BRS Big Fund Raising: $27 Million + More To Come

Last year we obtained an email BRS Labs sent to investors asking for one last drive. The company said if investors increased their positions by two or three percent, it would be able to stop raising money and “not go on the road.” But since then, IPVM has discovered government filings showing that BRS Labs has raised another $25 million this year. In this note, we examine the breakdown of the funding and what this means for the company.

UPDATE: BRS Labs disclosed another $2.2 million in funding plus plans for even more. Read the full update.  

Smaller Investments

The company's fund raising continues to come from smaller investments from a variety of sources, which matches the company’s historical pattern, but is questionable since the company is nearly a decade old. Typically by this time, companies are getting funding from smart, larger institutional investors. Here is a breakdown of the 5 filings:

While some of the investors may be participating in multiple offerings, there certainly are at least 100 investors if not 200 or more, compared to typical fund raising at similar stage companies which have a few investors max. Moreover, the average overall investment is likely under $100,000 which indicates that many unsophisticated smaller investors participated who are unlikely to be able to do the due diligence that larger professional investors conduct.

Numerous Sales Agents

The filings reveal that BRS Labs has used a variety of sales agents across the US to raise this money, including:

• David A. Noyles & Company, Chicago, IL
• Brian T. Meade, Chicago, IL
• Richard A. Bauroth, Jupiter, FL
• Steele Financial, Inc., Pendelton IN

Why Do They Need The Money?

Given their position in last year's investor's email, claiming that they only needed 2-3% more, plus this regular claims of closing monster contracts, why do they need this extra funding? Wouldn't BRS Labs executives be better off with debt financing for their presumably closed contracts with the government rather than diluting themselves with this massive fund raising?

Total Fund Raising

While BRS Labs raised $12 million in 2009 and $13.5 million in 2010, this is by far their biggest round ever.

UPDATE: Total BRS Labs Investments Disclosed to SEC - ~$87 Million

There has been some debate / discussion about total invested into BRS Labs. We total ~$87 million as disclosed to the US government. The list below is every SEC Form D filing we found online:

• $1.5 million September 29, 2006 [link no longer available]
• $5.0 million May 3, 2007 [link no longer available]
• $0.64 million May 3, 2007 [link no longer available]
• $2.5 million November 30, 2007 [link no longer available]
• $2.5 million February 7, 2008 [link no longer available]
• $1.05 million April 30, 2008 [link no longer available]
• $5.7 million May 6, 2008 [link no longer available]
• $3.68 million May 23, 2008 [link no longer available]
• $2.98 million August 28, 2008 [link no longer available]
• $2.6 million November 10, 2008 [link no longer available]
• $6 million December 1, 2008 [link no longer available]
• $6 million March 2, 2009 [link no longer available]
• $2.3 million April 9, 2009 [link no longer available]
• $6 million August 14, 2009 [link no longer available]
• $6 million September 21, 2009 [link no longer available]
• $5.6 million April 16, 2010 [link no longer available]
• $4.8 million May 14, 2010 [link no longer available]
• $25 million April 2013 as noted earlier in the post
• $2.2 million May 10, 2013 [link no longer available]

Be careful - we might have made an addition error, there could be other investments that might not have required SEC disclosure, etc.

BRS Labs Position

BRS Labs has declined past and more recent requests for more information on projects, investments, and 2013 projections, however it still says it is closing big projects, [link no longer available] including a deal with the Nuclear Regulatory Agency for “tens of thousands of cameras.” BRS Labs targets larger government and critical infrastructure organizations who we know are eager to spend money on experimental/speculative security solutions, but we know at least one large showcase project with the Port Authority of New York and New Jersey was cancelled, we are investigating why.

UPDATE:

BRS Labs is still fundraising, bringing in another $2.2 million from investors in the month of May, according to recent SEC filings. The filing, dated May 10 [link no longer available], comes two days after the company announced another round of funding available only to "accredited investors."

The funding will fuel development of a new product line scheduled for release in 2014, according to a BRS Lab press release. This new line will "expand the application of the company's behavioral recognition technology to markets outside of video surveillance," says the release. BRS Labs has not responded to calls or emails requesting more information about this expansion.