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
"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
"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: email@example.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.
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
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
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."
Nigel Gardner, president and CEO. 267-757-8778; fax, 267-757-8768.
Home page: www.aereonsolutions.com
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
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
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).
2, Suite 208, Box 7189, Princeton 08543. 609-987-1513; fax,
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.
Corporate Center, Cranbury 08512. Tage Honore, vice president.
609-409-5123; fax, 609-409-5799. Www.purduepharma.com
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
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.
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.
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.
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
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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