And in detail:

Inventor

• The Invention is put on as a microFunding® ‘New Invention’.

• The Inventor describes his Invention in terms intended to excite the interest of a Manager but without (at this stage) disclosing any secrets. The Introducer may help with this.

• When he is happy with his description, the Inventor posts the Invention so that it becomes visible to Investors and Managers.

• The Posting fee is determined by the Introducer website used, and is payable through Paypal when the Invention is posted.

• Please note that the arrangement and contractual obligations for hosting the idea are with microFunding Ltd regardless of which Introducer website is used to access the microFunding Exchange, while the Introducer is solely responsible for any added value services he might provide. microFunding collects Introducer fees on its behalf. Billing and VAT (if applicable) are in two separately identified invoices.

• The Invention is viewed by many Investors and Managers, and possibly identified as having significant commercial potential by a skilled and sector-experienced Manager.

• The Inventor is given feedback on the levels of activity and interest in his microFunding® Inventions, both absolutely and also relative to all postings on the site.

• Any Investor or Manager can give written feedback directly on the posting. This is visible only to the Inventor, not to other Managers or Investors.

• An interested Investor or Manager expresses interest on the website.

• Should any invention fail to attract interest from any Manager or Investor within a reasonable time, it is archived in the microFunding® Library. It remains viewable on demand by any Investor or Manager.

• The Inventor receives a £5.00 credit against future postings for each Invention that is archived.

• The Inventor gets a copy of a Invention-specific Confidentiality Agreement signed by the Investor or Manager, a copy of the Investor's or Manager’s CV and the Investor's or Manager's Reason for Interest.

• The Inventor decides whether or not to meet the Investor or Manager, and re-confirms his agreement to the microFunding® terms and Conditions by replying to microFunding's email with the words '(project number) AGREED' in the SUBJECT line.

• If the Investor or Manager also agrees, he is introduced to the Inventor by email.

• The Inventor and Investor or Manager contact each other and agree whether or not to work together under microFunding's® Terms.

• There is no limit to the number of Investors or Managers who can express interest or to whom the Inventor can request introductions.

• Each party MUST independently advise microFunding by email of their decision without delay.

• If the Inventor wants help in deciding who to work with from several interested Managers, he can ask for a short list to be prepared by an experienced Senior Manager. There is a charge for this service, microFunding® itself is not involved.

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Manager

• The Manager applies to microFunding® with a copy of his professional CV. microFunding removes all personal and contact details from the CV and files it for future use. He self certifies his credentials, and references may be required.

• microFunding gives the Manager his unique password to log on to the microFunding® Exchange. The Manager reads and agrees to the microFunding® Terms and Confidentiality

• The Manager visits the microFunding® List Inventions pages in order to identify Inventions that might be of interest.

• Every time a Manager visits the List Inventions pages, this is logged to provide overall activity feedback, and

• every time a Manager opens the details pages of an Invention, this is also logged so Inventors can get feedback about the activity and interest their inventions are generating.

• The Manager is invited to add his own feedback on the Postings

• Manager identifies a Invention as having significant commercial potential

• The Manager registers his interest in an Invention on the website and explains his Reason for Interest. He signs a new Invention-specific Confidentiality Agreement and re-confirms his agreement to the microFunding® Terms and Conditions by replying to microFunding's email with the words '(project number) AGREED' in the SUBJECT line.

• The Inventor receives a copy of the Manager’s CV, from which all personal and contact details have been removed, and the Manager's reason for interest. The Inventor also re-confirms agreement with microFunding®’s Terms and Conditions.

• If both wish to meet, the Manager is introduced to the Inventor.

• The Inventor and Manager contact each other and agree whether or not to work together under microFunding®’s Terms. Each must independently advise microFunding by email if they agree.

• At his own time and reputation risk the Manager specifies and costs a ‘Proof of Concept’ Project; note the charges for Legal, Audit and Project administration, and the preferential charge out rates of microFunding®’s preferred suppliers. VAT must not be forgotten; all Projects will be VAT registered and net VAT reclaimed, but it is important in the cash flow.

• The ‘Proof of Concept’ Project is written using the microFunding® Project Planner. This is the definitive Project plan, and also acts as the basis for the presentation to Investors.

• The Manager decides how, or through which Authorised Investor organisation, to raise the funding needed for the 'Proof of Concept' Project.

• For details of Business Angel Network posting fees, see individual Business Angel funding sites.

• The Manager and Inventor must agree between them who is to pay any 'fundraising' fee.

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Investor

• microFunding Ltd is not itself authorised to conduct investment business. References below to 'microFunding' mean the microFunding process as adopted by authorised intermediaries and accessible only by certified investors through authorised sites.

• microFunding is designed to provide Investors with reduced risk for greater reward, and is targeted specifically at two main types of Investor:

• Investors who have substantial funds available and who wish to back exciting early stage businesses. By buying into microFunding® Proof of Concept Projects, these investors risk very modest sums. They are backing the experience, judgment and skill of the Manager who has already – at his own risk – put considerable effort into the Project purely because he sees its potential for profit. These Investors will follow their initial Project stage funding with the larger sums needed to make profitable businesses from the successful Projects.

• Investors who have smaller sums available and who are prepared to take the higher risk associated with early stage investing in return for the early and potentially high rewards available from selling their investment rights in successful Projects to Investors with more substantial available capital.

• The investment unit in Proof of Concept Projects is £2500, and all Projects will require funding in multiples of £2500.

• While it is recommended and likely that each project will have a number of different Investors, this does not preclude a single Investor from funding an entire project.

• Investment in Proof of Concept Projects is by means of 'Cancellable Transferable Loans which carry Investment Rights'.

• It is expected that each Project will be funded by several Investors

• Investors can register with the microFunding® Exchange through any affiliated website so long as they agree to microFunding's Terms and Conditions which include a strict Confidentiality clause.

• Registered Investors may view the Projects and are invited to add comments.

• Investors who are not registered on the microFunding® Exchange may still see Project opportunities when they are listed on affiliated Funders' websites

• Interested Investors invest either in Projects preselected through the Exchange or by searching affiliated Funders' websites for attractive Project opportunities. Upon finding such a Project, the Investors follow the Funders' standard procedures to express interest.

• Angels interested in an Invention or Project Summary will be required to agree to (or re-confirm their agreement of) the microFunding® Terms and Conditions, and sign a specific Confidentiality Agreement

• Only after receipt of the above requirements, interested Angels will be introduced to the inventor or Manager.

• If enough Investors are interested, sufficient funds are raised and standard subscription agreements are completed by B P Collins solicitors.

• It is highly recommended that the Investor reads the standard subscription documents and understands how the stages of investment are structured

• Investors do not receive shares in the Project at this stage, but do get priority rights to subscribe to the next stage.

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When the Proof of Concept Project is Funded

• A new Company with 1000* authorised shares of £1.00 each is formed for the Project.

• IPR assigned to the new Company

• At this stage 300* shares are issued to the Inventor and 25 shares to microFunding Ltd for a nominal sum. No other shares are issued at this time.

• The Manager opens the Company bank account and registers for VAT; all else is done by BP Collins and / or Peter Upton.

• Inventor Manager and Investor(s) agree to and sign the standard subscription agreement prepared by B P Collins solicitors for the standard fee of £1,500 + VAT. In addition there are Audit and microFunding Project fees of £500.00 each

• Any variations from the standard microFunding® terms will be charged extra, and these additional costs will have to be guaranteed.

• The Manager and microFunding Ltd each nominate one director of the new Company; at this point, Investor(s) are advised that being a company director will prejudice their EIS tax relief. Investors nominate one director after their shares have been issued.

• The interests of the Manager and of the Investor(s) are guaranteed by the subscription agreement under which microFunding has a shareholder veto against rule changes.

• The Project is run by the Manager. He is wholly responsible for the Project specification, delivery, timing and personnel; he is answerable to microFunding® for performance.

• The Inventor does not have the right to be directly involved in the Project or subsequent business, and will be involved only if the Manager at his sole discretion so decides.

• It is possible that the Manager will require the Inventor to provide at least technical advice and support in the short term.

• The Project is supervised by microFunding

• microFunding reports to a Panel comprising an Investor nominee, the Manager and microFunding Ltd whose task is to determine whether or not the Project has succeeded in 'Proving the Concept'

• The Project is audited by Peter Upton, Chartered Accountants

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If the Panel determine that the Concept is not Proven, then:

• No further shares in the Company are issued and microFunding transfers its 25 shares back to the Inventor for a nominal sum.

• In this way the Inventor owns 100% of both Company and IPR and the Company has no liabilities arising from the Project

• As it is very possible that an opportunity will come up against a fatal flaw before all funds have been committed, all residual funds in the company are returned to Investors as partial repayment of their 'cancellable' Loans

• The balance of the 'cancellable Loans' is cancelled.

• The Auditor provides Certificate which Investors may wish to use with HM Revenue

• If the Concept is Proven, it is probable that it will become commercially profitable. The route to this profit will be either by creating a trading business to exploit it or through Licensing.

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If the Panel determine that the Concept is Proven and a trading business is the optimal route,

• The Proof of Concept report to the Panel provides an excellent basis for the future Business Plan, which is duly completed by the Manager

• Business Plan is circulated to the Company's Loan Investors

• Each Investor individually decides whether or not to take up his right to invest further

• The Standard terms are that exactly 300 shares in total are available for Investors. Investors can negotiate that all or part of the additional funding be in the form of a loan.

• The additional funds can be sought elsewhere; if this is in the form of shares and involves diluting the existing shareholders, an EGM must be called. Note that the Inventor is, at this stage, still the only major shareholder with a vote.

• If an Investor chooses not to take up his Rights to invest further, the Transferable Loan with its investment rights can be sold on the open market, possibly for a significant gain. Co-Investors have right of first refusal at the market-determined price.

• The loan(s) are repaid and the moneys immediately re-subscribed as part of the additional funding

• 300* shares are issued to the Investor(s)

• 300* shares are retained for the Manager's share Options

• Up to 30 shares are retained in the form of options for introducer fees

• and up to 45 shares are retained in the form of options for contingencies

• neither the introducers' nor the contingency options may ultimately all be issued

• if additional funds are in the form of 'new' shares, these are authorised and issued

• if appropriate and required, EIS is applied for

• Standard shareholder agreements are completed by B P Collins

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If the Panel determine that the Concept is Proven and Licensing is the optimal route

• The successful Project will provide an excellent basis for a Business Plan. This is prepared by the Manager and circulated by the Panel to existing Loan Investors

• The Panel determines that no further investment is required, or is considered trivial, or is sought by way of conventional Grant or debt.

• The loan(s) are repaid and immediately re-subscribed for equity

• 150* shares are issued to the Investor(s)

• 150* shares are retained by the Manager in the form of options

• Up to 30 shares are retained in the form of options for introducer fees

• and up to 45 shares are retained in the form of options for contingencies

• neither the introducers' nor the contingency options may ultimately all be issued

• (if appropriate and required) EIS is applied for

• Standard shareholder agreements are completed by B P Collins

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Once the business is funded

• The Manager’s role now starts in earnest.

• The manager may elect to use his Share Options to recruit and motivate an excellent team.

• His main reward for succeeding in this process will be when he can sell his shares. This means that the Manager is very motivated to create a favourable exit in as short a time as is realistically possible for as high a value as possible

Dividend Policy

• No dividends will be paid to shareholders until after an exit has been realised.

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 *Subject to the Standard Subscription Agreement not being varied by mutual agreement.