Leonovus Inc.’s (CVE:LTV) stock price has soared more than 700% in the past two months as investor interest in Blockchain builds
SmallCapPower | November 3, 2017: Leonovus Inc. (TSXV:LTV) is a cloud solutions software provider offering software-defined object storage solution and governance, risk management and compliance solution for enterprises. In early 2016, Leonovus started focusing on the implementation of a software defined object based storage solution, prior to which the Company used to develop browser-based platform with a remotely managed cloud system that provided connected devices with access to features, content, and functionality over the Web. The main reason for this shift was the huge demand for cloud and data storage solutions during 2016. Due to this strategic shift, the Company stopped making money from September 2015. Again in September 2017, Leonovus announced its intention to implement Blockchain technology to its existing and future products to further enhance the security levels.
Blockchain Technology to Enhance Data Security
Corporate Spending on Security will increase to Mitigate Increasing Data Breaches: Recent high-profile security breaches have resulted in the theft of personally identifiable data for millions of individuals, highlighting the reality that breaches are inevitable. Leonovus products enhanced with blockchain technology will directly address these issues by offering increased protection from data breaches by an order of magnitude, and protect companies as they strive to meet new regulatory environments for data security.
Blockchain – the biggest thing since the widespread adoption of the Internet: Blockchain is the database technology that underpins the rapidly-growing cryptocurrencies and encompasses distributed ledger architecture, unlike traditional databases where all information is at one central database. Blockchain eliminates the need for an independent third party to validate transactions, as Blockchain is able to ensure transactions and information is correct.
Blockchain has the potential to fundamentally change and lower transaction costs. According to analysis by the Economist, annual revenues earned by the banking system for processing payments were at $1.7 trillion in 2014, or 2% of global GDP at the time. Hence there exists significant potential for Blockchain technologies to capture a large slice of this opportunity. Blockchain will fundamentally alter today’s platforms for finance, insurance, and governance, among others.
The introduction of Blockchain technology to theCompany’s solutions not only enhances the mission to protect and preserve corporate information, but it will also expand the product offerings to an even larger market.
Blockchain strategy
Leonovus started exploring the Blockchain opportunity in the second quarter of 2017. Since then, the Company has made some rapid developments in this initiative to capture market share. Below is the snapshot of such developments.
Clearly the above steps have increased investor interest, which can be seen in the Company’s share price movement in the last few months. Leonovus shares have surged more 700% since September 8, 2017.
Along with these developments, Leonovus entered into a $10.0 million bought deal financing on November 1, 2017. Post this financing, the Company will have a cash balance of $11.7 million. This is a significant boost to the cash position and also shows the investor confidence in the Company’s strategy of implementing Blockchain to its existing and future products. As per the press release, Leonovus intends to use net proceeds for working capital and general corporate purposes.
Outlook
Even though the recent developments look positive, investors should wait for Leonovus’ third-quarter results to see if the entry into Blockchain technology will improve its top line as noted by the management.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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