MISSISSIPPI LEGISLATURE

2023 Regular Session

To: Ways and Means

By: Representative Guice

House Bill 1189

AN ACT TO AMEND SECTIONS 57-103-1, MISSISSIPPI CODE OF 1972, WHICH CREATES THE RESEARCH AND DEVELOPMENT PROGRAM, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO REVISE THE AMOUNT OF ASSISTANCE THAT MAY BE PROVIDED TO A BUSINESS UNDER THE RESEARCH AND DEVELOPMENT PROGRAM; TO AMEND SECTION 57-103-3, MISSISSIPPI CODE OF 1972, WHICH CREATES THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO CHANGE THE NAME OF THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1 TO THE PROOF OF CONCEPT LOAN PROGRAM; TO REVISE THE AMOUNT OF ASSISTANCE THAT MAY BE PROVIDED TO A BUSINESS UNDER THE PROGRAM; TO CHANGE THE NAME OF THE MISSISSIPPI NEW TECHNOLOGY BUSINESS PROGRAM-LEVEL 1 FUND TO THE PROOF OF CONCEPT LOAN FUND; TO AMEND SECTION 57-103-7, MISSISSIPPI CODE OF 1972, WHICH CREATES THE RURAL INNOVATION PROGRAM-LEVEL 1, FOR THE PURPOSE OF REFLECTING THE CHANGE OF THE NAME OF THE MISSISSIPPI TECHNOLOGY ALLIANCE TO INNOVATE MISSISSIPPI; TO CHANGE THE NAME OF THE RURAL INNOVATION PROGRAM-LEVEL 1 TO THE PROOF OF CONCEPT GRANT PROGRAM; TO CHANGE THE PROGRAM FROM A LOAN PROGRAM TO A GRANT PROGRAM; TO CHANGE THE NAME OF THE RURAL INNOVATION PROGRAM-LEVEL 1 FUND TO THE PROOF OF CONCEPT GRANT FUND; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 57-103-1, Mississippi Code of 1972, is amended as follows:

     57-103-1.  (1)  There is established under the direction of  the * * *Mississippi Technology Alliance ("MTA") Innovate Mississippi ("IMS") a program to be known as the "Research and Development Program" for the purpose of making assistance available for seed and early stage capital to small and medium sized Mississippi businesses with high growth potential that are engaged in research and development activities with a Mississippi university, college and/or community/junior college.

     (2)  (a)  In order to be eligible for assistance under the program, a business must:  (i) have its principal place of business based in Mississippi, (ii) produce or provide a product and/or service that is science or technology related, (iii) have completed its product and/or service development planning, and (iv) develop technology-based business opportunity in partnership with a Mississippi university, college and/or community/junior college.

          (b)  Any business desiring to participate in the program must submit an application to * * *the MTA IMS.  The application must contain a technical brief and project plan for the commercialization of the technology developed or proposed for development by the business and any other information requested by * * *the MTA IMS.  If * * *the MTA IMS staff reviewing the application determines that an application should be reviewed by the Seed Fund Investment Board appointed by the * * *MTA IMS Board of Directors, the application shall be forwarded to the Seed Fund Investment Board.  If the Seed Fund Investment Board approves the application, * * *the MTA IMS shall negotiate a contract with the business regarding any assistance provided to the business under the program, the expenditure of assistance provided to the business, repayment of assistance by the business, and any other matters to which the parties may agree.  Any such contract must provide for at least the following: (i) that any assistance provided to the business will be on a reimbursement basis in which the business will expend funds according to the terms of the contract and submit invoices, receipts and other applicable documentation and information to * * *the MTA IMS for reimbursement; (ii) that no funds may be expended or used for patent prosecution, reorganization of the business, or payment of any existing debt of the business outstanding or otherwise incurred at the time the contract is entered into; (iii) that no funds may be expended to reimburse expenses for work conducted or services provided by the business, a university or a third-party consultant if those expenses were incurred before the term of the contract; (iv) that at least fifty-one percent (51%) of the funds received by the business must be expended with a Mississippi university, college and/or community/junior college with which the business has a contract for research and development or technology development work or services; (v) that * * *the MTA IMS will pay not more than ten percent (10%) of overhead expenses for the business and/or the university, college and/or community/junior college; (vi) that the business will provide matching funding of One Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least fifty percent (50%) of the match being in cash and the remaining amount being from in-kind services, all of which must be documented by time sheets, payroll receipts, invoices and other documentation or information required by * * *the MTA IMS; and (vii) that the business receiving assistance will retain ownership of any technology developed by the business before the start of the project for which assistance is received, and that rights to new intellectual property developed as a result of the project will be subject to mutually agreed upon terms and conditions of the collaborative research agreement executed by the business and the university, college and/or community/junior college before the start of the project.  Assistance received by a business and not expended for purposes required in the contract between the business and * * *the MTA IMS may be expended for hiring third-party consultants to assist the business, working capital, marketing, prototype development and equipment.  The amount of assistance that a business may receive under the program shall not exceed * * *One Hundred Thousand Dollars ($100,000.00) in any one (1) year and shall not exceed Two Hundred Thousand Dollars ($200,000.00) Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate. 

          (c)  Except as otherwise provided in this paragraph, a business receiving assistance under the program shall be required to repay the assistance in the manner provided in this paragraph.  Repayment shall be made through the use of a convertible note in which the business will repay one hundred percent (100%) of the amount of assistance received if such repayment is made within thirty-six (36) months from the date the assistance is received, with the amount to be repaid by the business increasing at a rate determined by the parties in the contract up to an amount not to exceed two hundred percent (200%) of the amount of assistance if such repayment is made later than thirty-six (36) months from the date the assistance is received but not later than sixty (60) months from the date the assistance is received.  * * *The MTA IMS shall have the option of converting the amount of assistance awarded to the business into common stock of the business or into a royalty in the gross sales of the business.  Amounts received as repayments shall be deposited into the special fund created in subsection (3) of this section.  Notwithstanding the preceding provisions of this paragraph, if the business receiving assistance fails to meet certain financial performance levels established in the contract between the business and * * *the MTA IMS and the contract does not activate any repayment provisions, then * * *the MTA IMS will deem the assistance provided to be a loss and the business receiving assistance shall not be required to repay the assistance received.

     (3)  There is created in the State Treasury a special fund, to be designated as the "Research and Development Program Fund," which shall consist of funds appropriated or otherwise made available by the Legislature.  The fund shall be maintained by the State Treasurer as a separate and special fund, separate and apart from the General Fund of the state.  Unexpended amounts remaining in the fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned or investment earnings on amounts in the fund shall be deposited into such fund.  Monies in the fund shall be disbursed, in the discretion of the Mississippi Development Authority, to provide funds to * * *the MTA IMS for the purposes described in this section, or for the purposes described in Sections 57-103-3, 57-103-5 * * *, and/or 57-103-7 * * *and/or 57‑103‑9 if the MTA IMS determines that the funds are not needed for the purposes described in this section. 

     SECTION 2.  Section 57-103-3, Mississippi Code of 1972, is amended as follows:

     57-103-3.  (1)  There is established under the direction of the * * *Mississippi Technology Alliance ("MTA") Innovate Mississippi ("IMS") a program to be known as the "Mississippi New Technology Business Program-Level 1" for the purpose of making assistance available to provide working capital to support the initial capitalization of technology-based businesses in Mississippi.  From and after July 1, 2023, the "Mississippi New Technology Business Program-Level 1" shall be known as the "Proof of Concept Loan Program".

     (2)  (a)  In order to be eligible for assistance under the program, a business must:  (i) have its principal place of business based in Mississippi, and be a startup business, (ii) have rights to the intellectual property supporting the venture opportunity for which assistance is requested, (iii) demonstrate compelling evidence for rapid growth and high performance potential, (iv) be invited by * * *the MTA IMS to apply for assistance based upon an agreeable scope of work. 

          (b)  Any business desiring to participate in the program must submit an application to * * *the MTA IMS.  The application must contain a description of the purposes for which the assistance is requested, the amount of assistance requested and any other information requested by * * *the MTA IMS.  If * * *the MTA IMS staff reviewing the application determines that an application should be reviewed by the Seed Fund Investment Board appointed by the * * *MTA IMS Board of Directors, the application shall be forwarded to the Seed Fund Investment Board.  If the Seed Fund Investment Board approves the application, * * *the MTA IMS shall negotiate a contract with the business regarding any assistance provided to the business under the program, the expenditure of the assistance provided to the business, and any other matters to which the parties may agree.  Any such contract must provide for at least the following:  (i) that any assistance provided to the business will be on a reimbursement basis in which the business will expend funds according to the terms of the contract and submit invoices, receipts and other applicable documentation and information to * * *the MTA IMS for reimbursement; (ii) that no funds may be expended or used for patent prosecution, reorganization of the business, or payment of any existing debt of the business outstanding or otherwise incurred at the time the contract is entered into; (iii) that no funds may be expended to reimburse expenses for work conducted or services provided by the business, a university or a third-party consultant if those expenses were incurred before the term of the contract; (iv) that the business receiving assistance will retain ownership of any technology developed by the business regardless of whether the technology is developed before or after the receipt of assistance; and (v) that the business will provide matching funding of One Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least twenty-five percent (25%) of the match being in cash and the remaining amount being from in-kind services, all of which must be documented by time sheets, payroll receipts, invoices and other documentation or information required by * * *the MTA IMS.  Assistance received by a business may be expended for hiring third-party consultants to assist the business and for equipment.  The amount of assistance that a business may receive under the program shall not exceed * * *Ten Thousand Dollars ($10,000.00) Twenty-five Thousand Dollars ($25,000.00) and any award of assistance shall be made on a onetime basis.

          (c)  Except as otherwise provided in this paragraph, a business receiving assistance under the program shall be required to repay the assistance in the manner provided in this paragraph.  Repayment shall be made through the use of a nonrecourse loan in which the business will repay the loan upon the successful commercialization of the product or service.  The business will repay one hundred percent (100%) of the amount of assistance received if such repayment is made within thirty-six (36) months from the date the assistance is received, with the amount to be repaid by the business increasing at a rate determined by the parties in the contract up to an amount not to exceed two hundred percent (200%) of the amount of assistance if such repayment is made later than thirty-six (36) months from the date the assistance is received but not later than sixty (60) months from the date the assistance is received.  Amounts received as repayments shall be deposited into the special fund created in subsection (3) of this section.  Notwithstanding the preceding provisions of this paragraph, if the business receiving assistance fails to meet certain financial performance levels established in the contract between the business and * * *the MTA IMS and the contract does not activate any repayment provisions, then * * *the MTA IMS will deem the assistance provided to be a loss and the business receiving assistance shall not be required to repay the assistance received.

     (3)  There is created in the State Treasury a special fund, to be designated as the "Mississippi New Technology Business Program-Level 1 Fund," which shall consist of funds appropriated or otherwise made available by the Legislature.  From and after July 1, 2023, the "Mississippi New Technology Business Program-Level 1 Fund" shall be known as the "Proof of Concept Loan Program Fund".  The fund shall be maintained by the State Treasurer as a separate and special fund, separate and apart from the General Fund of the state.  Unexpended amounts remaining in the fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned or investment earnings on amounts in the fund shall be deposited into such fund.  Monies in the fund shall be disbursed, in the discretion of the Mississippi Development Authority, to provide funds to * * *the MTA IMS for the purposes described in this section, or for the purposes described in Sections 57-103-1, 57-103-5 * * *, and/or 57-103-7 * * *and/or 57‑103‑9 if * * *the MTA IMS determines that the funds are not needed for the purposes described in this section.

     SECTION 3.  Section 57-103-7, Mississippi Code of 1972, is amended as follows:

     57-103-7.  (1)  There is established under the direction of the * * *Mississippi Technology Alliance ("MTA") Innovate Mississippi ("IMS") a program to be known as the "Rural Innovation Program-Level 1" for the purpose of making assistance available to provide working capital to support the initial capitalization of technology-based businesses in rural  Mississippi.  From and after July 1, 2023, the "Rural Innovation Program-Level 1" shall be known as the "Proof of Concept Grant Program".

     (2)  (a)  In order to be eligible for assistance under the program, a business must:  (i) have its principal place of business based in * * *a rural county in Mississippi, (ii) produce or provide a product and/or service that is science or technology related, (iii) have fewer than one hundred fifty (150) employees, and (iv) have completed its product and/or service development planning. * * *  For the purposes of this paragraph, a "rural county" shall be a county designated as such by the MTA.  

          (b)  Any business desiring to participate in the program must submit an application to * * *the MTA IMS.  The application must contain a description of the purposes for which the assistance is requested, the amount of assistance requested and any other information requested by * * *the MTA IMS.  If * * *the MTA IMS staff reviewing the application determines that an application should be reviewed by the Seed Fund Investment Board appointed by the * * *MTA IMS Board of Directors, the application shall be forwarded to the Seed Fund Investment Board.  If the Seed Fund Investment Board approves the application, * * *the MTA IMS shall negotiate a contract with the business regarding any assistance provided to the business under the program, the expenditure of the assistance provided to the business, and any other matters to which the parties may agree.  Any such contract must provide for at least the following:  (i) that any assistance provided to the business will be on a reimbursement basis in which the business will expend funds according to the terms of the contract and submit invoices, receipts and other applicable documentation and information to * * *the MTA IMS for reimbursement; (ii) that no funds may be expended or used for patent prosecution, reorganization of the business, or payment of any existing debt of the business outstanding or otherwise incurred at the time the contract is entered into; (iii) that no funds may be expended to reimburse expenses for work conducted or services provided by the business, a university or a third-party consultant if those expenses were incurred before the term of the contract; (iv) that the business receiving assistance will retain ownership of any technology developed by the business regardless of whether the technology is developed before or after the receipt of assistance; and (v) that the business will provide matching funding of One Dollar ($1.00) for every One Dollar ($1.00) of assistance, with at least twenty-five percent (25%) of the match being in cash and the remaining amount being from in-kind services, all of which must be documented by time sheets, payroll receipts, invoices and other documentation or information required by * * *the MTA IMS.  Assistance received by a business may be expended for hiring third-party consultants to assist the business and for equipment.  The amount of assistance that a business may receive under the program shall not exceed Ten Thousand Dollars ($10,000.00) and any award of assistance shall be made on a onetime basis.

          (c)  Except as otherwise provided in this paragraph, a business receiving assistance under the program shall not be required to repay the assistance * * *in the manner provided in this paragraph.  Repayment shall be made through the use of a nonrecourse loan in which the business will repay the loan upon the successful commercialization of the product or service.  The business will repay one hundred percent (100%) of the amount of assistance received if such repayment is made within thirty‑six (36) months from the date the assistance is received, with the amount to be repaid by the business increasing at a rate determined by the parties in the contract up to an amount not to exceed two hundred percent (200%) of the amount of assistance if such repayment is made later than thirty‑six (36) months from the date the assistance is received but not later than sixty (60) months from the date the assistance is received.  Amounts received as repayments shall be deposited into the special fund created in subsection (3) of this section.  Notwithstanding the preceding provisions of this paragraph, if the business receiving assistance fails to meet certain financial performance levels established in the contract between the business and the MTA and the contract does not activate any repayment provisions, then the MTA will deem the assistance provided to be a loss and the business receiving assistance shall not be required to repay the assistance received unless IMS determines that the business has violated significant terms of their agreement, presented false information, or misrepresented facts in their application.  If it is determined the business violated terms or submitted false or knowingly incorrect information, the business will be required to repay one hundred percent (100%) of the amount of assistance received.

     (3)  There is created in the State Treasury a special fund, to be designated as the "Rural Innovation Program-Level 1 Fund," which shall consist of funds appropriated or otherwise made available by the Legislature.  From and after July 1, 2023, the "Rural Innovation Program-Level 1 Fund" shall be known as the "Proof of Concept Grant Program Fund".  The fund shall be maintained by the State Treasurer as a separate and special fund, separate and apart from the General Fund of the state.  Unexpended amounts remaining in the fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned or investment earnings on amounts in the fund shall be deposited into such fund.  Monies in the fund shall be disbursed, in the discretion of the Mississippi Development Authority, to provide funds to * * *the MTA IMS for the purposes described in this section, or for the purposes described in Sections 57-103-1, 57-103-3, 57-103-5 and/or 57-103-9 if * * *the MTA IMS determines that the funds are not needed for the purposes described in this section.

     SECTION 4.  This act shall take effect and be in force from and after July 1, 2023.