THE BUSINESS: Manufacturing PCs for harsh environments
CLOSED: December 1998
PRIMARY CAUSE OF DEATH: Overreliance on a risky initial public offering on the Internet

The harsh environment of a machine shop in Austin had been destroying PCs every couple of months until early 1998, when the computers were replaced with two airtight temperature-controlled models from Iron Computer Corp. "I opened one of them up the other day," says Jim Holmes, Iron Computer's former director of information systems, "and everything was fine."

Mission accomplished--thanks to an innovative computer design. Although Iron Computer was no less innovative in attacking its chronic financial woes--notably, by seeking capital in an initial public offering on the Internet--the Austin-based company ultimately proved to be less durable than its product.

The idea for the hard-as-nails computer came to company founder John Opincar in 1993, while he was running a software company. When he learned that computers were routinely crashing in hot restaurant kitchens, Opincar designed a rugged alternative and raised $50,000 from family and friends to start a company he dubbed Diehard Inc. But by late 1994, he was receiving letters from Sears, Roebuck and Co., maker of DieHard car batteries, alleging trademark infringement and threatening a court injunction. Opincar coined the new name Iron Computer. But the legal spat halted production for almost three months and so strained the company's financial resources that by mid-1995 Opincar had to suspend operations before he had sold even 100 computers.

Regrouping, he recruited some Austin business leaders for his board of directors. In December 1996 he signed on inventor Ted Windecker, who had developed stealth-airplane plastics, as vice-president of technology. Windecker redesigned Iron Computer's PC, which unlike its competitors' is made entirely from off-the-shelf components and costs less than $4,000.

To rev up production, however, the company sorely needed cash. Opincar came up with a bold idea to raise money and the company's profile: the first-ever fully registered stock offering on the Web. (Other companies had already held unregistered Internet offerings.) Iron Computer "very much wanted to be the Austin tech company that had done the first registered IPO," says its former attorney, Gary Kissiah.

But the IPO route Opincar chose was slow and costly. It took several tries to secure the necessary approvals from the Securities and Exchange Commission for a fully registered offering. Then filing fees and other costs chewed through the $65,000 Iron Computer had raised from a few private investors in early 1997, according to Windecker.

Iron Computer began selling shares through its Web site in June 1997, hoping to raise between $1.5 million and $9.9 million. But near the end of the 90-day offering period, less than $300,000 had been tendered. "We couldn't do any real marketing," says Opincar, blaming the SEC-mandated "quiet period" that restricted the company's public pronouncements during the 90 days. Iron Computer yanked its Internet IPO and, in vain, pursued a conventional public offering. But by 1998 the company was out of alternatives, having sold only seven of Windecker's redesigned machines.

The company entered Chapter 7 last December. The bankruptcy papers underscore just how costly Iron Computer's IPO was. Among the estimated 100 creditors are lawyers, consultants, and accountants who, Opincar says, claim roughly $250,000 to satisfy IPO-related bills that were never paid. --Emily Barker