Published: December 24, 2006 07:46 pm            

KIZ gives startups a happy holiday

Startup tech companies in the region recently received a welcome Christmas gift from the state.

During the past week, member companies of the Greater Johnstown Keystone Innovation Zone, GJKIZ, have seen the results of tax credits provided through the program filtering into their mailboxes.

And the result of those returns is about $665,000 that will largely be reinvested back into the local economy.

“The tax credits coming from the commonwealth is probably the biggest perk we can offer companies located in the KIZ,” said Bob Shark, technology development director for JARI and coordinator of GJKIZ. “Although the programs in place offer a number of advantages and perks, none come close to the dollar value of the tax credits.”

The credits were available only to a limited number of companies this year. A company’s eligibility is based on when it joined the GJKIZ, and this round went to those first companies to become part of the program.

The companies receiving credits this year are: Applied Technology; In-Shore Technologies; InforMedX Group; ISMG; ITSI Biosciences; MDR Global and Shrift Small Business Network Consulting.

Mike Stohon, president of In-Shore Technologies, said his company will immediately reinvest the funds it received due to the credit.

His company also has received forms of state assistance through a GJKIZ Seed Microgrant and for winning the St. Francis Small Business Development Center business plan contest.

“What’s the biggest complaint you hear about the use of tax revenues?” Stohon asked. “It’s usually something about money going to some bloated program or to purchase things that will sit in a box for years and years.

“But this program is making a real difference immediately. It’s going to stir the economy and allow a lot of smaller companies to grow at a much faster pace than they expected.”

Stohon said he expects the funding to have an immediate impact on his and many other small businesses

“It’s going to allow me to make some hiring and business determinations I wouldn’t be able to do otherwise,” Stohon said. “And that will allow us to possibly go after some projects that we couldn’t have in the past because we didn’t have the staff.”

One of the perks allowed in this program is that KIZ companies not turning a profit are allowed to sell their tax credits for cash. Shark said the majority of the GJKIZ companies were able to use that option this year.

“When this program was designed, it was done so with the understanding that a lot of these companies are startups and won’t be generating profit right away,” Shark said. “In order to make the program beneficial to all of the participants, this exception was allowed.

“Most of the companies are selling the tax credits at 90 cents on the dollar, and there are brokers that match the buyers and sellers,” he said. “The vast majority of those credit dollars will likely be turned around and sold for instant cash flow.”

        

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