SPACETALK LTD — Interim / Quarterly Report 2011

Jul 28, 2011

Companies Announcement Office Australian Stock Exchange Limited 20 Bridge Street Sydney NSW 2000

ASX Release MGM Wireless Ltd Thursday July 28, 2011

June 2011 4C Quarter Results

School communications group MGM Wireless Ltd said today that the Company completed the financial year with strong growth in school numbers and improvement in revenues from the previous year.

• Operational school customers increased 21.4% to 698 at 30 June 2011 from 575 at 30 June 2010. The increase in schools for the half-year ended 30 June 2011 was 138 schools, or 24.6%.
• Revenue for the year ended 30 June 2011 was \$2.358m, up 3.8% on 2010. This was on full-year sales of \$2.015m (down 3.2%).
• The Company expects to report a similar profit result to last year's \$0.203mill in line with previously released guidelines.

In other developments:

• The Company is aggressively progressing the development and rollout of a number of exciting new products which will generate revenue growth into the future – a key business objective of the company. Funding for this most extensive R&D program in the Company's history has been entirely met from operations. Some new products are complete and in early stages of commercialization, with other, larger products expected to be finalized and released throughout the course of 2011 and early 2012.

• Solid progress has been made in the rollout of product to schools signed under the New Zealand Ministry of Education Contract. At the end of June a total of 30 schools have been installed with a further 42 signed to date. Following the expiry of the 12-month contract period of government funding, MGM Wireless will have a significant opportunity to offer system upgrades and new feature rich products to the entire NZ market, as schools will no longer be tied to the product mandated by the former contract.

• In the previous quarter, the company completed and commercialized Smartsync, a universal software interface which removes the need to manually input parent contact details for schools using the Outreach and School News Channel SMS Solution. This has proven to be well received by both new and existing customers, and is a strategic key driver to gain growth in the smaller schools market sector, which has simpler requirements.

• In March, the company completed the redesign and rebuild of its backend communication and billing infrastructure to both support anticipated higher communication volumes with release of its new customer products, and to improve management and customer service functionality for its existing systems. The rebuild included the move of its infrastructure to a high security data-hosting facility in Sydney, and new functionality to support cloud server technology. This development has further improved the security, scalability, reliability and data redundancy of the company's services.
• MGM continues to migrate existing Government school customers previously managed by the NSW Education Department to direct contracts with MGM. This enables new revenue opportunities by offering more tailored, feature rich communication solutions and services to meet the unique needs of individual schools. To capitalize on this, MGM recently increased its sales resources dedicated to this market sector with the appointment of additional senior sales staff.

The company's top line revenue has not increased in direct correlation with the growth in its school numbers, reflecting a characteristic of modern business models which utilize web-based technology to reduce service delivery costs and offer more competitive, lower pricing without impacting on profit margins or service quality. This effect on the company's overall revenues is also being contributed by the company's significant existing customer base, some of which have been using MGM for more than 6 years as they renew their multi-year agreements.

The 30 June closing cash balance of \$ 108,000 was somewhat lower than usual, a temporary anomaly due to delays in cash receipts from customer contracts at the end of the quarter which happened to be the start of the school holiday period and associated school closures. There was also a delay in the receipt of R&D grant income anticipated to exceed \$ 200,000.

A combination of schools adopting a more cautious approach to school spending due to tighter economic conditions with associated deferment of purchasing decisions until after the end of the financial year, as well as the need for MGM to train new and existing staff to prepare for new product launches ,contributed to new sales falling below target for the June quarter. However, the strength of the MGM Wireless business model, which is based on multi-year customer contracts with recurrent income in software license fees and communication revenues, meant that the business remained profitable and continued to grow despite these factors.

About MGM Wireless Ltd and Messageyou, LLC

MGM Wireless Ltd is a South Australian (Adelaide) based public company with a market capitalisation of A\$1.2 m listed on the Australian Securities Exchange (ASX code: MWR). The company trades as Messageyou, LLC in the United States, based in Silicon Valley, Sunnyvale, California.

MGM Wireless is recognized in Australia and internationally as a pioneer of socially responsible technology-enabled school communications with a proven capacity to design, develop and successfully commercialise innovative world class technology products in Australia and internationally.

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-today operations.

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

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

93 091 351 530 30 June 2011

ABN Quarter ended ("current quarter")

Consolidated statement of cash flows

		Current quarter	Year to date
Cash flows related to operating activities		\$A'000	( .12.months)
			\$A'000
1.1	Receipts from customers	425	2,172
1.2	Payments for (a) staff costs	(242)	(1,332)
	(b) advertising and marketing	-	-
	(c) research and development	-	-
	(d) leased assets	-	-
	(e) other working capital	(172)	(586)
1.3	Dividends received	-	-
1.4	Interest and other items of a similar nature received	-	-
1.5	Interest and other costs of finance paid	(18)	(55)
1.6	Income taxes paid	-	-
1.7	Other
	Net operating cash flows	(7)	199

		Current quarter \$A'000	Year to date (9.months) \$A'000
1.8	Net operating cash flows (carried forward)	(7)	199
1.9	Cash flows related to investing activities Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets	- - (45) (0)	- - (195) (34)
1.10	(e) other non-current assets Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets	- - - - - -	- - - - - -
1.11 1.12 1.13	Loans to other entities Loans repaid by other entities Other – Development expenses	- - -	- - -
	Net investing cash flows	(45)	(229)
1.14	Total operating and investing cash flows	(52)	(30)
1.15 1.16 1.17 1.18 1.19 1.20	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material)	- - - (7) - -	154 - 23 (272) - 9
	Net financing cash flows	17	(79)
	Net increase (decrease) in cash held	(59)	(116)
1.21 1.22	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	167 -	224
1.23	Cash at end of quarter	108	108

Payments to directors of the entity and associates of the directors

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

		Current quarter \$A'000
1.24	Aggregate amount of payments to the parties included in item 1.2	271
1.25	Aggregate amount of loans to the parties included in item 1.11	-

1.26 Explanation necessary for an understanding of the transactions Nil

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Nil

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

Nil

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	-	-

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current quarter \$A'000	Previous quarter \$A'000
4.1	Cash on hand and at bank	108	167
4.2	Deposits at call
4.3	Bank overdraft
4.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	108	167

Acquisitions and disposals of business entities

		Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
5.1	Name of entity	N/A
5.2	Place of incorporation or registration	N/A
5.3	Consideration for acquisition or disposal	N/A
5.4	Total net assets	N/A
5.5	Nature of business	N/A

Compliance statement

• 1 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.
• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: M Fortunatow Date: 28 July 2011 Director

Print name: Mark Fortunatow

Notes

• 1. 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.
• 1. 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.
• 6.2 reconciliation of cash flows arising from operating activities to operating profit or loss
• 9.2 itemised disclosure relating to acquisitions
• 9.4 itemised disclosure relating to disposals
• 12.1(a)- policy for classification of cash items
• 12.3 disclosure of restrictions on use of cash
• 13.1 comparative information
• 1. 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.