Leonovus posts zero revenues in Q2 as software firm chases government contracts

Michael Gaffney
Michael Gaffney is CEO of Ottawa-based software company Leonovus. File photo

An Ottawa software firm that’s spent years overhauling its go-to-market strategy says its efforts are finally poised to bear fruit – even as the company reported zero revenues in its most recent quarter.

In financial filings on Monday, Leonovus (TSX-V:LTV) said it earned no income in the three-month period ending June 30, down from revenues of $102,000 a year earlier. The firm brought in just $78,000 in total revenues in the first half of 2021 after generating record sales of $327,000 in 2020.

Leonovus booked a net loss of $784,000 in Q2, more than double its loss of $383,000 a year earlier, as the firm pours more resources into R&D and sales and marketing in a bid to gain traction after years of struggling to remain afloat.

Earlier this spring, Leonovus received the green light to sell its secure data-transfer technology to more than 100 federal departments and agencies. In May, the company announced it closed a public offering that raised about $3.4 million to help finance its customer acquisition drive and new product development efforts.

The firm says it has successfully tested its products at three federal departments ​– agriculture, justice and national defence ​– and sees its new approved-vendor status as the key to finally unlocking a revenue stream that’s been shut tight for years as the company continually searched for the right market fit.

New channel partners

In documents posted on Monday, Leonovus management said the number of federal departments interested in buying the company’s software increased “significantly” between April and June, adding that several resellers and system integrators have started testing its products.

CEO Michael Gaffney said in a statement the firm expects to announce new government sales channel partners “in the next few months.”

Leonovus’s solution distributes and encrypts clients’ stored data across numerous cloud servers rather than a single on-premise location. 

The company says it plans to launch its real-time remote file-sharing system aimed at protecting data from ransomware, called XVault, as its first software-as-a-service offering on a monthly subscription basis this fall. 

Leonovus says it’s hired new sales and marketing staff and added more software developers to its payroll over the past few months as it ramps up its push to get its products into the hands of more government departments as well as private-sector customers.