By James Rundle
A cybersecurity company founded by former Pentagon brass said in a regulatory filing that it would furlough most of its workers and explore options including bankruptcy reorganization or liquidation.
IronNet, co-founded in 2014 by former National Security Agency director and retired Army Gen. Keith Alexander and other former intelligence and defense officials, announced the layoffs and the possibility of bankruptcy in an 8-K filing Tuesday to the Securities and Exchange Commission, also saying it would "substantially curtail" its operations.
IronNet, which didn't respond to a request for comment, said the furlough would last until its financial position improved enough for it to rehire a "portion" of affected employees and restart its operations. It has retained several employees to guard against service interruptions, it said.
"In the absence of additional sources of liquidity, the Company's existing cash and cash equivalents and anticipated cash flows from operations are not sufficient to meet the Company's operating and liquidity needs," IronNet said in its filing. The company posted losses in its last two fiscal years, $111 million for the year ended in January, and $242.6 million the previous year.
IronNet, which delisted its shares from the New York Stock Exchange last month, had already been through a number of layoff rounds in 2022, and had just over 100 employees at the start of this year. The company had warned in a regulatory filing for the quarter ended July 2022 that management didn't believe it had sufficient liquidity to continue past one year without additional capital.
IronNet provides cybersecurity products to businesses and governments, touting the federal experience of its leadership in the NSA -- where Alexander was also head of U.S. Cyber Command -- the Defense Advanced Research Projects Agency and other arms of the Defense Department. In 2021, it went public through a merger with a special-purpose acquisitions company, LGL Systems Acquisition.
But IronNet has reshuffled both its management and strategy in the past several months. In June, it signed a take-private deal with investment companies Cohen Circle and C5 Capital, in which the two would create a joint venture to fund IronNet with up to $15.5 million in additional capital, subject to financial and performance targets, according to a regulatory filing.
In July, IronNet announced that Gen. Alexander would be stepping aside as chief executive, with C5 Chair Linda Zecher taking over. Cameron Pforr, IronNet's chief financial officer, was appointed to president in addition to his existing duties.
Cohen Circle and C5 didn't respond to requests for comment.
In its filing, IronNet said the furlough and its halt in business operations constituted a default event on its debt. The company owes over $33 million to a number of creditors, including current and former directors and C5 Capital, among others. IronNet also said in its filing it was exploring a number of options, including bankruptcy protection, which could include a court-organized sale or liquidation.
IronNet's collapse comes as cyber companies generally have struggled to manage an uncertain economy and tighter technology budgets even as cyberattacks have been elevated to a core business risk. Many have had rounds of layoffs, while others have delisted from exchanges or canceled plans for initial public offerings. Startups have been particularly hard hit, with some seeing their valuations slashed while others have struggled to raise money at previous funding levels. A handful, however, have managed to pull off large investment rounds.
Write to James Rundle at james.rundle@wsj.com
(END) Dow Jones Newswires
September 06, 2023 14:49 ET (18:49 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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