Leonovus (TSX-V:LTV) continues to struggle as delays in contracts and proofs of concept with prospective customers push revenues further into the future and expenses drive up the Ottawa firm’s net losses.
On Thursday morning the firm, which develops a cloud-based storage solution for the enterprise market, reported no revenues for the three-month period ending March 31.
While the company garnered a few thousand dollars in revenues in the previous fiscal year, breaking a lengthy dry streak without any sales, contract negotiations with customers are taking longer to close than expected. Government departments that were set to trial the Leonovus software have also postponed pilot projects until later in the year and into 2020.
CEO Michael Gaffney said in a statement that the company is looking to tackle the vulnerability of the company’s long sales cycle by releasing a product next month with immediate functionality, in contrast to the drawn-out integration process that characterize Leonovus’ existing product line.
The firm reported a net loss of $2.2 million for the first quarter of the year, compared with $740,000 over the same period in 2018. Operating expenses were $1.6 million in the quarter, an increase of more than 50 per cent year-over-year. Much of the firm’s expenses relate to a rapid expansion of staff in the past 12 months that saw Leonovus grow from 10 employees to nearly 40.
Leonovus said last month it had begun implementing “cost-saving initiatives” and funneling resources into different product channels as it waits for revenue to start flowing again.