OTTAWA, April 30, 2019 /CNW/ - Leonovus Inc., ("Leonovus, the Company, we and our") (TSXV: LTV) (OTC: LVNSF) today announced its operating and financial results and business update for the year ended December 31, 2018. Unless otherwise noted all amounts are in USD.
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.
We closed our financing in December 2017, which meant that due to the significant expansion of our development and go-to-market teams in 2018, our 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 24th, we announced the closing of a contract for a major international mining company. Also, we have 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. We have a software development initiative to add new features to the existing product to reduce the long selling cycle. We expect to announce new partnership agreements this quarter along with vital technical integrations with core software infrastructure vendors in our space.
The Company is also negotiating with investment banks in the USA and Canada to lead the fundraising for the Galaxa digital security offering. This project continues to be an essential strategic element to our overall distributed data storage strategy. We hope to select and contract with a funding group by the end of May 2019.
The last six months have been very active for Leonovus in the area of protecting our intellectual property. We have 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, highly flexible and scalable distributed data center concept, de-coupling the data from its underlying resources whether on-premises or in the cloud.
We now have eight issued patents that span eleven countries, which include over 350 claims. We continue 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 data storage technology market has changed significantly 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 data 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 data storage product, which includes machine learning technology. The Company intends to launch this new technology later in the summer of 2019," said Michael Gaffney, Chair and CEO.
Leonovus is a cloud solutions software provider that offers the leading blockchain hardened hyper-secure software-defined object storage solution. Designed with the IT manager in mind, Leonovus' patented algorithms encrypt, shred and spread data across a network of on-premises, hybrid or multi-cloud storage nodes – allowing for the most secure yet internally accessible form of object-based data storage across the entire solution. The advanced geo-distributed architecture minimizes latency, optimizes geo-availability, reduces remote backup costs and meets data sovereignty requirements. With its software and hardware agnostic design, Leonovus provides petabyte scalability and allows the enterprise to utilize its existing idle storage resources, extend the useable lifespan of depreciated resources and improve the enterprise's overall ROI. To learn more, please visit www.leonovus.com and www.galaxa.com.
This press release may contain forward-looking statements and information, which may involve risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with Leonovus' growth, the state of the financial markets, regulatory risks and other factors. There can be no assurance or guarantees that any statements of forward-looking information contained in this release will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Unless otherwise required by applicable securities laws, Leonovus disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should not place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Further information on Leonovus' public filings, including its most recent audited consolidated financial statements, are available at www.sedar.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Leonovus Inc.
For further information: Christopher Benk, CPA, CA, CBV, VP Finance & Chief Financial Officer, [email protected]