The press and critics of Hawaii's high technology industry often make it sound as though high technology companies receive large amounts of tax credits, but do not return value to the state. Kai Medical has benefited from Act 221/215, the Hawaii state law that supports the growth of the high technology industry.
However, many people may be surprised to know that the Company already contributes more economic value to the State of Hawaii than it and its investors have claimed in credits. Further, Kai Medical’s first product received FDA clearance in 2009, positioning the Company to increase its contribution to the Hawaii state economy in 2010. The following chart shows Kai Medical’s annual contribution and cost to the State of Hawaii from 2007 - 2010 (est.).
Contribution to Hawaii* = Value of the funds spent in Hawaii (payroll, R&D, state taxes, etc.) by Kai Medical
Cost to Hawaii = Tax credits received by investors in Kai + research credits received by Kai from the State of Hawaii
*An economic multiplier of two was applied to the actual dollars spent by Kai Medical in Hawaii on its business and taxes. Multipliers are used to project changes in the economy that reach beyond the initial action (i.e. a dollar spent multiple times in the local economy). The State of Hawaii has used a 2x multiplier in the past when calculating the value to the economy of a dollar spent in the state.
On a cumulative basis, Kai Medical is already a net contributor to the State of Hawaii. Meaning, that if you add all of the economic contributions Kai Medical has made to the state since its inception and subtract all of the tax credits and incentives it has received, that Kai Medical has provided positive value to the State of Hawaii. The chart below summarizes the cumulative economic contribution to Hawaii over time.
Additional benefits to the State of Hawaii include:
1. Kai Medical's success benefits Hawaii's reputation as a place to do business
a. First and only Hawaii company to receive the Frost & Sullivan Technology Innovation of the Year Award (2008)
b. Developed the first and only Doppler radar based, non-contact respiratory monitor ever to receive FDA clearance
2. Helping to fight "brain drain"
"As I completed my Master's Degree at the University of Hawai'i, I was worried that I would have to return to the mainland to find meaningful work as an Electrical Engineer.
I am proud to work at Kai Medical with this team of top notch engineers. The fact that we are developing state-of-the-art medical devices in Hawai'i is something special."
- Alex Vergara, Member of the Technical Staff
If you have questions about this analysis or Kai Medical’s economic contribution to Hawaii, please contact:
Scott Miyasato, VP Legal Affairs & General Counsel
Email:
Phone: 808-687-2900
