annualreport9899

E C O N O M I C I N N O VAT I O N & TECHNOLOGY COUNCIL AR 98 99 Manitoba and the World at the Millennium Mapping our Future in a Global Environment EXECUTIVE COMMITTEE MEMBERS Bob Silver (Chair) Ralph Bullock David Shaw Vice-President, Engineering & Quality (Retired), Bristol Aerospace Ltd. Gary Coleman President, Standard Aero Merrill Shulman President, Integrated Messaging Inc. President, Western Glove Works Ltd. Serena Kraayeveld (Vice-Chair) President, Big Freight Systems Inc. Arthur Fast ´´ Dr. Emoke Szathmáry President and Vice-Chancellor, University of Manitoba Marv Tiller Tax Managing Partner, PricewaterhouseCoopers Doneta Brotchie Chief Financial Officer, The Landmark Group Inc. Lee Jebb Senior Vice-President, Central Prairie Region—CIBC Mark Chipman General Manager, Brandon Chamber of Commerce David Kalinchuk President, Tribal Councils Investment Group of Manitoba Ltd. Martin Weinberg President, Birchwood Automotive Group Mary Dixon Economic Development Officer, Virden-Wallace Economic Development Charron Kerr President and Chief Executive Officer, Loring Ward Investment Counsel Ltd. President, Peguis Publishers David Graves General Manager, Videon Graham Lane E I T C S TA F F John Meldrum Chairman and Chief Executive Officer, Centara Corporation David Romanow Vice-President, Finance and Administration, The University of Winnipeg Dr. John Langstaff Chief Executive Officer John Clarkson Vice-President Erica Bruce President and Chief Executive Officer, Roman Equipment Service (1973) Ltd. Peter Siemens President and Chief Executive Officer, Cangene Corporation Jeff Lawson Project Manager Jana Busse Marieta Consulting President, Clark Hy-Line Inc. COUNCIL MEMBERS Dr. Dennis Anderson Charles Loewen Coordinator Arlene Elendiuk President, Online Business Systems Derek Mazur Administrative Support Shelly Gillert President and Vice-Chancellor, Brandon University Leonard Asper President, CREDO Entertainment Corporation Sandra Métraux Project Manager Thomas Penner Project Manager Margaret Powell Chief Operating Officer, CanWest Global Communications Corp. Stanley Bear Senior Vice-President, Marketing, Investors Group Terence Perkins Administrator Leah Sinclair Business Advisor, Assembly of Manitoba Chiefs Michael Birch Vice-President and Chief Financial Officer, Isobord Enterprises Inc. Marc Raymond Administrative Support Christina Weise Research Assistant Chairman, Aboriginal Beverage Company Ltd. Chairman and Chief Executive Officer, Westsun International Inc. James A. Richardson Vice-President, James Richardson & Sons Limited E C O N O M I C I N N O VAT I O N & TECHNOLOGY COUNCIL July 28, 1999 To the Honourable Mervin C. Tweed Minister responsible for the Economic Innovation and Technology Council 358 Legislative Building 450 Broadway Winnipeg, Manitoba R3C 0V8 May it Please Your Honour: I have the privilege of presenting the Annual Report of the Economic Innovation and Technology Council for the year ending March 31, 1999. Respectfully submitted, Bob Silver Chair of the Economic Innovation and Technology Council 1 EITC Annual Report TA B L E O F C O N T E N T S AR 98 99 MESSAGE FROM THE CHAIR MESSAGE FROM THE CEO O U R M A N D AT E , M I S S I O N A N D G O A L S MEETING OUR GOALS EITC is positioning Manitoba to be a world-class environment for economic innovation. 4 5 6 8 9 9 11 12 14 15 15 17 17 19 19 19 19 20 21 21 22 24 25 25 25 26 26 26 26 27 Manitoba and the World at the Millennium Conference Task Groups Economic Innovation and Technology (EIT) Fund Small Projects EITC is encouraging innovation in education and training. Science and Technology Awareness EITC is creating an entrepreneurial climate. Invest Manitoba EITC is getting stakeholders to work together. Information Technology (IT) Sectoral Committee Manitoba Advanced Technology Alliance (MATA) Manitoba Centre of Knowledge Manitoba Innovation Network SMARTpark World Science Conference T O WA R D S T H E N E W M I L L E N N I U M M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S Operating Results This Year/Last Year Comparison Actual to Budget Analysis Summary of Program Expenditures Other Issues EIT Fund Conclusion E I T C ’ S F I N A N C I A L S TAT E M E N T S 2 3 MESSAGE FROM THE CHAIR As we head into a new millennium, 1998/99 provided the Economic Innovation and Technology Council with an opportunity to reflect on and create a vision for Manitoba’s economic environment. Council took this challenge head on and worked hard to develop activities and strategies to make Manitoba a better place to live, work and do business in the next millennium. Through each of our tasks we have contributed to the enhancement of a climate of innovation, entrepreneurship and technological development to benefit all Manitobans. A strategic planning session, early in the year, focused on reviewing and refining council’s priorities and activities. A number of priorities, including human resource and economic development, research as an economic thrust, and postsecondary education as an industry focused our efforts for the remainder of the year. Through Task Group reports we have, over the past year, provided advice to government, industry, and other stakeholders on various issues. This advice includes working together so that solutions for economic development in the Aboriginal community may be found and implemented. EITC also provided advice on putting in place new catalysts that will drive the growth of the health and biotechnology industry from within. We expanded our advisory role this year by providing the opportunity for all Manitobans, through the Manitoba and the World at the Millennium conference, to provide input into strategies for our future. The conference featured speakers and panelists that challenged participants with their ideas on the new economy, education, demographics, health and wellness, community health, and technology. Each participant took part in surveys and group discussions that led to the development of strategies for Manitoba in the new millennium. One of the Council’s goals is to get stakeholders to work together. This year we were the catalyst in developing and enhancing a number of partnerships including the Manitoba Centre of Knowledge, the Innovation Corridor, the Manitoba Innovation Network, the Manitoba Advanced Technology Alliance, the SMARTpark and the Information Technology (IT) Sectoral Committee. Once again, science and technology awareness was a focus for Council this year, with the creation of the Manitoba Network for Science and Technology (MindSet). Ongoing year-round activities of MindSet have made science and technology exciting and accessible to all Manitoba students, teachers and parents. Invest Manitoba continued to build an entrepreneurial climate in Manitoba through the Art of Raising Capital educational seminar series, the 1998 Invest Manitoba Venture Showcase and the Manitoba Investment Forum. Accessing capital is critical to the growth of small businesses in Manitoba and Invest Manitoba has continued its success in providing businesses and investors the opportunity to develop strategic alliances. As Council members, you should be proud of your accomplishments this year. Your efforts have developed strategies to move Manitoba into the new millennium and have helped Council move further to achieving its goals. None of this could have been accomplished without a dedicated staff to support Council’s activities. This year we welcomed a new project manager in Shelly Gillert and additional administrative support in Leah Sinclair. The coming year holds new opportunities for Council members to use their talents to further enhance Manitoba’s economic climate as we move into the next millennium. The work of Council will continue to ensure a better place for all of us here in Manitoba. Bob Silver Chair MESSAGE FROM THE CEO The Economic Innovation and Technology Council was established by the Province of Manitoba to be a catalyst for the development of innovation in the province and to drive the creation of an environment that stimulates responsible economic growth. As the wave of change accelerates and as global trends dictate our future like never before, the need for an agent to facilitate future economic growth becomes even more critical. Through its advice to government and its activities in 1998/99, EITC continued to fulfill its mission by being that instrument. In order to act as a catalyst, EITC has taken an innovative approach to its activities. In 1998, MindSet was created to further enhance EITC’s science and technology conference attracted over 400 people to hear speakers like Peter C. Newman, Nuala Beck, Daniel In the past year I have had the opportunity to work with a talented and influential group of individuals on Council; this coming year will be no different. As we move into the next millennium, EITC will continue to act as a catalyst to create an environment for economic growth through innovation. In the coming year, EITC will undertake the development of a new task group that will review the competitiveness of the manufacturing industry in Manitoba, and undertake the sponsoring of two forums, one on post-secondary education and the other on community economic development. I look forward to working with Council on these and other initiatives in 1999/2000. Stoffman, Diane Francis, and Hugh Segal and to develop strategies for making Manitoba a better place to live, work and do business in the next millennium. These strategies will lay the foundation for improving education, the business environment, the use of technology and the health of individuals and communities in Manitoba. A conference report detailing these recommendations will be presented to the Government of Manitoba and distributed to each participant. Facilitating partnerships like the Manitoba Centre of Knowledge, acting as a catalyst for entrepreneurship through Invest Manitoba and providing private sector advice to government by way of Task Groups, are all mechanisms EITC uses to support economic development in Manitoba. Our approach ensures that advice given and actions taken have support and assistance from all stakeholders. awareness activities. Five principles guide MindSet’s activities: partnerships; focus on participation; leveraging resources; mutual benefit; and results in real time. These guiding principles have allowed MindSet to substantially increase the number and scope of its activities. In addition to increasing its participation by approximately 10,000 to 24,700 participants, in- kind contributions have increased from $146 thousand to $817 thousand and for the first time MindSet received $77 thousand in sponsorships. EITC also facilitated an open discus- sion about the future of Manitoba during the Manitoba and the World at the Millennium conference. The John Meldrum Chief Executive Officer 4 5 Our Mandate, Mission and Goals O U R M A N D AT E , M I S S I O N A N D G O A L S EITC was established by the “Economic Innovation and Technology Council Act” on September 1, 1992. E I T C ’ S M A N D AT E IS TO: • Advise the government on all aspects of innovation and the development and commercialization of technology • Recommend a long-term course of action designed to stimulate innovation and technology commercialization • Generate prosperity by encouraging investment in innovation and technology • Serve as an innovation broker for personnel, ideas and research • Facilitate technology transfer between multi-stakeholders. EITC is the Province’s private T H E C O U N C I L’ S MISSION IS: “To promote and enhance a climate of innovation, entrepreneurship, and technological development that spurs responsible economic development for the benefit of all Manitobans.” EITC’s five goals, essential to sector advisory council on economic development and innovation and serves as an interface among government and stakeholders from business, industry, institutions and academia. It acts as a catalyst for partnerships and alliances for increased economic development through innovation. The Council reports to the Province through the Economic Development Board of Cabinet (EDB). Council members are appointed by the Government and represent Manitoba’s industry, business and educational communities across the province. The Council and its activities are supported by a Secretariat which provides support and advice to Council and its standing committees and task groups. the fulfillment of its mission and mandate, are set out in the Framework for Action document. They are: • To get stakeholders to work together • To facilitate the development and commercialization of technology • To position Manitoba as a world-class environment for economic innovation • To create an entrepreneurial climate • To encourage innovation in education and training. 6 7 Meeting Our Goals MEETING OUR GOALS EITC is positioning Manitoba to be a world-class environment for economic innovation. MANITOBA AND THE W O R L D AT T H E MILLENNIUM CONFERENCE On March 16 & 17, 1999 the Economic Innovation and Technology Council held a two-day forum titled Manitoba and the World at the Millennium: Mapping our Future in a Global Environment. The purpose of the forum was to bring together stakeholders from across Manitoba to discuss global trends affecting Manitoba and to develop strategies to enhance the economy and quality of life in Manitoba. Just over 400 people from across Manitoba participated in the conference. Participants represented a variety of different sectors including business, education, government, not-for-profit, and health care. For the attendees, the forum provided them with the opportunity to share their ideas about the future of their province, while listening to speakers with innovative and challenging viewpoints. During group discussions forum participants developed concrete suggestions for making Manitoba a better place to live and work. Keynote speakers including Peter C. Newman, Nuala Beck, Hugh Segal, and George Gilder, kicked-off the forum by sharing their insights on global trends and issues affecting Manitoba, Canada and the world, today and into the future. Their ideas provided the starting point for each of the panel discussions that followed. Panelists including Noralou Roos, Diane Francis, Cam Mustard, Daniel Stoffman, Wayne Helgason and Michael Walker presented their innovative and challenging viewpoints on education, the economy, post secondary education, technology, demographics, George Gilder, keynote speaker at the Manitoba and the World at the Millennium Conference. 8 9 Participants had yet another opportunity to provide their ideas and suggestions for Manitoba’s future by taking part in the Millennium Survey. No look at the near and long term future of the province would be accurate or complete without input healthy communities, and healthy individuals. After each panel discussion participants took part in mini-surveys related to the topics discussed by the speakers. Answering these surveys was their chance to be heard on various issues affecting Manitoba. In addition, group discussion took place to further identify the critical issues and to develop strategies. from youth. Over the month of February, all high schools in the in a survey almost identical to the Millennium Survey. Student representatives presented their results during the conference. The findings from the panel discussions, the mini-surveys, group discussion, the Millennium survey, and the student survey, form the basis of a report prepared by EITC and presented to the Government of Manitoba. The Manitoba and the World at the Millennium conference was sponsored by 18 organizations from Manitoba. They are listed below. • Central Prairie Region—CIBC • Economic Development Winnipeg • Elite Cellular • Faneuil ISG Inc. • Investors Group • Manitoba Hydro province were invited to participate • Manitoba Telecom Services • Nesbitt Burns • Online Business Systems • Oracle • Pan Am Games • PricewaterhouseCoopers • Productivity Point International • Standard Aero Ltd. • The Bentley Consulting Group Ltd. • Videon • Wardrop Engineering Inc. • Westsun International Inc. In March, 1999, CIBC sponsored EITC’s Manitoba and the World at the Millennium conference. The conference addressed issues that also concern CIBC, says Doneta Brotchie, Senior VP for CIBC Prairie Region. “One of the key areas of our community support is in programs that can assist entrepreneurship and economic development,” she says. “We also feel it’s very necessary to explore what the new millennium holds in terms of opportunities and in how it will affect our financial well-being.” “There’s a real need for an organization like EITC, one that takes a facilitating and organizing kind of role, to bring together organizations, businesses and entrepreneurs who could not do it alone,” says Brotchie. The Provincial Government has identified key areas that need to be addressed in order to insure the economic development of the province. EITC reflects those goals in actions.” Doneta Brotchie Senior Vice President, Prairie Region Canadian Imperial Bank of Commerce MEETING OUR GOALS TA S K G R O U P S As the Province’s private sector advisory body, EITC undertakes task groups to study and make recommendations on specific economic development issues. In 1998/99, EITC continued work on the Aboriginal Economic Development Task Group and formed two new task groups— the Microelectronics Task Group and the Health/Biotechnology Industry Development Task Group. • Increasing the participation of Aboriginal people in post-secondary education and training • Improving labour market information to be more relevant and meaningful • Increasing access to capital for Aboriginal entrepreneurs and businesses. • Approximately 15 percent indicated that they spend nothing on microelectronics during the manufacturing phase of production, while 40.4 percent claimed an amount ranging from $6,000 to $25 million. • About nine percent of organizations use custom-made microelectronics products, compared to 54.3 percent that use a mixture of custom made and generic products. About 37 percent never have used custom-made products. Microelectronics Task Group On October 6, 1998 EITC organized a breakfast session for approximately 65 people from the finance, industry, government and education communities to explore opportunities for the microelectronics industry in Manitoba. Participants of the session felt that it was important to gather more information about the size and scope of Manitoba’s microelectronics industry. As a result, EITC conducted a survey with Manitoba businesses that design, manufacture and use microelectronics in their manufacturing processes. In total, 47 businesses participated in Aboriginal Economic Development Task Group EITC undertook the challenge of Health/Biotechnology Industry Development Task Group In April 1998, EITC was asked to provide advice to government and industry regarding an innovative approach to stimulate Manitoba’s health industry towards its development as a centre of excellence. Members of the Task Group represented stakeholders from the business community, health research and educational institutions, and government. The Task Group focused their deliberations on identifying and developing opportunities, options and recommendations targeted at stimulating health and biotechnology industry development in Manitoba. Recommendations were developed around key areas such as access to capital, research funding, technology commercialization and human resources, and are aimed at all stakeholders. developing an innovative approach to economic development within the Aboriginal community. Separate Working Committees were formed to review issues related to education and training, employment opportunities, access to capital and building partnerships. The final report Working Together encourages stakeholders to work together to implement solutions for the Aboriginal community. Recommendations of the Task Group’s final report focus on five areas: • Improving co-ordination and linkages among all stakeholders by establishing best practice guidelines • Improving the educational outcomes of Aboriginal youth from the Kindergarten to Senior Four levels the survey. The following are highlights of the survey: • Involvement in the microelectronics industry in Manitoba is primarily by those organizations that use microelectronics in the products that they design and/or manufacture (70.2 percent). • Among the various areas of involvement in the microelectronics industry in Manitoba, switches, printed circuits (boards) and sub-assemblies were the products most frequently used. 10 11 Harry Schulz Member of the Health/Biotechnology Industry Development Task Group EITC’s role in promoting the growth of Manitoba’s health industry involves much more than just providing funding, says Health/Biotechnology Industry Development Task Group member Harry Schultz. “There are so many diverse players in this field, the trick is to effectively utilize their limited resources in a way that is cost effective, and that has an impact,” says Schultz. “It’s a matter of bringing people together and facilitating discussion.” “Without EITC’s involvement, this frank discussion would not have happened,” says Schultz. “A lot of what came out of the Task Group report was common sense, and much of it was being adopted by the industry before the report was even delivered.” E C O N O M I C I N N O VAT I O N AND TECHNOLOGY (EIT) FUND The Economic Innovation and Technology Council Act created the Economic Innovation and Technology (EIT) Fund for the amount of $10 million. EITC may provide grants, loans, loan guarantees, and incentives from this fund to carry out its mission and goals. Proposals receiving funding in 1998/99 were: companies by emphasizing entrepreneurship, innovation, and strategic partnering. Its mission is to increase the efficiency and competitive positions of its members; encourage leadership and partnering at home and abroad; and foster an environment conducive to alliance and exports. An advisory body that includes key players from the information technology industry will monitor the use of the funding. EITC has a representative on Natural Science and Engineering Research Council (NSERC) Chair in Aerospace Materials This initiative was supported by EITC through a $125,000 grant over five years ($25,000 per year). The initiative, in partnership with the University of Manitoba, NSERC, EITC and the private sector contributes to the Faculty of Engineering’s ability to conduct research in aerospace and supports an Under-graduate Aerospace Option as part of the Mechanical Engineering degree program. the advisory body. Canadian Advanced Technology Alliance (CATA) EITC is providing CATA with $55,000 over the next two years Manitoba and the World at the Millennium On March 16 and 17, 1999 EITC held a two-day forum to bring together stakeholders from across Manitoba to discuss global trends affecting Manitoba and to develop strategies to enhance the economy and quality of life in Manitoba. The cost of the conference was $340,000. Science and Technology Awareness EITC has established the Manitoba to establish a regional office, the Manitoba Advance Technology Alliance. CATA, as one of Canada’s leading business and advocacy groups, stimulates the growth of Canadian high technology Network for Science & Technology (MindSet) to increase awareness for students on the importance of science and technology. Activities include support for a Co-ordinator, MEETING OUR GOALS improved communication initiatives, S&T open houses and workshops, St. Boniface General Hospital Research Centre (Lasertech Surgical Proposal) EITC has provided $22,000 to the surgical time, length of stay and rehabilitation time for patients. The system is based on existing C-Shaped MRI technology. increased focus on Manitoba Science and Technology Week, and various community awareness activities. Cost for this initiative was $267,000 in 1998/1999. SMARTpark EITC has provided support to the development of the University of Manitoba’s SMARTpark. The total investment will be $250,000 for the start-up phase of the SMARTpark. The funding will Research Centre to support half the cost of undertaking a market feasibility study of the Lasertech Surgical System. The preparation of an acceptable market feasibility study could result in the Research Centre receiving $1 million from the Technology Partnership Canada Program in support of the development of the product. The Lasertech surgical laser venture combines the use of a laser based surgical system, with a Magnetic Resonance Imaging (MRI) system and a robotic manipulator. The system operates through the use of real time MRI feedback to guide the laser. The proposed system would allow surgeons to remove brain tumors with greater accuracy and less damage to healthy tissue. The system would result in a reduction in State of Innovation Report Annually, EITC produces a State of Innovation Report for the Province. The report provides statistical information on the Manitoba economy, identifies Manitoba’s advantages, focuses on innovative changes and highlights specific sectors of the economy. The 1997/98 report was produced in multi-media format including and interactive CD-ROM, Web-site, video and hard copy. The CD-ROM is linked to the Web-site, be used for start-up operating costs including the development of a detailed business plan, and recruitment of staff. EITC’s support of the SMARTpark will encourage the growth of Manitoba’s high-technology industry by bringing together collaboration between university researchers and Manitoba companies. which also contains over 300 links to Manitoba companies and support services. The report focused on the information, telecommunications and transportation sectors. The next report will also be in a multi-media format and focus on the new media industry. SMARTpark is a research park for knowledge-based industries at the University of Manitoba’s Fort Garry Campus. “The park will allow knowledge and technology based companies to partner with the university where appropriate,” says David Graves, Chair of the SMARTpark Board of Directors. “The result will be increased economic development initiatives, and enhanced technology transfer and commercialization activities within the province.” EITC provided $250,000 in start-up operating funds to the SMARTpark, and an additional $5,000 for an economic impact study. EITC’s support, however, has not only been financial, says Graves. “EITC’s executive committee has publically supported this project from the outset. Bob Silver in particular, EITC’s Chair, has been very vocal in his support of both the park and its goals.” “EITC is very important in realizing this kind of project,” says Graves. “Really, EITC is a trigger mechanism. It could be argued that without EITC’s support, this project would not have come into existence.” David Graves Chair of SMARTpark, Board of Directors 12 13 Andora Jackson Executive Director, Internet Innovation Centre The Internet Innovation Centre at the University of Manitoba is concerned with content on the internet, says Andorra Jackson, the Centre’s Executive Director. “We focus on what goes through the pipe, rather on the pipe itself,” she says. Every year, the centre holds the Internet Innovation Workshop. One of the workshop’s main sponsors is EITC. “The Internet Innovation Workshop affords a chance for small- and medium-sized business to come out and see what we’re doing, to learn about how to use the internet in business, e-commerce, multi-media and more,” says Jackson EITC’s support has been crucial in more ways than one, she says. “Their direct sponsorship of the workshop allows us to bring in speakers, and to keep costs down. That encourages small business to attend, where otherwise the cost would be prohibitive. In a less tangible, but equally important way, our relationship with EITC has helped to raise our profile in the business community.” SMALL PROJECTS The Economic Innovation and Technology Council receives various requests for funding that relate to its mandate and goals. Projects funded by EITC include conference and seminar sponsorships, education activities, forums, and joint studies and research. In 1998/99, EITC funded 25 initiatives for a total Re-thinking Government IV EITC, with joint funding from the Manitoba Robot Games EITC supports education and train- City of Winnipeg, the Provincial Auditor’s Office and Service First supported the Re-thinking Government IV project. This project is a vehicle to gather information about public perceptions surrounding alternative service delivery mechanisms. The approach includes surveys of 3,000 Canadians, focus group sessions, and surveys of senior decision-makers. ing initiatives for youth such as the Manitoba Robot Games. The exercise of building robots provides an entertaining and challenging way for students to become more interested in science and technology. Students expand their creative and analytical skills by undertaking the research and design of their robots. Students then compete against other students in four areas of competition —Mini Tractor Pull, Atomic Hockey, Sumo Wrestling and Seek and Capture. of $74.3 thousand. Highlighted below are some of the projects supported by the EITC. Internet Innovation Centre Deep River Science Academy The Deep River Science Academy is a camp operated out of the AECL Whiteshell Laboratories in The Internet Innovation Centre (IIC) promotes the cooperation, coordination and communication within and between academia, industry and government regarding the development of Internet applications at the University of Manitoba. Annually, the IIC organizes a workshop providing an opportunity for Manitoba business to explore the cutting-edge of Internet developments, and to learn how to apply new technology to the workplace. EITC supports this workshop, which provides seminars on entry-level, intermediate and advanced topics related to Internet technology. Pinawa. The camp provides opportunities for high school students to undertake hands-on scientific research and development with experienced university tutors and AECL staff. The students participate in projects that are part of the laboratory’s ongoing research programs. EITC supported the program by sponsoring students to attend the six-week camp. MEETING OUR GOALS EITC is encouraging innovation in education and training. SCIENCE AND T E C H N O L O G Y AWA R E N E S S The Standing Committee on Science and Technology (S&T) undertakes responsibilities for science and technology matters assigned by Council, including technology-related policy and activities in Manitoba. The members of the Standing Committee on S&T are: Dr. John Langstaff (Co-Chair), David Kalinchuk, Dr. Ron Humble, Policy Advisor, Industry, Trade & Tourism Dr. Jim Jamieson, Dr. Jasper McKee, Director of Accelerator Centre, Department of Physics, University of Manitoba 1998/99 was a year of strategic Dean of Science, University of Manitoba growth for EITC’s science and technology awareness activities. The S&T Committee established the Manitoba Network for Science and Technology (MindSet) to encourage and promote: • Scientific and technological awareness, knowledge, ability and skills Economic Development Officer, Virden-Wallace Economic Development Carrie Lagassé, Manager, Financing Products and Specialty Markets, Royal Bank President and CEO, Cangene Corporation Dr. Ian Smith (Co-Chair), Director General, Institute for Biodiagnostics, National Research Council of Canada Dr. Moe Barakat, President, InfoMagnetics Technologies Corporation John D. Carlyle, Deputy Minister of Manitoba Education and Training Inside each MindSet newsletter is a poster for kids, parents and teachers, highlighting the newsletter’s topics. 14 15 • Improved school-to-work transition in science and technology areas • Innovation in science and technology. • Expansion of partnerships and “sphere of influence” • Involvement of more schools, students and teachers • Greater variety of activities • More participation of rural areas • Activities positioned to support new science curriculum • $77,750 in sponsorship contributions • $817,250 in-kind contributions Key Activities of MindSet were the Brain Game Kick-Off, establishment of the MindSet Web-site (www.mindset.mb.ca), distribution of quarterly newsletters and posters on Sci-Trek, Hockey Science, Manitoba Science and Technology Week, and the science and technology of the Pan American Games, and the insertion of Manitoba Moose Hockey Science Units in 13 editions of Saturday Winnipeg Free Press. With a solid base of funding committed for three years, EITC established MindSet and was able to expand the reach and scope of its activities through the following steps: • Development of a corporate identity • Growth of the communications program MindSet achieved the following results for its programs and activities in 1998/99: • 24,700 participants • 422 partners Hope Kideckel Coordinator of Career Development Program, Sisler High School “MindSet’s involvement in the Career Development Program at Sisler High School is absolutely essential,” says program coordinator Hope Kideckel. “Our program would not be what it is without MindSet.” The program places students in both short-term job-shadowing positions and long term career internships. Every year, between 300 and 600 students are placed in positions where they can experience science and technology at work in the real world. Positions range from placements at the National Research Council to the Winnipeg Police Force. The value of the program is clear. “Students come back from their placements loving the job, knowing they better start taking their science courses seriously, or they come back realizing that they’re not at all interested in the field. Both results are valuable, and can help students plan their education and careers.” EITC, through MindSet plays an important role in encouraging students to explore science and technology as career options, says Kideckel. “MindSet has allowed us to introduce our students to scientists and engineers working in the real world, and kids come away encouraged and determined to stay in school.” MEETING OUR GOALS EITC is creating an entrepreneurial climate. INVEST MANITOBA Invest Manitoba has expanded its focus to be a year-round activity providing educational seminars, holding the annual Venture Showcase and developing increased partnerships. The Art of Raising Capital Seminar Series is an ongoing educational series that helps move businesses through a process to become investor ready and provide the business with a foundation to build relationships with investors. The following Invest Manitoba educational events were held in 1998/99: • Target Marketing to Investors, held at the Brandon Chamber of Commerce with presentations from Arthur Fast, Co-Chair of Invest Manitoba and Duncan D. Jessiman, Aikins MacAulay & Thorvaldson • Target Marketing to Investors, held in Winnipeg featured Arthur Fast, Co-Chair of Invest Manitoba, Peter A. Miller, KPMG Corporate Finance Inc. and Duncan D. Jessiman, Aikins MacAulay & Thorvaldson • Investing in Intellectual Property Opportunities was held at the University of Manitoba for a group of students and faculty. Presentations were made by Arthur Fast, Co-Chair of Invest Manitoba and Damiano Coniglio, KPMG Corporate Finance Inc. • Venture Capital: The Right Option was held in partnership with the Business Development Bank of Canada at the St. Boniface Hospital Research Centre. Presentations were made by Mary Macdonald, Macdonald & Associates and Mike Robinson, BDC Vencap Manager. A presenting company at the Invest Manitoba Venture Showcase talks to a potential investor. 16 17 EITC’s sponsorship of Invest Manitoba, and the annual Venture Showcase, is vitally important to the development of new entrepreneurs in Manitoba, says Jack Peterson, a member of the Invest Manitoba Steering Committee. The Venture Showcase provides a venue for new entrepreneurs to present their opportunities to an investment minded audience. “Not only is it good for the community, and the health of the economy, it’s also an essential learning experience for new entrepreneurs.” “EITC’s initiatives in this area are easily the most important activities that anyone is doing in Manitoba,” says Peterson. “They’re focused solely on new entrepreneurs. Nobody else is doing it to this extent.” Chuck LaFlèche, President of Momentum Health Information Services, agrees. His company has appeared at the Venture Showcase three times now. “It’s only by ‘telling your story’ to a knowledgeable audience that you can get immediate, and honest feedback. It allows young companies to hone their presentation skills, learn how to grab people’s attention for 15 minutes, and properly tell their story.” Appearing at the Venture Showcase has been of great benefit to Momentum Health Information Services. “It has raised our company’s profile in the investment community, not only with large individual investors, but with all the players like Nesbitt Burns, Bieber Securities, and ENSIS. We have received direct benefit from individual investors who first heard about us at the Venture Showcase, and indirect benefits from having a continued presence there, and being viewed as a ‘player’.” Initiatives like the Venture Showcase are extremely important if Manitoba and Canada are to flourish in the Information Technology sector, says LaFlèche. “There must be forums like this to link the sources and uses of funds. Young companies must have access to the capital markets. Conversely, the investment community must be exposed to a large number of IT companies, at different stages in the business cycle, allowing them to intelligently evaluate the various investment opportunities.” Jack Peterson Member of Invest Manitoba Steering Committee Chuck LaFlèche President, Momentum Health Information Services The Invest Manitoba Venture Showcase is an Entrepreneur Fair that brings entrepreneurs together with financial institutions, venture capital firms, and angel investors. In 1998, 20 companies made presentations to, and networked with over 400 potential investors. The presentations provided details on company business plans, management capabilities, financing needs and investment opportunities. In 1998 Invest Manitoba once again partnered with Nesbitt Burns to co-sponsor the Manitoba Investment Forum. The purpose of the forum is to increase awareness of the many successful Manitoba based firms available for individual investment. Attended by over 1500 people, 40 publicly traded companies and companies which were public or considering going public, participated by giving presentations at the forum. The management of Invest Manitoba is co-ordinated by a Steering Committee comprised of representatives from the private and public sectors. The Steering Committee is supported by a working committee made up of staff from EITC and Industry, Trade & Tourism. Members of the Steering Committee are: Arthur Fast (Co-chair), Duncan D. Jessiman, Partner, Aikins, MacAulay & Thorvaldson Carrie Lagassé, Finance Manager, Financial Products and Specialty Markets, Royal Bank Peter A. Miller, Senior Vice-President & Director, KPMG Corporate Finance Inc. Jack Peterson, Ph.D, Strategic Innovations Inc. Ian Robertson, Assistant Deputy Minister, Industry, Trade & Tourism Phil Sheps, Representative, Winnipeg Chief Financial Officer, The Landmark Group Inc Lee Jebb (Co-chair), Chamber of Commerce Steven Stang, Representative, Manitoba Chamber of Commerce Len Trotter, Senior Manager— General Manager, Brandon Chamber of Commerce Kevin Hooke, Vice-President (Corporate Finance), Wellington West Capital Inc. Emerging Markets, Business Development Bank of Canada MEETING OUR GOALS EITC is getting stakeholders to work together The Economic Innovation and Technology Council supports and is a member of many organizations which help support its goals and mandate. The following is a list of EITC’s key involvements. • Identify training needs for IT employees, existing and prospective • Attract and retain qualified IT professionals • Facilitate positive MANITOBA CENTRE OF KNOWLEDGE The vision for a Manitoba Centre of Knowledge is a place that provides access to information for all Manitobans and becomes a centre to support economic development, life-long learning, emerging technologies, cultural resources and community development. It is a place where people and companies can gather, in person or virtually for information, knowledge, wisdom, guidance, and universally supported resources. The driving force behind the Manitoba Centre of Knowledge is the innovation corridor, a cluster of small- and medium-sized high technology entrepreneurs who want to come together to support each other in business development initiatives. The cluster requires supports related to access to information and technology, access to a skilled workforce, and access to government support agencies. I N F O R M AT I O N TECHNOLOGY (IT) SECTORAL COMMITTEE EITC formed the Emerging Skills educational changes. M A N I T O B A A D VA N C E D TECHNOLOGY ALLIANCE ( M ATA ) The Manitoba Advanced Technology Alliance (MATA) was established as a regional office of the Canadian Advanced Technology Alliance (CATA), to focus on growing Manitoba’s small- and medium-sized companies, especially in the advanced technology community. This is accomplished through a combination of local networking events, services, educational and communication services, and services provided through CATA. The services provided are based on the needs of Manitoba-based companies as determined by a survey of companies. Needs Task Group in the Spring of 1997, in response to concerns raised by the Manitoba IT industry about the shortage of available IT workers, both in quantity and quality. A key recommendation of the Task Group was the formation of an IT Sectoral Committee made up of senior executives from the industry to develop a human resource strategy. The Information Technology Sectoral Committee was formed in September 1998 with the purpose to: • Identify the human resource needs for the sector • Develop a multi-year human resource needs plan 18 19 Rick Workman Chair, Information Technology Sectoral Committee The Information Technology (IT) Sectoral Committee recently presented its first report to the Minister of Education and the Minister of Industry, Trade and Tourism, says Committee chair Rick Workman. The Committee has been addressing three distinct issues, he says. “How many skilled IT workers are being produced by educational institutions. How many skilled IT workers does industry need now, and in the future. And how do we get the people we need, either through education or by encouraging them to move to Manitoba.” “I now see EITC’s role as being much more important than I originally thought,” says Workman. “EITC identified the problem to begin with, and their only goal has been to find solutions. Their task group recommended the formation of the IT Sectoral Committee, and they’ve been very supportive. They bring a neutrality to the proceedings that allows other parties to work together. Without EITC it wouldn’t happen.” The Centre of Knowledge would be made up of: • Small- and medium-sized companies who want to cluster either physically or virtually • A library to provide access to information • Education and training resources such as Red River College’s Market Driven Training Centre, University of Winnipeg Continuing Education Campus, and Brandon University satellite operations • Government and non-government support services such as Manitoba Trade, Economic Development Board, Economic Development Winnipeg, and the Chamber of Commerce. around technology with high-speed networking and broadband capabilities to ensure information sharing. The cadre of support services, including business development expertise, education and training, the library and government support services will ensure that people and companies have the ability to access information and opportunities. The Centre will employ the latest in data storage and mining techniques. The MIN organization forms, articulates and implements strategies for the information economy and works within the community to develop the skill sets and information that would shape the new industries of the future. The Manitoba Innovation Network consists of six modules each, which focus on a different sector of information technologies. • Education and Technology Training Module M A N I T O B A I N N O VAT I O N NETWORK The Manitoba Innovation Network (MIN) is a consortium of members, • FutureTech • Manitoba Advanced Technology Association (MATA) • Manitoba Health Telematics • New Media West Consortium • The Raven Innovation Network which brings together a unique The key component of the Centre will be the ability of companies to be virtually or physically attached to the necessary supports to create wealth. The centre will be built blend of information-based organizations whose emphasis are on the information technologies. The focus is on the accelerated adoption, by Manitobans, of information technologies and practices in the effort to enhance global competitiveness. MEETING OUR GOALS SMARTpark Over a number of years there have been numerous studies and proposals undertaken by various organizations that have supported the need for a technology/ research park in Winnipeg. Since the fall of 1996, the University of Manitoba has been working to develop a research park—also known as the SMARTpark—at its Fort Garry campus. The proposed SMARTpark will focus on knowledge-based industries such as advanced materials and manufacturing, agriculture/biotechnology, and information technology and telecommunications. The SMARTpark will create opportunities to forge greater links between the university and local businesses, increase economic development initiatives, and enhance technology transfer and commercialization activities within the province. WORLD SCIENCE CONFERENCE In June 1999, a World Science Conference will be held, sponsored by UNESCO and the International Council of Scientific Unions (ICSU). The broad purpose of the conference is to examine the natural sciences and their impact on society by the social sciences. The Canadian Commission for UNESCO organized a Canadian and Mexico. The focus of the North American Conference was on The Role of Science in Society and Governance. The discussions at the conference brought out a number of points for consideration. These points form the basis for the report from the North American preparatory meeting that will be presented at the World Science Conference. The report will also include an addendum on specific initiatives being undertaken by various North American communities. In that regard, one addendum will specifically focus on the S&T Awareness activities that are currently underway in Manitoba. Advisory Committee to receive input from across Canada on the major issues that the conference should address. The EITC represented the Province of Manitoba at these organizing meetings. UNESCO also held regional meetings as a mechanism to develop regional input into the conference. The North American meeting was held November 1 to 3, 1998 and brought together representatives from Canada, USA The Manitoba Innovation Network (MIN) is the organization that is leading the charge into the digital economy for Manitoba, says Hal Ryckman, Vice President of EDS Systemhouse and a Member of the MIN Board of Directors. EITC has very been supportive of the organization and its goals, says Ryckman, both as a member of MIN and in terms of financial support. “The EITC executive, in particular, has provided a strong leadership role in MIN’s affairs.” Growing Manitoba’s Information Technology companies is a goal shared by both MIN and EITC says, Ryckman. “EITC’s role is very important to what MIN does. As an agency of government itself, EITC is able to help us deal effectively with government, and there’s no getting away from the fact the government is a critical player in bringing Manitoba into the digital economy.” Hal Ryckman Vice-President, EDS Systemhouse Member of MIN Board of Directors 20 21 Towards the New Millennium TOWARDS THE NEW MILLENNIUM EITC will continue to work on science and technology awareness, access to capital and building partnerships. In 1999/2000, the Economic Innovation and Technology Council will continue to focus its activities on facilitating the creation of a world-class environment for economic development. EITC will continue to work on science and technology awareness, access to capital and building partnerships. Activities and study in other areas will be based on the priorities of Council, including manufacturing competitiveness, post-secondary education and community economic development. Following are a list of activities to take place in 1999/2000: • EITC will support the development of two forums. A forum on community economic development will be held in the fall in partnership with the Conference Board of Canada. A forum on the future of post-secondary education in the province will also be held in the fall in partnership with Red River College, the University of Winnipeg and the Manitoba Innovation Network. • Invest Manitoba will continue to play a role in promoting entreprenuership in the province. Yearround educational events, the Invest Manitoba Venture Showcase and the Manitoba Investment Forum will be held. Invest Manitoba will continue to expand its activities in rural Manitoba and its activities targeted to students and university faculty. • The next State of Innovation Report will be produced in the Fall of 1999 and will provide information The report will be available on a Web-site as well as in CD-Rom format and hard copy. The report is produced in a multi-media format to both demonstrate what is innovative in Manitoba and to ensure that the information is available in the format that the reader is comfortable. • Plans for MindSet reflect a continuation of the expanded activities including promoting science and technology awareness to attract additional sponsors and partners. In 1999/2000 the theme of MindSet’s activities will be the science of the entertainment industry. Other activities will include Connaught Biotechnology Partnership, the Telecommunications Summer Institute and the Wardrop Mentorship Program. • Two task groups will be formed, one of which will study the competitiveness of the Manitoba manufacturing industry in a global and knowledge-based economy. • Communicating the Aboriginal Economic Development Task Group to support implementation of the report’s recommendations by getting stakeholders to work together. on what has changed since the last report and highlight the new media industry. 22 23 Management’s Discussion & Analysis M A N A G E M E N T ’ S D I S C U S S I O N & A N A LY S I S O P E R AT I N G R E S U LT S The financial statements present the results for the year ending March 31, 1999. The statements have been prepared in accordance with generally accepted accounting principles. The excess of revenue over expenses from operations in 1998/99 was $11,892. This THIS YEAR/LAST YEAR C O M PA R I S O N Revenue: In 1998/99, revenue was $1,052.7 thousand and consisted of the provincial grant in the amount of $1,023.9 thousand and sundry ACTUAL TO BUDGET A N A LY S I S Revenue: Revenue for 1998/99 was $29 thousand greater than the budget of $1,023.9 thousand. Revenue was over budget as a result of greater than anticipated interest income that was not reflected in the budget. revenue in the amount of $28.8 thousand. This was $400 more than the previous year. excess was offset by extraordinary expense items in the amount of $192 thousand. The extraordinary items relate to the earned reduction in the value of the investment in the Manitoba Technical Centre and loss on disposal of capital assets. As a result, the net shortfall for 1998/99 was $180 thousand. • $288 thousand in activity expenditures • $89 thousand in building and office administration expenses • $128 thousand in printing, advertising, communication and travel expense • $52 thousand in fees and services. Expense: Operating expenses in 1998/99 were $1,040.8 thousand consisting of: • $482 thousand in salaries and benefits Expense: Actual expenditures were $16 thousand greater than the budget of $1,023.9 thousand. This was an increase of $24 thousand over 1997/98. 24 25 SUMMARY OF PROGRAM EXPENDITURES OTHER ISSUES Investment in Manitoba EITC has verified that all of its internal systems and applications are year 2000 compliant and the systems utilized by the service bureau providing financial services is also year 2000 compliant. Staff Costs— $482.0 EITC staff costs provided salary Technology Centre (MTC) As consideration for the transfer of ESC’s assets and liabilities, Council funding for the Chief Executive Officer, Vice-President, three Project Managers, one Research Assistant, one Receptionist, half time administrative coordinator, and part time contract support. There were no significant staff changes in 1998/99. Salary costs were $24 acquired an investment in the amount of $875,026. This investment consisted of 1,500,000 Class A Special Preferred Shares, 1 Class B Special Preferred Share, EIT Fund Economic Innovation and Technology Fund for period ending March 31, 1999 Description Actuals 1998/99 $000 10,000.0 and 25 Common Shares. Each Class A Special Preferred Share is non- thousand greater in 1998/99 than the previous year as a result of increases related to negotiated salary settlements, increments and the change in the reduced work week initiative. voting, redeemable and retractable on a semi-annual basis with one share canceled for each dollar contributed or invested by Envirotest Laboratories (ETL). The redemption amount of the Class A Special Shares is equal to the EXPENDITURES DURING THE YEAR S&T Awareness NSERC CATA SMARTpark SBGH Lasertech Surgical System Millennium Forum EIT FUND AUTHORITY BALANCE AT BEGINNING OF THE YEAR 8,894.2 Council Activities— $288.4 In 1998/99 Council activities included expenditures on: $ Thousands Three task groups Small projects Professional fees Invest Manitoba Annual report $ 53 74 101 20 13 agreed value of ESC’s contribution of $875,000 divided by 1,500,000 or $.5833 per share. ETL is committed to contributing $1,500,000 over the three years of the agreement. As at the end of March 1999 ETL has fully contributed its $1.5 million and as a result the 267.2 25.0 25.0 250.0 22.0 340.0 70.0 999.2 carrying value of the shares has been reduced to $26. State of Innovation Report Total commitments Occupancy Costs— $57 The occupancy costs include the rental of office space, insurance and minor renovations to the space during the year. Year 2000 Compliance In recognition of the potential impact of the year 2000 on computer systems, EITC has undertaken a comprehensive review of its computer systems. The issue is whether computer systems will properly recognize date-sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause a system to fail. Balance available for Future Commitments 7,895.0 CONCLUSION In 1998/99, EITC focussed on creating an environment that stimulates sustainable economic growth through innovation. This report demonstrates that EITC achieved its objectives and fulfilled its mandate and goals. EITC’s Financial Statements 26 27 E I T C F I N A N C I A L S TAT E M E N T S M A N A G E M E N T R E P O R T For the year ending March 31, 1999 The accompanying financial statements of the Economic Innovation and Technology Council are the responsibility of management and have been prepared in accordance with generally accepted accounting principles. These accounting principles have been applied on a basis consistent with that of the preceding year. In management’s opinion, the financial statements have been properly prepared within reasonable limits of materiality, incorporating management’s best judgement regarding all necessary estimates and all other data available up to June 7, 1999. Management maintains internal controls to provide reasonable assurance of the reliability and accuracy of the financial information and that the assets of the Economic Innovation and Technology Council are properly safeguarded. The responsibility of the Provincial Auditor is to express an independent, professional opinion on whether the financial statements of the Economic Innovation and Technology Council are fairly represented in accordance with generally accepted accounting principles. The Auditor’s Report outlines the scope of the audit examination and provides the audit opinion. On behalf of Management, John Meldrum John Clarkson Chief Executive Officer Vice-President May 7, 1999 AUDITOR’S REPORT To the Legislative Assembly of Manitoba We have audited the balance sheet of the Economic Innovation and Technology Council as at March 31, 1999 and the statement of revenue, expenditure and funds retained, the statement of Economic Innovation and Technology Fund revenue and grant expenditure and the statement of changes in cash flows for the year then ended. These financial statements are the responsibility of the Council’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the council as at March 31, 1999 and the results of its operations and its cash flows for the year then ended in accordance with generally accepted accounting principles. Winnipeg, Manitoba May 7, 1999 (except for Note 8, as to which the date is June 4, 1999) Larry Unryn, CA (for the Provincial Auditor) 28 29 BALANCE SHEET Exhibit A March 31 1999 1998 Assets Current Cash Funds on deposit with Minister of Finance Cash Term deposits (and accrued interest) Accounts receivable Province of Manitoba Other Prepaid expenses 744,798 21,903 47,499 1,178,846 225,597 20,000 47,268 733,892 49,323 314,923 27,460 413,167 $ 400 $ 400 Investment in Manitoba Technology Centre Ltd. (Note 3) Capital assets (Note 4) 26 24,505 182,503 24,520 $ 1,203,377 Liabilities Current Accounts payable and accrued liabilities Province of Manitoba Other Deferred revenue $ 6,000 598,601 $ 940,915 $ 7,000 146,183 8,725 161,908 — 604,601 Equity Funds retained (Exhibit B) 598,776 779,007 $ 1,203,377 $ 940,915 Uncertainty (Note 7) See accompanying notes to the financial statements. S TAT M E N T O F R E V E N U E , E X P E N D I T U R E A N D F U N D S R E TA I N E D Exhibit B Year ended March 31 1999 1998 Revenue Province of Manitoba (Note 5) Operating grant Sundry Total revenue Expenditure Operating expenses (Schedule 1) Excess of revenue over expenditure from operations Loss on disposal of capital assets Earned reduction in value of investment (Note 3) Deficiency of revenue over expenditure $ 1,040,810 1,016,285 $ 1,023,900 28,802 1,052,702 $ 1,029,100 23,203 1,052,303 11,892 (9,646) (182,477) (180,231) 36,018 — (231,523) $ (195,505) Funds retained, beginning of year Deficiency of revenue over expenditure Funds retained, end of year (Exhibit A) $ 779,007 (180,231) $ 974,512 (195,505) $ 598,776 $ 779,007 See accompanying notes to the financial statements. S TAT E M E N T O F E C O N O M I C I N N O VAT I O N A N D T E C H N O L O G Y FUND REVENUE AND GRANT EXPENDITURE Exhibit C Year ended March 31 1999 1998 Revenue — Grant from Province of Manitoba (Note 5) Grant expenditure Excess of grant revenue over expenditure/ funds retained $ 999,195 999,195 $ 343,624 343,624 $ — $ — See accompanying notes to the financial statements. 30 31 S TAT E M E N T O F C A S H F L O W S Exhibit D Year ended March 31 1999 1998 Increase (decrease) in cash and funds on deposit Operating Deficiency of Council operations revenue over expenditure (Exhibit B) Items not involving cash Amortization Loss on disposal of capital assets Earned reduction in value of investment in MTC Ltd. (Note 3) Net changes in non-cash working capital balances Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Deferred revenue Decrease in cash from operations Investments Acquisition of capital assets, net Cash applied to investing activies Net decrease in cash Cash and funds on deposit, beginning of year Cash and funds on deposit, beginning of year Represented by Cash Funds on deposit with Minister of Finance Cash Term deposits $ 49,323 314,923 27,460 413,167 (18,586) (18,586) (20,847) (20,847) (521,104) (231) 451,418 (8,725) (57,795) (217,457) (31,697) 68,066 8,725 (126,716) 182,477 231,523 8,955 9,646 9,629 — $ (180,231) $ (195,505) (76,381) (147,563) 441,027 364,646 588,590 441,027 $ 400 $ 400 364,646 $ 441,027 See accompanying notes to the financial statements. N O T E S T O F I N A N C I A L S TAT E M E N T S March 31, 1999 1 Establishment of the Council and nature of operations The Economic Innovation and Technology Council (EITC) was established by the Economic Innovation and Technology Council Act on September 1, 1992. Pursuant to the Act, the purpose of EITC is to foster economic development and to support economic restructuring and commercialization in technology so as to enable Manitoba to compete effectively in a global market economy. EITC’s mission statement is “to promote and enhance a climate of innovation, entrepreneurship, and technological development that spurs responsible economic development for the benefit of Manitobans”. In addition, EITC has responsibility for the operation of the Economic Innovation and Technology Fund from which EITC may provide grants, loans, loan guarantees and incentives which further EITC’s economic development objectives. EITC is economically dependent upon the Province of Manitoba. 2 Significant accounting policies a) Basis of Reporting The financial statements are prepared in accordance with generally accepted accounting principles. b) Capital assets Capital assets are recorded at cost less Government grants received and accumulated amortization. Amortization is calculated on a straight-line basis at the following annual rates: Computer equipment Furniture and fixtures Equipment 331 3% / 10% 10% c) Cash and funds on deposit Cash and funds on deposit include cash on hand, balances with the Minister of Finance and short term deposits with original maturities of three months or less. 3 Investment in Manitoba Technology Centre Ltd. Effective June 1, 1996, EITC discontinued its role in the operations of the Environmental Sciences Centre (ESC). Prior to June 1, 1996, the financial activities of ESC were reflected in the financial statements of EITC. On June 1, 1996, EITC entered into a public/private partnership with Enviro-Test Laboratories, a division of ETL Chemspec Analytical Limited (ETL). A new corporation, Manitoba Technology Centre Ltd. (MTC), was incorporated and certain assets of EITC, namely the assets of ESC, were transferred to MTC pursuant to an Asset Purchase Agreement in exchange for 25 Class A Common Shares with a paid-up capital value of $25, 1,500,000 Class A Special Preferred Shares with a redemption and paid-up capital value of $875,000, and 1 Class B Special Preferred Share with a paidup capital value of $1. Subsequent to the Asset Purchase Agreement, MTC issued 75 Class A Common Shares with a paid-up capital value of $75 to ETL. A Unanimous Shareholders Agreement between EITC and ETL sets out the rights and obligations in respect of the shares of MTC. The regular operations and management of MTC are the responsibility of ETL. 32 33 N O T E S T O F I N A N C I A L S TAT E M E N T S ( C O N T I N U E D ) . . . March 31, 1999 Investment in Manitoba Technology Centre Ltd. (continued) As described above and as consideration for the transfer of ESC’s assets and liabilities, Council acquired an investment in MTC as follows: Subscription Price 1,500,000 Class A Special Preferred Shares 1 Class B Special Preferred Share 25 Class A Common Shares $ 875,000 1 25 875,026 (875,000) Total subscription price Earned reduction in value of investment Carrying value $ 26 Class A Special Preferred Shares Each Class A Special Preferred Share is non-voting, redeemable and retractable on a semi-annual basis, with one share cancelled for each dollar contributed or invested by ETL in equipment, facilities, management and marketing. The redemption amount of the shares is equal to the agreed value of ESC’s contributed assets of $875,000 divided by 1,500,000 or $.5833 per share. As part of the Unanimous Shareholders Agreement, ETL is committed to contributing $1,500,000 over the first three years of the agreement. All Class A Special Preferred Shares were redeemed prior to May 31, 1999. Class B Special Preferred Share The Class B Special Preferred Share is non-voting, retractable and redeemable at $1.00 per share. Effective May 31, 1999, EITC has the option of retaining ownership of the Class B Special Preferred Share as long as it may wish and be entitled for so long as it holds this share to nominate one director to the Board of Directors provided that: 1 EITC no longer holds any common shares; 2 MTC continues to occupy premises owned by the Province of Manitoba; and 3 MTC has material contracts with the Province of Manitoba. Common Shares EITC, on behalf of the Province of Manitoba, owns 25% of the voting common shares. On May 31, 1999, MTC must redeem Council’s common shares for $434,200. The redemption price will be payable immediately unless MTC renews its lease with the Province of Manitoba for an additional term to May 31, 2002, in which case the $434,200 shall be paid in three equal instalments over the period of the renewal term, with the first instalment to be paid on June 1, 2000. A non-interest bearing promissory note will be provided to EITC in this case. The gain resulting from the redemption of these common shares will be recorded on May 31, 1999 (Note 8). N O T E S T O F I N A N C I A L S TAT E M E N T S ( C O N T I N U E D ) . . . March 31, 1999 Common Shares (continued) No dividends shall be declared, paid, or payable on the Common Shares until: 1 all outstanding Class A Special Preferred Shares have either been cancelled or redeemed in accordance with the terms of the Unanimous Shareholders Agreement; 2 the job targets of ETL and the MTC referred to in the Unanimous Shareholders Agreement have been attained or otherwise fulfilled to the satisfaction of EITC. Carrying Value The carrying value of the investment in Manitoba Technology Centre Ltd. has been reduced by the amount of the earned reduction. The earned reduction is based on the redemption amount of the Class A Special Preferred Shares and reflects ETL’s contribution to MTC during the year. During the year, ETL’s contribution totalled $396,919 which at a redemption price of $.5833, resulted in an earned reduction of $182,477. 4 Capital assets Capital assets owned by the Economic Innovation and Technology Council are summarized as follows: Less Government Grants Cost Received Less Accumulated Amortization 1999 Net Book Value 1998 Net Book Value Computer equipment Equipment Furniture & fixtures Total $ 27,682 13,791 32,214 $ — $ 14,086 2,882 $ 13,596 10,909 — $ 20,128 4,392 — 32,214 $ 32,214 $ — 16,968 $ $ 73,687 24,505 $ 24,520 5 Related party transactions EITC is related in terms of common ownership to all departments, agencies and Crown corporations created by the Province of Manitoba. EITC enters into transactions with these entities in the normal course of business. The Province of Manitoba provides access to a fund set aside for economic innovation initiatives. These funds are on deposit in the Fiscal Stabilization Fund and are available to fund EITC’s Economic Innovation and Technology Fund. The original amount of this fund was $10,000,000. Up to the end of the fiscal year 1998, $2,104,969, including $999,195 in the current year, has been expended by EITC and recovered from the Fiscal Stabilization Fund. 34 35 N O T E S T O F I N A N C I A L S TAT E M E N T S ( C O N T I N U E D ) . . . March 31, 1999 6 Pension plan In accordance with the provisions of The Civil Service Superannuation Act, employees of EITC are required to contribute to the Civil Service Superannuation Fund at prescribed rates for defined benefits. EITC is required to make contributions equal to the amounts contributed to the Fund by employees. Under this Act, EITC has no further pension liability. 7 Uncertainty due to the Year 2000 Issue The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and, if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity’s ability to conduct normal business operations. Is is not possible to be certain that all aspecs of the Year 2000 Issue affecting the Council, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 8 Subsequent event As at June 4, 1999, MTC was in the process of negotiating a lease renewal arrangement with the Province of Manitoba. S TAT E M E N T O F E X P E N S E S Year ended March 31 1999 SCHEDULE 1 1998 Advertising and promotion Amortization Building maintenance Computer Council activities Equipment rental, maintenance and repairs Fees, memberships and conferences Insurance Library operations Postage, delivery and telephone Printing and stationery Professional development Professional fees Purchased services Rental and property tax Salaries and benefits Travel $ 14,068 8,955 932 21,867 288,411 1,297 33,298 1,029 770 28,741 14,922 2,598 4,000 48,284 55,030 482,591 34,017 $ 16,396 9,629 5,047 4,612 353,297 3,795 25,168 863 1,819 17,785 9,678 225 27,936 32,310 54,411 447,384 5,930 $ 1,040,810 $ 1,016,285 This publication is also available electronically on CD-ROM or on EITC’s Web-site at www.eitc.mb.ca. For additional copies or more information about EITC please contact: E C O N O M I C I N N O VAT I O N & TECHNOLOGY COUNCIL 648 —155 Carlton Street Winnipeg, Manitoba R3C 3H8 Tel Fax 204 945 5940 204 945 8229 www.eitc.mb.ca