Spacetalk : 4QFY22 Business Update

For personal use only

ASX Announcement

Spacetalk Ltd. (ASX:SPA)

25 July 2022

4QFY22 BUSINESS UPDATE

4QFY22 Highlights

• Total Revenue of $4.1 million. 41%1 growth on pcp2
• Wearables Revenue of $3.5 million. 52% growth on pcp
• App ARR3 of $3.8 million. 41% growth on pcp

Spacetalk Ltd. (ASX:SPA) ("Spacetalk" or "Company"), developer of innovative technologies providing child safety and development tools to support wellness, provides an update on its (unaudited) financial and business performance for the three months ending 30 June 2022 ("4QFY22").

All figures are in AU$ million.

• Some calculations of changes to prior corresponding periods may be impacted by rounding.
  2 pcp - Previous Corresponding Period.
  3 APP ARR = Annualised Recurring Revenue from Spacetalk App monthly subscriptions.

Spacetalk Ltd. (ASX:SPA)

ABN 93 091 351 530

The Parks, Suite 13, 154 Fullarton Road, Rose Park, South Australia 5067

www.spacetalkwatch.com

For personal use only

Financial Summary

(Growth rates are compared to 4QFY21, the previous corresponding period, unless otherwise stated.)

1.0$3.0 $2.5

$2.0

0.7

$1.5

2.5$1.0

Spacetalk Ltd. (ASX:SPA)

ABN 93 091 351 530

The Parks, Suite 13, 154 Fullarton Road, Rose Park, South Australia 5067

www.spacetalkwatch.com

For personal use only

Commentary

For the quarter ended 30 June 2022, Spacetalk achieved total revenue of $4.1 million, a 40.9% increase on pcp. Total revenue for 2022 financial year was $20.7 million, a 37.1% increase on pcp. This the first time the Company's annual revenues exceeded $20 million.

Wearables revenue for the three months to end June 2022 was $3.5 million, a 51.5% increase on the prior corresponding quarter. 4QFY22 Annualised Recurring Revenue ("ARR") from Spacetalk App monthly subscriptions was $3.8 million, up 40.7% compared to pcp. Wearables sales for the quarter were achieved with marketing expenses of $0.5 million compared to $0.3 million in the pcp.

Revenue for the MGM Schools Business for the three months to 30 June 2022 was $0.6 million, a 4.9% increase on the pcp. The MGM Schools Business continues to be a strong net cashflow contributor for the Company.

Wearables Business - Device Sales Geographic Breakdown

• Australia-NewZealand sales were $1.5 million, up 25.0% on the pcp result of $1.2 million.
• Europe sales were $0.5 million, up 30.8% on the pcp result of $0.4 million.
• North America sales were $0.5 million.

Funding and Cash Position

As at 30 June 2022 the Company held cash of $5.5 million.

Business Optimisation

With recent capital markets volatility, Spacetalk has taken steps to reduce operating expenses and accelerate progress to cash-flow positivity. A key element has been a 15% reduction in headcount with several Spacetalk employees having regrettably been made redundant, including US based Chief Operating Officer Mr Jim Quinn. Some unfilled positions will also continue to remain unfilled.

Spacetalk remains confident in the growth opportunities available as the global connected wearables segment evolves towards a mass market tipping point. Spacetalk will continue investing in its core software, services, and devices to ensure that it retains a leading and differentiated position in the connected wearable market.

Spacetalk Ltd. (ASX:SPA)

ABN 93 091 351 530

The Parks, Suite 13, 154 Fullarton Road, Rose Park, South Australia 5067

www.spacetalkwatch.com

For personal use only

Distribution

Further to the prior announced distribution arrangement with BestBuy US, during 4QFY22 Spacetalk additionally expanded its distribution in Finland, the United Kingdom, and North America.

Verkkokauppa, Finland's best-known and most visited on-line retail store operator, now ranges the Spacetalk's Adventurer. Finland's largest consumer electronics retailer, Verkkokauppa, operates four mega-stores and a network of 2,500 pick-up points for on-line purchases.

BestBuy US and Verkkokauppa distribution arrangements are subject to "in-fill" orders whereby inventory is purchased and held by BestBuy US and Verkkokauppa and "re-filled" as required.

In addition, Spacetalk Adventurer wearables now are also available on-line through John Lewisin the United Kingdom, and in North America through:

Fulfilment for purchases through these additional channels is via Spacetalk's existing third- party logistics partners. Consequently, no additional "in-fill" orders for these channels were placed. Subject to sales and gross margin performance, distribution may progress to fulfilled- by-retailer with associated "in-fill" orders.

The financial impact of selling through these channels is currently unknown, with no guaranteed or minimum level of revenue. However, the Company expects it to have a direct positive impact on the total revenue of the Company.

Spacetalk continues to engage with other potential distribution partners in ANZ, North America, and Europe. Spacetalk will focus its distribution strategy to prioritise high quality, better yielding accounts in recognition of the opportunity cost of inventory, working capital, marketing, and staff resources, all with a view to improving gross profit margins.

Product Development and Innovation

Spacetalk continues to invest in the development of its products and eco-system. A new software update is scheduled for release in 1Q2023, offering new device and software functionality. The Company also continues to develop plans for new wearable device offerings.

Spacetalk Ltd. (ASX:SPA)

ABN 93 091 351 530

The Parks, Suite 13, 154 Fullarton Road, Rose Park, South Australia 5067

www.spacetalkwatch.com

For personal use only

Supply Chain and Inventory

Spacetalk did not experienced any material supply chain disruptions during 4QFY22.

The Company manages its supply chain and inventory risk by maintaining component buffers and inventories. Input expenses are managed with particular care due to intermittent supply disruptions, and more recently inflationary pressures emanating from global energy market volatility. Spacetalk currently holds sufficient inventory to meet forecast requirements and to down-risk supply chain issues. Shipping, handling, and warranty expense variabilities however remain.

Spacetalk's proprietary ownership of the design of its devices and applications provides a strategic competitive advantage in supply chain risk management.

Jumpy SIM MVNO

During the quarter, Spacetalk launched its JumpySIMMobile Virtual Network Operator ("MVNO") service in the US. It further announced that a JumpySIM service in Australia is in development with a target launch in 1QFY23 in advance of the Black Friday/Cyber Monday sales period.

Corporate Governance Update

During the quarter, the Company appointed Mr Georg Chmiel as Independent Non-ExecutiveChairman and Mr Mike Rann as Independent Non-ExecutiveDirector. Further, the Spacetalk Board constituted Audit and Risk Management, and Nomination and Remuneration Committees of the Board. The membership of these committees is as follows:

Spacetalk has also updated and published several Corporate Governance documents and policies which are available for review at the Spacetalk Investor Centre.

Spacetalk Ltd. (ASX:SPA)

ABN 93 091 351 530

The Parks, Suite 13, 154 Fullarton Road, Rose Park, South Australia 5067

www.spacetalkwatch.com