implementing METHOD and DEVICE for CROSS KNITTING PRODUCTION and MODERNIZATION of KNITTING MACHINES INCOMTECH LTD.

The proposed product is a Bulgarian invention. It has been patented in Bulgaria (Patent № BG 62816B1 of ) USA - (US Patent № 6,199,407B1 of ), Turkey (Patent № В of ) Kazakhstan (Patent № of ). Decisions for patents have been given in the European Union, China and Russia. At the final stage is the protection procedure in Canada, Mexico, Japan and Korea. 1. Product

IENA 2000 IENA 2000 – Nurnberg, Germany GOLD GOLD Medals at: First International Saloon for Innovations and Investments Innovations and Investments – Moscow, Russia ARCHIMEDES-2001 ARCHIMEDES Moscow, Russia INPEX XVII INPEX XVII – Pittsburgh, USA East-West Euro Intellect East-West Euro Intellect – Sofia, Bulgaria Brussels EUREKA Brussels EUREKA – Brussels, Belgium SILVER SILVER Medal at GRAND PRIX GRAND PRIX at The invention has been awarded at the following exhibitions:

-the knitting is realized by means of CAD/CAM system; -machine's mechanical part is minimized. -basis of the patent application - the created new stitching method that completely uses the possibilities of the now existing information technologies; -its accomplishment leads to:  the increase of efficiency of the performance process;  2 to 4 times higher performance of the knitting machines;  rise in their functional possibilities; -some of the performance phases like cutting and sewing are reduced, which  decreased the consumption of time and yarn and  provides 30% lower knitting cost General Description

FeatureClassical MachinesARTEK Machine 1.Performance: Number of products in 8h one color knitting Fabrics for 50 garmentsParts for 100 garments For multicolor knittingDecreasedParts for 100 garments 2. Weight:1,5 to 3 t0,8 t 3. Required work space for one machine 20 to 30 m2Up to 12 m2 4. Simultaneously used colorsUp to 816 to Yarn overstretching in knittingFrom 25% to 30% of used yarnUp to 1% 6. Effectiveness in part cutting70%100% PerformanceDecreased 1/3 to 5 timesPreserved 7. Number of parts manufactured simultaneously Up to 3Up to Possibilities for small series manufacturing Not payingNo limitation 1.2. Comparison with the basic futures of the classical machines

- the patent is registered in the countries that are the major consumers of knitting machines and these are the markets that we intend to appear on. - the machine has vastly higher technical parameters with comparison to our main competitor's machines. - its functional possibilities will increase parallel to development of the computer technologies. Therefore we are convinced that our machine will preserve its high competitiveness in the future. 2. Sources of long-term, sustainable competitive advantage

Target market for the first 2-3 years: Bulgarian market The Bulgarian knitwear industry consists of over private companies, employing approximately workers. There is a vastly increase of the produced knitwear fabrics, mainly purposed for export. In 2001 exports of Bulgarian knitwear production were 907 million USD, which is a 29.67% increase over % of the exports are for the counties of the European Union and USA. We are convinced that the machine will be in great demand after 2005, when all the customs and quota restrictions for the Far East will be eliminated. Now the custom taxes for the knitwear in this region are between 20 and 90%. 3. Potential market and its prospects

Our major client for the first year of sells will be the small companies with annual turnover from to EVR. Parallel to this we will work on development of the market of the great knitwear companies in the country. Special attention will be given to the leading foreign companies in the country, which reception of the machines will be the basis of the appearance on the foreign markets. This method of approach is conformable to the possibility of the sold machines maintenance, examination of the possible weaknesses and for technology perfection. 4. Major customers for the first year of sales The Production program for the first 2 years is based on the orders made in advance by knitwear manufacturers in Bulgaria.

5.1. Technical and Technological - in connection to fast overcome of the technical and construction problems Financial: - sources of funding for the project provided not on time and its late starting; - failure of observing the objects and terms for the sells, especially for the first several machines. 5. Risks

6. Main financial indicators 6.1. General financial scheme 1-9 month month 2nd Year 3rd Year 4th Year 5th Year ЕVR The amount of the current value of the expected net money incomes is ЕVR (at 30% discount percent). Primary investment – EVR. The term for the buy-off of the investment - the end of the second year of the prognosis. The inner norm of reinstatement - 189%.

6. Main financial indicators 6.1. General financial scheme 1-9 month month 2nd Year 3rd Year 4th Year 5th Year ЕVR Planned investment for turnover money for the serial production start up: EVR. Invested EVR for R&D, patent protection, construction of the new mechanisms and for the electronics.

1-3 months 4-6 months 7-9 months months 1-3 months 4-6 months 7-9 months months 3rd Year 4th Year 5th Year 2nd Year1st Year 6. Main financial indicators 6.2. Indicators for project’s efficiency Gross rentability % and net % ЕVR