RULEBOOK on the Support Instrument Co-financed Grants and Conditional Loans for Commercialization of Innovations 1

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1 Based on article 25 paragraph 19 of the Law on Innovation Activity ( Official Gazette of the Republic of Macedonia no.79/13, 137/13, 41/14, 44/15 and 6/16 and 53/16), the Managing Board of the Fund for Innovations and Technology Development, on its session held on, adopted the following RULEBOOK on the Support Instrument Co-financed Grants and Conditional Loans for Commercialization of Innovations 1 Article 1 This Rulebook shall determine the basic characteristics of the support instrument Co-financed Grants and Conditional Loans for Commercialization of Innovations 2 (hereinafter referred to as the Instrument ), the criteria and procedures for applying for co-financing and the criteria and procedures for awarding of the cofinanced grant or conditional loan. I BASIC CHARACTERISTICS Article 2 The aim of this instrument is to incentivize R&D (research and development) increase in the private sector, to encourage cooperation within the private sector and between the private sector and the higher educational and scientific institutions, as well as other forms of collaboration for commercialization of innovations. Article3 The instrument is open to micro, small and medium enterprises that wish to develop an innovative product, service or process either on their own or in collaboration with another enterprise or higher educational or scientific-research institution. The instrument is intended for financing enterprises registered in the Republic of Macedonia in order to develop and implement innovative solutions in enterprises, including support for enterprises that have high growth potential. The support through this instrument shall be granted to projects with a clear commercialization objective, which are in the phase of prototype (or appropriate phase depending on the type of innovation product, service, process) up to close-to-market phase. Article 4 Through this instrument the Fund for Innovations and Technology Development (hereinafter referred to as the Fund ) shall provide financing of up to 70% of the total project budget, in a maximum amount of 100, (one hundred thousand) EUR. The remaining amount of the total project budget shall be provided by the applicant. Funds received from the Fund on any other grounds or any other form of state aid is not acceptable as cofinancing by the applicant. Article 5 1 Co-financed Grants and Loans for Commercialization 2 Co-financed Grants and Loans for Commercialization

2 The financing under this instrument can be in a form of a co-financed grant or in a form of a conditional loan, depending on the amount of revenues of the applicant. The following conditions shall apply: - Financing for enterprises with annual revenues up to 500, (five hundred thousand) EUR in the last two years is awarded as a co-financed grant, - Financing for enterprises with annual revenues over 500, (five hundred thousand) euro in the previous 2 years, is awarded as a conditional loan. Financing awarded in the form of a conditional loan after the end of project may be converted into a cofinanced grant if the applicant fulfils the conditions stipulated in Article 6 of this Rulebook. The maximum amount which can be awarded in the form of a loan may not exceed 30% of the total capital of the applicant. Total capital of the applicant is the amount of the written capital, reserves and the undistributed profit. The conditional loan shall be repaid within 5 (five) years of the project end date. The obligation of repayment of the conditional loan starts at the project s end date. The conditional loan is repaid at quaterly intervals with a fixed interest rate of 2% (two percent) on annual basis under conditions determined in the Agreement given as Annex 9 - Agreement for Awarding Funds for a Conditional Loan of this Rulebook. Article 6 A conditional loan as stipulated in article 5, paragraph 1, indent 2 of this Rulebook, may be partially converted into a co-financed grant, upon completion of the following conditions: - the final report of the project (narrative and financial part) is approved by the Fund, - the beneficiary of the conditional loan retains the current number of employees (total number of persons employeed at the beneficiary according the annual Financial Report submitted to the Central Register for the last year of the project implementation) at least two years after the end of the project, - the beneficiary employs at least 5 (five) additional employees (with at least BSc degree in scientific fields of natural-mathematic sciencies, technical and technology sciences, medical sciences and health, biotechnical sciences, economic sciences, organizational sciences and management) which shall be each engaged in the company for at least 2 (two) years from the moment of their employment; and - the beneficiary has paid to the Fund all due liabilities for the principal and theinterest up to the day of approval of the conversion by the Fund. The beneficiary shall submit a request for approval of the conversion to the Fund including proof for fulfillment of the conditions for conversion listed in paragraph 1 of this Article. Due to the nature of the conditions for the conversion, the conversion may be approved by the director of the Fund earliest by two years after project completion. Upon approval of the conversion of the conditional loan into a co-financed grant, for the remaining obligations, from the date of submission of the request for conversion, the user needs to adhere to the rules and obligations that apply to users of allocated funds in the form of co-financed grants.

3 Article 7 In case of financing awarded in the form of a co-financed grant, upon successful commercialization, the revenue (not only the profits) derived from the sales of the product / service and any subsequent products / service based on the technology developed during / within the project financed by the Fund, shall become the basis for the royalty payments towards the Fund. Each royalty payments shall be made at the rate of 5% (five percent) of the annual revenue generated from sales of the product / service resulting from the project, up to 120% (hundred-twenty percent) of the financing received from the Fund or for a period of up to 5 (five) years after project completion, whichever condition is achieved first. The payment of royalties shall be calculated annually by the Fund in the current year for the previous year, and shall be paid by the beneficiary to the Fund no later than on March 31st in the current year for the previous year. Article 8 The duration of the project that has been granted financingunder this instrument may not exceed 24 (twentyfour) months. The director of the Fund may approve minor extensions of the project, up to two months, based on justified circumstances. Any extension longer than stated in paragraph 2 of this Article shall be approved only upon a decision taken by the Committee for Approval of Investments. In well justified cases, the projects may be extended for additional 12 (twelve) months upon prior approval by the Fund in accordance with paragraph 2 and 3 of this Article. In case of an extension, the amount of the awarded grant may not be increased. II ELIGIBILITY CRITERIA Article 9 Project proposals from all industries are eligible for financing. Project proposals may be submitted by a single applicant (micro, small or medium-sized enterprise) or by a consortium led by a micro, small or medium-sized enterprise. Cooperation between the private sector and higher education i.e. scientific-research institutions or other forms of cooperation for commercialization of innovation shall be considered an advantage in the project proposal. Article 10 The eligibility criteria that the applicant has to fulfill are: - to be an enterprise established in accordance with the Trade Company Law and registered in the Central Registry of the Republic of Macedonia,

4 - to be a micro, small or medium sized enterprise (up to 250 employees), - to be an enterprise with Macedonian ownership structure (of 50,1% or more) 3, - to be in ownership of a person/s and/or a micro, small or medium enterprise (with Macedonian ownership structure of 50,1% or more) and/or a higher education, i.e. scientific-research institution (up to 20% ownership in the applicant) - to not have revenues exceeding 1,000, (one million) EUR, according to the financial reports for the previous two fiscal years, - to not have capital connection (according to the Trade Company Law) to another enterprise where, the total annual revenues of both enterprises exceed 1,000, (one million) EUR in the previous two fiscal years, except in cases of capital connection with a higher education, i.e. scientific-research institution, - to not have accumulated over 200, (two hundred thousand) EUR aid of minor importance in the last three fiscal years including the requested amount from the Fund, in accordance with the Law on State Aid and the Regulation on the Conditions and Procedures for Granting Aid of Minor Importance (de minimis) - to not have accumulated over 100, (one hundred thousand) EUR aid minor importance in the last three fiscal years, including the requested amount from the Fund, if the enterprise is active in the road transport sector, in accordance with the Law on State Aid and the Regulation on the Conditions and Procedures for Granting Aid of Minor Importance (de minimis) - to not be in difficulty (an enterprise in difficulty is an enterprise that is unable to meet its obligations from its own resources or funds that can be obtained from its owner/shareholders or creditors, to end losses which without outside intervention of providers of aid, will certainly lead to short-term and long-term cessation of the operation of the enterprise, and - to not be engaged in coal production. Article 11 A single applicant may conclude an agreement for cooperation (subcontract for services) for research and development with national or international higher educational and/or scientific-research institutions, or another enterprise. In case of a project proposal submitted by a single applicant that involves an agreement for cooperation for research and development, the rights and obligations of the applicant and the higher educational and/or scientific-research institution shall be regulated within the cooperation agreement. The distribution of rights and obligations, as well the reallocation of the project budget shall be well argumented in the project proposal. Article 12 In case of applications submitted by a consortium, the project proposal shall be submitted by a lead applicant in the name of the consortium. The lead applicant shall fulfill the eligibility criteria listed in Article 10 of this Rulebook. The following can be members of the consortium: a micro, small or medium enterprises, higher education and scientific-research institutions from the country and abroad. In the case of a project proposal submitted by a consortium, the right of commercialization of the results from the project should rest exclusively with the lead applicant. 3 Applicant is majority owned (Greather than 50,1%) by a Macedonian citizen

5 Each consortium member shall fulfill the following eligibility criteria: - the consortium member shall not have accumulated over 200, (two hundred thousand) EUR aid of minor importance in the last three fiscal years including the requested amount of the Fund, in accordance with the Law on State Aid and the Regulation on the Conditions and Procedures for Granting Aid of Minor Importance (de minimis) - the consortium member shall not have accumulated over 100, (one hundred thousand) EUR aid of minor importance in the last three fiscal years including the requested amount from the Fund, if active in the road transport sector, in accordance with the Law on State Aid and the Regulation on the Conditions and Procedures for Awarding of Aid of Minor Importance (de minimis) - to not be in difficulty (an enterprise in difficulty is an enterprise that is unable to meet its obligations from its own resources or funds that can be obtained from its owner/shareholders or creditors, to end losses which without outside intervention of providers of aid, will certainly lead to short-term and long-term cessation of the operation of the enterprise. - to not be engaged in coal production. The rights and obligations among the consortia members shall be regulated under a consortium agreement. The distribution of rights and obligations, as well as the distribution of the project budget shall be well argumented in the project proposal. If the project proposal submitted by the consortium is approved for financing, the Fund will sign an agreement for awarding funds with the lead applicant. The lead applicant becomes the beneficiary of a co-financed grant or a conditional loan awarded by the Fund and is responsible for the financial management of the awarded funds in accordance with the agreement for awarding funds given in Annex 8 Model Agreement for Awarding a Co-financed Grant and Annex 9 Model Agreement for Awarding a Conditional Loan of this Rulebook. Article 13 The funds receivedfrom the Fund shall be used for development activities and for the implementation of the proposed innovation. Activities eligible for financing under the granted project are the following: - R&D activities; - Testing activities; - Activities related to the protection of IP; - Design; - Development of pilot lines; - Quality assurance activities;and - Marketing and sales activities (aimed at bringing innovation to investment readiness and maturity for market take-up). The list of activities listed in paragraph 2 of this Article is non-exhaustive. Costs eligible for financing under this instrument are: Article 14 - Gross Salaries (only for employees of the applicant and consortium members). The amounts of the gross

6 salaries for employees engaged in the project shall be in accordance with the established practices of the beneficiary before the start of the project - Purchase and or rent of R&D equipment andsupplies; - Engaging R&D services, subcontractors (e.g. testing, laboratory services, etc.); - Engaging R&D experts/advisors - Experts / advisors for other needs directly related to the expected results of the project (expertise related to innovation management, financial management, mobilisation of funds and capital, business development, marketing, legal affairs, intellectual property protection, etc.); - Preparation and submission of patent applications, protection of trade marks and/or industrial design; - Marketing costs and - Office and business support (rent of premises, office costs, bank fees, accounting services, hosting and other types of administrative costs in the maximum amount of 10% (ten percent) of the total project budget. The costs for office and business support are awarded on a quarterly basis, as a lump sum, for the budget lines for which there is evidence of expenditures. Only costs incurred for activities carried out during the project duration and which are in accordance with the approved project budget and rules and procedures of the Fund are eligible for financing. Costs ineligible for financing under this instrument are: - Cost for payment of interest or debt owed to another party; - Expenditures and provisions for past and possible future losses or debts; - Costs for covering currency exchange losses, fees and penalties; - Entertainment and hospitality expenses; - Recruitment expenditures (costs of publishing an announcement, commissions from employment agencies, expenses related to the selection of candidates etc.) and realocation costs; - Purchase of land or buildings, including any renovation; - Cash payments from the separate project account; - Export activities (costs directly linked to product export activities, to establishment and operation of a distribution network or similar or to other current costs of the enterprise linked to the export activities; - Annual fees for patent maintenance (except for well justified cases assessed as permissible expenses in the evaluation of project proposals) - Salary supplements - Costs of consulting services provided by the owner/s of the beneficiary - Renting office space from a lessor who participates in the activities of the project or is capitally connected to the beneficiary - Procurement of freight transport vehicles by undertakings performing freight transport by road for hire or compensation. - Procurement of commercial vehicles (with the exception of well justified cases assessed as permissible expenses in the evaluation of project proposals) and - Procurement of second-hand equipment. Costs for implementation of activities that have been previously funded from other sources are also not eligible for funding. The list referred to in paragraph 3 of this Article is non-exhaustive.

7 Article 15 If the project is based on already existing IP rights, the applicant is required to show proof of existing background IP rights including but not limited to licensing agreements, in-kind contribution agreements or any other agreements confirming that the Applicant has right to use the IP rights, on which the results of the projects are based. The applicant shall not knowingly or intentionally violate the intellectual property rights of any third party. If the project does not involve a co-operation agreement with a higher education and/or scientific-research institution or consortium agreement where the member of the consortium is a higher education or scientificresearch institution, all intellectual property rights and know how which shall be created in the course of the project and/or as a result of the implementation of the project, rest with the beneficiary, and if applicable, the beneficiary shall protect these IP rights. If the project involves a co-operation agreement with a higher education and/or scientific-research institution or consortium agreement where the member of the consortium is a higher education or scientificresearch institution, the ownership rights shall be regulated under the co-operationor the consortium agreement. The right for commercialization of the intellectual property rights shall rest solely with the beneficiary. The Fund shall not be responsible for any disputes related to IP rights between the applicant/beneficiary and third parties. III. APPLICATION PROCESS Article 16 The funds under this instrument are awarded on a competitive basis by a public call. The public call shall be published in at least two public media and on the website of the Fund. The deadline for submission of applications shall be set between 30 (thirty) and (90 ninety) days from the announcement of the public call. The content of the public call is regulated under the Rulebook on Management of the Support Instruments of the Fund for Innovation and Technology Development (hereinafter referred to as the Management Rulebook ). The total budget allocated to each public call is determined by the Fund s Annual Working Programme and the Fund s Annual Financial Plan. The forms for submitting a project proposal in the public call for awarding of funds under this instrument are provided as Annex 1- Project Application, Annex 2 - Project Budget, Annex 3- Financial Projection of this Rulebook. Other documents required for applying are defined under the Management Rulebook and shall be specified in the public call.

8 IV. EVALUATION PROCESS Article 17 The evaluation of submitted project proposals and the final decision of awarding funds under this instrument is under a sole jurisdiction of the Committee for Approval of Investments (herein after: the Committee) The Committee performs evaluation of all project proposals which pass the administrative verification of completeness of applications and eligibility of the applicant. The administrative verification is performed according to the form given as Annex 4 - Document for Administrative Verification of Project Proposals of this Rulebook. The rules and procedures for administrative verification and evaluation of projects are regulated in the Management Rulebook. Article18 The main criteria for evaluation of projects and awarding funds under this instrument are: - degree of innovation; - project quality; - capacity of the project team; - market potential; - impact The main criteria and sub-criteria for the evaluation are given in Annex 5 - Evaluation Grid for Project Proposals of this Rulebook. V. PROJECT IMPLEMENTATION AND SUPERVISION Article 19 The beneficiary shall implement the project effectively and efficiently in accordance with the Agreement for Awarding Funds and in accordance with the good technical, economic, financial, management, environmental and social practices and standards. The beneficiary is entitled to a reallocation of funds in the amount of 10% (fifteen percent) of the total project budget for the entire duration of the project in order to achieve the expected project results. The beneficiary shall inform the Fund for the reallocations as part of the quarterly reports and the final report. Any insignificant modifications to the Project Application and the Project Budget (e.g. changes in the activity plan, the key personnel, etc.) must be approved ex-ante by the director of the Fund. Any significant modifications to the Project Application and the Project Budget (e.g. changes in the dominant ownership structure, reallocation of funds higher than the amount of 10% (ten percent) of the total project budget etc., must be approved ex-ante by the Committee.

9 The Fund aims to encourage innovation and risk-taking. Due to the fact that innovative projects often develop in a nature not initially anticipated, the Fund and the Committee would be acutely cognizant of this and factor it in their decision making regarding their approval of the decisions for changes in the project. The detailed rules and procedures for project implementation are regulated under the Management Rulebook. Article 20 The Fund shall supervise the project through review of the reports submitted by the beneficiary, through field visits and evaluation of the project results. The forms for reporting under this instrument are given as Annex 6 - Quarterly Progress Report and Annex 7 - Final Report of this Rulebook. The rules and procedures for project supervision, monitoring, and evaluation of project results are regulated under the Management Rulebook. VI. FINAL PROVISIONS Article 21 For all matters that are not regulated under this Rulebook, the provisions ofthe Management Rulebook and Laws of the Republic of Macedonia shall apply. Article 22 On the day this Rulebook enters into force, the Rulebook on the Support Instrument Co-financed Grants and Conditional Loans for Commercialization of Innovations no /1 dated shall be repealed. Article 23 This Regulation shall enter into force following the publication on the notice board of the Fund and shall be published after prior approval by the Government of the Republic of Macedonia. No. Skopje, President of the Managing Board

10 Annex 1: Project application FUND FOR INNOVATIONS AND TECHNOLOGY DEVELOPMENT PROJECT APPLICATION Co-financed grants and Conditional Loans for Commercialization of Innovation Important notice: Before filling in this form, please read carefully the given Instructions and the Rulebook for the instrument. Please enter the text in the appropriate fields in accordance with the instructions which serve as guidelines while filling in the fields. It is recommended that when citing information from analyses and researches to reference the sources. If you choose to include tables, graphs, or references, add them in the appropriate text boxes. Note: The project summary stated in section II.1 Project summary may be used by the Fund for promotional purposes (e.g., excerpts from awarded projects may be published on the Fund s website). Therefore, this section should not contain information that is confidential. In order to secure an independent and objective evaluation procedure we strongly recommend applicants not to include information that identifies the enterprise or the owners in the following sections: Introduction of the applicant/partners/members of consortia, Introduction оf the consortia/partnership, Project Plan and Business Plan. APPLICANT NAME PROJECT TITLE The Applicant / Lead Applicant is applying for (please choose from the options below): Co-financed grant (for enterprises with annual revenues up to euros in the previous two years) Conditional Loan (for enterprises with annual revenues over euros in the previous two years)

11 I. APPLICATION FORM ADMINISTRATIVE DATA Notice: In case of an application by a single applicant, the applicant fills in questions 1 and 2. In case of an application by a consortia submitted by the Lead Applicant, data about the Lead applicant should be inserted in this part and data about each partner separately should be inserted in Annex 1. Administrative data In case of an application by a single applicant proposing a collaborative R&D project contract with third parties (Subcontracting R&D services), data about the applicant should be inserted in this part and data about each partner separately should be inserted in Annex 1: Administrative data. 1. Basic data about the applicant Please provide information as in official documents, issued by the relevant institutions Full name of the applicant: Legal form (DOOEL -Limited liability company established by one person, DOO- Limited liability, AD- Shareholder s company etc.): Unique registration number: Tax number: Registration date: NACE code for the main activity: Address: Telephone/fax/ Manager: Unique identification number Contact person Telephone number of the contact person: Number of employees: Revenue in the previous year Revenue from two years ago 2. Ownership structure (Please provide information as in official documents)

12 Owners Share % Position in the Applicant/Legal Entity Citizenship (Registration country for a company) 3. Capital links to other enterprises Maximum 200 words Please state if your enterprise has any capital links to other enterprises. If so, please state the enterprises with which you have capital links and elaborate on the nature of these links. (Capital link as defined in Law on Trade companies). 4. Financing structure (Please be aware that the amounts presented here should be consistent with the amounts presented in the project budget.) Total project value (in Euros) Requested amount (in Euros) Amount co-financed by the applicant (in Euros) Source of co-financed (own sources/ bank loan/ private investor/ other) 4.1. Use of funds Maximum 200 words Please elaborate what the funds received from the Fund for Innovations and Technology Development will be used for 5. How did you find out about the Fund for Innovations and Technology Development? a) Traditional media (TV, radio, newspaper) b) Social media c) Chambers of Commerce d) Other (please specify) INTRODUCTION OF THE APPLICANT 1. Please briefly describe your company: main area of activities, your main products/services, management and organizational structure, number of employees and their professional profiles.

13 Maximum 500 words Please state the industry your enterprise works in, and its main activities Describe the main products/ services of the enterprise. Provide basic information about the organizational and management structure of the enterprise (names, positions, information about their experience and education) Provide basic information about the employees (current number of employees, their profiles). Indicate if you are planning new employments as result of the project. In case of an application by a consortia / application by a single enterprise proposing a collaborative R&D project contract with third parties (Subcontracting R&D services), please answer this question for each partner/ member of consortia separately in Annex 2. Introduction of partners/members of consortia 2. Key clients (by sectors and countries) Please provide information about your existing customers Client Country Sector (Industry) Share of revenues generated from client INTRODUCTION OF THE CONSORTIA/ PARTNERSHIP 3. If the application is submitted by a consortia orby a single applicant proposing a collaborative R&D project contract with third parties (Subcontracting R&D services), please describe the proposed partnership. Maximum 300 words Describe the consortia/ partnership How the proposed consortia/partnership matches the goals of the project? Describe the main roles and responsibilities of each partner/member of consortia How will the partners/members of consortia be able to work effectively together? What is the relevance of the project for each of the applicant(s)? How does the proposed project match with the strategy of participating partners/members of consortia? How do the partners/members of consortia complement each other (and cover the value chain, where appropriate)? What is the plan for cooperation after the completion of the project? Please enclose your consortia agreement/partnership agreement/ Cooperation agreement which includes clear provisions which contains the rights clear and provisions responsibilities the of rights each member and responsibilities of the consortium of as each well member as provisions of the for derogation consortium and as / or well ownership as provisions of Intellectual for derogation Property rights. and / or ownership of intellectual property rights. II. PROJECT PLAN 1. Please provide a summary of the project for which you require funding

14 II. PROJECT PLAN 1. Please provide a summary of the project for which you require funding Maximum 500 words The summary should be written after the preparation of the Business plan and the Project Plan and should contain all the relevant project information. It should be written in an understandable language even for the people who read the project for the first time. The summary should contain narrative description of the key aspects of your project, while answering the questions: what, who, how, when and where? In this part, please describe the project s main goal, as well as the key activities that will lead to its achievement and achievement of the goals of the Instrument. Provide a short description on the innovation that you want to develop with this project and describe the market potential. 2. Please describe the needs and reasons for initiating this project. Maximum 500 words Please describe how you got the idea for this project. Please state what industrial/economic/social problem you have identified and are trying to address or what kind of business opportunity you are embarking on, and that have not been solved/ explored to date, but can be solved/ explored through the proposed project. Please describe how this project will contribute towards achievement of the goals of the Instrument 3. Please describe the innovation proposed in the project Maximum 1200 words Please give a description of the innovation that you plan to develop through this project. State also the type of the innovation (product innovation, service innovation, process innovation, technology innovation, organizational innovation, marketing innovation). Please elaborate how the solution that you plan to develop within the proposed project solves the problem or captures the business opportunity that you have identified. State the current stage of development of the innovation (e.g. completed proof-of-concept, developed prototype, initial testing etc.) and the main milestones that led to this phase. Describe and explain the concept and the approach/activities that you will implement during this project,and which phase of the innovation process is the subject of this project (e.g. demonstration, testing, prototyping, pilot lines, scale-up studies, miniaturization, design, performance verification, market replication encouraging the involvement of end users and potential clients, research etc). Please elaborate the novelty of your proposed solution. Explain why your innovative solution is better than the alternatives on the market. What makes your solution better/ more efficient and/or cheaper from the competing solutions? In this part you can present results of technology benchmarking and give an explanation how your solution compares to other alternatives across different parameters. If available, you can also present images, drawings and/or diagrams in this section.

15 4. Please describe the foreseen impact of introduction of this innovation. Maximum 500 words Will the innovation contribute to significant progress in the work of your enterprise? How does the development of this innovation match with your development plans? Will this innovation enable you to engage in further development of other products/services/ technologies? What are the expected results per applicant/partner (if any) and what impact will the project have on them? Will the innovation contribute to significant improvement in the field? Please indicate other potential impacts, such as environmental, employment, social, etc. 5. Intellectual Property Rights Maximum 500 words Please explain if any IP rights are already available (background IP),in relation to the project you are applying for. Please elaborate if you have conducted a novelty search for the proposed solution/ technology (patent bases search, such as Google Patents, EPO, USPTO, WIPO and scientific bases search, such as Google Scholar, ScienceDirect etc.) and present the results of this search. Is there any IP expected from the project and what is the protection strategy? Are there other companies, institutions or organizations involved in the development of previous technology, product or service? Are there any outstanding obligations towards them for the developed intellectual property? If applicable, please submit proof of IP rights that you own or have access to as attachment to this application. 6. Project team (Please attach the key personnel CVs in your application) Maximum 300 words Please introduce the key people that will be engaged in the project, with their position in the enterprise/organization, roles in the project, their skills and competencies. Please state the percentage of engagement of each member of the project team (e.g. if they will be engaged full or part-time) and provide a brief explanation. Please note that, for this instrument, salaries for marketing and sales personnel may be calculated into the Project Budget ( Gross salaries section in the Excel sheet). 7. Please present a project activity plan in the template provided below (add rows as needed) Please list the project activities, with a brief description for each activity, the period for implementation, the needed resources, responsible person and the expected results from their implementation. Activity title Activity Description Time frame (from-to) Resources (technical, human, Responsible partner (and Responsible Expected results

16 financial) person) III. BUSINESS PLAN 1. BUSINESS MODEL Maximum 500 words Please provide a summary of the business model for realization of your idea: describe how will you create value for your clients and how will you generate income, how will you organize the process of production and process of revenue generation, which are the key customers, which are the key activities, which are the main suppliers, which are the key partners, what is the pricing strategy which sales channels will you use etc. (In this part you can use tools for business model generation, such as the Business Model Canvas) 2. MARKET ANALYSIS 2.1. EXISTING MARKETS Maximum 300 words Please describe the markets you are present in currently and, if possible, indicate your market share MARKET POTENTIAL Maximum 500 words Please state the markets that you plan to target with the innovation that you will develop within the proposed project. Describe the potential users of your solutions; in which market segments/geographical areas are these potential users? How do you intend to reach them? State if you plan to target the national, regional or global markets. What is the estimated total size of the market you are targeting? What is the growth rate of this market? What are the market trends? What is the share that you expect to gain in the targeted market? Indicate the most relevant market segments for initial introduction of the innovative solution. Please state if you have already identified potential clients that expressed interest to purchase your product/ solution.

17 If applicable, please provide letter of intent/contracts with customers as annex to this application MAIN COMPETITORS Maximum 500 words Please list your main competitors on the markets you are targeting. List your main competitors and elaborate what are your advantages in comparison to them. What are the main benefits for the potential users of your solution, for which they would buy your product instead the one from your competition? What are you planning to use as unique selling points (USP)? 2.4. MARKETING AND SALES PLAN Maximum 500 words Please elaborate your marketing strategy and describe your plan for placing the product on the market within the project duration and for a period of five years after the project completion. Include estimates of sales amounts, selling prices, expected revenue and profit. 3. FINANCIAL FORECASTS 3.1. Assumptions for the financial projections Maximum 250 words Please describe the assumptions underpinning your financial projections, which are part of the Financial Forecast form Financial forecast (in annex) 4. RISK ANALYSIS Please describe the potential risks that might occur during project implementation and after its completion (during the introduction of your product on the market). Please also describe the measures you would undertake in order to mitigate the anticipated risks. Please add rows under each risk category as needed. Risk category Technological risks Potential risk (narrative description) Potential negative impact (1-5, 1 being the lowest and 5 being the highest) Mitigation measures (narrative description)

18 Market risks Legal risks Management risks Partnership risks Environmental risks Other Date Place Completed by: Signature and stamp Thank you for completing this application and for your expressed willingness for cooperation with the Fund for Innovations and Technology Development. Our administrative department and the members of the Committee for approval of investments will carefully review your application along with supporting documentation and will inform you on results in timely manner. For additional questions please contact us by phone or by .

19 Annex 1. ADMINISTRATIVE DATA In case of an application by consortia/collaborative R&D project, each partner/member of consortia should fill in questions 1 and 2 separately (Please include the data as given in official documents issued by relevant institutions) 1. Basic data about the partnership (Please provide information as in official documents, issued by relevant institutions) Partner/Member of consortia 1 Full name of Partner/Member 2: Legal form: Unique registration number: Tax number: Registration date: NACE code for the main activity: Address: Telephone/fax/ Manager: Unique identification number Contact person: Telephone number of the contact person: Number of employees: Revenue in the previous year Revenue from two years ago Partner / Member of consortia 2 Full name of Partner/Member 2: Legal form : Unique registration number: Tax number: Registration date: NACE code for the main activity: Address: Telephone/fax/ Manager: Unique identification number Contact person: Telephone number of the contact person:

20 Number of employees: Revenue in the previous year (before application submission): Revenue from two years ago ( before application submission): Please add partner/members of consortia tables as needed 2. Ownership structure Please provide information according the last current balance sheet issued by the Central Register. Partner/ Member of consortia 1 Owners Share % Position in the Applicant/Legal Entity Citizenship (Registration country for a company) Partner/ Member of consortia 2 Owners Share % Position in the Applicant/Legal Entity Citizenship (Registration country for a company) Please add partner/member of consortia tables as needed Annex 2. INTRODUCTION OF THE PARTNERS/MEMBERS OF CONSORTIA 1. Please briefly describe the member of consortia: describe the main area of activities, main products/services, management and organizational structure, number of employees and their professional profiles. Partner/Member of consortia 1

21 Maximum 300 words Please state the industry your enterprise works in,and its main activities Describe the main products/ services of the enterprise Provide information about the organizational and management structure of the enterprise (names, positions, information about their experience and education) Provide information about the employees (current number of employees, and their profiles. Indicate if you are planning new employments as result of the project. Partner/Member of consortia 2 Maximum 300 words Please state the industry your enterprise works in,and its main activities Describe the main products/ services of the enterprise Provide information about the organizational and management structure of the enterprise (names, positions, information about their experience and education) Provide information about the employees (current number of employees, and their profiles. Indicate if you are planning new employments as result of the project. Please add partners/members of consortia boxes as needed.

22 Annex 2: Project budget Worksheet: Instructions for filling out the forms Please fill out the following worksheets in the form: Project Budget and Cost Justification. Keep in mind that the applicant is responsible for the accuracy of the provided information. While filling out the form, keep in mind the following: - data is entered in the cells highlighted blue - in some cases data is transferred or calculated automatically. Before submitting the application check the formulas and the amounts/calculations - - the presented costs should be justified and consistent with the activities presented in the Project Application All expenses indicated in the budget should fall under the following categories of eligible expenses: - Gross salaries - Equipment and supplies for research and development (R&D) - R&D services- subcontracts - R&D services; experts/consultants - Patent application preparation and submission expenses, protection of trade mark and industrial design - Consultants (i.e. financial management,fund raising, business development, legal services, intellectual property protection, marketing (marketing data and market entry), and other, - Marketing expenses - Office and business support (up to 10 % (ten percent) of the total budget) Ineligible expenses for financing as part of the project are: - Repayment of interest or debt to third parties; - Costs and fees related to past of possible future losses or debt; - - Exchange rate differences, taxes, fines; - Entertainment and restaurants expenses; - Staff recruitment and relocation expenses (costs of announcement, commissions from employment agencies, costs related to candidate selection, etc.) and relocation; - Purchase of land or buildings, including renovation; - Cash payments from the project account; - Export related activities (expenses which are directly related to export activities or set up and working of distribution networks) - Annual taxes for patent maintainance (With the exception of duly justified cases assessed as permissible expenses during evaluation of project proposals) - Salary supplements - Costs of consulting services provided by the owner/s of the beneficiary - Renting office space from a lessor who participates in the activities of the project or is capitally connected to the beneficiary company - Procurement of freight transport vehicles by undertakings performing freight transport by road for hire or compensation; - Purchase of commercial vehicles (with the exception of duly justified cases assessed as permissible expenses in the evaluation of project proposals) and - Cost of purchasing second-hand equipment. Costs for implementation of activities that were previously funded from other sources are not eligible for funding. Note: The expenses presented by the applicant (salaries, purchase of goods and services), should be consistent with the market prices in view of the sound technical, economic, financial, management, environmental, and social standards and practices to be applied in project implementation.

23 Instruction for filling out the worksheet "Project Budget" I. Introduction Fill in the basic information on the project in the introduction section: applicant name, project title, project duration (months), total project budget and amount of co-financed. When calculating the total budget and the co-financed, keep in mind the following: - the co-financed by the Fund cannot exceed Euros - the % of co-financed by the Fund cannot exceed 70%, or - the % of co-financed by the applicant cannot be smaller than 30% (For example: in order to get the maximum amount of Euros of co-financed by the Fund, the total budget of the project should be at least , 00 Euros Divide the total project budget by quarters. In doing this please keep in mind the following: II. Budget lines - The co-financed amounts should be proportionately divided by quarters, i.e. in each quarter there should be a co-financed by applicant with at least 30% of the total quarterly amount. When presenting the expences by budget lines keep in mind that during project implementation you should run accounting on cash basis. This means that expences should be presented in the project by the moment of payment. (1) Example: If you are purchasing equipment which will be paid in two installments in different quarters, the total equipment cost should be allocated in the respective quarters. (2) An exception to this rule is budget item "Salaries" where the costs of wages are shown in the current quarter. Budget line "I. Salaries": This budget line inclueds the expenses for the current (or the future employees) of the aplicant who are engaged in project implementation. When filling out this budget line have in mind the following: - These employees can be on undetermined or time-determined contract, full time or part time - These employees cannot be hired on a service contract - If these persons also perform other work, that is, they are engaged in the project less than 40h per week, the % time of their engagement on the project should be specified - In case of partial egagement in the project the eligible salary cost is the % of the monthly gross salary corresponding with the % of time engaged on the project Detailed instructions: In the column "Name of the employee" enter the name and surname of the employee In the column "Position" indicate the employee's role in the project (example: project manager, programmer, sales manager, etc.) In the column "Monthly gross salary for full time - 100% engagement" indicate the salary for 40h per week (100% engagement)

24 In the column "% of engagement on the project" indicate the actual % of engagement on the project In the column "Number of months of engagement" indicate the number of months of employee engagement on the project NOTE: The amount for the "Total gross salary for the project" is automatically generated. Budget line "II. Equipment and supplies for research and development" In table "II.A. Description of equipment and supplies to be procured" enter the expences for the purchase of equipment and supplies for R&D, number of units, and the unit amount. In table "II.B. Description of rented equipment" enter the expence for rental equipment for R&D, number of units and the unit amount. Budget line "III. Office and business support" In this budget line indicate the expenses related to the aplicant's office work needed for the project implementation, indicate the number of months and the amount per month. Under this item the following costs should be presented: rent, utitity costs, banking fees, accounting services, hosting and other type of administrative costs. The funds for office and business support are awarded on a quarterly basis, as total amount for the items for which there is proven incurred expense. Note: This budget line cannot exceed 10% of the total project budget. Budget line "IV. R&D services - subcontracts" In this budget line indicate the expenses related to subcontracts for R&D, the duration of the subcontract and the amount. In a case of R&D cooperation (R&D subcontract) in accordance to the Rulebook, the total amount of the budget for the partner/subcontractor should be indicated. For example: testing, laboratory research, etc., its duration and the expense for the subcontractor who delivers the service. Budget line "V. R&D services - experts/advisors" In this budget line indicate the expenses related to R&D consultants - service description, expert/advisor daily fee and total number of days on the project. Budget line "VI. Patent application preparation and submision expences, trade mark protection and industrial design" In this budget line indicate the expenses related to prepration and submission of patent application, trade mark and industrial design. Patent maintanance costs are NOT eligible except of duly justified cases when it is assessed as permissable expense during evaluation of project proposals. Budget line "VII. Marketing expenses" In this budget line indicate the cost for marketing, name of the supplier that is offering the services and the total expense. Budget line "VIII. Consultants" In this budget line indicate the expenses related to hiring financial management, fund raising, venture capital, business development, marketing, legal services, intellectual property expertise, etc. - service description, consultant's daily fee and total number of days on the project. Attention: In a case the aplication is submitted by a sole aplicant only the worksheet "Project budget" should be fullfilled. In a case the aplication is submitted by and aplicant and one or several partners/consortium