SPACETALK LTD — Investor Presentation 2019

Sep 11, 2019

MGM WIRELESS (ASX:MWR)

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SPACETALK The Next Growth Category September 2019

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MGM Wireless today
MGM Wireless is the designer and developer of
the SPACETALK smartphone, watch and GPS for
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AllMyTribe app.
MGM Wireless is also the #1 provider of
messaging communication solutions for
Australian schools.
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SPACETALK Established ASX listed launched 2001 2003

October 2017

History of paying SPACETALK dividends and sold in Australia, tight capital UK and New management Zealand

New emerging SPACETALK global sales opportunity; children's Up 931% wearables

SPACETALK

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Our businesses
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Wearables

School communications

SPACETALK all-in-one smartwatch, phone and GPS product

• Innovative ‘Internet of Things’ product

• Industrial Design by the same team that designed the Apple Watch

• Fast growth trajectory

• Global opportunity – kid’s wearables

Australian school communications solutions since 2002

• Stable, profitable, subscription business

• Attendance management and school communication messaging

• 1,400 schools

• 1.7 million parents

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SPACETALK Simply Safer Phones for Kids

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Key features

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	3G Mobile High Band 3G Mobile Low Band Reliable mobile coverage across Australia and UK Complies with Australian, NZ and UK telecommunications network requirements Tested and certified to Australian, NZ and UK standards and safe for kids
	Kids’ data stored in Data secure and stored in Data protected by Australian privacy and security laws and EDPR Apps developed in Australia/UK Australia/UK Australia Camera Some

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2018 audit by The University of Adelaide’s School of Electrical and Electronic Engineering and Interpol accredited global cyber expert in digital forensics – found potential security breaches in all the models reviewed except SPACETALK – and that the severity of those breaches were ‘notifiable’ to federal authorities.

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Wearables – new, fast-growing market
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Gartner Research 2017

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the greatest revenue sales forecasted to
potential among
grow from 2017:
all wearables
$9.3B to $17.4B
through 2021’
(2017–2121)’
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Market - leading data security

SPACETALK is the most secure in the market:

• All data is hosted in Australia and the UK

• Data Encrypted between AllMyTribe app, servers and SPACETALK

• Two-factor authentication used in pairing process

• Hardware to chip level tested as secure

• Apps, server software and firmware developed in Australia

• European GDPR privacy of data compliant

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SPACETALK cumulative quarterly revenue $4.64m $3.83m $2.64m SPACETALK sales strong and growing through the year December quarter stronger due to Christmas $0.28m

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Australia New Zealand
316 stores 189 stores
SPARK (71)
JB Hi-Fi (196)
Noel Leeming (77) NEW
Leading Edge (120)
Harvey Norman (35) NEW
JB HiFi (6) NEW
SPACETALK UK
e-commerce
Sky Mobile NEW
store QVC UK NEW
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	Financial position as at:	30-Jun-19 $m	30-Jun-18 $m
	ASSETS
	Cash	1.64	2.65
	Inventory Other current assets	1.24 1.81	0.12 1.16
	Non-current assets	2.97	2.72
	TOTAL ASSETS	7.67	6.55
	LIABILITIES
	Current liabilities Non-current borrowings Deferred tax liabilities	1.61 1.25 0.0	0.89 0.0 0.0
	TOTAL LIABILITIES	2.86	0.90
	NET ASSETS	4.80	5.66
	EQUITY
	Issued capital	10.81	9.97
	Reserves	3.73	0.74
	Retained earnings	(9.73)	(5.04)
	TOTAL EQUITY	4.80	5.66

• Cash $1.6 million at 30 June 2019

• Inventory mostly SPACETALK units

• Non-current assets include intangible assets of $2.8 million

• Expecting to write down all IP assets 100% over 3 years

• $2 million convertible note drawn to $1.25 million at 30 June 2019 (drawn to $1.75 million at 9 September 2019)

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Share price and distribution milestones

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Leading
Edge
SPACETALK
$46 m Launch
12.51 m
Market capitalisation
Shares on
at $3.71 (as at
issue 11/09/19)
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Top shareholders

• 14.9% Fortunatow Family (Founder)

• 3.4% Hurd Family (Founder estate)

• 2.9% Gleneagle / Pink Style

• 2.2% Yavern Creek

Options expiring	Exercise Price	Number
30 April, 2020	$1.40	240,000
29 November, 2020	$4.00	550,000
30 April, 2022	$6.00	210,000	Held by directors
30 April, 2022	$8.00	150,000
30 April, 2022	$10.00	150,000

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$’000’s unless shown otherwise

		MGM Wireless	Nuheara	Life 360	Dubber	Family Zone
	Company	MWR	(NUH)	360	DUB	FZO
	FY19 Performance Revenue	7,142.1	2,218.7	24,597.0	7,392.2	4,184.3		Relative to peers,
	EBITDA	-270.0	-10,025.2	-16,672.0	-8,077.4	-14,401.1		MGM shows:
	NPAT*	-1,297.2	-10,027.2	-17,102.0	-9,676.8	-14,401.1		A very modest
	Working Capital	3,087.0	4,870.8	78,593.0	23,595.6	4,063.1		EBITDA loss
	Net Debt/(Cash)	-379.4	-3,220.1	-77,600.0	-19,618.2	-3,398.6
	Revenue Growth (1-year)	161%	-14%	114%	269%	80%		Conservative use of
	Market Capitalisation	45,020.5	26,555.3	495,199.6	250,245.6	37,116.1		working capital
	Ratios						Average	A low valuation based
	EBITDA Margin	-3.8%	-451.8%	-67.8%	-109.3%	-236.7%	-173.9%	on EV/revenue
	EV/Revenue	6.3	10.5	17.0	31.2	8.1	14.6
	EV/EBITDA	-165.3	-2.3	-25.0	-28.6	-3.4	-44.9
	Working Capital/Sales	43.2%	219.5%	319.5%	319.2%	97.1%	199.7%
	Working capital to net assets	64%	46%	98%	84%	51%	68.6%
	Shares (m)	11,847.5	1,062,210.3	145,219.8	186,750.5	200,627.8
	Price (Cents)(4/09/19)	380	2.5	341	134	18.5
	Market Capitalisation ($m)	45,020.5	26,555.3	495,199.6	250,245.6	37,116.1

Notes:

MWR EBITDA Normalised for non cash expense related to issue of shares and options FZO Current borrowings included in debt, not Working Capital

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Results for the year ended:	30 Jun 19	30 Jun 18	%
$m unless otherwise specified	$m	$m	Change
Total revenue	7.14	2.74	161
Wearables revenue	4.64	0.45	933
School communication revenue	2.19	2.23	(2)
EBITDA	(0.27)	0.67	(140)
Net loss	(4.69)	(1.13)	315
EBITDA margin	(4%)	24%	(28%)
Net cash from operations	(0.53)	1.25	(143%)
Cash balance	1.64	2.65	(38%)
Net cash/debt	0.39	2.65	(85%)
Earnings per share (basic) cents	(38.80)	(11.71)%	231%

• Record revenue – up 161%

• SPACETALK sales exceeding management expectations

• Capitalising on market leadership and growth opportunity while maintaining prudent expenditure

• Cost of sales $1.9 million, up from $0.3 million

• Amortisation and depreciation $2.0 million (FY18: $1.8 million)

• Loss reflects non-cash option and share issue costs of $3.4 million

• Monthly recurring revenue run rate $66k/month

• Grants of $275,000 received in FY2019

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Business model quickly replicable
in new markets
Online sales Bricks and Marketing Partnerships with
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www.spacetalkwatch.com mortar retail leading telcos
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Mobile

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66 million 1 million
People in UK Sky Mobile
(3x Australia) customers
Mobile
10 million
350
Sky UK subscribers
with children Sky sales people
trained
aged 5-12
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• Landmark agreement with Sky Mobile, part of Sky UK which has 23 million subscribers and is owned by Comcast

• Sky selling SPACETALK on a £10 per month plan

• Strong sales already reported; targeted marketing to Sky’s subscribers has begun and will accelerate sales in Q2 FY20

• MGM receives full wholesale payment and recognises 100% of revenue when SPACETALK is sold to Sky

• Sales agreement signed with QVC UK, leading home shopping channel with 12.5 million customer contacts

• QVC UK will promote SPACETALK on its TV in 30- and 45- minute shows, at its own expense

• Additional bricks and mortar agreements expected

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Units

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Forecast
Rapid growth expected
to continue this financial
year and beyond as
20,053 new markets are
12,775 opened
1,786
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Leveraging geographic expansion

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Further agreements
expected with a
leading Australian
telco and overseas
telco in FY20
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• Strong pipeline of distributors in current markets

• Barcelona Mobile World Congress February 2019 attendance led to approaches from leading global telcos and distributors

• Opportunity to expand into new European markets, discussions underway

• Strong interest in MGM’s Berlin IFA September 2019 consumer electronics show stand

• US trademark secured

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Rapidly assessing new market opportunities that can leverage MGM’s technology:

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Elderly Disabled Field
Workers
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Summary
Significant near
term growth opportunity
Record revenue SPACETALK sales
 Sky rollout of £10 per month plan
up 161% to up 931% to
Sales of SPACETALK  4G watch release
$7.1m $4.6m  Launch into new verticals
expected to grow
 QVC potential sales and brand awareness

4X to 90,000 Expecting new Australian telco in FY20
in FY20  Expecting new overseas telco in FY20
Australia and
SPACETALK Opportunity to capitalise on
New Zealand
unit sales up emerging new product
distribution
1,023% to
category
increased to
18,270 505 stores
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Appendix - Leadership team
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Mark Fortunatow Chief Executive Officer

BSc (MaSc) BEc

Paul Cooper General Manager Wearables Formerly Microsoft, Nokia

Nathan De Rozario SPACETALK Director of Marketing & Sales

Formerly Samsung

Jarred Puro Director of Finance and Corporate Services

Tim Eckermann HR Consultant Formerly World Bank Group HR BP

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Amanda Lee National Sales Manager

Formerly Microsoft, JB Hi-Fi, Blackberry and Motorola Senior Sales

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Andrew Cockburn General Manager Education

Formerly News Corp

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Leila Henderson Non-executive Director

Fellow of Entrepreneurship Flinders University

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Glen Butler Non-executive Director Founder Visy BSc

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