Corporate update and Leonovus targets Microsoft’s Office 365 platform

Ottawa, Canada – June 21, 2017 – Leonovus Inc.

“I would like to thank all our shareholders for their continued support of Leonovus. I am very pleased with our progress to date and I believe we are about to do even better. The new Office 365 market, as noted in my report, is a massive new market for Leonovus technology. We continue to receive messages from our customer prospects that we have a significantly differentiated software-defined storage solution for customers needing data security and compliance. I am pleased to provide the following update, which will be presented at the AGM on Wednesday, June 21, 2017. Questions from shareholders are welcomed,” said Michael Gaffney, Chairman, and CEO, Leonovus Inc.

 Sales Partners – The past quarter saw a lot of activity regarding sales channel partner recruitment. We signed partner agreements with ZoneTI (Montreal, Quebec) and Snowy River International (Canmore, Alberta). Currently, there are three new companies close to signing a sales partnership agreement. We believe that a broad basket of partners is required to fully access the total market for our technology. We continue to make partnership recruitment a key strategy. 

Technology – At the core of the Leonovus software-defined storage solution is the protection of data. In late 2016, we uncovered that compliance was an important requirement for our customers – but lacking in our technology stack. The IT departments of most corporations have GRC (‘Governance, Risk Management and Compliance’) policies and procedures. Leonovus was built to support Governance and Risk Management and over the last six months, the product development team added a Compliance capability to our software, which provides, even more, differentiation for our software.

Leonovus 365 – Shareholders are encouraged to review our website and the documentation on our new product targeting the installed base of 89 million Microsoft 365 users. Our Leonovus 3.0 software-defined object storage solution appears to be an ideal technology ‘fit’ that provides MS 365 with advanced security and compliance features at a very competitive price. Uniquely, Leonovus seamlessly pools the cloud storage from all the OneDrive licenses into one managed cloud storage instance. Leonovus 365 can also seamlessly include on-premises storage or other cloud storage services to the Cloud Storage Pool making it a hybrid and even multi-cloud storage solution. Competitive solutions are in the $45 per month range and Leonovus pricing is significantly below that number.

Advanced Collaboration in Leonovus 365 – With our collaboration application users can define, create, manage and delete groups for direct secure, authenticated file sharing. There are access control lists with customized privileges by a user, role or group for all content along with shared commentary on contents/files and shared concurrent editing. Email notification is available to all users in a group of updates on shared content and automatic content distribution just by dragging it into a pre-designated folder. Leonovus 365 supports data migration from over fifty (50) external cloud services enabling the user to bring content, currently residing in unprotected or unsanctioned cloud services, back into the secure, sanctioned Leonovus/OneDrive or hybrid environment/cloud

Cryptography Certification – Another requirement from our customers is for the certification of our software to the FIPS 140-2 (“Federal Information Processing Standards) standard. Leonovus has started to follow Cryptographic Module Validation Program (CMVP), which is a joint American and Canadian security accreditation program for cryptographic modules. The program is available to any vendors who seek to have their products certified for use by the U.S./Canadian Government and regulated industries (such as financial and health-care institutions) that collect, store, transfer, share and disseminate “sensitive, but not classified” information. Product certifications under the CMVP are performed in accordance with the requirements of FIPS 140-2 by approved third-party agencies. We expect the certification process to be completed in eight to twelve months. We have completed the initial technology audit, which identified the no material issues with our solution other than a ‘basket’ of typical issues that will be addressed for us to achieve the FIPS 140-2 standard.

Patent Monetization – In May 2017 IP consultants were retained to evaluate the monetization potential of our patent portfolio – specifically the ‘media acceleration’ patents from the early days of Leonovus. We are pleased to report that there appears to be an opportunity for the company to sell or license these patents. Given the feedback from two groups of consultants the monetization of the patents is not trivial and would be done in conjunction with an experienced intellectual property licensing company (“IPLC”). The basic business model is to split the monies gained from licensing, or selling, the patent 50/50 with IPLC after expenses. Monetizing these patents could be a significant, non-dilutive, source of cash for the company. If we move forward with this monetization strategy, the collection of monies, if any, would typically occur over a six to twenty-four-month period.

Acquisitions – An acquisition of a revenue-generating company, to accelerate the growth and contribution to Leonovus overheads, is a viable option assuming the availability of cash resources. Leonovus has been monitoring the opportunities to acquire or merge with another small revenue generating company in the data storage space. If such a transaction were to occur we would expect to affect it using our equity for the purchase and raising cash for the working capital.

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