DATAWORKS GROUP LIMITED — M&A Activity 2021

Jun 6, 2021

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Monday 7 June 2021

STRATEGIC ACQUISITION OF DATA REPUBLIC’S TECHNOLOGY ASSETS

HIGHLIGHTS:

• IXUP enters into a binding agreement to acquire the entire intellectual property and associated technology product portfolio of Data Republic Pty Ltd (Administrators Appointed) (“ Data Republic ”) for $3 million, less agreed deductions (“ Data Republic Technology Assets ”).

• The Data Republic Technology Assets complement IXUP’s current technology and products.

• • The purchase price represents a 94% discount to the almost $50 million expended by Data Republic to develop and deploy the Data Republic Technology Assets.

• The acquisition positions IXUP as the technologically leading Australian secure data collaboration provider and will accelerate the execution of our current market strategy.

• Where possible, IXUP plans to continue to deliver services to all of Data Republic’s previous and affected customer base.

IXUP Limited (“ IXUP ” or “the Company ”) (ASX:IXU) is pleased to announce it has reached agreement with the administrators of Data Republic 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.

Commenting on the agreement, Mr Marcus Gracey, CEO of IXUP, said: “due to Data Republic being a market competitor to IXUP, we have followed Data Republic’s evolution closely for many years. While it is unfortunate that the Data Republic business was not able to achieve the necessary scale required to continue in its previous form and we empathise with the affected employees and customers of their business, we believe that with a new and reinvigorated commercialisation strategy and in combination with IXUP’s aggressive growth plan, the Data Republic Technology Assets will demonstrate significant value”.

“Our acquisition of the Data Republic Technology Assets adds a well-developed, valuable and complementary product set to IXUP’s fast growing technology stack which we believe will deliver significant commercial benefits to IXUP shareholders. Given that the purchase price represents such a significant discount to the capital expended by Data Republic to develop and deploy the assets being acquired, we are confident that we will generate significant commercial returns from this modest investment and breathe significant life back into the Data Republic Technology Assets to fulfill their full potential. IXUP intends to continue to service to all of Data Republic’s previous and affected customers, where possible, and we are also in dialogue with the previous Data Republic employee base to explore how we might provide future employment opportunities”.

Strategic Rationale

IXUP is excited by the opportunity this acquisition 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 all corporate data collaboration needs and brings to IXUP an “out of the box” solution that should seamlessly integrate with IXUP’s existing product suite.

There is 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 acquisition also aligns strongly with the recently announced DataPOWA acquisition, with significant potential product and commercial synergies already identified.

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Details of the Asset Sale Agreement

The key terms of the Asset Sale Agreement signed between IXUP’s group entities and the administrators of Data Republic include the following:

• Date signed : 5 June 2021;

• Condition: completion is subject to the satisfaction of certain procedural steps relating to the extraction and back-up of the Data Republic Technology Assets, which are required to enable the assets to be transferred;

• Completion : expected to occur within the next few days (although may be longer depending on the time taken to complete the procedural steps referred to above). There is a sunset date of 1 July 2021 for completion;

• Consideration : the consideration of $3 million (less agreed deductions) will be funded from existing cash;

• Assets acquired : the intellectual property of Data Republic, together with technology hardware and associated books and records of Data Republic;

• Employees : IXUP has made offers of employment to certain employees of Data Republic; and

• • Transitional Services : the Administrators of Data Republic are required to provide certain transitional services to IXUP to ensure the smooth transfer of the Data Republic Technology Assets to IXUP.

IXUP expects to complete the acquisition within the next few days, with completion subject to the satisfaction of procedural steps relating to the extraction and back-up of the Data Republic Technology Assets which are required to enable the assets to be transferred. While completion is expected to occur within a few days, it may take longer depending on how quickly those procedural steps can be completed. IXUP is working collaboratively with the Administrators to complete as quickly as practicable.

IXUP is using existing cash to fund the acquisition. IXUP plans to offer a continuation of services to all of Data Republic’s previous and affected customer base. However, there is no assurance that existing Data Republic customer contracts will be assigned or novated and therefore no guidance can be given as to what if any additional revenue will be generated by the acquisition or the expected impact on IXUP’s financial position. IXUP believes that the acquisition of the Data Republic Technology Assets is a complementary product set to IXUP’s fast growing technology stack and will deliver significant commercial benefits to IXUP shareholders in the short to medium-term.

Overview of Data Republic Technology Assets

Like IXUP, the Data Republic Technology Assets provide a platform to enable the secure collaboration between discrete data sets, underpinned by solid governance and audit features. IXUP and Data Republic had taken a different approach to solving the same inherent security and privacy issues associated with this important task, resulting in two very complementary technology offerings.

IXUP’s platform provides a Secure Data Engine for working with sensitive information while encrypted .

Data Republic’s platform focuses on the provision of a secure data environment for working with sensitive information while unencrypted .

The Data Republic intellectual property is arranged around two core products, summarised below;

Product	Description
Sandbox	Enables external people, applications and algorithms to access data in a safe, controlled environment
Fusion Studio	Enables entities to procure data from other organisations which is matched to their existing customer data to add to existing data assets

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Benefits of the Data Republic Technology Assets to IXUP

The Data Republic Technology Assets are complementary to IXUP’s technology platform and accelerate the execution of IXUP’s current strategic focus on the sports data market. Additionally, IXUP’s platform is complementary to the Data Republic Technology Assets and potentially very valuable to the customers of Data Republic and can assist with the acceleration of commercialisation horizons additional to the sports data market.

In addition to these high-level benefits, a significant number of further opportunities are still being explored.

The merging of IXUP’s and Data Republic’s product sets creates a unique “end-to-end” solution for all corporate data collaboration needs.

IXUP looks forward to updating shareholders in the near future with additional details of the Data Republic Technology Assets and its implications for the IXUP business.

This announcement has been approved for release by the Board of IXUP.

-ENDS-

For enquiries regarding this release please contact:

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 that has developed world class software facilitating the secure sharing and analysis of sensitive information using advanced encryption technology. The Company’s Secure Data Engine 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. IXUP’s Secure Data Engine is 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, 5-7 Ross Street, Parramatta NSW 2150.

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Annexure 1 – Background to Data Republic and the Administration Process

The following information is an excerpt from the McGrath Nichol Administrator’s report to creditors, dated 4[th] June 2021. Interested readers are encouraged to download and read this report in its entirety, from the following link:

https://www.mcgrathnicol.com/app/uploads/Data-Republic-Administrators-report-to-creditors.pdf

Business Overview

Data Republic was incorporated in 2014 to enable enterprises to unlock value from their data assets. In 2016 Data Republic launched its first product, “Senate”, a data marketplace, i.e. a platform where users purchase or sell different types of data sets and data streams from several sources. Data Republic’s first customers included Westpac Banking Corporation, National Australia Bank and Qantas who used Senate to connect their data to product developers in a manner which is secure, governed and compliant.

Data Republic’s Senate continued as its cornerstone product until 2018 where Data Republic focussed on enabling enterprises to share data safely and securely with trusted partners as a Product as a Service ( PaaS ) offering. This leveraged the existing offerings and added a privacy preserving customer record matching capability, called “Senate Matching”, in October 2018.

Over the next two years, Data Republic further refined its offering. Recognising COVID as a key accelerant for data sharing, Data Republic launched the Data Sandbox, a secure data analytics collaboration space product in November 2020.

Timeline of key events	Timeline of key events
Date	Event
October 2014	Data Republic incorporated
June 2015	Seed funding of $1.25m received from Nuda Rudda Pty Ltd and Westpac’s venture capital fund, Reinventure Group.
April 2015	Developedproprietarylegal framework for multi-lateral data exchange.
December 2015	Convertible Note – Seed Round fundingof $4.5m received.
June 2016	Funding of $8.5m received, acquired Qantas Loyalty, NAB’s venture capital fund, NAB Ventures, and Qualgro Venture Capital Fund(Qualgro).
August 2016	Data Republic launched Senate, an open data marketplace.
April 2016	Established US entity, DRI.
February 2018	Funding of $10.5m received, acquired through previous investors and Ryder Innovation Fund.
April 2018	Established Singapore entity, DRPteL.
October 2018	Launch of Privacy-PreservingMatchingtechnology
December 2018	Funding of $22m received, led by Singtel Innov8, the corporate venture capital fund of the Singtel Group, with participation from Singapore Airlines and existing investor Qualgro. The round also included investments from existing investors ANZ, Reinventure and Ryder Innovation Fund.
November 2018	Data Sandboxproduct launch.
November 2020	Convertible notes fundingof $2.1m issued
February2021	Approval of USpatents for Data Sandbox and Privacy-PreservingMatching
5 May2021	Withdrawal of final interestedpartyfor the acquisition of Data Republic.
6 May2021	Administrators appointed.
5 June 2021	IXUP acquires IPportfolio of Data Republic

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Data Republic Funding History

Since its incorporation, Data Republic has attracted a number of blue-chip and other investors. From 2014, Data Republic received numerous rounds of equity funding from investors totalling c.$46.7m to assist with the expansion of operations. In addition to this amount, convertible notes totalling c.$2.1 million were raised in November 2020. The funding raised has been applied towards the development of Data Republic’s products including expansion overseas. As is commonly the case with technology start-up businesses, Data Republic traded at a loss with cumulative losses in excess of $40.8 million in the period from incorporation to 30 April 2021.

Events Leading to the Appointment of Administrators

In March 2021, the Directors sought further funding from the current investor group, as well as running a concurrent sale process. Whilst there was initial interest from a number of parties in regard to purchasing the business, ultimately the sale process was unsuccessful, as was the attempt to seek further funding. On 5 May 2021, when sales terms were unable to be agreed with the final interested party, the Directors held a board meeting where they decided that Data Republic was either insolvent, or likely to become insolvent, and resolved to appoint Barry Kogan, Robert Smith and Jonathan Henry as Administrators effective as at 9.00am on 6 May 2021.