EXCLUSIVE: Barrett Bready Buys Defunct Nabsys for Pennies on the Dollar

GoLocalProv News Team and Kate Nagle

EXCLUSIVE: Barrett Bready Buys Defunct Nabsys for Pennies on the Dollar

Barrett Bready
GoLocalProv has learned that the assets of the once sparkling start-up Nabsys have been purchased by none other than past CEO Barrett Bready for pennies on the dollars.

The company closed in September of 2015 leaving investors like the State of Rhode Island, Governor Gina Raimondo’s venture capital group and others with massive losses.

Nabsys, which had raised upwards of $50 million including millions from Governor Raimondo’s Point Judith Capital (she continues to have an ownership in a Point Judith Fund) as well as nearly $1 million from the State of Rhode Island via the Slater Fund.

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New Docs Emerge

According to documents secured by GoLocal, the Providence-based company which was working in the genome-mapping world was sold to Bready for $500,000 and the assumption of $100,000 in debt with General Electric Capital. 

Emails to Rich Horan of the Slater Fund to determine if the State of Rhode Island signed off on the deal, if it will receive any funds from the sale or any future ownership, were not responded to on Sunday.

The deal with Bready was made by Barry Kallander of the firm KallanderGroup of Boston, that served as the workout firm for the depleted company. 

According to marketing materials, KallanderGroup provides Advisory Services and Comprehensive Trust Services for distressed and special situations. “We provide dispassionate advice to Investor Groups, Boards of Directors and CEOs to help define their options when faced with changing market conditions, under performance, insolvency, or lack of capital,” says KallanderGroup’s website.

Bready will operate the company under a new entity named Nabsys 2.0, LLC, a Delaware Corporation.

Nabsys closed in September
According to the agreement, “The authorized membership interests of Buyer consists of 10,000,000 units of membership interests of the Buyer of which 7,450,000 are issued and outstanding.” The agreement does not disclose who owns the other units.

Nabsys' original founder and Brown Professor of Physics Xinsheng Sean Ling, who was forced out of the company by former-CEO Barrett Bready for raising concerns about the direction of the company told GoLocal Sunday that, “(Nabsys 2.0) has 10M shares, 7.5M issued to notes holders.  Not sure to whom. I hope Slater Fund is one of them.”

As part of the agreement millions of notes are written off by the buyer. The agreement states:

The Seller hereby agrees to obtain termination and discharge of the Investor Notes in the amount of $4,051,759 and any collateral security granted in connection therewith, according to the following terms: upon such termination and discharge Buyer shall issue 1,200,000 units of Buyer's membership interests to Investor Note Holders ("Investor Units") on a pro rata basis consistent with the allocation of prior Investor Note indebtedness, provided such units are then pledged as collateral to GEC in accordance with the GE Loan modification and assumption set forth in Section l .3(a) above. 

Slater receives its funding from state and federal funds and it is likely to lose most or all of its investments. The Slater funding to Nabsys totaled $995,000 in convertible notes. 

Raimondo’s Complex and Multiple Ties to Nabsys

As a venture capitalist, Gina Raimondo led Point Judith to make two rounds of investment in Nabsys. And under Raimondo’s direction, Point Judith was the lead in a $4 million round of investments in 2009.

According to documents filed with the US Securities and Exchange Commission (SEC), Raimondo served on the board of Nabsys as late as February of 2010 as a result of Point Judith’s multiple investments in the company, while she was beginning her run for Rhode Island General Treasurer. 

Rhode Island contracted with Point Judith to manage $5 million in state funds since 2007 and Raimondo’s former firm has been paid nearly $1 million in fees.

The Slater Fund’s Background and Investment

“The Slater Technology Fund was created in 1997 by Governor Lincoln Almond and the Rhode Island General Assembly to stimulate the creation of new technology-based companies in Rhode Island. The Fund is financed annually by the General Assembly,” said Slater’s website in 2007.

Nabsys Inc.
    •    $225,000 Convertible Loan, dated June 2004, subsequently converted into Nabsys’ Series A financing in April 2009;
    •    $250,000 Convertible Loan, dated June 2007, subsequently converted into Nabsys’ Series A financing in April 2009; and
    •    $250,000 investment in Series A Preferred Stock, dated April 2009, aggregating $4 million.

Gene Spectrum Inc. (merged into Nabsys)

    •    $20,000 Loan, dated Aug-Oct 2000, subsequently converted into Gene Spectrum shares as part of 2007 merger with Nabsys; and
    •    $250,000 Loan, dated Feb-Oct 2003, subsequently converted into Gene Spectrum shares as part of 2007 merger with Nabsys.


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