IXUP Limited announced the signing of a binding Agreement (Agreement) with Cipher Sports Technology Group (Cipher), which will see the creation of a joint venture sales and marketing vehicle (JVCo) to jointly develop and sell a number of new technology products aimed at the global sports affiliate industry, with an initial focus on the US digital sports wagering and gaming sector, where Cipher is already operational from its offices in New York City. JVCo will be provided with a license to IXUP's unique and secure data collaboration platform, which will underpin the creation and functionality of the new products, with Cipher contributing its product development and sales and marketing expertise to drive rapid commercialization efforts. IXUP and Cipher have jointly assessed the potential for multi-million dollars per annum of recurring product sales from this initiative, subject to successful product development and commercialisation efforts.

The parties have already commenced design and build of several initial products with the intention of having these products in market by 1QCY23. This Agreement represents the development of the first SaaS-based products that will be powered by the unique and IXUP secure data collaboration platform. IXUP will also look to utilize its existing sales resources to expand the new product offering into other market verticals, representing additional direct IXUP sale opportunities for IXUP in coming quarters.

The Agreement will see the formation of two new entities; 1. A 50/50 joint venture vehicle (JVCo), funded with initial working capital from each party with the objective to market and sell the products developed by the parties. Each party will also contribute the following services to advance the commercial efforts of JVCo; IXUP will contribute the core IXUP secure data collaboration technology and technical development personnel to support product development. Cipher will contribute product design, marketing and sales resources and expertise to JVCo, including any related intellectual property, in addition to development of a website for delivery of the initial JVCo products.

2. Another entity (ProductCo) will be formed by IXUP that will be responsible for technology and product development and to house an initial license to the IXUP secure data collaboration platform and will subsequently own all jointly developed intellectual property (IP) associated with the newly developed products. ProductCo will initially be owned 100% by IXUP, although based on the successful achievement of minimum sales within JVCo, Cipher will have the right to acquire a 50% share of ProductCo for $300,000 in cash to further align the joint venture initiative. The function of JVCo is primarily to contract revenue from products developed by and licensed from ProductCo.

On formation, JVCo will be owned 50/50 between IXUP and Cipher. To access IXUP's core secure data collaboration technology, Cipher has agreed to pay an IP Exclusivity Fee of $250,000 to IXUP, to be funded from Cipher's share of JVCo revenue. Up until full repayment of the IP Exclusivity Fee, the parties have agreed to share JVCo revenue 75/25 in favour of IXUP, reverting then to 50/50.

The parties have also agreed to a Gross Revenue Hurdle of $2,000,000, which must be met by JVCo within the initial two-year term of the Agreement. Achievement of this Gross Revenue Hurdle will enable Cipher to exercise its right to acquire a 50% share of ProductCo, through a cash payment of $300,000 to IXUP, delivering a 50/50 interest to both parties across both JVCo and ProductCo. Should JVCo fail to achieve the Gross Revenue Hurdle, the parties have agreed to dissolve the JVCo entity, with the technology license granted from IXUP to ProductCo, also being terminated.