NZ govt gives up chasing NextWindow R&D grants
NZ govt gives up chasing NextWindow R&D grants
By Paul McBeth
June 5 (BusinessDesk) - The New Zealand
government has given up on trying to claw back $3.9 million
in research and development grants paid to failed
touchscreen developer NextWindow, though potential claims by
former customers, staff, or suppliers remain a risk to its
Canadian owner, Smart Technologies.
Calgary,
Alberta-based Smart Technologies pulled the pin on
NextWindow last year, which was once a New Zealand
poster-child for local high-tech nous. Founded in 2000 in
Auckland by John Newton, NextWindow's optical touchscreen
technology was sold to manufacturers of PCs and other
interactive displays.
Smart anticipates wrapping up the wind-down during the 2016 financial year, having initially targeted completion by the end of March this year at a cost of between US$30 million and US$35 million.
As a result of NextWindow's pending closure, Economic Development Minister Steven Joyce tasked Callaghan Innovation, the government-backed innovation commercialisation hub, to see whether it could recover research and developments grants paid to the firm, which pre-dated Callaghan's existence.
NextWindow was approved for $8.2 million in
technology development and student funding grants, of which
it drew down $2.6 million and $1.3 million respectively. The
now-defunct Ministry of Science and Innovation defended its
2011 decision to award $5.9 million in grants after Smart's
takeover, saying NextWindow's intellectual property remained
in the country and other criteria had been met.
Callaghan manager grants and risk assurance Ross
Baker said in a statement the agency found it wouldn't be
able to claw back any funds from the technology developments
grants (TDGs), which have since been replaced with new
subsidies.
"Due to the lack of any underlying asset
value within NextWindow (the technology upon which their
products were built had become rapidly obsolete resulting in
the loss of two primary customers) it was determined that
seeking repayment of funds from the company was not
commercially viable," Baker said. "Callaghan Innovation did
not have any security over Smart Technology PLC (this was
not a requirement for TDGs) and as such, was not in a
position to recover any value from them."
Callaghan's replacement growth grants include clauses requiring stakeholder guarantees to improve the chance of recovery of funding from foreign shareholders, and puts greater emphasis on intellectual property and benefits to New Zealand in its assessments, Baker said.
Smart wrote off all of the goodwill attached to the loss-making NextWindow, worth US$34.2 million, in the 2013 financial year, and has incurred US$33.2 million of restructuring costs over the past three years including US$21 million of inventory write-offs in 2013 and the mothballing of a plant in Ottawa. The company, best known for its Smart interactive whiteboard, is pinning its future on finding new ways to make money from the education whiteboard market and branching into new enterprise services.
"We may face
potential liability from customers, suppliers, departed
employees or other parties in connection with the
wind-down," Smart said in its 2015 annual report. "If we are
not able to secure an effective and efficient supply chain
for optical sensors going forward, we may face disruptions
in our operations that may have a material adverse effect on
our business."
Smart bought NextWindow in April 2010 for US$82 million, ending a claim it filed against the New Zealand business claiming unspecified damages a year earlier for violating its Digital Vision Touch patent, preceding an initial public offering in July of that year. The acquisition coincided with the rise of touchscreen phones and the introduction of tablets, which undermined its market prompting the Canadian company to subsequently all but write off the value of NextWindow.
If the Canadian company is unable to negotiate settlements with suppliers, staff and customers, it has threatened to appoint a liquidator to NextWindow to take control of the wind-down process. A spokeswoman for Smart declined to comment on whether there were outstanding disputes relating to NextWindow's closure.
Smart's Toronto Stock Exchange-listed shares
last traded at C$1.20, valuing the company at C$152.2
million.
(BusinessDesk receives funding from Callaghan to assist in the coverage of the commercialisation of innovation)
(BusinessDesk)