MISSISSIPPI LEGISLATURE
2023 Regular Session
To: Ways and Means
By: Representative Guice
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 * * *
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 * * * 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 * * *
IMS. If * * *
IMS staff reviewing the application determines that an application
should be reviewed by the Seed Fund Investment Board appointed by the * * * IMS Board of Directors, the
application shall be forwarded to the Seed Fund Investment Board. If the Seed
Fund Investment Board approves the application, * * * 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 * * * 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 * * * 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 * * *
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 * * * 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 * * *
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. * * *
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 * * * 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 * * * 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 * * * 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 * * *
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 * * * 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 * * * 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 * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by the * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * 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 * * * 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 * * * 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 * * * 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 * * * IMS and the contract does not
activate any repayment provisions, then * * * 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 * * *
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 * * * if * * * 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 * * *
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 * * * 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. * * *
(b) Any business
desiring to participate in the program must submit an application to * * * 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 * * * IMS. If * * * IMS staff reviewing the
application determines that an application should be reviewed by the Seed Fund
Investment Board appointed by the * * * IMS Board of Directors, the application
shall be forwarded to the Seed Fund Investment Board. If the Seed Fund
Investment Board approves the application, * * * 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 * * * 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 * * * 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 * * * 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 * * * 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 * * * 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.