Delaware |
7372 |
83-4599446 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
• |
our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably; |
• |
our future operating or financial results; |
• |
future acquisitions, business strategy and expected capital spending; |
• |
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; |
• |
the implementation, market acceptance and success of our business model and growth strategy; |
• |
our expectations and forecasts with respect to the size and growth of the cybersecurity industry and our products and services in particular; |
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the ability of our products and services to meet customers’ compliance and regulatory needs; |
• |
our ability to compete with others in the cybersecurity industry; |
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our ability to retain pricing power with our products; |
• |
our ability to grow our market share; |
• |
our ability to attract and retain qualified employees and management; |
• |
our ability to adapt to changes in consumer preferences, perception and spending habits and develop and expand our product offerings and gain market acceptance of our products, including in new geographies; |
• |
developments and projections relating to our competitors and industry; |
• |
our ability to develop and maintain our brand and reputation; |
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developments and projections relating to our competitors and industry; |
• |
the impact of health epidemics, including the COVID-19 pandemic, on our business and on the economy in general; |
• |
the impact of the COVID-19 pandemic on customer demands for our products; |
• |
our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; |
• |
expectations regarding the time during which we will be an emerging growth company under the JOBS Act; |
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our future capital requirements and sources and uses of cash; |
• |
our ability to obtain funding for our operations and future growth; and |
• |
our business, expansion plans and opportunities. |
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F-i |
• | We have experienced rapid growth in recent periods, and if we do not manage our future growth, our business and results of operations will be adversely affected. |
• | We have a history of losses and we may not be able to achieve or sustain profitability in the future. |
• | If organizations do not adopt cloud-enabled, and/or software as a service (“SaaS”)-delivered cybersecurity solutions that may be based on new and untested security concepts, our ability to grow our business and results of operations may be adversely affected. |
• | Competition from existing or new companies could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and loss of market share. |
• | If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have defects, errors, or vulnerabilities, our brand and reputation would be harmed, which would adversely affect our business and results of operations. |
• | We rely on third-party data centers and our own colocation data centers to host and operate our platform, and any disruption of or interference with its use of these facilities may negatively affect our ability to maintain the performance and reliability of our platform, which could cause our business to suffer. |
• | Our future success will be substantially dependent on our ability to attract, retain, and motivate the members of our management team and other key employees throughout our organization, and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business. |
• | If we are unable to maintain successful relationships with our distribution partners, or if our distribution partners fail to perform, our ability to market, sell and distribute our platform and solutions efficiently will be limited, and our business, financial position and results of operations will be harmed. |
• | Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have an adverse effect on our business and results of operations. |
• | The success of our business will depend in part on our ability to protect and enforce our intellectual property rights. |
• | We are subject to laws and regulations, including governmental export and import controls, sanctions, and anti-corruption laws, that could impair our ability to compete in our markets and subject us to liability if we are not in full compliance with applicable laws. |
• | Our management identified material weaknesses in our internal control over financial reporting, which resulted in a restatement of our unaudited condensed consolidated financial statements as of and for the period ended October 31, 2021. In the future, we may identify additional material weaknesses or otherwise fail to maintain effective internal control over financial reporting, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations. |
Shares of common stock offered by us |
13,824,992 shares of common stock, consisting of (i) 5,200,000 shares of common stock that are issuable upon exercise of the Private Warrants and (ii) 8,596,273 shares of common stock that are issuable upon exercise upon the exercise of the Public Warrants. |
Shares of common stock outstanding prior to the exercise of all Warrants |
100,426,374 (as of April 30, 2022) |
Shares of common stock outstanding assuming exercise of all Warrants |
148,929,699 (based on the total shares outstanding as of April 30, 2022) |
Exercise price of warrants |
$11.50 per share, subject to adjustment as described herein |
Use of proceeds |
We will receive up to an aggregate of approximately $159.0 million from the exercise of the Warrants if they are exercised for cash. To the extent that Warrants are net exercised in accordance with their terms, we will not receive any net proceeds. We expect to use the net proceeds from the exercise of the Warrants, if any, for general corporate purposes. We will not receive any proceeds from the sale of shares of common stock that are issuable upon the exercise of the Private Warrants or the Public Warrants. See “ Use of Proceeds. |
Shares of common stock offered by the selling securityholders |
We are registering the resale by the selling securityholders named in this prospectus, or their permitted transferees, an aggregate of 64,020,756 shares of common stock, consisting of: |
• | up to 12,500,000 PIPE Shares; |
• | up to 2,904,375 Founder Shares; |
• | up to 5,200,000 shares of common stock issuable upon the exercise of the Private Warrants; and |
• | up to 43,416,381 shares of common stock pursuant to the Registration Rights Agreement (including up to 81,412 shares of common stock issuable pursuant to outstanding options, 7,465,923 shares of common stock issuable in connection with the vesting and settlement of restricted stock units, and 560,703 shares of common stock that were issued as Earnout Shares on September 17, 2021). |
Warrants offered by selling securityholders |
Up to 5,200,000 Private Warrants |
Redemption |
The Public Warrants are redeemable in certain circumstances. See “ Description of Our Securities – Warrants. |
Lock-Up Agreements |
Certain of our securityholders are subject to certain restrictions on transfer until the termination of applicable lock-up periods. See the section titled “Certain Relationships and Related Party Transactions—IronNet Related Agreements — Lock-Up Agreements. |
Terms of the offering |
The selling securityholders will determine when and how they will dispose of the securities registered for resale under this prospectus. |
Use of proceeds |
We will not receive any proceeds from the sale of shares of common stock or Warrants by the selling securityholders. |
Risk factors |
Before investing in our securities, you should carefully read and consider the information set forth in “Risk Factors” beginning on page 8. |
NYSE ticker symbols |
“IRNT” and “IRNT.WS” |
• | effectively attract, integrate and retain a large number of new employees, particularly members of our sales and marketing, data science, and research and development teams; |
• | further improve our platform and products, including our cloud modules and security capabilities, analytics, collective defense capabilities, and visualizations, and IT infrastructure, including expanding and optimizing our data centers, collection, and analytic capabilities, to support our business needs; |
• | enhance our information and communication systems to ensure that our employees and offices around the world are well coordinated and can effectively communicate with each other and our growing base of customers and partners; and |
• | improve our financial, management, and compliance systems and controls. |
• | product capabilities, including performance and reliability, of our platform, including our services and features particularly in the areas of analytics and collective defense, compared to those of our competitors; |
• | our ability, and the ability of our competitors, to improve existing products, services and features, or to develop new ones to address evolving customer needs; |
• | our ability to attract, retain and motivate talented employees; |
• | our ability to establish, capitalize on, maintain, and grow relationships with distribution and technology partners; |
• | the strength of our sales and marketing efforts; and |
• | acquisitions or consolidation within our industry, which may result in more formidable competitors. |
• | first-generation NDR vendors such as DarkTrace or Vectra Networks, who offer point products based on Bayesian analysis, outlier analysis, and heuristic detection-based detection; |
• | network security vendors, such as Cisco and Palo Alto Networks, Inc., who are supplementing their core network security additional behavioral-based detection with behavioral-based detection, threat intelligence and security operations solutions; and |
• | legacy network infrastructure and performance monitoring companies such as ExtraHop and Arista Networks, who are adding security use cases to their infrastructure products. |
• | the development and maintenance of the infrastructure of the internet; |
• | the performance and availability of third-party providers of cloud infrastructure services with the necessary speed, data capacity, and security for providing reliable internet access and services; |
• | decisions by the owners and operators of the data centers where our cloud infrastructure is deployed to terminate our contracts, discontinue services, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy or prioritize the traffic of other parties; |
• | physical or electronic break-ins, acts of war or terrorism, human error or interference (including by disgruntled employees, former employees or contractors) and other catastrophic events; |
• | cyberattacks, including denial of service attacks, targeted at us, our data centers, or the infrastructure of the internet; |
• | failure by us to maintain and update our cloud infrastructure to meet our data capacity requirements; |
• | errors, defects, or performance problems in our software, including third-party or open-source software incorporated in our software; |
• | improper deployment or configuration of our solutions; |
• | the failure of our redundancy systems, in the event of a service disruption at one of our data centers, to provide failover to other data centers in our data center network; |
• | the failure of our disaster recovery and business continuity arrangements; and |
• | effects of third-party software updates with hidden malware, similar to the supply chain attack that occurred via SolarWinds. |
Year Ended January 31, |
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2022 |
2021 |
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Customer A |
* | 10 | % | |||||
Customer B |
11 | % | * | |||||
Customer C |
10 | % | * | |||||
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21 | % | 10 | % |
* | Less than 10% |
• | the impact of the COVID-19 pandemic, including the emergence of variant strains of COVID-19, on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and employees; |
• | our ability to attract new and retain existing customers; |
• | the budgeting cycles, seasonal buying patterns, and purchasing practices of customers; |
• | the timing and length of our sales cycles; |
• | changes in customer or distribution partner requirements or market needs; |
• | changes in the growth rate of our market; |
• | the timing and success of new product and service introductions by us or our competitors or any other competitive developments, including consolidation among our customers or competitors; |
• | the level of awareness of cybersecurity threats, particularly advanced cyberattacks, and the market adoption of our platform; |
• | our ability to successfully expand our business domestically and internationally; |
• | decisions by organizations to purchase security solutions from larger, more established security vendors or from their primary IT equipment vendors; |
• | changes in our pricing policies or those of our competitors; |
• | any disruption in our relationship with distribution partners; |
• | insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our solutions; |
• | significant security breaches of, technical difficulties with or interruptions to, the use of our platform; |
• | extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes; |
• | rising inflation and our ability to control costs, including our operating expenses |
• | general economic conditions, both in domestic and foreign markets; |
• | future accounting pronouncements or changes in our accounting policies or practices; |
• | negative media coverage or publicity; |
• | political events; |
• | the amount and timing of operating costs and capital expenditures related to the expansion of our business; and |
• | increases or decreases in expenses caused by fluctuations in foreign currency exchange rates. |
• | selling to governmental agencies can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale; |
• | government certification requirements applicable to our products may change and, in doing so, restrict our ability to sell into the U.S. federal government sector until it has attained the required certifications. |
• | government demand and payment for our platform may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our platform; |
• | governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our platform, which would adversely impact our revenue and results of operations, or institute fines or civil or criminal liability if the audit were to uncover improper or illegal activities; |
• | interactions with the U.S. federal government may be limited by post-employment ethics restrictions on members of our management; |
• | foreign governments may have concerns with purchasing security products from a company that employs former NSA employees and officials, which may negatively impact sales; and |
• | governments may require certain products to be manufactured, hosted, or accessed solely in their country or in other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies. |
• | investigations, enforcement actions and sanctions; |
• | mandatory changes to our platform; |
• | disgorgement of profits, fines and damages; |
• | civil and criminal penalties or injunctions; |
• | claims for damages by our customers or distribution partners; |
• | termination of contracts; |
• | loss of intellectual property rights; and |
• | temporary or permanent debarment from sales to government organizations. |
• | resulting in time-consuming and costly litigation; |
• | diverting management’s time and attention from developing our business; |
• | requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable; |
• | causing delays in the deployment of our platform or service offerings to our customers; |
• | requiring us to stop offering certain services or features of our platform; |
• | requiring us to redesign certain components of our platform using alternative non-infringing or non-open source technology, which could require significant effort and expense; |
• | requiring us to disclose our software source code and the detailed program commands for our software; |
• | prohibiting us from charging license fees for the proprietary software that uses certain open source; and |
• | requiring us to satisfy indemnification obligations to our customers. |
• | diversion of management time and focus from operating our business to addressing acquisition integration challenges; |
• | coordination of engineering, analytics, research and development, operations, and sales and marketing functions; |
• | integration of product and service offerings; |
• | retention of key employees from the acquired company; |
• | changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition; |
• | cultural challenges associated with integrating employees from the acquired company into the organization; |
• | integration of the acquired company’s accounting, management information, human resources and other administrative systems; |
• | the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies; |
• | financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that are not adequately addressed and that cause our reported results to be incorrect; |
• | liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; |
• | unanticipated write-offs or charges; and |
• | litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties. |
• | greater difficulty in negotiating contracts with standard terms, enforcing contracts, and managing collections, including longer collection periods; |
• | higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for international operations and creating international operating entities, where applicable; |
• | management communication and integration problems resulting from cultural and geographic dispersion; |
• | risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our platform that may be required in foreign countries; |
• | greater risk of unexpected changes in applicable foreign laws, regulatory practices, tariffs, and tax laws and treaties; |
• | compliance with anti-bribery laws, including the FCPA, the U.S. Travel Act and the Bribery Act, violations of which could lead to significant fines, penalties, and collateral consequences; |
• | heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements; |
• | the uncertainty of protection for intellectual property rights in some countries; |
• | general economic and political conditions in these foreign markets; |
• | foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States; |
• | political and economic instability in some countries; |
• | the potential for foreign government demands for access to information or corporate property; |
• | double taxation of international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate; |
• | unexpected costs for the localization of services, including translation into foreign languages and adaptation for local practices and regulatory requirements; |
• | requirements to comply with foreign privacy, data protection, and information security laws and regulations and the risks and costs of noncompliance; |
• | greater difficulty in identifying, attracting and retaining local qualified personnel, and the costs and expenses associated with such activities; |
• | greater difficulty identifying qualified distribution partners and maintaining successful relationships with such partners; |
• | differing employment practices and labor relations issues; and |
• | difficulties in managing and staffing international offices and increased travel, infrastructure, and legal compliance costs associated with multiple international locations. |
• | threatened or actual litigation or government investigations; |
• | the occurrence of severe weather conditions and other catastrophes; |
• | publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | the public’s reaction to our press releases, our other public announcements and our filings with the |
• | SEC; |
• | announcements by us or our competitors of acquisitions, business plans or commercial relationships; |
• | any major change in our Board or senior management; |
• | additional sales of our securities by us, our directors, executive officers or principal stockholders; |
• | adverse market reaction to any indebtedness we may incur or securities we may issue in the future; |
• | short sales, hedging and other derivative transactions in our securities; |
• | exposure to capital market risks related to changes in interest rates, realized investment losses, credit spreads, equity prices, foreign exchange rates and performance of insurance linked investments; |
• | our creditworthiness, financial condition, performance, and prospects; |
• | our dividend policy and whether dividends on our common stock have been, and are likely to be, declared and paid from time to time; |
• | perceptions of the investment opportunity associated with our securities relative to other investment alternatives; |
• | regulatory or legal developments; |
• | changes in general market, economic, and political conditions; |
• | conditions or trends in our industry, geographies or customers; and |
• | changes in accounting standards, policies, guidance, interpretations or principles. |
• | limited availability of market quotations for our securities; |
• | a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, |
• | possibly resulting in a reduced level of trading activity in the secondary trading market for shares of our common stock; |
• | a limited amount of analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | existing stockholders’ proportionate ownership interest in our company will decrease; |
• | the amount of cash available per share, including for payment of dividends in the future, may decrease; |
• | the relative voting strength of each share of previously outstanding common stock may be diminished; and |
• | the market price of our common stock may decline. |
• | the division of the Board into three classes and the election of each class for three-year terms; |
• | advance notice requirements for stockholder proposals and director nominations; |
• | provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called, and to take action by written consent; |
• | restrictions on business combinations with interested stockholders; |
• | in certain cases, the approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal the bylaws, or amend or repeal certain provisions of the Charter; |
• | no cumulative voting; and |
• | the ability of the Board to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions by such acquirer. |
1. | continue to invest in research and development related to new technologies; |
2. | increase our investment in marketing and advertising, as well as the sales and distribution infrastructure for its products and services; |
3. | maintain and improve operational, financial, and management information systems; |
4. | hire additional personnel; |
5. | obtain, maintain, expand, and protect our intellectual property portfolio; and |
6. | enhance internal functions to support our operations as a publicly-traded company. |
January 31, |
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2022 |
2021 |
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Recurring Software Customers |
88 | 27 | ||||||
Year-over-year growth |
226 | % | 35 | % |
January 31, |
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2022 |
2021 |
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($ in millions) | ||||||||
Annual recurring revenues |
$ | 31.8 | $ | 25.8 | ||||
Year-over-year growth |
23 | % | 72 | % |
a. | Numerator: We multiply the average total length of the contracts, measured in years or fractions thereof, by the respective revenue recognized for fiscal year 2022 and 2021, as applicable. |
b. | Denominator: We use the revenue attributable to software and product customers for fiscal year 2022 and fiscal year 2021 in the numerator. This effectively represents the revenue base that is being generated by those customers. |
January 31, |
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2022 |
2021 |
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(in years) | ||||||||
Dollar-based average contract length |
2.7 | 2.9 |
Year Ended January 31, |
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2022 |
2021 |
2022 vs 2021 |
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($ in millions) | ||||||||||||||||
Revenue |
$ | 27.5 | $ | 29.2 | $ | (1.7 | ) | (6 | )% | |||||||
Add: Total Deferred revenue, end of period |
33.6 | 34.0 | (0.4 | ) | -1 | |||||||||||
Less: Total Deferred revenue, beginning of period |
34.0 | 20.3 | 13.7 | 67 | ||||||||||||
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Calculated billings |
$ | 27.1 | $ | 42.9 | $ | (15.8 | ) | (37 | )% | |||||||
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For the Year Ended January 31, |
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2022 |
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($ in thousands) | ||||
Net loss |
$ | (242,647 | ) | |
Stock compensation expense (1) |
156,596 | |||
Change in fair value of warrants liabilities |
11,265 | |||
Transaction costs expense (2) |
3,166 | |||
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Adjusted Net Loss |
$ | (71,620 | ) | |
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1. | Total stock based compensation of $156.6 million has been recorded within research and development of $22.9 million, sales and marketing of $51.8 million, and general and administrative expense of $81.9 million on the statement of operations |
2. | Transaction expenses have been recorded within general and administrative expense on the statement of operations |
Fiscal Year Ended January 31, |
2022 vs 2021 |
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2022 |
2021 |
Change $ |
Change % |
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($ in thousands) | ||||||||||||||||||||||||
Product, subscription and support revenue |
$ | 25,347 | 92 | % | $ | 24,701 | 85 | % | $ | 646 | 3 | % | ||||||||||||
Professional services revenue |
2,197 | 8 | % | 4,526 | 15 | % | (2,329 | ) | (51 | )% | ||||||||||||||
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Total revenue |
27,544 | 100 | % | 29,227 | 100 | % | (1,683 | ) | (6 | )% | ||||||||||||||
Cost of product, subscription and support revenue |
8,225 | 30 | % | 5,393 | 18 | % | 2,832 | 53 | % | |||||||||||||||
Cost of professional services revenue |
1,158 | 4 | % | 1,629 | 5 | % | (471 | ) | (29 | )% | ||||||||||||||
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Total cost of revenue |
9,383 | 34 | % | 7,022 | 24 | % | 2,361 | 34 | % | |||||||||||||||
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Gross profit |
18,161 | 66 | % | 22,205 | 76 | % | (4,044 | ) | (18 | )% | ||||||||||||||
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Operating expenses |
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Research and development |
52,899 | 192 | % | 25,754 | 88 | % | 27,145 | 105 | % | |||||||||||||||
Sales and marketing |
82,922 | 301 | % | 30,381 | 104 | % | 52,541 | 173 | % | |||||||||||||||
General and administrative |
112,099 | 407 | % | 21,347 | 73 | % | 90,752 | 425 | % | |||||||||||||||
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Total operating expenses |
247,920 | 900 | % | 77,482 | 265 | % | 170,438 | 220 | % | |||||||||||||||
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Operating loss |
(229,759 | ) | -834 | % | (55,277 | ) | -189 | % | (174,482 | ) | 316 | % | ||||||||||||
Other income |
25 | 0 | % | 71 | 0 | % | (46 | ) | (65 | )% | ||||||||||||||
Other expense |
(1,183 | ) | -4 | % | (90 | ) | 0 | % | (1,093 | ) | 1,214 | % | ||||||||||||
Change in fair value of warrants liabilities |
(11,265 | ) | -41 | % | — | 0 | % | (11,265 | ) | 100 | % | |||||||||||||
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Loss before income taxes |
(242,182 | ) | -879 | % | (55,296 | ) | -189 | % | (186,886 | ) | 338 | % | ||||||||||||
Provision for income taxes |
(465 | ) | -2 | % | (77 | ) | 0 | % | (388 | ) | 504 | % | ||||||||||||
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Net loss |
$ | (242,647 | ) | -881 | % | $ | (55,373 | ) | -190 | % | $ | (187,274 | ) | 338 | % | |||||||||
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Fiscal Year Ended January 31, |
2022 vs 2021 |
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2022 |
2021 |
Change $ |
Change % |
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($ in thousands) | ||||||||||||||||
Product, subscription and support gross profit |
$ | 17,122 | $ | 19,308 | $ | (2,186 | ) | (11 | )% | |||||||
Professional services profit |
1,039 | 2,897 | (1,858 | ) | (64 | )% | ||||||||||
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Total gross profit |
$ | 18,161 | $ | 22,205 | $ | (4,044 | ) | (18 | )% | |||||||
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2022 |
2021 |
Change |
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Product, subscription and support margin |
67.6 | % | 78.2 | % | (10.6 | )% | ||||||||||
Professional services margin |
47.3 | % | 64.0 | % | (16.7 | )% | ||||||||||
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Total gross margin |
65.9 | % | 76.0 | % | (10.1 | )% | ||||||||||
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Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
(in millions) | ||||||||
Net cash used in operating activities |
$ | (83.7 | ) | $ | (42.7 | ) | ||
Net cash (used in) provided by investing activities |
$ | (3.9 | ) | $ | 0.1 | |||
|
|
|
|
|||||
Net cash provided by financing activities |
$ | 103.4 | $ | 63.3 | ||||
|
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1. |
Identification of the contract, or contracts, with a customer |
2. |
Identification of the performance obligations in the contract |
3. |
Determination of the transaction price |
4. |
Allocation of the transaction price to the performance obligations in the contract |
5. |
Recognition of revenue when, or as, we satisfy performance obligations |
• | We did not design and maintain effective controls over the accounting for stock-based compensation modifications. This material weakness resulted in the restatement of our unaudited condensed consolidated financial statements as of and for the three months ended October 31, 2021. However, this error was corrected as of the date of the filing of the Annual Report on Form 10-K for the fiscal year ended January 31, 2022 and the consolidated financial statements are correctly stated for the year ended January 31, 2022. |
• | We did not design and maintain effective controls over the review of journal entries and account reconciliations. Specifically, certain personnel have had the ability to both (i) create and post journal entries within our general ledger system, and (ii) prepare and review account reconciliations. This material weakness did not result in a material misstatement to the consolidated financial statements. |
• | We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (i) program change management controls for the financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (ii) appropriate user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs and data to appropriate personnel; (iii) computer operations controls to ensure data backups are authorized and restorations monitored; and (iv) testing and approval controls for program development to ensure that new software development is |
aligned with business and IT requirements. This material weakness did not result in a material misstatement to the consolidated financial statements. |
• | we hired and continued to hire additional accounting and finance resources with public company experience, including expertise in technical accounting and complex transactions, in addition to utilizing third-party consultants and specialists, to supplement our internal resources; |
• | we are revising account reconciliation controls within all business processes to require proper segregation of duties of preparer and reviewer utilizing the additional personnel mentioned above; |
• | we are implementing comprehensive access control protocols to implement restrictions on user and privileged access to certain applications and establishing additional controls over the preparation and review of journal entries; and |
• | we are redesigning and strengthening financial system and application change management controls, testing and approval controls for program development, as well as data backup and restoration controls. |
• | differentiated business value that includes behavioral analytics, which find threats that other tools cannot; |
• | real-time threat-sharing across communities; and |
• | value to the Collective Defense ecosystem through integrations. |
(1) | Summation of revenues generated from solutions for Security Information and Event Management (SIEM) Software, IDPS Equipment, Enterprise Data Loss Prevention, Threat Intelligence Software, Network Detection and Response, and Network Access Control. |
• | SIEM tools to retrieve logs, share detections, and retrieve analyst feedback; |
• | SOAR tools to share detections, retrieve analyst feedback, and augment existing playbooks; |
• | EDR platforms to ingest endpoint event and entity context and initiate response to malicious activity; and |
• | NGFW products to dynamically block malicious activity and ingest logs for analysis. |
• | AWS |
• | Azure |
• | GCP |
• | Splunk |
• | IBM QRadar |
• | Microsoft Azure Sentinel |
• | LogRhythm |
• | Cortex XSOAR (formerly Demisto) |
• | Splunk Phantom |
• | Swimlane |
• | ServiceNow |
• | CrowdStrike |
• | Carbon Black |
• | Forescout |
• | Tanium |
• | Palo Alto Networks |
• | Checkpoint Software Technologies |
• | Zscaler |
• | first-generation NDR vendors such as DarkTrace or Vectra Networks, who offer point products based on Bayesian analysis, outlier analysis, and heuristic detection-based detection; |
• | network security vendors, such as Cisco and Palo Alto Networks, Inc., who are supplementing their core network security additional behavioral-based detection with behavioral-based detection, threat intelligence and security operations solutions; and |
• | legacy network infrastructure and performance monitoring companies such as ExtraHop and Arista Networks, who are adding security use cases to their infrastructure products. |
• | detect advanced network threats and to prevent security breaches; |
• | anonymously correlate and share threats in real-time across a community of peer enterprises; |
• | share human-intelligence across a Collective Defense community on how peer enterprises have rated and triaged similar detections; and |
• | integrate with other participants in the security ecosystem. |
• | time to value, price, and total cost of ownership; |
• | brand awareness, reputation, and trust in our services; |
• | strength of sales, marketing, and channel partner relationships; and |
• | customer success, cyber hunt, and cyber advisory services. |
Name |
Age |
Position | ||||
Executive Officers |
||||||
GEN Keith B. Alexander (Ret.) |
70 | Co-Chief Executive Officer, President and Chairman | ||||
William E. Welch |
54 | Co-Chief Executive Officer and Director | ||||
James C. Gerber |
61 | Chief Financial Officer | ||||
Donald Closser |
54 | Chief Product Officer | ||||
Non-Employee Directors |
||||||
Donald R. Dixon (1) |
74 | Director | ||||
Mary E. Gallagher (1) |
56 | Director | ||||
GEN John M. Keane (Ret.) (3) |
79 | Director | ||||
Robert V. “Rob” LaPenta Jr. (2) |
53 | Director | ||||
VADM John M. McConnell (Ret.) (2) . |
78 | Director | ||||
André Pienaar (3) |
52 | Director | ||||
Hon. Michael J. Rogers (1) |
58 | Director | ||||
Theodore E. Schlein (2) |
58 | Director | ||||
VADM Jan E. Tighe (Ret.) (3) |
59 | Director |
(1) | Member the Audit Committee. |
(2) | Member of the Compensation Committee. |
(3) | Member of the Nominating and Corporate Governance Committee. |
• | the Class I directors are Donald R. Dixon, Theodore E. Schlein and André Pienaar, and their terms will expire at the annual meeting of stockholders to be held in 2022; |
• | the Class II directors are VADM John M. McConnell (Ret.), Hon. Michael J. Rogers, GEN John M. Keane (Ret.) and Robert “Rob” LaPenta Jr., and their terms will expire at the annual meeting of stockholders to be held in 2023; and |
• | the Class III directors are Mary E. Gallagher, William E. Welch, VADM Jan E. Tighe (Ret.) and GEN Keith B. Alexander (Ret.), and their terms will expire at the annual meeting of stockholders to be held in 2024. |
• | helping the Board oversee corporate accounting and financial reporting processes; |
• | managing the selection, engagement, qualifications, independence and performance of a qualified firm to serve as the independent registered public accounting firm to audit the financial statements; |
• | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, the interim and year-end operating results; |
• | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; |
• | reviewing related person transactions; |
• | obtaining and reviewing a report by the independent registered public accounting firm at least annually that describes internal quality control procedures, any material issues with such procedures and any steps taken to deal with such issues when required by applicable law; and |
• | approving or, as permitted, pre-approving, audit and permissible non-audit services to be performed by the independent registered public accounting firm. |
• | reviewing and approving the compensation of the co-chief executive officers, other executive officers and senior management; |
• | administering the equity incentive plans and other benefit programs; |
• | reviewing, adopting, amending and terminating incentive compensation and equity plans, severance agreements, profit sharing plans, bonus plans, change-of-control |
• | reviewing and establishing general policies relating to compensation and benefits of the employees, including the overall compensation philosophy. |
• | identifying and evaluating candidates, including the nomination of incumbent directors for reelection and nominees recommended by stockholders, to serve on the Board; |
• | considering and making recommendations to the board of directors regarding the composition and chairmanship of the committees of the Board; |
• | developing and making recommendations to the board of directors regarding corporate governance guidelines and matters, including in relation to corporate social responsibility; and |
• | overseeing periodic evaluations of the performance of the Board, including its individual directors and committees. |
• | for any transaction from which the director derives an improper personal benefit; |
• | for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
• | for any unlawful payment of dividends or redemption of shares; or |
• | for any breach of a director’s duty of loyalty to the corporation or its stockholders. |
• | GEN Keith B. Alexander (Ret.), our Chairman, President and Co-Chief Executive Officer; |
• | William Welch, our Co-Chief Executive Officer; |
• | James C. Gerber, our Chief Financial Officer; |
• | Donald Closser, our Chief Product Officer; and |
• | Sean Foster, our former Chief Revenue Officer. |
Name and Principal Position |
Fiscal Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) (1) |
Non-Equity Incentive Plan Compensation ($) (2) |
All Other Compensation ($) (3) |
Total ($) |
|||||||||||||||||||||
GEN Keith B. Alexander (Ret.) |
2022 | 360,000 | — | — | — | 15,544 | 375,544 | |||||||||||||||||||||
Chairman, President and Co-Chief Executive Officer |
2021 | 339,000 | — | — | 44,350 | 10,680 | 394,030 | |||||||||||||||||||||
William E. Welch |
2022 | 360,000 | — | — | — | 11,192 | 371,192 | |||||||||||||||||||||
Co-Chief Executive Officer |
2021 | 339,000 | — | — | 44,350 | 11,400 | 394,750 | |||||||||||||||||||||
James C. Gerber |
2022 | 340,000 | 125,000 | (5) |
695,673 | — | 12,183 | 1,172,856 | ||||||||||||||||||||
Chief Financial Officer(4) |
||||||||||||||||||||||||||||
Donald Closser |
2022 | 330,000 | — | 627,671 | — | 11,152 | 968,823 | |||||||||||||||||||||
Chief Product Officer(4) |
||||||||||||||||||||||||||||
Sean Foster |
2022 | 275,000 | (6) |
— | 627,671 | 113,204 | 1,462,420 | 2,478,295 | ||||||||||||||||||||
Former Chief Revenue Officer |
2021 | 383,336 | (7) |
— | — | 88,029 | 11,948 | 483,313 |
(1) | The amounts in this column reflect the aggregate grant date fair value of restricted stock units, or RSUs, granted in the applicable year, computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 718 for stock-based compensation transactions. |
(2) | For officers other than Mr. Foster, the amounts in this column reflect cash incentive bonuses earned under our bonus plan during the respective year and paid during the first quarter of the following year. For Mr. Foster only, amount represent sales commissions. |
(3) | Amounts in this column consist primarily of 401(k) plan matching contributions. For Mr. Foster, amounts for fiscal 2022 also include (a) cash severance payments of $150,000, (b) post-termination benefit payments in the amount of $14,303, and (c) $1,288,680, representing the value of acceleration of vesting of restricted stock units to the date of termination. |
(4) | Mr. Gerber and Mr. Closser were not named executive officers for fiscal 2021, and as a result their compensation for that year has been omitted pursuant to applicable SEC rules and regulations. |
(5) | Amount represents a discretionary bonus paid upon the closing of the Business Combination. |
(6) | Mr. Foster’s employment with our company ceased on December 31, 2021, and amounts in this table for fiscal 2022 represent amounts paid or earned for service through that date. |
(7) | Consists of $300,000 in base salary and $83,336 in sales commissions, including non-recoverable draws against such commissions. |
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date (1) |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) (2) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) (2) |
||||||||||||||||||||||||
William E. Welch |
4,438,674 | (3) |
15,135,878 | |||||||||||||||||||||||||||||
244,126 | (4) |
832,470 | ||||||||||||||||||||||||||||||
244,126 | (5) |
832,470 | 983,905 | (6) |
3,355,116 | |||||||||||||||||||||||||||
James C. Gerber |
81,412 | — | 0.58 | 4/23/2027 | ||||||||||||||||||||||||||||
94,842 | (3) |
323,411 | ||||||||||||||||||||||||||||||
Donald Closser |
659,426 | (3) |
2,248,643 | |||||||||||||||||||||||||||||
Sean Foster |
1,043,684 | (3) |
3,558,962 |
(1) | The expiration date of each stock option is ten years from the date of grant. |
(2) | The market value amount is calculated based on the closing price of our common stock of $3.41 on January 31, 2022. |
(3) | These shares represent time-based RSUs outstanding at January 31, 2022 which vested 25% on the first anniversary of their grant date, with the remaining 75% vesting thereafter in 36 monthly installments, subject to the officer’s continuous service as of each vesting date. Certain of the amounts vested at January 31, 2022 remained subject to a liquidity event condition that was satisfied subsequent to January 31, 2022, at which time the vested portion of the RSUs were settled and shares were issued to the officer, net of shares sold to satisfy tax withholding obligations. |
(4) | Of the shares underlying this restricted stock unit award, 25% will vest on July 31, 2022 and the remainder will vest in 36 monthly installments thereafter, such that the award will be fully vested on July 31, 2025, subject to the officer’s continuous service as of each such vesting date. |
(5) | Of the shares underlying this restricted stock unit award, 25% will vest on August 26, 2022 and the remainder will vest in 36 monthly installments thereafter, such that the award will be fully vested on August 26, 2025, subject to the officer’s continuous service as of each such vesting date. |
(6) | These shares represent RSUs granted in February 2019 as performance-based grants. The vesting of these shares will be based on the achievement of specified performance conditions. |
• | arrange for the assumption, continuation or substitution of a stock award by an acquiring or succeeding entity or an affiliate; |
• | provide that an award will become exercisable, realizable or deliverable, or restrictions applicable to the award will lapse, in whole or part, prior to or upon the reorganization event (accelerate the vesting of the award); |
• | upon written notice to a holder of an award, provide that all of the unexercised awards will terminate immediately prior to the consummation of such reorganization event unless exercised (to the extent exercisable) within a specified period following the date of such notice; |
• | In the case of a reorganization event under which the holders of IronNet’s common stock will receive a cash payment for each share surrendered in such reorganization event (the acquisition price), cancel or arrange for the cancellation of the stock award in exchange for a cash payment equal to the number of shares of IronNet’s common stock subject to the vested portion of the award, multiplied by the excess of (1) the acquisition price, over (2) the exercise, measurement or purchase price otherwise payable in connection with the award; or |
• | any combination of the foregoing. |
Name |
CASH ($) FEES EARNED OR PAID IN CASH ($) |
STOCK AWARDS ($) (1) |
TOTAL ($) |
|||||||||
Donald R. Dixon (2) |
16,369 | 196,320 | 212,689 | |||||||||
Mary E. Gallagher (3) |
21,538 | 196,320 | 217,858 | |||||||||
GEN John M. Keane (Ret.) (4) |
14,431 | 196,320 | 210,751 | |||||||||
Robert V. “Rob” LaPenta Jr. (3) |
15,077 | 196,320 | 211,397 | |||||||||
VADM John M. McConnell (Ret.) (4) |
18,092 | 196,320 | 214,412 | |||||||||
André Pienaar (3) |
14,431 | 196,320 | 210,751 | |||||||||
Hon. Michael J. Rogers (4) |
16,369 | 196,320 | 212,689 | |||||||||
Theodore E. Schlein (3) |
15,077 | 196,320 | 211,397 | |||||||||
VADM Jan E. Tighe (Ret.) (5) |
16,154 | 196,320 | 212,474 |
(1) | This column reflects the aggregate grant date fair value of restricted stock units granted during the year measured pursuant to Financial Accounting Standard Board Accounting Standards Codification Topic 718, |
the basis for computing stock-based compensation in IronNet’s consolidated financial statements. This calculation assumes that the director will perform the requisite service for the award to vest in full as required by SEC rules. The assumptions used in valuing options are described in Note 6 to IronNet’s consolidated financial statements included in this prospectus. These amounts do not reflect the actual economic value that will be realized by the director upon settlement of the restricted stock units or the sale of the common stock underlying such restricted stock units. |
(2) | The director held an aggregate of 271,672 restricted stock units as of January 31, 2022. |
(3) | The director held an aggregate of 24,000 restricted stock units as of January 31, 2022. |
(4) | The director held an aggregate of 387,252 restricted stock units as of January 31, 2022. |
(5) | The director held an aggregate of 139,580 restricted stock units as of January 31, 2022. |
MEMBER ANNUAL FEE |
CHAIRMAN ADDITIONAL ANNUAL FEE |
|||||||
Board of Directors |
$ | 30,000 | $ | 20,000 | ||||
Audit Committee |
8,000 | 20,000 | ||||||
Compensation Committee |
5,000 | 12,000 | ||||||
Nominating and Corporate Governance Committee |
3,500 | 7,500 |
• | the amounts involved exceeded or will exceed $120,000; and |
• | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest. |
Borrower |
Date of Promissory Note |
Largest Aggregate Amount of Principal Outstanding During the Period |
Amount Outstanding as of Closing of Business Combination |
Annual Rate or Amount of Interest Payable on the Indebtedness |
||||||||||||
James Heath |
12/29/2018 | $ | 1,000,000 | — | 2.8 | % | ||||||||||
James Gerber |
10/24/2019 | $ | 435,836 | — | 1.7 | % |
Stockholder |
Shares of Series B-2 Preferred Stock Purchased |
Total Purchase Price (in millions of dollars) |
||||||
C5 Partners, LLC (2) |
2,791,870 | $ | 25.0 | |||||
Entities affiliated with ForgePoint Capital (3) |
1,383,280 | $ | 12.4 | |||||
KPCB Holdings, Inc., as nominee (4) |
558,370 | $ | 5.0 |
(1) | Each share of Series B-2 convertible preferred stock converted into ten shares of IronNet common stock immediately following the consummation of the Business Combination. After further application of the Merger Exchange Ratio of 0.814107, the numbers presented herein are expressed on an as-converted to IronNet common stock basis. |
(2) | This entity beneficially owns more than 5% of IronNet’s capital stock. André Pienaar, a member of our board of directors and that of Legacy IronNet, is an affiliate of C5 Capital. |
(3) | Consists of 1,103,900 shares purchased by ForgePoint Cybersecurity Fund I, L.P., 1,284 shares purchased by ForgePoint Cyber Affiliates Fund I, L.P. and 266,540 shares purchased by ForgePoint Cyber Co-Investors I-E, L.P. Donald R. Dixon, a member of our board of directors and that of Legacy IronNet, is an affiliate of ForgePoint Capital, of which the foregoing purchasers are affiliated funds. These entities collectively beneficially own more than 5% of IronNet’s capital stock. |
(4) | KPCB Holdings, Inc., as nominee beneficially owns more than 5% of IronNet’s capital stock. Ted Schlein, a member of our board of directors and that of Legacy IronNet, is an affiliate of KPCB Holdings, Inc. |
Stockholder |
Shares of Series B-1 Preferred Stock Purchased |
Total Purchase Price (in millions of dollars) |
||||||
C5 Partners, LLC (2) |
3,908,620 | $ | 35.0 | |||||
Entities affiliated with ForgePoint Capital (3) |
3,886,280 | $ | 34.8 | |||||
KPCB Holdings, Inc., as nominee (4) |
670,050 | $ | 6.0 |
(1) | Each share of Series B-1 convertible preferred stock converted into ten shares of Legacy IronNet common stock immediately prior to the consummation of the Business Combination. The numbers presented herein are expressed on an as-converted to Legacy IronNet common stock basis. |
(2) | This entity beneficially owns more than 5% of IronNet’s capital stock. André Pienaar, a member of our board of directors and that of Legacy IronNet, is an affiliate of C5 Capital. |
(3) | Consists of 1,159,110 shares purchased by ForgePoint Cybersecurity Fund I, L.P., 748,220 shares purchased by ForgePoint Cyber Co-Investors I-B, L.P., 1,965,475 shares purchased by ForgePoint Cyber Co-Investors I-C, L.P., and 13,475 shares purchased by ForgePoint Cyber Affiliates Fund I, L.P. Donald R. Dixon, a member of our board of directors and that of Legacy IronNet, is an affiliate of ForgePoint Capital, of which the foregoing purchasers are affiliated funds. These entities collectively beneficially own more than 5% of IronNet’s capital stock. |
(4) | KPCB Holdings, Inc., as nominee beneficially owns more than 5% of IronNet’s capital stock. Ted Schlein, a member of our board of directors and that of Legacy IronNet, is an affiliate of KPCB Holdings, Inc. |
Stockholder |
Shares of Series A Preferred Stock Purchased |
Total Purchase Price (in millions of dollars) |
||||||
Entities affiliated with ForgePoint Capital (2) |
2,982,070 | $ | 15.0 | |||||
KPCB Holdings, Inc., as nominee (3) |
2,982,070 | $ | 15.0 |
(1) | Each share of Series A convertible preferred stock converted into ten shares of Legacy IronNet common stock immediately prior to the consummation of the Business Combination. The numbers presented herein are expressed on an as-converted to Legacy IronNet common stock basis. |
(2) | Consists of 1,491,035 shares purchased by ForgePoint Cyber Co-Investors I, L.P., 1,473,900 shares purchased by ForgePoint Cybersecurity Fund I, L.P., and 17,135 shares purchased by ForgePoint Cyber Affiliates Fund I, L.P. Donald R. Dixon, a member of our board of directors and that of Legacy IronNet, is an affiliate of ForgePoint Capital, of which the foregoing purchasers are affiliated funds. These entities collectively beneficially own more than 5% of IronNet’s capital stock. |
(3) | KPCB Holdings, Inc., as nominee beneficially owns more than 5% of IronNet’s capital stock. Ted Schlein, a member of our board of directors and that of IronNet, is an affiliate of KPCB Holdings, Inc. |
• | the risks, costs, and benefits to us; |
• | the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; |
• | the terms of the transaction; |
• | the availability of other sources for comparable services or products; and |
• | the terms available to or from, as the case may be, unrelated third parties. |
• | each person known by us to be the beneficial owner of more than 5% of our common stock; |
• | each director; |
• | each of the executive officers named in the Summary Compensation Table as set forth in this prospectus; and |
• | all of our current executive officers and directors as a group. |
Name and Address of Beneficial Owner (1) |
Number of Shares |
Percentage of Common Stock Outstanding |
||||||
5% or Greater Stockholders |
||||||||
Entities affiliated with ForgePoint (2) |
10,100,057 | 10.1 | % | |||||
Entities affiliated with C5 Partners (3) |
6,794,861 | 6.8 | % | |||||
Entities affiliated with Kleiner Perkins Caufield & Byers (4) |
6,002,001 | 6.0 | % | |||||
Named Executive Officers and Directors |
||||||||
GEN Keith B. Alexander (Ret.) (5) |
11,053,024 | 11.0 | % | |||||
William E. Welch (6) |
2,002,228 | 2.0 | % | |||||
James C. Gerber (7) |
860,116 | * | ||||||
Donald Closser (8) |
296,001 | * | ||||||
Sean Foster |
543,065 | * | ||||||
Donald R. Dixon (9) |
10,447,729 | 10.4 | % | |||||
Mary E. Gallagher |
15,000 | * | ||||||
VADM John M. McConnell (Ret.) |
363,251 | * | ||||||
GEN John M. Keane (Ret.) |
388,251 | * | ||||||
André Pienaar (10) |
6,818,861 | 6.8 | % | |||||
Hon. Michael J. Rogers |
376,548 | * | ||||||
Theodore E. Schlein (11) |
6,102,001 | 6.1 | % | |||||
VADM Jan E. Tighe (Ret.) |
115,579 | * | ||||||
Robert V. “Rob” LaPenta Jr |
25,000 | * | ||||||
All current directors and executive officers as a group (13 individuals) (12) |
38,863,589 | 38.7 | % |
(1) | Unless otherwise noted, the business address of each of the following entities or individuals is c/o IronNet, Inc., 7900 Tysons One Place, Suite 400, McLean, Virginia, 22102. |
(2) | Includes (i) 52,869 shares of common stock held by ForgePoint Cyber Affiliates Fund I, L.P., (ii) 2,278,138 shares of common stock held by ForgePoint Cyber Co-Investors I, L.P., (iii) 758,760 shares of common stock held by ForgePoint Cyber Co-Investors I-B, L.P., (iv) 1,993,158 shares of common stock held by ForgePoint Cyber Co-Investors I-C, L.P., (v) 270,293 shares of common stock held by ForgePoint Cyber |
Co-Investors I-E, L.P., and (vi) 4,746,839 shares of common stock held by ForgePoint Cybersecurity Fund I, L.P. ((i) to (vi), inclusive, the “ForgePoint Funds”). Donald R. Dixon and Alberto Yepez are the managing members of ForgePoint Cybersecurity GP-1, LLC, which is the general partner of each of the ForgePoint Funds and exercise shared voting, investment and dispositive rights with respect to the shares of stock held by each of the ForgePoint Funds. The address for all entities and individuals affiliated with the ForgePoint Funds is 400 S El Camino Road, Suite 300, San Mateo, CA 94402. |
(3) | André Pienaar (a director of the company), William Kilmer and James Coats are the directors of C5 Investors General Partner Limited, which acts on behalf of C5 Investors LP, the sole manager of C5 Partners LLC. C5 Capital Limited is the investment manager of C5 Investors LP and exercises voting, investment and dispositive rights with respect to the shares of stock held by C5 Investors LLC. André Pienaar is the chief executive officer and a director of C5 Capital Limited together with William Kilmer and Linda Zecher. The address of the entities and individuals affiliated with C5 Capital Limited is 7 Vigo Street, London, W1S 3HF, UK . |
(4) | Includes (i) 5,853,150 shares of common stock held by KPCB Digital Growth Fund II, LLC (“KPCB DGF II”), and (ii) 148,851 shares of common stock held by KPCB Digital Growth Founders Fund, LLC (“DGF II Founders,” together, the “Kleiner Funds”). The Kleiner Funds’ shares are held for convenience in the name of KPCB Holdings, Inc., as nominee, for the accounts of such individuals and entities. The managing member of the Kleiner Funds is KPCB DGF II Associates, LLC (“DGF II Associates”). Theodore E. Schlein (a director of the company), together with L. John Doerr and Mary Meeker, the managing members of DGF II Associates, exercise shared voting and dispositive control over the shares held by the Kleiner Funds. The principal business address for all entities and individuals affiliated with Kleiner Perkins Caufield & Byers is c/o Kleiner Perkins Caufield & Byers, LLC, 2750 Sand Hill Road, Menlo Park, CA 94025. |
(5) | Excludes shares of common stock held by trusts established by GEN Alexander, as (a) each such trust is an irrevocable trust, (b) neither GEN Alexander nor his spouse serve as trustee of any such trust, and (c) GEN Alexander does not otherwise exercise voting, investment or dispositive control over the shares of common stock held by the trusts. |
(6) | Consists of (i) 1,817,283 shares of common stock and (ii) 184,945 shares of common stock issuable upon the settlement of restricted stock units that will vest within 60 days of April 30, 2022. |
(7) | Consists of (i) 844,736 shares of common stock and (ii) 15,380 shares of common stock issuable upon the settlement of restricted stock units that will vest within 60 days of April 30, 2022. |
(8) | Consists of (i) 249,387 shares of common stock and (ii) 46,614 shares of common stock issuable upon the settlement of restricted stock units that will vest within 60 days of April 30, 2022. |
(9) | Includes (i) the 10,100,057 shares held by the ForgePoint Funds as described in footnote (2) above, (ii) 100,000 shares of common stock held by The Dixon Revocable Trust, of which Mr. Dixon and his spouse are co-trustees, and (iii) 247,672 shares of common stock held directly by Mr. Dixon. |
(10) | Includes (i) the 6,794,861 shares held by C5 Partners as described in footnote (3) above and (ii) 24,000 shares of common stock held directly by Mr. Pienaar. |
(11) | Consists of the shares described in footnote (4) above and 100,000 shares of common stock held by the Schlein Family Trust, of which Mr. Schlein is the trustee. |
(12) | Consists of (i) 38,616,650 shares of common stock and (ii) 246,939 shares of common stock issuable upon the settlement of restricted stock units that will vest within 60 days of April 30, 2022. |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name of Selling Securityholder |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
Directors and Executive Officers of IronNet, Inc. |
||||||||||||||||||||||||||||||||
GEN Keith B. Alexander (Ret.) (1) |
11,530,649 | 11,530,649 | — | — | — | — | — | — | ||||||||||||||||||||||||
William E. Welch (2) |
4,476,446 | 4,476,446 | — | — | — | — | — | — | ||||||||||||||||||||||||
James C. Gerber (3) |
965,179 | 965,179 | — | — | — | — | — | — | ||||||||||||||||||||||||
Sean Foster (4) |
1,052,219 | 1,052,219 | — | — | — | — | — | — | ||||||||||||||||||||||||
Russell Cobb (5) |
778,776 | 778,776 | — | — | — | — | — | — | ||||||||||||||||||||||||
Donald Closser (6) |
663,189 | 663,189 | — | — | — | — | — | — | ||||||||||||||||||||||||
Donald R. Dixon (7) |
247,672 | 247,672 | — | — | — | — | — | — | ||||||||||||||||||||||||
Mary E. Gallagher (8) * |
15,000 | 15,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
GEN John M. Keane (Ret.) (9) |
363,251 | 363,251 | — | — | — | — | — | — | ||||||||||||||||||||||||
Robert V. “Rob” LaPenta Jr. (10) * |
25,000 | 25,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
VADM John M. McConnell (Ret.) (11) |
363,251 | 363,251 | — | — | — | — | — | — | ||||||||||||||||||||||||
Hon. Michael J. Rogers (12) |
270,293 | 270,293 | — | — | — | — | — | — | ||||||||||||||||||||||||
VADM Jan E. Tighe (Ret.) (13) |
115,579 | 115,579 | — | — | — | — | — | — | ||||||||||||||||||||||||
Other Holders |
||||||||||||||||||||||||||||||||
143 Avenue B Associates, LLC (14) |
250,000 | 250,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Alan Cameron Carson (15) * |
3,800 | 3,800 | — | — | 6,100 | 6,100 | — | — | ||||||||||||||||||||||||
Anand Rawani (16) * |
2,000 | 2,000 | — | — | 200 | 200 | — | — | ||||||||||||||||||||||||
ATHANOR INTERNATIONAL MASTER FUND, LP (17) |
250,300 | 250,300 | — | — | — | — | — | — | ||||||||||||||||||||||||
ATHANOR MASTER FUND, LP (18) |
749,000 | 749,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
BRIDGEWATER ASSOCIATES, LP (19) |
1,339,023 | 250,000 | 1,089,023 | 1.3 | % | — | — | — | — | |||||||||||||||||||||||
C5 Partners, LLC (20) |
6,794,861 | 6,794,861 | ||||||||||||||||||||||||||||||
David L. Fitzgerald (21) * |
4,800 | 4,800 | — | — | 7,700 | 7,700 | — | — | ||||||||||||||||||||||||
David T. Butler (22) * |
7,000 | 7,000 | — | — | 11,000 | 11,000 | — | — | ||||||||||||||||||||||||
Entities advised by Capital Research and Management Company (23) |
3,884,000 | 3,884,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cyber Affiliates Fund I, L.P. (24)(25) |
52,869 | 52,869 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cyber Co-Investors I, L.P.(24)(26) |
2,278,138 | 2,278,138 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cyber Co-Investors I-B, L.P.(24)(27) |
758,760 | 758,760 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cyber Co-Investors I-C, L.P.(24)(28) |
1,993,158 | 1,993,158 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cyber Co-Investors I-E, L.P.(24)(29) |
270,293 | 270,293 | — | — | — | — | — | — | ||||||||||||||||||||||||
ForgePoint Cybersecurity Fund I, L.P. (24)(30) |
4,746,839 | 4,746,839 | — | — | — | — | — | — | ||||||||||||||||||||||||
Funds advised by Weiss Asset Management LP (31) |
1,000,000 | 1,000,000 | — | — | — | — | — | — |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name of Selling Securityholder |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
George Anthony Bancroft II (32) * |
14,566 | 14,566 | — | — | 2,500 | 2,500 | — | — | ||||||||||||||||||||||||
GGCP, Inc. (33) * |
216,000 | 216,000 | — | — | 345,000 | 345,000 | — | — | ||||||||||||||||||||||||
Hendi Susanto (34) * |
41,760 | 41,660 | 100 | * | * | 50 | — | 50 | — | |||||||||||||||||||||||
Jeffrey M. Illustrato (35) * |
28,250 | 28,000 | 250 | ** | 125 | — | 125 | — | ||||||||||||||||||||||||
John G. Vonglis (36) * |
16,000 | 16,000 | — | — | 26,000 | 26,000 | — | — | ||||||||||||||||||||||||
John S. Mega (37) * |
59,320 | 59,320 | — | — | 75,000 | 75,000 | — | — | ||||||||||||||||||||||||
Jordan Lobiak (38) * |
4,250 | 4,000 | 250 | ** | 125 | — | 125 | — | ||||||||||||||||||||||||
KEPOS ALPHA MASTER FUND L.P. (39) |
500,000 | 500,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
KPCB Digital Growth Founders Fund II, LLC (40) |
148,851 | 148,851 | — | — | — | — | — | — | ||||||||||||||||||||||||
KPCB Digital Growth Fund II, LLC (41) |
5,853,150 | 5,853,150 | — | — | — | — | — | — | ||||||||||||||||||||||||
Leslie B. Daniels (42) * |
— | — | — | — | 65,000 | 65,000 | — | — | ||||||||||||||||||||||||
LGL Systems Acquisition Holding Company, LLC (43) * |
386,325 | 386,325 | — | — | 2,147,500 | 2,147,500 | — | — | ||||||||||||||||||||||||
Manjit S. Kalha (44) * |
28,000 | 28,000 | — | — | 5,000 | 5,000 | — | — | ||||||||||||||||||||||||
Marc Gabelli (45) * |
284,900 | 284,900 | — | — | 10,000 | 10,000 | — | — | ||||||||||||||||||||||||
Marshall Wace Investment Strategies —EUREKA FUND (46) |
1,001,540 | 1,001,540 | — | — | — | — | — | — | ||||||||||||||||||||||||
Marshall Wace Investment Strategies —MARKET NEUTRAL TOPS FUND (47) |
105,613 | 105,613 | — | — | — | — | — | — | ||||||||||||||||||||||||
Marshall Wace Investment Strategies —SYSTEMATIC ALPHA PLUS FUND (48) |
29,304 | 29,304 | — | — | — | — | — | — | ||||||||||||||||||||||||
Marshall Wace Investment Strategies —TOPS FUND (49) |
63,543 | 63,543 | — | — | — | — | — | — | ||||||||||||||||||||||||
Michael Clark Martin (50) * |
2,830 | 2,830 | — | — | — | — | — | — | ||||||||||||||||||||||||
Michael Ferrantino (51) * |
30,000 | 30,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
NGM Asset Management LLC (52) * |
369,800 | 369,800 | — | — | 400,000 | 400,000 | — | — | ||||||||||||||||||||||||
Patrick B. Huvane Jr. (53) * |
49,415 | 49,415 | — | — | 25,000 | 25,000 | — | — | ||||||||||||||||||||||||
Robert P. Jacobson (54) * |
8,430 | 8,430 | — | — | 9,000 | 9,000 | — | — | ||||||||||||||||||||||||
Robert V. LaPenta Sr. (55) * |
191,000 | 191,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Schlein Family Trust dated April 20, 1999 (56) |
100,000 | 100,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Shotfut Menayot Chul – (57) |
850,000 | 850,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
The Dixon Revocable Trust (58) |
100,000 | 100,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
The Hard Yards LLC (59) * |
50,000 | 50,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
The LGL Group, Inc. (60) * |
1,572,529 | 1,572,529 | — | — | 2,065,000 | 2,065,000 | — | — | ||||||||||||||||||||||||
The Phoenix Insurance Company Ltd (61) |
150,000 | 150,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Timothy J. Foufas (62) * |
60,000 | 60,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Woodline Partners LP (63) |
1,000,000 | 1,000,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Yleana Investments, LLC (64) |
1,250,000 | 1,250,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Total |
64,020,756 | — | 5,200,000 | — |
* | Reflects beneficial ownership as of September 14, 2021, the date on which the Sponsor distributed securities to its members. |
** | Less than one percent. |
(1) | Consists of 11,530,649 shares of common stock, of which 160,154 are Earnout Shares. |
(2) | Consists of (i) 4,438,674 RSU Shares and (ii) 37,772 Earnout Shares. |
(3) | Consists of (i) 788,925 shares of common stock of which 12,454 are Earnout Shares, (ii) 81,412 Option Shares, and (iii) 94,842 RSU Shares. |
(4) | Consists of (i) 1,043,684 RSU Shares and (ii) 8,535 Earnout Shares. |
(5) | Consists of (i) 773,401 RSU Shares and (ii) 5,375 Earnout Shares. |
(6) | Consists of (i) 659,426 RSU Shares and (ii) 3,763 Earnout Shares. |
(7) | Consists of 247,672 shares of common stock, of which 3,440 are Earnout Shares. |
(8) | Consists of 15,000 Founder Shares. |
(9) | Consists of (i) 249,277 shares of common stock of which 5,045 are Earnout Shares and (ii) 113,974 RSU Shares. |
(10) | Consists of 25,000 Founder Shares. |
(11) | Consists of (i) 249,277 shares of common stock of which 5,045 are Earnout Shares and (ii) 113,974 RSU Shares. |
(12) | Consists of (i) 249,277 shares of common stock of which 5,045 are Earnout Shares and (ii) 113,974 RSU Shares. |
(13) | Consists of (i) 113,974 RSU Shares and (ii) Earnout Shares. |
(14) | Shares registered hereby consist of 250,000 PIPE Shares held by 143 Avenue B Associates, LLC, a Connecticut limited liability company. 143 Avenue B Associates, LLC is wholly owned by the Raymond T. Dalio Revocable Trust, of which Raymond Dalio is the sole trustee. |
(15) | Consists of (i) 3,800 Founder Shares and (ii) 6,100 Private Warrant Shares. |
(16) | Consists of (i) 2,000 Founder Shares and (ii) 200 Private Warrant Shares. |
(17) | Consists of 250,300 PIPE Shares. Parvinder Thiara owns Athanor International Fund GP, LP, the general partner of Athanor International Master Fund, LP (“Athanor International”) and he may be deemed to beneficially own these securities. The address of Athanor International is c/o Athanor Capital, LP, 888 Seventh Avenue, 21 st Floor, New York, NY 10019. |
(18) | Consists of 749,700 PIPE Shares. Parvinder Thiara owns Athanor Capital Partners, LP, the general partner of Athanor Master Fund, LP (“Athanor Master Fund”) and he may be deemed to beneficially own these securities. The address of Athanor Master Fund is c/o Athanor Capital, LP, 888 Seventh Avenue, 21 st Floor, New York, NY 10019. |
(19) | Shares registered hereby consists of 250,000 PIPE Shares held by Bridgewater Associates, LP (“BALP”), a Delaware limited partnership. Raymond Dalio has voting control of Bridgewater Associates Holdings, Inc., a Delaware corporation, which is the ultimate parent company of BALP. Mr. Dalio therefore has voting and/or investment control over the PIPE shares held by BALP. Mr. Dalio disclaims beneficial ownership of the securities reported herein for purposes of Section 16 of the Securities and Exchange Act of 1934, as amended, except as to such extent of such reporting person’s pecuniary interest in the securities. |
(20) | Consists of 6,794,861 shares of common stock of which 94,377 are Earnout Shares. Andre Pienaar (a director of the company), William Kilmer and James Coats are the directors of C5 Investors General Partner Limited, which acts on behalf of C5 Investors LP, the sole manager of C5 Partners LLC. C5 Capital Limited is the investment manager of C5 Investors LP and exercises voting, investment and dispositive rights with respect to the shares of stock held by C5 Investors LLC. Andre Pienaar is the chief executive officer and a director of C5 Capital Limited together with William Kilmer and Linda Zecher. The address of the entities and individuals affiliated with C5 Capital Limited is 7 Vigo Street, London, W1S 3HF, UK. |
(21) | Consists of (i) 4,800 Founder Shares and (ii) 7,700 Private Warrant Shares. |
(22) | Consists of (i) 7,000 Founder Shares and (ii) 11,000 Private Warrant Shares. |
(23) | Consists of (i) 3,130,000 PIPE Shares held by SMALLCAP World Fund, Inc. (“SCWF”) and (ii) 754,000 PIPE Shares of common stock held by American Funds Insurance Series – Global Small Capitalization Fund (“VISC” and, together with SCWF, the “CRMC Stockholders”). Capital Research and Management Company (“CRMC”) is the investment adviser for each CRMC Stockholder. For purposes of the reporting requirements of the Exchange Act, CRMC and Capital Research Global Investors (“CRGI”) may be deemed to be the beneficial owner of the shares of common stock held by each CRMC Stockholder; however, each of CRMC and CRGI expressly disclaims that it is, in fact, the beneficial owner of such securities. Brady L. Enright, Julian N. Abdey, Jonathan Knowles, Gregory W. Wendt, Peter Eliot, Bradford F. Freer, Leo Hee, Roz Hongsaranagon, Harold H. La, Dimitrije Mitrinovic, Aidan O’Connell, Samir Parekh, Andraz Razen, Renaud H. Samyn, Michael Beckwith, and Arun Swaminathan, as portfolio managers, have voting and investment powers over the shares held by SCWF. Renaud H. Samyn, Michael Beckwith, Bradford F. Freer, Harold H. La, Aidan O’Connell, and Gregory W. Wendt, as portfolio managers, have voting and investment powers over the shares held by VISC. The address for each of the CRMC Stockholders is c/o Capital Research and Management Company, 333 S. Hope St., 50th Floor, Los Angeles, California 90071. Each of the CRMC Stockholders acquired the securities being registered hereby in the ordinary course of its business. |
(24) | Donald R. Dixon and Alberto Yepez are the managing members of ForgePoint Cybersecurity GP-1, LLC, which is the general partner of this ForgePoint fund and exercise shared voting, investment and dispositive rights with respect to the shares of stock held by this ForgePoint fund. The address for all entities and individuals affiliated with this ForgePoint fund is 400 S El Camino Road, Suite 300, San Mateo, CA 94402. |
(25) | Consists of 52,869 shares of common stock of which 734 shares are Earnout Shares. |
(26) | Consists of 2,278,138 shares of common stock of which 31,642 are Earnout Shares. |
(27) | Consists of 758,760 shares of common stock of which 10,539 are Earnout Shares. |
(28) | Consists of 1,993,158 shares of common stock of which 27,684 are Earnout Shares. |
(29) | Consists of 270,293 shares of common stock of which 3,754 are Earnout Shares. |
(30) | Consists of (i) 4,546,839 shares of common stock of which 63,153 are Earnout Shares and (ii) 200,000 PIPE Shares. |
(31) | Consists of (i) 370,000 PIPE Shares held by Brookdale Global Opportunity Fund (“BGO”) and (ii) 630,000 PIPE Shares held by Brookdale International Partners, L.P. (“BIP”). Andrew Weiss is the Manager of WAM GP LLC, which is the general partner of Weiss Asset Management LP, the investment manager of BGO and BIP. WAM GP LLC is also the Manager of BIP GP LLC, the general partner of BIP. Mr. Weiss has voting and dispositive power with respect to the securities held by BGO and BIP. Mr. Weiss, WAM GP LLC, Weiss Asset Management LP and BIP GP LLC each disclaim beneficial ownership of the shares held by BGO and BIP, except to the extent of their respective pecuniary interests therein. The business address of the foregoing entities is c/o Weiss Asset Management, 222 Berkeley Street, 16th Floor, Boston, MA 02116. |
(32) | Consists of (i) 14,000 Founder Shares, (ii) 566 PIPE Shares, and (iii) 2,500 Private Warrant Shares. |
(33) | Consists of (i) 216,000 Founder Shares and (ii) 345,000 Private Warrant Shares. Mario Gabelli controls GGCP, Inc. and he may be deemed to beneficially own these securities. |
(34) | Shares of common stock beneficially owned prior to the offering consists of (i) 36,000 Founder Shares and (ii) 5,660 PIPE Shares and (iii) 100 shares of common stock; number of shares of common stock registered hereby consists of (i) 36,000 Founder Shares and (ii) 5,660 PIPE Shares; number of shares of common stock beneficially owned after the offering consists of 100 shares of common stock and assumes such common stock is not sold; warrants beneficially owned prior to and after the offering consists of 50 Public Warrants and assumes such Public Warrants are not sold. |
(35) | Shares of common stock beneficially owned prior to the offering consists of 28,000 Founder Shares and 250 shares of common stock: number of shares of common stock registered hereby consists of 28,000 Founder Shares; number of shares of common stock beneficially owned after the offering consists of 250 shares of common stock and assumes such common stock is not sold; warrants beneficially owned prior to and after the offering consists of 125 Public Warrants and assumes such Public Warrants are not sold. |
(36) | Consists of (i) 16,000 Founder Shares and (ii) 26,000 Private Warrant Shares. |
(37) | Consists of (i) 48,000 Founder Shares, (ii) 11,320 PIPE Shares, and (iii) 75,000 Private Warrant Shares. |
(38) | Shares of common stock beneficially owned prior to the offering consists of 4,000 Founder Shares and 250 shares of common stock: number of shares of common stock registered hereby consists of 4,000 Founder Shares; number of shares of common stock beneficially owned after the offering consists of 250 shares of common stock and assumes such common stock is not sold; warrants beneficially owned prior to and after the offering consists of 125 Public Warrants and assumes such Public Warrants are not sold. |
(39) | Consists of 500,000 PIPE Shares. Kepos Capital LP is the investment manager of KEPOS ALPHA MASTER FUND L.P. (“KAMF”) and Kepos Partners LLC is the General Partner of KAMF and each may be deemed to have voting and dispositive power with respect to the shares. The general partner of Kepos Capital LP is Kepos Capital GP LLC (the “Kepos GP”) and the Managing Member of Kepos Partners LLC is Kepos Partners MM LLC (“Kepos MM”). Mark Carhart controls Kepos GP and Kepos MM and, accordingly, may be deemed to have voting and dispositive power with respect to the shares held by KAMF. Mr. Carhart disclaims beneficial ownership of the shares held by KAMF. The address of KAMF is c/o Kepos Capital LP, 11 Times Square, New York, NY 10036-6600. |
(40) | Consists of (i) 143,891 shares of common stock, of which 1,999 are Earnout Shares and (ii) 4,960 PIPE Shares. KPCB Digital Growth Founders Fund II, LLC’s (“DGF II Founders”) shares are held for convenience in the name of KPCB Holdings, Inc., as nominee, for the accounts of such individuals and entities. The managing member of DGF II Founders is DGF II Associates. Theodore E. Schlein (a director of the company), together with L. John Doerr and Mary Meeker, the managing members of DGF II Associates, exercise shared voting and dispositive control over the shares held by DGF II Founders. The principal business address for all entities and individuals affiliated with DGF II Founders is c/o Kleiner Perkins Caufield & Byers, LLC, 2750 Sand Hill Road, Menlo Park, CA 94025. |
(41) | Consists of (i) 5,658,110 shares of common stock, of which 78,588 are Earnout Shares and (ii) 195,040 PIPE Shares. KPCB Digital Growth Fund II, LLC’s (“KPCB DGF II”) shares are held for convenience in the name of KPCB Holdings, Inc., as nominee, for the accounts of such individuals and entities. The managing member of KPCB DGF II is DGF II Associates. Theodore E. Schlein (a director of the company), together with L. John Doerr and Mary Meeker, the managing members of DGF II Associates, exercise shared voting and dispositive control over the shares held by KPCB DGF II. The principal business address for all entities and individuals affiliated with KPCB DGF II is c/o Kleiner Perkins Caufield & Byers, LLC, 2750 Sand Hill Road, Menlo Park, CA 94025. |
(42) | Consists of 65,000 Private Warrant Shares. |
(43) | Consists of (i) 372,175 Founder Shares, (ii) 14,150 PIPE Shares, and (iii) 2,147,500 Private Warrant Shares. LGL Systems Acquisition Holding Company, LLC. LGL Systems Nevada Management Partners LLC is the managing member of LGL Systems Acquisition Holding Company, LLC (the “Sponsor”). Marc J. Gabelli, Patrick B. Huvane Jr., George Anthony Bancroft II, Timothy J. Foufas, and Jeffrey M. Illustrato (appointed by Mr. Gabelli) are the managers of LGL Systems Nevada Management Partners LLC and approve actions of the Sponsor. Each manager has one vote, and the approval of three of the five managers is required for approval of an action of the Sponsor. Under the so-called “rule of three”, if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based on the foregoing, no individual manager exercises voting or dispositive control over any of the securities held by the Sponsor, even those in which he has a pecuniary interest. Accordingly, none of them are deemed to have or share beneficial ownership of the securities held by the Sponsor. The address for all entities and individuals affiliated with the Sponsor is 165 W. Liberty St., Suite 220, Reno, NV 89501. |
(44) | Consists of (i) 28,000 Founder Shares and (ii) 5,000 Private Warrant Shares. |
(45) | Consists of (i) 200,000 Founder Shares, (ii) 84,900 PIPE Shares, and (iii) 10,000 Private Warrant Shares. |
(46) | Consists of 1,001,540 PIPE Shares. Marshall Wace, LLP, a limited liability partnership formed in England (the “Investment Manager”), is the investment manager of Marshall Wace Investment Strategies – EUREKA FUND (“Eureka Fund”). Eureka Fund is a sub-trust of Marshall Wace Investment Strategies, an umbrella unit trust established in Ireland with limited liability between sub-trusts. The Investment Manager has delegated certain authority for U.S. operations and trading to Marshall Wace North America L.P. Each of the foregoing other than the Investment Manager disclaims beneficial ownership of the securities listed above. The address of Eureka Fund is 32 Molesworth Street, Dublin 2, Ireland. |
(47) | Consists of 105,613 PIPE Shares. Marshall Wace, LLP, a limited liability partnership formed in England (the “Investment Manager”), is the investment manager of Marshall Wace Investment Strategies – MARKET NEUTRAL TOPS FUND (“MNT Fund”). MNT Fund is a sub-trust of Marshall Wace Investment Strategies, an umbrella unit trust established in Ireland with limited liability between sub-trusts. The Investment Manager has delegated certain authority for U.S. operations and trading to Marshall Wace North America L.P. Each of the foregoing other than the Investment Manager disclaims beneficial ownership of the securities listed above. The address of MNT Fund is 32 Molesworth Street, Dublin 2, Ireland. |
(48) | Consists of 29,304 PIPE Shares. Marshall Wace, LLP, a limited liability partnership formed in England (the “Investment Manager”), is the investment manager of Marshall Wace Investment Strategies – SYSTEMATIC ALPHA PLUS FUND (“SAP Fund”). SAP Fund is a sub-trust of Marshall Wace Investment Strategies, an umbrella unit trust established in Ireland with limited liability between sub-trusts. The Investment Manager has delegated certain authority for U.S. operations and trading to Marshall Wace North America L.P. Each of the foregoing other than the Investment Manager disclaims beneficial ownership of the securities listed above. The address of SAP Fund is 32 Molesworth Street, Dublin 2, Ireland. |
(49) | Consists of 63,543 PIPE Shares. Marshall Wace, LLP, a limited liability partnership formed in England (the “Investment Manager”), is the investment manager of Marshall Wace Investment Strategies – TOPS FUND (“TOPS Fund”). TOPS Fund is a sub-trust of Marshall Wace Investment Strategies, an umbrella unit trust established in Ireland with limited liability between sub-trusts. The Investment Manager has delegated certain authority for U.S. operations and trading to Marshall Wace North America L.P. Each of the foregoing other than the Investment Manager disclaims beneficial ownership of the securities listed above. The address of TOPS Fund is 32 Molesworth Street, Dublin 2, Ireland. |
(50) | Consists of 2,830 PIPE Shares. |
(51) | Consists of 30,000 Founder Shares. |
(52) | Consists of (i) 200,000 Founder Shares, (ii) 169,800 PIPE Shares, and (iii) 400,000 Private Warrant Shares. Nathan G. Miller controls NGM Asset Management LLC and he may be deemed to beneficially own these securities. As of September 14, 2021, Mr. Miller also individually beneficially owned 44 Public Warrants and had dispositive power over 158,638 Public Warrants held by a fund for which he serves as portfolio manager. |
(53) | Consists of (i) 48,000 Founder Shares, (ii) 1,415 PIPE Shares, and (iii) 25,000 Private Warrant Shares. |
(54) | Consists of (i) 5,600 Founder Shares, (ii) 2,830 PIPE Shares, and (iii) 9,000 Private Warrant Shares. |
(55) | Consists of 191,000 Founder Shares. Mr. LaPenta Sr. is the father of Mr. LaPenta Jr., who serves on our board of directors. |
(56) | Consists of 100,000 PIPE Shares. Theodore E. Schlein, who serves on our board of directors, is a trustee of the Schlein Family Trust dated April 20, 1999. |
(57) | Consists of 850,000 PIPE Shares. Haggai Schreiber, Deputy Chief Executive Officer and Chief Investment Officer, Gilad Shamir, Chief Investment Officer and Dan Kerner, Head of Nostro, may be deemed to have voting and dispositive power with respect to the securities held by Shotfut Menayot Chul – (“Shotfut”). The address of Shotfut is Derech Hashalom 53, Giv’atayim, Israel. |
(58) | Consists of 100,000 PIPE Shares. Donald R. Dixon, who serves on our board of directors, and his spouse, are co-trustees of The Dixon Revocable Trust. |
(59) | Consists of 50,000 Founder Shares. Jason David Lamb controls The Hard Yards LLC and he may be deemed to beneficially own these securities. |
(60) | Consists of (i) 1,300,000 Founder Shares, (ii) 272,529 PIPE Shares, and (iii) 2,065,000 Private Warrants. The address of the LGL Group, Inc. is 2525 Shader Rd., Orlando, Florida. |
(61) | Consists of 150,000 PIPE Shares. Haggai Schreiber, Deputy Chief Executive Officer and Chief Investment Officer, Gilad Shamir, Chief Investment Officer and Dan Kerner, Head of Nostro, may be deemed to have voting and dispositive power with respect to the securities held by The Phoenix Insurance Company Ltd—(“Phoenix”). The address of Phoenix is Derech Hashalom 53, Giv’atayim, Israel. |
(62) | Consists of 60,000 Founder Shares. |
(63) | Consists of 1,000,000 PIPE Shares. Woodline Partners LP serves as the investment manager of Woodline Master Fund LP and may be deemed to be the beneficial owner of the shares reported on this line. Woodline Master Fund LP disclaims any beneficial ownership of these shares. The address of Woodline Master Fund LP is 4 Embarcadero Center, Suite 3450, San Francisco, CA 94111. |
(64) | Consists of 1,250,000 PIPE Shares. Gabriel Hammond is the managing manager of Yleana Investments, LLC and may be deemed to beneficially own these securities. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in the United States or under the laws of the United States or of any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust if (a) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions or (b) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person. |
• | the gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder); |
• | the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or |
• | we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. Holder held our common stock or Warrants and, in the case where shares of our common stock are regularly traded on an established securities market, (i) the non-U.S. Holder has owned, actually or constructively, more than 5% of our common stock at any time within the relevant period or (ii) provided that our Warrants are regularly traded on an established securities market, the non-U.S. Holder has owned, actually or constructively, more than 5% of our Warrants at any time within the within the relevant period. It is unclear how a non-U.S. Holder’s ownership of Warrants will affect the determination of whether the non-U.S. Holder owns more than 5% of our common stock. In addition, special rules may apply in the case of a disposition of warrants if our common stock is considered to be regularly traded, but our Warrants are not considered to be publicly traded. There can be no assurance that our common stock or Warrants will or will not be treated as regularly traded on an established securities market for this purpose. |
• | at any time after the warrants become exercisable; |
• | upon not less than 30 days’ prior written notice of redemption to each warrant holder; |
• | if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the warrants become exercisable and ending on the third trading day prior to the notice of redemption to warrant holders; and |
• | if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants. |
• | before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
• | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, those shares owned (1) by persons who are directors and also officers and (2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
• | on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder. |
• | any merger or consolidation involving the corporation and the interested stockholder; |
• | any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
• | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
• | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or |
• | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits by or through the corporation. |
• | permit our board of directors to issue up to 100,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate, including the right to approve an acquisition or other change of control; |
• | provide that the authorized number of directors may be changed only by resolution of our board of directors; |
• | provide that, subject to the rights of any series of preferred stock to elect directors, directors may only be removed in the manner specified in Section 141(k) of the DGCL; |
• | provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by the sole remaining director; |
• | require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent or electronic transmission; |
• | provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice; |
• | provide that special meetings of our stockholders may be called by (i) the chairperson of the board of directors, (ii) the chief executive officer or (iii) a majority vote of the board of directors; and |
• | not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose. |
• | 1% of the total number of shares of our common stock then outstanding; or |
• | the average weekly reported trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | issuer of the securities that was formerly a shell company ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10-type information with the SEC reflecting its status as an entity that is not a shell company. |
• | purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus; |
• | ordinary brokerage transactions and transactions in which the broker solicits purchasers; |
• | block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
• | an over-the-counter |
• | through trading plans entered into by a selling securityholder pursuant to Rule 10b5-1 under the Exchange Act, that are in place at the time of an offering pursuant to this prospectus and any applicable prospectus supplement hereto that provide for periodic sales of their securities on the basis of parameters described in such trading plans; |
• | short sales; |
• | distribution to employees, members, limited partners or stockholders of the selling securityholders; |
• | through the writing or settlement of options or other hedging transaction, whether through an options exchange or otherwise; |
• | by pledge to secure debts and other obligations; |
• | delayed delivery arrangements; |
• | to or through underwriters or broker-dealers; |
• | in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales agents; |
• | in privately negotiated transactions; |
• | in options transactions; |
• | through a combination of any of the above methods of sale; or |
• | any other method permitted pursuant to applicable law. |
Report of Independent Registered Public Accounting Firm |
F-1 | |||
F-2 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-9 |
As of January 31, |
||||||||
2022 |
2021 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable |
||||||||
Unbilled receivables |
||||||||
Related party receivables and loan receivables |
||||||||
Account and loan receivables |
||||||||
Inventory |
||||||||
Deferred costs |
||||||||
Prepaid warranty |
||||||||
Prepaid expenses |
||||||||
Other current assets |
||||||||
Total current assets |
||||||||
Deferred costs |
||||||||
Property and equipment, net |
||||||||
Prepaid warranty |
||||||||
Deposits and other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities and stockholders’ equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued expenses |
||||||||
Deferred revenue |
||||||||
Deferred rent |
||||||||
Short-term PPP loan |
||||||||
Income tax payable |
||||||||
Other current liabilities |
||||||||
Total current liabilities |
||||||||
Deferred rent |
||||||||
Deferred revenue |
||||||||
Warrants |
||||||||
Long-term PPP loan |
||||||||
Other long-term liabilities |
||||||||
Total liabilities |
As of January 31, |
||||||||
2022 |
2021 |
|||||||
Stockholders’ equity |
||||||||
Preferred stock, $ |
$ | $ | ||||||
Class A common stock; $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive (loss) income |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Subscription notes receivable |
( |
) | ||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Product, subscription and support revenue |
$ | $ | ||||||
Professional services revenue |
||||||||
Total revenue |
||||||||
Cost of product, subscription and support revenue |
||||||||
Cost of professional services revenue |
||||||||
Total cost of revenue |
||||||||
Gross profit |
||||||||
Operating expenses |
||||||||
Research and development |
||||||||
Sales and marketing |
||||||||
General and administrative |
||||||||
Total operating expenses |
||||||||
Operating loss |
( |
) | ( |
) | ||||
Other income |
||||||||
Other expense |
( |
) | ( |
) | ||||
Change in fair value of warrants liabilities |
( |
) | ||||||
Loss before income taxes |
( |
) | ( |
) | ||||
Provision for income taxes |
( |
) | ( |
) | ||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Basic and diluted net loss per common share |
$ | ( |
) | $ | ( |
) | ||
Weighted average shares outstanding, basic and diluted |
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Change in net unrealized (losses) gains on available for sale investments, net of tax |
( |
) | ||||||
Foreign currency translations adjustment, net of tax |
||||||||
Total comprehensive loss |
$ | ( |
) | $ | ( |
) | ||
Series A Preferred Stock |
Series B Preferred Stock |
Class A Common Stock |
Class B Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Subscription Notes Receivable |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||
Balance at January 31, 2020, as previously reported |
$ | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||||
Retroactive application of recapitalization (1) |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||||
Adjusted Balance at January 31, 2020 |
— | $ | — | — | $ | — | $ | — | $ | — | $ | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Interest earned on subscription notes receivable |
— | — | — | — | — | — | — | — | — | — | ( |
) | — | |||||||||||||||||||||||||||||||||||||||
Payments on subscription notes receivable |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | — | — | ( |
) | — | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||
Unrealized gain on investments |
— | — | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax of $ |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at January 31, 2021 |
— | $ | — | — | $ | — | $ | — | $ | — | $ | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Merger recapitalization (Note 3) |
— | — | — | — | — | — | ( |
) | — | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||||
PIPE Shares |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to Public Warrants |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to Private Warrants |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of earnout |
— | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Interest earned on subscription notes receivable |
— | — | — | — | — | — | — | — | — | — | ( |
) | — | |||||||||||||||||||||||||||||||||||||||
Settlement of related party loan receivable for common shares |
— | — | — | — | ( |
) | — | — | — | ( |
) | — | — | — | ( |
) | ||||||||||||||||||||||||||||||||||||
Payment of note receivable and settlement of note receivables for common shares |
— | — | — | — | ( |
) | — | — | — | ( |
) | — | — | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment, net of tax of $ |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at January 31, 2022 |
— | $ | — | — | $ | — | $ | — | $ | — | $ | $ | ( |
) | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||
(1) | Prior to the Merger, as discussed in Note 3, Legacy IronNet Series A and Series B preferred stock were converted to Legacy IronNet Class A common stock and Legacy IronNet Class B common stock was converted to Legacy IronNet Class A common stock. All Legacy IronNet Class A common stock was then converted to Legacy LGL Class A common stock at the Exchange Ratio of approximately |
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
— | |||||||
Depreciation and amortization |
||||||||
Loss (Gain) on sale of fixed assets |
( |
) | ||||||
Bad debt expense |
||||||||
Employee stock based compensation |
( |
) | ||||||
Non-cash interest expense |
||||||||
Change in fair value of warrants liabilities |
||||||||
Non-cash interest on amounts due from stockholder |
( |
) | ||||||
Changes in operating assets and liabilities: |
— | |||||||
Accounts receivable |
( |
) | ( |
) | ||||
Deferred costs |
( |
) | ( |
) | ||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ( |
) | ||||
Other current assets |
( |
) | ( |
) | ||||
Deposits and other assets |
( |
) | ||||||
Prepaid warranty |
( |
) | ||||||
Accounts payable |
||||||||
Accrued expenses |
||||||||
Income tax payable |
||||||||
Other short-term liabilities |
( |
) | ||||||
Deferred rent |
( |
) | ( |
) | ||||
Deferred revenue |
( |
) | ||||||
Warrants |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
— | |||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Proceeds from the sale of fixed assets |
||||||||
Proceeds from the maturity of investments |
||||||||
Net cash (used in) provided by investing activities |
( |
) | ||||||
Cash flows from financing activities |
||||||||
Proceeds from issuance of common stock |
||||||||
Proceeds from borrowing SVB Bridge loan |
||||||||
Proceed from borrowing PPP loan |
||||||||
Payment of loan - SVB Bridge |
( |
) | ||||||
Payment of PPP loan |
( |
) | ||||||
Merger recapitalization |
||||||||
Proceeds from PIPE shares |
||||||||
Payment of transaction costs |
( |
) | ||||||
Proceeds from stock subscriptions |
||||||||
Net cash provided by financing activities |
||||||||
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Effect of exchange rate changes on cash and cash equivalents |
$ | $ | ||||||
Net change in cash and cash equivalents |
||||||||
Cash and cash equivalents |
— | |||||||
Beginning of the period |
$ | $ | ||||||
End of the period |
||||||||
Supplemental disclosures of non-cash investing and financing activities |
||||||||
Interest earned on subscription notes receivable |
$ | $ | ||||||
Unpaid purchases of property and equipment |
( |
) | ||||||
Non-cash settlement of related party loan receivable for common shares |
( |
) | ||||||
Initial classification of warrant liabilities |
||||||||
Cashless exercise of warrants classified as liabilities |
$ | ( |
) | $ |
1. |
Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies |
Computer and other equipment | ||
Leasehold improvements | ||
Furniture and fixtures | ||
Software |
• | Identification of the contract, or contracts, with a customer |
party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and the parties are committed to perform, and (iii) the Company determines that collection of substantially all consideration to which it will be entitled in exchange for goods or services that will be transferred is probable based on the customer’s intent and ability to pay the promised consideration. |
• | Identification of the performance obligations in the contract |
• | Determination of the transaction price |
• | Allocation of the transaction price to the performance obligations in the contract |
• | Recognition of revenue when, or as, we satisfy performance obligations |
2. |
Revenue |
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Customer A |
* | |||||||
Customer B |
* | |||||||
Customer C |
* | |||||||
% | % | |||||||
Balance at February 1, 2020 |
$ | |||
Cost of revenue recognized |
( |
) | ||
Costs deferred |
||||
Balance at January 31, 2021 |
||||
Balance at February 1, 2021 |
||||
Cost of revenue recognized |
( |
) | ||
Costs deferred |
||||
Foreign exchange |
( |
) | ||
Balance at January 31, 2022 |
$ | |||
Balance at February 1, 2020 |
$ | |||
Revenue recognized |
( |
) | ||
Revenue deferred |
||||
Foreign exchange |
||||
Balance at January 31, 2021 |
||||
Balance at February 1, 2021 |
||||
Revenue recognized |
( |
) | ||
Revenue deferred |
||||
Foreign exchange |
( |
) | ||
Balance at January 31, 2022 |
$ | |||
Years Ending January 31, |
||||
$ | ||||
$ | ||||
3. |
Reverse Recapitalization |
Recapitalization and Associated Transactions |
||||
Cash (Trust) |
$ | |||
Redemptions |
( |
) | ||
Less: fees to underwriters and advisors |
( |
) | ||
Net cash received from Merger recapitalization |
||||
Issuance of PIPE Shares |
||||
Less: PIPE fees to underwriters and advisors |
( |
) | ||
Net cash received from PIPE Shares and Merger recapitalization |
||||
Less: debt settlement |
( |
) | ||
Net proceeds from Merger recapitalization, PIPE Shares and debt settlement |
$ | |||
Shares by Type |
Number of Shares |
|||
IronNet Class A Common Stock outstanding previous to the Merger |
||||
Issuance of common stock (exercise of ISOs and warrant) |
||||
Number of Shares issued at the date of the business combination (Recapitalization) |
||||
LGL Class A Common Stock outstanding previous to the Merger |
||||
Less: Redemption of LGL Class A previous to the Merger |
( |
) | ||
Total Class A Shares issued to former LGL shareholders |
||||
LGL Founders Shares |
||||
PIPE Shares |
||||
Number of Share issued at the Merger |
||||
Number of Shares issued (redeemed) following the consummation of the Merger |
||||
Earnout Shares |
||||
Private Warrants (Exercised) |
||||
Public Warrants (Exercised) |
||||
Exercise of ISOs |
||||
Payments on subscription notes receivable |
( |
) | ||
Shares repurchase related to loan pay-off |
( |
) | ||
Total Shares of Common Stock as of January 31, 2022 |
||||
4. |
Prepaid Expenses |
5. |
Property and Equipment |
2022 |
2021 |
|||||||
Computer and other equipment |
$ | $ | ||||||
Leasehold improvements |
||||||||
Furniture and fixtures |
||||||||
Software |
||||||||
Less: Accumulated depreciation and amortization |
( |
) | ( |
) | ||||
$ | $ | |||||||
6. |
Stock Incentive Plans |
Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (Years) |
Intrinsic Value of outstanding options |
|||||||||||||
(in thousands) | ||||||||||||||||
Outstanding at February 1, 2020 |
|
$ | |
$ | |
|||||||||||
Granted |
— | — | — | — | ||||||||||||
Exercised |
( |
) | $ | $ | ||||||||||||
Forfeited or expired |
( |
) | $ | — | ||||||||||||
Outstanding at January 31, 2021 |
$ | $ | ||||||||||||||
Exercisable at January 31, 2021 |
$ | $ | ||||||||||||||
Outstanding at February 1, 2021 |
$ | $ | ||||||||||||||
Granted |
— | — | — | — | ||||||||||||
Exercised |
( |
) | $ | $ | ||||||||||||
Forfeited or expired |
( |
) | $ | — | ||||||||||||
Outstanding at January 31, 2022 |
$ | $ | ||||||||||||||
Exercisable at January 31, 2022 |
$ | $ | ||||||||||||||
Number of Shares |
Weighted Average Grant Date Fair Value |
|||||||
(in thousands) | ||||||||
Non-vested at February 1, 2020 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited or expired |
( |
) | ||||||
Non-vested at January 31, 2021 |
$ | |||||||
Non-vested at February 1, 2021 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited or expired |
( |
) | ||||||
Non-vested at January 31, 2022 |
$ | |||||||
7. |
Stockholders’ Equity |
• | in whole and not in part; |
• | at a price of $ |
• | upon not less than 30 days’ prior written notice of redemption; and |
• | if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $ 20 trading days within a 30 -trading |
8. |
Fair Value Measurements |
January 31, 2022 |
January 31, 2021 |
|||||||||||||||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||
Cash equivalents |
$ | $ | — | $ | — | $ | $ | $ | — | $ | — | $ | ||||||||||||||||||||
Private Warrants |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Total assets |
$ | $ | $ | — | $ | $ | $ | — | $ | — | $ | |||||||||||||||||||||
9. |
Income Taxes |
2022 |
2021 |
|||||||
Current income taxes |
||||||||
Federal |
$ | $ | ||||||
State |
||||||||
Foreign |
||||||||
Deferred income taxes |
||||||||
Total income tax expense |
$ | $ | ||||||
2022 |
2021 |
|||||||||||||||
Income tax expense computed at U.S. federal statutory income tax rate |
$ | ( |
) | % | $ | ( |
) | % | ||||||||
State income taxes |
( |
) | % | ( |
) | % | ||||||||||
Permanent items |
- |
% | - |
% | ||||||||||||
Valuation allowance |
- |
% | - |
% | ||||||||||||
Other |
( |
) | % | |||||||||||||
Income tax expense computed at U.S. federal statutory income tax rate |
$ |
- |
% |
$ |
- |
% |
2022 |
2021 |
|||||||
Deferred tax assets |
||||||||
Net operating loss carryforward |
$ | $ | ||||||
Accruals and other |
||||||||
Intangibles |
||||||||
Depreciation and amortization |
||||||||
RSU |
— | |||||||
Others |
||||||||
Deferred revenue |
||||||||
Gross deferred tax assets |
||||||||
Valuation allowance |
( |
) | ( |
) | ||||
Net deferred tax asset |
||||||||
Deferred tax liabilities |
||||||||
Deferred costs |
( |
) | ( |
) | ||||
Net deferred tax assets (liabilities) |
$ | $ | ||||||
Income Tax Valuation Allowance |
Balance at Beginning of Period |
Charged to Costs & Expenses |
Federal/State NOL |
Balance at End of Period |
||||||||||||
Year Ended |
||||||||||||||||
January 31, 2022 |
||||||||||||||||
January 31, 2021 |
( |
) |
10. |
Accrued Expenses |
11. |
COVID-19 – CARES Act Provision |
12. |
Commitments and Contingencies |
Years Ending January 31, |
||||
2023 |
$ | |||
2024 |
||||
2025 |
||||
2026 |
||||
2027 |
||||
$ | ||||
13. |
Earnings (Loss) per Share |
Year ended |
||||||||
2022 |
2021 |
|||||||
Numerator: Net loss |
$ | ( |
) | $ | ( |
) | ||
Denominator: Basic and Diluted Weighted-average shares in computing net loss per share attributable to common stockholders |
||||||||
Net loss attributable to common stockholders - basic and diluted |
$ | ( |
) | $ | ( |
) |
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
Shares of common stock issuable from stock options |
||||||||
Total RSUs unvested pending settlement |
||||||||
Private Warrants |
||||||||
Public Warrants |
||||||||
Potential common shares excluded from diluted net loss per share |
14. |
Related Party Transactions |
15. |
Retirement Plans |
16. |
Segment and Geographic Information |
Year Ended January 31, |
||||||||
2022 |
2021 |
|||||||
($ in thousands) |
||||||||
United States |
$ | $ | ||||||
International |
||||||||
Total |
$ | $ | ||||||
17. |
Subsequent Events |
Amount |
||||
SEC registration fee |
$ | 242,815 | ||
Accountants’ fees and expenses |
150,000 | |||
Legal fees and expenses |
200,000 | |||
Printing fees |
150,000 | |||
Miscellaneous |
7,185 | |||
|
|
|||
Total expenses |
$ | 750,000 | ||
|
|
(1) | On April 30, 2019, the Sponsor purchased 3,593,750 shares of Class B common stock for an aggregate purchase price of $25,000, or approximately $0.007 per share, in connection with LGL’s organization. In November, 2019, LGL effected a stock dividend of 0.2 shares for each share of LGL Class B common stock outstanding, resulting in the Sponsor holding an aggregate of 4,312,500 shares of LGL Class B common stock, 1,078,125 shares of which were forfeited upon closing of the Business |
Combination. Upon the closing of the Business Combination, each share of LGL Class B common stock outstanding automatically converted into a share of LGL Class A common stock in accordance with LGL’s certificate of incorporation. |
(2) | In November, 2019, Sponsor purchased an aggregate of 5,200,000 warrants at a price of $1.00 per warrant generating gross proceeds of $5.2 million. Each warrant is exercisable for one share of our common stock at an exercise price of $11.50 per share. |
(3) | In August 2021, upon the closing of the Business Combination, we issued an aggregate of 12,500,000 shares of Class A Common Stock for an aggregate purchase price of $125.0 million to qualified institutional buyers and accredited investors, at a purchase price of $10.00 per share. |
(4) | Between January 2020 and December 2020, Legacy IronNet sold an aggregate of 932,945 shares of its Series B-2 convertible preferred stock at a purchase price of $72.90 per share for an aggregate amount of $68.0 million, on an as-converted to Legacy IronNet common stock basis. |
(5) | Since April 30, 2019, Legacy IronNet has granted to certain employees, directors and consultants of Legacy IronNet and its subsidiaries RSUs, net of forfeitures and cancellations, representing (i) 9,995,785 shares of Legacy IronNet common stock under the 2014 Plan and (ii) 1,600,000 shares of Legacy IronNet common stock outside of the 2014 Plan, for an aggregate of 11,595,785 shares of Legacy IronNet common stock. Upon the closing of the Business Combination, such RSUs were automatically and without any required action on the part of any holder or beneficiary thereof, assumed by us and converted into RSUs to purchase an aggregate of 9,439,955 shares of our common stock. |
Incorporated by Reference | ||||||||||
Exhibit Number |
Description |
Schedule/ Form |
File No. |
Exhibit |
Filing Date | |||||
2.1 | Agreement and Plan of Reorganization and Merger, dated March 15, 2021, by and among the registrant, LGL Systems Merger Sub Inc. and IronNet Cybersecurity, Inc. | S-4/A |
333-256129 |
2.1 | August 6, 2021 | |||||
2.2 | Amendment No. 1 to Agreement and Plan of Reorganization and Merger, dated August 6, 2021, by and among the registrant, LGL Systems Merger Sub Inc. and IronNet Cybersecurity, Inc. | S-4/A |
333-256129 |
2.2 | August 6, 2021 | |||||
3.1 | Amended and Restated Certificate of Incorporation of the registrant | 8-K |
001-39125 |
3.1 | September 1, 2021 |
Incorporated by Reference | ||||||||||
Exhibit Number |
Description |
Schedule/ Form |
File No. |
Exhibit |
Filing Date | |||||
10.15 | Registration Rights Agreement dated February 11, 2022, by and between Ironnet, Inc. and Tumim Stone Capital LLC | 8-K | 001-39125 | 4.1 | February 14, 2022 | |||||
21.1 | List of Subsidiaries | 10-K |
001-39125 |
21.1 | May 2, 2022 | |||||
23.1* | Consent of PricewaterhouseCoopers LLP | |||||||||
23.2 | Consent of Cooley LLP (included in Exhibit 5.1) | S-1 | 333-259731 | 5.1 | September 23, 2021 | |||||
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document). | |||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
104 | Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101 attachments) |
* | Filed herewith. |
+ | Indicates a management contract or compensatory plan, contract or arrangement. |
# | Previously filed. |
(a) | The undersigned registrant hereby undertakes as follows: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
IRONNET, INC. | ||
By: | /s/ James C. Gerber | |
Name: James C. Gerber | ||
Title: Chief Financial Officer |
Signature | Title | Date | ||
/s/ Keith B. Alexander GEN Keith B. Alexander (Ret.) |
Co-Chief Executive Officer, President and Chairman (Principal Executive Officer) |
May 16 , 2022 | ||
* William E. Welch |
Co-Chief Executive Officer and Director |
May 16 , 2022 | ||
/s/ James C. Gerber James C. Gerber |
Chief Financial Officer (Principal Financial and Accounting Officer) | May 16 , 2022 | ||
* Donald R. Dixon |
Director |
May 16 , 2022 | ||
* Mary E. Gallagher |
Director |
May 16 , 2022 | ||
* GEN John M. Keane (Ret.) |
Director |
May 16 , 2022 | ||
* Robert V. LaPenta Jr. |
Director |
May 16 , 2022 | ||
* VADM John M. McConnell (Ret.) |
Director |
May 16 , 2022 | ||
* André Pienaar |
Director |
May 16 , 2022 | ||
* Michael J. Rogers |
Director |
May 16 , 2022 | ||
* Theodore E. Schlein |
Director |
May 16 , 2022 |
* VADM Jan E. Tighe (Ret.) |
Director |
May 16 , 2022 |
*By: | /s/ James C. Gerber | |
James C. Gerber | ||
Attorney-in-Fact |