MGM (ASX:MWR), makers of the SPACETALK all-in-one smartphone, watch and GPS device, says that despite the impact of COVID-19 on supply chains globally, cost-saving measures have included directors and senior management agreeing to reduce pay, staff taking leave without pay and a reduction in full time positions - which are expected in total to lower full time equivalent wage costs by over 20% for the period 1 April, 2020 to 30 September, 2020.

MGM says it has also reduced discretionary costs and expects to benefit from government support initiatives which will assist in meeting tenancy and other costs.

Releasing a trading update for the third quarter quarter ending March 31, 2020, MGM reported:

• Total Q3 revenue $1.9 million, up 37%*
• Year to date revenue $9.5 million, up 74%*
• Q3 Wearables revenue $1 million, down 15%*
• AllMyTribe app subscription revenue $130,000 in March 2020, up 124%*
• Annualised recurring app revenue increased to $1.5 million
• Q3 School communication revenue $0.9 million, up 350%*
• Cash of $6.1 million and debt of $1.75 million at 31 March 2020

MGM Wireless CEO Mark Fortunatow said: “Although overall sales have been sound and recurring revenue is growing, we have taken the necessary actions to reduce costs while the effects of the pandemic remain uncertain”.

“We want to preserve our strong liquidity position which provides us with the capacity both to continue to fund our operating expenditure and to grow our business through the release of new and exciting products and services in the short to medium term.

“Our products are well suited for these challenging times.

“We’re seeing increased usage from children using their SPACETALKs to send messages and make phone calls to their isolated and lonely grandparents, and from messages sent by kids, SPACETALK to SPACETALK, staying in touch with their school friends while they’re not attending school.

“All of this can be done safely as parents control who can contact their child.

“Our school messaging business is experiencing unprecedented demand and message traffic, as schools, teachers, students and parents use our systems to stay connected.

“The next level for family connectivity is coming with our new SPACETALK smartphone watch for seniors. We’re creating whole new ways for grandparents to stay connected to their children and grandkids in a fun and engaging way, with additional features that are unique in terms of seniors safety, whether in aged care or living independently.

“Through our SPACETALK range, combined with these new circumstances we find ourselves in, we may be seeing the start of a structural and permanent change in the way families stay safe and connected,” Fortunatow concluded.

According to Fortuanow, MGM’s products well suited to the challenges of isolation, including:

• COVID-19 closures drive schools business as messaging needs increase
• SPACETALK-to-SPACETALK keeps kids in touch with their mates
• Children use SPACETALK to call and message lonely grandparents

“Our products are well suited for these challenging times,” Mr Fortunatow said. “We’re seeing increased usage from children using their SPACETALKs to send messages and make phone calls to their isolated and lonely grandparents, and from messages sent by kids, SPACETALK to SPACETALK, staying in touch with their school friends while they’re not attending school.

“All of this can be done safely as parents control who can contact their child.

“Our school messaging business is experiencing unprecedented demand and message traffic, as schools, teachers, students and parents use our systems to stay connected.

“The next level for family connectivity is coming with our new SPACETALK smartphone watch for seniors. We’re creating whole new ways for grandparents to stay connected to their children and grandkids in a fun and engaging way, with additional features that are unique in terms of seniors safety, whether in aged care or living independently.

“Through our SPACETALK range, combined with these new circumstances we find ourselves in, we may be seeing the start of a structural and permanent change in the way families stay safe and connected.”