The Manhattan Economic Development Advisory Board received a positive report at Wednesday's meeting.
Seventeen companies have received MEDOFAB money. More than $7.7 million has been given as Grants and another $2.6 million has been loans.
The Board received reports on four companies: ASHA Distributing, Inc.; Kansas Entrepreneurial Center, Inc. (KEC); Manhattan Holdings, LLC; and Manko Window Systems.
Here are the reports:
ACCOUNTABILITY CHECKLIST
Company: ASHA Distributing, Inc. Date of Review: October 22, 2001
Report for year ending: December 31, 2000
Review Team: Diane Stoddard
Company Representative: Trace Smith, President
GOAL OF COMPANY: ASHA Distributing, Inc., was formed in 1982 to distribute top quality products at a fair and reasonable price to installing contractors and dealers. ASHA is a wholesaler of top quality heating, venting, air conditioning, and plumbing products. The Company was in need of expanding its warehouse capacity to be able to increase the needed inventory on-hand to meet customer demand. Increasing the inventory on-hand and expanding its product line would help ASHA be more competitive and increase its sales and presence in the four-state area. ASHA’s vision is to be a highly visible company known as one of the best wholesalers in the heating, cooling, and plumbing industry by 1998. By marketing and actively promoting heating, cooling, plumbing, and related products, the Company hopes to become a leader in the Midwest region. To accomplish this vision, ASHA has built a regional distribution facility to increase the amount of inventory needed to meet customer demands, maximize sales with an extensive campaign to promote its products, add regional distribution and sales offices, reinforce Customer Support services to handle the increased demands created by the influx of new orders and broader coverage of existing accounts, and augment company staff to support and sustain prolonged growth under the new marketing plan. ASHA (doing business locally as Manhattan Properties, Inc.) constructed an 84,500 square foot facility at 803 Levee Drive on July 27, 1998 with a total capital investment of approximately $2,300,000.
JOB INCENTIVE GRANT: $135,000
ADDITIONAL JOB INCENTIVE GRANT: Not to exceed $30,000 in increments of $6,000.
JOB CREATION PROVISIONS: For each job created in excess of 14 full-time employees (3 original and 11 projected first-year employees), the Company will be paid $6,000. This amount will not exceed $30,000.
GENERAL
Annual financial statements.
No
Pending completion by Company’s CPA.
Quarterly Financial Statements.
No.
Pending completion by Company’s CPA.
JOB INCENTIVE GRANTS
Review firm’s business plan.
In 2000, ASHA began distributing the Goodman and Amana lines of heating and air conditioning equipment. The addition of these lines of equipment enabled the Company to expand its customer base and secure new business in the new construction and multi-family markets. The Company continued to automate its distribution practices to streamline operations. Four new locations were opened in November of 2000 and the opening of three new locations is planned for late 2001. The Company’s web site was improved to enable e-commerce for its customers. Internet access for web, as well as data communications for all branches, was in the early planning stages.
Number of new direct jobs created during year?
ASHA had 5 FTEs as of December 31, 2000 and 4 FTEs as of September 1, 2001. This is down slightly from 5.95 FTEs in 1999. The Company added a warehouse manager, sales manager, and a delivery driver.
Median annual income of new jobs created during year?
Median income for new jobs created was $10.50 per hour. Sales positions pay $35,000 annually. A quarterly incentive plan was implemented to provide a bonus to each employee based on a performance checklist. Managers were paid bonuses at year-end based on new profits of the branch.
Median wage of entry-level position after 6 months of employment?
Median income is approximately $9.00 per hour.
Firm in compliance with all other terms of original agreements?
Yes.
Any pending legal actions?
No.
PRIVATE OR OTHER CAPITAL INVESTMENTS:
$2.3 million initial investment. Inventory and fixed assets of a former wholesale distributor were purchased and four new locations opened. Ten trucks were added to the fleet.
LOCAL COMMUNITY INVOLVEMENT:
ASHA Distributing is a member of the Manhattan Area Chamber of Commerce and donates to many local charitable causes.
DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.)
As of December 31, 2000, 80% (four) of employees live in Manhattan and 20% (one) in Ogden.
GENERAL COMMENTS:
ASHA continues to provide warehouse space at its Manhattan facility for general lease in the community. This is an important need in Manhattan.
NEEDED ACTIONS:
None.
ACCOUNTABILITY CHECKLIST
Company: Manhattan Holdings, LLC Date of Review: September 21, 2001
Report for year ending: December 31, 2000
Review Team: Bill Riley, Diane Stoddard, Libby Peterson, and Bret Glendening
Company Representatives: Ron Sampson, President and CEO
Note: Manhattan Holdings, LLC’s, fiscal year runs from July 1 - June 30
MEDOFAB Funding History: Manhattan Holdings, LLC, was approved for $600,000 in Seed and Venture Capital Funds to be paid in $200,000 increments on July 1 of 1996, 1997, and 1998.
GOAL OF COMPANY: To provide early stage risk capital for the commercialization of new products and technologies with apparent high growth potential. The funds will be highly leveraged and invested in companies where Mid-America Commercialization Corporation invests management time and expertise.
PRIMARY GOAL (5-10 YEARS):
* Generate compounded annual returns of 12 to 22% through investment strategies.
SECONDARY GOALS (10 YEARS):
* Leverage Manhattan Holdings’s investments in ventures by at least three-fold by facilitating access to other sources of risk capital, grants, and financing.
* Create, within the region of Manhattan Holding’s focus, at least 50 new direct, technology-based jobs, leveraged to about 200 total new jobs through direct and indirect multiplier effects.
REPRESENTATION: The City of Manhattan will appoint a minimum of three (3) persons proportional to the City’s investment to represent the City on the Board of Members or other governing board of Manhattan Holdings, in order to facilitate communication between the parties. In addition, one of these members shall serve on the Investment Committee of the board, or any other committee constituted to review, recommend, or approve investments by Manhattan Holdings. The City’s representative on the Investment Committee should be able to contribute financial, legal, or other relative expertise to the investment process.
Kansas Entrepreneurial Center and Manhattan Holdings report their job creation figures together.
Cumulatively, they have created a total of 76.5 new FTEs by the end of 2000. Exceeds goal of 60 jobs. FTE total as of June 2001 is 95.
Average annual MH/KEC salary is over $34,000 with a mean of over $31,000. Total gross aggregate payroll exceeds $3.5 million annually.
Continues positive investment of funds. During 2000, the City received its first financial return in the amount of $137,657.25. This disbursement represented the City’s share of returns from liquidations of a MHL investment in FoodLabs, Inc. This return reduced the basis for the City’s investment in MHL from $600,000 to $462,342.75.
Investment reports.
MHL held equity interest in the following entities at the end of 2000:
Nanoscale Materials, Inc.- $250,000
Kansas Advanced Technologies- $25,000
Four Fish Productions, LLC- $175,000
ICE Corporation - $180,000
The City’s fund represents 1/3 of the overall investment funds.
To date, $990,000 has been invested in six different companies.
Financial balance sheet.
Balance sheets from December 31, 2000 and June 30, 2001 were provided and are on file.
Two (2) year projection of investment funds needed.
It is anticipated that approximately $600,000 will be required within the next two years to invest in four new ventures.
PRIVATE OR OTHER COMMUNITY INVESTMENTS:
$1.2 million investment from Kansas State University Foundation and KTEC Holdings.
GENERAL COMMENTS:
Two notable companies include:
* Nanoscale Materials, Inc.- catalyzed the development of the K-State Research Park through its plans to construct a new corporate headquarters and research building. Nanoscale Materials continues to be successful and plans to add a significant number of high-value jobs to the community over the next few years. The company plans to add a production facility in the next several years.
* NutriJoy, Inc.- a new startup company founded to commercialize certain nutritional beverage technologies acquired by MACC from the Procter & Gamble Company. The company will launch a new line of products in late 2001 or early 2002.
NEEDED ACTION:
None.
ACCOUNTABILITY CHECKLIST
Company: Kansas Entrepreneurial Center, Inc. (KEC) Date of Review: September 21, 2001
Report for year ending: December 31, 2000
Review Team: Bill Riley, Diane Stoddard, Libby Peterson, and Bret Glendening
Company Representatives: Ron Sampson, President/CEO, Mid-America Commercialization Corporation
Note: KEC’s fiscal year runs from July 1 - June 30
MEDOFAB Funding History and Overview: $300,000 Special Projects Grant - 1996
$250,000 Loan - 2000
Kansas Entrepreneurial Center, Inc., received a $300,000 Special Projects Grant. The City used the grant to purchase the former Big Lakes Developmental Center at 1500 Hayes Drive. KEC renovated the building at its expense to relocate its incubator business center there along with the offices of Mid-America Commercialization Corporation (MACC). The primary purpose of the facility is to incubate high-growth businesses that create high-value jobs. Originally, KEC targeted the creation of 60 new FTE jobs in the Manhattan area between December 1, 1996 and November 30, 2001. KEC originally had a five (5) year lease at $1.00 per year and had an option to extend this lease for five (5) more years through November 30, 2006. (Lease signed in 1996.) In 2000, KEC signed a new lease with the City to extend the lease through November 30, 2006 for $1.00 per year. The lease agreement signed November 7, 2000 requires KEC to create a total of 100 full-time equivalent jobs in the period beginning December 1, 1996 through November 30, 2006. The City issued a $250,000 loan to KEC for the purposes of increasing the capacity and adding other improvements to the facility owned by the City. The loan is being re-paid in monthly installments of $3,847 that began on June 1, 2001 and will be completed in October 2006 with a final payment of $3,792. KEC also retains an option to purchase the facility from the City for $300,000 through November 30, 2006.
GENERAL
Annual financial statements or audits.
On file.
Quarterly financial statements.
On file.
Annual reports.
June 30, 2000 Corporate Annual Report on file.
Number of new direct jobs created during year?
Kansas Entrepreneurial Center and Manhattan Holdings report their job creation figures together. Cumulatively, they have created a total of 76.5 new FTEs by the end of 2000. Exceeds goal of 60 jobs. FTE total as of June 2001 is 95.
Per November 7, 2000 agreement with the City, job target is 100 jobs created by KEC by November 30, 2006.
Median annual income of these new direct jobs created during year?
Average annual MH/KEC salary is over $34,000 with a mean of over $31,000. Total gross aggregate payroll exceeds $3.5 million annually.
Median wage of entry-level position after 6 months of employment?
SPECIAL PROJECTS GRANT
Review firm’s business plan.
KEC continues to incubate companies with high-growth potential. Companies who have worked with KEC include: ICE, KATS, Hematech of Kansas, Cancer Center, FoodLabs, Four Fish, NutraJoy, KSURF, Mid-America Technology Management and MACC. Professional Mentoring and NRG (Network Research Group) are graduates of KEC. KEC is currently working with three additional emerging companies.
Providing appropriate building maintenance.
Site visit conducted. KEC has invested about $350,000 in building capital improvements.
Property and flood insurance in force.
In force. Policies on file.
Minimum of $1 million Comprehensive General Liability Insurance Policy in force.
In force. Policy on file.
Any pending legal actions?
None.
PRIVATE OR OTHER CAPITAL INVESTMENTS:
* City’s $300,000 investment enabled the expenditure of over $800,000 in delivering economic development services (capital building improvements and operational expenses).
LOCAL COMMUNITY INVOLVEMENT:
No information provided.
DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.)
No information provided.
GENERAL COMMENTS:
* KEC became self funded for "out of pocket" operational costs within two years, and continues to operate without any governmental subsidy beyond use of the City-owned building.
* The following relates to both KEC and MHL:
* Gross aggregate payroll for the new jobs exceeds $3.5 million annually in new dollars to the community. These dollars generate approximately $396,000 in new state and local taxes per year.
* Companies brought over $5 million dollars of new revenues from outside the community into Manhattan during the fiscal year ended June 30, 2001. These revenues included product and service sales, investment funds, and non-local governmental grants. Most is spent locally.
NEEDED ACTION:
None.
VOLUNTARY ACCOUNTABILITY
Company: Manko Window Systems
Report for year ending: December 31, 2000
GOAL OF COMPANY: Manko Window Systems, Inc., was incorporated in 1989 and is a commercial grade window and door manufacturer located in Manhattan. In early 1996, an application was made to MEDOFAB from Manko requesting assistance to expand the firm’s manufacturing facility in Manhattan. Manko was looking to expand in order to increase manufacturing capacity by building a new 68,000 square foot facility allowing additional space for manufacturing operations, inventory storage, and improved line management.
REQUIREMENTS: Grant funds are to be spent only for the purpose of:
*Expanding the business of Manko to create approximately 55 new jobs;
*Assisting Manko with interest payments on loans needed to construct its facility;
*Assistance in moving costs of inventory, supplies, office equipment, and records;
*Assistance in site preparation; and
*Assistance in complying with regulations of federal, state, and local governments regarding the construction of the facility.
JOB INCENTIVE GRANT: $750,000 approved on April 2, 1996
PARTICIPATORY LOAN CATEGORY: $181,861 Present Value Interest Differential Grant
CURRENT STATUS:
*As of December 31, 2000, Manko had 150 FTEs (far exceeds target of 55 new positions)
*As of September 30, 2001, Manko had 153 FTEs
* The Company has added onto its building and has new equipment
* There has been a steady increase in sales