SPACETALK LTD — Interim / Quarterly Report 2007

Feb 27, 2007

Appendix 4D

MGM WIRELESS LIMITED

ABN 93 091 351 530

Half-year Report

31 December 2006

(Previous corresponding period: 31 December 2005)

Results for announcement to the market

Financial Results				6 monthsended31 Dec 2006
Revenue	down	8%	to	1,242,177
Profit (loss) after tax attributable to members	down		to	(278, 935)
Net profit (loss) for the period attributable to members	down		to	(278, 935)

Dividends	Amount perOrdinary Security	Franked amountper security
2007 interim dividend	ΝiΙ	Nil
2006 final dividend	ΝiΙ	Nil
It is not proposed to pay a dividend.
Record date for determining entitlements to the 2006 interim dividends		N/A

∣ Net Tangible Asset Backing ∣	. 31 December 2006	31 December 2005
Net tangible asset backing per ordinary security	$0.26$ cps	0.6 CDS

Other explanatory notes

Control gained or lost over entities during the period
Name of entity
Date of gaining control
Distributions to shareholders	N/A

Dividend reinvestment plan details	N/A
∣ Joint venture and associate details	N/A
Foreign entities accounting standards used	N/A

The information required by listing rule 4.2A is contained in both this Appendix 4D and the attached half-year report. This half-year report does not include notes of the type normally included in an annual financial repor financial report.

MGM WIRELESS LIMITED

ABN 93 091 351 530

HALF-YEAR REPORT

31 DECEMBER 2006

MGM WIRELESS LIMITED CORPORATE DIRECTORY

DIRECTORS

Mark Fortunatow Executive Chairman

Mark Hurd Executive Director

Richard Sciano Non-Executive Director

SECRETARY

Neville Bassett

REGISTERED OFFICE

Suite 13, The Parks 154 Fullarton Road Rose Park SA 5067

Telephone: (08) 8431 2300 Facsimile: (08) 8431 2400

AUDITOR

RSM Bird Cameron Partners 8 St George's Terrace Perth WA 6000

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level2 45 St George's Terrace Perth WA 6000

Telephone: (08) 9323 2058 Facsimile: (08) 9323 2033

STOCK EXCHANGE

The securities of MGM Wireless Limited are listed on the Australian Stock Exchange Limited

ASX Codes: MWR ordinary fully paid shares MWRO options, expiring 30 November 2010

MGM WIRELESS LIMITED DIRECTORS' REPORT

Your directors submit the financial report of the consolidated entity for the half-year ended 31 December 2006.

DIRECTORS

The names of the company's directors in office during the half-year and until the date of this report are:

Mark Fortunatow Mark E Hurd Richard S Sciano

Directors were in office for this entire period unless otherwise stated.

REVIEW OF OPERATIONS

During this half-year, the company made great progress and achieved significant key strategic milestones, including:

• Successful completion of the US Trial School program in Arizona
• Opening of direct US operations based in the Silicon Valley, San Francisco
• Successful commercial launch of new Electronic Roll Marking products

In addition, the company continued to significantly grow its core Australian and New Zealand business, booking a record 50% rise in operating revenues (excluding sales of sales franchise licences.)

Whilst investment and resources were required to achieve these milestones, the benefits are not reflected financially in the current period by way of increased revenues. The company is confident these positive results will commence to flow in calendar 2007.

The $278,935 loss does not include several important factors which investors should take into consideration. Other than depreciation and amortisation of $91,496, as in previous years, for the current period the company expects to receive cash refunds from export market development investments (EMDG) and ATO Research and Development Tax Concessions of approximately $150,000. If these effects are taken into consideration, the operating loss for the period would be $37,439.

This means that expansion activities the company is undertaking are being funded to a large degree by existing operations. The company believes this is solid financial performance. As revenues grow from these expansion activities, in particular the US, the financial performance of the company should improve significantly.

The challenge for the remainder of financial 2007 will also be to service the growing demand in the domestic Australian market, both from individual secondary and primary schools, as well as from central Government education departments.

The company enters 2007 with a richer suite of product offerings which monitor a student from the moment the class teacher does a roll call first thing in the morning. The teacher marks the roll using our messageyou Electronic Roll Marking solution, sends the details to the school head office where late comers and non-attenders are identified and an unobtrusive text message is sent to parents or guardians. The whole process is logged on our Watchlists system, giving the school a secure record keeping service which can help schools identify students with attendance problems.

As we look ahead, we believe MGM Wireless is well positioned to take advantage of our growth opportunities. We are optimistic about our future, and look forward to reporting to you on our progress.

CHANGES IN STATE OF AFFAIRS

During the half-year ended 31 December 2006 there was no significant change in the entity's state of affairs other than that referred to in the half-year financial statements or notes thereto.

AUDITOR'S DECLARATION OF INDEPENDENCE

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 in relation to the review for the half-year ended 31 December 2006 is set out on page 13.

Signed in accordance with a resolution of the directors.

A Mod

M Fortunatow Director Adelaide, 28 February 2007

MGM WIRELESS LIMITED INCOME STATEMENT For the half-year ended 31 December 2006

	Consolidated	Consolidated
	6 MonthsEnded31 December2006$	6 MonthsEnded31 December2005$
Revenues	1,242,177	1,349,275
Cost of salesBad and doubtful debtsFinance costsDepreciation and amortisation expenseSales expensesConsulting expensesCorporate and administration expensesEmployee benefit expenses	(382, 879)(20, 424)(7,769)(91, 496)(44, 476)(168, 758)(204, 142)(601, 168)	(193, 816)(30,000)(88, 240)(230, 899)(127, 632)(192, 864)(433,602)
Profit (Loss) before income tax expense	(278, 935)	52,222
Income tax expense
Profit (Loss) after taxProfit (loss) attributable to minority interestNet profit (loss) attributable to members of MGMWireless Limited	(278, 935)(278, 935)	52,22218052,042
Basic earnings/ (loss) per share (cents per share)	(0.17)	0.03
Diluted earnings/ (loss) per share (cents per share)	(0.17)	0.03

The accompanying notes form part of these financial statements

MGM WIRELESS LIMITED BALANCE SHEET As at 31 December 2006

	Consolidated	Consolidated
	31 December2006$	30 June2006$
CURRENT ASSETSCash and cash equivalentsTrade and other receivablesOther current assets	373,787247,882250	562,834329,0545,155
TOTAL CURRENT ASSETS	621,919	897,043
NON-CURRENT ASSETSPlant and equipmentIntangible assets	154,686384,850	158,723344,700
TOTAL NON-CURRENT ASSETS	539,536	503,423
TOTAL ASSETS	1,161,455	1,400,466
CURRENT LIABILITIESTrade and other payablesProvisions	293,34250,538	281,13822,818
TOTAL CURRENT LIABILITIES	343,880	303,956
TOTAL LIABILITIES	343,880	303,956
NET ASSETS	817,575	1,096,510
EQUITYParent entity interestIssued capitalReservesAccumulated losses	4,663,58475,796(3,921,805)817,575	4,663,58475,796(3,637,805)1,101,575
Minority interestIssued capitalAccumulated losses	20(20)	20(5.085)(5,065)
TOTAL EQUITY	817,575	1,096,510

The accompanying notes form part of these financial statements

MGM WIRELESS LIMITED STATEMENT OF CHANGES IN EQUITY For the half-year ended 31 December 2006

At 1 July 2005Profit attributable tomembers of parent entity	IssuedCapital$4,291,584	AccumulatedLosses$(2,989,437)52,042	OptionIssueReserves$5,740	OutsideEquityInterest$(5,220)	TotalEquity$1,302,66752,042
Profit attributable tooutside equity interest				180	180
At 31 December 2005	4,291,584	(2,937,395)	5,740	(5,040)	1,354,889
At 1 July 2006Profit attributable to	4,663,584	(3,637,805)	75,796	(5,065)	1,096,510
members of parent entityLoss attributable to		(278, 935)			(278, 935)
outside equity interestTransfer of accumulatedlosses of minority interestin accordance with AASB127		(5,065)		5,065
At 31 December 2006	4,663,584	(3,921,805)	75,796		817,575

The above statement should be read in conjunction with the accompanying notes.

MGM WIRELESS LIMITED CASH FLOW STATEMENT For the half-year ended 31 December 2006

	Consolidated	Consolidated
	6 MonthsEnded31 December2006$	6 MonthsEnded31 December2005$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	1,294,236	1,108,574
Payments to suppliers and employees	(1,470,008)	(1, 245, 767)
Interest receivedInterest and other costs of finance	5,353	14,967
	(7,769)
Net cash used in operating activities	(178, 188)	(122, 226)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment	(10, 859)	(26, 315)
Net cash used in investing activities	(10, 859)	(26, 315)
Net decrease in cash held	(189, 047)	(148, 541)
Cash at beginning of the financial period	562,834	649,387
Cash at the end of the financial period	373,787	500,846

The accompanying notes form part of these financial statements

MGM WIRELESS LIMITED NOTES TO THE FINANCIAL STATEMENTS For the half-year ended 31 December 2006

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES $11$

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 "Interim Financial Reporting". Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 "Interim Financial Reporting".

The half-year financial report should be read in conjunction with the Annual Financial Report of MGM Wireless Limited as at 30 June 2006. It is also recommended that the half-year financial report be considered together with any public announcements made by MGM Wireless Limited and Controlled Entities during the half-year ended 31 December 2006 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

The financial report covers the consolidated entity of MGM Wireless Limited and controlled entities. MGM Wireless Limited is a listed public company domiciled in Australia.

The half-year financial report has been prepared on a historical cost basis. Cost is based on the fair value of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the consolidated entity as in the full financial report.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company's 2006 annual financial report for the year ended 30 June 2006.

MGM WIRELESS LIMITED NOTES TO THE FINANCIAL STATEMENTS For the half-year ended 31 December 2006

	31 December2006$	30 June2006$
2.ISSUED CAPITAL
Issued CapitalOrdinary shares - fully paid	4,663,584	4.663,584
Movement in ordinary shares on issueBalance at beginning of period	Number164,621,690	ŝ4,663,584
Balance at end of period	164,621,690	4,663,584

$31$ SEGMENT INFORMATION

The company operates predominantly in one business segment, being the provision of business messaging solutions and internet related services. During the half-year the company commenced the establishment of operations in the USA. The following table presents the revenue and earnings information regarding geographical segments for the half-year periods ended 31 December 2006 and 31 December 2005.

	Australia	USA$	Total$
31 December 2006
Segment revenue	1,242,177	÷	1,242,177
Segment results	(186, 404)	(92, 531)	(278, 935)
31 December 2005
Segment revenue	1,349,275	$\blacksquare$	1,349,275
Segment results	52,042	$\blacksquare$	52,042

4. CONTINGENT LIABILITIES

There has been no change in contingent liabilities since the last annual reporting date.

5. EVENTS SUBSEQUENT TO REPORTING DATE

After reporting date, the Company has raised $440,000 through the issue of 8,000,000 ordinary fully paid shares at an issue price of 5.5 cents per share.

No other matter or circumstance has arisen since the end of the half-year which has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial periods.

MGM WIRELESS LIMITED

DIRECTORS' DECLARATION

The directors of the company declare that:

• $1)$ The financial statements and notes set out on pages 4 to 9 are in accordance with the Corporations Act 2001, including:
  • $(a)$ complying with the Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001;
  • $(b)$ give a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of its performance for the half-year then ended.
• $2)$ In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Mal for

M Fortunatow Director

Adelaide, 28 February 2007

RSM Bird Cameron Partners

Chartered Accountants

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844 T+61892619100 F+61892619101 www.com/site

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF MGM WIRELESS LIMITED

The Financial Report

We have reviewed the accompanying half-year financial report of MGM Wireless Limited (the consolidated entity) which comprises the income statement, balance sheet, statement of changes in equity, cash flow statement, accompanying notes to the financial statements and directors' declaration for the half-year ended 31 December 2006. The consolidated entity comprises both MGM Wireless Limited (the company) and the entities it controlled during the half-year.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including:

• giving a true and fair view of consolidated entity's financial position as at 31 December 2006 and its performance for the half-year ended on that date; and
• complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

As the auditor of the company, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion,

Liability limited by a scheme approved under Professional Standards Legislation

Ħ

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

n sang panggunang mananggunan.Sa mananggunang mananggunan na manang

Independence

Museu

In conducting our review, we have followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of MGM Wireless Limited is not in accordance with the Corporations Act 2001 including:

• $(a)$ giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of its performance for the half-year ended on that date; and
• $(b)$ complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

RSM Bid Cameron Partners.

ang mga mga kalalalang ng

RSM BIRD CAMERON PARTNERS Chartered Accountants

DJWALL Partner

Perth, WA Dated: 28 February 2007 RSM Bird Cameron Partners

Chartered Accountants

8 St Georges Terrace Perth WA 6000 GPO Box R1253 Perth WA 6844T +61 8 9261 9100 F +61 8 9261 9101 www.rsmi.com.au

AUDITOR'S INDEPENDENCE DECLARATION

As lead audit partner for the review of the financial report of MGM Wireless Limited for the half-year ended 31 December 2006, I declare that to the best of my knowledge and belief, there have been no contraventions of:

the auditor independence requirements of the Corporations Act 2001 in relation to the review; and $(i)$

any applicable code of professional conduct in relation to the review. $(ii)$

This declaration is in respect of MGM Wireless Limited and the entities it controlled during the period.

RSM Bid Cawas Partes.

RSM BIRD CAMERON PARTNERS Chartered Accountants

.DJ WALL Partner

Perth, WA Dated: 28 February 2007

Liability limited by a scheme approved under Professional Standards Legislation

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

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