SPACETALK LTD — Annual Report 2007

Aug 30, 2007

MGM Wireless cashed up for New Year assault on international markets August 31st, 2007

Adelaide-based school communications and services group, MGM Wireless Ltd, today announces a loss of $784,000 on revenues of $2.198m for the year to end June, 2007. The result comes after expensing costs associated with a strong year of international expansion and product development and a depreciation charge of $184,000.

"This has been a big year of investing for MGM Wireless, during which we opened our Californian office, launched a joint venture in India and consolidated our market leading position among Australian schools," commented MGM Wireless executive chairman, Mr Mark Fortunatow.

The company ended the year with cash on hand of $806,000 and is pushing hard into the US school market with the recent signing of an entire school district in Arizona.

"MGM Wireless is also gearing up for a new product launch in October which will enhance the company's interactive offering between parents and schools. The new product will shortly commence beta testing, and is generating a lot of excitement in house", Mr Fortunatow said.

"We are entering the new financial year with a strong product offering, sound financial backing and ready to move ahead and improve on a great 2007 financial year, during which we achieved many significant milestones and grew the company from an $8m to a $31m company today servicing schools and school communities in four countries," Mr Fortunatow said.

"We have boosted our organizational capability, growing sales teams and sales support in Australia and see a lot of opportunity with our joint venture partner in India," he said.

Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2007 (Previous corresponding period – Year ending 30 June 2006)

Results for announcement to the market

			$
Revenues from ordinary activities	up 10%	to	2,198,029
(Loss) after tax from continuing operations	up 24%	to	(783,932)
Net (Loss) for period attributable to members	up 24%	to	(783,932)
Dividends (distributions)	Amountper security		Franked amountper security
Final dividend	Nil¢		Nil¢
Previous corresponding period	Nil¢		Nil¢
Record date for determining entitlements todividends	Not applicable

The company has proposed not to pay a dividend.

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2007

The company is pleased to conclude the year with a number of significant achievements and operational highlights, as previously announced, including:

• successful expansion into the US market
• Commencement of operations into India
• Awarded 'preferred Tender' by WA Government for all WA public schools
• Record revenue growth
• Alliances with VIP Tone in California and South Australia
• New board appointments
• Significant growth in communication traffic over company networks
• Winning first US district school sale

Clearly, a highlight of the Australian business was the winning the preferred tenderer role with the Western Australian Department of Education and Training to supply 800 schools with SMS messaging software.

The company is confident that the messageyou solution will continue to prove its ability to monitor school attendance and fight truancy. A clear development is the way in which Australian schools are beginning to discover the effectiveness of communicating up to minute information to their communities using unobtrusive text messaging and beaming into a portal which is never far from most Australian's hands, their mobile phones.

The company is moving forward with confidence and optimism, and is looking forward to reporting back to its shareholders on its progress.

MGM Wireless Limited Income Statement For the Year Ended 30 June 2007

	Note	2007$	2006$
Revenue	2	2,198,029	1,991,803
Cost of salesDoubtful debtsBorrowing costsAmortisation & depreciationAdvertising and marketingConsulting feesCorporate and administration expensesShare based payment expenseEmployee benefit expensesNet foreign currency losses		(737,550)(22,960)(17,253)(184,255)(121,199)(151,153)(484,259)-(1,257,278)(6,054)	(293,005)(31,974)(89)(179,049)(324,590)(338,731)(376,407)(52,836)(1,026,115)-
Loss before income tax expenseIncome tax expense		(783,932)-	(630,993)-
Loss after tax from continuing operationsNet loss attributable to minority interest		(783,932)-	(630,993)(155)
Net loss attributable to members of MGMWireless Limited		(783,932)	(631,148)
Basic earnings per share (cents per share)	3	(0.46)	(0.41)
Diluted earnings per share (cents per share)	3	(0.46)	(0.41)

The above Income Statement should be read in conjunction with the attached notes.

MGM Wireless Limited Balance Sheet As at 30 June 2007

$$ASSETSCurrent AssetsCash and cash equivalents6806,812562,834Trade and other receivables475,076329,054Other1,3425,155Total Current Assets1,283,230897,043Non-Current AssetsProperty, plant & equipment158,557158,723Intangibles615,383344,700Total Non-Current Assets773,940503,423Total Assets2,057,1701,400,466LIABILITIESCurrent LiabilitiesTrade and other payables351,906281,138Provisions39,75822,818	2006
Total Current Liabilities391,664303,956
Total Liabilities391,664303,956
Net Assets1,665,5061,096,510
EQUITYParent entity interestIssued capital46,016,5124,663,584Reserves575,79675,796Accumulated losses5(4,426,802)(3,637,805)
1,665,5061,101,575Outside equity interestIssued capital20Accumulated losses(20)(5,085)	20
-(5,065)Total Equity1,665,5061,096,510

The above Balance Sheet should be read in conjunction with the attached notes.

MGM Wireless Limited Statement of Changes in Equity For the Year Ended 30 June 2007

	IssuedCapital	AccumulatedLosses	OptionIssueReserves	OutsideEquityInterest	TotalEquity
	$	$	$	$	$
At 1 July 2005Loss attributable to	4,291,584	(3,006,657)	22,960	(5,220)	1,302,667
members of parent entityProfit attributable to	-	(631,148)	-	-	(631,148)
minority interest	-	-	-	155	155
Shares issuedCost of share based	372,000	-	-	-	372,000
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	4,663,584	(3,637,805)	75,796	(5,065)	1,096,510
members of parent entityTransfer of accumulatedlosses of minority interestin accordance with AASB	-	(783,932)	-	-	(783,932)
127	-	(5,065)	-	5,065	-
Shares issued	1,430,000	-	-	-	1,430,000
Transaction costs	(77,072)	-	-	-	(77,072)
At 30 June 2007	6,016,512	(4,426,802)	75,796	-	1,665,506

The above Statement of Changes in Equity should be read in conjunction with the attached notes.

MGM Wireless Limited Cash Flow Statement For the Year Ended 30 June 2007

	Note	2007$	2006$
Cash flows from operating activitiesReceipts from customersPayments to suppliers and employeesInterest receivedInterest and other costs of finance		2,015,639(2,659,918)13,408(17,253)	1,879,817(2,284,985)23,524(89)
Net cash (used in) operating activities	6(a)	(648,124)	(381,733)
Cash flows from investing activitiesPayments for plant & equipmentPayment for research and development		(30,889)(288,883)	(76,820)-
Net cash provided by investing activities		(319,772)	(76,820)
Cash flows from financing activitiesProceeds from issue of sharesExpenses of share issuesRepayment of borrowings		1,295,000(77,072)-	372,000--
Net cash provided by (used in) financing activities		1,217,928	372,000
Net decrease in cash held		250,032	(86,553)
Cash at beginning of the yearEffect of exchange rate changes		562,834(6,054)	649,387-
Cash at end of the year	6(b)	806,812	562,834

The above Cash Flow Statement should be read in conjunction with the attached notes.

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2007

1. Significant Accounting Policies

Statement of Compliance

The Appendix 4E preliminary final report has been prepared in accordance with ASX listing rules and the recognition and measurement criteria of Accounting Standards and interpretations. Accounting Standards include Australian equivalents to International Financial Reporting Standards.

Basis of Preparation

The Appendix 4E has been prepared on the basis of historical cost. The accounting policies and methods of computation adopted in the preparation of the Appendix 4E are consistent with those adopted and disclosed in the company's 2006 annual financial report for the financial year ended 30 June 2006.

2.Revenue from Ordinary Activities	2007$	2006$
Revenue from ordinary activitiesSales revenueInterest received – other persons	2,184,62113,408	1,968,27923,524
Total Revenue from Ordinary Activities	2,198,029	1,991,803
3.Earnings per Share (EPS)
Net loss from continuing operations attributable to membersof the parent entity	(783,932)	(631,148)
Weighted average number of ordinary shares outstandingduring the year used in the calculation of basic earnings pershare	168,296,113	155,347,169
Earnings per share (cents)	(0.46)	(0.41)

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.

	2007$	2006$
4.Contributed Equity
Issued and paid up capital
Ordinary shares – fully paid	6,016,512	4,663,584
Movement in ordinary shares on issue	Number	$
Balance at beginning of year	164,621,690	4,663,584
Issue for cash issue at 5.5 cents – 2 February 2007Issue for cash on exercise of options – 28 May 2007Consideration for acquisition of distribution rights – 30 May	8,000,000500,000	440,00015,000
2007	924,658	135,000
Issue for cash at 13 cents – 14 June 2007	6,000,000	780,000
Issue for cash on exercise of options – 22 June 2007	2,000,000	60,000
Share issue costs	-	(77,072)
Balance at end of year	182,046,348	6,016,512

			Appendix 4EPreliminary final report
			Period ending 30 June 2007
	Notes to the Financial Statements for the Year Ended 30 June 2007 (Cont.)
		2007$	2006$
5.	Reserves and Accumulated Losses
	Option issue reserve	75,796	75,796
	Accumulated losses	(4,426,802)	(3,604,534)
	(a) Option issue reserve
	(i) Movements in reserve
	Opening balance 1 July	75,796	22,960
	Share-based payments	-	52,836
	Closing balance 30 June	75,796	75,796
	(ii) Nature and purpose of reserveThe option issue reserve contains amounts receivedor the value on the issue of options over unissuedcapital of the company.
	(b) Accumulated losses
Accumulated losses at beginning of yearNet loss attributable to members of MGM Wireless LtdTransfer of accumulated losses of minority interest in		(3,637,805)(783,932)	(3,006,657)(631,148)
	accordance with AASB 127	(5,065)	-
	Accumulated losses at end of year	(4,426,802)	(3,637,805)
6.	Cash Flow Statement
	(a) Reconciliation of cash
	Cash at the end of the year as shown in the statement ofcash flows is reconciled to the related items in the statementof financial position as follows:
	Cash at bank and on hand	806,812	562,834
	(b) Reconciliation of net cash used in operatingactivities to loss ordinary activities after income tax:
	Net lossNon-cash items	(783,932)	(630,993)
	Amortisation	153,200	153,200
	Depreciation	31,055	25,849
	Bad and doubtful debts	22,960	31,973
	Provision for employee entitlementsEquity settled share based payment	16,940-	16,05252,836
	Foreign exchange loss	6,054	-
	Changes in assets and liabilitiesReceivables	(168,982)	(88,462)
	Payables	34,554	55,114
	Tax assets	36,214	2,698
	Other assets	3,813	-
	Net cash used in operating activities	(648,124)	(381,733)

Notes to the Financial Statements for the Year Ended 30 June 2007 (Cont.)

7.Net Tangible Asset per Security	2007$	2006$
Net tangible assets	1,050,123	751,810
Number of shares on issue at 30 June	182,046,348	164,621,690
Net tangible assets per share (cents)	0.58	0.46

8. Dividends Paid

No dividends were paid or proposed during the financial year ended 30 June 2007.

9. Dividend Reinvestment Plans

The Company does not have Dividend Reinvestment Plans.

10. Segment Information

The company operates predominantly in one business segment, being the provision of business messaging solutions and intent related services and in one geographic region, namely Australia.

11. Additional Commentary on Results

(a) Earnings per Security (EPS)

Basic EPS for the year ended 30 June 2007 was (0.46) cents.

Details of the calculation of basic and diluted EPS is outlined in note 3.

(b) Returns to Shareholders

The Company has not made any distributions or buy backs during the financial year ended 30 June 2007.

12. Subsequent Events

Any event of material significance has been reported. There has been no other event, item or transaction between the end of the financial year and the date of this report of a material and unusual nature likely, in the opinion of the Directors, to have a significant effect on the Company operations, results or outcomes in subsequent years.

13. Status of Audit or Review

The statutory financial statements of the consolidated entity are in the process of being audited.

Signed: Mark Fortunatow Director

Appendix 4E – Page 9