SPACETALK LTD — Annual Report 2022

Aug 23, 2022

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Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

SPACETALK LTD

ABN 93 091 351 530

Year Ending 30 June 2022 (Previous corresponding period – Year ending 30 June 2022)

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Appendix 4E

SPACETALK LTD

ABN 93 091 351 530

Preliminary Final Report

Year Ending 30 June 2022

(Previous corresponding period – Year ending 30 June 2021)

RESULTS FOR ANNOUNCEMENT

RESULTS FOR ANNOUNCEMENT	RESULTS FOR ANNOUNCEMENT	RESULTS FOR ANNOUNCEMENT	RESULTS FOR ANNOUNCEMENT	RESULTS FOR ANNOUNCEMENT
$
Revenue from ordinary activities	Up by 37%		to	20,704,012
Profit/(loss) from ordinary activities after tax attributable to members	Down by 254%		to	(6,300,910)
Net Profit/(loss) for period attributable to members	Down by 267%		to	(6,575,925)
Dividends (distributions)		Amount per security		Franked amount per security
Final dividend		Nil		Nil
Previous corresponding period		Nil		Nil
Record date for determining entitlements to dividends		N/A		N/A
Payment date		N/A		N/A
Net tangible asset backing		30 June 2022		30 June 2021
Net tangible asset backing per ordinary security		$0.06		$0.04
Control gained or lost over entities during the period
Name of entity		N/A
Date of gaining or losing control		N/A
Dividend or distribution reinvestment plan details
There is no conduit foreign income for this dividend.
Joint venture and associate details		N/A
Foreign entities' accounting standards used		N/A
Status of Audit		The accounts are in the process of being audited. The accounts are not subject to dispute or qualification.

2

Financial Statements For the Year Ended 30 June 2022

(Previous corresponding period – Year ended 30 June 2021)

CONNECTED FAMILIES • CONFIDENT KIDS • SAFE SENIORS

Preliminary Final Report Year Ended 30 June 2022

Contents

03 Corporate Directory

• 04 Review of Operations & Financial Results

09 Financial Statements

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Corporate Directory

Registered Office	Suite 13, TheParks
	154 FullartonRoad
	Rose Park SA5067
PrincipalOffice	Suite 13, TheParks
	154 FullartonRoad
	Rose Park SA5067
	Telephone:(08) 81049555
	Facsimile:(08) 84312400
Auditor	Ian G McDonald
ShareRegistry	Computershare Investor Services PtyLtd
	Level5
	115 GrenfellStreet
	Adelaide SA5000
	Telephone:1300 556161
	Overseas Callers:+61 3 94154000
	Facsimile:1300 534 987
Stock Exchange	The securities of Spacetalk Ltd. are listed on the
	Australian Securities Exchange.
ASX Code	SPA
	ordinary fully paid shares

3

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Review of Operations & Financial Results for the Year Ending 30 June 2022

Operational Highlights

• Generated greater than $20 million in revenue for the first time in Company’s history.

• Received mobile operator technical acceptance for Spacetalk Adventurer in Europe, the United States of America, and Canada.

• Launched North American business with distribution through leading retailers including Amazon, and Best Buy in both US and Canada.

• Expanded European business into Nordic region with distribution through leading retailers including Elkjop and Verkkokauppa, and leading mobile operators including Elisa and Telenor.

• Expanded distribution in Australia to Big W and in the UK to John Lewis and Robert Dyas.

• Launched JumpySIM virtual mobile network service in the US and commenced development of service in Australia (estimated launch in 1QFY23).

• Enhanced corporate governance arrangements with appointment of independent non-executive Chairman and two additional independent non-executive Directors with a resultant Board of 5 non-executive and 1 executive director.

• Established Audit and Risk Management, and Nomination and Remuneration committees of the Board, membered by independent non-executive directors.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Financial Highlights

2022 FINANCIAL RESULTS SUMMARY

2022 Key results

2022 FINANCIAL RESULTS SUMMARY 2022 Key results
Twelve months ending 30 June	2022	2021	Change
$ million unless otherwise specified
Total Revenue	20.70	15.12	37%
Wearables Revenue	18.19	12.75	43%
School Communications Business Revenue	2.44	2.25	8%
EBITDA	(1.79)	1.08	(266)%
Net Profit	(6.40)	(1.78)	(254)%
Dividend per share (cents)	0	0	0
EBITDA margin	(9)%	7%	(16)%
Net cash from operating activities	(5.57)	(1.18)	372%
Cash balance	5.58	4.19	33%
Net cash/(debt)	0.63	1.27	(50)%
Earnings per share (basic) cents (3.66) (1.09) (236)%

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GROUP REVENUE BY QUARTER ($M)
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$25.0
CAGR: 30.7%
$20.0
$4.1
$15.0 $4.3
$3.0
$10.0 $1.1 $3.9
$1.9
$8.3
$1.7
$5.0 $1.4 $5.2 $5.5
$3.1 $4.0
$2.4 $2.7
$0.9
$-
FY2019 FY2020 FY2021 FY2022
Q1 Q2 Q3 Q4
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HIGHLIGHTS

• Highest year of Group Revenues up 37% to $20.7m

• Gross profit up 33% to $12.4m

• Wearables business revenue up 43% to $18.2m

• Schools business revenue up 8% to $2.5m

• Device sales revenue up 41% to $14.9m

• APP revenue up 55% to $3.2m

• APP annualise recurring revenue (ARR) up 41% to $3.8m

• Group EBITDA of -$1.8m

• Cash at bank of $5.6m

APP ARR BY QUARTER

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$4.0
$3.5
$3.0 CAGR: 47.6%
$2.5
$2.0
$1.5
$1.0
$0.5
$-
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
FY2019 FY2019 FY2019 FY2019 FY2019 FY2019 FY2019 FY2019
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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

COMMENTARY

The 2022 financial year was a strong and important year for

the Company.

During the financial year ended June 2022, the Company’s distribution was expanded to include North America and the Nordic region of Europe. From its beginnings in Adelaide, South Australia, Spacetalk wearables are now sold in Australia, New Zealand, the United Kingdom, the United States, Canada, Norway, Denmark, Sweden, and Finland. This growing distribution footprint, coupled with improving performance of existing distribution, contributed to Spacetalk generating greater than $20 million of revenue for the first time in the Company’s history.

FY2022 also noted that $5.7 million (27.5%) of Spacetalk’s revenues were generated from recurring non-device sales (App fee and schools business revenue). This is consistent with the Company’s strategy to increase the contribution of recurring revenues. With the addition of JumpySIM, recurring revenues are expected to further increase.

Responding to prevailing capital market conditions and the increased cost of capital, Spacetalk is determined to accelerate its pathway to cashflow positivity, in particular through increasing gross profit and enhanced operating efficiencies. In driving for this objective, Spacetalk has adapted and refined its strategy away from a "land-grab" focus on growing top-line revenue, to a targeted quest for profitable growth, strategic awareness and brand building. This will be reflected through future capital allocation, expense management and distribution decisions.

In the first quarter of FY2023, Spacetalk adjusted its operating model to increase efficiencies. and recently took steps to reduce expenses through a 15% reduction in headcount and refinement of marketing and advertising activities. Certain Spacetalk expenses, such as shipping, platform fees and warranties, are correlated with revenue performance and will continue to increase as sales grow. The Company will continue to seek further opportunities to make the business leaner and more cost efficient.

Consistent with this refined focus, Spacetalk is taking a more targeted approach in choosing distribution partners to prioritise higher quality and better yielding accounts. Spacetalk will also continue to identify and execute on opportunities to generate further software/eco-system revenues.

While the operating and economic environment may have changed, the Company remains confident in the future. The potential for the global connected children’s wearables category is significant, as are the growth and profit opportunities available to Spacetalk.

WEARABLES BUSINESS

The Spacetalk wearables business continues to go from strength to strength. Following a record revenue performance in FY21, the Spacetalk wearables business recorded revenue of $18.2 million in FY22, a 43% increase over FY21. This growth was achieved from increased sales through existing and new distribution channels.

(including Elkjop, Verkkokauppa, Elisa and Telenor). Distribution was also expanded in Australia (including Big W) and in the United Kingdom (including John Lewis and Robert Dyas).

Spacetalk continues to engage with other potential distribution partners in ANZ, North America, and Europe. Entering FY2023, the Company has focused its distribution strategy to prioritise high quality, better yielding accounts in recognition of the opportunity cost of inventory, working capital, marketing, and staff resources, with a view to improving gross profit and operational efficiencies.

JUMPYSIM VIRTUAL MOBILE NETWORK SERVICES

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In 4QFY22, Spacetalk launched the JumpySIM virtual mobile network service in the United States. JumpySIM US is showing great promise and is significantly improving the Spacetalk customer experience. Although subscriber numbers are still modest, they have more than quadrupled in the period since Spacetalk released its 4QFY22 business update.

JumpySIM has allowed the Company to capture the economic value of provisioning mobile network services necessitated by the sale of every Spacetalk watch to the 5- to 12-year-old kids market segment; a segment currently under serviced. In providing the JumpySIM service, Spacetalk is now able to generate recurring revenues in markets, such as in North America, where the Company previously did not charge a monthly Spacetalk App fee. It also allows Spacetalk to increase recurring revenues where the monthly Spacetalk App fee is already charged.

Spacetalk will be launching JumpySIM services in Australia in 1QFY23, in advance of the Black Friday/Cyber Monday sales period. Investigations also continue for JumpySIM services in other jurisdictions, but it should be noted that launching services in additional jurisdictions comes with additional operational complexities.

Launching Spacetalk and JumpySIM services in new countries and regions requires careful planning beyond the acquisition of inventory, procuring mobile network wholesale services and adding device and service language capabilities. In all regions where Spacetalk devices are sold, after-market support infrastructure needs to be established, typically in the local language, to provide customer support befitting Spacetalk’s brand and quality positioning. Additionally, forward and reverse logistics processes need to be implemented to support distribution and statutory warranties.

Revenue from Spacetalk’s App was $3.4 million for the year, a 55% increase on the prior year. App Annual Recurring Revenue (ARR) was $3.8 million, a 41% increase on the prior year.

During the year, Spacetalk commenced distribution in North America (including Amazon and BestBuy) and the Nordic Region

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

With two main variants of Adventurer (North American and Rest of World), and across four colours for each variant, having withSIM and without-SIM inventory to support across multiple sales channels adds complexity to Spacetalk’s logistical operations and increases inventory holding costs.

SUPPLY CHAIN AND INVENTORY

Spacetalk did not experience any material supply chain disruptions during the year with the Company’s proprietary ownership of the design of its devices and applications providing a strategic competitive advantage in supply chain risk management.

The Company’s management of supply chain and inventory risk includes maintaining component buffers and inventories. Input expenses are managed with particular care due to intermittent supply disruptions, and recently inflationary pressures emanating from global energy market volatility. Spacetalk currently holds sufficient inventory to meet forecast requirements and to downrisk supply chain issues.

PRODUCT DEVELOPMENT AND INNOVATION

Spacetalk continues to invest in the development of its products and eco-system. A new software update is scheduled for release in 1QFY23. The Company also continues to develop plans for new wearable device offerings.

Spacetalk operates in a highly competitive and fast-growing segment and is thus cautious in early disclosure of innovations. Additionally, the introduction of new wearables to the market generally requires detailed regulatory and technical testing to satisfy network operators as to the quality and security of Spacetalk’s devices. There is also significant logistical planning required to ensure that Spacetalk wearables can be appropriately supported and efficiently made available to distribution partners.

SCHOOLS BUSINESS

The MGM Schools Business continues to be a strong net cashflow contributor with revenue for the FY22 year recorded at $2.4 million, an 8% increase on the prior year. During the year, the service agreement with the Western Australian Government was also extended for a further 12 months.

CORPORATE GOVERNANCE

During the FY22 financial year, the Company appointed Mr Georg Chmiel as Independent Non-Executive Chairman and Mr Saurabh Jain as Independent Non-Executive Director. Mr Mike Rann was appointed Independent Non-Executive Director on 1 July 2022.

• Mr Chmiel is a business leader, company director and senior advisor with three decades of experience in rapidly growing companies and disruptive technologies who brings strong capital market and technology business expertise with extensive global exposure in Asia, Australia, New Zealand, and Europe.

• Mr Jain brings 20 years of experience in the technology and telecommunications industry and was previously the Chief Executive Officer and Executive Director of Urbanise Limited, an ASX listed SaaS company.

• Mr Rann was Premier of South Australia for almost ten years from 2002 to 2011. While Premier, he also served as Minister for Economic Development, the Arts, Sustainability and Climate Change and Social Inclusion. In late 2012 Mr Rann was appointed as Australian High Commissioner to the United Kingdom and was a Governor of the Commonwealth Secretariat.

Additionally, the Spacetalk Board constituted Audit and Risk Management, and Nomination and Remuneration Committees of the Board. The membership of these committees is as follows:

AUDIT AND RISK MANAGEMENT COMMITTEE:

• Mr Martin Pretty, Chair

• Dr Brandon Gien, member

• Mr Saurabh Jain, member

REMUNERATION AND NOMINATION COMMITTEE:

• Mr Saurabh Jain, Chair

• Mr Martin Pretty, member

• Dr Brandon Gien, member

Spacetalk has also updated and enhanced several Corporate Governance documents and policies which are available for review at the Spacetalk Investor Centre.

CAPITAL AND BALANCE SHEET

Spacetalk opened the financial year with $4.2 million in cash and closed with $5.6 million. During the year, the Company drew down the $2.0 million second tranche of its debt facility from Pure Asset Management and raised $9.5 million of equity capital (before costs).

A significant proportion of these funds were used to acquire inventory with the Company holding $7.1 million of inventories at end FY2022 compared to $1.7 at end FY2021. As noted earlier, a key component of the Company’s supply chain risk management approach is maintaining larger component buffers and inventories.

Spacetalk also incurred investment costs in establishing both its North American operation and in enhancing its European operations to support the Nordic market expansion. Both these expansions, with sales commencing in November 2021, are now starting to bear fruit.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

PROFIT AND LOSS

The Company achieved a gross profit for FY2022 of $12.4 million compared to $9.4 million in FY2021. The statutory result for FY2022 was an accounting loss of $6.6 million compared to $1.8 million in FY2021.

Spacetalk’s strong revenue growth was accompanied by a significant increase in expenses as the Company scaled up to take advantage of global growth opportunities, including the establishment of its North American operations.

The most significant cost increase was in the Company’s employment cost. Company headcount increased to a peak of 69 during FY2022 from 50 at the end of FY2021. The yearon-year comparison of costs is also reflective of artificially low employee expenses in FY2021 due to one-off items, including the receipt of Government support payments ($0.5 million) and the impact of the Company’s COVID-19 response strategies (temporary headcount reductions and 20% salary reductions to all staff applied in July and August 2020). Included in the reported employee expenses is $330,000 of restructure costs incurred in FY2022 that relate to this rationalisation.

In keeping with Spacetalk’s focus on operational efficiencies in FY2023,staff numbers reduced to 54 as at 30 June 2022. Staff numbers are projected to be 54 at end August 2022 with further natural attrition expected thereafter.

The increase in Interest expenses reflects the cost of debt associated with the Pure Asset Management funding arrangement ($1.1 million compared to $0.2 million in FY2021) and the increase in Corporate and Administration expenses reflects costs associated with increased sales, such as shipping, platform fees and warranty provisions.

The Spacetalk Board and leadership team are determined to increase gross profit and operating efficiencies to accelerate the Company’s pathway to cashflow positivity. Future capital allocation, expense management and distribution decisions will now be assessed through this prism.

POST BALANCE DATE

The 2023 financial year has commenced soundly in the context that revenues in the first quarter of the financial year have historically been the quietest of the year.

With the success of new retail and operator partnerships in the Nordic region, distribution has since been further expanded with Swedish mobile network operator Telia commencing ranging the Spacetalk Adventurer.

The Company continues to invest in its products and services including ongoing enhancement to its core software, services, and devices. A significant firmware and features update is scheduled for release in 1QFY23. These investments will ensure that Spacetalk retains its leading and differentiated position in the connected wearable market.

Spacetalk is dedicated to delivering an exceptional experience to its customers so that they stay with us and recommend us to friends and family. We are confident that we have the people, devices, platforms, brand, and business model to achieve our goal of brand market leadership in this new, large and fast growing global connected children’s wearables category.

Importantly also, Spacetalk remains committed to a profitable growth strategy to deliver value to Spacetalk shareholders.

Spacetalk Strategy

Placement

Profit

HARDWARE

• New devices

• New price points

SOFTWARE

• New services

• New features

• Eco-system enhancements

ADD NEW DISTRIBUTION

TILT PRICE CURVE

• New geographies

• Increase contribution of recurring revenues

• Within existing geographies

• New services (eg JumpySIM)

OPTIMISE EXISTING DISTRIBUTION

• New paid in-app services

• Benchmarking peer performance • Reduce upfront cost of wearables

• Improve margins and ROI

PROFITABLE GROWTH

• Accelerate pathway to cashflow positivity

• Enhance operating efficiencies

• Strategic awareness and brand building

• Improvement to overall share of category

Product

Price

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Notes	Group Year Ended 30/06/2022 30/06/2021
Continuing Operations Revenue 2 Cost of sales Doubtful debts Interest expense Amortisation & depreciation Options and share issue costs Corporate and administration Advertising and marketing Employee costs Fair value gain (Loss)/ Gain on foreign exchange (Loss)/ profit before tax Income tax benefit 3 Net loss for the period attributable to owners of the Company Other comprehensive income, net of income tax Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Other comprehensive income for the period (net of tax) Total comprehensive income for the period attributable to owners of the Company (Loss)/profit attributable to: Owners of the Company Earnings per share Basic (cents per share) 4 Diluted (cents per share) 4	$ $ 20,704,012 15,121,573 (8,285,417) (5,759,779) (69,171) (75,170) (1,092,011) (172,128) (3,686,445) (2,993,992) (540,788) (351,342) (4,852,238) (3,292,530) (2,041,968) (1,491,229) (7,628,970) (3,029,154) 544,231
	(161,161) (391,968)
	(7,109,926) (2,435,719)
	809,016 655,571
	(6,300,910) (1,780,148)
	(275,015) (11,881)
	(275,015) (11,881)
	(6,575,925) (1,792,029)
	(6,575,925) (1,792,029)
	(3.66) (1.09) (3.50) (3.03)

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the attached notes.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Consolidated Statement of Financial Position

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Group As At
Notes 30/06/2022 30/06/2021
$ $
ASSETS
Current Assets
Cash and cash equivalents 5 5,577,088 4,185,033
Trade and other receivables 6 3,590,951 2,218,826
Inventories 7,062,398 1,736,994
Other current assets 7 761,411 2,774,845
Total Current Assets 16,991,848 10,915,698
Non-Current Assets
Property, plant and equipment 9 221,971 205,911
Intangibles 10 3,768,797 3,941,220
Right-of-use assets 11 104,052 289,016
Deferred tax assets 1,100,272 655,661
Total Non-Current Assets 5,195,092 5,091,808
Total Assets 22,186,940 16,007,506
LIABILITIES
Current Liabilities
Trade and other payables 12 3,976,901 1,944,348
Provisions 581,001 418,494
Current tax liabilities 90,347 51,379
Lease Liabilities 11 109,304 183,539
Total Current Liabilities 4,757,553 2,597,760
Non-Current Liabilities
Borrowings 15 3,077,683 1,538,125
Warrants 1,865,495 2,409,726
Lease liabilities 11 - 109,304
Deferred Tax Liabilities 1,063 1,046
Total Non-Current Liabilities 4,944,241 4,058,201
Total Liabilities 9,701,794 6,655,961
Net Assets 12,485,146 9,351,545
EQUITY
Issued capital 13 28,064,477 18,686,099
Reserves 14 6,498,878 6,442,745
Accumulated losses (22,078,209) (15,777,299)
Total Equity 12,485,146 9,351,545
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The above Consolidated Statement of Financial Position should be read in conjunction with the attached notes.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Consolidated Statement of Changes in Equity

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Issued Capital Accumulated Share based Foreign Total Equity
Losses payment Currency
Reserve Translation
Reserve
Consolidation $ $ $ $ $
At 30 June 2020 16,124,617 (13,997,151) 6,216,746 (31,029) 8,313,183
Loss attributable to members - (1,780,148) - - (1,780,148)
- - -
Currency translation differences (11,881) (11,881)
- -
Total comprehensive income (1,780,148) (11,881) (1,792,029)
Transaction with owners
Contributions and distributions
Shares issued 2,505,047 - - - 2,505,047
- - - - -
Options exercised
Cost of share issued (29,095) - - - (29,095)
- -
Options/rights issued 85,530 268,909 354,439
Transactions with owners 2,561,482 - 268,909 - 2,830,391
At 30 June 2021 18,686,099 (15,777,299) 6,485,655 (42,910) 9,351,545
Loss attributable to members - (6,300,910) - - (6,300,910)
- - -
Currency translation differences (275,015) (275,015)
- -
Total comprehensive income (6,300,910) (275,015) (6,575,925)
Transaction with owners
Contributions and distributions
Share issued 9,497,018 - - - 9,497,018
- - - - -
Options exercised
Cost of share issued (328,280) - - - (328,280)
- -
Options/rights issued 209,640 331,148 540,788
Transactions with owners 9,378,378 - 331,148 - 9,709,526
At 30 June 2022 28,064,477 (22,078,209) 6,816,803 (317,925) (12,485,146)
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The above Consolidated Statement of Changes in Equity should be read in conjunction with the attached notes.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Consolidated Statement of Cash Flows

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Group Year Ended
30/06/2022 30/06/2021
$ $
Cash flows from operating activities
Receipts from customers 21,188,990 15,264,873
Payments to suppliers and employees (27,480,011) (16,842,403)
Tax benefits 837,145 650,612
Interest and other costs of finance (114,641) (257,596)
Net cash provided by/(used in) operating activities (5,568,517) (1,184,514)
Cash flows from investing activities
Payments for plant and equipment (56,206) (48,089)
Payment for research and development (3,288,913) (2,997,639)
Net cash (used in)/provided by investing activities (3,345,119) (3,045,728)
Cash flows from financing activities
Proceeds from issue of shares 9,497,018 2,495,047
Costs associated with issue of shares (328,280) (35,653)
Proceeds from borrowings 2,000,000 3,000,000
Payment of lease liabilities (183,539) (197,363)
-
Repayment of borrowings (404,493)
Net cash provided by/(used in) financing activities 10,580,706 5,262,031
Net increase/(decrease) in cash held 1,667,070 1,031,789
Cash and cash equivalents at 1 July 4,185,033 3,165,125
Effect of exchange rate changes (275,015) (11,881)
Cash at the end of the year 5,577,088 4,185,033
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The above Consolidated Statement of Cash Flows should be read in conjunction with the attached notes.

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

Notes to the Financial Statements for the Year Ended 30 June 2022

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 Group’s 30 June 2021 annual financial report.

2. REVENUE

The following is an analysis of the Group’s revenue	Group Year Ended 30/06/2022 30/06/2021 $ $	Group Year Ended 30/06/2022 30/06/2021 $ $
	30/06/2022
	$
Schools sales Wearables sales Grants received Other Wearables income Sundry income Total sales revenue	2,440,783	2,245,288 12,686,980 15,300 64,503 109,502
	18,193,123
	2,700
	64,503
	2,903
	20,704,012	15,121,573

Other Spacetalk income relates to repairs and shipping charges.

3. INCOME TAX

3. INCOME TAX Income tax benefit	Group Year Ended 30/06/2022 30/06/2021 $ $
The income tax benefit for the year can be reconciled to the accounting profit or loss as follows: (Loss)/profit for the year Prima facie tax benefit at 25% (2021: 26%) Non-deductible items Other Research and development tax offset Adjustments recognised in the current year in relation to the current tax of prior year Adjustment recognised in the current year in relation to deferred tax losses not recognised Adjustments recognised in the current year in relation to the deferred tax of prior year Adjustments recognised in the current year in relation to changes	(7,109,926) (2,435,719) (1,777,482) (633,287) 133,795 43,329 (106,297) (173,167)
	105,299 - 835,669 - - 56,319 - 51,235
	(809,016) (655,571)

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PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

4. EARNINGS PER SHARE

4. EARNINGS PER SHARE	Group Year Ended 30/06/2022 30/06/2021 $ $
Basic earnings per share Total basic earnings per share (cents per share) Diluted earnings per share Total diluted earnings per share (cents per share)	(3.66) (1.09)
	(3.50) (1.03)

4.1 BASIC EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per shares are as follows:

Net(loss)/profit for the year attributable to owners of the Company	(6,300,910)	(1,780,148)
Earnings used in the calculation of total basic earnings per share	(6,300,910)	(1,780,148)
Weighted average number of ordinary shares for the purpose of basic earnings per share	172,221,382	163,699,515
(all measures)

4.2 DILUTED EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per shares are as follows:

Net(loss)/profit for the year attributable to owners of the Company Earnings used in the calculation of total diluted earnings per share Weighted average number of ordinary shares for the purpose of diluted earnings per share (all measures)	(6,300,910) (1,780,148) (6,300,910) (1,780,148) 180,269,382 175,454,882

5. CASH & CASH EQUIVALENT

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

	Group Year Ended 30/06/2022 30/06/2021 $ $	Group Year Ended 30/06/2022 30/06/2021 $ $
	30/06/2022
	$
Cash and bank balances	5,577,088	4,185,033

6. TRADE AND OTHER RECEIVABLES

6. TRADE AND OTHER RECEIVABLES	Group Year Ended 30/06/2022 30/06/2021 $ $	Group Year Ended 30/06/2022 30/06/2021 $ $
	30/06/2022
	$
Trade receivables Loss allowance	3,658,203	2,287,874 (69,048)
	(67,252)
	3,590,951	2,218,826

14

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

7. OTHER CURRENT ASSETS

7. OTHER CURRENT ASSETS	Group Year Ended 30/06/2022 30/06/2021 $ $
R&D tax incentives Prepayments Loan commitment asset	249,976 517,380 511,435 1,224,146 - 1,033,319
	761,411 2,774,845

8. PARENT ENTITY INVESTMENTS

Unlisted controlled entity Date of acquisition County of incorporation Class of shares	Cost of Parent Entity’s Investment Cost of Parent Entity’s Investment 30/06/2022 30/06/2021 $ $
MGM Wireless Holdings Pty Ltd 08/10/2003 Australia Ordinary Massage You LLC 11/09/2006 USA Ordinary MGM Wireless (NZ) Pty Ltd 18/05/2010 Australia Ordinary Spacetalkwatch UK Ltd 25/02/2019 United Kingdom Ordinary Spacetalk Holdings Pty Ltd 29/06/2015 Australia Ordinary Spacetalk USA Pty Ltd 29/06/2015 USA Ordinary Spacetalk Inc 29/04/2021 USA Ordinary Spacetalk LLC 29/04/2021 USA Ordinary	767,000 767,000 124,440 124,440 80 80 186 186 1 1 100 100 1,340 1,340 1,340 1,340
	894,487 894,487

9. PLANT, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

9. PLANT, EQUIPMENT AND LEASEHOLD IMPROVEMENTS	Plant and equipment Leasehold improvements Total $ $ $
	414,327 211,979 626,306 52,515 1,364 53,879
	466,842 213,343 680,185
	51,947 4,258 56,205
	518,789 217,601 736,390
	(316,391) (127,184) (443,575) (22,188) (8,511) (30,699)
	(338,579) (135,695) (474,274)
	(32,100) (8,045) (40,145)
	(370,679) (143,740) (514,419)
	128,263 77,648 205,911

15

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

10. INTANGIBLE ASSETS

10. INTANGIBLE ASSETS		Group Year Ended 30/06/2022 30/06/2021 $ $
At cost Accumulated amortisation and impairment Carrying value Cost	21,240,854 17,951,941 (17,472,057) (14,010,721) 3,768,797 3,941,220 Distribution Rights Capitalised Development Costs Total $ $ $	21,240,854 17,951,941 (17,472,057) (14,010,721)
		3,768,797 3,941,220
Balance as at 30 June 2020 Additions from internal developments Balance as at 30 June 2021 Additions from internal developments Balance as at 30 June 2022 Accumulated amortisation and impairment Balance as at 30 June 2020 Amortisation Balance as at 30 June 2021 Amortisation Balance as at 30 June 2022 Carrying value at 30 June 2022	441,017 14,513,284 14,954,301 - 2,997,640 2,997,640
	441,017 17,510,924 17,951,941
	- 3,288,913 3,288,913
	441,017 20,799,837 21,240,854
	(308,707) (10,932,590) (11,241,297) (44,100) (2,725,324) (2,769,424)
	(352,807) (13,657,914) (14,010,721)
	(44,100) (3,417,236) (3,461,336)
	(396,907) (17,075,150) (17,472,057)
	44,110 3,724,687 3,768,797

11. LEASES 11.1 RIGHT-OF-USE

Cost	Building $	Vehicle $	Total
			$
Balance at 1 July 2020 Additions Balance at 30 June 2021 Additions Balance at 30 June 2022 Accumulated amortisation and impairment Balance at 1 July 2020 Amortisation Balance at 30 June 2021 Amortisation Balance at 30 June 2022 Carrying Value 30 June 2022	336,816 354,563	33,176 -	369,992
			354,563
	691,379 -	33,176 -	724,555
			-
	691,379	33,176	724,555
	(211,668) (190,695)	(24,213) (8,963)
			(235,881)
			(199,658)
	(402,363) (184,964)	(33,176) -	(435,539)
			(184,964)
	(587,327)	-	(620,503)
	104,052	-	104,052

16

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

11.2 LEASE LIABILITIES

11.2 LEASE LIABILITIES
	Group Year ended 30/6/2022 30/06/2021 $ $
Maturity analysis
Less than one year	111,254 -	197,578 111,254
1-5 years
	111,254 (1,950)	308,832 (15,989)
Less: unearned interest
	109,304	292,843
Analysed as:	109,304 -	183,539 109,304
Current
Non-current
Balance as at 30 June	109,304	292,843

12. TRADE AND OTHER PAYABLES

	Group Year ended 30/6/2022 30/06/2021 $ $
Maturity analysis
Trade payables	3,711,385 1,744,968 229,297 171,275 36,219 28,105
Indirect tax liability
Accrued SMS charges
	3,976,901 1,944,348

13. SHARE CAPITAL

13.1 ISSUED AND PAID UP CAPITAL

	Group Year ended 30/6/2022 30/06/2021 $ $	Group Year ended 30/6/2022 30/06/2021 $ $
Ordinary shares, fully paid	28,064,477	18,686,099
(30 June 2022: 216,355,749, 30 June 2021: 165,381,445)

17

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

13.2 FULLY PAID ORDINARY SHARES

13.2 FULLY PAID ORDINARY SHARES
	Group Year ended 30/6/2022 30/06/2021 $ $
Balance at 30 June 2021	165,381,445 18,686,099 7,879,040 1,497,018 42,105,264 7,671,720 990,000 209,640 216,355,749 28,064,477
Share Purchase Plan
Capital raising
Shares issued on employee retention rights vested during the year
Balance at 30 June 2022

During the year, the Company issued 990,000 ordinary shares under the employee retention plan (2021: 285,000). A total of 49,984,304 shares were issued under share purchase plan and capital rising program.

14. RESERVES

.	Group Year Ended 30/06/2022 30/06/2021 $ $
Option issue reserve Foreign currency translation reserve	6,816,803 6,485,655 (317,925) (42,910)
	6,498,878 6,442,745
	Option issue reserve Foreign currency translation reserve $ $
Balance as at 30 June 2020 Options/rights issued Currency translation differences Balance as at 30 June 2021 Options/rights issued Currency translation differences Balance as at 30 June 2022	6,216,746 (31,029) 268,909 - - (11,881)
	6,485,655 (42,910) 331,148 - - (275,015) 6,816,803 (317,925)

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 expense on valuation of incentive-based share options.

The foreign currency translation reserve is used to record exchange rate difference arising from the translation of the financial statements of foreign subsidiaries and is recognised directly in the Statement of Profit or Loss and Other Comprehensive Income before accumulation in this reserve.

18

PRELIMINARY FINAL REPORT YEAR ENDED 30 JUNE 2022

15. BORROWINGS

15. BORROWINGS
	Group Year ended 30/6/2022 30/06/2021 $ $
Loan from Pure Asset Management	3,077,683 1,538,125
	3,077,683 1,538,125

In March 2021, the Company entered into a facility agreement with Pure Asset Management Pty Ltd (Pure AM) for a total of $5 million that is drawn in 2 tranches. The first tranche of $3 million was drawn in March 21. During the year ended 3o June 2022, the Company drew down the second tranche of $2 million.

15. SUBSEQUENT EVENTS

There was no items, transaction or event of material and unusual nature arising in the interval between 30 June 2022 and the date of this report that, in the opinion of the Directors of Spacetalk Ltd, to affect significantly the operations of the consolidated Group, the results of those operations, or the state of affairs of the consolidated Group, in future period.

MARK FORTUNATOW

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Rose Park, South Australia 24 August 2022

19

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