SPACETALK LTD — Annual Report 2012

Aug 19, 2012

ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000

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ASX Release MGM Wireless Ltd Monday August 20, 2012

MGM WIRELESS ACHIEVES RECORD PROFIT

Highlights of the year included:

• Profit up 135% to $603K

• Operational schools now number 808, up 16%

• Nearly 7 million SMS text messages sent to parents

• School News Channel launched

• Consolidation of the share capital

The Directors of school communications group, MGM Wireless Ltd, are pleased to report that the company achieved a record net profit for the year ended 30 June 2012 of $602,756, a 135% increase over the prior year. Revenue for the year was 9% higher at $2,605,719.

Strong revenue growth was primarily driven by the growth in the number of operational schools over the past two years and the very high rate of annual renewals. Income from renewals and messages now account for approximately 80% of total revenue.

In November 2011, the company completed a 30:1 consolidation of the number of shares on issue. This was an important signal to the market that the company had reached the major milestone of achieving a proven business model capable of delivering sustainable profits.

The number of operational schools increased by 16% to 808, including 30 in New Zealand. During the year, over 100 new schools became operational whilst many others upgraded their service and added new products including Outreach™ and Rollmarker™. There are a significant number of schools in the pipeline and at various stages of installation, who will become operational over the next few months and enquiry remains high.

Mark Fortunatow, MGM Wireless CEO said:

“It was a great year for MGM Wireless with a record profit and a phenomenal response from parents to the launch of the School News Channel. Our SMS service greatly improves the engagement of schools with parents and the value and utility of the service was amply demonstrated by schools in flood affected areas that were able to maintain real time communication with parents during a critical, high stress period.”

The company continues to invest record amounts in R&D to develop new products as well as enhancements to existing flagship products that improve functionality and extend their product lifecycles. New products will be progressively released throughout the coming year.

Appendix 4E Preliminary final report Period ending 30 June 2012

Nearly 7 million SMS text messages were sent by schools during the year to parents, an increase of nearly 9% over the prior year. More significantly, the share of these messages that related to student attendance fell from 70% to 57%. Messages being sent by schools advising parents of other issues such as logistics, security, sports events, speech nights, parent teacher meetings and other events are now nearly half of all the messages sent and demonstrate the enormous scope of the MGM Wireless service. The utility of the service was clearly evident earlier this year when over 200,000 messages were sent over two days by schools in flood stricken areas of south-eastern Australia to advise parents of the status of their schools. This compares with about 35,000 messages sent on a typical school day.

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 improvements resulted in significant efficiency and cost savings 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 for schools to develop their engagement with their stakeholder communities, including parents, guardians, grandparents and former students. This is a micropayment based subscription service which is expected to be a major contributor to growth over the next few years.

The service was launched on a limited basis in Victoria in February 2012 and subsequently in NSW. It will be progressively rolled out to the other states as the company builds its understanding of the marketing and sales processes. At this time, stakeholders register their interest in advance of schools providing the service. The response has been exceptional and to date there have been over 70,000 unique visitors to the site with more than 1,000 schools receiving more than 5 enquires. Significantly, over 100 schools have had more than 15 enquires indicating significant pent up demand from parents and other stakeholders for a timely, accessible and non-intrusive communication from their schools. It is anticipated that a number of schools will launch this new service over the next few months.

Further strong growth is anticipated in the coming financial year as more schools become operational and the volume of SMS text messages sent continues to rise. Investment in product development will increase to ensure the company’s existing products and services maintain their leadership and that a pipeline of new products and services is available which will secure long term profit growth.

About MGM Wireless Ltd and Messageyou, LLC

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.

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

Appendix 4E – Page 2

Appendix 4E Preliminary final report Period ending 30 June 2012

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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 2012

(Previous corresponding period – Year ending 30 June 2011)

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Appendix 4E – Page 3

Appendix 4E Preliminary final report Period ending 30 June 2012

Appendix 4E Preliminary Final Report

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2012

(Previous corresponding period – Year ending 30 June 2011)

Results for announcement to the market

$ Revenue from ordinary activities Up 9% to 2,605,719 Profit/(loss) from ordinary activities after tax attributable Up 135% to 602,756 to members Net Profit/(loss) for period attributable to members Up 135% to 602,756 Dividends (distributions) Amount Franked amount per security per security Final dividend Refer to Refer to statement below statement below Previous corresponding period Nil¢ Nil¢ Record date for determining entitlements to Refer to dividends statement below Net tangible asset backing 30 June 2012 30 June 2011 Net tangible asset backing per ordinary security $0.03 $0.00

Control gained or lost over entities during the period

Name of entity Date of gaining or losing control

Name of entity Not applicable Date of gaining or losing control Not applicable Dividends or distributions to shareholders Refer to statement below Dividend or distribution reinvestment plan details Refer to statement below Joint venture and associate details Not applicable Foreign entities' accounting standards used Not applicable

Appendix 4E – Page 4

Appendix 4E Preliminary final report Period ending 30 June 2012

Dividend

Following the record net profit for the year ended 30 June 2012, the Directors are giving consideration to the payment of a maiden dividend. At this stage a view has not been formed either way and there is no certainty that a dividend will be paid to shareholders. The company will update the market once a decision has been made.

Appendix 4E – Page 5

Appendix 4E Preliminary final report Period ending 30 June 2012

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2012

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 2012, the Company invested $910,908 on its R&D programs, of which $242,256 was capitalised. All R&D activities 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 lifecycles and migrating to new technology platforms such as the cloud. Ongoing R&D 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 contributed to the improved profit results.

Key financial results for the year include:

1. EBITDA profit 52% improvement to $858,267 (2011 result $565,592)

2. Net profit 135% improvement to $602,756 (2011: $256,944)

3. Revenue for the full year was 9% higher at $2,605,719 (2011: $2,390,487).

4. Customer base of operational schools grew by 16% to a total of 808 schools (2011: 698).

5. For the six months to June 30, 2012 an EBITDA profit of $490,919 (2011: $368,390) with a net profit of $362,750 (2011: $211,934).

6. For the six months to June 30, 2012, the company grew its customer base of operational schools by 7% or 55 new schools.

Balance Sheet

The company improved its net asset position by $618,736 from $647,902 as at 30 June 2011 to $1,266,638 as at 30 June 2012.

Total current liabilities were 37% lower than a year earlier at $615,929 as at 30 June 2012 which included $112,018 accrued SMS charges and trade payables of $283,023.

The Company is pleased with the progress achieved in 2012. 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 later this year.

Appendix 4E – Page 6

Appendix 4E Preliminary final report Period ending 30 June 2012

Consolidated statement of comprehensive income Notes Continuing Operations Revenue 2 Cost of sales Doubtful debts Borrowing costs Amortisation & depreciation Advertising and marketing Consulting fees Corporate and administration Employee costs Profit before tax Income tax expense 3 Profit for the year from continuing operations Profit for the year Other comprehensive income Exchange differences on translating foreign operations Transfer to foreign currency 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 Note 8.2 details profit by segment. Earnings per share From continuing and discontinued operations: Basic (cents per share) 4 Diluted (cents per share) 4 From continuing operations Basic (cents per share) 4 Diluted (cents per share) 4
	Group
	Year Ended
	30/06/2012 30/06/2011
	$ $
	2,605,719 2,390,487 (120,130) (233,070) (18,349) 6,652 (28,586) (55,334) (226,924) (253,314) - - (31,544) (51) (431,168) (391,771) (1,146,262) (1,206,655)
	602,756 256,944 - -
	602,756 256,944
	602,756 256,944
	1,306 4,355 (1,306) (4,355)
	- -
	602,756 256,944
	602,756 256,944
	602,756 256,944
	7.54 3.31 7.18 3.31 7.54 3.31 7.18 3.31

Appendix 4E – Page 7

Appendix 4E Preliminary final report Period ending 30 June 2012

Consolidated statement of financial position

Notes ASSETS Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Other 8 Total Current Assets Non-Current Assets Property, plant and equipment 9 Intangibles 10 Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 11 Borrowings 12 Provisions 13 Total Current Liabilities Non-Current Liabilities Borrowings 12 Total Liabilities Net Assets EQUITY Parent entity interest: Issued capital 14 Reserves 15 Accumulated losses 16 Outside equity interest: Issued capital Accumulated losses Total Equity	Group
	As At
	30/06/2012 30/06/2011
	$ $
	169,139 107,975 783,075 602,361 1,208 5,864
	953,422 716,200
	165,905 151,694 1,063,240 1,063,240
	1,229,145 **1,214,934 **
	2,182,567 1,931,134
	532,540 888,948 - 13,080 83,389 81,204
	615,929 983,232
	300,000 300,000
	300,000 300,000
	915,929 1,283,232
	1,266,638 647,902
	7,010,826 7,010,826 176,781 181,986 (5,920,969) (6,544,909)
	1,266,638 647,902
	- - - -
	- -
	1,266,638 647,902

Appendix 4E – Page 8

Appendix 4E Preliminary final report Period ending 30 June 2012

Consolidated statement of changes in equity

Consolidated At 30 June 2010 Profit attributable to members Shares issued (SPP) Employee shares issued Cost of share issue Options issued to directors Currency translation differences At 30 June 2011 Profit attributable to members Adjusted accumulated depreciation Other comprehensive income Currency translation differences At 30 June 2012
	Issued Accumulated Option Foreign Total
	Capital Losses Issue Currency Equity
	Reserve Translation
	Reserve
	$ $ $ $ $
	6,864,663 (6,801,853) 136,284 312 199,406 256,944 256,944 154,275 154,275 8,000 8,000 (16,112) (16,112) 41,035 41,035 4,355 4,355
	7,010,826 (6,544,909) 177,319 4,667 647,903 602,756 602,756 17,537 17,537 1,306 1,306 3,647 (6,511) (2,864)
	7,010,826 (5,920,969) 170,808 5,973 1,266,638

Appendix 4E – Page 9

Appendix 4E Preliminary final report Period ending 30 June 2012

Consolidated statement of cash flows

Notes Cash flows from operating activities Profit for the year Amortisation Non-cash salaries Depreciation 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 / (used in) operations Cash flows from investing activities Payments for plant and equipment Payment for research and development Net cash provided / (used) by investing activities Cash flows from financing activities Proceeds from issue of shares Costs associated with the issue of shares Proceeds from borrowing Non cash movement of Retained Earnings Net cash provided / (used) by 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	Group
	Year Ended
	30/06/2012 30/06/2011
	$ $
	602,756 256,944 200,000 226,426 - 49,034 26,924 26,697 18,349 (6,652)
	848,029 552,449 (50,968) (86,166) - (240) (330,402) (415,951) 2,185 1,232 (167,702) (95,878)
	301,142 (44,554)
	(40,376) (31,507) (200,000) (195,145)
	(240,376) (226,652)
	- 154,275 (3,951) (16,112) (14,037) 13,080 17,080 -
	(908) 151,243
	59,858 (119,963) 107,975 223,583 1,306 4,355
	169,139 107,975

Appendix 4E – Page 10

Appendix 4E Preliminary final report Period ending 30 June 2012

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2012

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 2012 annual financial report.

2. Revenue The following is an analysis of the Group's revenue for the year from continuing operations. Revenue Sales revenue Interest received - other persons Total revenue Note 5.2 details revenue by segment 3. Income Tax 3.1 Income tax expense The income tax expense for the year differs from the prima facie tax as follows: Profit for the year Prima facie tax benefit at 30% (2011: 30%) Non-assessable items Non-deductible items Deferred tax assets not brought to account Total income tax expense	Group
	Year Ended
	30/06/2012 30/06/2011
	$ $
	2,605,719 2,390,457 - 30
	2,605,719 2,390,487
	602,756 256,944 180,827 77,083 (159,625) 21,495 419,819 (8,264) (441,021) (90,314)
	- -

Appendix 4E – Page 11

Appendix 4E Preliminary final report Period ending 30 June 2012

	Appendix 4E Preliminary final report Period ending 30June 2012
3.2 Deferred tax asset Deferred tax assets not brought to account arising from tax losses, the benefits of which will only be realised if the conditions for deductibility occur: 4. Earnings per share The Annual General Meeting held on 1 November 2011 approved a 30:1 share consolidation to reflect a more effective capital structure going forward. Fair value per share immediately prior to the consolidation was $0.01, and $0.23 per share after consolidation. Basic earnings per share From continuing operations (cents per share) From discontinued operations (cents per share) Total basic earnings per share (cents per share) Diluted earnings per share From continuing operations (cents per share) From discontinued operations (cents per share) Total diluted earnings per share (cents per share) 4.1 Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows. Net profit for the year attributable to owners of the Company Earnings used in the calculation of total basic earnings per share Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations Earnings used in the calculation of basic earnings per share from continuing operations Weighted average number of ordinary shares for the purposes of basic earnings per share (all measures)	Group Year Ended 30/06/2012 30/06/2011 $ $ 1,047,177 1,488,198
	7.54 3.31 0.00 0.00
	7.54 3.31
	7.18 3.31 0.00 0.00
	7.18 3.31
	602,756 256,944
	602,756 256,944
	- -
	602,756 256,944
	7,992,441 7,746,455

Appendix 4E – Page 12

Appendix 4E Preliminary final report Period ending 30 June 2012

4.2 Diluted earnings per share The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows. Net profit / (loss) for the year attributable to owners of the Company Earnings used in the calculation of total diluted earnings per share Profit for the year from discontinued operations used in the calculation of diluted earnings per share from discontinued operations Earnings used in the calculation of basic earnings per share from continuing operations Weighted average number of ordinary shares for the purposes of basic earnings per share (all measures)	Group Year Ended 30/06/2012 30/06/2011 $ $ 602,756 256,944
	602,756 256,944
	- -
	602,756 256,944
	8,388,658 7,746,455

5. Segment Revenues and Results

5.1 Adoption of AASB 8 Operating Segments

The Group adopted AASB 8 Operating Segments with effect from 1 July 2009. As the company in both the current and previous financial years has only operated in one business sector and reporting to management has been on a geographical basis, the adoption of AASB 8 has resulted to no change in the identification of the Group's reportable segments.

Appendix 4E – Page 13

Appendix 4E Preliminary final report Period ending 30 June 2012

5.2 Segment revenues and results

The Group operates predominately in one business segment being the provision of school messaging services and internet related services. The revenue figure quoted below is inclusive of $411,734 R&D refund for the period (2011: $273,000). 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 returns. This is the basis by which management controls and reviews the operations of the Group.

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.

MGM Wireless Holdings USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Total for Continuing Operation Profit before tax (continuing operations)
	Segment revenue	Segment profit/(loss)
	Year Ended	Year Ended
	30/06/2012 30/06/2011	30/06/2012 30/06/2011
	2,507,187 2,362,735 - 512 98,532 27,240	613,752 304,999 (10,996) (14,127) - (33,928)
	2,605,719 2,390,487
		602,756 256,944

Revenue reported above represents revenue generated from external customers.

5.2 Segment revenues and results (cont.)

The segment result for NZ and the USA represents the profit earned by each segment without allocation of central administration costs and directors' salaries, investment revenue, finance costs and income tax expense. These costs are routinely considered to be part of the Australian operations. This is the basis on which segment results are routinely reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

5.3 Segment assets and liabilities

MGM Wireless Holdings MGM Wireless USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Consolidated Assets Consolidated Liabilities
	Assets	Liabilities
	Year Ended	Year Ended
	30/06/2012 30/06/2011	30/06/2012 30/06/2011
	2,058,365 1,874,310 1,000 - 5,669 564 117,533 56,260	866,841 1,240,475 - - 22,489 29,946 26,599 12,811
	2,182,567 1,931,134
		915,929 1,283,232

Each segment's assets and liabilities are accounted for within their own entity. Other assets and liabilities are retained within the Australian entity. General intellectual property is retained by the parent company.

Appendix 4E – Page 14

Appendix 4E Preliminary final report Period ending 30 June 2012

5.4 Other segment information

MGM Wireless Holdings USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Depreciation and Amortisation Additions to Non-Current Assets	Depreciation and amortisation	Additions to non-current assets
	Year Ended	Year Ended
	30/06/2012 30/06/2011	30/06/2012 30/06/2011
	226,924 253,123 - 191 - -	19,062 31,507 - - - -
	226,924 253,314
		19,062 31,507

5.5 Geographical Information

All revenues in New Zealand result from the Group's preferred supplier status (1 of 3 companies) to New Zealand Government's Early Notification initiative whereby the Government funded the first year's license fees for all eligible schools.

6. Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:

Cash & cash equivalents

Cash and bank balances	Group
	30/06/2012 30/06/2011
	$ $
	169,139 107,975

Cash at bank earns interest at floating rates based on daily bank deposit rates.

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.

7. Trade and Other Receivables 7.1 Trade and other receivables Current Trade receivables Provision for doubtful debts	Group
	30/06/2012 30/06/2011
	$ $
	810,407 609,197 (27,332) (6,836)
	783,075 602,361

Trade Receivables of $810,407 includes trade receivables of $390,062 and accrued revenue $420,345. Trade and other receivables having been reviewed and Provision for potential Doubtful Debts of $27,332 established. No further impairment loss is considered necessary.

Terms and conditions relating to the above financial instruments:

Appendix 4E – Page 15

Appendix 4E Preliminary final report Period ending 30 June 2012

• Trade debtors are non-interest bearing and generally repayable in the range within 30-180 days.

• Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

• Transactions between the parent entity and its subsidiary consist of intercompany loans, upon which no interest is charged and no repayment schedule exists. The fair value approximates the carrying value of the receivable.

7. Trade and Other Receivables (cont.)

7.2 Past due but not impaired trade receivables

As at 30 June 2012, trade receivables of $102,632 (2011, $58,182) were past due but not impaired. These relate to a number of recent accounts where there is no recent history of default.

Past due 0-30 days Past due 31-90 days Past due over 91 days Movement in the provision for doubtful debts Balance at the beginning of the year Amounts recovered during the year (Increase)/Decrease in provision attributable to new sales Balance at the end of the year 8. Other Current Assets Sundry debtors	Group
	30/06/2012 30/06/2011
	$ $
	20,571 28,176 6,668 - 75,393 30,006
	102,632 58,182
	(6,836) (13,488) - - (20,496) 6,652 (27,332) (6,836)
	1,208 5,864

Appendix 4E – Page 16

Appendix 4E Preliminary final report Period ending 30 June 2012

9. Plant, Equipment and Leasehold Improvements

9.1 Plant, equipment and leasehold improvements Balance at 30 June 2010 Additions Disposals Balance at 30 June 2011 Additions Disposals Balance at 30 June 2012 Accumulated depreciation and impairment Balance at 30 June 2010 Depreciation expense Eliminated on disposal of assets Balance at 30 June 2011 Adjusted accumulated depreciation Depreciation expense Eliminated on disposal of assets Balance at 30 June 2012
	Plant and Leasehold
	Equipment Improvements	Total
	$ $	$
	216,647 124,822 31,507 - -	341,469 31,507 -
	248,154 124,822 16,647 2,415 - -	372,976 19,062 -
	264,801 127,237	392,038
	(151,746) (42,839) (18,499) (8,198) - -	(194,585) (26,697) -
	(170,245) (51,037) 17,717 4,356 (22,451) (4,473) - -	(221,282) 22,073 (26,924) -
	(174,979) (51,154)	(226,133)
	Written Down Value	165,905

9.2 Impairment losses recognised in the year

The following useful lives are used in the calculation of depreciation.

Plant and Equipment	5 years
Leasehold Improvements	10 years

The useful lives used in the calculation of depreciation were considered appropriate estimations of expense allocations in the period. An assessment of the remaining net values where also deemed an appropriate estimation of the remaining useful life of the items with no provision for impairment required.

Appendix 4E – Page 17

Appendix 4E Preliminary final report Period ending 30 June 2012

10. Intangible Assets At cost Accumulated depreciation and impairment Balance at 30 June 2012	Group
	30/06/2012 30/06/2011
	$ $
	2,004,260 2,528,003 (941,020) (1,464,763)
	1,063,240 1,063,240

Cost Balance at 30 June 2010 Additions from internal developments Balance at 30 June 2011 Additions from internal developments Disposals Balance at 30 June 2012 Accumulated amortisation and impairment Balance at 30 June 2010 Amortisation Balance at 30 June 2011 Amortisation Disposal Balance at 30 June 2012 Carrying Value	Intellectual
	Property Intellectual
	Message Distribution Property
	You Rights Software	Total
	$ $ $	$
	766,000 533,902 1,032,956 - - 195,145	2,332,858 195,145
	766,000 533,902 1,228,101 - - 200,000 (766,000) - -	2,528,003 200,000 (766,000)
	- 533,902 1,428,101	1,962,003
	(766,000) (92,885) (379,452) - - (226,426)	(1,238,337) (226,426)
	(766,000) (92,885) (605,878) - - (200,000) 766,000 - -	(1,464,763) (200,000) 766,000
	- (92,885) (805,878)	(898,763)
	- 441,017 622,223	1,063,240

Other than 'Distribution Rights', the remaining Intangible assets have finite useful lives considered to be 5 years.

The current amortisation charges for these intangible assets are included under depreciation and amortisation expense in the Statement of Comprehensive Income. The useful life of intangible assets and impairment considerations of intangibles are subject to management estimates and judgements.

Distribution rights have arisen from the acquisition of territory rights from former distributors. These assets have provided the Company the right to operate in the respective territories. The income from those territories, WA, SA, Queensland, Victoria and Tasmania is the major part of the MGM Wireless's income. As the amount of income in respect of these distribution rights has not decreased in any of the territories since acquisition, the Board is of the opinion that the value of the assets remains unchanged and no amortisation is appropriate.

Appendix 4E – Page 18

Appendix 4E Preliminary final report Period ending 30 June 2012

11. Trade and Other Payables

11. Trade and Other Payables
Trade creditors and accruals: Other corporations Directors and director related entities Tax liability Accrued SMS charges Unearned revenue - licence fees	Group
	30/06/2012 30/06/2011
	$ $
	283,023 331,882 39,379 40,308 92,895 171,028 112,018 172,802 5,225 172,928 532,540 888,948

Terms and conditions relating to the above financial instruments:

• Trade creditors and accrued charges are non-interest bearing and normally settled on terms between 30-180 days.

• Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.

• Unearned or deferred revenue represents annual license fees charged under purchase contracts.

• Share subscription monies held in trust represents fund received at balance date for a placement of securities completed subsequent to balance date.

12. Borrowings Current Unsecured loans from related parties Secured loans other Non - Current Secured loans from related parties	Group
	30/06/2012 30/06/2011
	$ $
	- - - 13,080
	- 13,080
	300,000 300,000

The Directors have agreed not to invoke the security clause attached to their loans until revised loan agreements have been subject to shareholder approval.

13. Provisions Current Employee benefits Movement in provisions Opening Amounts provided Amounts used Closing balance Number of employees	Group
	30/06/2012 30/06/2011 $ $ 83,389 81,204
	81,204 79,972 32,221 1,232 (30,036) 0
	83,389 81,204
	16 14

The provision for employee benefits represents annual leave and long service leave entitlements accrued.

Appendix 4E – Page 19

Appendix 4E Preliminary final report Period ending 30 June 2012

14. Issued capital 14.1 Issued and paid up capital Ordinary shares, fully paid (30 June 2012 = 7,992,441, 30 June 2011 = 239,766,768 shares) 14.2 Fully paid ordinary shares Balance as at 30 June 2010 Share issue costs 2011 Shares issued pursuant to Share Purchase Plan Issued to management (Dec 2010) Balance as at 30 June 2011 Share consolidation Balance as at 30 June 2012	Group
	30/06/2011 30/06/2011
	$ $
	7,010,826 7,010,826
	Group
	Number of Share
	shares capital $
	220,616,768 6,864,663 - (16,112) 18,150,000 154,275 1,000,000 8,000
	239,766,768 7,010,826 (231,774,327) -
	7,992,441 7,010,826

Ordinary shares have the right to receive dividends as declared and, in the event of 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 Group.

14.3 Share options

At 30 June 2012 there were options over 450,000 (2011: 14,183,334) ordinary shares of the Company. Details of these options and movement since 30 June 2011 follow:

Expiry Date Exercise Price	Number	Expired New Closing
7/11/2011 2.0c each 15/11/2011 8.0c each 18/11/2012 25.0c each 15/04/2012 60.0c each 30/04/2013 60.0c each	1,000,000	(1,000,000) - - (683,334) - - - - 100,000 (66,667) - - - - 350,000
	683,334
	100,000
	66,667
	350,000
		(1,750,001) - 450,000
	2,200,001

The Annual General Meeting held on 1 November 2011 approved a 30:1 share consolidation to reflect a more effective capital structure going forward. Fair value per share immediately prior to the consolidation was $0.01, and $0.23 per share after consolidation.

Share options granted under the employee share option plan carry no rights to dividends and no voting rights.

Appendix 4E – Page 20

Appendix 4E Preliminary final report Period ending 30 June 2012

15. Reserves Option issue reserve Foreign currency translation reserve Balance as at 30 June 2010 Movement in foreign currency translation reserve Options issued Balance as at 30 June 2011 Options issued Movement in foreign currency translation reserve Currency translation differences Balance as at 30 June 2012	Group
	30/06/2012 30/06/2011
	$ $
	170,808 177,319 5,973 4,667
	176,781 181,986
	Foreign Currency Option Issue Reserve Translation Reserve 136,284 312 - 4,355 41,035
	177,319 4,667 - - - 1,306 (6,511) -
	170,808 5,973

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 of incentive based share options.

The foreign currency translation reserve is used to record exchange rate differences arising from the translation of the financial statements of foreign subsidiaries are recognised directly in the Statement of Comprehensive Income before accumulation in this reserve..

16. Retained earnings Retained Earnings/(Accumulated losses) Balance at the beginning of the year Net profit / (loss) attributable to members Currency translation Adjusted accumulated depreciation Balance at the end of the year	Group
	30/06/2012 30/06/2011
	$ $
	(5,920,969) (6,544,909)
	(6,544,909) (6,801,853) 602,756 256,944 3,647 - 17,537 -
	(5,920,969) (6,544,909)

Appendix 4E – Page 21

Appendix 4E Preliminary final report Period ending 30 June 2012

17. Subsequent Events

Except for as disclosed above, there has not been any matter or circumstance that has arisen since 30 June 2012, 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.

18. Status of Audit or Review

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

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Signed: Mark Fortunatow Director

Appendix 4E – Page 22