Leonovus: Net Loss of $4,9 million for Year Ended December 31, 2018

Leonovus Inc. announced its operating and financial results and business update for the year ended December 31, 2018.

The company incurred a net loss of $4,924,000 for the year ended December 31, 2018, and a net loss of $1,321,000 for the fourth quarter of 2018 compared to a net loss of $2,725,000 for the year ended December 31, 2017, and a net loss of $1,120,000 for the fourth quarter of 2017.

It closed its financing in December 2017, which meant that due to the significant expansion of development and go-to-market teams in 2018, operating expenses increased to $5,063,000 for the year ended December 31, 2018, and $1,259,000 for the fourth quarter of 2018 as compared to $1,626,000 and $648,000 for the year ended December 31, 2017, and the fourth quarter of 2017, respectively.

The company had a cash balance of $3,609,000 on December 31, 2018, as compared to $10,906,000 on December 31, 2017. Working capital was $3,024,000 on December 31, 2018, as compared to $7,643,000 on December 31, 2017. After December 31, 2018, $1,564,000 of additional funding was raised through warrants that expired in March of 2019. After implementing several cost management initiatives and factoring in the elimination of one-time start-up costs from 2018, the company’s burn rate will drop to CAD 350,000-400,000 per month.

On April 24, it announced the closing of a contract for a major international mining company. Also, it has over 70 qualified prospects in the sales pipeline with an unweighted revenue potential of CAD 6,900,000. The first $500,000 of an up to $2,000,000 initial contract from the Canadian federal government contract is now in the procurement phase with three major departments.

One other large government project, with petabytes of stored data, has completed its proof of concept testing and is now moving into the final due diligence phase.

$1,300,000 of revenue is at the quantification stage of our sales process and includes several new potential customers including another bank, new government departments and several multinationals.

As previously communicated, revenue is targeted to ramp this quarter. The company has a software development initiative to add new features to the existing product to reduce the long selling cycle. It expects to announce new partnership agreements this quarter along with technical integrations with more software infrastructure vendors in its space.

The company is also negotiating with investment banks in the USA and Canada to lead the fund raising for the Galaxa digital security offering. This project continues to be an essential strategic element to its overall distributed storage strategy. It hopes to select and contract with a funding group by the end of May 2019.

The last six months have been active for Leonovus in the area of protecting IP. It has new patents issued in USA and Europe with coverage in ten countries including Great Britain, Germany, France, Switzerland, and Ireland. These patents protect a data centric, flexible and scalable distributed data center concept, de-coupling the data from its underlying resources whether on-premises or in the cloud.

The firm now has eight issued patents that span eleven countries, which include over 350 claims. It continues to pursue the examination of several additional patents in both North America and Europe. 

Of note is that the first two patents were filed for technology and methods relating to the Galaxa project. These patents cover concepts as scalable distributed blockchain processing in a virtualized environment and a robust, enterprise-grade, global, vendor-neutral, secure cloud services marketplace for any services, beginning with storage and compute. They also cover a more straightforward, lower cost, higher efficiency way for enterprises to benefit from the blockchain and smart contracts through the natural interfaces of Smart Services. Several more patents are being drafted with an expectation of filing in May and June.

“The storage technology market has changed since the fall of 2017. Based on feedback from the market, we decided to add an emergent/tactical front end to our product to solve urgent enterprise storage problems. We expect that this evolution of our multi-cloud storage solution to more of a data management platform gives us a stronger market appeal and a shorter sales cycle. In a few weeks, we will announce summary details about our next-generation storage product, which includes machine learning technology. The company intends to launch this new technology later in the summer of 2019,” said Michael Gaffney, COB and CEO.

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