Aereon Is Lured To Pennsylvania

Contract Awarded: Grant for Mikros

Downsizing: No Painkiller for Purdue

Leaving the Airport

Management Moves

New in Town

Crosstown Moves

Deaths

Corrections or additions?

These articles by Barbara Fox were prepared for the June 23, 2004

issue of U.S. 1 Newspaper. All rights reserved.

Life in the Fast Lane

For technology companies applying for federal Small Business

Innovation Research grants, June is a hot month in more ways than one.

It is a prime month to put in applications for grant monies, says one

SBDC consultant. And last week one veteran of the application process,

Moshe Lavid, found himself in legal trouble.

On Friday, June 18, in U.S. District Court in Newark, the 61-year-old

founder of Energia, the Plainsboro-based R&D firm, pleaded guilty to

one count of tax evasion and one count of mail fraud on Friday, June

18. Together the two charges could bring Lavid a prison sentence of up

to 10 years and fines of up to $350,000. He is free on $100,000 bail.

Lavid’s attorney, Justin Walder, of the Roseland-based firm of Walder,

Hayden and Brogan, notes that his client has had numerous grants over

the years. He says that his client has admitted in open court to only

two facts, that $2,000 in electrical work performed at his home should

have been declared as income in 1999, and that there was one instance

of duplication in grant applications, when raw data used on a U.S. Air

Force contract was used, years later, as part of the work on a

National Science Foundation grant.

"We will ask the judge to take into account how long the company has

been in business – 22 years – and how many contracts for federal

agencies it has had under this program," says Walder. Judge Harold A.

Ackerman scheduled sentencing for October 7.

Located in the IRL building on Schalks Crossing Road, Energia does

research and development in environmental remediation, optical

diagnostics, combustion, laser ignition, and photochemical processes.

Assistant U.S. Attorney Mark Winston, of the government fraud unit,

alleged in a press release that Lavid had subcontracted out parts of

his research, and that this violated the terms of the grant. Both

attorneys declined to say how the duplicate grants came to the

attention of the federal government.

"It’s not all that uncommon for entrepreneurs to apply for a similar

project for two different agencies, to improve their prospects that

one will win. But you are supposed to tell them if you get both

grants," says Randy Harmon, director of the New Jersey SBDC’s

Technology Commercialization Center. He had not heard of the Energia

case.

"Often these technologies have numerous applications in numerous

industries, so it may be possible to develop a different application

for a different industry," says Harmon. "But when the agencies make

SBIR presentations, you hear them caution entrepreneurs about

duplication."

"We are in the midst of one of the busiest SBIR seasons," says Harmon.

"The Department of Defense has an open solicitation, so that between

now and July 3 the contact information for the topic sponsor is posted

on the web. Entrepreneurs can call, and if the sponsor is excited ,

you know you might have a good chance."

Harmon has scheduled SBIR workshops for Thursday and Friday, September

30 and October 1 (E-mail: rjharmon@njsbdc.com, 800-432-1832). This

summer he offers one-on-one online sessions with entrepreneurs to show

them how to conduct searches on an SBIR website to identify SBIR or

STTR topics that will fit their technologies. "We can also engage a

consultant and pay for 6 to 12 hours of coaching time," says Harmon,

"to coach the entrepreneur through the process."

Given the potential penalty for an incorrect SBIR application, getting

a consultant’s help might be a very good idea.

Top Of Page
Aereon Is Lured To Pennsylvania

Just as New Jersey was holding a press conference to tout a $850,000

grant to CareGain Inc., a healthcare asset management company that

expanded within New Jersey, Pennsylvania was announcing that it had

snagged another New Jersey company, Aereon Solutions, with a $62,500

funding guarantee and a grant of up to $250,000.

The two companies are of different sizes and in different stages of

growth. As announced at the press conference on Monday, June 21,

CareGain has quadrupled its space with a move to Windsor Corporate

Park, has closed a $6.8 million Series B round of financing, and has

30 employees (U.S. 1, June 16). Aereon Solutions moved from Princeton

Forrestal Village to Newtown, has closed a $1.7 million Series A round

of financing, and has 12 employees.

Aereon Solutions (not to be confused with Nassau Street-based Aereon

Corporation) provides field service automation platforms for equipment

and site-based service businesses. It has just landed its first

marquee account, the University of Pennsylvania, and it will provide

mobile application productivity solutions to Penn’s technicians and

engineers.

If Aereon Solutions had been a little older or a little younger, it

might have struck paydirt with one of New Jersey’s incentive programs.

Springboard grants, for instance, are geared for companies that need

to come up with a prototype. But in 2002, when Aereon might have

qualified for a Springboard grant, there was a budget crunch, and the

Springboard well went dry. (These recoverable grants have since been

restored and a fund of $10 million is being administered by the New

Jersey Economic Development Authority.)

Nigel Gardner, the CEO of Aereon Solutions, claims the only carrot

that the New Jersey’s commerce commission could offer him was one that

required him to personally guarantee the loan. "While that may be

appropriate in the early stage, it is not appropriate when there are a

significant number of outside investors and institutions involved in

the company," says Gardner. Aereon has had significant outside

investors since July, 2003. "There is no way that angel investors will

give a personal guarantee, and it is also unlikely that the CEO will

give a personal guarantee when he does not control the company."

The tug of war began at the end of last year, when Gardner submitted

an application to the Ben Franklin program. The Pennsylvania deal was

approved early this year, contingent on the company’s move.

"I tried hard to see if New Jersey could come up with a competitive

offering but they were not able to do so," says Gardner. "I didn’t

want to move. I live in New Jersey. But for the sake of the business I

wanted to do what’s best."

Gardner, 57, co-founded the firm with Arshad Masood, who also founded

Geeps.com and is involved with Visionet Systems at Exit8A. A graduate

of the University of Kent at Canterbury, Gardner earned the British

equivalent of the CPA designation and the equivalent of an MBA at the

Sloan School of Management at MIT. Not only had he worked 10 years as

a vice president of Chase Manhattan Bank, but he had also started a

two technology companies before founding Aereon.

The company’s $1.7 million financing round was put together by Robin

Hood Ventures, a Pennsylvania-based angel investor group, and a group

called Loosely Organized Retired Executives. Contributions came from

Intel Capital Corp., New York Angels, the Tri-State Private Investors

Network, and the Aereon management team.

Gardner was lured out of New Jersey by the Ben Franklin Investment

Partners (BFIP) program, the first of its kind in the United States.

Under this "angel guarantee," the state will reimburse up to 25

percent of investments made by angels (high-net-worth early-stage

investors) in a qualifying Pennsylvania company.

Launched at the end of 2002, the $2 million BFIP is an economic

development financing tool designed to promote increased investment by

accredited private investors in early-stage technology companies

located in southeastern Pennsylvania. It is funded by the Ben Franklin

Technology Development Authority.

In exchange for its guarantees, the BFIP is supposed to get a

guarantee fee of 1.5 percent per annum of the guaranteed amount, plus

an option to purchase, at the angel’s cost, up to 15 percent of the

investment.

For Aereon, the BFIP will support up to $250,000 of angel funding and

guarantee $62,500. Aereon might also receive up to $250,000 directly

from the Ben Franklin Technology Partners of Southeastern

Pennsylvania. The conditions: the 12-person firm had to move to

Pennsylvania. It moved last month.

Pennsylvania has two other new economic stimulus programs, the New

Pennsylvania Venture Guarantee Program and the New PA Venture Capital

Investment Program (www.newpa.com).

"How can we make Einstein’s Alley as successful as the Ben Franklin

program? Study the Ben Franklin program and provide something as

competitive," says Gardner, a Skillman resident. "I think it would be

great if New Jersey could offer a competitive program."

Aereon Solutions, 41 University Drive, Newtown, PA 18940.

Nigel Gardner, president and CEO. 267-757-8778; fax, 267-757-8768.

Home page: www.aereonsolutions.com

Top Of Page
Contract Awarded: Grant for Mikros

After selling its defense business in 1997 to concentrate on

commercial applications, Mikros Systems has reentered the military

arena and landed several military contracts. Just announced: a

$100,000 contract from the U.S. Navy for radar and wireless

communications systems related research. For the Small Business

Innovation Research Phase I contract, it will partner with DRS

Technologies of Parsippany to work with the AN/SPS-67 radar made by

DRS.

Military radars on navy ships can create interference with commercial

TV signals, and often they must be turned off when they come into

port, according to CEO Thomas Meaney. Mikros’ product would help

military radars to operate simultaneously with commercial systems,

says Meaney, who hopes the Phase I grant will lead to a Phase II

award.

Founded in 1978 in Albany, New York, Mikros uses microprocessor

technology developed for General Electric for the defense industry.

Its technology – a digital system for AM radio data transmission that

allows the simultaneous broadcasting of the traditional radio signal

and a digital signal – could enhance the data transmission rates for

both AM and FM radio.

Mikros had landed the New Jersey Commission on Science and

Technology’s first-ever Small Business and Innovation Research grant

in 1993 and in 1996 was one of the first winners of a Small Business

Administration innovation award. At one point Mikros employed 25

people at 3490 Route 1 North, but last year, the company had three

people on Alexander Road, and it was in the red. Then in August, 2003,

Mikros Systems won a $600,000 Phase II Small Business Innovation

Research contract with the U.S. Navy’s Dahlgren Division, Naval

Surface Warfare Center (U.S. 1, August 27, 2003).

Mikros Systems Corp. (MKRS), 707 Alexander Road, Building

2, Suite 208, Box 7189, Princeton 08543. 609-987-1513; fax,

609-987-8114.

Top Of Page
Downsizing: No Painkiller for Purdue

Thanks to generic competition to OxyContin, Purdue Pharma’s

painkiller, the Connecticut-based firm has had to chop half the jobs

at its Cedarbrook Corporate Center laboratory. Seventy jobs were cut

and about 75 workers remain to do basic research on pain therapeutics.

OxyContin had $1.8 billion in sales last year and represents 80

percent of the firm’s revenue, the company said. Purdue employs about

3,000 people overall, with 450 in New Jersey, and it opened the

115,000 foot Cranbury facility, built by Eastern Properties, in 2002.

Purdue Pharma LP, 6 Cedar Brook Drive, Cedar Brook

Corporate Center, Cranbury 08512. Tage Honore, vice president.

609-409-5123; fax, 609-409-5799. Www.purduepharma.com

Top Of Page
Leaving the Airport

Shuttle America, Trenton Mercer Airport, West Trenton

08628. 888-999-3273. Home page: www.shuttleamerica.com

In a third change of mind, Shuttle America has decided to leave

Trenton, leaving Boston Maine airways a clear field for flights to

Bedford, Massachusetts.

Top Of Page
Management Moves

Church & Dwight Co. Inc. (CHD), 469 North Harrison

Street, CN 5297, Princeton 08543-5297. Robert A. Davies III, chairman

and CEO. 609-683-5900; fax, 609-497-7177. Home page: www.armhammer.com

James R. Craigie, 50, will succeed Robert Davies, 68, as president and

CEO, effective July 6. A graduate of the University of Rochester, with

an M.B.A. from Harvard University. His most recent job, was to do a

turnaround of at an athletic equipment maker, Spalding. Craigie has

been CEO of Spalding Sports Worldwide since 1998. He has also been

executive vice president at Kraft Foods/General Foods, where he was

general manager of beverages and desserts. Davies, who has been

president and CEO since 1995, will retain his job as chairman.

Voxware Inc. (VOXW.OB), 168 Franklin Corner Road,

Lawrenceville 08648. Tom Drury, CEO. 609-514-4100; fax, 609-514-4101.

Home page: www.voxware.com

The new vice president and CFO at Voxware, Paul Commons, was most

recently CFO at VPIsystems Inc. Voxware is a provider of integrated

voice-based solutions for distribution and logistics operations.

Top Of Page
New in Town

Connecting Products, 194 Tamarack Circle, Skillman 08558.

Anthony Freakes, president. 609-688-1801; fax, 609-252-1877.

In March Connecting Products, a manufacturer of electrical lead wires

and connectors, opened an office at Montgomery Knoll. It has plants in

Ridgefield, New Jersey, and El Paso, Texas, and its clients are

manufacturers of consumer products and automobile parts.

Top Of Page
Crosstown Moves

Marta Cruz Gold Esq., 160 Lawrenceville Pennington Road,

Lawrenceville 08648. 609-924-8500; fax, 732-875-1198.

Marta Cruz Gold has changed her mailing address, moving it from 60

Mount Lucas Road. She does real estate, immigration, and bankruptcy

law.

Top Of Page
Deaths

Terry O. Blackburn, 61, on May 17, of a heart attack in the

Mediterranean. A structural engineer, he had retired in 2000 from

Schoor-DePalma in order to sail with his wife around the world.

David Messineo, 45, on June 11, of an apparent heart attack. He was

principal organist at Princeton University, known for his

improvisations to the 1925 silent movie, "The Phantom of the Opera."


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