8.0. EDSR 09-08-2003 ITEM # 8.
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority
CC: Harlan Jacobs, Genesis Business Centers
FROM: Heidi Hall, Economic Development Assistant
DATE: September 8, 2003
SUBJECT: Consider New Business Incubator Tenant:
Lap2 Technology Corporation
Attachments
• Incubator Advisory Committee Minutes,August 12, 2003
• • Application&Presentation to Advisory Committee—Lap2 Technology Corporation
Background
Advisory Committee Reviews Two Incubator Applications
The Incubator Advisory Committee reviewed Incubator applications from Lap2 Technology
Corporation and IntelliPatch on August 12t. The Committee recommended that both
companies be admitted to the Incubator Program, however IntelliPatch is not interested in
entering the Incubator until financing has been secured with local investment clubs.
IntelliPatch President Mike Geatz had indicated that this might not occur until mid-
November. Mr. Geatz has asked for free Incubator rent in the interim. Staff does not
recommend that this occur.
Lap2 Technology Corporation
Formed in June of 2003,Lap2 Technology Corporation proposes the following business
plan activities:
• Software and hardware product development
• Identify new applications for high-powered hardware
• Invent and develop "glue" technologies to create applications
• Productize the applications with support materials and tools
• Build independent business units to market the resulting products
President Rob Henningsgard would like to lease Incubator Suite 130,which is 1,041 sq. ft. of
. space for research and development, followed by product engineering,light manufacturing
S:\Eda\BUSNSINC\EDAUpdates\2003\9-8-03.doc
Consider New Incubator Tenant:: Lap2 Technology Corporation
September 8,2003
Page 2 of 2
• and assembly,marketing, sales,and order fulfillment. Mr. Henningsgard is willing to enter
the Incubator as soon as September 15th•
Mr. Henningsgard will be in attendance to provide additional background information on
the company and answer any questions the EDA might have.
Action Requested
Staff recommends that the EDA consider the Advisory Committee's recommendation and
accept Lap2 Technology Corporation as a tenant in the Business Incubator Program. With
the EDA's direction, staff will work with the company and City Attorney to prepare the
necessary sublease and stock documents. Staff has had preliminary negotiation with the
company for a rent rate of$3.00/SF cash rent and$7.00/SF stock value in exchange for
rent.
•
i
• MEETING OF THE ELK RIVER
BUSINESS INCUBATOR ADVISORY COMMITTEE
HELD AT THE ELK RIVER BUSINESS INCUBATOR CONFERENCE ROOM
TUESDAY, AUGUST 12, 2003
Members Present: Jeff Gongoll-EDA Representative,Louise Kuester-EDA/Council Representative,
Stephanie Klinzing-EDA/Council Representative,Jim Barthel-Small Business
Representative, and Jack Mowry-Small Business Representative
Members Absent: Larry Hickman-Business Incubator Partner&EDA Landlord
Staff Present: Director of Economic Development Catherine Mehelich
Others Present: Rob Henningsgard and Mike Wallace—Lap2 Technology Corp., Rich Daly—
IntelliPatch,Dennis Chuba—Elk River Investment Club, Sandy Voigt—Initiative
Foundation, and Harlan Jacobs-Genesis Business Centers
Presentation: Rob Henningsgard, Lap2 Technology Corporation
Mr. Henningsgard provided the Committee with his background experience of a previous business in Elk
• River (FastTechnologies). He stated that Lap2Technology was formed in June 2003 with founder
investment of$25,000. He indicated that the business plan included in the Incubator application has been
shelved due to a shift in their plan to identify and develop new custom software applications for high-
powered hardware (i.e. SmartPhone). He has not yet prepared any financial projections for the business
plan. Mr. Henningsgard introduced Mike Wallace,who will be the sales manager for Lap2 Technology. He
stated that the business timeline includes adding support staff(2-3 people) within the next 30-days to be
ready for full-scale product development in the Incubator building, and national product launch by January
2004. Lap2 Technology will be looking to make application for investments from the Anoka/Sherburne
County Capital Fund and the Elk River Investment Club.
Presentation: Rich Daly, IntelliPatch board member and business advisor
Mr. Daly provided the Committee with background on the company, IntelliPatch. The company was
formed in March 2002. Currently the company is engineering prototypes and beginning pre-production of
model products. Mr. Daly stated that the company has developed a technology for wristwatches that
monitor pulse as well as several other symptom indicators. The company plans to market the product as a
sports watch and data collection, clinical monitoring, and medical markets for symptom prediction. The
company has applied for several patents on the technology. The technology uses artificial intelligence and
data mining for predictive symptoms,i.e. migraine headaches. Mr. Daly stated that Medtronic has indicated
interest in the data. The company timeline in the incubator includes,getting revenue from sales of sports
watches (12 orders to date), collect data and market,identify subjects for clinical testing for FDA approvals
in early 2004. He stated that the company projects being ready to market the product by mid-2004.
Mr. Daly stated that IntelliPatch has been working with a manufacturer,Paul Wagner to engineer the
• prototype watches. He stated that IntelliPatch is prepared to locate the assembly/manufacturing operation
Business Incubator Advisory Committee
August 12,2003 Meeting Minutes
Page 2 of 2
• in Mason City, Iowa due to offers of$200,000 in financial assistance. IntelliPatch has made application for
consideration of tenancy in the Incubator for its clinical research and development, and watch engineering.
Committee Discussion
Following the presentations, the applicants were excused from the meeting. The committee discussed
concerns of the timetable for IntelliPatch as "optimistic", however mentioned that staging of bringing the
technology to market made some sense. There was also concern of whether or not competition exists for
pulse watches. The committee stated concern about the separation of operation in Mason City and Elk
River,but felt that if the corporate office and clinic was located in Elk River that would be sufficient.
Committee members felt that Mr. Henningsgard brings considerable amount of technical experience to the
proposed business.
Recommendation
Advisory Committee members Jeff Gongoll and Stephanie Klinzing made motion to recommend that staff
offer incubator tenancy for the purpose of locating the headquarters of Lap2 Technology Corporation and
IntelliPatch in the Business Incubator Program,including stock options and cash rent for the appropriate
amount of space, and prepare the recommendation for EDA consideration.
Review Incubator Member Company Selection Guidelines
Director of Economic Development Catherine Mehelich reviewed the staff proposed changes to the
Incubator Selection Guidelines. Staff proposed adding a section that would clarify and outline the
application process between staff,incubator consultant, and preparation of the applicant for review by the
Advisory Committee and EDA Board. Following discussion it was the consensus of the committee that the
proposed amendments to the guidelines be forwarded to the EDA Board for consideration and approval.
Submitted by,
Catherine Mehelich
Director of Economic Development
•
ELK RIVER BUSINESS INCUBATOR
• APPLICATION FORM
Name of Business: Lap2 Technology Corporation
Name of Principal: Robert C. Henningsgard
Address: 942 Main Street. #200. Elk River, Minnesota 55330-1540
Phone: 612-802-5820 Fax: 253-276-2755
Ownership Structure: Sole Proprietorship 0
Partnership 0
Corporation
•
Business is primarily involved in: Research and Development
Product Manufacturing/Assembly 0*
Other 0
Principal product(s): The business is in the research and development phase, creating products combin-
ing hardware and software to capitalize on the newly-emerging Pocket PC +telephone combination
• products being introduced in the 3rd & 4th quarters of calendar 2003.
Activities to be undertaken in the incubator facility: The aforementioned research and development,
presumably followed by product engineering, light manufacturing and assembly, marketing, sales, and
order fulfillment.
Projected number of employees (including principal) at incubator operation:
Full Time Part Time
Initially 2 0
After 6 months 4 1
At the end of 1 Year 5 2
At the end of 3 Years 25 6
*The research and development are specifically focused on the development of combination hardware/
software products to be manufactured and/or assembled, packaged, and sold by the company within six
months.
The Business has the following characteristics:
Advances Technology 0
Projects Fast to Moderate Growth 0
Medical Related Product/Technology ❑
Energy Related Product/Technology ❑
If the business is a sole proprietorship, indicate principal's net worth:
$0 - $24,999 0
$25,000 - $74,999 0
$75,000 - $99,999 0
$100,000 - $200,000 0
Greater than $200,000 0
List the amount of equity you have received to date in the form of stock ownership and/or direct
investment:
$0 - $24,999 0 $300,000 - $400,000 0
$25,000 - $74,999 El $400,000 - $500,000 ❑
$75,000 - $99,999 ❑ $500,000 - $1,000,000 0
$100,000 - $200,000 ❑ $1,000,000 - $1,500,000 0
$200,000 - $300,000 0 $1,500,000 and up ❑
List the amount of equity you will require from outside sources over the period of:
one year in the Business Incubator $250,000
• two years in the Business Incubator $400.000
The business is currently in operation: Yes El No 0
Current Location of Business 942 Main Street, Suite 200, Elk River
Number of Years in Operation 0.17
Current Number of Employees 1
Most Recent Annual Sales n/a
The business will require approximately 500 square feet of space in the Business Incubator,
with the following special needs/requirements:
DSL internet connectivity, computer-room environmental controls (65 to 75 degrees Farenheit, relative
humidity of 15%to 35%, non-condensing. ambient noise of not more than 60 dbC, customary lock-
and-key security. parking capacity for seven vehicles
i
Please attach the following information:
• • Business Plan, including financial projections, current sales figures (if any), Profit and
Loss Statement, and Balance Sheet.
• Personal financial statements
4,4j7()".
r
Signature: <
Printed name: Robert C. Henningseard
s
Company name: Lap2 Technology Corporation
Date: 31 July 2003
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