Outgoing UK-based chairman Bill McCluggage will retire from the three-person board at the end of October 2019 while top 20 investor Graham Mirabito will take a vacant casual spot on the board from November 1. 2019.
Covata noted its strategic direction in a market update today, highlighting the changes would increase the number of Australian-based directors on the board to two members or two-thirds of the board.
The company also confirmed data security, information governance and market compliance would continue to be its focus.
Covata’s CipherPoint Eclipse product is now the lead asset for the company.
To reflect its focus, the company revealed that it plans to ask shareholders to approve a proposed name change to Cipherpoint Limited at an upcoming meeting.
Covata banks $2 million in September quarter
The New South Wales company divested of its SafeShare business in the September quarter by selling its shares in subsidiary Cocoon Data Holdings Pty Limited to Cybr5 Pty Limited.
Covata banked $1.7 million of the $5 million transaction last quarter and now expects a late final $1 million instalment in the March 2020 financial quarter.
Cybr5’s late payable had been due on October 15, 2019.
The exact timing of the outstanding receivable payment is still being negotiated.
Continued licence rights
Covata is continuing to advance its CipherPoint Eclipse product for file servers and information systems such as Microsoft SharePoint and Office365 after a change of undertaking away from SafeShare earlier this year.
While Covata did not go ahead with a planned reverse takeover of investor Wolfgang Munz’s German outfit dataglobal GmbH, the Sydney company is still focused on new data discovery and classification solutions built on assets licensed from the Heilbronn, Germany-based company.
Covata has also retained a number of assets built on the divested SafeShare platform, such as access control, content and encryption key management intellectual property it is continuing to advance.
‘’Break-even” point possible
Covata and its executives are looking forward to the future, with a focus on the company’s balance sheet and break-even cash flow.
The company reported today, “Although the company has not provided (and is not in a position to provide) any forecasts, management’s objectives in the coming year are to significantly increase Eclipse revenues, convert current opportunities in Asia into sales through our partner TeBs, secure further marquee customers in Europe and build a solid pipeline locally for our products.
“Management believes, based on its current pipeline and its relatively low cash burn, the company has the opportunity to reach cash flow break-even in the 2021 calendar year.”
Besides the upcoming payable from Cybr5, the company is also expecting to bank an R&D tax credit from the Australian Government.
Cost reductions continue
Covata released its September quarterly report two days ago after taking $273,000 of customer receipts in the quarter.
The company spent $1.6 million in the September 2019 quarter and ended the period with $1.3 million in cash.
It expects to spend a reduced $1.1 million in the December quarter as it moves to a more cost-effective site in Sydney.
Covata said in its update the company and its board continued to review its funding position and business needs, and seek input from major shareholders and financial advisors.
The company is continuing to liaise with ASX Ltd (ASX:ASX) about the suspension of its securities from the Australian Securities Exchange, including discussing any proposed conditions the market manager might put on a relisting.
A notice of meeting is expected to be circulated shortly with details of the company’s proposed name change.