Crossword Cybersecurity plc acquires Verifiable Credentials Limited

26 May 2021 – London, UK - Crossword Cybersecurity Plc (AIM:CCS, “Crossword”, the “Company” or the “Group”), the technology commercialisation company focused on cyber security and risk management, is pleased to announce its acquisition of the whole of the share capital of Verifiable Credentials Limited (VCL), the provider of Identiproof™, the World Wide Web Consortium (W3C) verifiable credentials compatible middleware and wallet technology, with whom Crossword is already working.

Identiproof, VCL’s middleware technology suite of products, is a key component in verifiable credentials systems such as COVID-19 status certificates and their issuer, verifier, and wallet applications. Identiproof is currently being used in a UK Government funded trial of COVID-19 certificates for East Kent Hospitals University NHS Foundation Trust (EKHUFT) which Crossword is also involved in, separately for a client in the entertainment sector, and with another client in the United Arab Emirates. Identiproof will become Crossword’s third product, joining Rizikon and Nixer in the portfolio, as a cryptography based cyber security product.

Crossword Cybersecurity has agreed to pay a total consideration of up to £2.75m for Verifiable Credentials Limited. The payments are structured as follows;

• an initial payment of £100,000 cash and £300,000 in Company shares, issued in two tranches; £150,000 on completion and £150,000 on the first anniversary of completion;
• £100,000 in Company shares payable on achievement of the first VCL commercial licence deal to the NHS or another UK Government organisation;
• On the first anniversary of the transaction, up to £750,000 in Company stock payable on a straight-line pro rata basis on achievement of revenue between £100,000 and £325,000 in the first 12 months post acquisition;
• On the second anniversary of the transaction, up to £1,500,000 in Company shares payable on a straight-line pro rata basis on achievement of revenue between £250,000 and £625,000 in the second 12 months post acquisition; and
• All shares will be issued at a price based on the average mid-market price for the three months prior to the date of issue.

Identiproof is a central technology in applications for the issuing of digital certificates and documents that cannot be forged or transferred, and that respect the privacy of the holders of those certificates. It does this through the process of selective disclosure, whereby the recipient requests the minimum of information in conformance with GDPR. Identiproof is one of the first systems built to the 2019 W3C recommendations: The Verifiable Credentials Data Model and Web Authentication (FIDO2) – two new global web security standards. This technology has wide ranging applications including digital ticketing, certificates, licenses, memberships, passports, proof of ownerships, and the list goes on.

VCL achieved this early adoption of the W3C verifiable credentials standard because Emeritus Professor David Chadwick, VCL’s CEO, is one of the six co-authors and editors of the standard – and a well-known expert in the field of digital identity and verifiable credentials. David Chadwick will join Crossword as Product Director for verifiable credentials products. David Chadwick incorporated VCL in April 2019 and it has been assigned the intellectual property from the University of Kent. David will be joined at Crossword by VCL’s specialist development team. VCL has successfully bid for a number of prestigious grants in the UK, the EU and overseas. For the 18 months ended 30 September 2020, VCL made a loss of £2,842 and had a deficiency of assets of £2,742 at that date.

Crossword first started working with VCL when David Chadwick, as Professor of Information Systems Security at the University of Kent, brought his academic team to participate in the InnovateUK / UKRI CyberASAP programme in 2019. Crossword was, and still is, a provider of training to the cyber security academic start-ups that go through that programme. Jake Holloway, Crossword’s Chief Product Officer maintains close relationships with the CyberASAP alumni, and it became obvious that with the opportunities in the W3C standard and Identiproof, David Chadwick and his talented team would be an incredible asset to Crossword for entering this new and exciting market.

Issue of Ordinary Shares

Crossword will issue the vendors 423,730 ordinary shares of 0.5p each (“Ordinary Shares”) at a price of 35.4p per share in consideration of the initial payment of shares worth £150,000.

Application has been made for the admission of the 423,730 Ordinary Shares to trading on AIM (“Admission”), with admission expected to take place on or around 2 June 2021.

Total Voting Rights

For the purposes of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules ("DTRs"), following Admission, Crossword will have 58,042,630 Ordinary Shares in issue with voting rights attached. Crossword holds no shares in treasury. This figure of 58,042,630 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the DTRs.

Tom Ilube, CEO of Crossword Cybersecurity plc, commented: “VCL has unique knowledge and a fantastic product in the new era of W3C verifiable credentials – which can and should power COVID certificates as well as all manner of digital, secure and privacy-respecting credentials, certificates, tickets and proofs of ownership. We know Professor Chadwick and his start-up team well from CyberASAP and believe Identiproof is a perfect fit for Crossword as our third product. This acquisition comes at a time when we are experiencing great success from strategies to increase Rizikon market penetration, particularly the launch of Rizikon Pro. In the last 6 months this has increased 10 fold, with the number of Rizikon users exceeding 250.”

David Chadwick, CEO of Verifiable Credentials Limited, commented: “Identiproof is unique in the market and with Crossword’s great structure, connections and sales team – we’re expecting to achieve excellent revenue growth.”

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.