Tenacity and attention to detail uncovered a first SR&ED claim worth over $1M for Pine

Client Overview

Bubblegum Kids is a small-scale Consumer Packaged Goods (CPG) company with a mission to create the "perfect bubblegum" — a product embodying an ambitious combination of qualities such as being kosher, gluten-free, sugar-free, and xylitol-free.

The company, led by passionate entrepreneurs, had been collaborating with various manufacturers to achieve these characteristics but faced challenges in defining and documenting their innovative efforts.  

Challenge

The company’s innovation efforts seemed unconventional for SR&ED claims. Traditionally, bubblegum production isn’t associated with scientific research or experimentation. In addition, the manufacturing occurred overseas, complicating SR&ED eligibility.

The documentation of experiments and feedback was informal, reliant on personal notes and anecdotal evaluations. And finally, there was little precedence for similar claims.

As a result before connecting with Zero to One Strategic, the team had spoken to other providers and faced skepticism about eligibility. They weren’t willing to take the time to consider the innovative work they were doing within this product space.

The team at Bubblegum Kids hoped to use SR&ED credits to offset development costs but lacked the infrastructure and technical expertise to navigate the complexities of SR&ED eligibility.

Solution

The expert team of ex-CRA auditors and CPA’s at Zero To One Strategic spent the time needed to identify the unique uncertainty the Bubblegum Kids team faced.

It was confirmed that the R&D work done by Bubblegum Kids’ was in fact eligible within the SR&ED framework.

They did this by leveraging case law, reframing innovation, providing support with documentation and ultimately setting up Bubblegum Kids for future success by educating the client on better tracking methodologies for future claims, ensuring compliance and defensibility. A considerable amount of time was spent supporting the client to collect and organize feedback records that formed the basis for their claim.

Impact

Zero to One Strategic meticulously documented the client’s development process, capturing experimentation with the product as the central R&D activity.

Despite what on the surface seemed to be informal evaluation methods, the team emphasized the resource constraints of a small business, aligning with CRA guidelines for small-scale innovators. This resulted in a successful claim and Bubblegum Kids were able to secure SR&ED credits. This enabled them to offset their significant R&D expenses. Furthermore, the Zero to One team supported Bubblegum Kids in “future-proofing” their innovation by introducing structured documentation and tracking methods for future claims.

Client Overview

iMarketing is an integrated marketing services company with clients in the not-for-profit, political & association sectors.

They use lead generation techniques in a unique way to facilitate communication with potential and actual donors. They are a fundraising company that lacked a clear understanding of R&D within their operations without a dedicated R&D team.

Challenge

Innovation was embedded in day-to-day tasks managed by the IT department with the team juggling support duties and new product development interchangeably.

This blurred the lines between R&D and routine work and therefore the engineering team struggled to identify eligible R&D activities. And historically, their innovation efforts were not systematically documented.

Additionally, the fundraising sector is not typically associated with R&D and as result, there was internal skepticism about claim eligibility that had to be overcome. This would have been compounded by the fact that most SR&ED providers would likely have dismissed iMarketing’s efforts as ineligible early in the process.

Solution

Unlike traditional SR&ED providers that filter clients for obvious eligibility, the team at Zero to One Strategic spent time analyzing iMarketing’s work, uncovering hidden opportunities. They were able to reframe their operations and showcase measurable optimization.

They focused on data-driven innovation that highlighted cutting-edge processes, including a proprietary algorithm that analyzed vast datasets to optimize operations based on specific team member skill sets and schedules.

Finally, the Zero to One team was able to demonstrate how to best document work properly for SR&ED eligibility. In turn, the IT team realized that the “routine activities” they thought were ineligible were addressing uncertainties, exceeding industry standards, and demonstrating innovation in their niche.

This empowered iMarketing to see their work through an R&D lens, paving the way for future claims.

Impact

Determined to highlight this innovative company, the Zero to One team conducted detailed interviews to analyze two years of work. They isolated innovative processes from routine operations, building a defensible narrative for SR&ED eligibility. This resulted in the filing of a successful claim, aligned with CRA guidelines, focusing on the most innovative aspects of their operations.

The iMarketing team secured funding for previously unrecognized innovation efforts. This reinforced the importance of operational optimization as an R&D expense, transforming iMarketing’s view of their work. They have positioned themselves as a tech-enabled innovator in the fundraising space.

Client Overview

Orderease, a rapidly growing company with a 40-member team, faced significant financial pressure in early 2024 as they approached their Series A raise, a critical funding milestone.

While successfully leveraging various non-dilutive funding sources and claiming SR&ED, they found themselves in difficult situation and we were able to support.

Challenge

The Zero to One team discovered that past filed SR&ED claims were significantly undervalued, an oversight that, left unaddressed, threatened the company’s growth trajectory and morale at a pivotal time in its funding journey.

Previous SR&ED claims had netted only $35,000 annually, a far cry from what they should have received, given their significant investment in R&D. Immediate intervention was essential to stabilize finances, maintain team structure, and sustain investor confidence as they approached their Series A close.

Solution

The expert team of ex-CRA auditors and CPA’s at Zero To One Strategic quickly identified missed opportunities, suspecting that miscalculations and a misunderstanding of the challenges Orderease had faced, left considerable funds unclaimed within the allowable 18-month period. By conducting a thorough SNF test, we confirmed R&D work that met SR&ED eligibility criteria, warranting a claim reevaluation. Given the severity of the financial situation, the team reallocated resources internally immediately, working evenings and weekends alongside the Orderease team to expedite data collection and claim preparation.

Impact

Through extensive and detailed claim revisions, the team successfully refiled the Orderease SR&ED claims. During the process, Zero to One strategic also facilitated additional bridge financing of $470,000. This helped Orderease meet payroll obligations and avoid workforce disruption while waiting for the return.

These efforts collectively enabled Orderease to maintain operations and reinforce investor confidence. In July 2024, Orderease’s revised SR&ED claims were approved without audit, a testament to the meticulous and compliant claim preparation.

The outcome was transformative: Orderease’s SR&ED refund grew from $35,000 to $500,000 per year for two years, resulting in nearly $1 million in new revenue.

As a result of these actions, Orderease was positioned advantageously during their Series A due diligence. With a stabilized financial outlook, they closed a multi-million dollar funding round shortly thereafter.

Future Outlook

Orderease now stands financially stronger, continuing to expand and innovate with the support of a robust SR&ED foundation. This case exemplifies our dedication to unlocking maximum funding and optimizing cash flow for growth-oriented clients.