SPACETALK LTD — Annual Report 2009

Aug 26, 2009

Companies Announcement office Australian Stock Exchange Limited 20 Bridge Street Sydney NSW 2000

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2009 Preliminary Annual Report

27 August 2009

The Company is pleased to report solid progress in its previously stated goals of maintaining and improving growth momentum whilst simultaneously tracking operations towards profit and positive cashflow.

Key achievements include:

• For the six months to June 30th, 2009 the company EBITDA profit was $ 6,425.00 with an operating loss of ($118,855).

• Revenue for the six months to June 30[th] , 2009 was up by 16.5% from $ 791,268 to $ 921,921.

• For the full year to June 30[th] , 2009 the company EBITDA loss was ($124,889) with an operating loss of ($350,109).

• Revenue for the year was lower by 0.8 % from $ 1,902,566 to $ 1,887,067

• For the year, the company grew its customer base of operational schools by 66 % or 142 new schools to a total of 370 live schools by June 30th, 2009 as compared to 228 schools at the start of the year.

• As of June 30th, 2009 there was a backlog of 106 sold (contracted) schools yet to go live.

Current Liabilities

Total current liabilities were $1,608,610 of which trade payables were $147,573. The balance of current liabilities included an accrual of $367,938 for unearned revenue, accrued SMS charges of $143,161, other accruals and provisions for $649,938 and borrowings of $300,000.

Unearned revenue relates to the unexpired portion of annual software license fees. Software license fees are normally 3 year agreements – which are non-refundable by the company to the customer. The company invoices customers annually. Under current accounting policy, the company accrues revenues on a monthly basis, with the balance of the annual term appearing as a current liability.

The company does not report the un-expired balance of any term of a 3 year agreement as an accrued asset. The aggregate value of these contracts approximately represents additional forward and contracted revenue in excess of $ 4 million to the company.

As previously reported, costs associated with the re-organisation of the company’s operations came to approximately $ 160,000 - which were felt early in the September 2008 quarter.

About MGM Wireless Ltd and Messageyou, LLC

MGM Wireless Ltd is a public company with a market capitalisation of approximately A$ 2.0 m listed on the Australian Securities Exchange (ASX code: MWR). The company trades as Messageyou, LLC in the United States, with its head office in Silicon Valley at Sunnyvale, Cal.

The company’s patented School Attendance Management solutions empower schools to effectively communicate to parents and caregivers using SMS text messaging in combination with culturally sensitive communication to improve attendance, student welfare and safety. MGM Wireless is recognized in Australia and internationally as pioneers and market leaders. MGM’s professional services team delivers an integrated suite of software and communications using its own infrastructure. The solutions enable schools to reduce costs, increase productivity, discharge their duty of care, engage parent involvement, and ultimately improve student learning and social outcomes. Schools in Australia, New Zealand and America use Messageyou software in their day to day operations.

For further information contact:

MGM Wireless Ltd. - (ASX:MWR, MWRO)

Phone: +61 8 8431 2300 Email: mfortunatow@mgmwireless.com Web: www.mgmwireless.com

Appendix 4E Preliminary final report Period ending 30 June 2009

Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

MGM Wireless Limited (ABN 93 091 351 530) Year Ending 30 June 2009

(Previous corresponding period – Year ending 30 June 2008)

Results for announcement to the market

			$
Revenues	down 0.8%	to	1,887,067
(Loss) after tax from continuing operations	down 84%	to	(350,109)
Net (Loss) for period attributable to members	down 84%	to	(350,109)
Dividends (distributions)	Amount	Franked amount
	per security	per	security
Final dividend	Nil¢		Nil¢
Previous corresponding period	Nil¢		Nil¢
Record date for determining entitlements to
dividends	Not applicable
The company has proposed not to pay a dividend.

Appendix 4E – Page 1

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2009

The Company is pleased to inform Shareholders of significant progress in the achievement of previously stated goals of maintaining and improving growth momentum whilst simultaneously track operations towards profit and positive cash flow.

Key financial results for the year include:

1. For the six months to June 30[th] , 2009 the company is pleased to announce an EBITDA profit of $6,425.

2. For the full year, the company grew its customer base of operational schools by 66% or 142 new schools to a total of 370 live schools by June 30[th] , 2009 as compared to 228 schools at the start of the year.

3. As of June 30[th] , 2009 there was a backlog of 106 sold (contracted) schools yet to go live.

4. For the six months to June 30[th] , 2009 the company loss was $118,855 with EBITDA of $6,425.

5. For the full year to June 30[th] , 2009 the company EBITDA loss was $124,889 with an operating loss of $350,109.

6. For the six months to June 30[th] , 2009, the company grew its customer base of operational schools by 44 % or 113 new schools, as compared to growth of 13% and 29 new schools for the six months to 31[st] December 2008.

7. Revenue for the year was lower by 1% from $ 1,902,566 to $ 1,887,067 due to a market related product pricing adjustment – which had little effect on our overall gross profit margins.

Current Liabilities

Total current liabilities were $1,608,610 which included $367,938 for unearned revenue and accrued SMS charges of $143,161. Trade payables were $147,573.

Unearned Revenue Liability and Forward Revenue

The company typically enters into multi-year agreements with its customers, but only invoices annually in advance. Revenue is recognised monthly on a straight line basis that reflects the timing, nature and value of the services provided. The balance of the annual license fee component is booked as unearned revenue liability. The balance of the multi-year agreement is not recognised in the company’s accounts.

As previously mentioned, costs associated with the re-organisation of the company’s operations came to approximately $160,000 - which were felt early in the September quarter.

The company is particularly pleased that it was able to make significant improvement in the size of its business by way of the 66% growth in its school clients, whilst simultaneously restructuring its operations and delivering a much improved bottom line trading result. If the one-off re-organisation costs in the September quarter are taken into consideration the company’s overall results for the year are even stronger.

Appendix 4E – Page 2

Appendix 4E Preliminary final report Period ending 30 June 2009

To support its strategy, during the year, the company implemented many new internal systems and business processes in its sales management, customer service, R&D and finance and administration to streamline operations, improve efficiencies, productivity and reduce costs. These included improved Customer Relationship Management, Accounting, Billing and Management systems. Whilst expensive to introduce, these systems have made a significant improvement to the company’s financial performance.

In particular, the company R&D operations developed many new and innovative product features and technology improvements which resulted in a more attractive, functionally richer and more competitive product offering to both new and existing customers. This assisted the company to drive new sales harder and achieve a record number of new sales.

The company is committed to building on the progress achieved this year, is excited about its future prospects and looks forward to reporting an improved result for 2010.

Appendix 4E – Page 3

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited Income Statement For the Year Ended 30 June 2009

Note Revenue 2 Cost of sales Doubtful debts Borrowing costs Amortisation & depreciation Advertising and marketing Consulting fees Corporate and administration expenses Share based payment expense Employee benefit expenses Net foreign currency losses Loss before income tax expense Income tax expense Loss after tax Net loss attributable to minority interest Net loss attributable to members of MGM Wireless Limited Basic earnings per share (cents per share) 3 Diluted earnings per share (cents per share) 3	2009 $ 2008 $ 1,887,067 1,902,566 (141,341) (81,468) (28,698) (196,522) (38,968) (87,911) (478,626) - (1,183,642) - (905,664) (86,089) (13,950) (338,797) (195,060) (144,530) (619,114) (109,560) (1,714,683) (2,621)
	(350,109) (2,227,502) - -
	(350,109) (2,227,502) - -
	(350,109) (2,227,502)
	(0.18) (1.20) (0.18) (1.20)

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

Appendix 4E – Page 4

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited Balance Sheet As at 30 June 2009

Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other 6 Total Current Assets Non-Current Assets Property, plant & equipment Intangibles Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Borrowings Provisions Total Current Liabilities Total Liabilities Net Assets EQUITY Parent entity interest Issued capital Reserves Accumulated losses 4 5 Outside equity interest Issued capital Accumulated losses Total Equity	2009 $ 2008 $
	241,448 320,265 10,712 236,651 670,001 3,236
	572,425 909,888
	169,111 718,646 196,643 584,386
	887,757 781,029
	1,460,182 1,690,917
	1,277,712 300,000 30,898 1,473,047 5,000 56,038
	1,608,610 1,534,085
	1,608,610 1,534,085
	(148,428) 156,832
	6,722,112 133,873 (7,004,413) 6,677,112 134,024 (6,654,304)
	(148,428) 156,832
	20 (20) 20 (20)
	- -
	(148,428) 156,832

EQUITY Parent entity interest Issued capital Reserves Accumulated losses Outside equity interest Issued capital Accumulated losses Total Equity

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

Appendix 4E – Page 5

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited Statement of Changes in Equity For the Year Ended 30 June 2009

At 1 July 2007 Loss attributable to members of parent entity Shares issued Cost of share based payment Currency translation differences At 30 June 2008 At 1 July 2008 Loss attributable to members of parent entity Shares issued Cost of share based payment Currency translation differences At 30 June 2009	Issued Capital $ Accumulated Losses $ Option Issue Reserve $ Foreign Currency Translation Reserve $ Total Equity $ 6,016,512 (4,426,802) 75,796 - 1,665,506 (2,227,502) - - (2,227,502) 611,100 - - - 611,100 49,500 - 60,060 - 109,560 - - - (1,832) (1,832)
	6,677,112 (6,654,304) 135,856 (1,832) 156,832
	Issued Capital $ Accumulated Losses $ Option Issue Reserve $ Foreign Currency Translation Reserve $ Total Equity $ 6,677,112 (6,654,304) 135,856 (1,832) 156,832 - (350,109) - - (350,109) 45,000 - - - 45,000 - - - - - - - - (151) (151)
	6,722,112 (7,004,413) 135,856 (1,983) (148,428)

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

Appendix 4E – Page 6

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited Cash Flow Statement For the Year Ended 30 June 2009

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance Net cash (used in) operating activities 6(b) Cash flows from investing activities Payments for plant & equipment Payment for research and development Net cash provided by investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Net cash provided by (used in) financing activities Net decrease in cash held Cash at beginning of the year Effect of exchange rate changes Cash at end of the year 6(a)	2009 $ 2008 $ 2,011,188 (2,160,851) 59 (28,698) 2,121,217 (2,958,171) 12,361 (13,950)
	(178,302) (838,543)
	(5,885) (252,365) (74,648) (271,238)
	(258,250) (345,886)
	146,500 295,000 611,100 5,000
	441,500 616,100
	4,948 568,329 236,651 806,812 (151) (1,832)
	241,448 236,651

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

Appendix 4E – Page 7

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited

Notes to the Financial Statements for the Year Ended 30 June 2009

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 2008 annual financial report.

In the previous financial year, the company changed its revenue recognition policy for the year ended 30 June 2008 and is now recognising Annual Licence Fee revenue over the life of the contract rather than the previous practice of recognising revenue at the time of signing the purchase contract. Management believes that this will result in the financial report providing reliable and more relevant information about the entity's financial performance and financial position. The change in accounting policy led to a once-off write-down of revenue by $486,826. The effect of the change is detailed below.

Net loss under old	Effect of change in	Net loss under new	Net loss under new
policy	accounting policy		policy
$	$		$
2008 (1,740,676)	486,826	(2,227,502)
		2009	2008
		$	$
2. Revenue
Revenue
Sales revenue		1,887,008	1,890,205
Interest received – other persons		59	12,361
Total Revenue		1,887,067	1,902,566
3. Earnings per Share (EPS)
Net loss from continuing operations attributable to members
of the parent entity		(350,109)	(2,227,502)
Weighted average number of ordinary	shares outstanding
during the year used in the calculation	of basic earnings per
share		198,259,835	187,000,624
Earnings per share (cents)		(0.18)	(1.20)

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.

Appendix 4E – Page 8

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited	MGM Wireless Limited
Notes to the Financial Statements for the Year Ended 30 June 2009 (Cont.)
		2009	2008
		$	$
4.	Contributed Equity
Issued and paid up capital
Ordinary shares – fully paid		6,722,112	6,677,112
Movement in ordinary shares on issue		Number	$
Balance at beginning of year		197,561,205	6,677,112
Issued as consideration for licence distribution rights		5,000,000	45,000
Balance at end of year		202,561,205	6,722,112
5.	Reserves
Option issue reserve		135,856	135,856
Foreign currency translation reserve		(1,983)	(1,832)
		133,873	134,024
(a)	Option issue reserve
	(i) Movements in reserve
	Opening balance 1 July	135,856	75,796
	Share-based payments	-	60,060
	Closing balance 30 June	135,856	135,856
	(ii) Nature and purpose of reserve
	The option issue reserve contains amounts received
	or the value on the issue of options over unissued
	capital of the company.
(b)	Foreign currency translation reserve
	(i) Movements in reserve
	Opening balance 1 July	(1,832)	-
	Currency translation differences	(151)	(1,832)
	Closing balance 30 June	(1,983)	(1,832)
	(ii) Nature and purpose of reserve
	The foreign currency translation reserve records
	exchange differences arising on translation of a
	foreign controlled entity.

Appendix 4E – Page 9

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited
Notes to the Financial Statements for the Year Ended 30	June 2009 (Cont.)
	2009	2008
	$	$
6. Cash Flow Statement
(a)Reconciliation of cash
Cash at the end of the year as shown in the statement of
cash flows is reconciled to the related items in the statement
of financial position as follows:
Cash at bank and on hand	241,448	236,651
(b)Reconciliation of net cash used in operating
activities to loss ordinary activities after income tax:
Net loss	(350,109)	(2,227,502)
Non-cash items
Amortisation	163,105	302,235
Depreciation	33,417	36,562
Bad and doubtful debts	81,468	86,089
Equity settled share based payment	-	109,560
Changes in assets and liabilities
Receivables	268,268	(281,014)
Tax assets	-	102,826
Other assets	(7,477)	(1,893)
Payables	(197,746)	506,288
Provisions	(25,140)	16,280
Unearned revenue	(144,088)	512,026
Net cash used in operating activities	(178,302)	(838,543)
7. Net Tangible Asset per Security
Net tangible assets	(867,074)	(427,554)
Number of shares on issue at 30 June	202,561,205	197,561,205
Net tangible assets per share (cents)	(0.43)	(0.22)
8. Dividends Paid

No dividends were paid or proposed during the financial year ended 30 June 2009.

9. Dividend Reinvestment Plans

The Company does not have Dividend Reinvestment Plans.

Appendix 4E – Page 10

Appendix 4E Preliminary final report Period ending 30 June 2009

MGM Wireless Limited

Notes to the Financial Statements for the Year Ended 30 June 2009 (Cont.)

10. Segment Information

The company operates predominantly in one business segment, being the provision of business messaging solutions and internet related services. The Group’s primary segment format is geographical as each segment represents a strategic business unit that offers different risks and rates of return. The following table presents the revenue and earnings information regarding geographical segments and the assets and liabilities.

	Australia	USA	Total
	$	$	$
2009
Segment revenue	1,837,341	49,726	1,887,067
Segment results	(244,898)	(105,211)	(350,109)
Segment assets	1,445,450	14,732	1,460,182
Segment liabilities	1,575,079	33,531	1,608,610
2008
Segment revenue	1,806,909	95,657	1,902,566
Segment results	(1,918,263)	(309,239)	(2,227,502)
Segment assets	1,657,499	33,418	1,690,917
Segment liabilities	1,514,210	19,875	1,534,085

11. Additional Commentary on Results

(a) Earnings per Security (EPS)

Basic EPS for the year ended 30 June 2009 was (0.18) 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 2009.

12. Subsequent Events

Subsequent to the end of the financial year, the company reached a commercial settlement to finalise and cease litigation proceedings initiated against the company by Lionpalm Pty Ltd, and Messrs Ian & Dean Cameron which operated the company’s Western Australian & South Australian licenses, as well as a cross-claim filed by MGM against Lionpalm and Ian & Dean Cameron.

Lionpalm, was seeking $460,000 and further and alternative compensation plus costs from MGM Wireless Holdings Pty Ltd – a subsidiary of MGM Wireless Ltd - for a variety of alleged claims under various sections of Fair Trade and Trade Practices Act and claims in contract.

The parties have settled the dispute and release each other by:

1. MGM agreeing to acquire the licenses, operations, customers, revenues and all aspects of the businesses in Western Australia & South Australia.

2. Settlement payment by MGM to Lionpalm to be satisfied by:

3. a. Lionpalm retaining approximately $100,000 currently held by Lionpalm in trust for MGM Wireless Holdings Pty Ltd; and

Appendix 4E – Page 11

Appendix 4E Preliminary final report Period ending 30 June 2009

• b. By November 30[th] , 2010, payment of $ 260,000 by MGM Wireless Holdings Pty Ltd to Lionpalm.

• Each party bearing its own costs.

Except for as disclosed above, there has not been any matter or circumstance that has arisen since 30 June 2009, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial 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 12