Even after laying off nearly 300 Oregon employees, Hillsboro-based SureID says it's still losing money and will have to make additional cuts while it searches for a financial lifeline, according to a letter to shareholders obtained by The Oregonian/OregonLive.

SureID told shareholders it is seeking new investors, but if it can't find them will consider selling all or part of the business. The company provides identity authentication technology to the military, businesses and other organizations.

Privately held SureID has been silent publicly on the state of the business since it began cutting jobs in May. It didn't acknowledge the scope of the layoffs until after a former employee sued, alleging SureID hadn't given her and her colleagues adequate notice before cutting their jobs.

The company didn't respond to an inquiry for this article.

In the letter to shareholders this week, however, SureID chief financial officer Sean Sullivan described a bleak situation triggered when the company lost a deal to provide identification services at U.S. Navy facilities. The company had previously said the Navy, which used SureID's RAPIDGate technology, accounted for 70 percent of its revenue.

"The cash flow implications of losing the Navy have been severe," Sullivan wrote in SureID's first update to shareholders since June. SureID still has contracts with other military branches, he said, but annual revenue from the military has declined from $57 million in 2016 to just $20 million going forward.

"SureID is still operating at a monthly cash loss," Sullivan wrote. "We anticipate the negative cash flow will necessitate further cost-cutting while we work hard to generate new revenue streams."

SureID had 550 employees two years ago. Sullivan's letter did not specify how many remain, what kind of additional cuts SureID will make, or when they will take place. Cutting costs is making it harder to develop new business, he wrote, but the company had to make those cutbacks to ensure continued financial support.

"The company currently is operating on a payroll-to-payroll basis with funding provided by the company's senior secured lender," Sullivan wrote. "The current funding approach is not sustainable."

While Sullivan did not identify who that secured lender is, SureID announced an agreement in 2015 to borrow up to $25 million from Goldman Sachs. Former employees say the investment banker had personnel on site, overseeing SureID's business decisions.

SureID has other promising business opportunities, according to Sullivan, but he said it's been difficult to raise money to pursue those "given the rapid and unexpected changes at the company."

In June, Sure ID replaced chief executive Steve Larson, who started the business in 2001, with longtime company president James Robell. The great majority of SureID's employees worked at its headquarters, just north of Highway 26 in Hillsboro.

SureID hired Deloitte Corporate Finance to consider "strategic alternatives" for the business, and has made formal presentations to a dozen prospective investors. He said Deloitte expects proposals from some of them this week.

"Possibilities under consideration include minority equity investments, recapitalization with a specialty lender, sale of business divisions, sale of the entire company, and other options," Sullivan wrote.

In the letter, Sullivan also addresses factors behind the loss of the Navy business. An April report in the San Diego Union-Tribune, near a major naval base, linked the Navy's exit to a critical 2013 audit from the Department of Defense Inspector General. But Sullivan said that's false.

Instead, he said the Navy switched to an alternative ID verification system in part because of unspecified "policy changes" in the Defense Department and "different Navy leadership under the new Administration."

"We continue to have political support for our RAPIDGate program, and members of Congress are pressing for answers," Sullivan wrote, "but regaining the lost Navy business in the near term is not likely."

-- Mike Rogoway; twitter: @rogoway; 503-294-7699