to share based payments made during the year.

17. SEGMENT REPORTING

The company operates predominantly in one business segment, being provision of business messaging solutions and internet related services utilising Web server technology and one geographic region, namely Australia.

18. CONTINGENT LIABILITIES

There were no contingent liabilities at balance date.

19. COMMITMENTS

There were no commitments at balance date.

20. FINANCIAL INSTRUMENTS

(i) Financial risk management

The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable and loans to and from subsidiaries.

The Group does not speculate in the trading of derivative instruments. The main risks the Group is exposed to through its financial instruments are interest rate risk and liquidity risk.

Interest rate and liquidity risk

The Group manages interest rate and liquidity risk by monitoring immediate and forecast cash requirements and ensuring adequate cash reserves are maintained.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2007

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted the policy of dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis. The Group does not have any significant credit risk exposure to a single counterparty or any group of counterparties having similar characteristics.

The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Group's maximum exposure to credit risk without taking account of the fair value of any collateral or other security obtained.

(ii) Interest rate risk

	Weighted AverageInterest Rate		Floating InterestRate		Non-InterestBearing		Total
	2007	2006	2007$	2006$	2007$	2006$	2007$	2006$
Financial AssetsCashReceivables	6.19%-	5.28%-	806,812-	562,834-	-475,076	-329,054	806,812475,076	562,834329,054
Total financial assets			806,812	562,834	475,076	329,054	1,281,888	891,888
Financial LiabilitiesPayablesTotal financial liabilities	-	-	--	--	351,906351,906	281,138281,138	351,906351,906	281,138281,138

(iii) Net fair value

The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities approximates their carrying value.

The net fair value of financial assets and financial liabilities is based upon market prices where a market exists or be discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.

21. EVENTS SUBSEQUENT TO END OF THE FINANCIAL YEAR

Since the end of the financial year and to the date of this report, there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to significantly affect the operations of the Group, in subsequent financial years.

SHAREHOLDER INFORMATION

Information relating to shareholders and optionholders at 19 September 2007

		Ordinaryshares	Listed Options30 Nov 2010
1.	Number of Holders	688	124
2.	Distribution of shareholders/optionholders
	1 - 1,000	4	-
	1,001 - 5,000	64	-
	5,001 - 10,000	87	3
	10,001 - 100,000	334	111
	100,001 and over	199	10
	Total number of holders	688	124
	Total on issue	182,046,348	14,103,380
	Number of holders of less than a marketable parcel	35
3.	Percentage of total holdings of 20 largest holders	53.33%	82.60%
4.	Substantial Shareholders	Number	%
	Mark Fortunatow	41,743,046	22.93%
	Mark Edwin Hurd	12,542,500	6.89%
5.	Twenty largest shareholders	Number	%
	Paula Fortunatow	24,721,000	13.58%
	Mark Edwin Hurd	9,882,500	5.43%
	Mark Fortunatow <the &="" am="" jm="" trust="">	9,870,124	5.42%
	Michael Christopher Samra	8,823,530	4.85%
	Davies Nominees Pty Ltd	6,132,000	3.37%
	Yavern Creek Holdings Pty Ltd	5,255,000	2.89%
	Mark Fortunatow	3,851,922	2.12%
	Paula Fortunatow	3,300,000	1.81%
	Francis George & Danielle Georgette Heppingstone	3,290,909	1.81%
	Mark Hurd Ronatac Pty Ltd	2,660,0002,513,636	1.46%1.38%
	Cheval Holdings Pty Ltd	2,400,000	1.32%
	David John McDougall	2,000,000	1.10%
	Nurragi Investments Pty Ltd	2,000,000	1.10%
	Carmel Elizabeth Whiting	2,000,000	1.10%
	Geoffrey Peter Ballard	1,950,000	1.07%
	Graham Flavel Ball	1,821,000	1.00%
	Oswin Pty Ltd	1,600,000	0.88%
	Samuel Christopher McCarthy & Brooke Elizabeth Hambour	1,500,000	0.82%
	Cosimo Spagnoletti	1,500,000	0.82%
		97,071,621	53.33%

SHAREHOLDER INFORMATION

6.	Twenty largest listed optionholders (30 November 2010; 20 cents)	Number	%
	Julie Vassallo	3,230,000	22.90%
	Craig Peter Ball <1998 Pope A/C>	3,010,000	21.34%
	Kalgoorlie Mine Management Pty Ltd	2,000,000	14.18%
	Lois Alda Corns	990,000	7.02%
	David John McDougall	500,000	3.55%
	Douglas Gary Spencer & Angelique Rumbold	300,000	2.13%
	David John Jones	200,000	1.42%
	Alan John Taylor	200,000	1.42%
	Anketell Pty Ltd	150,000	1.06%
	Richard Anthony Yelash	115,000	0.82%
	Belmark Investments Pty Ltd	100,000	0.71%
	Gregory Noel Kenny	100,000	0.71%
	L J Thomson Pty Ltd	100,000	0.71%
	Ted Marchese	100,000	0.71%
	Barbara Anne Tolhurst	100,000	0.71%
	USB Pty Ltd (Sub S/F A/C>	100,000	0.71%
	Robert Colin Wilson	100,000	0.71%
	Ronatac Pty Ltd	90,000	0.64%
	Ronald Robert Porter	88,000	0.62%
	Moy Corporation Pty Ltd	75,000	0.53%
		11,648,000	82.60%
7.	Unlisted Options
(a)	Options expiring 31 December 2007, exercisable at 3 cents each
	-Number of optionholders	6
	-Total options issued	8,050,000
	-Holders with more than 20% of this class
	Paula Fortunatow ATF Fortunatow Family Trust	2,500,000
	Mark Edwin Hurd ATF Mark Hurd Investment Trust	2,500,000
(b)	Options expiring 31 January 2010, exercisable at 7 cents each
	-Number of optionholders	7
	-Total options issued	5,400,000
	-Holders with more than 20% of this class
	Paula Fortunatow ATF Fortunatow Family Trust	1,500,000
	Mark Edwin Hurd ATF Mark Hurd Investment Trust	1,500,000
(c)	Options expiring 31 January 2010, exercisable at 9 cents each
	-Number of optionholders	2
	-Total options issued	3,000,000
	-Holders with more than 20% of this class
	Paula Fortunatow ATF Fortunatow Family Trust	1,500,000
	Mark Edwin Hurd ATF Mark Hurd Investment Trust	1,500,000
(d)	Options expiring 31 December 2010, exercisable at 20 cents each
	-Number of optionholders	6
	-Total options issued	5,100,000
	-Holders with more than 20% of this class
	M L Stevens	2,000,000
	G P O'Hara	1,200,000

8. Voting Rights

Each member present in person, or by proxy, representative or attorney, has one vote on a show of hands and one vote per share on a poll for each share held. Each member is entitled to notice of, and to attend and vote at, general meetings.