The ASX-listed MGM says SPACETALK sales represented record growth of 933% for the product, pulling in revenue of $4.6 million for the 12 months.
MGM Wireless (ASX:MWR) CEO Mark Fortunatow said: “This was an outstanding result with sales of our SPACETALK smartwatch, mobile phone and GPS device increasing from 1,785 units in FY18 to 18,270 units in FY19.
And total company revenue grew 161% from $2.7 million to $7.1 million, as the rollout of SPACETALK gathered “significant momentum” with the signing of additional major international retail distribution agreements.
“Our product is the world leader in the children’s wearables segment, because of its exceptional reliability, high quality, ease-of-use, while meeting the highest standards of data security and privacy standards. SPACETALK is becoming the ‘hot, must have’ mobile phone product among children aged between five and 12.
“Just as in the 1990s with the mobile phone, and the 2000s with the smartphone, we are now witnessing the emergence of a new mobile phone product category - the children’s wearable mobile phone, in which SPACETALK is the market leader.”
While MGM’s schools products revenue in Australia was stable at $2.2 million. the company stressed it has funded R&D through cash flow, with inventory and marketing supported through a $2 million convertible note that was drawn to $1.25 million at 30 June 2019 ($1.75 million drawn at 21 August 2019).
MGM also received grants of $275,000 in FY2019.
The full year report reveals cost of sales increased from $0.3 million to $1.9 million, with MGM anticipating EBITDA of $0.25 million for FY2019, prior to non-cash options and share issue expenses of $3.4 million.
And cash at 30 June 2019 was $1.6 million.
In the UK, which MGM says has an addressable market three times larger than Australia’s, sales for the fhe full year were boosted through what the company describes as a “watershed agreement”” with Sky, Europe’s leading media, entertainment and telecommunications company and part of the Comcast group.
Sky began selling SPACETALK through Sky Mobile on a £10 per month plan this month.
According to MGM the Sky Agreement represents a very attractive pricing for families with young children.
Under the agreement, Sky Mobile will market SPACETALK to Sky’s 23 million subscriber base, as well as specifically targeting its 10 million subscribers that have children aged between five and 12.
MGM says Sky has already reported strong sales without any specific marketing activities – with several stock re-fill orders placed in just the first week of sales.
The deal with SKY SEES MGM receive full wholesale payment and recognises 100% of revenue when SPACETALK is sold to Sky.
MGM says the increased maturity of its UK business has enabled extended payment terms with suppliers, freeing up cash flow – and it continues to receive interest from telecommunication companies and retailers in the UK and mainland Europe.
“The growth opportunities for SPACETALK are enormous. In the UK, we have already received extensive positive media coverage and feedback, and that’s before the commencement of planned mass scale advertising and marketing,” Fortunatow said.
“For The SPACETALK watch is the most secure in the children’s wearables market, is GDPR compliant and meets all UK, European and Australian standards for data privacy and security. We have also secured a US trademark.
“We are also working on the release of a 4G watch given strong interest from telecommunication companies to enter the children's smartwatch mobile phone category at that particular level.
“We believe our technology communication and GPS location platform for SPACETALK has further applications beyond the children’s market which the company is very excited about.”