SPACETALK LTD — Audit Report / Information 2008

Sep 17, 2008

==> picture [299 x 52] intentionally omitted <==

MGM Wireless clarifies balance sheet composition resulting from new accounting treatment

Adelaide- September 18, 2008 – MGM Wireless wishes to clarify the composition of its balance sheet released to the ASX on August 29, in particular in reference to changes brought about by the new accounting treatment of revenue recognition from annual contracts which extend across corporate balance dates.

The company sought to change the revenue recognition to more accurately reflect when revenue is earned, in line with that expected of a growing company with significant contracts with a large number of school and education system clients.

The change gave rise to an increase in current liabilities as explained by the notes below:

ASSETS Current Assets Cash & Cash Equivalents Trade & Other Receivables Trade Debtors R&D Grant Receivable Other Total Current Assets Non Current Assets Property Plant & Equipment Intangibles TOTAL ASSETS	$236,651	$236,651 $670,001 $3,235
	$470,001 $200,000
	$3,235
	$196,643 $584,386
		$909,887 $781,029
		$1,690,916

LIABILITIES

Current Liabilities

Trade & Other Payables

Unearned Revenue Tax Liability Accrued Expenses Trade Creditors Accrued Employee Expenses Other Provisions Total Current Assets NET ASSETS	$512,026 $204,423 $380,930 $236,653 $107,294 $36,721	Note 1 Note 2 Note 3 $1,478,047 $56,038 $1,534,085 $156,831
	$56,038

Note 1 - Unearned Revenue

Annual Licence Fees

A decision was taken by the company to amortise revenue for annual licence fees for our software over the period for which it applies. In prior years, the company had recognised the revenue from annual licence fees as they were invoiced. Below is an example to illustrate the effect on our recognition of revenue.

Annual Licence Fee	$8,000
Period of Licence Fee	1/4/08 to 31/3/09
Old Method	$8,000 recognised in the 2008 financial year.
New method	$2,000 recognised in 2008 financial year reflecting period
	1/4/08 to 30/6/08

If the same approach had of been taken in the 2007 financial year, the company would have been carrying approximately $366,000 liability

Accounting process going forward

Licence fees will be recognised over the period for which they apply (usually 12 months) therefore "smoothing" the revenue recognised.

Unearned revenue is effectively a non payable liability. Licence conditions specifically state there will be no refund of licence fees. This liability amount will therefore simply fluctuate based upon licences sold, renewed and cancelled.

Note 2 - Tax Liability

Approx $180,000 is a liability to the ATO for PAYG and GST. It should be noted that the company has recognized a current asset of a R&D Grant of approx $200,000.

Note 3 - accrued expenses

Approx $266,000 of this amount relates to expenses expected to be incurred in the future.

As part of the company's normal course of business, schools periodically buy a block of text messages (SMS's) in advance and prepay the company for these. As and when the school sends SMS's and uses these credits, the company is charged by our telecommunications carrier. The company has taken the decision to recognise the future expense to be incurred when SMS's are sent by the schools.

If the same approach had of been taken in the 2007 financial year, the company would have been carrying approximately $142,000 liability.

MGM Wireless is a market leader in the supply and management of sophisticated SMS text-based communications solutions for schools and school districts in Australia and the US. Our broad and diverse customer base spans two Australian Government contracts – WA covering up to 800 schools, NSW Sydney region up to 2,300 schools and 144 TAFE colleges and over 200 individual State, Independent and Catholic schools as well as 23 schools in the US. The WA and Sydney region contracts involve schools opting-in to our service so the take-up numbers are likely to be closer to 300-400 schools in WA and it is too early to forecast take-up numbers in NSW.

MGM continues to field a significant stream of interest from potential school customers and, in addition to the large Government contracts, as at today’s date, over 80 schools are currently in discussions to take up MGM Wireless communications solutions. Not all of these negotiations will lead to contractual agreements being entered into, however, MGM Wireless is pleased at the level of interest being expressed by forward thinking education authorities with regard our leading edge suite of communication, anti-truancy and safety products.

About MGM Wireless Ltd and Messageyou, LLC

MGM Wireless Ltd is a public company with a market capitalisation of A$ 8m listed on the Australian Securities Exchange (ASX code: MWR). The company trades as Messageyou, LLC in the United States, with its head office in Silicon Valley at Sunnyvale, Cal.

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

For further information contact:

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

CEO Mobile: +61 421 328 984 Phone: +61 8 8431 2300 Email: mfortunatow@mgmwireless.com Web: www.mgmwireless.com www.191ask.com.au