INNOVATION July-August 2017

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p r o f e s s i ona l s e r v i ce s

“I was amazed at the level of plan- ning, spirit and dedication of all teams in Canstruction,” said APEGBC President, Timothy Smith PGeo EngL and Canstruction® 2007 juror, “I am very proud of our pro- fession’s strong contribution to Canstruction and look forward to an even bigger sweep of the awards in 2010. Even though we won the Engineers versus Architects chal- lenge, the real winner here is the food bank.”

We can conclude, therefore, that at the growth phase, support is relatively large, with both tax credits and grants well represented and with government assistance making up a more appealing proportion of the funding mix. Support at the Mature Phase When the organization enters the mature phase, sales and expenditures stabilize and risk settles at its cyclic minimum. Expenditures are high and include several new R&D projects funded by earlier R&D technologies that have transitioned into commercialization. Tax credits enter a virtuous cycle in which high sales and previous funding support is reinvested into R&D activities to drive future ITC returns. Note in Figure 4, however, how the funding profile differs from that at the concept phase even though new R&D projects exhibit the same eligibility in both phases. Tax credits in the mature phase command greater returns because the revenues generated by sales allow a far greater level of eligible R&D expenditures that are in turn reclaimed as tax credits. R&D grants generally subside at this point until the next growth phase, thereby limiting grant financing to Hiring & Training, Business Development, and Capital Expenditures. In fact, you can think of the transition period between the growth and mature phases of the business as roughly corresponding to TRL levels 7 to 9 of the R&D cycle. We can conclude, therefore, that at the mature phase, total support peaks, with tax credits making up the most appealing proportion of the funding mix. Capital Assets We’ll round out our discussion with a special case: the development of a capital asset. While the general principles of the TRL scale still apply, when considering capital assets, you may also want to book an appointment with your accountant to understand how your expenditures are being logged on your financial statements. When uncertainty is high and the feasibility of the technology remains in question, your R&D expenditures are typically expensed and end up on your income statement under operating expenses.

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