Innovation Tax Credit Stimulates Investment in Rhode Island Companies
November 27, 2007 | Print this page | Share This | Email this page
Six Rhode Island companies now approved for program aimed at encouraging investment in high-growth, high-wage innovation industries.
The Rhode Island Economic Development Corporation Board of Directors has pre-approved six companies to pursue investments that will be eligible for the state's new Innovation Tax Credit program. The credit will offer investors up to a 50 percent credit on eligible investments, with a maximum credit of $100,000.
Proposed by the Rhode Island Science and Technology Advisory Council (STAC) and enacted into law by Governor Donald Carcieri and the General Assembly in 2006, the Innovation Tax Credit is designed to attract and retain serial entrepreneurs and stimulate economic growth in high-wage, high-growth industries.
Six applications for the credit were approved at the November 26 RIEDC Board of Directors meeting: Bionica Corp., Lighthouse Security Group, Ocean State Solutions (doing business as mPay USA), Providence Health Solutions, Public Display, Inc., and Tizra, Inc.
"Supporting entrepreneurs and attracting investment into Rhode Island companies is central to creating an economy that produces higher wage jobs for all Rhode Islanders," says RIEDC Executive Director Saul Kaplan. "Many of our incentive programs are outdated and reflect old assumptions about the kind of economy we need to create greater prosperity for our citizens. The Innovation Tax Credit directs resources toward innovative companies that are poised to create new, higher wage jobs. This program is a strategic investment for Rhode Island and one that is in-line with our economic development strategy."
To be eligible for the credit, an investor must invest in a Rhode Island business that produces traded goods or services and has annual gross revenues of less than $1 million in the prior two calendar years. Companies must be categorized as one of the following innovation industries: biotechnology and life sciences; communication and information technology; financial services; marine and defense manufacturing; professional, technical and educational services; industrial and consumer product manufacturing and design.
Applications for the credit are accepted by the RIEDC on a rolling basis. All applications are subject to an analysis and review to determine if they meet the eligibility requirements as stipulated in the enabling statute and accompanying regulations. Applications also are evaluated on the economic development merits and broader impacts of the proposed capital investment. These criteria include: 1) how well conceived and organized is the business plan; 2) how qualified is the applicant to accomplish the business plan; 3) what is the economic impact of the business plan; 4) how well the project supports a culture of entrepreneurship; and 5) how important is the plan to advancing an innovation economy.
"This is an incredibly important tool for our state's entrepreneurial community in attracting private capital investments," says Ken Kirsch, director of finance of mPay USA. "In a relatively short time, the investment community has taken note of Rhode Island's innovation tax credit, and I would expect this to also have a positive effect on attracting and retaining top talent for innovative small businesses who are competing globally."
The companies/investors pre-approved for the credit have six months to make the investment and provide proof of investment back to the RIEDC board of directors. Upon completion of this process, the RIEDC will certify the investor's eligibility for the credit with the Rhode Island Division of Taxation. The RIEDC, which will review applications for the credit quarterly, may not approve more than $2 million in credit applications in any two-year calendar year period. The credit sunsets in 10 years.
"When Majority Leader Fox and I worked together with the Science and Technology Advisory Council and the EDC last year to develop these incentives, it was with the intent of attracting high-wage, high-growth industries to the state," says Senate Corporations Committee Chairman William A. Walaska (D-Dist. 30, Warwick). "I am gratified to see the effort bearing fruit with the creation of good jobs in a variety of innovative sectors. Building a vibrant 21st century economy depends upon supporting entrepreneurs and attracting investment to the state, and the result of initiatives such as this is higher wage jobs for Rhode Islanders."
"Early stage investment in burgeoning technology companies plays an extremely important role in new company creation," stated Kipp Bradford, chief technology officer, Bionica Corporation. "In our particular instance, we are company that grew out of the local scientific, industrial design and engineering communities, which saw great potential in developing new innovative technologies for the hearing impaired. It is our intention to leverage the innovation tax credit to attract more local investment in our company and see this as an integral part of our business growth strategy."
About the applicants receiving pre-approval:
Bionica Corporation
Bionica Corporation is a prime example of cross-industry collaboration. Established in 2007, Bionica Corporation was founded by Design Lab principals Ralph Beckman and Kipp Bradford after Beckman became frustrated with his father's struggles wearing a hearing aid.
Working with scientists, designers and engineers at Design Lab, Bay Computer Associates and Brown University, Bionica has developed an improved hearing aid called the Clio. The Clio, a hearing aid based on leading edge technology in microprocessors and sound transmission, will target a 30 million person market.
The Clio will be the first hearing aid to work well in multiple hearing environments, including the car, theater and restaurants. The hearing aid's software separates speech from noise for optimal hearing in all environments.
Currently, 5 million people in the United States use a hearing aid device, but 30 million people report some sort of hearing loss. Bionica's first product will work for all people reporting hearing loss, including the 25 million who do not use the devices currently available.
Lighthouse Security Group, LLC
Located in Lincoln, Lighthouse Computer Services (LCS) has focused on IT services and customer satisfaction since 1995 in order to become one of the premier IT skill-based companies in the Northeast. With each consultant holding a minimum of 15 years experience on the latest hardware and software technologies available today, it was no surprise when LCS placed 15th among Rhode Island's 100 fastest-growing private companies in 2006, according to Providence Business News.
Now, responding to a growing need in the IT security industry, LCS has formed a new subsidiary, Lighthouse Security Group (LSG), dedicated to helping organizations protect business systems and data from security risks. Headed by industry veteran Eric Maass, LSG will deliver enterprise security services to mid- to large-sized businesses (such as financial, insurance and healthcare) and government entities that require application data and resources across multiple sites and systems.
LSG's enterprise security solutions practice focuses on helping organizations reduce the risk and complexity of security implementations through consolidating their IT systems and utilizing thorough and consistent security practices. Security is one of the top IT challenges faced by organizations today, and LSG solves IT security problems — comprehensively and fast.
Ocean State Solutions LLC, d/b/a mPayUSA
Paying bills by mail has become nearly obsolete. Today, most people pay their bills online, saving time and money. Ocean State Solutions aims to help people save more time and money by enabling them to pay their bills using a ubiquitous device — a cell phone.
The North-Kingstown-based company is developing a system that allows cell phone users to pay bills, wire money and even buy a loaf of bread at the grocery store. Dubbed mPay, the system is modeled after the successful mobile payment market in spots such as Taiwan and Singapore. mPay can be used any way a debit card can be used. It can be used to pay bills, to do online Christmas shopping or to make cash withdrawals.
The mobile telephone payment industry is expected to jump to a $22 billion market by 2010 — an increase of nearly $20 billion from the end of 2007. Ocean State Solutions plans to be a big part of that increase. The company plans to launch mPay in Rhode Island this spring to more than 8,000 college students and eventually reaching out to the state's retail markets.
Providence Health Solutions
Providence Health Solutions, LLC (PHS) assists people to increase their physical activity, improve their nutrition and lose weight with team-based wellness programs: Shape Up the Nation and Shape Up Premier. PHS has created a model and proprietary software that has been tested and proven to be effective here in Rhode Island and now is ready for national expansion.
Public Display
Public Display is a software company focused on developing web applications around proprietary, patent-pending information extraction technology. The company's first product, FuseCal, enables consumers and web publishers to find and edit unstructured schedules and event information and convert such information to structured event "feeds." The feeds can be subscribed to via personal calendars and other websites.
Tizra
Established in 2006, Providence-based Tizra is creating a new way to sell electronic content and giving publishers control. AgilePDF, Tizra's first product, is a flexible web application that gives publishers the ability to price, package, market and sell their content with the speed and agility that the web demands.
Tizra is currently targeting the book market with AgilePDF. With this new tool, publishers can quickly upload a PDF, reorganize the content to meet the customer's needs, brand it to meet their own needs and sell access to the content. Print-oriented PDF dominates publisher inventories, but publishers can't use it to deliver tailored web products cost-effectively. Until now.
AgilePDF changes the way a PDF is created and used. With smart search results, AgilePDF brings readers directly to a customized landing page, rather than a generic chapter or book URL. With the ability to manipulate content in a PDF document, publishers get easy re-packaging, while the readers benefit from a browser-friendly, full-searchable site that supports bookmarks, the browser "back" button and all other web features they come to expect.
The usability that the readers enjoy is based on the ease-of-use Tizra provides for the publishers. Tizra provides so much web support for its software that promotion, marketing and sales people with no web expertise can use it without IT help.
