DATAWORKS GROUP LIMITED — Interim / Quarterly Report 2021

Apr 29, 2021

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30 April 2021

IXUP Third Quarter FY21 Update and Appendix 4C

IXUP Limited (ASX: IXU) (“IXUP” or the “Company”) , an innovative technology company currently focused on collaborative and secure data analytics, today lodged its Appendix 4C Report and provided a review of the Company’s progress for the third quarter ended 31 March 2021 ( Q3 ).

Q3 Highlights

• R&D tax incentive rebate further strengthens cash position

• DataPOWA Collaboration delivers strategic and commercial opportunities in the sports sponsorship and sports data analytics markets

• IXUP achieves the prestigious SOC 2 compliance designation in preparation for product deployment across mature international markets

• Appointment of key person - Chief Technology and Operating Officer

• Tekkorp Collaboration continues to explore and progress opportunities in the digital gaming and sports betting markets for IXUP Platform

• Opportunity pipeline for IXUP Platform in horizontal and vertical markets continues to expand

• Continuing development and upgrades to IXUP Platform

• Deloitte renews Reseller Agreement for IXUP Platform

R&D tax incentive refund further strengthens cash position

During the quarter the Company received a rebate of $554,598 from the Australia Tax Office under the R&D tax incentive program, related to the costs of research and development during the 2020 financial year. This rebate further strengthens IXUP’s cash position and balance sheet, with a cash balance as at 31 March 2021 of $9,078,330 (including term deposit balance of $100,000).

DataPOWA Collaboration

IXUP continues to progress and accelerate its recently announced collaboration agreement with UKbased DataPOWA Limited (“DataPOWA”) and to pursue joint opportunities across the digital sports sponsorship, sports marketing and sports data analytics markets. The collaboration is gaining momentum with significant interest being shown in the joint offering of IXUP’s Platform with DataPOWA’s AI driven POWA index technology platform. It is expected that this important collaboration will continue to build momentum and deliver commercial opportunities for the international deployment of the IXUP Platform particularly in mature markets like the Unites States of America and the United Kingdom. The collaboration importantly provides the Company with a pathway to large geographical markets for the IXUP Platform, the ability to leverage DataPOWA’s customer base and the opportunity to establish itself in the large and growing sports marketing, sports sponsorship and sports data analytics markets with a unique and valuable technology offering.

Subsequent to the end of the Third Quarter and as announced by the Company on 21 April 2021, DataPOWA signed a 3 year commercial contract with globally renowned international sporting body Concacaf (‘the DataPOWA Agreement’). The DataPOWA Agreement is strategically significant to the commercialisation of IXUP’s secure data collaboration platform (‘the IXUP Platform’) and represents the first commercial deployment of IXUP’s technology.

Concacaf is one of FIFA’s six continental football confederations, servicing 41 member associations across North America, Central America and the Caribbean and providing an initial strategic commercial deployment point in the USA, for IXUP and DataPOWA’s new joint product offering called the POWA index 2.0. The POWA index 2.0 includes DataPOWA's unique Artificial Intelligence (AI) sponsorship valuation and digital benchmarking technology, as well as IXUP’s secure database collaboration technology. Together these technology platforms create a unique set of valuation and benchmarking tools which provide users with the unique ability to collaborate and analyse multiple data sets while they remain securely encrypted, including first-party and third-party enrichment data (‘the POWA index 2.0’).

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SOC 2 Compliance Designation – Preparation for major international markets

During the quarter, the Company achieved the prestigious System and Organisation Controls 2 (“SOC 2”) compliance designation for its core database collaboration software. This compliance certification complements IXUP’s existing ISO 27001 accreditation and presents strong independent confirmation that IXUP’s core software-based platform and the associated underpinning processes are of a high standard and reflect global best practice.

SOC 2 designation adds valuable market confidence in IXUP’s technology, demonstrates best practice and will assist in accelerating commercialisation of opportunities. SOC 2 provides cloud software (SaaS) businesses with a definitive set of auditable criteria for managing customer data which is fast becoming the global standard for participation in major international markets and adds further momentum to progressing IXUP’s collaboration with DataPOWA and the associated opportunities with DataPOWA’s international customers.

Appointment of Key Person - Chief Technology and Operating Officer

Dr Paul Coe has been IXUP's Chief Technology Officer for the last 5 years and has been promoted to the expanded role of Chief Technology and Operating Officer, effective from 3 May 2021.

Dr Coe brings more than 20 years’ experience in large transformation programs and enterprise software platforms and has held several senior technology roles, in ASX listed and private companies. He also has experience in leading programs to obtain and retain organisation/platform security certifications including PCI-DSS, ISO-27001 and SOC-2.

Tekkorp Collaboration - Digital Gaming and Wagering Opportunities

On 11 November 2020, IXUP announced the execution of a Strategic Collaboration Agreement with Tekkorp Capital, a US based digital gaming company founded by Mr. Matthew Davey, which provides specialist advisory services in relation to the international digital sports gaming and wagering sector.

As disclosed, a key focus of the Agreement is to assist IXUP with an evaluation of its existing core technology for potential applications within the international digital sports gaming and wagering sectors and associated markets. This initial evaluation process has confirmed a number of potential use cases, customers and partnerships which are being vigorously explored by the IXUP team. Under the terms of the Strategic Collaboration Agreement, Tekkorp Capital is also locating and assessing complimentary commercial opportunities and technologies for that may be of interest to IXUP, such as DataPOWA Limited and its AI driven POWA index technology platform.

During the quarter, IXUP continued to work closely with Tekkorp on a range of potential opportunities and the Company will continue to update the market as required on the progress of this important collaboration.

Opportunity Pipeline

During the quarter the Company continued to work with its channel partners to extend the sales pipeline opportunities in new sectors, including health and the government sector.

IXUP Platform Further Development and Upgrades

During the quarter development continued on the platform based on feedback from users. The focus of this development has been to make the experience using the platform simpler and more efficient. Several of the core workflows will have fewer steps making them quicker, simpler and easier to understand as well as improve the overall user experience. A small set of enhancements is scheduled for release in May with the majority of the features and enhancements planned for release later in the year.

Independent penetration testing of the platform was also completed and the platform was found to have no vulnerabilities.

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Deloitte Renews Reseller Agreement

Deloitte Australia has renewed its non-exclusive Reseller Agreement for a further 12 months from 31 March 2021. The parties continue to work collaboratively to identify opportunities for IXUP’s Platform across its extensive client base.

Financial Update

In line with expectations, net cash outflows from operations were $0.24 million for the quarter. The material expense items of Staff Costs and Administration & Corporate Costs, being $0.55 million and $0.23 million respectively, were offset by the receipt of R&D tax incentive noted above.

Staff Costs increased on the prior two quarters due to the payment in this quarter of accrued Directors fees, consulting fees and salary. A significant portion of these payments were voluntarily delayed by the Directors until the receipt of capital raising and R&D tax incentive rebates had been finalised, which occurred in this quarter.

Directors, being related parties of the Company, were paid remuneration in the amount of $230,411 during the March quarter. In addition, $16,444 was paid to related parties for rent and office services. No other related party payments were made. Therefore, related party remuneration payments for the quarter exceeds normalised related party remuneration, due to the payment of expenses voluntarily delayed until this quarter as outlined above.

The Board and management remain focussed on disciplined cash management and tightening of operational expenses to position IXUP to capitalise on opportunities and deliver growth.

Governance Update

During the quarter Mr Dean Joscelyne, founder of the IXUP core technology and business and previously an Executive Director and consultant to IXUP, transitioned to a Non-Executive Director of the Company. He remains a key consultant to the Company.

Mr David Franks and Ms Victoria-Jane Otavski from the Automic Group were appointed as Joint Company Secretaries. Previous Company Secretary, Mr Andrew Whitten, also of the Automic Group, stepped down from the role.

-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 an innovative technology company currently focused on collaborative and secure data analytics.

IXUP provides a secure software environment that enables data to be processed without being exposed, making collaborative analytics for sensitive data possible. Using IXUP’s platform, enterprises and governments can create value from data while it remains fully encrypted and in control.

To learn more, please visit: www.ixup.com. IXUP’s registered address is Level 3, 5-7 Ross Street, Parramatta NSW 2150.

Rule 4.7B

Appendix 4C

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

Name of entity

IXUP Ltd ABN Quarter ended (“current quarter”) 85 612 182 368 March-21

Consolidated statement of cash flows	Current quarter $A	Year to date (9 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) (549,675) (234,455) - 2,361 (84) - 554,598 -	45,950 - - (7,701) (49,333) (1,178,408) (851,920) - 9,291 (1,702) - 786,754 -
	(243,699)	(1,247,069)
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	- - - - -	- - - (975,000) -

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 (9 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		- - - - - - - - - -	- - - 1,240 875,000 - - - - -
		0	(98,760)
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		- - 30,146 (17,704) - - - - -	9,478,402 - 30,146 (721,754) - - - - -
		12,442	8,786,794
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)	9,209,587 (243,699)	1,537,365 (1,247,069)

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 (9 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	- 12,442 -	(98,760) 8,786,794 -
		8,978,330	8,978,330
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). 31 March 2021 IXUP has $100k in Term Deposits maturing 08/07/2021. Total cash on hand, on call deposit and in term deposits at end of current quarter totals $9,078,330		8,978,330 - - -	8,334,587 - - 875,000
		8,978,330	9,209,587
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 (246,855) 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Notes 6.1 Directors, being related parties of the Company, were paid remuneration in the amount of $230k during the March quarter. Also $16k was paid during the quarter to related parties for rent and office services. No other related party payments were made.			(246,855)
			-

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 31 March 2021) 100,000 - Total financing facilities 100,000 - Unused financing facilities available at quarter end 100,000 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
		-	-
		-	-
		100,000	-
		100,000	-
	St George Term Deposit $100,000, interest rate 0.35% p.a., maturity date 08/07/2021. This Term Deposit secures credit card facilities.

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) (243,699) Cash and cash equivalents at quarter end (item 4.6) 8.978,330 Unused finance facilities available at quarter end (item 7.5) 100,000 Total available funding (item 8.2 + item 8.3) 9,078,330 Estimated quarters of funding available (item 8.4 divided by item 8.1) 37.25 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?	(243,699) 8.978,330 100,000
		9,078,330
	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 April 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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