Preliminary Results

Brainspark PLC
28 June 2002

                                                                    28 June 2002


                 BRAINSPARK PLC ('Brainspark' or 'the Company')


                     Preliminary Results for the year ended

                                31 December 2001


I am pleased to present my report for the year ended 31 December 2001.

The results represented a loss of £12.9 million and have been heavily influenced
by the negative sentiment affecting the technology investment market as a whole
and early stage companies in particular. The uncertainty surrounding the markets
in general added to this difficulty. Furthermore, the tragic events of 11
September have had a significant effect on world markets since that date and
Brainspark has not been immune to this. There is no evidence at present of an
imminent improvement in this sentiment.

Therefore, the Board has agreed several changes within Brainspark to navigate
through this continuing hostile environment, while pursuing, at the same time, a
cost reduction policy.

Whereas Internet incubation can no longer represent a viable business model, the
new Board of Brainspark has acknowledged the current market situation and is in
the process of adopting a strategy of sharp departure from the sole incubator
approach - focusing on additional lines of revenues, ranging from IT portfolio
management, private placements, mergers and acquisitions and fund raising
through advanced financial instruments.

I was appointed Chairman in February 2002 following the offer by AISoftware
S.p.A. which resulted in it holding 65.5 per cent. of the Company's issued share
capital.

As the present Chairman, I will describe the period covered by this financial
statement and give a brief outline of the subsequent first quarter of 2002.


Summary Financial Results

The Group cash reserves at 31 December 2001 stood at £5.6 million and the
Company's net asset value ('NAV') at 31 December 2001 was £7.0 million compared
with £24.0 million at 31 December 2000. This negative movement in NAV is
disappointing. This was mainly due to the losses realised on the sale and
winding down of a number of portfolio companies.


Market Environment

The underlying reason for this result has been the dramatic turn for the worse
in capital market sentiment towards our investment arena during the whole of
2001. The businesses in which the Company invested seed capital last year and
the year before have not been able to achieve follow-on funding and related
valuation gains as originally planned.


Operational Changes

In response to these market conditions, the Board modified its operating
approach. From the outset, the Company has provided a relatively comprehensive
range of services and infrastructure to support the development of its investee
businesses. This has remained our approach but in the current market the cost
base should be further reduced. The previous Board adopted a programme that
reduced our operating cash requirement during the whole year - reducing our
operating cash requirement to below £200,000 per month. These actions reduced
the negative impact operating expenses on our NAV. The present Board is focussed
on further reducing the monthly cash requirement during 2002 to a minimum.


Board Changes

In keeping with the market and the operational changes, the Board was
restructured on 28 February 2001. This restructuring was designed to align the
skills and experience of the Board with Brainspark's modified operation and the
specific challenges facing the Company. Following the offer by AISoftware
S.p.A., the Board structure was modified to better represent the new
shareholding structure.  I considered that the Board would benefit from having
additional experience available in order to better assist young companies better
through difficult market conditions. In this respect, the individuals appointed
to the present Board are - in my opinion - best able to support the business
both in Europe and the United States of America.


Brainspark Evolution

At the outset, Brainspark was conceived to build a role in the initial stages of
financing new business ideas. It would find, develop and then exit through trade
sales or flotation a number of businesses relatively swiftly. The consequence of
the current negative market conditions is that Brainspark has invested in fewer
businesses and for a longer period than originally envisaged. As a result, some
of our businesses were beyond the point where extensive hands-on support was
making the difference between success and failure. Adding these factors
together, we were at a stage of market development and our own portfolio
development where Brainspark had to evolve its business model. While on the one
hand, we had to significantly reduce the Brainspark headcount during 2001 -
retaining just two employees by March 2002 - on the other hand, new sources of
revenues, consistent with the Company's and new Board's know-how had to be
identified. This process is currently ongoing, but the first areas of
intervention have already been identified, which include, among others: IT
portfolio management, private placements, mergers and acquisitions and fund
raising through advanced financial instruments.

At the same time, an important asset acquisition is under evaluation, which
would involve some key investments of Infusion S.p.A, the AISoftware 99.9 per
cent. controlled investment vehicle, transferring to Brainspark, to create a
portfolio covering a geographic area ranging from UK to Italy and Israel.


Investments Review

To date, Brainspark has invested in eighteen projects. Seventeen investments
were made during 2000 and one in 2001. At the beginning of 2001, our portfolio
comprised a broad range of businesses including exchanges, Web service
businesses and application service providers. As the follow-on funding
environment became tougher, we have had a longer-term view in our initial
selection criteria and also our decisions on whether or not to continue
supporting businesses that were not attracting new third party funding. This has
been the case for the last few months and it will certainly continue. Some of
our businesses have not made the progress that was originally envisaged. We
announced the closure or sale of ten companies at the end of 2001. We have also
made provisions in the year end accounts for the losses on disposal of our
interests in certain other portfolio businesses. The aggregate impact of these
activities has been a £6.0 million reduction in the value of the Company's
portfolio.

In May 2002, following the takeover of Brainspark, the Board announced it had
entered into negotiations with Infusion S.p.A. - an Italian incubator owning
eight minority holdings in advanced technology companies - with a view to the
acquisition of certain of Infusion's trade and assets. A further announcement
will be made in due course.


Prospects

We face the future with optimism - especially if the transaction between
Brainspark and Infusion takes place. We still have to consider certain issues
going forward - externally market conditions and internally further
rationalising the portfolio taking into consideration the opportunities that are
presented by these companies.

I believe that the Board has now approved the necessary steps to enable the
financial performance of Brainspark to improve - especially when market
sentiment in the technology sector improves. If and when the acquisition of
Infusion is completed, we will have a number of interesting businesses operating
in technologically advanced sectors. A few companies are already prepared for
the public sale of shares when the market conditions are more favourable than
now.


Prof. Francesco Gardin
Chairman


Consolidated profit and loss account
for the year ended 31 December 2001
                                                                     Notes                 2001          2000
                                                                                          £'000         £'000

Turnover                                                                                      -             -

Net operating expenses - recurring                                                      (4,149)       (5,644)
Net operating expenses - exceptional                                                    (3,550)       (4,054)
                                                                                       --------      --------
Total net operating expenses/group operating                                            (7,699)       (9,698)
   loss - continuing


Share of operating loss of associated undertakings                                      (5,329)       (4,548)
                                                                                       --------      --------
Total operating loss: group and share of
   associated undertakings                                                             (13,028)      (14,246)


Exceptional items

Profit on deemed disposal of interests in                                                   421          1379
   associated undertakings
Loss on disposal, liquidation and provisions
   for loss on disposal of interests in                                                   (223)        (2433)
   associated undertakings
                                                                                       --------      --------
Loss on ordinary activities before interest                                            (12,830)      (15,300)
Net interest receivable                                                                     396           736
Amounts written off investments                                                           (499)             -
                                                                                       --------      --------
Loss on ordinary activities before taxation                                            (12,933)      (14,564)


Tax on loss on ordinary activities                                                            -          (27)

                                                                                       --------      --------
Loss on ordinary activities after taxation                                             (12,933)      (14,591)
Equity minority interests                                                                    34            37

                                                                                       --------      --------

Retained loss for the financial year                                                   (12,899)      (14,554)

                                                                                       ========      ========
Loss per 1p ordinary share                                                2
basic and diluted                                                                       (10.5p)       (14.9p)
                                                                                       ========      ========


The loss for the year is derived wholly from continuing activities.



Consolidated statement of total recognised gains and losses
for the year ended 31 December 2001
                                                                Notes                  2001              2000
                                                                                      £'000             £'000


Loss for the financial year                                                        (12,899)          (14,554)
(Impairment)/Revaluation of fixed asset investments                                   (719)               719
                                                                                   --------          --------


Total recognised losses for the year                                               (13,618)          (13,835)
                                                                                   --------          --------


Consolidated Balance sheet
as at 31 December 2001

                                                                                         2001              2000
                                                                                        £'000             £'000

Fixed assets

Tangible assets                                                                           616             1,135
Investments in associated undertakings                                                    250             4,987
Other investments                                                                         350             1,568
Investment in own shares                                                                  147             2,445
                                                                                     --------          --------
                                                                                        1,363            10,135
                                                                                     --------          --------
Current Assets

Debtors                                                                                   981             1,609
Cash at bank in hand                                                                    5,553             9,766
                                                                                     --------          --------
                                                                                        6,534            11,375
Creditors: amounts falling due within one year                                          (762)             (586)

                                                                                     --------          --------

Net current assets                                                                      5,772            10,789

                                                                                     --------          --------

Total assets less current liabilities                                                   7,135            20,924
Provisions for liabilities and charges                                                  (122)             (385)

                                                                                     --------          --------

Net assets                                                                              7,013            20,539
                                                                                     ========          ========
Capital and reserves
Called up share capital                                                                 1,233             1,233
Share premium account                                                                  26,442            26,442
Revaluation reserve                                                                         -               719
Other reserves                                                                          6,813             6,813
Profit and loss account/(deficit)                                                    (27,475)          (14,702)
                                                                                     --------          --------
Total equity shareholders' funds                                                        7,013            20,505

Equity minority interests                                                                   -                34
                                                                                     --------          --------
Capital employed                                                                        7,013            20,539
                                                                                     ========          ========



Reconciliation of movements in shareholders' funds
for the year ended 31 December 2001
                                                                                         2001              2000
                                                                                        £'000             £'000

Loss for the period                                                                  (12,899)          (14,554)
New share capital issued for cash                                                           -            26,799
Revaluation of fixed asset investments                                                  (719)               719
Charge for issue of shares at below market value                                          126               395
                                                                                     --------          --------
Net (reduction)/ additions to shareholders' funds                                    (13,492)            13,359
Opening shareholders' funds                                                            20,505             7,146
                                                                                     --------          --------
Closing shareholders' funds                                                             7,013            20,505
                                                                                     ========          ========


Consolidated cash flow statement
for the year ended 31 December 2001
                                                                 Notes                     2001            2000
                                                                                          £'000           £'000

Net cash outflow from operating activities                             1                (3,696)         (6,260)
                                                                                       --------        --------
Returns on investments and servicing of finance
Interest received (net)                                                                     381             723
                                                                                       --------        --------
Net cash inflow from returns on investments and servicing of                                381             723
finance
                                                                                       --------        --------
Capital expenditure and financial investment
Purchase of tangible fixed assets                                                          (61)         (1,392)
Receipts from sale of tangible fixed assets                                                  13               -
Purchase of other investments                                                                 -           (849)
Purchase of own shares                                                                        -         (5,322)
                                                                                       --------        --------
Net cash outflow from capital expenditure and                                              (48)         (7,563)
   financial investment
                                                                                       --------        --------
Acquisitions and disposals
Purchase of subsidiary undertaking                                                            -           (550)
Cash acquired with subsidiary undertaking                                                     -             550
Purchase of investments in associated undertakings                                        (385)         (6,800)
Loans to associated undertakings                                                          (465)           (780)
                                                                                       --------        --------
Net cash outflow from acquisitions and disposals                                          (850)         (7,580)

                                                                                       --------        --------
Net cash outflow before financing                                                       (4,213)        (20,680)

                                                                                       --------        --------
Financing                                                                                     -
Issue of ordinary share capital                                                                          26,799
                                                                                       --------        --------
Net cash inflow from financing                                                                -          26,799

                                                                                       --------        --------
(Decrease)/Increase in net cash for the period                                          (4,213)           6,119
                                                                                       --------        --------
Reconciliation of cash flow to movement in net cash
Net cash at beginning of period                                                           9,766           3,647
(Decrease)/Increase in net cash in the period                                           (4,213)           6,119
                                                                                       --------        --------
Net cash at end of period                                                                 5,553           9,766

                                                                                       ========        ========


Notes to the financial statements

1    Reconciliation of operating loss to net cash outflow from operating 
     activities
                                                                                            2001         2000
                                                                                           £'000        £'000

Operating loss                                                                           (7,699)      (9,698)
Depreciation charge                                                                          467          257
Goodwill written off on acquisition of subsidiary undertaking                                  -           71
Provisions against loans to associated undertakings                                          645            -
Provision against investment in own shares                                                 2,298        2,877
Loss on disposal of fixed assets                                                             100            7
Decrease/(Increase) in debtors                                                               383      (1,025)
Increase in creditors                                                                        247          471
Charge for issue of shares at below market value                                             126          395
(Release of) /Increase in provisions                                                       (263)          385
                                                                                        --------     --------
Net cash outflow                                                                         (3,696)      (6,260)

                                                                                        ========     ========


2    Loss per share
     
     The loss per share is calculated by dividing the earnings attributable to
     ordinary shareholders by the weighted average number of ordinary shares
     outstanding during the period. For diluted earnings per share, the weighted
     average number of ordinary shares in issue is adjusted to assume conversion 
     of all dilutive potential ordinary shares.  The Group has one class of 
     dilutive potential ordinary shares being those share options and warrants 
     granted where the exercise price is less than the average market price of 
     the Company's ordinary shares during the period.  However, these are not 
     considered dilutive as their conversion to ordinary shares would reduce the 
     net loss per share from continuing operations.

     Reconciliation of the loss and weighted average number of shares used in the
     calculation are set out below:


                                                        2001                                  2000
                                                    Weighted                              Weighted          Per
                                                     average        Per                    average           of
                                                      no. of      share                  no. share       Amount    
                                           Loss       shares     Amount         Loss        shares        pence   
                                          £'000        000's      pence        £'000          000's                     
                      
                                                                    


Basic loss per share
Loss attributable to ordinary          (12,899)      123,258     (10.5)     (14,554)        97,555      (14.9)
shareholders
                                         ------       ------     ------       ------        ------      ------
Effect of dilutive shares
Options                                       -       18,390          -            -         8,318           -
Diluted loss per share                   ------       ------     ------       ------        ------      ------
Adjusted loss                          (12,899)      141,648     (10.5)     (14,554)       105,873      (14.9)
                                         ======       ======     ======       ======        ======      ======



3.   Dividend

     The Directors are not proposing the payment of a dividend in respect of the 
     year ended 31 December 2001.

4.   Publication of non-statutory accounts

     The financial information for the year ended 31 December 2000 is extracted 
     from the Group's financial statements to that date which received an 
     unqualified auditors' report and have been filed with the Registrar of 
     Companies.

     The financial information set out in this preliminary announcement does not
     constitute statutory accounts as defined in Section 240 of the Companies 
     Act 1985.

     The consolidated balance sheet at 31 December 2001 and the consolidated 
     profit and loss account, consolidated cash flow statement and associated 
     notes for the year then ended have been extracted from the Group's 
     financial statements. 

     Those financial statements have not yet been delivered to the Registrar of
     Companies.

5.   Report and Accounts

     Copies of the Report and Accounts will be sent to shareholders and will be
     available from the Company's registered office, The Lightwell, 12-16 
     Laystall Street, London EC1R 4PF later today.


                      This information is provided by RNS
            The company news service from the London Stock Exchange