7.0. EDSR 09-13-2004 ITEM # 7.
•
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority
FROM: Heidi Steinmetz, Assistant Director of Economic Development
DATE: September 13, 2004
SUBJECT: Consider Business Incubator Tenant Lease Extension:
LapTwo Technology Corporation
Attachments
• Company Flyer
• Executive Brief,August 27, 2004
• Background
LapTwo Technology Corporation became an Incubator tenant in September of 2003,
subleasing 1,041 SF of space. In addition to the stock offering, the company has made
timely cash rent payments in the amount of$260.25 per month.
LapTwo President, Rob Henningsgard,provided staff with the following update (the
attached company flyer and executive brief provide additional details):
Early during its first year in the Incubator,LapTwo did research and development work in
several product areas involving new uses of the internet,web servers, and hand-held PDA
computers. In the first quarter of 2004, a new product opportunity was identified. The
product, to be sold as a software package,is a management and security system for internet
hospitality"hot spot" providers such as restaurants, hotels,motels, and the like. The
LapTwo product, dubbed"WarmSpot," decisively solves several problems and security
vulnerabilities inherent in existing competitive products from T-Mobile, Cisco, and other
vendors.
The full-scale product development project began in March of this year. An alpha
installation of the new product went live on August 19th, at"Pike's Restaurant and Bar,"
overlooking the marina on Lake Pepin in Lake City, Minnesota. As is anticipated in alpha
installations, there have been a few discoveries and problems,but the system has generally
performed as expected,with its uptime exceeding 98%.
•
Consider Business Incubator Tenant Lease Extension
LapTwo Technology Corporation
September 13,2004
Page 2 of 2
• LapTwo seeks a one year extension of its tenure in the Incubator to see the company
through the market introduction and maturation of the WarmSpot product line. The
company currently has two W-2 employees, and is actively seeking both additional
programmers and some added investment. The company's plan is to grow its engineering
staff by adding two full-time software developer positions by the first quarter of 2005.
Issue
Mr. Henningsgard has requested that the EDA consider a twelve-month sublease extension
through September 2005. Mr. Henningsgard will be in attendance to answer any questions
the EDA might have.
Staff Recommendation
Staff recommends that the EDA consider granting the twelve-month sublease extension to
LapTwo effective September 23, 2004 through September 22, 2005 at the following
cash/stock rent rate:
$ 4 per SF cash rent ($347.00 per month)
$ 7 per SF stock value (divided among building owner, Incubator consultant, &EDA)
$ 11 per SF total rent value
•
410
s custom software 16820 Highway 10, Suite 130
•pocket pc applications Elk River, Minnesota 55330
•windows programming
•custom web servers main: 763-633-9434
•web design&hosting
fax: 253-276-2755
•smartphone programming
TECHNOLOGY CORPORATION •technology consulting www.laptwo.com
About LapTwo Technology Corp Our customer list includes IBM,AT&T,Fairchild,
The history of LapTwo Technology Boeing, Texas Instruments, Kyocera, Lucent, Bell
Labs, Hewlett-Packard, MIT Lincoln Laboratories,
Corporation is two-fold. First, the
and hundreds of smaller companies.
corporation itself was formed in
2001, in the divestiture of its former
r parent, FASTechnologies, Inc. In that What can we do for you?
divestiture, most ownership rights to The main strength of LapTwo today lies in replacing
over one million lines of industrial software source existing"hodgepodge" software systems with fully-
code were granted to LapTwo Technology Corpora- integrated, web-deployed applications. We developed
tion. Much of the Company's current development is this concept in 1996, and by 1999 it was so strong that
centered on re-applying large parts of that source code even I.B.M. chose to use it over one of their own
to cutting-edge consumer and industrial applications. internally-developed network/web servers.
The second part of LapTwo's history began in 1978, Our key technology is our 100%
with the employees involvement in the data recording custom web server core. On this totally
business, with both Schlumberger and the prestigous hack-proof web server, we can create
Fairchild Data Recorder Division. completely integrated applications for
Working in such diverse areas as all kinds of jobs. Anything from log-
enhancing the reliability of oil well w ging and reporting the production
drilling telemetry, "black box" flight activity of automated manufacturing machines to
data recorders, and aircraft test simply managing customer contact databases is pos-
telemetry packages greatly broadened �-
- - sible. Regardless of the application, when we are
the technology exposure of the staff tte. done creating a purpose-specific web server, the result
is elegance itself A single, self-contained Windows
With the experience gained over twenty-five years of executable program that's no more difficult to install
diverse, high-end engineering history, LapTwo is or use than a copy of NOTEPAD.EXE.
qualified to take on a wide variety of projects. For
example, recent developments include a crack-proof The benefits of this approach are support and reliabil-
industrial web server, an image processor capable of ity. There's virtually no way to disable one of our
extracting the ASCII text from photographs of servers by accidentally changing a setting, deleting a
stacked barcodes, and a real-time assembly-language file, or pushing a button... any button! Our products
executive program for closed-loop mobile electro- are so reliable that we support them 24x7x365, and
hydraulic control systems. it's no bother: Our support phone almost never rings.
Our business and customers Want to learn more?
Since 1978, our staff has created software, electronic, Our philosophy is that no application is too large or
mechanical, optical, and process technologies in fields too small to investigate. No matter what your busi-
from manufacturing to health care. We have solved ness or industrial application might be, give us a call.
problems, developed technologies, created products, At the very least, we'll both learn something. At the
and provided 24x7 support for customers in over 46 most, you may end up wondering why you ever
countries. tolerated the old-fashioned approach to computing.
•
Ia
LapTwo Technologies, LLC
16820 Highway 10, Suite 130
Elk River, Minnesota 55330-6105
763-633-9434
www.laptwo.corn
Executive Brief: LapTwo Technologies, LLC, August 27, 2004
Company Formation
LapTwo began full-time operations in July, 2003 with investors Robert
Henningsgard (founder of sixteen year old Elk River software company
FASTechnologies) , and Harlan Jacobs of Genesis Business Centers. In
August 2004, the Elk River Economic Development Authority made an
investment in the company, by accepting LapTwo into its Business
Incubator program.
The principal business activity of the company in the period from July
2003 to March 2004 was research, primarily in the emerging areas of
mobile computing of all kinds. This led to several proposed business
plans which sounded promising, but which were discarded as nonviable
for various reasons upon in-depth market research.
Product Area
• In March 2004, the decision was taken to pursue the development of a
guest access control system for internet hospitality providers.
Several such systems were available at that time but, in the collective
opinion of many industry observers, they were all primitive at best.
Also encouraging was the observation that the systems available from
even notable, top-tier suppliers such as Toshiba, T-Mobile, and Cisco
were very primitive, as well as being demonstrably vulnerable to
various hacking, spoofing, and session-hijacking attacks.
Some in-depth research of the potential problems with (and
opportunities for improving upon) existing hospitality systems revealed
that with existing systems:
• It was either relatively easy (or completely automatic) for
clients to gain access and use the connection without
authorization.
• Multiple client systems connected at the same time were
completely unprotected from each other, allowing viruses and
worms to propagate from one client to another.
• There were no restrictions on outgoing email, making it possible
for users (authorized or not) to run "spamming" programs, thereby
violating the internet connection terms of service of the
hospitality provider.
one of four
LapTwo Technologies Brief / August 27, 2004 / two of four
• The few Windows-based control systems in use were completely
vulnerable to every new virus and worm infection appearing on the
internet.
• The non-Windows control systems were inflexible, offering little
to nothing in terms of customizability or upgrade paths. They
also suffered from vulnerabilities to viruses and worms (although
such non-Windows attacks are rare at present) .
Technologies Developed
Significant technical breakthroughs and developments created in
subsequent months have equipped the company with unique networking
software development capacity and capabilities:
• A method was devised to allow low-level networking software to be
developed efficiently, in a user-friendly development tool.
(Low-level networking software development using conventional
methods, is easily among the most difficult, burdensome
programming tasks in existence) .
• A total replacement for all Windows Internet Networking (TCP-IP)
software was designed and developed. (This completely eliminates
the attack points used by viruses and worms to infect Windows
• systems, while obviating the need for applying Microsoft security
updates to patch such attack points) .
• Made possible by the replacement TCP-IP software, several
techniques for positively authenticating network traffic from
validly-authorized system users were developed. (These
techniques prevent the theft of internet connectivity by
unauthorized users.)
• Several techniques for isolating client computers from each other
while they are connected to a common hospitality system were
developed. (This prevents client computers having viruses from
attacking other client computers while connected to the system.)
• A technique for limiting the outbound email traffic sent by any
one client computer was devised. (This protects the hospitality
provider from inadvertently but illegally providing internet
connectivity used to send mass-mail "spam" from the hospitality
provider's internet connection.)
Employing these breakthroughs, LapTwo is currently developing and
refining a complete internet hospitality control system, planned for
volume shipments in the fourth quarter of 2004. The common name for an
establishment offering wireless public internet access is a "hotspot."
•
LapTwo Technologies Brief / August 27, 2004 / three of four
• Playing on the widespread use of the term "hotspot," and the safer
hospitality environment created by the aforementioned technologies, the
name "WarmSpot" was coined. A U.S. trademark application and
registration of the internet domain "Warmspots.Net" followed
immediately. As no form of the term "warmspot" has ever been
trademarked, the issuance of the plain-text, singular and plural U.S.
trademark is assured under standard U.S.P.T.O. operating procedures.
The "WarmSpot" product was publicly announced at the Strictly Business
Technology Expo, at the Minneapolis Convention Center, on June 9, 2004.
Interestingly, the most enthusiastic responses came from internet
service providers and networking security consultants and experts. The
opinion repeatedly voiced was that "writing your own TCP-IP stack from
scratch" was an inspired idea, and the only possible way to create a
product completely immune to the viruses and worms which so easily and
often infect Windows-based systems.
A fortuitous encounter at the Expo was with Mr. Greg Osterdyk.
Osterdyk is an accomplished, knowledgeable networking expert who also
happens to be a principal in a new Restaurant and Bar overlooking the
marinas in Lake City, Minnesota. As a networking expert, Mr. Osterdyk
was well awareof the risks inherent in offering open, uncontrolled
internet access to his Bar and Restaurant clientele. As a restaurant
owner, he also recognized the appeal of offering connectivity to his
clientele. After a short discussion, Mr. Osterdyk agreed to be
LapTwo's alpha test site for the WarmSpots software package.
• The alpha WarmSpots package was installed at Pike's Restaurant and Bar
in Lake City and made operational on August 19th, 2004. The system has
been running continuously since then, providing tightly-controlled
internet access to the patrons at Pike's. Guest access is granted by
providing the guests a "Guest Access Card," as shown below.
, our : 123 +
su
r s page totogin
LapTwo Technologies Brief / August 27, 2004 / four of four
• Current status and plans
The development of the core networking technologies has positioned the
company to create and capitalize on opportunities in a number of
networking fields. The current development area of systems for
internet hospitality providers is presently quite fertile, and should
represent a very viable initial product area for the company. So the
present focus is on finishing the development, deployment, testing, and
refinement of the "WarmSpots" product.
Because of the dynamic state of the internet hospitality system market,
it is unlikely that the company can maintain its current technical lead
for long. Therefore, the present plan is to wrap that technology into
a license to a wholly-owned subsidiary C-corporation "Warmspots, Inc."
which can be sold to a larger entity with the infrastructure and
financial resources to broadly market the "WarmSpots" product.
Beyond that, there are many unexplored industrial applications for the
core technologies. The company will re-enter the research mode,
seeking and defining such applications, upon the completion of the
WarmSpots development and deployment.
•
The foregoing information is proprietary to LapTwo Technology Corporation. While it is being disseminated in small
volumes to select parties outside of the customary non-disclosure agreements,it is also(C)Copyright 2004,LapTwo
Technology Corporation,with all rights reserved. Please do not duplicate,transmit,or otherwise share its contents with
any third party. Thank you in advance for your consideration in this.
•
c. Incubator Prospects Report
Prepared for the Elk River EDA Meeting
• 13 September 2004
Swedish Technology and Software Connection Join Local Opportunities for Potential Job
Creation in Elk River
There are four prospects for the Elk River Incubator Program that are worthy of mention
at this time;they will be described in reasonable detail in this report.
The general theme of software seems to best summarize the nature of the cluster that is
developing in the Elk River Incubator Program and the momentum that it is developing
that makes the Elk River Incubator Program attractive to other software oriented
companies. Of the four prospects described below, two are squarely in the realm of
advanced software development. While the other two have software related technologies
that are deployed in conjunction with sensors.
In addition to this written report, there is a short video presentation to be made in respect
of Mr. Anders Lindberg, a Swedish entrepreneur who is involved in the realm of food
traceability systems. And there will also be a brief presentation in person by Mr. Jerry
Pettersson, a second Swedish entrepreneur who is considering the establishment of an
operation in the U.S. to deploy his novel technology for inexpensive RFID tags (Radio
4111 Frequency Identification). The prospects listed alphabetically include:
Intellignostics: Intellignostics' disposable sensor technology is being developed for use
in human and veterinary medical markets. The Company is developing a new generation
of in-vitro diagnostic tests through the use of its proprietary RFPST"' (radio frequency
phase shift) detection method. The Company's patented technology, which has been
conclusively demonstrated at a laboratory level, allows for a disposable electronic sensor
used with an instrument that can be configured and manufactured for hand-held point-of-
sampling (POS) use or for large-scale laboratory batch processing of samples. The
advantages of RFPSTM detection using the IntelliProbe ImmunosensorTm (IPITM) over
current technology are summarized below:
• No reagents are needed to perform a test
• Real-time sensor detection of its target in seconds
• Ease of use—take sample; expose sensor to sample; read results
• Minimal training needed to use
• Digital data instantly available for storage&/or transmission via modem
•
This company is been under review by Genesis Business Centers for about five years
now; The timing is good for the company to enter a formal incubation program and
• seems well suited for an Elk River location.
*Language Solutions, LLC
This company is commercializing training programs for teaching English as a Second
Language (ESL) and accent reduction for recent immigrants seeking to make their way
into careers that involve speaking with the public (usually within a call center context).
The Company is preparing to expand its operations throughout the metropolitan area and
is also in need of a software development center. The Elk River location would
simultaneously meet two needs: the software development center and a training center for
the northwestern metropolitan area could be established in a single location.
In recent months, the Company has made significant progress that is summarized below
and provides the justification for it seeking and receiving capital for expansion at this
time:
The Company has successful made a conversion of several of its demonstration
sites and new clients for its English on the Job version 1 and 2 programs at these
locations:
• Iowa Workforce Development/New Iowan Program-IA
• Stearns-Benton Employment& Training Council—MN
• Ramsey County/Workforce Solutions—MN
• Pendleton Workforce Investment Board, SC
• Association of Joint Labor Management Education Program-NY
• Association of Joint Labor Management Educational Programs •
o Workshop presenting results of training program with MN
Teamsters Services Bureau and Bongard's Creamery
o Free display space at vendor show
o Free sponsorship of lunch program
o Agreed June for delivery Oct 2004
• Indiana Department of Education State ESL Conference
o Workshop presenting results of demonstration sites
o Free display at vendor faire
• Ramsey County/Workforce Solutions
o Health Care Language and Cultural Competency Forum
• State MN—DEED Annual MFIP Conference
"You Speak English, They Don't, ... Now What!"Workshop
This company has been under review by Genesis for about one year now. The company is
making good progress and is now likely to be able to obtain capital from the Anoka
Sherburne County Capital Fund once that fund receives new capital in the next month or
two.
411
Incubator Prospects Report
Prepared for the Elk River EDA Meeting
• 13 September 2004
Swedish Technology and Software Connection Join Local Opportunities for Potential Job
Creation in Elk River
There are four prospects for the Elk River Incubator Program that are worthy of mention
at this time;they will be described in reasonable detail in this report.
The general theme of software seems to best summarize the nature of the cluster that is
developing in the Elk River Incubator Program and the momentum that it is developing
that makes the Elk River Incubator Program attractive to other software oriented
companies. Of the four prospects described below, two are squarely in the realm of
advanced software development. While the other two have software related technologies
that are deployed in conjunction with sensors.
In addition to this written report, there is a short video presentation to be made in respect
of Mr. Anders Lindberg, a Swedish entrepreneur who is involved in the realm of food
traceability systems. And there will also be a brief presentation in person by Mr. Jerry
Pettersson, a second Swedish entrepreneur who is considering the establishment of an
operation in the U.S. to deploy his novel technology for inexpensive RFID tags (Radio
• Frequency Identification). The prospects listed alphabetically include:
Intellignostics: Intellignostics' disposable sensor technology is being developed for use
in human and veterinary medical markets. The Company is developing a new generation
of in-vitro diagnostic tests through the use of its proprietary RFPST"' (radio frequency
phase shift) detection method. The Company's patented technology, which has been
conclusively demonstrated at a laboratory level, allows for a disposable electronic sensor
used with an instrument that can be configured and manufactured for hand-held point-of-
sampling (POS) use or for large-scale laboratory batch processing of samples. The
advantages of RFPSTM detection using the IntelliProbe ImmunosensorTM (IPITM) over
current technology are summarized below:
• No reagents are needed to perform a test
• Real-time sensor detection of its target in seconds
• Ease of use—take sample; expose sensor to sample; read results
• Minimal training needed to use
• Digital data instantly available for storage&/or transmission via modem
•
This company is been under review by Genesis Business Centers for about five years
now; The timing is good for the company to enter a formal incubation program and
• seems well suited for an Elk River location.
*Joint Venture of CPUm (Uppsala, Sweden) and Electronic Materials, LLC
• Mr. Jerry Pettersson of Uppsala, Sweden, has been working with Genesis Business
Centers, Ltd. , for about six months now on several technology development projects.
The technology of CPUm is capable of providing low cost (defined as a unit cost of less
than one cent) RFID tags (Radio Frequency Identification tags). Mr. Pettersson was
introduced to a Minnesota company (Electronic Materials LLC (EMC) of Columbia
Heights-a Genesis incubator company there). CPUm will form a join venture with EMC
to deploy its RFID technology with the mass production techniques that have been
patented by EMC. The joint venture company could easily be established in the Elk River
Business Incubator facility during its development stage.
*North American operations of Anders Lindberg's Food Traceability Technology
Mr. Lindberg is a member of the European Union (EU) commission on food safety that
has responsibility for traceability of food (produce, livestock, meat and grain). He is the
inventor of the patented technology that has been utilized by ScandTrace AB, a Swedish
company headquartered in Mora, Sweden. His goal is to deploy the technology on a
global basis initially in North America and to do so with certain improvements (possibly
in conjunction with the very same technology to be developed by CPUm and EMC for
inexpensive RFID tags)to augment/replace the bar codes presently used in Sweden.
s
Non Incubator Prospects for the City of Elk River:
Mr. Ron Anderson of GrainValue LLC has received a government grant to improve the
processing of grain for ethanol. He needs access to steam and about 4,000 square feet of
industrial space with heavy load capacity. While he cannot consider the incubator site,
Genesis is pleased to have made an introduction to the utility plant operators in Elk River.
The specifications have just recently been provided to Mr. Gary Connett at the utility
plant; we look forward to learning from him in respect of the possibility of GrainValue
LLC taking space in one of their buildings where steam can be purchased from the utility.
General Visibility for the City of Elk River:
Genesis proposed a panel for the World Technopolis Association at its recent global
conference held in Uppsala, Sweden on 1-3 September2004. In the proposed panel, a
representative from Elk River's EDA was invited to speak about its incubator and seed
capital programs. Due to budget constraints, no travel subvention was available from the
conference organizers and that made it difficult for the EDA to send a representative. It is
anticipated that additional speaking opportunities will be available in the next year or two
for an EDA representative to serve on one or more panels both here in the U.S. and
overseas.
•
*Language Solutions, LLC
This company is commercializing training programs for teaching English as a Second •
Language (ESL) and accent reduction for recent immigrants seeking to make their way
into careers that involve speaking with the public (usually within a call center context).
The Company is preparing to expand its operations throughout the metropolitan area and
is also in need of a software development center. The Elk River location would
simultaneously meet two needs: the software development center and a training center for
the northwestern metropolitan area could be established in a single location.
In recent months, the Company has made significant progress that is summarized below
and provides the justification for it seeking and receiving capital for expansion at this
time:
The Company has successful made a conversion of several of its demonstration
sites and new clients for its English on the Job version 1 and 2 programs at these
locations:
• Iowa Workforce Development/New Iowan Program-IA
• Stearns-Benton Employment& Training Council—MN
• Ramsey County/Workforce Solutions—MN
• Pendleton Workforce Investment Board, SC
• Association of Joint Labor Management Education Program-NY
• Association of Joint Labor Management Educational Programs •
o Workshop presenting results of training program with MN
Teamsters Services Bureau and Bongard's Creamery
o Free display space at vendor show
o Free sponsorship of lunch program
o Agreed June for delivery Oct 2004
• Indiana Department of Education State ESL Conference
o Workshop presenting results of demonstration sites
o Free display at vendor faire
• Ramsey County/Workforce Solutions
o Health Care Language and Cultural Competency Forum
• State MN—DEED Annual MFIP Conference
"You Speak English, They Don't, ... Now What!"Workshop
This company has been under review by Genesis for about one year now. The company is
making good progress and is now likely to be able to obtain capital from the Anoka
Sherburne County Capital Fund once that fund receives new capital in the next month or
two.
•