Check Out the 24 Tech and Biotech Companies That Received $75 Million in NOL Awards

Twenty-four technology and biotechnology companies were approved for inclusion in the state’s Technology Business Tax Certificate Transfer Program, more commonly known as the Net Operating Loss (NOL) Program, the New Jersey Economic Development Authority (NJEDA) announced in October.

Combined, these companies will receive approximately $75 million through the program to fund working capital or research and development (R&D), the maximum total amount available from the program.

Now in its 23rd year, the NOL Program enables participants to sell their New Jersey net-operating-loss and unused-R&D tax credits to unrelated profitable corporations for cash. The NJEDA and the New Jersey Department of Treasury’s Division of Taxation jointly administer the program.

The average award this year was over $3.1 million, which is high compared with the awards given in the early years of the program. According to an NJEDA statement, 36 percent of the program applicants are private businesses, while the remaining 64 percent are publicly traded companies. Two applicants are located in an Opportunity Zone, and three are in an Innovation Zone. Three of the 24 approved companies are participating in the NOL Program for the first time this year, according to the release.

Since the program’s inception, in the late 1990s, more than $1.17 billion in funding has been distributed to over 570 technology and life-science companies.

“One of the many advantages of the NOL Program is that it enables growing companies to obtain cash without sacrificing equity,” stated NJEDA CEO Tim Sullivan in a release. In January 2021, Governor Phil Murphy signed the New Jersey Economic Recovery Act of 2020 (ERA), which increased the program’s annual cap from $60 million to $75 million. It also increased the lifetime cap for individual applicants from $15 million to $20 million. 

“Legislation created under the ERA has been extremely beneficial to New Jersey’s innovation community and to NOL Program participants in particular,” stated NJEDA Chief Economic Transformation Officer Kathleen Coviello in a release. “Companies that had previously maxed out of the program are able to participate once again due to the increased cap the Act provides to individual businesses.”

The program also provides major benefits to the profitable companies that are buying the net- operating-loss and unused-R&D tax credits. A profitable company can purchase the tax credits at a discount, based on the market price at the time. These tax credits have traditionally traded somewhere between 88 and 94 cents on the dollar. Once purchased, they can be used to reduce the buyer’s state tax obligation.  

Most of the NOL money this year went to biotech companies, as was the case last year. In previous years, however, it was more evenly divided between the biotech and tech/clean tech sectors.  One of the tech companies taking part is IoTecha, a Cranbury-based clean technology company that has developed an integrated smart charging platform — including hardware, software and cloud-based services — for the electric-vehicle charging infrastructure.

“New Jersey’s transformation to a green economy, combined with our ability to access state resources like the NOL Program, has been extremely beneficial to our company,” said Oleg Logvinov, IoTecha’s president and CEO.  

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