LDFA 1-27-09 Board Meeting Packet

8/14/2019 LDFA 1-27-09 Board Meeting Packet

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- ANN Arbor/YPSILANTI

SMARTZONE

LDFA Board MeetingJanuary 27, 2009

8:15am to 10:15 amSPARK Central Incubator

330 E. Liberty Street, Arm Arbor, MI 48104

Agend aI .Call to Order0 .Approval of the AgendaI I .Approval of the Minutes of theNovember 14, 2008 Special Board

Meeting0 . L D F A C h a i r ' s R e p o r tV. Reports from Service Providers

a. Acceptance ofSPARK Report FY2009 2nd Quarter

Ended December31, 2009

b. Acceptanceof theSPARK FY2009Entrepreneurial Plan c.Acceptanceof the SPARKFY 2009Cantillon

MaintenancePlan (to bedistributedat themeeting)

VI. LDFA Treasurer's Reporta. LDFA Financial Report 2nd

Quarter Ended December 31, 2008VII. Reports from Committees

a. Update of AuditCommittee

Review/Acceptance

of SPARK CorrectiveActions Plan, DatedNovember 7, 2008Abraham & GaffneyEngagement Letter:FY 2009 SPARK Audit,Six (6) Months EndedDecember 31, 2008

b. Ad-hoc Committee for Re-designof SPARK Reporting Elements

c.Ad-hoc Committee forStrategic Planning and


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Auditd.By-Laws Committeee. Contract/BudgetCommittee

Phase IScreenings toDetermineGeographicLocationEligibility

VIII. Report from the MEDCIX. Other Business

a.Ann Arbor AngelsProposalb.Committeeappointments NominatingRecommendation c.FY 2008 LDFAAnnual Report

X. Motion to Adjourn


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Ann Arbor/Ypsilanti SmartZone LDFABoard of Directors

FY 2009

Municipality Member LDFA Title Term Starts Term Ends Company Phone Email

Ann Arbor Mike Korybalski Vice Chair 10/4/2004 6/30/2011 369-2774 [email protected] Arbor Rob Risser 6/30/2002 6/30/2009Picometrix, Inc. 864-5605 [email protected] Arbor Steve Rapundalo 10/15/2007 6/30/2011City of Ann Arbor 476-0648 srapundaloaa2cov.orqAnn Arbor Richard Beedon 11/17/2008 6/30/2009MacBeedon Group 323-0114Ann Arbor Theresa Carroll 6/30/2008 6/30/2012Dykema Gossett PLLf 214-7698Ann Arbor Lisa Kurek 6/30/2008 6/30/2012Biotechnology Busine 930-9741 lisaebioconsultants.com

Y silanti Darr l Daniels Treasurer 6/30/2007 6/30/2011Jacobsen Daniels 734-961-3200 darrvleiacobsendaniels.comYpsilanti Mark Maynard 6/30/2008 6/30/2012U-M Tech Transfer 734-516-1432 mmaynardnumich.edu

Ypsilanti Richard King Chair 6/30/2005 6/30/2009SDTDC 487-0490 [email protected]

Ex-officio Roselyn Zator MEDC (517)241-0771 zatorramichigan.orqEx-officio Tom Crawford Recording Secretary City of Ann Arbor 994-2909 tcrawforde.a2clov.orq
mailto:[email protected]:[email protected]://lisaebioconsultants.com/http://darrvleiacobsendaniels.com/http://mmaynardnumich.edu/mailto:[email protected]:[email protected]://lisaebioconsultants.com/http://darrvleiacobsendaniels.com/http://mmaynardnumich.edu/mailto:[email protected]:[email protected]


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H: 734

C: 734

A R T Z O N E -

D R A F T

MINUTES SPECIAL BOARD MEETINGNovember 14, 2008

Ann Arbor-Ypsilanti SmartZone Local Development Finance Authority

City of Ann Arbor, Guy C. Larcom, Jr. Municipal Building, 5th Floor Conference Room100 N. Fifth Ave., Ann Arbor, MI

Members Present: Richard King, Michael Korybalski, Rob Risser, Stephen Rapundalo,

Theresa Carroll, Mark Maynard, Darryl Daniels, Lisa Kurek, Roselyn Zator-Ex-officio, TomCrawford-Ex-officio

Members Excused:

Others Present: Michael Finney-SPARK, Scott Olson-SPARK, Greg Fronizer-SPARK,

Elizabeth Parkinson-SPARK, Skip Simms-SPARK, Kurt Riegger-SPARK, Timothy Marshall-SPARK, Sandi Bird-City of Ann Arbor-Finance, Tina Reed-Ann Arbor News, Nathan Bomey-Ann

Arbor Business Review, Mickey Katz-Pek

CALL TO ORDER:

King called the meeting to order at 8:14am. A quorum was present.

APPROVAL OF THE AGENDA:Korybalski moved, seconded by Rapundalo, to approve the Agenda for this meeting in the form

presented at this meeting, as amended per discussion. Motion approved unanimously.

MOTIONS & RESOLUTIONS:

1. Minutes of the October 28, 2008 Board Meeting:

Risser moved, seconded by Korybalski, to approve the Minutes of the October 28, 2008 boardmeeting in the form presented at this meeting, as amended per discussion. Motion approvedunanimously.

REPORT FROM COMMITTEES:

1. Audit Committee:

The question was called at the October 28, 2008 meeting to confirm the number of votesrequired to approve a motion when a 6 member quorum is present, and the answer is 5, at alltimes.


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D R A F T

Risser moved, seconded by Rapundalo, in reference to the FY 2008 Agreement between theLDFA and Ann Arbor SPARK, whereby Ann Arbor SPARK owes the LDFA $23,612.50 for netoverbillings relative to the audit findings, subject to the potential adjustment for the $2,312.50inadequate documentation for Phase II and Phase Ill if provided within 30 days. Payment dueDecember 1, 2008. Motion approved unanimously.

Risser moved, seconded by Korybalski to provide for SPARK employees to incur up to 1 hourof Phase I screenings, per new Phase I company, to determine geographic location eligibility forreimbursed services under the FY09 LDFA contract with SPARK. Further, the LDFA shouldinvestigate if a modification to the existing SPARK FY09 contract is necessary in order to

clarify this geographic eligibility screening of one (1) hour during Phase I. Motion approvedunanimously.

OTHER BUSINESS:

1.Nomination of Officer Position Treasurer

Korybalski moved, seconded by Risser, to nominate Darryl Daniels as Treasurer. Motionapproved unanimously.

2.Committee Appointments Contract/Budget, Nominating Recommendation,By-laws, Ad-hoc Committee for Re-design of SPARK Reporting Elements, Ad-hoc Committee for Strategic Planning and Audit:

The Chair made the following committee appointments:

Contract/Budget Committee:

Daniels (Chair), Carroll, Risser

By-laws Committee:

Carroll (Chair), Daniels, Rapundalo

Ad-hoc Committee for Re-design of SPARK Reporting Elements:Kurek, Maynard, King

Ad-hoc Committee for Strategic Planning and Audit:Risser, Korybalski, Kurek, King

3.Update of Ann Arbor Angels:

Korybalski reported SPARK is working with the Ann Arbor Angels and a proposal would beforthcoming to the LDFA.

4.Proposed Meetings/Location:

King requested a conference call meeting, prior to the January meeting, between the LDFAboard members and the City of Ann Arbor Attorney's office to discuss the Open Meetings Act.Public meeting notice to be forthcoming.


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D R A F T

Carroll moved, seconded by Daniels to move the location of the January LDFA board meeting tothe SPARK Central Incubator due to the current City Hall construction with limited parkingspace. Motion approved (Rapundalo No).

5.FY 2009 Budget Reallocation:

Risser moved, seconded by Maynard to amend the agenda to add item for budget reallocation.Motion approved unanimously.

Risser moved, seconded by Korybalski, to provide funding of $10,000 for Cantillon Maintenanceand to authorize the budget reallocation by reducing the unexpended Cantillon EntrepreneurialEducation Series-Maintenance, Enhancement and Operation, budget line item-Development.Motion approved unanimously.

0.FY 2009 Administrative Agreement between the LDFA and the City of AnnArbor:

Korybalski moved, seconded by Maynard to authorize the Chair to review and execute the FY2009 Administrative Agreement between the LDFA and the City of Ann Arbor, not to exceed$4,000. Motion approved unanimously.

1.Executed Copy of Attachment C to the FY 2008 Agreement between theLDFA and Ann Arbor SPARK:

King noted Attachment C to the Agreement between LDFA and Ann Arbor SPARK, dated July15, 2008, in the form presented at this meeting, and attached hereto and made a part hereof,reflects the budget increases approved at the June 13, 2008 board meeting.

2.FY 2008 LDFA Annual

Report: Postponed until the next

meeting.

REPORT FROM SERVICE PROVIDERS:

Korybalski moved, seconded by Risser, to accept The Ann Arbor SPARK Business AcceleratorReport, Attachment A: Business Accelerator Clients, for the quarter ended September 30,2008, in the form presented at this meeting and attached hereto and made a part thereof.Motion approved unanimously.

The Chair requested the Budget/Contract Committee to review the Corrective Action Plan reportsubmitted by Ann Arbor SPARK.


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D R A F T

MOTION TO ADJOURN:

Risser moved, seconded by King, to adjourn the meeting at 9:23am. Motion approvedunanimously.

Respectfully Submitted,

Tom Crawford, Recording Secretary


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Ann Arbor-Ypsilanti SmartZone

Local Development Finance Authority

Ann Arbor SPARK

Quarterly Report

October 1, 2008 through December 31, 2008

Work Accomplished

Number and identity of companies in each phase, plus relevant aspects of

commercialization

59 companies in Ann Arbor were served this quarter. Countingcompanies outside the area a total of about 80 companies wereserved with Phase I, II and III services.

The following companies only received Phase I reviews

Absolute 3D ImagingAviCenna MedicalSystems, Inc.Bio LogicEngineering, Inc.Brooks Newco

Brugeman Newco

Carew Energy, Inc.

Cutting ImageHistology, LLC

DiMarzo NewcoDVM Newco

ePack

fiftySense LLCGlobal

ManagementConsultants, LLC

Livonia

Ann Arbor

Dexter Troy

Ann Arbor

Grand Blanc

Ann Arbor Ann Arbor Ann Arbor

Ann Arbor Chelsea

Ann Arbor


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Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 1

Business planning

Business planningassistance

Assistance withbusiness planning,financial modeling,funding

Concept validationand referralBusiness modeldecisions and

implicat

ionsforplanning

Conve

rting waste to neutriceutical.

Business plan development

Business planning

Organizing next steps, possibleMLSIC tenantMEMS packaging source

Newco

Quality management consulting


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ase Monkeys, LLCBusiness Academymzsystems

Ann Arbor Business planning and networkconnections

Ypsilanti Eligibility requirement

Ann Arbor Newco

Ann Arbor New product commercialization help

Patient

Provider

Comm

unicatio

ns

Photonic

Crystal

Biosys

tems

PillarTechnology

Real3D Places

Rate My

Student Rental

Smoothie

Llama

SofirekStephanie

Freeth Newco

stopyourforecl

osure.org

thePatientConn

ection

Threefold

Sensors/IA, Inc.

Toolp

ax

Valent

a

Newco

Wedli

nk

WorknetSystems

Ann Arbor Ann Arbor

Brighton Howell

FlintAnn Arbor Franklin Ann

Arbor Novi

Ann Arbor Ann Arbor

Dexter

Ann Arbor
http://stopyourforeclosure.org/http://stopyourforeclosure.org/http://stopyourforeclosure.org/http://stopyourforeclosure.org/


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Referral to BBC

for SBIR

Market

validation

andbusiness

planning

Outside the area

Can't help

Online studenthousing site

Mobile

Smoot

hieFranc

hise

Newco

Business

Idea

Form

Referr

ed to

others

Looking for fundingMarket entry strategy,

introductions Business

planning for

investment

Web 2.0 for linking

photographers and

weddings

Growth strategy

The following companies were in Phase II

Due Diligence this quarter but have not

reached Phase Ill

Boomdash

ExpressByte

Ann Arbor Market entry strategy for secondmarket channel

Ann Arbor Marketing assistance


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Akervall Technologies Daixo

n Arbor 1800018000

n Arbor 4000

n Arbor 25002500Mobatech, Inc.PhiosAnalyticalLaboratories

UrTurnAdGuru

TheGISH

AudialloBetter Rehab,

LLC

Huckestein

Newco Kiyo

Networks

MarketMonitor

HQ Nudge

Them Inc.

Ann

Arbor

Ann

Arbor

Ann

Arbor

Ann

Arbor

AnnArbor

Ann

Arbor

Ann

Arbor

AnnArborAnnArborAnnArborAnnArbor

Education, Financial,

Business Plan Review

plans for moving forward

Fundraising assistance

Due diligence, developengagement proposalBusiness planning andtechnical assistanceNext stepsBranding, webarchitecture and IPassistance

Evaluate technology

hurdles Business Idea

Form

NewcoInitial Meeting

The following companies received Phase III level support

AccountName

BACity Request

Amt

BAContract Statement of Work orMilestones Amt

Market assessment and product mappingMarket assessment and entry strategy


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Arbor Ann Arbor00 4000ng, LLCvation Online

hnologies Hygieia, Inc.

r Ann Arbor

90006400 6400

5105

Sciences, IncArbor

Sentry Medical Technologies

Arbor 15000000

Ann Arbor SPARK Q2, 2008/09 LDFA Report Page

recommendations

Development of financial assumptions andreportsValue chain analysis, market segmentation and

meeting w/DTECorporate identityMarket assessment and partnering opportunities

Business planning

Business plan review for fundingCombination of remaining amounts from earlierProposalsProduct development and market research


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Ann Arbor 1470011725

Ann Arbor Ann Arbor

Ann Arbor 15000 Ann ArborAnn Arbor 14700

11000

2400

11725


Switchback LLC Ann Arbor 2400

Velesco Pharmaceutical Services LLC

Wizrad Ann Arbor

Development of sales and

marketing structure

Website marketing tactics and

strategy

Market research

Number and identity of companies that completed phase III engagements

EiPon Learning, LLC

Hygieia, Inc.

Sentry

Medical

Technologies

Switchback LLC

Velesco Pharmaceutical

Services LLC

16800 Corporate identity

6400 6400 Business plan review for funding

Product development and market research

Development of sales and marketing structure

Website marketing tactics and strategy

Founding location, current location

We have just started tracking where the companies were located at the time the initial

contact occurred. We do not yet have enough data to provide a meaningful report with

this information.

Work to be Accomplished:

We anticipate the volume of companies served next quarter will be slightly higher than

this quarter.

Next Boot Camp will be held in

April. Problems

SPARK would like clarity on:

1.Phase III use of funds for companies that need services not easily or practically billable atan hourly rate

2.Event Sponsorship qualifications or limitations,

if any 3. Hosted Event location limitations within

SmartZone Significant Deviation from Scope of

Work

Number of companies reaching Phase II due diligence is under our projections. This is

due in part to the number of companies actually located in the city of Ann Arbor at a


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stage of development or preparedness for acceleration services. Despite this anomaly we

are using more


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C'est Moi!

itFire

ontis Biotechnologies GIDEON2 Imagination International

n the Groove

Magic Bio

Michigan Aerospace

MKP Structural Design Associates, Inc.

Next Generation Therapeutics

vation (FM) is an AI- based recommendation system that draws on personality and populatio

bor Ann Arbor Saginaw Ann Arbor Ann Arbor

Ann Arbor


Phase III services with companies to accelerate their progress. This will continue to be the case.The forecast for the next two quarters for Phase II and Phase In expenditures are significantly

higher than the first half of the year but we believe we could reach them. The hours spent in Due

Diligence is averaging much less than originally estimated and may be too high still, but Phase

III support will be ramped up the next half of the year.

Business Incubator expense this quarter was higher than forecast because paid rents weresignificantly in arrears. We experienced significant IT challenges also which drove up

maintenance costs. Our concern going forward is the number of paying tenants meeting our

estimates.

Business Services

The following companies attended the 14th Entrepreneur Boot Camp inNovember:

Anita GoodBee

Audiallo

Biomatrix Photonics

(BMP)

Transcutaneous Raman

Spectroscopy (TRS) is an opticaldiagnostic tool for non-invasive

measurement of bone quality.

511 Fairview

819 Brown #3

930 N. University

Ave., Lab 4638

Ypsilanti

Ann Arbor

Ann Arbor

26677 West TwelveSouthfield

Mile Road

1645 MoreheadDrive Ann Arbor

2284 Hardyke Ct. Ann Arbor

University of Michigan

University of Michigan

7600 Madeline Street

1601 Pond Shore Drive

1777 Highland Dr., Suite B

2500 Packard Street,

Ann Arbor Suite 1052900 Huron Parkway Suite 8


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enix Technologies 3424 EECSBuilding, 1301 Beal Ann Arbor Ave

Ann Arbor

tchback LLC WindStar Energyted Events


Wireless sensor motes that offer the sensing andcomputational capabilities of traditional sensor moteswith costs and form factor similar to those of passivesensors (RFID tags).A traditional website mimics print

marketing. A CMS lets a client536 South Firstmake the most of the internet by Streetmanaging their own website.

1684 Parkside Ct. Ann Arbor

SPARK hosted 19 entrepreneurial events thisquarter, all at SPARK Central. Attendance rangedfrom 9 to 64 entrepreneurs with a total of 566attending.Sponsorships/Partnered Events

We sponsored only one event this quarter.ArbCamp was an ad-hoc 'unconference' of ideasshared in an open environment for technologyentrepreneurs and could-be entrepreneurs. 163people attended.

See

invoic

e for

detail

s of

each

event

.

SPAR

K

Central

Incubat

or

Five companies were tenants at SPARK


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Central this quarter, four tenants at the end ofthe quarter. They are:

Openworld Institute - Entrepreneur looking foropportunities - December, 2008

Vision Interface Technologies - Non-contact

spatial input/pointing system - December, 2007

Ruby Skills - Computer code around Ruby

technology - August

Hygieia - Glucose monitor that recommends dosageadjustments for improved glycemic control -September

Outreach

Cantillon Entrepreneurial Education

The following entrepreneurs took advantageof the Cantillon program. These are mostlyattendees of the November Boot Camp andfocused on Unit 2 "The Executive Summary".

Alice Brown - In Groove111111.111111M,..

Last Login: Octob2:06 AM Total Log


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Good activity - 1 Plan review taken

Mark Birac - GIDEON

Last Login: December 22, 2007, 2:32 PM

Total Login Time: 14 hours, 0 minutes

Excellent activity 24 plan reviews taken

Scott Hanson

Last Login: October 14, 2008, 9:44 PM


Excellent activity 17 plans downloaded and 3

reviews taken

Greg Hulbert MKP.6



Very good activityZd Ma MKP



Vladimir Marakov auditor this cyclek W

Last Login: July 28, 2008, 5:27 PMTotal Login Time: 16 hours, 5 minutes

Exceptional activity- 21 visits to the course overthe period of 2 months; 17 plans downloaded

Stephen Colson - Switchback



Limited activity

Cliff Williams MI Areo


Total Login Time: 19 minutes

Limited activity

Katie Miller i2 ImaginationLast Login: October 18, 2008, 12:29 PM

Total Login Time: 29 minutes

Esmonde Whites

Last Login: October 14, 2008, 9:00 PMRavi Birla Not camper this cycle Total Login Time: 4 minutes

Last Login: October 6, 2008, 11:07 PM Limited activity downloadsTotal Login Time: 5 hours, 8 minutes

Interest in using Cantillon as a tool for entrepreneurs continues to grow with SmartZones at TechTown,Battle Creek Unlimited incubator, and the OUlNCubator looking to contract for licenses. JacksonCommunity College, Kettering University, Saginaw Valley State, and Northern Lakes Regional ED are

evaluating the product. Professors at U of M and EMU are piloting the use of the product as part of their

class syllabus.

Other

In a separate proposal is a plan for the maintenance, enhancement and ongoing operation of Cantillon.

Lastly, there is a separate proposal from Ann Arbor Angels which we support. The revival of this

Angel network is vital for the long term success of our efforts to accelerate companies. With

limited capital investment available to young companies it is more important than ever in today'seconomic climate to have a robust source of capital.



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A N N A ,ARKIGNITING. INNOVATION

Entrepreneur Education: Emerging Growth

Proposed Emerging Growth Seminar SeriesTwo-Unit Series: Leadership and Sales

Getting the Right Results, The Right Way, Right NowBased on the book "How Great Leaders Get Great Results"John Baldoni (author), Bill Wood (consultant, advisor)

Sales Master University curriculumDenise Rob erts of Sales Partners TroyFour month, bi-weekly program

Two-part format

Platform training, delivered by experienced entrepreneurialmentors

One-on-one co aching following sem inar for enrolledentrepreneurs only, to apply !earnings to specific situations

Budget amount $20,700


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1

September 17, 2008

To: LDFA Board

From: Scott Olson, Ann Arbor SPARK Subject: Entrepreneurial Education Plan 2008-2009

NOTE: This memo replaces the memo dated July 15, 2008 of the same Subject.

Ann Arbor SPARK stimulates Washtenaw County's dynamic entrepreneurial community by

focusing on the three areas vital to economic growth: ideas, people and funding. Through

its entrepreneurial education initiatives, SPARK helps entrepreneurs increase their chances

of launching and growing successful businesses.

Background

Entrepreneurial education tends to organize by Stage of company maturation, with the bulk of

activity in the Washtenaw County region at the formation Stage. For purposes of analyzing

entrepreneurial education programs, the following "Stage" definitions are used:

Stage Definition

Concept Ideation Formation of the business idea through

InnovationDevelopment of the business idea into a

product or service that a marketplace could

PlanningFormalizing the implications of the business idea and

the resources that are required to bring it to the

Commercialization

Product Development

Based on the earlier stages, creating and refining with

the intended customer and the supplier partners

the intended product or service offering

Launch Entering the target market with a product or service

Growth SystematizationDeveloping the systemic processes that allow a

company to expand its products or services

ExpansionBreaking in to new markets or new products that

take advantage of the company's existing base

Rapid Growth

Real iz ing the growth through sales of the

company's products and services, with the

attendant resource requirements to enable the

There are numerous educational programs in the Washtenaw County area, through SPARK

and several other entrepreneurial support organizations. Existing programs are summarized

below, with their status for the 2008-2009 year. Also included in the table are other

resources available to entrepreneurs in Washtenaw County.


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2

Educational Program DescPt ion and Status

Cantillon eCourse for

Technology Entrepreneurs

Cost: Free to Washtenaw

County entrepreneurs

Format: Self-paced course with up to10 hours of individual mentoring

available Stage: Commercialization

Cantillon is a 10-module, self-paced course

designed for the technology entrepreneur, with the

remote assistance of an experienced mentor. As of

uly 1, 2008, eight of the modules were available; the

final two are scheduled to go live by August 31,2008. The course is being marketed within

Washtenaw County, including through university

channels, and across the state through the

Entrepreneurial Boot Camp

Cost: $995

Format:Two-day intensive trainingincluding three individual breakout

sessions with experienced mentors

Stage: Commercialization

For the past 10 years, the Entrepreneurial Boot

Camp has been serving technology entrepreneurs

from around the region. Delivered by well-respected

entrepreneurs and educators, the Boot Camp also

draws from a pool of over 100 experienced mentors

who volunteer their wisdom in guiding the

Marketing Roundtable

Cost: Free

Format: Monthly panel discussion

with Q&A, moderated by marketing

professionalsStage: Commercialization, Growth

The Marketing Roundtable is a ten-session monthly

series featuring regional talent who discuss practical

and cost- effective innovation marketing. Program

topics range from brand strategy to social media,

and from financial accountability to guerrilla

marketing. There is a strong networking emphasis as

Starting Your Own Business

Seminar Cost: $25

Format: One day with hands-on

exercises plus access to support service

organizations Stage: Concept

Attendees learn about personality traits that impact

entrepreneurialism; how to create a marketing

plan for their businesses; and details of legal,

accounting, franchises, business plans and

financing options. They also receive one on one

counseling with a business expert and have an

opportunity to get advice from a variety of business

experts and organizations that are available to

FastTrac TechnoVenture

(GLEQ) Cost: $395

Format: Six-session evening

program facilitated by a trained

mentor and including guest

entrepreneurs

Stage: Concept

Developed by the Kauffman Foundation specifically

for knowledge-based businesses, the program was

modified. by SPARK and the MI-SBTDC in 2007 from

a 10-session format to the current 6-session.

Materials must be purchased from the Kauffman

Foundat ion, and on ly trained mentors can deliver

the course. It is unknown if GLEQ or MI-SBTDC will

Intro to Commercialization

(Biotechnology Business Consultants)

Cost: FreeFormat: Half-day session for life

science companies

Stage: Concept, Commercialization

This half-day session for early stage life science

companies and entrepreneurs explores issues

pertaining to commercialization and identifies

BBC resources available to support the

commercialization process. It is targeted toward

Michigan-based scientists and entrepreneurs

interested in commercialization of life science

SBIR/STTR 101 Intro and

Overview (Biotechnology Business

Consultants) Cost: $50

Format: Half-day workshop covering

This half-day workshop covers the SBIR/STTR

program basics, including: program purpose;

eligibility; and sources of funding. The course is

targeted to a broad audience that is still exploring


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3

of federal funding through the SBIR

and STIR programs

Stage: Concept, Commercialization

is designed to provide enough information for

attendees to determine if they would like to

seriously pursue proposal development.

SBIR/STTR Proposal Presentation Periodic courses, including some that emphasize NIH

Workshop (Biotechnology Business funding and cover electronic submission. Includes

Consultants) detailed instruction on proposal preparation,

Cost: $125 both technical and commercialization plans and

Format: 1 to 2 day intensive course,

depending on the content and

submission procedures. Differences between

agencies are addressed. Core principals of

covered SBIR/STTR proposals are stressed.

Stage: CommercializationVision to Reality (Small Business and Basic seminar on how to start a business, for all types

Technology Development Center) businesses.

Cost: $30

Format: Monthly 2.5 hour seminars

taught by SBTDC counselors and

business professionals

Stage: Concept

Assessment

While there are numerous educational opportunities at the earliest Concept and

Commercialization Stages of a new venture, the needs of entrepreneurial businesses at the

operational Commercialization and Growth Stages are thinly met. (Later Growth Stages are

similarly poorly met, but are not the focus of this assessment as the companies in those

Stages have many more resources available.)

To address the needs of the operational Stage entrepreneurs in Sales and Leadership,SPARK has outlined two courses in conjunction with its consultants. The courses have share

several characteristics:

1. Targeted to entrepreneurs in early Growth (Systematization and Expansion Stages)

technology ventures

2. Courses have practical focus, suitable to immediate implementation, with discussion

format to engage specific actions

3. Enrollment benefits include individual coaching between education modules by topicpresenters

4. Smal l fee to support commitment to attend

5. Delivered by entrepreneurs experienced in operational areas (including coaching)

SPARK proposes to progress with a two-part emerging Emerging Growth series as follows:

1. Emerging Company Leadership, delivered by John Baldoni and Bill Wood (based on

Baldoni's book "How Great Leaders Get Great Results") (one day session followed

by three one-hour coaching sessions spaced monthly).

2. Sales Master University, delivered by Denise Roberts, Sales Partners Troy (4 month

program with biweekly half-day sessions and intervening coaching).


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4

BudgetA maximum budget has been authorized under the LDFA-SPARK contract dated as of June 30,

2008. The following breakdown is projected, within 20% of the indicated amounts but not to

exceed the total amount without prior authorization by the LDFA.

$ 8,000Emerging Company Leadership Development (program design, materials, recruitmentofentrepreneurs in cooperation with SPARK) and delivery of monthly content,

including coaching

$ 12,000Sales Partners Delivery of content and monthly one-on-one coaching$ 700Miscellaneous (facility charges in excess of collected fees)

$ 20,700 TotalNext StepsPursuant to the LDFA-SPARK contract dated June 30, 2008 (sections 1.4.2, 3.2.1, and 3.7) this

plan must be approved by the LDFA, and such approval is hereby requested.


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AN N! AR ti WE ,. e ... ILAN 11

S M A R T Z O N E ' ' ' ' ' '

FINANCIAL SUMMARYas of December 31, 2008


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ACTUAL ACTUAL FORECAST FORECAST

Q1 Q2

Q3 Q4 Full Year

Smart Zone LDFA

DELIVERABLESas of December 31, 2008

67 42 74 74 257Memo: Total Phase II Hours

Memo: Total Phase Ill Hours 392 618 1,046 1,094 3,151

22 21 1 23 21 213 21 (8) 71 84 (13)

2.5 10.0 (7.5)2.5 10.0 (7.5) 2.6 10.0 (7.4)2.5 10.0 (7.5)

Phase II (Due Diligence) $100/hrNumber of Clients

Actual/Forecast 23 17 30 30 100Budget/Proposed 11 11 11 11 44Actual Over/(Under) Target 12 6 19 19 56

Hours per Client (Avq)Actual/Forecast 2.9Budget/Proposed 10.0Actual Over/(Under) Target (7.1)

Phase Ill (Intensive Service) $100/hr Number of New ClientsActual/Forecast 13Budget/Proposed 21

Actual Over/(Under) Target (8)

Hours per Client (Avg)

Actual/Forecast 30.2 47.6 47.6 47.6 43.2Budget/Proposed 40.0 40.0 40.0 40.0 40.0Actual Over/(Under) Target (9.8) 7.6 7.6 7.6 3.2

Smartzone Financial Report 12-31-08 (2).xlsx


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ACTUALS A CTUA L FO RECA ST FOR ECAS T

01

B U D G E TForecast

(Over)/UnderAmount Budget

VARIANCE Explanation

Q2 03 Q4Full Year

Smart Zone LDFA

FY 2008 FINANCIAL SUMMARYas of December 31, 2008

INCOME STATEMENT

Revenues:

Tax Revenue $ 580,396 $ 213,861 $ 142,574 $ 13,662 $ 950,492 $ 950,492 $ -

Miscellaneous 5,000 23,763 28,763 28,763

Investment Income 4,655 5,000 2,000 $ 1,000 12,655 12,655

Total Revenues $ 590,051 $ 242,623 $ 144,574 $ 14,662 $ 991,910 $ 950,492 $ 41,418

Expenditures:

Contracted Services

SPARK BA Direct Staffing (39,252) (39,252) (39,252) (39,244) (157,000) (157,000)Phase II (Due Diligence) (2,800) (1,350) (7,410) (7,410) (18,970) (44,000) 25,030

Phase III (Intensive Service) (39,040) (61,825) (104,627) (109,383) (314,875) (334,000) 19,125

Bus. Network Events-Hosted (2,312) (3,679) (4,800) (4,800) (15,591) (19,200) 3,609

Bus. Network Events-Sponsorships (831) (1,250) (10,000) (6,000) (18,081) (24,000) 5,919Entreprenuer Educ.-Bootcamp & Grants (10,000) (20,350) (10,175) (40,525) (40,700) 175

Tuition Matching (9,453) (5,000) (5,000) (19,453) (20,000) 548

Cantillon Web Based Education (4,600) (11,800) (23,600) (13,600) (53,600) (54,400) 800

Total Contracted Services $ (98,834) $ (128,609) $ (215,039) $ (195,612) $ (638,095) $ (693,300) $ 55,206

Other Proiected Services

Marketing - P/R, Print, Websites (7,069) (14,324) (14,600) (14,407) (50,400) (50,400)Business Incubator (26,487) (43,443) (35,000) (35,000) (139,930) (139,930) 0

SPARK Accounting (10,750) (10,750) (10,750) (10,750) (43,000) (43,000)

Legal & Admin. Support (17,293) (4,000) (6,208) (27,500) (27,500)

Other Contingency

Total Other Projected Services $ (61,598) $ (68,517) $ (64,350) $ (66,365) $ (260,830) $ (260,830) $ 0

Total Expenditures $ (160,432) $ (197,126) $ (279,389) $ (261,976) $ (898,924) $ (954,130) $ 55,207

Net Increase/Decrease $ 429,619 $ 45,497 $ (134,815) $ (247,315) $ 92,985 $ (3,638) 9 6 6 24 )

Memo:

Fund Balance (6/30/2008) $ 178,240

Fund Balance - Operations (Qtr End) $ 607,859 $ 653,356 $ 518,541 $ 271,226

Smartzone Financial Report 12-31-08 (2).xlsx


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Legal & Admin. Support July 08 1 2009 1 Audit 1.00 $ (12,360.00)SPARK BA Direct Staffing July 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)

Phase II (Due Diligence) July 08 1 2009 1 Hours 20.00 $ (2,000.00)

Phase III (Intensive Service) July 09 1 2009 1 Hours 140.55 $ (14,055.00)Business Incubator July 08 1 2009 1 Facility Exp 1.00 $ (8,679.52)

SPARK Accounting July 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)

SPARK BA Direct Staffing Aug. 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)

Phase II (Due Diligence) Aug. 08 1 2009 1 Hours 4.00 $ (400.00)

Phase III (Intensive Service) Aug. 08 1 2009 1 Hours 174.15 $ (17,415.00)Business Incubator Aug. 08 1 2009 1 Facility Exp 1.00 $ (10,466.98)

SPARK Accounting Aug. 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)Bus. Network Events-Sponsor: Aug. 08 1 2009 1 Events 1.00 $ (268.00)

Bus. Network Events-Hosted Aug. 08 1 2009 1 Events 1.00 $ (1,009.77)Cantillon Web Based Educatio Aug. 08 4 2008 1 Dev Unit 10 1.00 $ (12,000.00)

Cantillon Web Based Educatio Aug. 08 4 2008 1 Accr. 6/08 1.00 $ 12,000.00

Legal & Admin. Support Sept. 08 1 2009 1 Audit 1.00 $ (4,932.50)SPARK BA Direct Staffing Sept. 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)Phase II (Due Diligence) Sept. 08 1 2009 1 Hours 4.00 $ (400.00)Phase III (Intensive Service) Sept. 08 1 2009 1 Hours 75.70 $ (7,570.00)

Business Incubator Sept. 08 1 2009 1 Facility Exp 1.00 $ (7,340.25)

SPARK Accounting Sept. 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)Bus. Network Events-Sponsdr: Sept. 08 1 2009 1 Events 1.00 $ (562.86)

Bus. Network Events-Hosted Sept. 08 1 2009 1 Events 1.00 $ (1,301.81)

Marketing - P/R, Print, WebsitE Sept. 08 1 2009 1 Marketing 1.00 $ (7,068.76)Cantillon Web Based Educatio Sept. 08 1 2009 1 Cantillon 1.00 $ (4,600.00)Entreprenuer Educ.-Bootcamp Sept. 08 1 2009 1 Bootcamp 1.00 $ (10,000.00)

SPARK BA Direct Staffing Oct. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)Phase II (Due Diligence) Oct. 08 2 2009 2 Hours 2.00 $ (200.00)

Phase III (Intensive Service) Oct. 08 2 2009 2 Hours 136.00 $ (13,600.00)Business Incubator Oct. 08 2 2009 2 Facility Exp 1.00 $ (15,091.95)

SPARK Accounting Oct. 08 2 2009 2 Accting Svc 1.00 $ (3,583.33)Bus. Network Events-Hosted Oct. 08 2 2009 2 Events 1.00 $ (1,733.95)

Marketing - P/R, Print, WebsitE Oct. 08 2 2009 2 Marketing 1.00 $ (4,212.57)Tuition Matching Oct. 08 2 2009 2 Bootcamp Match 1.00 $ (9,452.50)

Cantillon Web Based Educatio Oct. 08 2 2009 2 Dev Unit 6 1.00 $ (12,000.00)Cantillon Web Based Educatio Oct. 08 2 2009 2 Accr. 6/08 1.00 $ 4,800.00Cantillon Web Based Educatio Oct. 08 2 2009 2 Mentor List & Train 1.00 $ (1,200.00)

SPARK BA Direct Staffing Nov. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)

Phase II (Due Diligence) Nov. 08 2 2009 2 Hours 11.50 $ (1,150.00)

Phase III (Intensive Service) Nov. 08 2 2009 2 Hours 201.50 $ (20,150.00)

Business Incubator Nov. 08 2 2009 2 Facility Exp 1.00 $ (12,512.14)Smartzone FM511124291044-2618 (2).xlsx Nov. 08 2 20094 2 Accting Svc 1.00 $ (3,583.33)


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Bus. Network Events-Hosted Nov. 08 2 2009 2 Events 1.00 $ (845.75)Marketing - P/R, Print, WebsitE Nov. 08 2 2009 2 Marketing 1.00 $ (6,002.81)

Cantillon Web Based Educatio Nov. 08 2 2009 2 Consult & Mentors 1.00 $ (1,200.00)

SPARK BA Direct Staffing Dec. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)

Phase III (Intensive Service) Dec. 08 2 2009 2 Hours 280.75 $ (28,075.00)

Business Incubator Dec. 08 2 2009 2 Facility Exp 1.00 $ (15,838.83)

SPARK Accounting Dec. 08 2 2009 2 Accting Svc 1.00 $ (3,583.00)

Bus. Network Events-Sponsor; Dec. 08 2 2009 2 Events 1.00 $ (1,250.00)

Bus. Network Events-Hosted Dec. 08 2 2009 2 Events 1.00 $ (1,099.55)

Marketing - P/R, Print, WebsitE Dec. 08 2 2009 2 Marketing 1.00 $ (4,109.00)

Cantillon Web Based Educatio Dec. 08 2 2009 2 Promo - Q Pymt 1.00 $ (1,000.00)Cantillon Web Based Educatio Dec. 08 2 2009 2 Consult & Mentors 1.00 $ (1,200.00)


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1

47fit . TisEal'YearT

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tzone Financial Report 12-31-08 (2).xlsx 5

eet, Ann Arbor, Michigan 48104 T:734-761-9317 F 734-761-9062 W:AnnArborSPARK.org

A N N A R B O R

SPARKI G N I T I N G I N N O V A T I O N

November 7,

2008 LDFA

Board

Enclosed please find the following documents, in response to motionstaken at the September 23, 2008 LDFA Regular Board Meeting:

1. Corrective Actions Draft 11-07-2008, an update of the draftprovided to the LDFA by SPARK on 10-22-2008

2. Business Accelerator and Accounting Procedures

a.3.4.4. LDFA Third Party Consultant Paymentsb.3.5.7. LDFA Monthly Billing Procedurec.5.1. Business Accelerator Procedure Flowchartd.5.1.1. Phase I Screening

0.5.1.2. Phase II Due Diligencea.5.1.3. Phase III Intensive Advising

3. SPARK's Conflict of Interest Policy, with recommended changesmarked that; this has not yet been approved by SPARK's Board

4. SPARK's Consulting Agreement, with recommended changesmarked

Respectfully submitted,

Greg FronizerDirector of Finance and Administration


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Ann Arbor SPARKLDFA Contract Compliance Audit

Corrective Action PlanDraft #3 November 7, 2008

General Contract Controls

Co araci RequirementStaff Responsible

for ( rection

ndent program audit not funded by LDFA, and not conducted by SPARK. SPARK did include LDFA activities within

rogram progress report was provided to LDFA Chair on time, but determined to be inadequate. Modifications made a

Corrective Action: SPARK will work with the LDFA Board to develop reporting require

Corrective Action: SPARK has instituted a deadline for internal review of LDFA End of Year reportsreports are due to the President & CEO of Ann Arbor SPARK one week prior to the LDFA due date

End of Year Reportinguired program audit by end ofcontract year and program progress report 60 days following year end.

SPARK Staff

Status: Pending

Status: Complete

A primary cause for the delay in billing in FY07/08 was receiving all third party BA consultant invoices prior to

Corrective Action: Consultant invoices are due to SPARK by 5 th of the month, as documented agreements effective for engagements during

Status: Complete

SPARK Staff

Timely Billingue to LDFA by 10th calendar day FY08/09 - billing timeframe lengthened - billing due between 5 th and

of month

Issue/Corrective Action


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Audit Finding Staff Resinmsible Correctio

SPARKStaff

Status: Complete

Status:

Complete; see Procedure 5.1.3. Ph

Contract 12equirentent

Billing Recordsecord of services provided, identification of service recipient or businessal performing

the 2008-09 fiscal year, and communicated

to all consultants in August and September

2008.

Insurance In past and current Corrective Action: Each year upon renewal SPARK Staff

of the insurance contract, the Insurance

carrier will directly provide the LDFA with

a copy of the certificate of insurance naming

the LDFA as an additional insured party.

Business Accelerator Services

IssneiCorrectil e Action

Consultants were previously unclear regarding requirements for each invoice submitted for LDFAbillable work.

Corrective Actions SPARK revised its consultant agreement on June 24, 2008 to include a provision that invoices

must be submitted within 5 business days of the end of the month. On September 26, 2008, SPARK distributed a memo

to all consultants and held a training at the monthly BA consultant meeting. Training included core elements required

for each time and billing invoice for LDFA billable services. Going forward, the Director of Finance & Administration

will confirm that all elements are included on invoices prior to payment or billing. This action will be a regular agenda

item for the monthly consultant meetings.

Corrective Action: Consultants will now be required to notify their Client of the


33/120

audit Fi Issue/Corrective Action

s approved to receive phase III services must sign an engagement contract prior to commencement of services.

ase III documentation

amount of hours being billed to

SPARK on each monthly invoice.

Intensiv

e"cc" the Client during e-mail

submission of their invoice.Clients will then have the

opportunity to identify any issues

related to the billing. ConsultantsClient signature on invoices

before submitting to SPARK

Corrective Action: Company

office location information will bePhase III businessaccelerator

by Managing Director of

Entrepreneurial Business

SPARK Staff

Geographic have a principal place 'o nn r or recor s. Complete; seeEligibility business located within clients will certify in writing that Procedure

Ann Arbor portion of eligibility requirements during the Phase III

LDFA Service area. diligence process, with a new form Intensive

10-13-08.

Business Accelerator Services (continued)

Contract Requirement Staff Responsiblefor Correction

Corrective Action: All companies will sign documentationprior to phase II due diligence and/or phase III services. Theoriginal signed version of all of these documents will becentralized in the accounting office at SPARK headquarters. Allengagement documents will contain the elements required by the

current LDFA contract. Salesforce.com has been modified torequire Phase II documentation and eligibility as part of settingup a BA opportunity.

SPARK Staff

Status: Complete; see

Procedure 5.1.2. Due

Diligence and 5.1.3.

Intensive Advising

Status: Complete; seeProcedure 3.5.7.
http://contract.salesforce.com/http://contract.salesforce.com/


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Corrective Action: All phase II and/

or phase III documents will be

verified by the Director of Finance

on a monthly basis prior to billing

the LDFA, effective with the July

2008 billing. All documents willalso be uploaded into theSalesforce data managementSPARK staff.

SPARK's current conflict of

interest policy does not

restrict use of related parties

for consulting services, nor

SPARK Staff

Nevertheless, SPARK willmodify its conflict of interest

policy to preclude the use of

family members on

SPARK's practice has been to

hire consultants interested inworking on client

engagements on a full-time

executive basis should theSPARK knowin l hired a

Use of relatedparty

consultant

Contract was mute on issueof using related parties as

consultants.

who held equity in a client, orwho was already receiving

compensation from the client

for the same work being

Corrective Action: SPARK will Status:

modify its Conflict of Interest policy

to include restrictions on (1)

contracting with immediate family

members of client executives for

consulting engagements, (2)

contracting for services with current

executives of client companies; (3)

contracting for services from

individuals who own equity in the

client; (4) contracting with

consultants who have contingent

Complete;

modifications

proposed to both

Conflict ofInterest policy

and Consulting

Agreement


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compensation or equity

arrangements with the Client.

Tracking of

$50,000 Contract in place for 07/08

Corrective Action: SPARK will trackSPARK Staff

total funds allocated by company,

and monitor quarterly.

Quarterly

Network

Collaboration

Reporting

Quarterly reporting of networking

activities and staff involved

Quarterly reporting was instituted

during the contract period and will be

continued.

SPARK Staff


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Issue/Cori eclive Action

Staff Revonsibl for CorrectionCo itract Roquirern

in Ann Arbor/ Ypsilanti SmartZone. SPARK is to maintain copies of tuition checks as eligibility for match.

tcamp eligibility andng

SPARK Staff

Status:Complete; see Procedure 3.5.7. LDFA Mo

Status: Complete

Entrepreneur's Bootcamp

Finding

Billing for the tuition match was done based on collections and billing of receivables, not only on the amount actually collected.

Corrective Action: Billing for the Bootcamp matching funds will only occur upon receipt of

checks (or other payment method).

Corrective Action: The Boot Camp participant agreement has been modified to include a

certification of geographic eligibility, and is being implemented for the October 2008 Boot

Camp.


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Contract Requirement Issue/Corrective Action

ion to the LDFA of any revenues, royalties, user fees

Status:Not yet implemented. Recommend establishingdirect contractual and payment relationship betweencontracting party and LDFA. SPARK would continue to facilitatemarketing and promotion.

Revenue, royalties and fees received by SPARK must be paid to the LDFA

e copyright and trademark protectionseasonable copyright and trademark protections

Cantillon Entrepreneurial Education Series

SPARK Staff

One fee received from GLEQ was not paid to the LDFA in a timely manner.

Current process requires that SPARK President & CEO must sign any license or other revenue-

producing agreement involving Cantillon.

Corrective Action: Upon execution of a license or other agreement that would generate fees,SPARK accounting will create corresponding A/R and A/P entries to ensure that amounts taken

in are paid out to the LDFA in timely fashion.

Reasonable protections are not specified in the contract.

Corrective Action: Theresa Carroll will review the

documentation and process surrounding Cantillon, and

advise the LDFA as to appropriate steps to determine what

is reasonable.

Corrective Action: SPARK will implement the "click" license

on its website immediately, and require all prospective

participants to accept it to use Cantillon. Additionally, SPARK

SPARK Staff LDFA Board

Status: Under review

Status: Changes to websiteto implement click licenseare underway, with a targetdate for


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will determine the cost of

implementation on the U-M system

and provide the cost information to the

LDFA Board, to be considered as part

of the overall.

implementation

of 11-14-08. Cost

figures have not

yet been received

from U-M CPD,

but will be

forwarded to

LDFA when

available.

There have been no new inventions

arising from Cantillon to date.SPARK Staff

Corrective Action: Include a statement

LDFA as to new inventions, or theabsence thereof. SPARK will require

Implementedwith first quarter

Providesufficient

SPARK must communicate tothe LDFA:

from subcontractor Business Enginesreport.

reports to LDFAon new

- any new inventions arisingfrom Cantillon

(Kurt Riegger) a statement of any

known new inventions arising from

invention and - listing of consultants trained Cantillon.

trained and qualified to work with Status:

consultants client firms training and current qualified mentors

at each quarterly report to the LDFA.

Implementedwith first quarterreport.

SPARK will require from

subcontractor Business Engines (KurtRiegger) quarterly reporting in timing

and detail to support the LDFA

report.

Business Incubator

Audit Finding

Contract Requirement

Issue/Corrective ActionStaff, Responsible

for Correction

The audit found

that internal

controls were

adequate

None


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Procedure Number Procedure Name Procedure Section

3.4.4. LDFA Third Party ConsultantPayments

Accounts Payable

Department Approved by Signature & Date

Accounting & F inance Michael A. Finney, Pres ident & CEO

LDFA Third Party Consultant Invoices

1. Upon receipt of an approved invoice, accounting staff will review it for the following:

a.Accounting will verify the signature approval on the invoice.

b.Accounting staff will also verify that the invoice contains the following:

Identification of the service recipient or business purpose

Date of services provided

Durat ion of services provided

Name of individual performing services on behalf of SPARK

Amount of the total invoice

2. The invoice is posted and stamped

a. The invoice is posted into the accounts payable portion of the accounting

system with the proper coding of class and general ledger account number

0 . The copy of the invoice i s s tamped as "posted"

c. The invoice is then processed for p ayment

November 7, 2008 Page 1


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Procedure. Number Procedure Name Procedure Section

3.5.7. LDFA Monthly Billing Procedure Accounts Receivable

Department Approved by: Signature & Date

Accounting & Finance Michael A. Finney, President & CEO

SPARK Accounts Receivable Process

LDFA Monthly Billing Procedure

1. Timely Submission of the LDFA Invoicea. A monthly invoice with supporting documentation is sent to the LDFA

between the 5 th and 15 th business days of the month following service.

0. The process consists of accounting staff preparing the data and the Director of

Finance and Administration reviewing and completing the invoice.

2. Preparation of the detail for the LDFA invoicea. Accounting will receive internal staff time sheets and external consultant

invoices which have been approved.

b. Accounting will compile the monthly data spreadsheet to include detail of

phase I, phase II and phase Ill billable hours from the information on the internal

timesheets and approved invoices.

c. Accounting staff will also put together the event reconciliation backupspreadsheet and Business Incubator expense detail spreadsheet.

3. Director of Finance and Administration Review and Completion of the LDFA Invoicea. The Director of Finance and Administration will verify the billing information

for the proper engagement documentation and review the address of all

companies for geographic eligibility.

0. Bootcamp The Director of Finance and Administration will review records for

each attendee at bootcamp prior to billing for any matching funds. The review

will include geographic eligibility for matching funds billed to the LDFA for

each attendee. SPARK will bill the LDFA monthly for payments received for

bootcamp attendees on a progress billing basis up to the last day allowableunder the contract.

c. The LDFA Invoice is then generated, approved and submitted


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E')

PHASE I SCREENING

Proceed toYes ' -

Determine

F-..I'd,r1g)pr Phase II

N o I

1.1,r1)-tt,:q

Obtain BA Engagement

dea SdhrnIs,io.

Review Business Idea Submission; call prospect to

Salesforce updated with eligibility data: date of Engagement Letter;signed Incubator license if appropriate; business address; taxing

jurisdiction

E II DUE DILIGENCE

. .

iptOin5igned

Phase II

ement in place (including conflict of interest language); selection may be made subsequent to Client Intake Interview

Interview and Assessment may be conducted by Project Manager only or with Consultant included

Salesforce updated with date of signed proposal agreement; consultant name added to account as Contact Role; dollar value of engagement

No

if4egin Phase ITN , ",,,,, ::re,..,--) t-,:,1f Intensive \tab c:',i,)fJ:',K1". tf, - - f p - I r r , e , - e . " . fk., Advising Bec 1 .ki.-I,I,4&x.1.:-..:-..-:, ,

'N's.f.i..!3.':n,....5::;:,...%...t.;:,

Invoice sent to Incubator Coordinator with copy to Project Manager, Director of Finance and Administration

Salesforce updated with completion date if appropriate

5.1. BUSINESS ACCELERATION SERVICES

PHASE II I INTENSIVE ADVISING


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5.1.1. Phase I Screening BA


Entrepreneurial BusinessDevelopment

Michael A. Finney, President & CEO

SPARK Business Accelerator Procedure

PHASE I SCREENING

1. Prospective client submits a Business Idea, either by web form, email or in person.

The web for

automatically populates Salesforce.com, creating a Lead. If client submits outside ofthe web

form, the Incubator Coordinator creates a lead to enter the system and begin the

process.

2. Incubator Coordinator receives not ice of Lead from Salesforce.a. If Lead has complete information and appears to be in Southeast MI region,

Coordinator converts Lead to Account and creates and Opportunity, with an

assignment to a Project Manager (the Managing Director or his designee).

b. Coordinator enters all Leads into A2Newco entrepreneurial group to receive

information of general entrepreneurial interest.

3. Project Manager contacts prospective client by phone or in meeting to determine if

prospective client is appropriate for SPARK services.

a. Appropriate prospect is:i. located in Washtenaw County, or interested in locating its

business to Washtenaw County

ii. one that is doing business (or intends to do business) in technology

innovation field, but will require further diligence to determine

coachability and appropriateness of needs

b. Inappropriate prospect is one that seeks assistance for a business outside of

SPARK's geographic (Washtenaw County) or technology service areas

i. Project Manager refers prospect to non-SPARK resources

ii. At option of Project Manager, Coordinator sends letter to prospect with

contact information for other Entrepreneurial Support Organizations

(ESO's)

4. Incubator Coordinator obtains signature on BA Engagement Letter from client

5. Incubator Coordinator checks geographic eligibility to receive LDFA funded direct services

a. Coordinator obtains business address from Engagement Letterb. Coordinator checks if address is in Ann Arbor City, using website

http://www2.a2gov.org/Mypropertyinformation/address.asp. If property in is City,

Coordinator captures screen print to file for upload into Salesforce.
http://salesforce.com/http://salesforce.com/http://www2.a2gov.org/Mypropertyinformation/address.asphttp://salesforce.com/http://www2.a2gov.org/Mypropertyinformation/address.asp


43/120



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c. If not in City, Coordinator determines taxing jurisdiction using website

http://gisweb.ewashtenaw.org/website/mapwashtenaw/, or paper map if website

search does not provide taxing jurisdiction.

d. If address provided is home address outside of Ann Arbor City, Coordinator

offers to prospect that the company may join the Incubator. If prospect

accepts, Coordinator obtains client signature on License Agreement to join,

and uses SPARK Central for business address.

0. If Client is a U-M faculty/staff/student entrepreneur without another principal

place of business, business address is U-M.

e. Coordinator updates Salesforce with address and taxing

jurisd ict ion data . 6. Project Manager determines eligibility

for funding of direct services, using Salesforce data.

a. If business address is in Ann Arbor City, client is eligible for LDFA-funded direct

services. Under Opportunity in Salesforce, modify to show Funding Source

listed as LDFA - W/in AA City Limits.

b. In business address is NOT in Ann Arbor City, client is NOT eligible for LDFA-

funded direct services. (no other funding available at 11-05-2008)

c. Prospect not eligible for any funding sourcei. Project Manager refers prospect to non-SPARK resourcesii. At option of Project Manager, Coordinator sends letter to prospect with

contact information for other Entrepreneurial Support Organizations

(ESO's)
http://gisweb.ewashtenaw.org/website/mapwashtenaw/,http://gisweb.ewashtenaw.org/website/mapwashtenaw/,


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- Proposal Proceed to

.,.. ' - -



5.1.2. Phase II Due Diligence BA





PHASE II DUE DILIGENCE

1. Project Manager confirms Phase II starting Criteria

a.Signed Engagement Letter is in Salesforce

b.Funding Status in Salesforce of "LDFA W/in AA City Limits"2. Project Manager selects a consultant, based on things including skills, experience,

industry knowledge, style and expected fit with client

3. Incubator Coordinator

a.Checks to see if a current Consulting Agreement is on file with Consultant

b.Checks availabil ity with Consultant

c. Schedules a Client Intake Interview

4. Consultant and Project Manager conduct Client Intake interview (this discussion will form the

basis for further due diligence prior to creating a BA Engagement Statement of Work)

a. The published guidelines for "full" engagement with SPARK BA are as follows

i.Management interested in growth and amenable to coaching

ii.Within 1-3 years of sustainable commercial revenues

0.Fundamental technical development completed

i.Potential annual revenues of $10MM within 5 years

ii.Technology-driven products/services, especially with defensible

intellectual property

iii.Target milestone(s) that SPARK can realistically help achieve givenSPARK's time

and resource limitations

0.Located with in Ann Arbor Region

i. Interest from professional investors and/or management

b. Baseline information

i.Complete address and contact informationii .Status of business formation

iii. Amount of investment to date

c. Technology or scientific review

i.Descr ipt ion of technology

0.Status of intellectual property


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iii. Identification of proof of concept milestones

d. Management team review

i .Founder 's background

ii.Management team background, level of commitment

0.Targeted execut ive talent with t imeframes

i.Advisory board members, stage of commitment

v. Board of directors, if any

e. Market understanding

i . C om pet it or a sse ss men t

i i . Need for p roposed p roduct or serv ice

iii. Amount of investigation into market dynamics (channel, pricing,

influencers, key enabling patents)

iv. Market forces identif ied (economic cycle, t rends)

f. Financing

i.Founder investment to date (cash, not in kind or deferred salary)

i i .Funding needs

iii. Openness to outside funding if business model indicates it

g. Coachability

i .Founding team

ii.Advisors, i f any

5. Consultant or Project Manager summarizes results of Intake interview

a. Brief written assessment of each area i nterviewed

i .Base l ine in format ion

ii .Technology or scient if ic review

i i i .Management team

iv . Mar ke t u n d e r s t an d in gv . F in an c in g

v i . C oach ab i l i t y

b. Judgment of areas for further due diligence

i.Intellectual property must be addressed

ii.Technology or scientific areas must be addressed, especially as endpointsfor

project milestones

6. Design of Statement of Work (See 5.1.3.)

a. Based on milestones that are both valuable to the client and that can beaccomplished

in approximately 20-40 hours of consulting time, Consultant drafts an initialStatement

of Work.

i. This may be based on sample language from other SOW's, at thediscretion of

the Consultant or the Project Manager.

ii. Consultant also estimates the amount of hours of consulting time it will

take to achieve the milestones, along with a calendar time estimate.

b. Project Manager reviews and provides feedback until a mutually agreeable SOW is

complete.


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c. The review and feedback may involve the Client as well.

7. Obtain Signed Proposal Agreementa. Project Manager, with support of Incubator Coordinator, integrates SOW into

Proposal Form for client signature

0. Project Manager and Incubator Coordinator secure signature of cl ient

b. Incubator Coordinator uploads electronic copy of signed agreement intoSalesforce

a. Incubator Coordinator updates Opportunity fields within

Salesforce with relevant information

i .Contract Star t Date

i i .C lose Date

ii i .Status (change to "Closed-Won")

iv .Engagement Amount


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5.1.3. Phase III Intensive Advising BA

Department Approvedby: Signature & Date




PHASE III INTENSIVE ADVISING

1. Project Manager confirms Phase III starting criteria

a.Contract start date in Salesforce

b.Signed Proposal Agreement is in Salesforcec. Funding Status in Salesforce of "LDFA W/in AA City Limits"

2. Project Manager notifies Consultant of contract initiation by email or phone, and sends

copy of signed Proposal Agreement

3. Consultant creates detai led t imeline, i f appropriate

4 . C on su l tan t e xe cut es ag ain st S OW

5. Consultant and Project Manager review progress no less frequently thanmonthly

6. On a monthly basis, and at the close of the project, Consultant submits to SPARK an

invoice containing:

a .Name o f C l ien t

b.Dates and durat ion of service

c.Description of activity by each date

d.Name of consultant providing service7. Consultant submits the invoice by email to the Incubator Coordinator, and a copy to the

Project Manager and the Director of Finance and Administration.

0.Incubator Coordinator sends copy of invoi ce to client for review and

in forma tion. 9. At the conclusion of the project, Consultant submits copies of work

product to the Client, Incubator Coordinator and the Project Manager.


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SPARK Conflict of Interest Policy

Article IPurpose

The duty of loyalty owed by members of the Board of Directorsof Ann Arbor Spark, a Michigan nonprofit corporation (the"Corporation") requires that Directors exercise their power in theinterest of the Corporation. As a tax exempt organization theCorporation also is obligated to promote publicly supportedorganizations that it benefits, rather than private interests.

It is the policy of the Corporation that all Directors andOfficers shall scrupulously avoid any conflict, or the appearance ofany conflict, between their own interests and the interests of theCorporation. The purpose of this Conflict of Interest Policy is toprotect the Corporation's interest when contemplating atransaction or arrangement that might benefit the private interestof an Officer or Director of the Corporation.

This policy is intended to supplement but not replace theBylaws of the Corporation. If any conflict exists between thisPolicy and the Bylaws of the Corporation, the Bylaws shallcontrol.

This Policy is further intended to supplement and not replace

(a) any applicable state law governing conflicts of interestconcerning nonprofit corporations, and (b) any conflicts of interestpolicy that governs the conduct of any member of the Corporation.In the event of any conflict between this Policy and either of theforegoing, the foregoing shall control.

Article HDefinitions

1.Interested Person

A director, principal officer, OP, member of a committee withboard delegated powers, or consultant hired by the Corporation to

provide services benefitting a client ofthe Corporation,_and who has a

direct or indirect Financial Interest, as defined below, is anInterested Person.

2.Financial Interest

A person has a Financial Interest if the person has, directly orindirectly, through business, investment or family, 1 or more of thefollowing:

a.An ownership or investment interest in any entity with whichthe

Corporation has a transaction or arrangement;


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b.A compensation arrangement with the Corporation or withany entity or

individual with which the Corporation has a transaction orarrangement, or

c.A potential ownership or investment interest in, orcompensation

arrangement with, any entity or individual with which theCorporation is negotiating a transaction or arrangement.

Compensation includes direct and indirect remuneration aswell as gifts or favors that are substantial in nature.

A Financial Interest is not necessarily a conflict of interest.

Under Article III, Section 2, a person who has a Financial Interestmay have a conflict of interest only if a determination is made that aconflict of interest exists.

Article IIIProcedures

I. Duty to Disclose

In connection with any actual or possible conflicts ofinterest, an Interested Person shall disclose the existence andnature of his or her Financial Interest and must be given theopportunity to disclose all material facts to the directors andmembers of committees with board delegated powers consideringthe proposed transaction or arrangement.

2.Determining Whether a Conflict of Interest Exists

After disclosure of the Financial Interest and all materialfacts, and after any discussion with the Interested Person, theInterested Person shall leave the board or committee meeting whilethe determination of a conflict of interest is discussed and votedupon. The remaining board or committee members shall decide if aconflict of interest exists.

3.Procedures for Addressing the Conflict of Interest

a.An Interested Person may make a presentation at the boardor committee

meeting, but after such presentation, he/she shall leave the meetingduring the discussion of, and the vote on, the transaction orarrangement that results in the conflict of interest.

b.The chairperson of the board or committee shall, ifappropriate, appoint a

disinterested person or committee to investigate alternatives to theproposed transaction or arrangement.


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c.After exercising due diligence, the board or committeeshall determine

whether the Corporation can obtain a more advantageous transactionor arrangement with reasonable efforts from a person or entity thatwould not give rise to a conflict of interest.

d.If a more advantageous transaction or arrangement is notreasonably

attainable under circumstances that would not give rise to a conflictof interest, the board or committee shall determine by a majority voteof the disinterested directors whether the transaction or arrangementis in the Corporation's best interest and for its own benefit andwhether the transaction is fair and reasonable to the Corporation

and shall make itsdecision as to whether to enter into the transaction orarrangement in conformity with such determination.

4. Violations of the Conflicts of Interest Policy

a.If the board or committee has reasonable cause to believethat a member

has failed to disclose actual or possible conflicts of interest, it shallinform the member of the basis for such belief and afford themember an opportunity to explain the alleged failure to disclose.

b.If after hearing the response of the member and makingsuch further

investigation as may be warranted in the circumstances, theboard or committee determines that the member has in fact failedto disclose an actual or possible conflict of interest, it shall takeappropriate disciplinary and corrective action.

Article IVRecords of Proceedings

The minutes of the board and all committees with board-delegated powers shall contain:

a.The names of the persons who disclosed or otherwise werefound to have

a Financial Interest in connection with an actual or possible conflict

of interest, the nature of the Financial Interest, any action taken todetermine whether a conflict of interest was present, and theboard's or committee's decision as to whether a conflict ofinterest in fact existed.


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b.The names of the persons who were present fordiscussions and votes

relating to the transaction or arrangement, the content of thediscussion, including any alternatives to the proposed transactionor arrangement, and a record of any votes taken in connectiontherewith.

Article VAnnual Statements

Each director, principal officer-arid, member of a committeewith board delegated powers and consultant hired by theCorporation to provide services benefitting..a client of


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I the Corporation, shall annually sign a statement which affirmsthat such person in the form attached hereto as Exhibit A:

a.has received a copy of the conflict of interest policy;

b.has read and understands the policy;

c.has agreed to comply with the policy; and

d.understands that the Corporation is an organization exemptfrom taxation

and that in order to maintain its federal tax exemption it mustengage primarily in activities which accomplish one or more ofits tax-exempt purposes.

Article VIPeriodic Reviews

To ensure that the Corporation operates in a mannerconsistent with its exempt purposes and that it does not engage inactivities that could jeopardize its status as an organization exemptfrom federal income tax, periodic reviews shall be conducted. Theperiodic reviews shall, at a minimum, include the followingsubjects:

a.Whether compensation arrangements and benefits arereasonable and are

the result of arm's-length bargaining.

b.Whether any of its activities result in inurement orimpermissible private

benefit.

c.Whether partnership and joint venture arrangements andarrangements

with publicly supported and private organizations conform towritten policies, are properly recorded, reflect reasonablepayments for goods and services, further the Corporation's exemptpurposes and do not result in inurement or impermissible privatebenefit.


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Article VIIUse of Outside Experts

In conducting the periodic reviews provided for in Article VI,the Corporation may, but need not, use outside advisors. If outsideexperts are used their use shall not relieve the board of itsresponsibility for ensuring that periodic reviews are conducted.


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Formatted: Font: (Default) Times New Roman, 12 pt

Formatted: Numbered + Level: 1 + Numbering Style: 1, 2, 3, ... + Start at: 1 + Alignment: Left + Aligne

Exhibit AANN ARBOR SPARK

CONFLICT OF INTEREST POLICY

ANNUAL STATEMENT

As a member of the Board of Directors of Ann Arbor Spark (the"Corporation"), a Corporation officer, employee, or a member of acommittee with powers delegated by such Board, in each case inthe capacity indicated below, I do hereby affirm as of the date setforth below that:

1.I am affiliated with the Corporation in the following describedway(s)

(check and complete all that are applicable):(

Member of the Corporation's Board of DirectorsMOfficer of the Corporation: (complete with office)OMember of the following committee (s):M

Consultant hired by the Corporation to provide se vices benefitting a

client of the CorporationFormatted

:Nobulletsornumbering

B2. I have received a copy of the Conflict of InterestPolicy of the. Corporation (the "Policy");

.I have read and I understandthe Policy;14 . I agree to comply with thePolicy; and4 .5. Except as indicated as follows, I have no real or potential

conflict of


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interest with the Corporation, determined as provided inthe Policy:

Describe any perceived real or potential conflict of interest (useand attached additional sheets, if necessary):

Signature:_______________________

Print Name:______________________

Date:


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CONSULTING AGREEMENT

This Consulting Agreement, including all Addenda referred to herein, is made effectiveand-entered__into asof July 1,_______________________ , 2008 (the "Effective Date) by and between the Ann Arbor SPARKBusiness Accelerator (hereinafter "SPARK"), a Michigan non-profit corporation which has a place of

business at 201 S. Division, Suite 430, Ann Arbor MI 48104, and _____________________(hereinafter

"Consultant") with principal place of business at_____________________. The parties, intending to be

legally bound, hereby agree as follows:

ARTICLE I - TERM

The term of this Agreement shall be one year commencing on the Effective Date. Unless notice isprovided by one party to the other in writing no less than 30 days prior to the end of the term, thisAgreement shall automatically renew for subsequent one year terms. Notwithstanding the foregoing, thisAgreement may be terminated earlier or canceled as provided in Article XI.

ARTICLE II - STATEMENT OF WORK

During the term of this Agreement, Consultant shall perform the specific responsibilities identified foreach client engagement, as set forth between Consultant and SPARK in a Project Engagement insubstantially the form included as Addendum A ("Work"). Each Project Engagement shall become anamendment to this Agreement, and the Work for each Project Engagement shall include preparing and

presenting a report of findings, providing all work products electronically, and recording activities andproviding them electronically to Project Manager.

ARTICLE III - FEES/PAYMENT/TAXES

FEES: The Consultant will be paid at an hourly rate of $100.00 per hour, and with a maximum fee as setforth the Project Engagement for each client engagement, unless work above the limit is approved bythe Project Manager. In addition, SPARK shall pay all pre-approved or reasonable travel and out of

pocket expenses. Fees paid to Consultant for Work under this Agreement constitute the entire payment toConsultant for the Work performed, unless otherwise specified in the Project Engagement. In no case mayConsultant accept equity, the promise of equity, or other contingent compensation from a SPARK clientduring the term of the Proiect Engagement, for Work paid for by SPARK.

PAYMENT: Consultant shall submit monthly invoices to SPARK status rcports no laterinefe-f-r-equentlyt h an t h e 5 t h d a y o f t h e m o n t h f o r w o r k p e r f o r m e d d u r i n g t h e p r i o r m o n t h .Invoices should indicate the hours worked by date during the month, to the nearest quarter hour, and thespecific activities pursuant to the outlined Work week to the SPARK Project Manager

TAXES: Amounts payable by SPARK for Consultant's performance of the Work do not include relatedfederal, state, local or any other taxes. Consultant will be responsible for his/her own payment ofappropriate taxes. Subject to the federal, state and local laws, SPARK will issue a 1099 form at the end ofthe year for the amounts paid to the Consultant for the Work performed under this Agreement.

ARTICLE IV - RELATIONSHIP OF PARTIES

In performing the Work, Consultant is acting as an independent contractor and not as an employee, agent,or representative of SPARK. Consultant has no authority to transact any business in the name of or onaccount of SPARK or otherwise obligate SPARK in any manner.

ARTICLE V - INTELLECTUAL PROPERTY RIGHTS

A. Consultant agrees to and does hereby assign and grant to SPARK the entire right, title and interest

of Consultant in and to the Deliverables and any other work product Consultant produces

SPARK Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 1


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RK Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 2

pursuant to this Agreement, including, but not limited to, programs, documentation and reportsproduced in the course of or pursuant to performance of the Work done under this Agreement.Consultant agrees and does hereby assign to SPARK the entire right, title and interest ofConsultant in and all inventions, improvements and discoveries (including, but not limited to,those that are or may be patentable or subject to copyright, trademark or patent protection) made,originated, conceived or first actually reduced to practice in the course of or pursuant to the

performance of Work done under this Agreement (including, without limitation, website/webportal design, development and content) and to all United States and Foreign Letters Patentsgranted thereon. Consultant agrees and does hereby assign and grant to SPARK the entire right,title and interest of Consultant in training, presentation, educational and/or informationalmaterials, programs, methodologies, formulas, techniques, forms, templates and similarinformation developed or used for general or broad-based training, education or consulting

produced in the course of or pursuant to performance of the Work done under this Agreement.

B. Consultant agrees to deliver to SPARK such duly executed instruments of assignment,application papers, and rightful oaths as are necessary to vest in SPARK or its designee, the sole

and exclusive ownership of, and the right to apply for and prosecute patent applications coveringeach such invention, improvement or discovery. Consultant further agrees that it will at all timesat SPARK expense, aid SPARK or its designee in preparing for and in giving information ortestimony, or in doing any other reasonable acts deemed necessary by SPARK in any and all

proceedings involved in the securing of any patent or patents for any such invention,improvement or discovery, or in enforcing and defending any rights there under.

0. Consultant agrees to and does hereby assign and grant to and vest in SPARK the entire right, title

and interest of Consultant to all copyrights, both U.S. and foreign, and all copyrightable materialfirst produced or composed in the course of or pursuant to the performance of Work under thisAgreement.

D. Consultant agrees to and does hereby grant to SPARK an unlimited, paid-up, royalty-free, non-exclusive, irrevocable license to reproduce, translate, publish, use and dispose of, and to authorizeothers so to do, any and all of Consultant's copyrighted or copyrightable material furnished as aresult of Work performed under this Agreement but not first produced or composed by

Consultant in the performance of such Work.

ARTICLE VI - PROPRIETARY INFORMATIONA.Proprietary Information shall include all business and technical information relating to the Work

which is furnished or made available to Consultant by SPARK and all other information which isfurnished by SPARK at any time prior or during the Tenn of the Agreement to the Consultant intangible form marked as "restricted", "confidential", "proprietary", or other appropriate legend, ordisclosed by SPARK or Client of SPARK to the Consultant in non-tangible form with indication ofits proprietary nature.

B.The Work and deliverables representing Work are deemed to be Proprietary Information ofSPARK as though it was Proprietary Information furnished by SPARK to Consultant, and shall

be so treated by Consultant.

C. Title, or the right to possess Proprietary Information, as between the parties shall, except as

otherwise provided herein, remain in the party which furnishes or otherwise makes it available tothe other party. No rights are granted by either party to the other with respect to ProprietaryInfonnation except as expressly stated herein. Neither party shall use or copy any ProprietaryInformation of the other party except for the purposes of and to the extent necessary for thisAgreement. Each party shall exercise reasonable care with respect to Proprietary Information of

the other party to preclude disclosure thereof to any third party and permit disclosure only to itspersonnel who are involved in the Work and have agreed in writing to be bound consistent withthe provisions of this Agreement. Each party shall have the obligations stated in this Article VI


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regarding Proprie

LDFA 1-27-09 Board Meeting Packet

Documents

Transcript of LDFA 1-27-09 Board Meeting Packet