BRS Labs Financial and Company Update 2012

Published Jun 14, 2012 04:00 AM
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BRS Labs remains one of the most controversial companies in the surveillance market. They burst on to the scene in 2008 claiming $100 Million worth of contracts 'in the pipeline' and an imminent 'exit north of a billion dollars.' Since then the company has been subject to fierce debates, numerous trade show awards and, most recently, a social media firestorm. In this note, we review a letter from BRS Labs' CEO that details their current financial state plus we examine their overall positioning.

Key Points

Here are the key points we see about BRS Labs:

  • The company is focused on 'whale hunting', targeted at large government and critical infrastructure organizations that are suckers prime targets for spending on large speculative security projects.
  • BRS has secured a number of contracts with very respected organizations. The key question/issue is how big and inclusive those contracts are. Most appear to a first stage of potential super large scale rollouts.
  • BRS is the only company aggressively marketing 'super' analytics and have this large and lucrative market segment, essentially, to themselves.
  • The company continues to burn through cash, most likely due to the long and costly sales cycles of such complex, large deals.

Financial Update

Individuals claiming to be BRS Labs investors have forwarded an email they say is from BRS Labs' CEO. We contacted BRS Labs repeatedly over a week but received no response. That noted, here are the key points from the letter/email:

  • 3 major projects cited: 555 cameras in DC for nearly one million dollars with the potential for ~9,500 more cameras in the future; 1,200 cameras for a US transit agency worth $2.4 Million USD; pending deal with a Nuclear Regulatory Agency for 'tens of thousands of cameras'
  • Through the first 5 months of 2012, "well over $12 million in closed deals already that will hit the books this year"
  • However, they "remain in a cash flow shortfall"
  • Raising more investment: "Put one million common shares on the market at $3 per share. This price is only for current investors and their relatives and associates. As I discussed on the conference call; if every investor ups their position by 2% to 3% in this final $3 offering, we will have covered our short fall and not have to "go on the road" to raise the money. There is no "minimal" amount of stock that can be purchased in this round so you may buy $99 or $999,000, but I would like to close this offer at the end of the month.:

The good news for BRS Labs is that they are clearly getting footholds into the megaprojects they need to be viable. Plus, if the user likes the BRS Labs pitch, they do not have any strong alternatives.

The main two challenges are:

  • Time Pressures: Even they seem to acknowledge it, including this statement in the letter: "It has taken longer than any of us wanted." Part of it is their own fault; Since the beginning they have heaped upon themselves unrealistic expectations (i.e., claimed $100 Million pipeline in 2008). At this point, how much money can they continue to raise and will they be able to raise it?
  • Product Acceptance: Ultimately, the key determinant of BRS Labs success is how well the product works at their early customers / early stage deployments. So much of BRS Labs potential is based on going from try outs to full organization wide roll-outs. This has been hard for all previous video analytic entrants. BRS Lab's predecessors got a lot of big customer's excited but the results never matched the hype (a la Object Video). Will BRS Labs meet the same fate? We do not know but ultimately that will make or break them.

For background on BRS Labs product, pricing and positioning, see our BRS Labs AiSight review.