SPACETALK LTD — Annual Report 2011

Aug 29, 2011

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

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ASX Release MGM Wireless Ltd Tuesday August 30, 2011

MGM WIRELESS ACHIEVES RECORD PROFIT

School communications group MGM Wireless Ltd is pleased report that it achieved a record net profit for the year ended 30 June 2011 of $256,944, a 27% increase over the prior year. Revenue for the year was 5% higher at $2.4 million. The number of operational schools increased by 21% to 698 including 30 in New Zealand.

During the year, the company invested record amounts in R&D to develop a range of new products as well as enhancements to existing flagship products that improved functionality and extend their product life-cycles. New products will be progressively released throughout the coming year.

Further operational improvements were achieved by introducing new technology and streamlining processes in customer service systems, new customer implementation methodologies and back-end infrastructure. These resulted in significant efficiency and cost improvements which contributed to the much improved margins, despite pressure on pricing.

A major achievement during the year was the launch of School News Channel, our school based SMS social networking platform, which will create considerable opportunities schools to develop their engagement with their stakeholder communities, including parents, grandparents and former students. This is a subscription, micropayment based service which is expected to be a major contributor to growth over the next few years. A range of subscription based services are expected to become a significant feature of our revenue base over the next few years.

About MGM Wireless Ltd and Messageyou, LLC

MGM Wireless Ltd is a South Australian (Adelaide) based public company with a market capitalisation of A$1.4 m listed on the Australian Securities Exchange (ASX code: MWR). The company trades as Messageyou, LLC in the United States, based in Silicon Valley, Sunnyvale, California.

MGM Wireless is recognized in Australia and internationally as a pioneer of socially responsible technology-enabled school communications with a proven track record to design, develop and successfully commercialise innovative world class technology products in Australia and internationally.

The company’s patented SMS School communication solutions empower schools to effectively communicate to parents and caregivers using SMS text messaging to improve student attendance, welfare, safety and parent engagement. Measurable benefits for schools

Appendix 4E Preliminary final report Period ending 30 June 2011

include reduced operating costs, increased productivity and improved parent and community engagement, which ultimately improve student learning and social outcomes.

Schools in Australia, New Zealand and the United States use Messageyou software in their day-to- day operations.

For further information contact:

MGM Wireless Ltd. - (ASX:MWR) Mark Fortunatow, CEO Mobile: +61 421 328 984 Phone: +61 8 8431 2300 Email: mfortunatow@mgmwireless.com Web: www.mgmwireless.com

Appendix 4E – Page 2

Appendix 4E Preliminary final report Period ending 30 June 2011

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Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2011

(Previous corresponding period – Year ending 30 June 2010)

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Appendix 4E – Page 3

Appendix 4E Preliminary final report Period ending 30 June 2011

Appendix 4E Preliminary Final Report

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2011

(Previous corresponding period – Year ending 30 June 2010)

Results for announcement to the market

			$
Revenues	Up 5%	to	2,390,487
Net Profit after tax from continuing operations	Up 27%	to	256,944
Net Profit for period attributable to members	Up 27%	to	256,944
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 4

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2011

MGM Wireless Ltd is pleased to report that during the period, the Company achieved its previously stated goals of maintaining and improving revenue growth whilst simultaneously improving operations to increase profit, improve cash flow and strengthen its balance sheet.

During 2011, the Company invested a record amount of $635,985 on its R&D programs, of which $195,145 was capitalised. All of the programs were funded by operations. This significant investment was made in a range of new products as well as on existing flagship products which resulted in improved functionality, extension of product lifecycle and migrating to new technology platforms such as the cloud. The company believes this investment positions the company well for the future and will lead to further revenue and profit growth and create opportunities for the company to enter other markets and deliver new services.

Further operational improvements were achieved by introducing new technology and streamlining processes in customer service systems, new customer implementation methodologies and back-end infrastructure. These resulted in significant efficiency and cost improvements which in turn attributed to the improved profit results.

Key financial results for the year include:

1. EBITDA profit 21% improvement to $565,592 (2010 result $467,006)

2. Net profit 27% improvement to $256,944 (2010 result $202,985)

3. Revenue for the full year was 5% higher at $2,390,487 (2010 result $2,270,678).

4. Customer base of operational schools grew by by 21% to a total of 698 schools (2010 result 575).

5. For the six months to June 30, 2011 an EBITDA profit of $368,390,(2010: $353,347) with a net profit of $211,934 (2010 result $198,142).

6. For the six months to June 30, 2011, the company grew its customer base of operational schools by 25 % or 138 new schools, as compared to a fall of 3% and 15 schools for the six months to December 31, 2010.

The number of schools for the first half was affected by the timing of the transition of NSW Sydney region schools from a group supply arrangement through the region with MGM Wireless to each school that elects to do so, contracting individually with MGM Wireless. This transition was in progress in late December 2010 and was not completed until the second half of the year.

Balance Sheet

The company improved its net asset position by $448,498 from $199,404 to $647,902.

Total current liabilities were 45% lower than in 2010 at $983,232 which included $172,928 for unearned revenue and accrued SMS charges of $172,802. Trade payables were $209,053.

Revenue growth for the year ended June 2011 has not increased in direct correlation with the growth in school numbers, reflecting the nature of modern business models that utilize webbased technology to lower service delivery costs, enabling services to be offered with more competitive pricing without affecting profit margins or service quality. This has also had an impact on revenues when existing customers renew their multi-year contracts.

Appendix 4E – Page 5

Appendix 4E Preliminary final report Period ending 30 June 2011

Progress has been made throughout 2011 in building a solid footprint in the NZ market. At 30 June 2011, 72 schools had been signed of which 42 remain to be installed (not included in the school numbers above). This market presence will provide a valuable base, and provide significant opportunities to sell upgrades and new feature rich products to the whole NZ market as schools will no longer be tied to the product mandated by the former Government contract.

During the half year ended 30 June 2011, MGM Wireless completed the redesign and rebuild of its backend communication and billing infrastructure to support growth in communication volumes with the release of its new products and to improve management and customer service functionality for its existing systems. The rebuild included the move of its infrastructure to a high-security data-hosting facility in Sydney, and new functionality to support cloud server technology. This development has improved the security, scalability, reliability and data redundancy of MGM Wireless’s services.

During the financial year the re-purchase of the WA distribution licenses for $260,000 was finalised, meaning the Company now receives 100% of all customer license fees generated in this territory. This will also attribute to further improved profit and cashflow growth into the future, and allow greater marketing flexibility by being able to directly operate into this territory.

The 30 June closing cash balance of $ 108,000 was somewhat lower than usual, a temporary anomaly due to delays in cash receipts from customer contracts at the end of the quarter which was happened to be the start of the school holiday period and associated school closures. There was also a delay in the receipt of its R&D grant income of $273,000.

The Company is pleased with the progress achieved in 2011. The company is well positioned for the future, with ongoing profitable operations from existing products and new revenue opportunities and further associated profit growth with the release of its new products latter this year.

Appendix 4E – Page 6

Appendix 4E Preliminary final report Period ending 30 June 2011

	Appendix 4E Preliminary final report Period ending 30June 2011
MGM Wireless Limited Consolidated Statement of Comprehensive Income For the Year Ended 30 June 2011 Note Continuing Operations Revenue 2 Cost of sales Doubtful debts Borrowing costs Amortisation and depreciation Advertising and marketing Consulting fees Corporate and administration Employee costs Profit before tax Income tax expense Profit for the year from continuing operations Profit for the year Other comprehensive income Exchange differences on translating foreign operations Transfer to foreign currency translation reserve Other comprehensive income net of tax Total comprehensive income for the year Profit attributable to : Owners of the Company Total comprehensive income attributable to: Owners of the Company Earnings per share: From continuing and discontinued operations: Basic (cents per share) 3 Diluted (cents per share) 3 From continuing operations: Basic (cents per share) 3 Diluted (cents per share) 3	2011 2010 $ $ 2,390,487 2,270,678 (233,070) (52,753) 1,597 42,182 (55,334) (39,643) (253,314) (224,378) 0 (8,730) (51) (17,432) (386,716) (390,302) (1,206,655) (1,376,637)
	256,944 202,985 - -
	256,944 202,985
	256,944 202,985
	4,355 2,295 (4,355) (2,295)
	- -
	256,944 202,985
	256,944 202,985
	256,944 202,985
	0.11 0.09 0.11 0.09 0.11 0.09 0.11 0.09

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

Appendix 4E – Page 7

Appendix 4E Preliminary final report Period ending 30 June 2011

	Appendix 4E Preliminary final report Period ending 30June 2011
MGM Wireless Limited Consolidated Statement of Financial Position As at 30 June 2011 Note ASSETS Current Assets Cash and cash equivalents 6 Trade and other receivables Other Total Current Assets Non-Current Assets Property, plant & equipment Intangibles Total Non-Current Assets Total Assets LIABILITIES Trade and other payables Borrowings Provisions Total Current Liabilities Borrowings Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Parent entity interest Issued capital 4 Reserves 5 Accumulated losses Outside equity interest Issued capital Accumulated losses Total Equity	2011 2010 $ $ 107,975 223,583 602,361 509,543 5,864 5,624
	716,200 738,750
	151,694 146,884 1,063,240 1,094,521
	1,214,934 1,241,405
	1,931,134 1,980,155
	888,948 1,400,779 13,080 300,000 81,204 79,972
	983,232 1,780,751
	300,000 0
	300,000 0
	1,283,232 1,780,751
	647,902 199,404
	7,014,777 6,864,663 181,558 136,168 (6,548,432) (6,801,427)
	647,902 199,404
	- - - - - -
	- -
	647,902 199,404

The above Consolidated Statement of Financial Position should be read in conjunction with the attached notes.

Appendix 4E – Page 8

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Consolidated Statement of Changes in Equity For the Year Ended 30 June 2011

At 1 July 2009 Profit attributable to members of parent entity Shares issued Cost of share issue Currency translation differences At 1 July 2010 Profit attributable to members of parent entity Shares issued (SPP) Shares issued (employee) Cost of share issue Cost of share issue Options issued to Directors Currency translation differences At 30 June 2011	Issued Capital Accum. Losses Option Issue Reserve Foreign Currency Translation Reserve Total Equity $ $ $ $ $ 6,722,112 (7004,413) 135,856 (1,983) (148,428) - 202,986 - 202,986 146,500 - - 146,500 (3,949) - - (3,949) - - - 2,295 2,295
	6,864,663 (6,801,427) 135,856 312 199,404 - 256,944 - 256,944 154,275 - - 154,275 8,000 8,000 (16,111) (16,111) 3,950 (3,949) - 1 41,035 41,035 - - - 4,355 4,355
	7,014,777 (6,548,432) 176,891 4,667 **647,902 **

Appendix 4E – Page 9

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Consolidated Statement of Cash Flows For the Year Ended 30 June 2011 Notes Cash flows from operating activities Profit (loss) for the year Amortisation Depreciation Non-cash salaries Doubtful debts provision Movements in working capital: (Increase) / decrease in trade and other receivables (Increase) / decrease in other assets Increase / (decrease) in trade and other payables Increase / (decrease) in provisions Decrease in unearned revenue Net cash generated from operations Cash flows from investing activities Payments for plant and equipment Payment for research and development Net cash used provided / (used by) investing activities Cash flows from financing activities Proceeds from issue of shares Costs associated with issue of shares Proceeds from borrowing Net cash provided by / (used in) financing activities Net increase / (decrease) in cash held Cash at the beginning of the year Effect of exchange rate changes Cash at the end of the year 6	2011 2010 $ $ 256,944 202,986 226,426 198,497 26,697 25,881 49,034 0 (6,652) (42,182)
	552,449 385,182 (86,166) (240,999) (240) 5,088 (415,951) 108,700 1,232 49,074 (95,878) (99,132)
	(44,554) 207,913
	(31,507) (3,654) (195,145) (220,470)
	(226,652) (224,124)
	154,275 - (16,112) (3,949) 13,080 -
	151,243 (3,949)
	(119,693) (20,160) 223,583 241,448 4,355 2,295
	107,975 223,583

The above Consolidated Statement of Cash Flows should be read in conjunction with the attached notes.

Appendix 4E – Page 10

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited

Notes to the Financial Statements for the Year Ended 30 June 2011

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 2011 annual financial report.

2. Revenue Revenue Sales revenue Interest received – other persons Total Revenue 3. Earnings per Share (EPS) Net profit / (loss) from continuing operations attributable to members of the parent entity Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share Earnings per share (cents)	2011 $ 2010 $ 2,390,457 30 2,270,658 20
	2,390,487 2,270,678
	256,944 202,985 232,393,663 219,971,563 0.11 0.09

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 11

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2011 (Cont.)

4. Contributed Equity Issued and paid up capital Ordinary shares – fully paid Movement in ordinary shares on issue Balance at beginning of year Issued pursuant to capital raising (July 2009) Share issue costs Share issue costs 2010 transferred to Retained Earnings Issued to management (Dec 2009) Balance at end of year 5. Reserves Option issue reserve Foreign currency translation reserve (a) Option issue reserve (i) Movements in reserve Opening balance 1 July Share-based payments Closing balance 30 June (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 Currency translation differences Closing balance 30 June (ii) Nature and purpose of reserve The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled entity.	2010 $ 2010 $ 7,014,777 6,864,663
	Number 220,616,768 $ 6,864,663 18,150,000 154,275 0 (16,110) 0 3,949 1,000,000 8,000
	239,766,768 7,014,777
	176,891 135,856 4,667 312
	181,558 136,168
	135,856 41,035 135,856 -
	176,891 135,856
	312 4,365 (1,983) 2,293
	4,667 312

Appendix 4E – Page 12

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2011 (Cont.)

6. Cash Flow Statement -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 7. Net Tangible Asset per Security Net tangible assets Number of shares on issue at 30 June Net tangible assets per share (cents)	2011 $ 2010 $ 107,795 223,583
	(415,338) (895,117) 239,766,768 220,616,768 (0.17) (0.41)

8. Dividends Paid

No dividends were paid or proposed during the financial year ended 30 June 2011.

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 school messaging solutions and internet related services. The Group functions with a subsidiary operating in each geographical segment. Each company represents a strategic business unit that offers different risks and rates of return. This is the basis by which management controls and reviews the operations of the Group. The following table presents the revenue and earnings information regarding each segment and their assets and liabilities.

2011	Australia –	USA –		NZ –		Total
	MGM Wireless	Message	You	MGM	Wireless
	Holdings Pty	LLC		(NZ) Pty Ltd
	Ltd
Segment	2,362,735		512		27,240	2,390,487
revenue
Segment results	304,999	(14,127)			(33,928)	256,944
Segment assets	1,874,310		564		56,260	1,931,134
Segment	1,240,475		29,946		12,811	1,283,232
liabilities
2010
Segment	2,240,795		12,848		17,035	2,270,678
revenue
Segment results	210,830		(7,679)		(166)	202,985
Segment assets	1,951,046		9,945		19,164	1,980,155
Segment	1,747,578		31,044		2,129	1,780,751
liabilities

Appendix 4E – Page 13

Appendix 4E Preliminary final report Period ending 30 June 2011

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2011 (Cont.)

11. Additional Commentary on Results

(a) Earnings per Security (EPS)

Basic EPS for the year ended 30 June 2011 was 0.1 cents.

Details of the calculation of basic and diluted EPS are 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 2011.

12. Subsequent Events

Except for as disclosed above, there has not been any matter or circumstance that has arisen since 30 June 2011, 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 14