Lockheed Martin Canada’s SMB Mentoring Program Economic Development Opportunities (EDO)

EDO and Government Assistance SMBs often have access to enhanced economic incentives over and above large businesses in Canada Federally Provincially SMBs often have more flexibility to consider different types of funding than larger companies with stricter policies Grants Low-cost Loans Forgivable loans Leverage these tools in order to supplement your R&D resources and make yourself more competitive. © 2016 LOCKHEED MARTIN CANADA

© 2016 LOCKHEED MARTIN CANADA Definitions EDO = Economic Development Opportunities which are equivalent to Government Incentives SR&ED = The Canadian Scientific Research and Experimental Development Tax Incentive which supports corporations, partnerships or individuals who conduct scientific research or experimental development in Canada SMB = Small and Medium Business © 2016 LOCKHEED MARTIN CANADA

© 2016 LOCKHEED MARTIN CANADA Types of EDOs EDO opportunities for SMBs are funded by: Federal Government Provincial Governments EDO opportunities typically take the form of: Tax credits Grants Loans © 2016 LOCKHEED MARTIN CANADA

Select Examples of EDOs Tax Credits SR&ED tax credits Significantly enhanced tax credit rate for SMBs performing qualifying work in Canada: 35% cash refund federally plus provincial tax credit rate Federal tax credit rate for large corporations is 15% plus, in some cases, a lower provincial rate Digital Media Tax Credits Provincially administered credits in NS, QC, ON, BC with similar philosophies but different criteria & administration Loans SADI – Strategic Aerospace and Defence Initiative Federal program that provides repayable contributions to support research and development (R&D) projects in the aerospace, space, defence and security (A&D) sectors. SADI is available to firms of all sizes to support product, service or process innovation © 2016 LOCKHEED MARTIN CANADA

Select Examples of EDOs Cont’d Grants IRAP – Industrial Research Assistance Program Federal Program providing technology assistance to small and medium-sized enterprises (SMEs), at all stages of the innovation process, to build their innovation capacity and successfully take their ideas to market. OCE – Ontario Centres of Excellence In partnership with industry, OCE co-invests to commercialize innovation originating in the province’s publicly funded colleges, universities and research hospitals. Also supports and invests in early-stage projects, where the probability of commercial success and potential total return on innovation are substantial. TDP – Technology Demonstration Program Federal program that provides non-repayable contributions to support one or more large-scale research and development (R&D) projects per year. Mitacs Federal program that manages and funds research and training programs for undergraduate, graduate students and postdoctoral fellows in partnership with universities, industry and government. Also supports two-way research collaboration between Canada and international partners. © 2016 LOCKHEED MARTIN CANADA

© 2016 LOCKHEED MARTIN CANADA EDO Considerations Cannot be the sole reason for doing business EDO should complement the engagement … not drive the engagement Many forms and sources of government assistance Focus on ones with good net value (amount of the incentive minus the effort to apply/report/defend) You don’t have to be an expert in all incentives; but you should have some base level knowledge There are free experts (government employees) There are paid experts (e.g. accounting & tax firms) PLAN! Often a long lead time process; don’t expect quick turnarounds Typically months to work through applications, approvals & agreements © 2016 LOCKHEED MARTIN CANADA

Why EDOs are Important to Large Businesses Lowers the cost of an investment Government assistance direct to large organizations lowers costs Government assistance to an SMB lowers the cost of a large organization’s investment Increase the scope of work based on investment Leveraging government assistance could lead to increased scope of work/more capability or functionality for the same level of large organization investment © 2016 LOCKHEED MARTIN CANADA

© 2016 LOCKHEED MARTIN CANADA Conclusion SMBs have access to (and the versatility to apply) EDOs that may not be available to larger companies SMBs can leverage these EDOs to: Lower their own costs Work in partnership with larger businesses who may not be able to apply these EDOs directly SMBs don’t have to be experts in all EDOs, but should: Become aware of Federal EDOs and determine which provide the ideal ROI for their particular business Become aware of all EDOs within the provinces in which they do business Hire a consultant to ensure you are maximizing your opportunities and to develop in-house expertise © 2016 LOCKHEED MARTIN CANADA

© 2016 LOCKHEED MARTIN CANADA Helpful Links Scientific Research and Experimental Development Tax Incentive Program (SR&ED) Sustainable Development Technology Canada Build-in-Canada Innovation Program (BCIP) Digital Media Tax Credits: Nova Scotia Ontario Quebec British Columbia IRAP – Industrial Research Assistance Program OCE – Ontario Centres of Excellence TDP – Technology Demonstration Program SADI – Strategic Aerospace and Defence Initiative Mitacs – National, not-for-profit that has designed and delivered research and training program in Canada © 2016 LOCKHEED MARTIN CANADA