SPACETALK LTD — Interim / Quarterly Report 2006

Jan 30, 2006

MGM Wireless boosts revenue 171% in December half

Revenue for the quarter increased 72% to $535,000 compared to previous corresponding period of $310.540 but a decrease of 31% from $780.000 in the September 2005 quarter. The quarter's sales included one further licensee establishment fee. Excluding the licensee establishment fee, the company achieved solid growth in all revenue streams including new customer sales.

The company is pleased to report revenues for the 6 months to 31 December 2005 increased by 171% to $1,292,000, compared to previous corresponding period of $476,487 and an improvement of 106% from $628,313 for the 6 month period to 30 June 2005.

Significantly, by achieving year-to-date revenues of $1,292,000 the company has already exceeded total 2004/5 annual revenues of $1,079,960. The company expects to report its first positive EBITDA (unaudited) of approximately $100,000 for this halfyear period.

The company notes that the coming 31 March quarter is historically weaker due to school summer holiday closures.

Working capital improved by 2% to $812,000 as compared to $793,517 for the same period a vear ago, and a decrease of 8% from $887,000 last quarter.

Cash holdings decreased 24% to $507,000 from $670,000 for the same period a vear ago, and a decrease of 31% from $735,000 last quarter, primarily due to expenses related to Intellectual Property patents and protection for new products and in preparedness for expansion into new international markets this year.

Shareholders should note that during the corresponding period one year ago, the company completed a share placement resulting in a cash increase of $437,000. meaning direct operating comparisons to 12 months ago are difficult.

Underlying new sales growth continued to improve this quarter, with the company's new product – messagevou™WatchLists – clearly enhancing the company's competitiveness in all geographical markets.

The company continued to make large investments in new and existing product R&D. product internationalisation, sales channel development, marketing and communications, infrastructure message centre upgrades not only to maintain but to further strengthen its position in the Australian. New Zealand and upcoming new international markets. The company funds all such investments and costs from internal operations and cash flows and expenses in current reporting periods.

As previously reported, the company was recently honoured to be the recipient of the 2005 Deloitte Technology Fast 50 Rising Star Award.

To further strengthen the company's expertise in the education sector and professional services offering, the company this quarter appointed Mr. Peter Scott, to the position of Director - Education Strategy and Services, (a non-Board position).

Mr. Scott has a distinguished reputation as a career educator, which spans 37 years. Prior to joining MGM Wireless in December 2004 as Education Consultant, he retired from the Department of Education and Children's Services (DECS) in South Australia. where he served in various senior roles including Principal of three secondary schools, District Superintendent, Manager - Site Information Management Solutions and Manager - Head. Technology School of the Future.

Items affecting cash flow not reflected in the report include:

• Receivables of approximately $495,000 (September 2005 of $450,000) $\ddagger$
• $\mathcal{P}$ Total liabilities of approximately $190,000 (September 2005 otr $298,000)

For additional information please contact Mark Fortunatow on (08) 8431 2300.

Quarterly Revenues

Half Yearly Revenues

$Rule\ 4.7B$

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity MGM Wireless Ltd

ABN

93 091 351 530

Quarter ended ("current quarter")

31 December 2005

Consolidated statement of cash flows

Cash flows related to operating activities		Current quarter$A'000	Year to date$(6$ months)
			$A'000
1.1	Receipts from customers	429	1,024
1.2	Payments for(a) staff costs	(251)	(467)
	(b) advertising and marketing	(97)	(268)
	(c) research and development
	(d) leased assets
	(e) other working capital	(298)	(421)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	8	15
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net operating cash flows	(209)	(117)

$+$ See chapter 19 for defined terms.

		Current quarter$A'000	Year to date$\left( \mathfrak{Z} \right)$ months)$A'000
1.8	Net operating cash flows (carried forward)	(209)	(117)
1.9	Cash flows related to investing activitiesPayment for acquisition of:(a) businesses (item 5)(b) equity investments(c) intellectual property(d) physical non-current assets(e) other non-current assets	(19)	(26)
1.10	Proceeds from disposal of:(a) businesses (item 5)(b) equity investments(c) intellectual property(d) physical non-current assets(e) other non-current assets
1.111.121.13	Loans to other entitiesLoans repaid by other entitiesOther (provide details if material)
	Net investing cash flows	(19)	(26)
1.14	Total operating and investing cash flows	(228)	(143)
1.151.161.171.181.191.20	Cash flows related to financing activitiesProceeds from issues of shares, options, etc.Proceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowingsDividends paidOther (provide details if material)
	Net financing cash flows
	Net increase (decrease) in eash held	(228)	(143)
1.211.22	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	735	650
1.23	Cash at end of quarter	507	507

$+$ See chapter 19 for defined terms.

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

	$A'000
Aggregate amount of payments to the parties included in item 1.21.24	28
Aggregate amount of loans to the parties included in item 1.111.25

Explanation necessary for an understanding of the transactions 1.26

Non-cash financing and investing activities

• Details of financing and investing transactions which have had a material effect on consolidated $2.1$ assets and liabilities but did not involve cash flows
• $2.2$ Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities
3.2	Credit standby arrangements

+ See chapter 19 for defined terms.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
4.1	Cash on hand and at bank	26	82
4.2	Deposits at call	481	653
4.3	Bank overdraft
4.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	507	735

Acquisitions and disposals of business entities

		Acquisitions(Item $1.9(a)$ )	Disposals(Item $I.10(a)$ )
5.1	Name of entity	N/A
5.2	Place of incorporationor registration	N/A
5.3	Consideration foracquisition or disposal	N/A
5.4	Total net assets	N/A
5.5	Nature of business	N/A

Compliance statement

• $\mathbf{I}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Sign here: M Fortunatow Director

Date: 31 January 2006

Print name: Mark Fortunatow

$+$ See chapter 19 for defined terms.

Notes

• $\mathbb{L}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{2}$ . The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.
  • reconciliation of cash flows arising from operating activities to 6.2 $\bullet$ operating profit or loss
  • $9.2$ - itemised disclosure relating to acquisitions
  • itemised disclosure relating to disposals 9.4
  • $12.1(a)$ policy for classification of cash items
  • $12.3$ - disclosure of restrictions on use of cash
  • $13.1$ - comparative information
• $\overline{3}$ . Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

+ See chapter 19 for defined terms.