Backdoor listing costs leave Covata with AU$14.7m first-half loss

​Expenses stemming from Covata's backdoor listing on the ASX have left the Australian data security company with a loss of AU$14.7 million for the six months ending December 2014.

Australian data security company Covata has reported a total comprehensive loss of AU$14.7 million for the six months ending December 2014, down by 177.6 percent compared to the same period the prior year.

The result comes as it works to establish its presence in the United States following its backdoor public listing late last year, made possible by a reverse-takeover deal worth AU$57 million with Australian Securities Exchange (ASX)-listed uranium mining company Prime Minerals.

Covata, which initially emerged from its fully owned Sydney-based subsidiary Cocoon Data Holdings, listed publicly in November after raising an oversubscribed AU$15 million share offer.

In its half-yearly financial results (PDF), released on Friday, Covata reported that its expenses for the six months came to AU$15.6 million, almost triple the AU$5.6 million it incurred for the same period the prior year.

The company, which provides data-centric security solutions, reported just AU$0.21 million in revenue for the six-month period, down from the previous year's revenue tally of AU$0.25 million for the same period.

"During the period, the group earned technology-related revenues of AU$208,332...The group continued to invest in its technology and development capability," Covata told shareholders.

"This resulted in Version 2.0 of the Covata platform; a new underlying technology framework designed to deliver reliability and scale into the future."

Covata also reported that it received AU$0.93 million in research and development cash tax concession, with total income equating to AU$1.14 million for the half.

Many of Covata's first-half expenses were incurred from its reverse takeover of Prime Minerals Limited, and its listing on the ASX.

The company reported it paid AU$2 million on advisor fees relating to the acquisition of Prime Minerals, AU$2.2 million on recapitalisation costs, and AU$5.4 million for the listing expense on the reverse acquisition.

Covata told investors that AU$9.65 million of the AU$14.7 million loss were non-cash, non-recurring expenses, primarily related to the acquisition of the mining company. The loss after these non-cash items was AU$4.7 million.

Despite the half-yearly loss, Covata assured shareholders that the result comes as it "transitions from the research and development of data security technology to the commercialisation of data security products".

In fact, Covata has been making headway locally, with the company announcing earlier this month that it had signed a reseller agreement with Macquarie Telecom to distribute its Safe Harbour product to Australian government agencies.

"This agreement is an important step for the company as it begins to deliver on its strategy of distributing Safe Share as a SaaS [software-as-a-service] model through managed service providers and telecommunications companies," the company told shareholders on Friday.

While the Macquarie Telecom deal will help the company bolster its footprint in Australia, much of its focus is on establishing itself in the North American market. Founder and CEO Trent Telford moved to the company's Virginia-based office to join chairman and former assistant director of the US Federal Bureau of Investigations Charles Archer to help drive the company's growth in that market.

"Being in the US will allow me to interact daily with our prospects, customers, and partners, so we can shape the product direction to address their specific requirements," said Telford late last year.