DATAWORKS GROUP LIMITED — Interim / Quarterly Report 2021

Jul 29, 2021

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30 July 2021

IXUP Fourth Quarter FY21 Update and Appendix 4C

IXUP Limited (ASX: IXU) (“IXUP” or the “Company”) , an innovative technology company focused on collaborative and secure data analytics, today lodged its Appendix 4C Report and provided a review of the Company’s progress for the fourth quarter ended 30 June 2021 (“ Q4 ”).

Q4 and Post Reporting Period Highlights

• Acquisition of DataPOWA Limited to strategically position IXUP for accelerated growth within the global sports data market.

• Completion of strategic acquisition of the entire intellectual property and associated technology product portfolio of Data Republic Pty Ltd (Administrators Appointed) (“ Data Republic ”), which delivers a data collaboration software tool for broader market applications to complement IXUP’s existing higher end encryption solutions.

• Execution of assignment agreement with Data Republic Inc. to assume the obligations and rights for a key US based SaaS customer ( US Customer ), representing the most significant revenue contract for IXUP since Company inception.

• Commencement of business in the US via the incorporation of a new US subsidiary (IXUP Inc.), which will service the initial US Customer, and will also underpin the planned expansion of IXUP’s global sports data initiatives in the US.

• Continued assessment and negotiation of additional commercialisation opportunities with prior Data Republic customers in Australia, Asia and the US.

DataPOWA Limited Acquisition

On 19 May 2021 IXUP announced that it entered into a binding Share Purchase Agreement (“ SPA ”) to acquire UK-based sports technology company DataPOWA Limited (“ DataPOWA ”), for a maximum purchase price of A$12 million on a cash-free, debt-free basis (“ Acquisition ”).

The Acquisition follows on from collaboration initiatives between DataPOWA and IXUP which have led to the recent commercial deployment of the “POWA Index 2.0” product, which combines DataPOWA’s revolutionary AI-driven sports sponsorship asset valuation tool (the “ POWA Index ”) with IXUP’s secure data collaboration engine (the “ IXUP Secure Data Engine ”).

The Acquisition has been structured to secure maximum value for IXUP shareholders from the value to be unlocked by the commercialisation of the POWA Index, the deployment of IXUP’s technology through DataPOWA, as well as providing a clear path to market for IXUP’s technology within the global sports data market.

The Acquisition will be subject to IXUP shareholder approval at an Extraordinary General Meeting to be held on 30 July 2021, as detailed in the Notice of Extraordinary General Meeting that was announced on 30 June 2021.

The Acquisition highlights the value of the IXUP Secure Data Engine as a valuable ‘key’ to unlocking value in the sports data market for all participants who have information assets that they are unable to share or commercialise due to concerns around privacy, compliance and/or cyber security.

IXUP’s strategic efforts within the large and lucrative sports data market are expected to deliver significant product integration and new product development opportunities and will be strategically guided by a world class team of partners and incentivised advisors.

The timing of the Acquisition affords a number of unique benefits, such as:

• it enables IXUP to acquire a synergistic and complementary business with associated domain expertise that is poised for accelerated revenue and customer growth;

• it accelerates IXUP’s commercialisation plans; and

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• the global sports data market notably intersects the international digital sports betting market, which is undergoing rapid growth due to the deregulation of the US markets, which in turn is increasing the value of, need for, and desire for sharing of valuable but previously siloed sports data.

Completion of strategic acquisition of Technology Assets of Data Republic Pty Ltd (Administrators Appointed) (“Data Republic”)

During the quarter, the Company also announced that it had completed a transaction to acquire the entire intellectual property and associated technology product portfolio that underpinned Data Republic’s high profile, global data collaboration product suite. The Data Republic technology assets became available as part of a rapid-fire, contested sale process commenced by the Administrators for Data Republic in mid-May 2021.

IXUP is excited by the opportunity this transaction will bring to the Company, particularly the augmentation of IXUP’s existing technology offering, which will now include the data collaboration software products of Data Republic, which are aimed at broader market segments than IXUP’s higher end encryption solutions. Combining IXUP and the Data Republic technology assets creates a compelling “one-stop-shop” for corporate data collaboration needs and brings to IXUP an “out of the box” solution that will seamlessly integrate with IXUP’s existing product suite to deliver a compelling, end to end secure data collaboration suite of products.

IXUP sees strong potential for the Data Republic technology assets to be applied to the global sports sponsorship and sports data segments; areas of intense focus for IXUP. This transaction also aligns strongly with the DataPOWA acquisition, with significant potential product and commercial synergies already identified.

Revenue Potential

Post the acquisition of Data Republic’s technology assets, IXUP has been in discussions with a number of Data Republic’s past customers who have expressed interest in a continuation of services that were previously supplied by Data Republic and/or its related international entities. The first commercial opportunity has already been confirmed, with the execution of an assignment agreement with Data Republic Inc. to assume the obligations and rights for a key US Customer. The assignment of this contract to IXUP delivers the most significant revenue contract for IXUP since Company inception, providing a modest yet meaningful base for planned growth in the US markets.

IXUP is continuing to assess and negotiate additional commercialisation opportunities with prior Data Republic customers, which also affords the potential to introduce IXUP’s existing, higher security data engine to service their needs. To enable a seamless delivery of service to these customers, including technology support and targeted product roadmap expansion, IXUP has secured employment of select key employees previously employed by Data Republic in Australia and the US.

As part of this resourcing initiative to service previous Data Republic customers, post the reporting period, IXUP established a US beachhead (IXUP Inc.), which will also be used to facilitate the planned expansion of IXUP’s global sports data initiatives (including the acquisition of DataPOWA into the rapidly growing US market).

In addition to revenue opportunities from previous Data Republic customers, IXUP also intends to support the revenue growth initiatives of the soon to be acquired DataPOWA business (subject to shareholder approval), which is expected to commence meaningful revenue generation in coming quarters. These DataPOWA revenue streams are expected to commence for both the core SaaSbased POWA Index sponsorship valuation tool, as well as the DataPOWA 2.0 product, which was a codevelopment between DataPOWA and IXUP. These discrete revenue streams are anticipated to be further enhanced through already identified cross sell and additional product development opportunities in future periods.

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While the focus during the quarter has been on the various significant corporate, integration and presales initiatives outlined above, management efforts in subsequent quarters will shift to the potential realisation of revenue generation across the IXUP group of companies.

Q4 Financial Update

Net cash outflows from operations were $1.29 million for the quarter. The material expense items of Staff Costs and Administration & Corporate Costs, being $0.55 million and $0.73 million respectively.

As detailed earlier, the Company commenced an expansion of its staffing and office infrastructure during the quarter to meet the requirements of the acquisitions and to service the already secured as well as the planned securing of additional customer contracts in these jurisdictions. Staff costs during the quarter included retention payments to existing staff, new Solution Architect hires and the full-time appointment of a Chief Technology and Operating Officer, based in Sydney.

The increase in Administrative and Corporate Costs for the quarter reflects transaction and advisor costs associated with the Data Republic technology assets acquisition and the DataPOWA acquisition.

Net cash outflows from investing activities were $3.3 million for the quarter, being payment for the acquisition of Data Republic’s technology assets.

Directors, being related parties of the Company, were paid remuneration in the amount of $140,299 during the June quarter. In addition, $16,444 was paid to related parties for rent and office services. No other related party payments were made.

The Board and Management remains focussed on disciplined cash management as IXUP seeks to capitalise on opportunities and deliver growth through its recent strategic acquisitions.

-ENDS-

Enquiries: IXUP Investor relations Marcus Gracey Julia Maguire CEO – IXUP Limited Executive Director – The Capital Network contact@ixup.com julia@thecapitalnetwork.com.au +61 02 8999 3699

About IXUP

IXUP Limited (ASX:IXU) (pronounced ‘eyes up’) is a pioneering technology company with a world class suite of software products that facilitate the secure sharing and analysis of sensitive information using advanced security technology. The Company’s Secure Data Collaboration Suite of products represent is the missing ‘key’ to organisations ‘unlocking’ their information assets previously unable to be shared or commercialised due to concerns around privacy, cyber security, and compliance considerations. These data collaboration products are being commercialised at a crucial junction when the need to share and drive revenue from sensitive data and dormant data assets is becoming more important yet more difficult to achieve.

To learn more, please visit: www.ixup.com. IXUP’s registered address is Level 3, 223 Liverpool Street, Darlinghurst, Sydney, NSW 2010.

Rule 4.7B

Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

IXUP Ltd ABN 85 612 182 368

Quarter ended (“current quarter”) June-21

Consolidated statement of cash flows	Current quarter $A	Year to date (12 months) $A
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives (JobKeepers Rebate and Cash Boost) 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- - - - (16,444) (548,491) (726,278) - - (325) - - -	45,950 - - (7,701) (65,777) (1,726,899) (1,578,200) - 9,291 (2,026) - 786,754 -
	(1,291,538)	(2,538,608)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (Term Deposits with maturity of 3 months or greater) (e) intellectual property	- - - - (3,300,000)	- - - (975,000) (3,300,000)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A	Year to date (12 months) $A
(f) other non-current assets 2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (Term Deposits with maturity of 3 months or greater realised during quarter) (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities		- - - - 100,000 - - - - -	- - - 1,240 975,000 - - - - -
		(3,200,000)	(3,298,760)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities		- - 346,860 (8,692) - - - - -	9,478,402 - 377,007 (730,446) - - - - -
		338,168	9,124,963
4. 4.1 4.2	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above)	8,978,330 (1,291,538)	1,537,365 (2,538,608)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A	Year to date (12 months) $A
4.3 4.4 4.5 4.6	Net cash from / (used in) investing activities (item 2.6 above) Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	(3,200,000) 338,168 -	(3,298,760) 9,124,963 -
		4,824,960	4,824,960
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A	Previous quarter $A
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (Term Deposits maturing within 3 months of quarter end) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		4,724,960 - - 100,000	8,978,330 - - -
		4,824,960	8,978,330
6. Payments to related parties of the entity and their associates			Current quarter $A
6.1 Aggregate amount of payments to related parties and their associates included in item 1.2 (156,743) 6.2 Aggregate amount of payments to related parties and their associates included in item 2.3 - "Notes 6.1 Directors, being related parties of the Company, were paid remuneration in the amount of $140k during the June quarter. Also $16k was paid during the quarter to related parties for rent and office services. No other related party payments were made."			(156,743)
			-

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

7. 7.1 7.2 7.3 7.4 7.5 7.6	Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A Amount drawn at quarter end $A Loan facilities - - Credit standby arrangements - - Other (Term Deposits maturing after 30 September 2021) - - Total financing facilities - - Unused financing facilities available at quarter end - Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A	Amount drawn at quarter end $A
		-	-
		-	-
		-	-
		-	-
8.	Estimated cash available for future operating activities		$A
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (1,291,538) Cash and cash equivalents at quarter end (item 4.6) 4,824,960 Unused finance facilities available at quarter end (item 7.5) - Total available funding (item 8.2 + item 8.3) 4,824,960 Estimated quarters of funding available (item 8.4 divided by item 8.1) 3.74 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?		(1,291,538) 4,824,960 -
			4,824,960
	Answer: N/A
	8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: N/A
	8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
	Answer: N/A
	Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 30 July 2021 .....................................................................

Authorised by: By the Board......................................................................

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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