Leonovus bets on federal bid to boost fortunes of struggling software company

A struggling Ottawa-based software company that made less than $100,000 last year says it’s hoping for a standing offer to supply the federal government with its secure file-sharing and storage platform cloud will pull it out of the doldrums.

In financial documents filed last week, Leonovus reported revenue of just $78,000 for the fiscal year ending Dec. 31, 2021, compared to $327,000 the previous year. The business generated no revenue in the last six months of 2021.

Leonovus reported a net loss of $2.6 million, compared to a net loss of $1.8 million in 2020, driven by higher administration costs and foreign exchange losses.

Still, the company says it hopes for a turnaround after receiving a standing offer in March to sell its technology — which has been rebranded from XVault to Torozo — to the federal government.

CEO Michael Gaffney said in a press release last week that two federal departments, Justice and Shared Services, had finished testing the product in mid-April. He said the company has moved into the “next phase of evaluation” with the federal government, adding that the product was launched last week for private sector customers with “additional functionality needed for enterprise and consumer markets.” companies”.

Leonovus’ solution distributes and encrypts customer data stored across multiple cloud servers rather than a single on-premises location. The company now sells the platform on a monthly subscription basis.

In last week’s press release, Gaffney touted the secure file sharing and data transfer space as a multi-billion dollar market opportunity. The company said the industry is growing rapidly as the Internet of Things requires more and more connected devices to communicate wirelessly with each other.

“Leonovus is well positioned with its technology to capitalize on growth trends in cloud computing data storage,” management said in a report filed with regulators last week.

Leonovus got the green light last spring to sell its secure data transfer technology to more than 100 federal departments and agencies. In May 2021, the company announced the closing of a public offering that raised approximately $3.4 million to help fund its customer acquisition campaign and new product development efforts.

The company said it then saw Approved Vendor status as the key to finally unlocking a revenue stream that had been shut down for years as the company continually hunted for the right market.

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