UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F
(Mark One)
[_]  REGISTRATION  STATEMENT  PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
     EXCHANGE  ACT  OF  1934
                                  OR FORM 20-F
(Mark One)
[X]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.
                                       OR
[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE SECURITIES
     EXCHANGE  ACT  OF  1934 FOR THE TRANSITION PERIOD FROM _________TO


----------------------------------------------------------------
| COMMISSION FILE NUMBER       0-31082                         |
----------------------------------------------------------------

                                  VI GROUP PLC
                                  ------------
             (Exact name of Registrant as specified in its charter)

                  REGISTRAR OF COMPANIES FOR ENGLAND AND WALES
                  --------------------------------------------
                 (Jurisdiction of incorporation or organization)

         THE MILL, BRIMSCOMBE PORT, STROUD, GLOUCESTERSHIRE GL5 2QG, UK
         --------------------------------------------------------------
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
NONE


Securities registered or to be registered pursuant to Section 12(g) of the Act:
ORDINARY SHARES, NOMINAL VALUE OF 0.5 PENCE PER SHARE


Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:  NONE


Indicate the number of outstanding shares of each of the issuer's classes of
capital or ordinary stock as of the close of the period covered by the annual
report.  AS OF DECEMBER 31, 2002 THERE WERE 37,261,166 SHARES OF THE COMPANY'S
ORDINARY SHARES OUTSTANDING AT A NOMINAL VALUE OF 0.5 PENCE PER SHARE.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes      X     No     [_]

Indicate by check mark which financial statement item the registrant has elected
to follow.

Item 17 [_]    Item 18 X


(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

Yes     [_]    No [_]   NOT APPLICABLE


<PAGE>
<TABLE>
<CAPTION>
                                       VI GROUP PLC
                                      2002 FORM 20-F

                                     TABLE OF CONTENTS


<S>                                                                                     <C>
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  i
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ii


PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Item 1. Directors, Senior Management and Advisors. . . . . . . . . . . . . . . . . . .   1
Item 2. Offer Statistics and Expected Timetable. . . . . . . . . . . . . . . . . . . .   1
Item 3. Key Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Item 4. Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . .   9
Item 5. Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . .  21
Item 6.  Directors, Senior Management and Employees Compensation . . . . . . . . . . .  34
Item 7. Major Shareholders and Related Party Transactions. . . . . . . . . . . . . . .  42
Item 8. Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
Item 9.  Listing Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
Item 10. Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
Item 11. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . . . .  49
Item 12.  Description of Securities other than Equity Securities . . . . . . . . . . .  53

PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
Item 13. Defaults, Arrearages and Delinquencies. . . . . . . . . . . . . . . . . . . .  54
Item 14.  Material Modifications to the Rights of Security Holders and Use of Proceeds  54
Item 15.  Intentionally omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
Item 16.  Intentionally omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . .  54

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
Item 17.  Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
Item 18.  Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
Item 19.  Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
</TABLE>


                                        i
<PAGE>
                                  INTRODUCTION

     VI  Group  plc  is  a public limited company incorporated in England, which
conducts  its  operations  through  subsidiaries.  The  term  "VI  Group" or the
"Company"  as  used  in  this  Annual  Report on Form 20-F (the "Annual Report")
refers  to  VI  Group  plc  and/or  its  subsidiaries,  as  appropriate.

     The consolidated financial statements of the Company as of and for the year
ended  December  31,  2002  are  presented in conformity with generally accepted
accounting  principles  in  the  United  States  ("US  GAAP").

     The  principal  office  of  the  Company is located at The Mill, Brimscombe
Port, Stroud Gloucestershire GL5 2QG, United Kingdom and its telephone number is
011-44-1453-732900.


                                       ii
<PAGE>
                                     PART I

ITEM 1. DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

Not Applicable


ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

Not Applicable

ITEM 3. KEY INFORMATION.

                    A.   Selected Consolidated Financial Data
                         ------------------------------------



     The  following selected financial data for the years ended December 31, are
derived from the consolidated financial statements attached hereto or previously
filed  on  Form  20-F.  This  information should be read in conjunction with the
consolidated  financial  statements  and  the operating and financial review and
prospects  contained  in  Item  5  of  the  Annual  Report.

<TABLE>
<CAPTION>
Amounts in thousands of USD, except per share data

                                                  Year  ended December 31

                                         2002     2001     2000     1999     1998
                                       --------------------------------------------
<S>                                    <C>       <C>      <C>      <C>      <C>
Net revenue                             11,277    9,308    8,443    7,339    6,834
Cost of revenue                         (2,385)  (2,007)  (1,845)  (1,807)  (1,377)
                                       --------------------------------------------
GROSS PROFIT                             8,892    7,301    6,598    5,532    5,457

OPERATING EXPENSES
Selling expenses                         4,412    3,051    2,703    2,375    2,735
Administrative expenses                  2,700    1,982    1,595    1,714    1,811
Product development                      1,439    1,260    1,563      762      967
Re-organization costs                        -        -        -        -      371
                                       --------------------------------------------
TOTAL OPERATING EXPENSES                  8551    6,293    5,861    4,851    5,884
                                       --------------------------------------------
INCOME (LOSS) FROM OPERATIONS              341    1,008      737      681     (427)
Interest income, net                        35        2       31       17       17
                                       --------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES          376    1,010      768      698     (410)
Income taxes                              (450)    (415)    (412)    (306)    (181)
                                       --------------------------------------------
Net income (loss) after income taxes       (74)     595      356      392     (591)
Minority interest                            -        -        -        -        -
                                       --------------------------------------------
NET INCOME (LOSS)                          (74)     595      356      392     (591)
                                       ============================================

Earnings (loss) per share:


                                        1
<PAGE>
Basic ($)                               (0.002)    0.03     0.02     0.02    (0.03)
Diluted ($)                             (0.002)    0.03     0.02     0.02    (0.03)

Weighted average number of shares
outstanding in thousands
Basic                                   31,228   20,642   20,210   20,000   18,573
Diluted                                 31,228   20,673   20,268   20,033   18,573

BALANCE SHEET DATA:

                                                     As at December 31
Amounts in thousands of USD               2002     2001     2000     1999     1998

                                       --------------------------------------------
Cash and cash equivalents                1,907      746    1,072    1,324    2,123
Net current assets                       6,250    3,052    2,667    3,108    3,047
Total assets                            15,382    8,146    6,621    5,609    6,379
Total liabilities                       (5,330)  (3,619)  (2,910)  (2,187)  (3,093)
Total shareholders' equity             (10,052)  (4,527)  (3,711)  (3,422)  (3,286)
</TABLE>


                                        2
<PAGE>
                         B.   Not applicable

                         C.   Not applicable

                         D.   Risk Factors
                              ------------

FORWARD LOOKING STATEMENTS

This Annual Report contains forward-looking statements relating to the Company's
operations  that  are  based on management's current expectations, estimates and
projections  about  the  CAD/CAM software business in the mechanical engineering
sector.  Words  such as "anticipates", "expects", "intends", "plans", "targets",
"believes",  "seeks",  "estimates",  and  similar  expressions  are  intended to
identify  such  forward-looking statements.  These statements are not statements
of  fact  or  guarantees of future performance and are subject to certain risks,
uncertainties  and  other  factors, some of which are beyond our control and are
difficult  to  predict.  Therefore,  actual  outcomes  and  results  may  differ
materially  from  what  is  expressed  or  forecasted  in  such  forward-looking
statements.  You  should  not  place  undue  reliance  on  these forward-looking
statements,  which  speak  only  as  of the date of this report.  Unless legally
required,  the  Company  undertakes  no  obligation  to  update  publicly  any
forward-looking  statements,  whether  as  a  result  of new information, future
events  or  otherwise.

Among  the  factors that could cause actual results to differ materially are the
effects  of any failure by the Company to upgrade its products quickly enough to
keep  pace  with  changes  in  software  technology in the Company's market, the
effects  of  larger  companies requiring their sub-contractors to conform to the
existing  CAD/CAM  systems  of  such  large  companies,  patents,  copyrights or
intellectual  property  rights  owned  by  others,  the availability and cost of
financing  for  the  Company's  operations,  capital  expenditures  and  future
acquisitions,  termination  of  licensing  agreements  for  software  components
utilized  by the Company, termination of distribution relationships, the ability
of  the  Company  to attract and retain necessary skilled employees and currency
fluctuations.  In  addition,  such  statements  could  be  affected  by  general
domestic  and international economic and political conditions.  Unpredictable or
unknown factors not discussed herein also could have material adverse effects on
forward-looking  statements.

     THE COMPANY'S PRODUCTS MAY BE RENDERED OBSOLETE IF THE COMPANY IS UNABLE TO
UPGRADE  ITS  PRODUCTS  QUICKLY  ENOUGH  TO  KEEP PACE WITH THE RAPIDLY CHANGING
SOFTWARE  TECHNOLOGIES  OF  THE  CAD/CAM  MARKET.

     Software  technologies  in the rapidly changing CAD/CAM market for the mold
and  die  sector  can  become  obsolete  or  less  competitive  if not regularly
advanced.  The  Company's  internal development aims to ensure that its products
are  continually  upgraded  to  take  account  of  changes,  while  the  product
development  of  competitors  is  also  monitored.

     Despite the Company's commitment to development there are dangers that mold
design  or  manufacturing processes and technologies may change or be introduced
which  shorten  the  expected  life  time  of  the  Company's  products.

     THE  POTENTIAL  MARKET  FOR  THE  COMPANY'S PRODUCTS COULD BE SUBSTANTIALLY
REDUCED  IF  LARGER  COMPANIES REQUIRE THEIR SUB-CONTRACTORS TO CONFORM TO THEIR
EXISTING CAD/CAM  SYSTEMS.


                                        3
<PAGE>
     The  Company  is  exposed  to  the  risk  that  larger  companies, who have
extensive  design and management systems, may require that their sub-contractors
and suppliers use the same CAD/CAM systems used by those companies. In this case
the  potential  market for the Company's products would be reduced.  At present,
most  of  the  Company's  customers  are not generally under this pressure which
applies particularly in the upper tier supplier levels of the automotive sector.

     IF  THE  COMPANY  FAILS  TO PROTECT ITS INTELLECTUAL PROPERTY RIGHTS, OR IS
UNABLE  TO  OBTAIN  THE  RIGHT TO USE TECHNOLOGIES OWNED BY OTHERS, ITS BUSINESS
COULD  BE  MATERIALLY  IMPAIRED.

     THE COMPANY'S INTELLECTUAL PROPERTY RIGHTS MAY NOT BE ADEQUATELY PROTECTED.

     THE COMPANY PRESENTLY DOES NOT HOLD ANY PATENTS OR COPYRIGHTS, NOR DOES THE
COMPANY  INTEND  TO  OBTAIN ANY PATENTS IN THE FUTURE. The Company however, does
have  common  law copyright protection for all of its software. The Company also
attempts  to  protect  its  proprietary  rights  to  its  software  with license
agreements  and  with  the  registration of trademarks. The licensing agreements
between the Company and its customers typically provide that the Company retains
the  proprietary rights to the software. Nonetheless there is a possibility that
disputes may arise regarding the ownership of the software. The Company also has
developed  technical  safeguards  and  password requirements within the software
itself  that are designed to prevent unauthorized use of the software and aim to
ensure  the  integrity  of  the  systems.

     An  entity  which reverse engineers the Company's software would be able to
copy  and  re-market  the software in direct competition with the Company.  This
risk  is  most relevant in developing countries where legal remedies are weakest
and  the technical support for the maintenance and repair of the products is not
perceived  as  fundamental.

     The  Company  has  developed  and  utilizes  software in collaboration with
various  software  developers.  In  this  case  the  Company  has  entered  into
agreements  that  provide  for  the Company's right to market and distribute the
products  containing  these component technologies.  However, it is possible for
disputes  to  arise  in  relation  to  the  validity  of  these  rights.

     THE  COMPANY'S  SOFTWARE PRODUCTS MAY INFRINGE ON THE INTELLECTUAL PROPERTY
RIGHTS  OF  OTHERS.

     Companies in the technology industry frequently receive claims of patent or
copyright  infringement  or  the  infringement  of  other  intellectual property
rights.  In  this  regard, third parties may in the future assert claims against
the  Company  regarding its existing products or with respect to future products
under  development.  The Company has entered into indemnification obligations in
favor  of  some  customers that could be triggered upon an allegation or finding
that  it  infringed  on the other parties' proprietary rights. Thus, the Company
may receive notification of alleged infringements in the future. The Company may
not  in  all  cases  be  able  to  resolve  such  allegations  through licensing
arrangements, settlement, alternative designs or otherwise. The Company may take
legal action to determine the validity and scope of the third party rights or to
defend  against  any allegations of infringement.  In the course of pursuing any
of  these  means  the  Company  could  incur


                                        4
<PAGE>
significant costs and diversion of its resources.  Due to the competitive nature
of  the  industry,  it is unlikely that the Company could increase its prices to
cover such costs. In addition, such claims could result in significant penalties
or  injunctions  that  could  prevent  it  from  selling some of its products in
certain  markets  or  result  in settlements that require payment of significant
royalties  that  could  adversely  affect  the  Company's  ability  to price its
products  profitably.

     IN ORDER TO FUND THE COMPANY'S OPERATIONS AND BROADEN THE RANGE OF, AS WELL
AS  UPGRADE, ITS PRODUCTS, THE COMPANY MAY NEED ADDITIONAL CAPITAL IN THE FUTURE
THAT  MAY  NOT  BE  AVAILABLE  ON  ACCEPTABLE  TERMS,  IF  AT  ALL.

     The  Company  may  need  additional  capital  in  the  future  to  fund its
operations,  finance  investments  in equipment and corporate infrastructure, to
increase  the  range  of products it offers and respond to competitive pressures
and  perceived opportunities. Cash flow from operations may not be sufficient to
cover the Company's operating expenses and capital expenditure needs. Any needed
additional financing may not be available on terms acceptable to the Company, if
at  all.  If  the  Company raises additional funds by selling equity securities,
the relative equity ownership of its existing investors could be diluted and the
new investors might obtain terms more favorable than previous investors.  If the
Company  raises additional funds through debt financing, the Company could incur
significant  borrowing  costs.  A  failure  to  obtain  additional funding could
prevent the Company from making expenditures that allow it to grow its business,
maintain  its  operations  or  to  make  acquisitions in order to strengthen its
position  in  the  market  and  achieve  its  strategic  goals.

     THE  CAD/CAM  MARKET  IN  WHICH THE COMPANY OPERATES IS HIGHLY COMPETITIVE,
WHICH  COULD  RESULT  IN  LOST  SALES  AND  LOWER  REVENUES.

     The  development  of software to enhance design and manufacturing processes
is highly competitive. The Company faces competition from numerous companies for
all  of its products. The risk factors in relation to competitors varies broadly
according  to  the  two principal types of competitor that the Company faces and
can  be  classed  according  to  their  approach  to  the  market.

     The  first  type  of  competitor  approaches  the  full range of industrial
sectors  involved  in  mechanical  engineering  and  that  benefit  from CAD/CAM
technology  in  that they provide generic solutions to those companies designing
or  making  mechanical systems and components.  This type of competitor includes
the  largest  CAD/CAM suppliers such as Parametric Technology, Dassault Systemes
of  France  and  Unigraphic  Solutions  Inc.  Such  companies have substantially
greater  manufacturing,  financial,  marketing  and  research  and  development
resources  than  the  Company.

     The second type of competitor offers tailored solutions to the mold and die
sector.  This  type  of  competitor  includes Cimatron (USA) and Delcam (UK) and
Missler  (France).  These companies may offer new or improved features which are
specific  to  the  Company's  chosen  sector and may cause a decline in revenues
until  such  time  as  the  Company  can  offer  similar  facilities.

     New  competitors  have  only  rarely  appeared  over  recent years but this
possibility  could  require  the  adoption  of newer technologies and additional
development  costs  to  minimize  the  sales  effect  of  any  new  entry.


                                        5
<PAGE>
     A  DISRUPTION  IN  THE  SUPPLY  OF PRODUCTS FROM THE COMPANY'S SUPPLIERS OR
PRICE  INCREASES  FOR  SUCH  PRODUCTS  COULD  AFFECT  PROFITABILITY.

     The  strength  of the Company's relationship with its dealers and suppliers
is  a  significant  factor in the Company's profitability. The Company's current
arrangements  with  these  dealers and suppliers are not guaranteed to remain in
place  long term.   There are about 60 distributors employed by the Company with
most  agreements  requiring  between  six  months  and  one  years  notice  of
termination.  One  distributor  Mecadat  Gmbh  (11%)  represented 10% or more of
revenues  in  2002. These distributors maintain networks of dealers, which could
continue  the  business  in  the  regions if they no longer wished to follow the
business.  If  this  distributor  terminates  its  existing  agreement  with the
Company,  the  Company could suffer a temporary but significant loss of revenue.

     THE TERMINATION OF THE COMPANY'S LICENSING AGREEMENTS FOR TECHNOLOGIES FROM
THIRD  PARTIES  COULD RESULT IN SIGNIFICANT COSTS, DELAYS IN PRODUCT DEVELOPMENT
AND  EFFECT  THE  COMPANY'S  PROFITABILITY.

     At present the Company licenses a number of component software technologies
from  third  parties.  Each  of  these  component  libraries  are licensed under
agreements. The Company considers that early termination by a third party of any
of  the  five  material  agreements  is  unlikely,  however, replacement of such
licenses  may  involve  a  delay in delivering products containing new libraries
with  consequential  revenue  losses  and  profitability  effects.  No  material
agreement  has  a  specific  termination  date  earlier  than  June 2003 and all
material  agreements  are  renewable  beyond  the term of the current agreement.

     Where  the  Company  believes  the  library to be critical to the Company's
overall  success  or  where  it  would  be  particularly difficult to replace (2
agreements)  the  Company  has  made  suitable arrangements to obtain the source
codes and rights to incorporate the library in the event that the supplier fails
to  continue  its development. No guarantee can be made that the Company will be
able  to  correctly integrate these source codes with the Company's products and
in  these  circumstances  could  also  result  in delaying the production of new
products  and  cause  additional  engineering  expenses.

     In  the  future,  the  Company may need to obtain further license rights to
patents  or  other  intellectual  property held by others. Unless the Company is
able  to obtain such licenses on commercially reasonable terms, patents or other
intellectual  property  held  by others could inhibit the Company's development.
Licenses granting the Company the right to use third-party technology may not be
available  on  commercially  reasonable  terms,  if  at  all.



     THE  CURRENT  DEPRESSED  GENERAL ECONOMIC AND MARKET CONDITIONS COULD CAUSE
DECREASES  IN  DEMAND  FOR THE COMPANY'S PRODUCTS, WHICH COULD NEGATIVELY AFFECT
THE  COMPANY'S  REVENUE  AND  OPERATING  RESULTS.

     Downturns  in  general  economic  and market conditions such as those being
experienced at present may result in customers postponing or cancelling software
purchasing  decisions.  If  demand  for  the  Company's  products decreases, the
Company's  revenues  may  decrease  and  operating  results  would be negatively
impacted.

     THE  COMPANY EXPECTS TO ACQUIRE BUSINESSES AS PART OF ITS BUSINESS STRATEGY
AND


                                        6
<PAGE>
WILL  NEED  TO  INTEGRATE  THEM  SUCCESSFULLY  OR  ITS  BUSINESS  AND RESULTS OF
OPERATIONS  COULD  SUFFER.

Acquisitions  are  an  integral  part  of  the Company's business strategy.  The
Company  is actively engaged in identifying and evaluating potential acquisition
candidates.  Any potential acquisition could be material in size and involve the
issuance  of  significant  new  debt  or equity securities and/or the payment of
substantial  cash  consideration.  If the Company funds acquisitions in whole or
in part through the issuance of equity securities, its existing shareholders may
experience substantial dilution.  If the Company raises additional funds through
debt  financing,  the  Company  could  incur  significant  borrowing costs.  The
Company  may  also  be  required  to  make  significant  investments in acquired
companies  to facilitate commercialization of its own products or to support the
integration  of the acquired company's operations with the Company's operations.
Any  acquisition  may  also  involve  significant management time and attention,
which  could  cause  a  disruption  to  the  Company's  overall  operations.

     Although  the Company has had no particular difficulties in absorbing prior
acquisitions,  the  Company  recognizes that integrating different businesses or
software  products  from future acquisitions could prove difficult to manage and
runs  the  risk  of  delaying  current  product  projects.

     If  the  Company  is  unable  to  successfully integrate any newly acquired
business  or  technologies,  it may be unable to achieve its strategic goals and
its  business  could  suffer.

     COMPETITION  FOR  SKILLED EMPLOYEES IN THE CAD/CAM INDUSTRY IS INTENSE, AND
THE  COMPANY  MAY HAVE DIFFICULTY ATTRACTING AND RETAINING THE SKILLED EMPLOYEES
IT  NEEDS  TO  EXECUTE  ITS  GROWTH  PLANS.

     The  Company's  future  success will also depend on its ability to attract,
retain  and  motivate  highly  skilled  employees,  particularly engineering and
technical  personnel.  Competition  for such employees in the Company's industry
is  intense and many companies use aggressive recruiting techniques. The Company
has  from time to time experienced, and expects to continue to experience in the
future,  difficulty  in  hiring  employees  with  appropriate  technical
qualifications.  In  particular,  the  Company's  Italian  development group has
recently  been  forced  to  expand  its  search for experienced programmers to a
national  level rather the local area previously canvassed.  The Company may not
be  able  to  retain  its  key  employees or attract, assimilate or retain other
highly  qualified  employees  in  the future. If the Company does not succeed in
attracting  and  retaining  skilled personnel, its ability to operate and expand
its  business could suffer.  Furthermore, the Company's recruitment of employees
from  its competitors could be challenged by their former employers, which could
result  in  litigation  costs  and  the  loss  of  those  employees.


     THE  COMPANY  GENERATES  A  SIGNIFICANT  PORTION OF ITS REVENUE OUTSIDE THE
UNITED  KINGDOM AND IS THEREFORE SUBJECT TO ADDITIONAL RISKS ASSOCIATED WITH THE
EXTENT  OF  ITS  INTERNATIONAL  OPERATIONS.

     The Company's revenue and results of operations are subject to fluctuations
in  general  economic  conditions  in the various areas of the world in which it
does business. The risks inherent in conducting international business generally
include  longer  payment  cycles,


                                        7
<PAGE>
greater difficulties in accounts receivable collection and enforcing agreements,
tariffs  and  other restrictions on foreign trade, export requirements, economic
and  political instability, withholding and other tax consequences, restrictions
on  repatriation of earnings and the burdens of complying with a wide variety of
foreign  laws. Such risks are higher from areas outside of the United States and
member  countries  of the European Union, which accounted for 16% of revenues in
2002,  21%  of  revenues  in 2001 and 24% in 2000. The majority of such revenues
were  from countries in Asia where the revenues fell by close to 18% during 2002
compared  to  2001,  whereas  in  2001  revenues were 9% lower compared to 2000.

     CURRENCY  FLUCTUATIONS  MAY  ADVERSELY  AFFECT  THE  COMPANY'S  RESULTS  OF
OPERATIONS.

     The  Company  is  exposed  to  the risk of fluctuations in foreign currency
exchange  rates  due to the international nature and scope of its operations. In
the  future,  the Company expects to continue to derive a significant portion of
its  net  revenue and incur a significant portion of its operating costs outside
the  United  States,  and  changes in foreign currency exchange rates may have a
significant  effect  on  the  company's  results  of  operations.

     As  a  result  of  the strengthening Euro relative to the US dollar, during
2002  the  revenue  growth was 21% when presented in US dollars, whereas had the
currency  rates  remained  similar  to  those  in  2001  it  would have been17%.

     As  a  result  of the weakening Euro relative to the US dollar, during 2001
the  revenue  growth  was  11%  when  presented  in  US dollars, whereas had the
currency  rates  remained  similar  to  those  in  2000  it would have been 17%.


     Also,  as  a result of the weakening Euro relative to the US dollar, during
2000 the revenue growth was 15%, whereas had the currency rates remained similar
to  those  in  1999  it  would  have  been  26%.

     Due  to  the  fact  that  costs  and  revenues are matched to a significant
extent,  the  overall  effect  on  net income was much less significant than the
effect  on  revenues.


     The  extent  of  exchange  gains  and  losses  arising  on foreign currency
transactions  and  included  in determining net income were a loss of $27,000 in
2002,  a  loss  of  $10,000  in  2001,  and  a  gain  of  $77,000  in  2000.


     THE  EFFECT  OF  SEVERE ACUTE RESPIRATORY SYNDROME (SARS) ON THE MARKET FOR
THE  COMPANY'S  PRODUCTS

Severe  Acute  Respiratory Syndrome is a disease for which there is currently no
known  remedy  and  has originated in the Far Eastern countries during the early
part  of  2002.  Health  authorities  (including the World Health Organization),
governments  and  immigration  departments  have  placed  travel restrictions or
travel  recommendations  on  people  travelling  to  or  from  the most affected
countries  and  regions.  This has caused the postponement of business trips and
the  cancellation of important trade exhibitions, some of which are important to
the mold and die sector that is the target market for the Company's products. If
SARS  spreads further, causes further cancellations and remains un-remedied then
VI  revenues  and earnings may fall or suffer as a result of the restrictions on
travel  or  isolation  of some  market  areas.


                                        8
<PAGE>
     ENFORCEABILITY OF CIVIL LIABILITIES UNDER THE U.S. FEDERAL SECURITIES LAWS.

     The  Company  is  a  public  limited company incorporated under the laws of
England and Wales.  A majority of the Company's directors and executive officers
named  in  this  Annual  Report are residents of countries other than the United
States.  All  or  a substantial portion of their assets and the Company's assets
are  located outside the United States.  As a result, it may not be possible for
a  shareholder:

-    to effect service of process within the United States upon the Company or a
     majority  of  its  directors  and  executive  officers;

-    to  enforce  in  the  United  States  courts  or  outside the United States
     judgments  obtained  against  the  Company  or  a majority of the Company's
     directors and executive officers in the United States courts in any action,
     including  actions  under  the  civil liability provisions of United States
     securities  laws;  or

-    to  enforce  in  the  United  States  courts judgments obtained against the
     Company  or a majority of the Company's directors and executive officers in
     the  courts  in  jurisdictions  outside  the  United  States in any action,
     including  actions  under  the  civil liability provisions of United States
     securities  laws.

-    Parties  may  also have difficulties enforcing liabilities under the United
     States  securities  laws  in  original  actions  brought  in  courts  in
     jurisdictions  located  outside  the  Unites  States.

     The  Company  has  been  advised  by  Addleshaw  Goddard, its English legal
     counsel,  that  there  is  doubt  as  to  the enforceability of liabilities
     against  the  Company  and/or  its  directors and executive officers in the
     United  Kingdom  in  original  actions or in actions for the enforcement of
     judgments  of  United  States courts predicated upon the federal securities
     laws  of the United States. In particular, English law significantly limits
     the  circumstances  under which shareholders of English companies may bring
     derivative  actions.  Under  English law generally, only the Company can be
     the  proper  plaintiff in proceedings in respect of wrongful acts committed
     against  the  Company.

     THE  RIGHTS  OF  THE COMPANY'S SHAREHOLDERS MAY DIFFER FROM THE SHAREHOLDER
RIGHTS  OF  A  U.S.  CORPORATION.

     The  rights  of  shareholders  are  governed  by English law, including the
Companies  Act 1985, and by the Company's Articles of Association.  These rights
differ  in  many  respects  from  the  rights  of  shareholders  in typical U.S.
corporations.

ITEM  4.  INFORMATION  ON  THE  COMPANY.

                                  Introduction
                                  ------------

     The  Company designs, develops, manufactures, markets and supports a family
of  modular,  high-performance,  fully  integrated  computer-aided
design/computer-aided manufacturing software ("CAD/CAM") focused on the mold and
die  sector.  The  Company's  products  provide  an  integrated
design-through-manufacturing  solution  for  small-to-medium-


                                        9
<PAGE>
sized companies and manufacturing divisions of large corporations. These product
lines  provide  customers  with a wide array of design and building capabilities
that are adaptable to many types of machining techniques and tools. As a result,
the  Company's  products  are especially popular in the manufacturing segment of
the  CAD/CAM market, particularly among mold, tool, die and fixture makers.  The
Company  is  committed  to  providing  mold,  tool,  die and fixture makers with
comprehensive,  cost-effective  CAD/CAM  solutions that streamline manufacturing
cycles,  enable  collaboration  with  vendors  and  decrease  delivery  time.

     The  Company's  revenue  has  increased  every year since its foundation in
Italy in 1988 with both its product range and sales network expanding to compete
in nearly all of the world's leading industrial markets. At present, the Company
has subsidiaries in the UK, Italy, the US and Japan and sales offices in France.

                    A. History and Development of the Company
                       --------------------------------------

     The  legal  and commercial name of the Company is VI Group plc and its date
of  incorporation  was  November  5,  1997 as Deepcredit Limited. The Company is
domiciled  and  operates  under  the  laws  of  the  United Kingdom specifically
pursuant  to  the Companies Act of 1985.  The Company was created to consolidate
and  re-organize Vero International Software S.r.l. (hereinafter "Vero") and its
subsidiaries  in  the U.K. and the U.S. with the U.K. entity becoming the parent
company.  On  February  25, 1998 the name of the Company was changed to VI Group
Ltd.  On March 16 1998 the Company was re-registered as a public company limited
by  shares.  Its  principal  place  of  business  is:  The Mill Brimscombe Port,
Stroud,  Gloucestershire,  GL5  2QG,  U.K.,  the  telephone  number  is
011-44-1453-732900.

     Vero  was  founded  in Northern Italy in October 1988 by one of its current
executive  directors  and  a former executive director: Donald A. Babbs and Ezio
Galardo  respectively,  under the name Vero. By 1990, Vero had opened a UK sales
office  and  had  a  growing Italian user base. Vero traditionally developed its
products  for the promising, but technically demanding personal computer, ("PC")
market.  Vero  was one of the world's early purchasers of a compiler which broke
the  640 Kbytes memory barrier leading to Vero's development of the edge surface
modeler.  The  modeler  was soon incorporated with machining software to provide
one  of  the  first  surface  machining  software  packages  on  the  PC.

     The  development  of  the  modeler further fueled sales which grew steadily
through  the early nineties.  Thereafter, Vero took a further technology step by
incorporating  a  solid  modeler  in  its products in 1995, which maintained its
competitive  advantage  and  growth.  As  a  dedicated PC software provider Vero
quickly  adopted  the  de-facto  Windows  standard, as it became available. Vero
established  relationships with important distributors in Japan and the Far East
in  the mid-nineties and spread its geographic coverage to the United States for
the  first  time  in  1997.  Funding  for  the  Company  initially came from the
founders,  bank  loans  and  cash  flow.

     The  Company  completed  its reorganization and made a fully subscribed and
successful  public offering as VI Group plc. (the name "Vero" being unavailable)
on the London Stock Exchange's Alternative Investment Market ("AIM") in April of
1998.  The Company issued 5,600,000 ordinary shares of 0.5p per share at a price
of  50p  per  share  and  raised  $4.0  million  after  expenses.


                                       10
<PAGE>
     Thereafter,  the  Company  moved its commercial activities and headquarters
from Italy to England in the same year. Ultimately, the Company has utilized the
proceeds  of  the public offering in its expansion worldwide including marketing
and  sales  activities,  relocation  and  office expansion and supplementing its
working capital. The Company also used approximately $900,000 of the proceeds of
the  offering  to  purchase  minority  interests  in  the  subsidiary companies,
including  fees.

     In  May 2000, the Company acquired an Italian software company, called Vero
Technologie  S.p.A.  (formerly  known  as Tecnocam, S.p.A.) for 360,000 ordinary
shares  of  the  Company  and  $349,000  in cash to secure valuable products and
knowledge  and  experience  in  the  field  of  progressive  die  design.

     On  March  2, 2001 Ubiquity Software Corporation Ltd a UK company, sold the
assets  of  its Electronic Data Interchange (EDI) division to Vero International
Software  UK  Ltd,  a UK subsidiary of the Company ("VERO UK"). The EDI division
sells software and systems for the secure transfer of CAD and CAM files data for
the  automotive  industry  in the United Kingdom. This division was purchased by
VERO  UK  for  a  total  consideration  of  $361,000.

     On  May 7, 2002, the Company successfully completed a placing in the United
Kingdom  of 14,651,166 ordinary shares of 0.5 pence, raising $4.6 million before
expenses

     On  July  1, 2002, the Company's U. S. subsidiary, Vero International, Inc.
acquired the Company's Canadian distributor Vero Tooling Solutions, Inc. for the
nominal sum of one dollar plus the assumption of debt in the amount of  $355,000
and  forgiveness  of  debt in the amount of $259,000 and entered into employment
agreements  with the two former owners. The acquired subsidiary will continue to
sell  the Company's software in the Toronto area and will be integrated with the
Company's  Michigan  office  and  headquarters  of  Vero  International  Inc.

     On  August 29th, 2002, the Company sold its Prague based Czech company VISI
Sro  to  the management of that office for a consideration of $33,000 to be paid
over  three  years. VISI Sro will continue to sell the Company's product as part
of  a  distribution  agreement  for  the  area.

     On  August 1, 2002 the Company opened a branch offices in Lyon and Lille in
France.  The  offices  will  provide  sales  and support services for the French
market.

     On September 28th 2002, the Company acquired the Machining Strategist 3D
CAM business of NC Graphics (Cambridge) Ltd. and Arthur Flutter of England . The
acquisition included goodwill, interests in copyrights , transfer of 8 staff
including the development team employees, transfer of 8 foreign dealer
agreements and UK based end-user customers. Total consideration was 1.25 million
pounds (approximately $1.87m) with 1.0 million pounds (approximately $1.5m)
being paid in cash and 250,000 pounds (approximately $0.37m) in ordinary shares
of the Company.  Proceedings have been initiated against the Company by NC
Graphics (Cambridge) Limited ('NCG') for the payment of disputed invoices
arising from the acquisition by the Company of NCG's Machining Strategist
business, totalling $172,000 It is the Directors' view that this claim is
without merit and the Company has advised, through its solicitors, of its
intention to vigorously defend this claim. The Company has notified NCG of its
intention to pursue, as part of these proceedings, a counterclaim for
substantial damages arising from NCG's failure to comply with certain terms of
the agreement relating to the acquisition of the Machining Strategist business.


                                       11
<PAGE>
     On  October  28th,  2002,  the  Company  successfully  listed  its American
Depositary  Shares  (ADS's)  on  the  American  Stock  Exchange  with  each  ADS
representing  20  of  the  Company's  ordinary  shares.

On  January  10th,  2003 the Company issued a convertible debenture of $1.0m and
entered  into  an  agreement, subject to approval by existing stockholders at an
extraordinary  general  stockholder meeting for a possible further investment of
between $2.0m and $4.0m in newly created preference share  In the event that the
Company  does  not  receive  shareholder  approval for the creation of the above
preference  shares the convertible debenture will be repaid and the Company will
pursue  other  sources  which  may  be  available to it in its attempt to secure
financing  in  the  United  States  or  in  England  in  order to fund potential
acquisitions.  If  another source of financing is not available the Company will
not  be  in  a  position  to  pursue  significant  acquisitions.

     The  Company  ended  its  long  term  distribution  agreement  in  Japan by
executing  a termination agreement with the existing distributor on November 6th
2002 to become effective on April 1st 2003. The Company successfully applied for
and  set up a wholly owned Japanese based subsidiary , Vero Japan kk to carry on
the  work  previously  undertaken  by its former Japanese distributor. The newly
formed  subsidiary  was  registered  in  Tokyo  on  April  1st  2003.

     There have been no public takeover offers of the Company to date.

     Investments  in  property,  plant  and  equipment  amounted  to  $701,000,
$282,000, $149,000 during 2002, 2001 and 2000 respectively.


     Expenditures on research and development amounted to $1,439,000, $1,260,000
and  $1,563,000  during  2002,  2001  and  2000  respectively.  The  increase in
expenditures  in  2002  was  as  a  result of the OEM agreement with NC Graphics
(Cambridge)  Ltd  and  three  months  of  operations of the Cambridge Technology
Centre following the acquisition of the Machining Strategy business. These costs
accounted  for  approximately  41%  of  the  increase,  in  the  ongoing product
development  activity.

     There  are  currently  no  major contracts or investments in progress other
than  general  renewal  and maintenance of existing assets and purchases made to
equip  new  employees.

                              B. Business Overview
                                 -----------------

     OPERATIONS  AND  PRINCIPAL  ACTIVITIES.

The  Company designs, develops and supplies CAD/CAM software intended for use in
the  mechanical  engineering  sector.  Except  for  the newly acquired Machining
Strategist product the Company markets its products as modular software packages
under  its  trademark  VISI-Series.  These  products  offer  high  performance
facilities  for  the  design and manufacture of mechanical components and tools,
using  standard  Windows  TM  based  computer  platforms.

     Background  to the Development of CAD (Computer Aided Design)/CAM (Computer
Aided  Manufacture).  Over  the  last  30  years  CAD/CAM  has  revolutionized
engineering


                                       12
<PAGE>
design and methodology.  In the 1970's engineers designed components, as well as
the  tools  and  processes  used to manufacture them by hand on sheets of paper.
Today, fast and extremely accurate computerized design and production of complex
components  is  an  everyday requirement for engineers. CAD/CAM software enables
manufacturers  to  manage the entire operation on computers, from the designers'
first  sketches,  through  mechanical  design  to  production  planning.

     Many  manufacturers  of  mechanical  components  follow design and building
processes  in  which  each  phase is distinct but highly integrated. The process
normally  begins  with the conceptual design of a product followed by a detailed
study  of  its  component  parts  and,  on  occasions,  by  the  production of a
prototype.  The prototype is then examined to evaluate the original design, this
may  lead to improvements or specification changes. Next the production planning
of  components,  including the specification of tools, fixtures, molds and dies,
is undertaken. The item, or its mold form, is machined and finished, readied for
assembly,  tested  and  shipped.

     Manufacturers  are  continually under pressure to reduce the time taken for
the  design  and  building  processes,  as  well  as to produce a higher quality
product  at  lower cost. These market pressures have lead to the search for more
efficient  methods  either  to  integrate  these  processes  or  to perform them
concurrently,  hence  the  development  of  CAD/CAM  technologies.  When CAD/CAM
technologies  first  became available they were relatively expensive and complex
to implement, therefore primarily larger companies were able to use them.  These
larger  companies  encouraged their traditional sub-contractors to invest in the
emerging  CAD/CAM technologies and, as a result, lower cost systems (albeit with
lower  functionality)  began  to  emerge  in  the  1980's.

     In  the  early  1990's,  in the quest for greater efficiency, manufacturers
also  sought  to  identify  processes  such  as  design studios (concept phase),
project  management  (detail  design and drafting), mold making (tooling phase),
model  makers  (prototype production) and machine shops (production phase), that
could  be 'out-sourced' or carried out by smaller companies specializing in each
phase.  This  out-sourcing  has  increased  the number of companies dedicated to
these processes and this in turn has further fueled the growth of the lower cost
CAD/CAM  market.  CAD technology, which formerly covered the detail design area,
now  also  includes  surface  modeling,  solid  modeling  and  the  more complex
requirements  of  conceptual  design  and  prototyping.

     Many  CAM  users  have  also invested in CNC (Computerized Numeric Control)
machine  tools,  which  provide  the  benefits  of higher accuracy and a greater
flexibility  in  machine  tool operations and manning. CNC machine tools require
extensive  programming.  CAM  software  provides  the  ability to convert design
drawings  or  prototype  models  into  numeric  data  for the tool to follow. In
addition, reverse engineering technologies convert model data generated by laser
scanners  and  touch  probes  to  mathematical  and  computer  visualized forms.

     CAD/CAM  technologies have become both more advanced and more affordable to
the  small  design and manufacturing organizations due to the parabolic increase
in  and  lower  cost  of  personal  computing  power  in  recent  years.  These
organizations  produce  molds  and dies that form the Company's core market. The
Company  has  also  developed  highly specialized solutions for vertical markets
such  as  plastic  injection molding and the production of progressive dies that
can  achieve  higher  productivity  than  the  more  generic  CAD/CAM  systems.


                                       13
<PAGE>
     Strategic  Direction of the Company.  In order to retain a competitive edge
the  Company  has  maintained  both CAD and CAM expertise, sought out specialist
sectors  requiring 3D solutions, and made those software solutions available for
PC  platforms.  As  a result, the Company is in a strong position to serve those
mold  and  die  manufacturers  that  have  moved  towards  the  use  of  CAD/CAM
technologies.  These  strategies have been a significant factor in the Company's
continued  growth.

     The  Company has also built specific software products for the mold and die
making  sector  (itself  subsets  of  the  mechanical  engineering sector).  The
Company is presently one of only a limited number of CAD/CAM suppliers operating
within  this  niche  market.

     The  increasing  power  of  PCs  has  made  it  possible to perform complex
geometrical  and design computations and to stimulate machining operations.  The
increased sales of CNC machine tools together with, in the Company's opinion, an
increase  in  the outsourcing of manufacturing, has lead to an increasing demand
for CAD/CAM products. This can be seen particularly among small and medium-sized
sub-contractors,  mold  makers,  project  design  offices  and  machine  shops.

     The  Company  maintains  and services its software products through regular
issues  of  upgrades  and  software  maintenance  agreements.  In  the technical
software  environment,  the  Company  stresses  the  importance  of  support and
consultancy  in winning and retaining customers. Accordingly the Company and its
representatives  have established more than sixty (60) Competence Centers, which
have  dedicated  help  lines,  training  centers  and support staff to advise on
CAD/CAM specification and implementation. All the technical support for both the
Company's  offices  and  Competence  Centers  are linked via Internet E-mail and
provide  facilities  for  the  exchange  of  data and customer feedback reports.

     The  Company's products are designed and specified by engineers who attempt
to  incorporate  in  their  designs  the  feedback  received from the Competence
Center's own marketing units. Development is shared between the Company's UK and
Italian  based  facilities  with  mathematicians, software engineers, electronic
engineers  and  mechanical  engineers operating in teams to produce and maintain
individual  projects.  New  products  evolve  as  a  direct  result  of  client
requirements  and  feedback,  new geometry techniques, enabling technologies and
progress  in  computing  power.

     PRODUCTS.

     The  Company sells two product lines. A series of modular software products
under  the  registered trade name of VISI-Series. This proprietary collection of
software  modules  features  a  common  geometrical or design base, which can be
configured to provide different software configurations to match customer needs.
The  Company  also  sells  the  newly  acquired  Machining Strategist product to
provide  shop  floor  based  3D  CAM  solutions.

     Much  of  the  Company's  success is due to its strategic and technological
choices,  which  include  the  incorporation  of both surface modeling and solid
modeling,  the  use  of  C++ programming language and adoption of the Windows TM
based  operating  systems. Currently, the Company's products are designed to run
on  all  versions  of  the  popular Windows TM operating systems, making complex
CAD/CAM  technologies  available  to  a  wider  audience.


                                       14
<PAGE>
     With VISI-Series and Machining Strategist the Company aims to:

-    Present  an  easily  understandable,  yet  intuitive  interface.
-    Build  specific and productive CAD/CAM solutions on a common base for niche
     markets.
-    Provide  a  complete  means  of  transmitting  numerical  shape data across
     CAD/CAM  and  other  system  technology  interfaces.
-    Provide  modular  packages with a common interface and a common database to
     cover a broad range of machining and scanning technologies, that are useful
     to  the  mold  &  die  sector.
-    Maintain  the  process  advantage by increasing integration between CAD/CAM
     and  other  allied  technologies.
-    Provide  an  open  platform  environment  for  third-party  development  of
     complementary  solutions.
-    Maintain  a  competitive  edge  by  experimenting  and  incorporating  new
     technologies,  as  they  become  practicable.

-    Offer  an  automated approach to defining 3D machining programs on the shop
     floor

     The  software products that make up the two product lines contain a context
sensitive  on-line  help  facility.  Products  are  available  in many languages
including English, Italian, German, Spanish, French, Japanese, Mandarin, Korean,
Czech,  Bulgarian  and  Turkish.

     Software  products  are  supplied as a standard package including technical
manuals,  guides  and  the  software  itself on a CD-ROM. The Company's software
products  and  documentation  are  provided  under  license  agreements with the
customers,  which  seek  to secure protection of the code and other intellectual
property. Use of the Company's software products is accessed by the provision of
a  password  associated  with  the  end-user's  security  key.  The  Company's
VISI-Series  trademarks  are  registered in the UK, USA, Canada, Italy and Japan
and  registration  has been applied for all countries included within the Madrid
protocol.

The  Company  provides  a  software  maintenance service for its products, gives
technical support, software upgrades and consultation service to customers. As a
result  of  the Company's dedication to service and commitment to development of
cutting  edge  technology,  it has relationships with some of its customers that
have  extended  through  three  generations  of  software  products.

     PRINCIPAL MARKETS.

     The  Company  sells  directly  to  end  users  in the areas surrounding the
Company  offices in Turin, Milan, Venice and Rome in Italy, in England, Michigan
in  the  U.S.A,  Toronto  in Canada, and Lyons and Lille in France. Direct sales
provide  substantial  user  feedback  on  product ideas and improvements. Direct
sales  represented  fifty  one percent (51%) of sales in 2002, compared to fifty
percent  (50%)  of  sales  in  2001.  The increase in direct sales is due to the
expansion  of the direct sales force in the U.S.A, Canada, France, Italy and the
acquisition  of  the  Machining  Strategist  product  in  the  UK.

     The  majority  of  indirect  sales  come through fifty-nine (59) re-sellers
operating  in  thirty-eight (38) countries.  Many of these are classified by the
Company as Competence Centers that provide all pre-sale consultations, technical
support, maintenance, customization and configuration services.  Most Competence
Centers  sell  the  Company's  products  only,


                                       15
<PAGE>
although some sell hardware or compatible solutions for other sectors.

     Some of the smaller markets such as Malaysia, Turkey or Chile are typically
run  by  a  single  Competence  Center with a few staff who operate a network of
agents  or  promotional partners to cover the territory.  They provide all local
technical  services and are visited and invited for up-date training at suitable
points  in  every  year.

     Below  is  a  breakdown of the Company's total revenue by geographic market
for  the  last  three  (3)  calendar  years.

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                              2002       2001       2000
<S>                                         <C>        <C>        <C>
     Net revenues
     Italy                                  $   4,520  $   4,120  $   3,584
     United Kingdom                             4,447      4,007      4,045
     United States                              2,095        950        609
     Rest of World                                215        231        205
                                                  ---      -----      -----
     Consolidated net revenues              $  11,277  $   9,308  $   8,443
                                              =======      =====      =====
</TABLE>


Sales by geographic region reported in the table above are based on the location
of the invoicing company. Sales from the United Kingdom include sales to the
following geographic regions:
Europe $2,892,000, $2,720,000, and  $2,388,000 in 2002, 2001 and 2000
respectively. Asia $1,401,000, $1,213,000 and $1,548,000 in 2002, 2001 and 2000
respectively. North America $72,000, $0,and $0 in 2002, 2001 and 2000
respectively and Rest of the World $82,000, $74,000 and $109,000 in 2002,2001
and 2000 respectively .
Sales from the USA include sales to the following geographic regions: North
America $2,050,000, $909,000 and $536,000 in 2002,2001 and 2000 respectively and
Rest of the World $61,000,$41,000 and $73,000 in 2002,2001 and 2000
respectively.



     The Company's sales fluctuate throughout the quarterly operating periods as
a  result  of  variable  factors  such as seasonal customer demand and timing of
software  releases.  Seasonality  may  be  influenced by a number of factors. In
Europe,  the  third calendar quarter is generally weaker than the others because
of  well recognized summer vacation periods in July and August.  Also the fourth
quarter  is  traditionally the strongest because many mold and die companies buy
capital  goods  products at the end of their financial or budget years which are
predominantly  calendar  year  oriented.  In some countries particularly in Asia
where  more customers purchase upgrades in preference to maintenance agreements,
sales  are  stronger  following  the issue of a new software release. During the
second quarter 2002, revenues were adversely affected by world events, with some
business  being  deferred  to  the  fourth  quarter.

Seasonality  for  revenues  has been as follows for the 2002 quarters (as a % of
--------------------------------------------------------------------------------
annual  revenue):
-----------------

     Year          1st  Quarter   2nd  Quarter   3rd Quarter   4th Quarter
     ----          ------------   ------------   -----------   -----------

     2002              21%            21%           15%            43%
      MARKETING.


                                       16
<PAGE>
     The  Company  employs a broad series of marketing activities to promote its
products and develop name recognition and visibility. The Company uses print and
online  advertising, online promotions, and regional marketing development in an
effort  to  further  penetrate  the  tooling  segment  of the CAD/CAM market. In
addition to online promotions, the Company uses the Internet as a marketing tool
that  increases  its visibility in the market place, offers downloadable product
demonstrations  and  facilitates  communication  between  the  Company  and  its
clients.  The  Company  also  employs  three  distinct  marketing  strategies to
strengthen  its  position  in  the  market  place. The Company's three marketing
strategies  are  as  follows:

     Product  Strategy:  For  the  past  four  years the Company has focused the
VISI-Series products as specialist CAD/CAM software for the niche "mold and die"
sector.  Providing  specialist  solutions  for  a  single sector has enabled the
Company  to position itself as a potential reference point for this niche market
sector and has added significantly to its customers' productivity. By adding and
building-in  the  knowledge  of  a specific design or manufacturing process, the
resulting  software  is  substantially  more  productive  in  achieving  results
compared  to  even  third  generation  CAD  systems.

     Internet  Strategy:  The  Company  believes  that  by  adopting a number of
measures to more forcefully adapt its business to the Internet it could increase
margins,  gain  competitive  advantage,  and provide valuable customer services.

     The Internet is currently used to provide technical support for all dealers
and  customers,  internal  communications  and  reporting  as well as supporting
website  information  for  customers and investors.  The Company currently makes
extensive  use  of  the  Internet  by  offering  helpdesk and an FTP service for
dealers  and  an  on-line  support  service, for both Competence Centers and end
users.  In  addition,  upgrades  and  system  improvements  are  also offered to
customers  via  the  Internet.

     The  Company is working to provide some downloadable options to its CAD/CAM
product  range.  At  present, the availability of all applications is limited by
the  bandwidths  available  to  customers,  which restricts the accessibility of
large  CAD/CAM applications.  Such downloadable options will provide some direct
purchasing possibilities when sufficient bandwidth becomes more widely available
to  the  Internet  Infrastructure

     Acquisition  Strategy:  The  Company  has  developed manufacturing software
(CAM)  applications  for more than 12 years and attains much of its revenue from
CAM software or applications allied with CAM software. The Company believes that
the  CAM  market is highly fragmental with approximately 50 competing suppliers.
Some  of  these suppliers operate in a single geographic market or manufacturing
segment.  Some  have  failed  to  adopt  the  latest  solid  modeling  and three
dimensional  technologies  and others have falling sales.  For these reasons the
Company believes the CAM market may be ready to consolidate in much the same way
as  the CAD market has reduced the number of global suppliers from around thirty
to  ten  over  the  last  decade.

     The  Company  believes  that  by  combining  the right CAM and/or component
technology  companies  with  sector  based  products  or interlocking geographic
distribution  it  could  become a larger broad based CAM company that provides a
greater  range  of  applications  to  a  wider  geographic  area.

     To  this  end the Company made its first such acquisition in purchasing the
Italian


                                       17
<PAGE>
company Vero Tecnologie S.p.A in 2000 to attain its component technology for the
manufacture  of  progressive  die.  This  acquisition  broadened  the  Company's
manufacturing  offering  as  well as strengthening sales and distribution of its
products  in  the  Milan  area  of  Italy.

     On  March 2nd, 2001 Ubiquity Software Corporation Ltd a UK company sold the
assets  of  its Electronic Data Interchange (EDI) division to Vero International
Software  UK  Ltd,  a UK subsidiary of the Company ("VERO UK")(See Item 4A for a
description  of  this  acquisition).

     On  July  1,  2002, the company's U.S. subsidiary, Vero International, Inc.
acquired  the  Company's Canadian distributor. (See Item 4A for a description of
this  acquisition).

     On  September  28th, 2002 NC Graphics (Cambridge) Ltd a UK company sold its
Machining  Strategist  3D  CAM to VI Group plc (See Item 4A for a description of
this  acquisition).

     PATENTS,  LICENSES  AND/OR  CONTRACTS.

     The Company seeks to protect the proprietary rights to its software through
contract  provisions, license agreements and the registration of trademarks. The
Company  sells  a series of modular software products under the registered trade
name  VISI-Series.  The  Company's  trademarks  are  registered  in the UK, USA,
Canada,  Italy  and  Japan  and  the Company has applied for registration in all
member  states  countries  of  the  Madrid  protocol.

     The  Company's  software  products  and  documentation  are  provided under
license agreements that provide for the protection of all intellectual property.
The  use  of  the  Company's software is accessed by the provision of a password
associated  with the end-user's security key.  The Company generally enters into
confidentiality  or license agreements with its employees, resellers, customers,
consultants,  and  corporate  partners,  and  generally  controls  access to and
distribution  of  its software, documentation and other proprietary information.
Despite  the  Company's  efforts to protect its proprietary rights, unauthorized
parties  may  attempt to copy aspects of the Company's products or to obtain and
use  information  the  Company  regards  as  proprietary.  Although  the Company
utilizes  software security devices and/or key codes to prevent unauthorized use
or  copying  of  its  products,  preventing  unauthorized  use  of  software  is
difficult.  There  can  be no assurance that the steps taken by the Company will
prevent  misappropriation  of  its technology, particularly in foreign countries
where  the  laws may not protect the Company's proprietary rights as fully as do
the  laws  of the United States and the United Kingdom. (See, Risk Factors, Item
3.D).

     COMPETITION.

     The  CAD/CAM  software  industry,  characterized  by  rapid  advances  in
technology  and  evolving  customer  requirements,  is  highly  competitive. The
Company  faces competition from numerous companies in all of its products. Also,
some  of the Company's competitors are larger and more established, benefit from
greater  market recognition and have greater financial, production and marketing
resources  than  the  Company. The Company believes that due to the increasingly
larger  number  of companies that operate in this market, it has no major single
competitor  or  group  of  competitors.  The  principle  factors  permitting the
Company's  products  to  compete  successfully against its competitors' products
are:  (i)  the  compatibility  of  the  Company's  products  with other software
applications  and  existing  and


                                       18
<PAGE>
emerging  industry  standards;  (ii)  the Company's ongoing product development;
(iii) the offering of innovative products that incorporate both surface modeling
and  solid  modeling,  use the C++ programming language and adopt the Windows TM
operating  system;  (iv)  the  level  and  breath of the Company's technological
integration;  (v)  the  technical  expertise and support provided by the Company
through  its  Competence  Centers;  (vi) the reputation of the Company among its
providers  as  well  as  customers;  and,  (vii)  the  cost-efficient pricing of
ownership  of  the  Company's  products  coupled  with  the  products'  high-end
capabilities.

MATERIAL EFFECTS OF GOVERNMENT REGULATIONS. None.

                          C. Organizational structure.
                             ------------------------

     SUBSIDIARIES.

     As  of December 31st 2002 the Company had the following subsidiaries all of
which  are  engaged  in  the  development,  marketing  and  distribution  of the
Company's  products:

<TABLE>
<CAPTION>
                                        Percentage  Country of
                                        ownership   incorporation
                                        ----------  --------------
<S>                                     <C>         <C>
Vero International Software S.r.l.            100%  Italy
Vero International Software UK Limited        100%  United Kingdom
Vero International, Inc.                      100%  USA
*Vero Sistemi e Consulenze S.r.l.             100%  Italy
**Vero Tooling Solutions, Inc.                100%  Canada
Vero Tecnologie S.p.A.                        100%  Italy
<FN>

*Wholly-owned subsidiary of Vero International Software S.r.l.
**  Wholly-owned subsidiary of Vero International Inc.
</TABLE>

Subsequent  to the year end the Company formed a new, wholly owned subsidiary in
Tokyo,  Japan  and  reorganized  the  three Italian subsidiaries into one wholly
owned  corporation  Vero  International  Software  S.p.A.

     All  commercial activities of the Company are organized and controlled from
the  Company's  office  in  Gloucestershire  in  England.

     The  company  has a nine percent (9%) equity interest in Visisoft S.R.O., a
company  incorporated  in  the Czech Republic. The Company does not exercise any
control  over  the  activities  of  Visisoft  S.R.O.

     While  all of the subsidiaries are engaged in the principal business of the
Company  thefollowing  narrative  provides  details  of  the  main focus of each
subsidiary's  activities.

     Vero  International  Software S.p.A now has offices at Via Prelle 30, 10090
Romano Canavese, (To) Italy, Villagio della Cooperazione, 20, 30020 Marcon (Ve),
Via  Maestri  del  Lavoro, 29, 20025 Legnano (MI) and via Madonna del Carmine 5,
03023  Ceccano  (Fr).  Principle  functions  are  both direct and indirect sales
activities  for  the Italian market and product development, serving as the main
development  center  for  the  Company.


                                       19
<PAGE>
     Vero  International  Software  UK  Limited has its principal offices at the
Company's  headquarters  at  The Mill, Brimscombe Port, Stroud, Gloucestershire,
GL5  2QG,  England  sales  offices at Unit 2, Bowden Drive, Padge Road, Beeston,
Nottingham, England, 29 Bis Chemin de Genas, 69800 Saint Priest, France, 121 Rue
Chanzy.  59260  Lille-Hellemmes,  France  and a Technology Development Center at
Cambridge  Technology  Centre,  Compass House, Vision Park, Chivers Way, Histon,
Cambridge  CB4  9AD,  England.  Principal  functions are the direct and indirect
sales  for  the  UK,  France  and  world  wide except for countries addressed by
another  of  the Company's subsidiaries, together with supporting the activities
of  the  Group  headquarters.

     Vero International, Inc has its offices at 30150 Telegraph Road, Suite 183,
Bingham  Farms,  MI  48025, USA. The principal function is development of the US
market  through  both  direct  and  indirect  sales  operations and provision of
technical  resources  for  the  US market.  This subsidiary is the 100% owner of
Vero  Tooling  Solutions, Inc. a Canadian corporation with an office in Ontario,
Canada.

     Vero  Tooling  Solutions,  Inc has its offices at 3600 Billings Court, Unit
109,  Burlington,  OnR7N  3N8.  The  principal  function  is  the  provision and
technical  support  of  systems  to  Canadian  customers.

     Vero  Japan  kk  has  its  offices  at  Matsuki  Building, 1-3-8 Shibakoen,
Minato-Ku,  Tokyo,  Japan  The principal function is development of the Japanese
market  through  an  indirect  sales  operation  and  the provision of technical
resources  and  Japanese  versions  of  the  Company's products for the Japanese
market


<TABLE>
<CAPTION>
                      D. Property, Plant and Equipment List
                         ----------------------------------

Location         Type of facility                               Owned/Leased      Annual     Lease
--------         ----------------                               ------------      ------     Expiration
                                                                                  rent       Date
                                                                                  ----       ----
<S>              <C>                                            <C>               <C>       <C>

Stroud           Corporate  headquarters of VI Group plc        Leased            $ 67,920        2008
Gloucestershire  and principal offices of
UK               Vero International Software UK Ltd
                 Activities include sales and marketing,
                 technical support,
                 development and administration

Beeston          Activities include sales and marketing,        Leased            $ 24,140        2007
Nottingham,UK    and technical support

Cambridge,UK     Activities include development                 Leased            $115,900        2008

Lyon, France     Activities include sales and marketing,        Leased            $ 12,220        2005
                 technical support and administration
Lille, France    Activities include sales and marketing         Leased            $  3,690        2004
                 and technical support
Romano           Principal offices of Vero International        Partially         $ 19,490        2003
Canavese         Software S.p.A.                                owned/
To, Italy        Activities include sales and marketing,        partially leased
                 technical support,


                                       20
<PAGE>
                 development and administration



Marcon, Ve,      Office of Vero International Software, S.p.A.  Leased            $  9,745        2004
Italy
                 Activities include sales and marketing,
                 and technical support


Milan, Italy     Office of Vero International Software, S.p.A   Leased            $ 22,740        2013
                 Activities include sales and marketing
                 technical support,
                 development and administration

Bingham          Offices of Vero International, Inc.            Leased            $ 43,282        2005
Farms,
Michigan,
U.S.A
                 Activities include sales and marketing,
                 and technical support

Burlington,      Office of Vero Tooling Solutions, Inc.         Leased            $ 19,920        2005
On,Canada        Activities include sales and marketing,
                 and technical support
Tokyo, Japan     Principal offices of Vero Japan kkActivities   Leased              49,800        2005
                 include sales and marketing,
                 and technical support
</TABLE>


ITEM  5.  OPERATING  AND  FINANCIAL  REVIEW  AND  PROSPECTS.

     The  purpose  of  this  section  is  to provide management's explanation of
factors  that  have  affected  the  Company's financial condition and results of
operations  for  the  historical  periods  covered by the consolidated financial
statements  attached  hereto,  and management's assessment of factors and trends
which  are  anticipated  to  have  a  material effect on the Company's financial
condition  and  results  of  the  operations  in  future  periods.

                                  Introduction
                                  ------------

     During  1997  Vero International Software S.r.l ("Vero"), which at the time
was a privately owned company and principal holding company for the Group, began
a  reorganization  in  preparation  for  a  public  offering  and listing on the
Alternative  Investment  Market  of  the London Stock Exchange ("AIM"). Vero was
acquired  at  the  beginning  of  1998 by VI Group plc, being a newly formed U.K
company  for  the  purpose of the reorganization. At that time both VI Group plc
and Vero were owned and controlled by the same parties. VI Group plc raised $4.0
million  in  April  of  1998.  The reorganization continued with the move of the
Company's headquarters from Italy to Stroud in Gloucestershire, England in 1998.
At  the end of 1998 the Company decided to run all commercial operations outside
of  Italy from the new Company headquarters and, as a result, the Belgian branch
closed early in March 1999, a new company was appointed as a distributor for the
Benelux  region.


                                       21
<PAGE>
                              A.  Operating Results
                                  -----------------

     The table below sets forth, for the periods indicated, the  Company's
consolidated statement of operations.

<TABLE>
<CAPTION>
Amounts in thousands of USD, except per share data

                                                Year  ended December 31

                                         2002     2001     2000     1999     1998
                                       --------------------------------------------
<S>                                    <C>       <C>      <C>      <C>      <C>
Net revenue                             11,277    9,308    8,443    7,339    6,834
Cost of revenue                         (2,385)  (2,007)  (1,845)  (1,807)  (1,377)
                                       --------------------------------------------
GROSS PROFIT                             8,892    7,301    6,598    5,532    5,457

OPERATING EXPENSES
Selling expenses                         4,412    3,051    2,703    2,375    2,735
Administrative expenses                  2,700    1,982    1,595    1,714    1,811
Product development                      1,439    1,260    1,563      762      967
Re-organization costs                        -        -        -        -      371
                                       --------------------------------------------
TOTAL OPERATING EXPENSES                  8551    6,293    5,861    4,851    5,884
                                       --------------------------------------------
INCOME (LOSS) FROM OPERATIONS              341    1,008      737      681     (427)
Interest income, net                        35        2       31       17       17
                                       --------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES          376    1,010      768      698     (410)
Income taxes                              (450)    (415)    (412)    (306)    (181)
                                       --------------------------------------------
Net income (loss) after income taxes       (74)     595      356      392     (591)
Minority interest                            -        -        -        -        -
                                       --------------------------------------------
NET INCOME (LOSS)                          (74)     595      356      392     (591)
                                       ============================================

Earnings (loss) per share:
Basic ($)                               (0.002)    0.03     0.02     0.02    (0.03)
Diluted ($)                             (0.002)    0.03     0.02     0.02    (0.03)

Weighted average number of shares
outstanding in thousands
Basic                                   31,228   20,642   20,210   20,000   18,573
Diluted                                 31,228   20,673   20,268   20,033   18,573

BALANCE SHEET DATA:


                                                   As  at  December  31
Amounts in thousands of USD               2002     2001     2000     1999     1998

Cash and cash equivalents                1,907      746    1,072    1,324    2,123
                                       --------------------------------------------
Net current assets                       6,250    3,052    2,667    3,108    3,047
Total assets                            15,382    8,146    6,621    5,609    6,379
Total liabilities                       (5,330)  (3,619)  (2,910)  (2,187)  (3,093)
Total shareholders' equity             (10,052)  (4,527)  (3,711)  (3,422)  (3,286)
</TABLE>


                                       22
<PAGE>
The table below sets forth, for the periods indicated, the Company's
consolidated statement of operations in EBITDA format. This table is included to
give consistency of presentation with the UK GAAP results published by the
Group.


<TABLE>
<CAPTION>
Amounts in thousands of USD, except per share data

                                                                Year  ended  December  31

                                                         2002     2001     2000     1999     1998
                                                       --------------------------------------------
<S>                                                    <C>       <C>      <C>      <C>      <C>
Net revenue                                             11,277    9,308    8,443    7,339    6,834
Cost of revenue                                         (2,385)  (2,007)  (1,845)  (1,807)  (1,377)
                                                       --------------------------------------------
GROSS PROFIT                                             8,892    7,301    6,598    5,532    5,457

OPERATING EXPENSES
Selling expenses                                         4,362    2,886    2,555    2,238    2,609
Administrative expenses                                  2,520    1,719    1,443    1,631    1,703
Product development                                      1,232    1,204    1,487      687      904
Re-organization costs                                        -        -        -        -      371
                                                       --------------------------------------------
Operating expenses excluding                             8,114    5,809    5,485    4,556    5,587
depreciation and amortization
                                                       --------------------------------------------
EBITDA                                                     778    1,492    1,113      976     (130)
                                                       --------------------------------------------
Depreciation                                               292      234      256      253      287
Amortization of goodwill and other intangible assets       145      250      120       42       10
                                                       --------------------------------------------
TOTAL OPERATING COSTS                                    8,551    6,293    5,861    4,851    5,884
                                                       --------------------------------------------
INCOME (LOSS) FROM OPERATIONS                              341    1,008      737      681     (427)
Interest income, net                                        35        2       31       17       17
                                                       --------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES                          376    1,010      768      698     (410)
Income taxes                                              (450)    (415)    (412)    (306)    (181)
                                                       --------------------------------------------
Net income (loss) after income taxes                       (74)     595      356      392     (591)
Minority interest                                            -        -        -        -        -
                                                       --------------------------------------------
NET INCOME (LOSS)                                          (74)     595      356      392     (591)
                                                       ============================================

Earnings (loss) per share:
Basic ($)                                               (0.002)    0.03     0.02     0.02    (0.03)
Diluted ($)                                             (0.002)    0.03     0.02     0.02    (0.03)

Weighted average number of shares
outstanding in thousands
Basic                                                   31,228   20,642   20,210   20,000   18,573
Diluted                                                 31,228   20,673   20,268   20,033   18,573

BALANCE SHEET DATA:

                                                                       As at December 31

Amounts in thousands of USD                               2002     2001     2000     1999     1998
                                                       --------------------------------------------

Cash and cash equivalents                                1,907      746    1,072    1,324    2,123
Net current assets                                       6,524    3,119    2,667    3,108    3,047
Total assets                                            15,382    8,146    6,621    5,609    6,379
Total liabilities                                       (5,330)  (3,619)  (2,910)  (2,187)  (3,093)
Total shareholders' equity                             (10,052)  (4,527)  (3,711)  (3,422)  (3,286)
</TABLE>


                                       23
<PAGE>






                                       24
<PAGE>
    YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31, 2001


     NET  REVENUES.  Product  revenues include the sale of software licenses and
associated  hardware.  Service  revenues  are principally revenues in respect of
software  maintenance  fees  and include training revenues and consultancy fees.
Product  revenues increased by $0.8 million to $8.6 million in 2002, compared to
the  $7.8  million  for  2001, an increase of 10%. Service revenues increased by
$1.1  million  to  $2.7  million  in  2002 compared to $1.5 million for 2001, an
increase  of  74%.  The  increase  in  service  revenues  follows  a trend of an
increasing  number  of  customers  renewing  maintenance contracts, although the
acquisition  of  the  Machining  Strategist  product line also had the effect of
increasing  service  revenues by $0.04 million, representing 4% of the increase.


     Overall,  net  revenues  increased by $2.0 million to $11.3 million in 2002
compared  to  the $9.3 million for 2001, an increase of 21%. However, the weaker
US  dollar  against  pounds sterling and the Euro, by comparison to 2001 had the
effect  of increasing the growth rate when revenues are expressed in US dollars.
Had  exchange rates been similar to those in 2001 revenue growth would have been
closer  to  17%


     Net  revenues  arising  from subsidiaries operating in Italy increased $0.4
million  to $4.5 million compared with $4.1 million in 2001, an increase of 10%.
Net  revenues from the subsidiary operating in the United Kingdom increased $0.4
million  to  $4.4  million compared with $4 million in 2001, an increase of 10%.
Net  revenues  arising  from  the subsidiary in the United States increased $1.1
million  to  $2.1 million compared to $0.95 million in 2001, an increase of 45%.

     Growth  in  product  revenues  was substantially in respect of increases in
sales  through  direct  sales channels. The average configuration price remained
the  same  as 2002. While the Company continually updates its software range and
improves  functionality  with each new release, the extent of revenues generated
during  both 2002 and 2001 from identifiable new modules or products amounted to
less  than  10%  of  total  product revenues. There were no new types of service
provided.

     There were no third party revenues generated by the holding company.

     COST  OF  REVENUES. Cost of product revenues include license fees for third
party  software licenses, software media costs and a relatively small amount for
computer  hardware.  Cost of product revenues for 2002 remained close to the 18%
of  product  revenues  recorded  in  2001


     Cost of service revenues are principally the compensation cost of employees
providing maintenance support and consultancy services provided following a sale
of  software  to  a  customer  and as such are considered to be a cost of sales,
rather  than  a  selling  cost.  Cost  of  service revenues for 2002 were 33% of
service  revenues  compared  to  39%  for


                                       25
<PAGE>
2001.  The  reduction  of  the  cost  of service revenues in relation to service
revenues is mainly due to efficiencies in staffing the increased revenue stream.

     SELLING  EXPENSES.  Selling  expenses  consist of costs associated with the
promotion,  advertising, trade shows, travel costs and compensation of personnel
involved  in  selling  and marketing of products and pre sales technical support
activities.  Such  costs  increased  by  $1.5  million  to  $4.4 million in 2002
compared  to $3 million for 2001, an increase of 51%. A full year of the cost of
additional  staff  in  the  Detroit  office,  the  branch offices in France, the
acquisition  of  Vero  Tooling  Solutions,  Inc.  and  Machining  Strategist
contributed  to  the  increase.

     GENERAL  AND  ADMINISTRATION.  General and administration costs include the
Company's  group  management,  finance,  legal  and facilities costs. Such costs
increased  by  $0.8  million in 2002 at $2.7 million compared to $1.9 million in
2001,  an  increase  of 42%. The increase in cost was due to a number of factors
including  the  additional  facility  costs  of  the new offices in Detroit, the
branch  offices  in  France  and the offices associated with the acquisitions of
Vero  Tooling  Solutions,  Inc.  and  the  Machining  Strategist  business.


     PRODUCT  DEVELOPMENT.  Product  development  consists  principally  of
compensation for product developers and associated costs incurred, together with
the  cost  of  any  development  activities carried out for the Company by third
parties.  Such  costs  increased  by  $179,000  to  $1.4 million. This small net
increase  fails  to  reflect  an  underlying growth of about 37% ($0.67 million)
after  excluding  the  effects  of  the Eureka development grant awarded to Vero
International  Software  Srl  in  Italy on the 17th of December 2002. The Eureka
project  commenced  in  July  2001 and is scheduled to continue until the end of
December  2003.  Accordingly  the  Company  recognized  $0.68 million due to the
Eureka  grant  and other Italian grant awards as development cost savings in the
2002  accounts,

     The  Company  believes  that  ongoing  product  development is necessary to
maintain  and enhance the Company's competitive position and thereby assist with
future  revenue  growth.  In  any  particular  period  the  increase  in product
development  costs  may  not  directly  relate  to  increases in revenue, as the
additional revenues generated would normally expect to follow the release of new
or  enhanced  products.

     EARNINGS  BEFORE INTEREST TAX DEPRECIATION AND AMORTIZATION ('EBITDA'). The
EBITDA  measure  of earnings was reduced to $0.8million in 2002 compared to $1.5
million  in  2001  as  the Company invested further in sales offices and product
development.


     DEPRECIATION.  Depreciation costs relate largely to capital equipment items
such  as  computer  hardware,  telecommunications  systems,  software  tools and
Company  cars.  Depreciation  in 2002 rose by $58,000 to $292,000 as a result of
equipping  new  offices  and  personnel.

     AMORTIZATION OF GOODWILL AND OTHER INTANGIBLE ASSETS.  Amortization charges
relate  largely  to capitalized purchased software products and goodwill arising
from  acquisition.

Amortization charges in 2002 fell by $105,000 largely due to the adoption of the
SFAS No. 142 "Goodwill and other Intangible Assets".  Under the provisions of
this accounting standard certain intangible assets which were previously being
amortized will instead be


                                       26
<PAGE>
tested annually for impairment.


     INCOME TAX. The effective income tax rate for the Company was 120% compared
to  41%  for 2001 and 54% in 2000. The rate of taxation is influenced by the tax
rate applicable to the various locations in which the Company operates. The rate
was  higher  due  to the relative impact of Italian taxes relating to the Eureka
grant and some other taxes that were not directly related to the earnings of the
Italian  subsidiaries.

     NET  INCOME.  Net  income  decreased  by  $0.7 million in 2002 to a loss of
$74,000,  compared  to  a  profit  of $0.6 million in 2001. The decrease largely
represents the additional investments made by the Company in expanding sales and
product  development  that  are  expected  to  provide  returns later than 2002.

     The  net (loss)/income of the holding company was $0.6 million, compared to
a  profit  of  $0.1million  in  2001.

     Income  from operations arising from subsidiaries operating in the European
Union  decreased  by  $0.27  million  to  $0.33 million in 2002 compared to $0.6
million  in 2001. In the United States, income from operations decreased by $0.3
million  to  $0.1 million from $0.4m in 2001. The decrease is principally due to
the  increase  in  costs  due  to the Company's expansion not being matched by a
similar  increase  in  revenues  over  the  same  period.

     CASH  FLOW.  Cash  flow  from  operating  activities was an outflow of $1.1
million  for  2002  compared to an outflow of $0.2 million for 2001. This change
was  principally  due  to  an  increase  in the level of trade debtors and other
debtors  at  December  31, 2001, compared to 2001. The increase in trade debtors
arises  from  both  an  increase in the level of revenues and from the timing of
revenues  being  weighted  towards  the  year  end.

     Cash  outflow  from  investing activities increased by $2.6 million to $3.3
million  in  2002 compared to $0.7 million in 2001. Additions to property, plant
and equipment increased to $0.7 million compared to $0.3 million in 2001. During
2002  the  Company  acquired  the  Machining Strategist business for which  cash
consideration  of  $1.5  million  was paid in 2002. Total payments in respect of
acquisitions amounted to $2.6 million in 2002 compared to $ 0.4 million in 2001.

     Cash  flow from financing activities was an inflow of $4.9 million in 2002,
compared  to  $0.5  million  in  2001.  During 2002, the Company sold additional
shares  to  institutional  shareholders  for a value of $4.8 million and reduced
short  term  bank  borrowings  by  $0.2  million  and  increased  capital  lease
repayments  by  $0.2  million.

     The net result was an increase in cash and cash equivalents of $0.6 million
in  2002  compared to a decrease in cash and cash equivalents of $0.4 million in
2001.  Cash  and cash equivalents at the end of 2002 were $1.9 million, compared
to  $0.7  million  at  the  end  of  2001.


                                       27
<PAGE>
    YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000


     NET  REVENUES.  Product  revenues include the sale of software licenses and
associated  hardware.  Service  revenues  are principally revenues in respect of
software  maintenance  fees  and include training revenues and consultancy fees.
Product  revenues increased by $0.5 million to $7.8 million in 2001, compared to
the  $7.3  million  for  2000,  an increase of 7%. Service revenues increased by
$0.36  million  to  $1.5  million  in 2001 compared to $1.2 million for 2000, an
increase  of  30%.  The  increase  in  service  revenues  follows  a trend of an
increasing  number  of  customers  renewing  maintenance contracts, although the
acquisition  of  the  EDI  division  also  had  the effect of increasing service
revenues  by  $0.2  million,  representing  60%  of  the  increase.


     Overall,  net  revenues  increased  by $0.9 million to $9.3 million in 2001
compared to the $8.4 million for 2000, an increase of 11%. However, the stronger
US  dollar  against pounds sterling and the Euro, by comparison to 2000, had the
effect  of  reducing  the growth rate when revenues are expressed in US dollars.
Had exchange rates been similar to those in 2000, revenue growth would have been
closer  to  17%.


     Net  revenues  arising  from subsidiaries operating in Italy increased $0.5
million  to $4.1 million compared with $3.6 million in 2000, an increase of 15%.
Net  revenues  from  the subsidiary operating in the United Kingdom remained the
same  as  2000  at $4.0 million. Net revenues arising from the subsidiary in the
United  States increased $0.35 million to $0.95 million compared to $0.6 million
in  2000,  an  increase  of  56%.

     Growth  in  product  revenues  was substantially in respect of increases in
sales  through  direct  sales channels. The average configuration price remained
the  same  as 2001. While the Company continually updates its software range and
improve  functionality  with  each new release, the extent of revenues generated
during  both 2001 and 2000 from identifiable new modules or products amounted to
less  than  5%  of  total  product  revenues.  There  were  no  new  services.

     There were no third party revenues generated by the holding company.

     COST  OF REVENUES. Cost of product revenues includes license fees for third
party  software licenses, software media costs and a relatively small amount for
computer  hardware.  Cost  of  product  revenues  for  2001  were 18% of product
revenues  compared  to  19%  in  2000.  The  decrease  is  primarily  due to the
acquisition of Vero Tecnologie (formerly Tecnocam S.p.A) in May 2000, as license
fees  paid  to Tecnocam, following acquisition, were eliminated on consolidation
for  a  full  year in 2001 , whereas such costs would have been treated as third
party  license  fees  for  the  first  five  months  in  2000.

     Cost of service revenues are principally the compensation cost of employees
providing maintenance support and consultancy services provided following a sale
of  software  to  a  customer  and as such are considered to be a cost of sales,
rather  than  a  selling


                                       28
<PAGE>
cost. Cost of service revenues for 2001 were 39% of service revenues compared to
37%  for  2000.


     SELLING  EXPENSES.  Selling  expenses  consist of costs associated with the
promotion,  advertising, trade shows, travel costs and compensation of personnel
involved  in  selling  and marketing of products and pre sales technical support
activities.  Such  costs  increased  by  $0.3  million  to  $3.0 million in 2001
compared  to  $2.7 million for 2000, an increase of 13%. A full year of the cost
of  Vero  Tecnologie  and the acquisition of the EDI division contributed to the
increase.

     GENERAL  AND  ADMINISTRATION.  General and administration costs include the
Company's group management, finance, legal and facilities costs and amortization
of  goodwill.  Such  costs  increased  by  $0.4  million in 2001 at $2.0 million
compared  to  $1.6  million in 2000. The increase in cost was due to a number of
factors including an increase in the amortization of goodwill and a full year of
Vero  Tecnologie.

     PRODUCT  DEVELOPMENT.  Product  development  consists  principally  of
compensation for product developers and associated costs incurred, together with
the cost of development activities carried out for the Company by third parties.
Such  costs  decreased by $0.1 million to $1.5 million, compared to $1.6 million
in  2000.  The  decrease  is  due  to  a  favorable effect of exchange rate when
development  costs  are stated in US dollars, which more than offsets the effect
of  a  full  year  of  development  costs  relating  to  Vero  Tecnologie.

     The  Company  believes  that  ongoing  product  development is necessary to
maintain  and enhance the Company's competitive position and thereby assist with
future  revenue  growth.  In  any  particular  period  the  increase  in product
development  costs  may  not  directly  relate  to  increases in revenue, as the
additional revenues generated would normally expect to follow the release of new
or  enhanced  products.

     INCOME  TAX. The effective income tax rate for the Company was 41% for 2001
and  54%  in 2000. The rate of taxation is influenced by the tax rate applicable
to  the  various  locations in which the Company operates. The rate was lower in
2001  principally due to profits arising in the United States, which were offset
by  tax  losses  from  previous  periods.

     NET  INCOME. Net income increased by $0.24 million in 2001 to $0.6 million,
compared  to  $  0.4  million  in 2000, an increase of 50%.  The increase is due
mainly  to  the  gross  profit  increasing  by more than the operating expenses,
together  with  the  effect  of  a  lower  tax  rate.

     The  net  income of the holding company was $52,000, compared to $92,000 in
2000.

     Income  from operations arising from subsidiaries operating in the European
Union decreased by $0.1 million to $0.6 million in 2001 compared to $0.7 million
in  2000. In the United States, income from operations increased to $0.4 million
from  a  break-even  position in 2000. The increase is principally due to strong
revenue  growth  that  exceeded  increases  in  operating  costs.

     CASH  FLOW.  Cash  flow  from  operating  activities was an outflow of $0.2
million for 2001 compared to an inflow of $0.3 million for 2000. This change was
principally  due  to an increase in the level of trade debtors and other debtors
at  December  31,  2001,  compared  to


                                       29
<PAGE>
2000. The increase in trade debtors arises from both an increase in the level of
revenues  and  from  the timing of revenues being weighted towards the year end.

     Cash  outflow  from  investing activities increased by $0.3 million to $0.7
million  in 2001 compared to $0.4 million in 2000. Additions to property, plants
and equipment increased to $0.3 million compared to $0.1 million in 2000. During
2001  the  Company  acquired  the  EDI  division for which consideration of $0.3
million  was  paid  in 2001, together with the balance of payments in respect of
Vero  Tecnologie.  In total payments in respect of acquisitions amounted to $0.4
million  in  2001  compared  to  $  0.3  million  in  2000.

     Cash  flow from financing activities was an inflow of $0.5 million in 2001,
compared  to  no  change  during 2000. During 2001, the Company issued new share
capital to Baronsmead Venture Capital Trust for $0.4 million and increased short
term  bank  borrowings  by  $0.2  million.

     The  net result was a decrease in cash and cash equivalents of $0.4 million
in  2001  to  cash  and  cash  equivalents  of  $0.7 million at the end of 2001,
compared  to  $1.1  million  at  the  beginning  of  the  year.

                      B. Liquidity and Capital Resources.
                         -------------------------------

     The  Company  has  financed its operations primarily through cash generated
from  operations,  utilization  of  bank facilities and from the sales of equity
during  the  flotation  in  April  1998 and subsequent placements. The effect of
operations  and  investments  on  cash  flows  is described in section A. above.

     The  Company's  Italian  subsidiary  Vero International Software S.p.A. has
mortgage  notes  which are secured by the Company's property in Romano Canavese,
near  Turin,  Italy.  The  balance  outstanding at December 31, 2002 was $34,000
owed  to  an Italian bank. Interest rates are variable and were between 8.5% and
7.25%  per  annum.

     In addition to mortgage loans, the Company has bank facilities available to
its  subsidiaries.  The Italian subsidiary has facilities of up to $0.74 million
dollars, from a combination of three separate banks, available  at between 1% to
3%  above the bank base rate. The UK subsidiary has a multi-currency facility of
up  to  $0.8  million secured on qualifying trade debtors when outstanding at an
interest  rate  of  1.5%  above the UK bank base rate. On December 31, 2002, the
amount  borrowed  under  such  facilities  was  $0.74  million.


On  May  7,  2002,  the  Company  successfully completed a placing in the United
Kingdom  of 14,651,166 ordinary shares of 0.5 pence, raising $4.6 million before
expenses.

On January 10th 2003, the Company completed a loan and investment agreement with
Hemisphere  Capital,  LLC for a debenture $1.0 million convertible into American
Depositary  Receipts  ("ADRs")  and  agreed  upon  the terms for possible future
acquisition  finance  of  between  $2.0  million and $4.0 million by the sale to
Hemisphere  of  preference shares. The preference share financing are subject to
the  approval  of  the  Company's  shareholders. A description of the Hemisphere
financing  is  contained  in  section  10C  of  this  Report.

The  Company  believes  that  the  cash balances, bank facilities and cash being
generated  from operations will be sufficient to meet the Company's current cash
requirements  for  working


                                       30
<PAGE>
capital and capital expenditures for at least the next twelve months.

     The level of borrowing and cash balances fluctuates throughout the year and
follows  the  pattern  of  business  principally  affected  by the collection of
accounts  receivable,  settlement  of  operating  expenses and payment of taxes.

     There  are  no  material  restrictions  on  the  ability  of the subsidiary
companies  to  pay dividends other than the fact that the companies need to have
sufficient  profits  available  for  distribution  and  that  sufficient working
capital  be  maintained.

     The  treasury  objectives  of  the  Company  are principally to ensure that
sufficient  finance  is  available  to  meet  the  operating requirements of the
Company  and its subsidiaries; that funds are held in the appropriate currencies
to  match  obligations to creditors and balance the level of monetary assets and
liabilities  within each subsidiary, and that consideration is given to the post
tax  cost  of  borrowing  or  investing in currency deposits across the range of
countries  in  which the Company operates. Treasury activities are monitored and
controlled  from  the  Company's  UK  headquarter  to  ensure a co-ordinated and
consistent  approach  to  treasury  management.

                    C.     Research  and  Development
                           --------------------------

     The Company relies heavily on the sale of its proprietary software products
and  as  such  the  software  needs  to  be  continually  updated  to maintain a
competitive  edge  and  to incorporate user suggestions. The Company has had two
development  groups  since  early  1998.

     The  research  group  provides  research  and  information  on  emerging
technologies  and  software  component  libraries. This unit also performs early
feasibility,  development  or  integration work for these emerging technologies.

     The  development  group  maintains  existing releases of the commercialized
products  and  develops  future  releases incorporating new features, additional
modules  and  new  applications  for  the  products.

     The  Company's  policy  is  not  to capitalize its research and development
expenses  but  to  expend  them  on  an  "as  incurred"  basis. The Company also
purchases  software  to  incorporate into its products. Those software purchases
normally  occur  when  the  software  element  can  be configured as a "plug-in"
library  to the proprietary products and when it is a cost-effective alternative
to developing the component software in-house. Purchased software is capitalized
and  amortized  over  its  estimated  useful  life.

The  Company  normally  provides  at least one major new release per year of its
existing  product  line  and  has  issued four releases in the last three years.
Expenditure  on  product  development  over  the  last  three  years  has  been
$1,439,000,  $1,260,000,  and $1,563,000 for the years ending December 31, 2002,
2001,  and  2000  respectively.

D.   Trend Information
     -----------------


     The  Company's  revenue  has grown on average by 13% per year over the last
five  years  with positive growth in each year.  There was a 21% increase in the
year  ending  on


                                       31
<PAGE>
December  31,  2002,  10% in the year ending on December 31, 2001 and 15% in the
year  ending  on  December  31,  2000.  The  growth  rate for the year ending on
December  31, 2002 would have been 11% if exchange rates had remained similar to
2001,  and  the  growth rate for the year ending on December 31, 2001 would have
been  17%  if  exchange  rates  had  remained  similar  to  2000.


     The  Company's  revenues  are  also affected by significant seasonal trends
with  the third quarter typically being the weakest and the fourth quarter being
the  strongest.  These  seasonal  trends are triggered because European revenues
fall during the month of August when many French, German and Italian engineering
companies close for a two or three week break. Similarly, revenues are higher in
the last two months of the year when customers analyze the current year's budget
expenditures  or  profits.  Since  many  European  companies have year-ends that
coincide  with  the  calendar  year,  these  year-end  calculations give rise to
additional  ordering  in  the  final  weeks  of  the  year.

E.   OFF-BALANCE SHEET ARRANGEMENTS
NONE

F.   TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>
                                                     Payments due by period
                                        Total   Less than   1-3 years   3-5 years   More than
                                                   1 year                             5 years
<S>                                    <C>      <C>         <C>         <C>         <C>
     Gross Long-term Debt Obligations  $   35          35           -           -           -
     Interest payable                  $   (1)         (1)
                                           ---         ---
     Net  long term debt obligation    $   34          34
                                           ---         ---

     Gross Capital Lease Obligations   $  342         103         179          60           -
     Interest payable                  $  (31)        (14)        (15)         (2)
                                          ----        ----        ----         ---
     Net Capital Lease Obligations     $  311          89         164          58
                                          ---          --         ---          ---

     Operating Lease Obligations       $  995         340         461         160          34

     Purchase Obligations              $   80          80           -           -           -
</TABLE>



G.   APPLICATION OF CRITICAL ACCOUNTING POLICIES

The company regards the following as its critical accounting policies:

     REVENUE  RECOGNITION

     The Company derives revenues principally from two sources, customer license
fees  on  its  software  products  and  service  fees.


                                       32
<PAGE>
     The  Company  recognizes  revenue  based  on the provisions of Statement of
Position  ("SOP")  97-2,  "Software  Revenue  Recognition".  As  no  significant
modification  to  the  Company's software products is required, software license
revenues are recognized upon persuasive evidence of an arrangement, delivery and
acceptance  of  the  software,  and  when  collection of a fixed or determinable
license  fee  is  considered probable.  Agreements may provide the customers the
right  to multiple copies in exchange for guaranteed amounts, only if copies are
requested  by  the  customer.  The  license fee is payable even if no additional
copies  are  requested by the customer. Revenue is recognized at the delivery of
the  product  master  or  the first copy and the estimated costs of duplication,
incidental  to  the  arrangement,  are  accrued.

     Service  revenues  consist  of  fees from maintenance and technical support
agreements  and  consulting or training arrangements.  Maintenance revenue, when
bundled  with  the  sale  of  software licenses, is recognized together with the
initial  licensing fee on delivery of the software as (a) the maintenance fee is
included  with  the  initial  licensing  fee,  (b) maintenance included with the
initial  license  is  for  one year or less, (c) the estimated cost of providing
maintenance  during  the  arrangement  is  insignificant,  and  (d)  unspecified
upgrades/enhancements  offered  during  the maintenance arrangement historically
have  been  and  are  expected  to  continue  to be minimal and infrequent.  All
estimated  costs  of providing the services, including upgrades/enhancements are
accrued.  Maintenance  revenue  under  separate  arrangements  is  deferred  and
recognized  on  a  straight-line  basis  over the term of the agreement; amounts
received  in  advance of revenue recognition are classified as deferred revenue.
Maintenance  agreements  provide  for technical support and periodic unspecified
product upgrades.  Revenues from consulting services or training are measured by
the  relationship of hours incurred and estimated total hours of the contract or
training  course.  Revisions  in estimated hours are reflected in the accounting
period  in  which  the  required  revisions  become  known.

     The  Company  sells  software  licenses  to distributors at a predetermined
price.  Distributors  are  responsible  for  supplying  maintenance and customer
support  to  the end customer.  The Company may provide maintenance and customer
support to the distributors.  Revenues on these sales are recognized in the same
manner  as all other software license and maintenance sales. These sales are not
generally  contingent  upon  the  distributors'  resale  of  the  software.

     The  Company  is  generally  not contractually obligated to accept returns,
except  for  defective,  shelf-worn  and  damaged  products  in  accordance with
negotiated  terms.  In  accordance  with  SFAS No. 48, "Revenue Recognition when
Right  of  Return Exists", revenue is recorded net of an allowance for estimated
returns,  exchanges,  markdowns,  price  concessions,  and  warranty costs. Such
reserves  are  based  upon  management's  evaluation  of  historical experience,
current  industry  trends and estimated costs. The amount of reserves ultimately
required  could  differ materially in the near term from the amounts included in
the  accompanying  consolidated  financial  statements.


                      F. Recent Accounting Pronouncements
                         --------------------------------


     On January 1, 2002, the Company adopted SFAS No. 142 "Goodwill and other
Intangible Assets".  Under this standard, goodwill is no longer amortized but
reviewed for impairment at least annually.  The standard also provides guidance
on the accounting for other intangible assets.  An acquired intangible asset


                                       33
<PAGE>
(other than goodwill) with an indefinite useful life should not be amortized
until its useful economic life is determined to be finite. These assets should
be tested for impairment at least annually. An acquired intangible asset (other
than goodwill) with a limited useful life should be amortized over its useful
economic life and reviewed for impairment in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets. If the
provisions of SFAS had been adopted in 2001 and 2000, amortization would have
been reduced by $109,000 in 2001 and $26,000 in 2000.

On January  1, 2002, the Company adopted SFAS No. 144 "Accounting for the
Impairment or Disposal of Long Lived Assets". This standard supersedes SFAS No.
121  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" but retains the basic requirements regarding when and
how to measure an impairment loss.  SFAS No. 144 applies to long-lived assets to
be held or disposed of but specifically excludes certain classes of assets such
as goodwill and intangible not being amortized.


ITEM  6.  DIRECTORS,  SENIOR  MANAGEMENT  AND  EMPLOYEES'  COMPENSATION.


                      A. Directors and Senior Management.
                         -------------------------------


     The  Senior  Management  of  the  Company  is  as  follows, all of whom are
Directors  of  the  Company  except  as  noted:

Name                       Age             Position with Company
----                       ---             ---------------------
Stephen Palframan          51              Director and Non-Executive
                                                  Chairman
Donald A. Babbs            51              Director and Chief Executive Officer
Gerard O'Driscoll          55              Director and Research and
                                                  Development Director
Peter Wharton*             40              Director and Finance Director
Elliot I. Miller           69              Director and Non-Executive Deputy
                                                  Chairman
Richard Youhill            39              Director, Sales Director
Ivy Fredericks             44              Non-Executive Director

*Mr.  Wharton  ceased  to be a Director of the Company with effect from February
22,  2003.

     STEPHEN  PALFRAMAN, the Non-Executive Chairman of the Company since January
2000,  was formerly Chief Executive of Bristow Helicopter Group Ltd, the world's
largest  operator  of  twin-engined  helicopters.  He  joined Bristow in 1988 as
Finance  Director  and  was  instrumental in the  200m management buyout in 1991
from  its  parent  company. As Chief Executive in 1996 he oversaw the subsequent
sale  of Bristow to an American group. Prior to Bristow he held senior financial
positions  with  Northern  Engineering  Industries  plc (now part of Rolls-Royce
plc),  Nabisco  Brands  Inc. and Ingersoll-Rand Inc. He qualified as a Chartered
Management  Accountant  in  1979.


                                       34
<PAGE>
     DONALD  A.  BABBS,  the  Chief Executive Officer of the Company since 1988,
started  his career as a sales engineer for the British Aerospace Concorde sales
team.  He  joined  British  Olivetti  in  1980  where he became Software Manager
(CAD/CAM)  and ultimately Marketing Manager (CAD/CAM). He took on responsibility
for  corporate  marketing  of  engineering workstations and CAD/CAM software for
Olivetti  in  Italy  before  establishing  the  Company  in  1988.

     GERARD  O'DRISCOLL,  the  Research  and Development Director of the Company
since  1988,  started his career on a short service commission in the Royal Navy
before  joining  British  Olivetti  as  a  sales  engineer (1976-1981) and later
Marketing Manager for CAM systems. After a sojourn at Racal Redac Ltd., he moved
into  software  consultancy, and was among the first to develop a 2D CAD system.
Ultimately  he  became  Senior  Consultant  for CAD systems to Olivetti in Italy
before  joining  the  Company  at  its  inception  in  1998.

     ELLIOT  I.  MILLER,  the Non-Executive Deputy Chairman of the Company since
1997,  is  an  American lawyer who has practiced law in New York and Connecticut
since  1958. He has broad legal experience in corporate, partnership, securities
and tax matters, including equity and debt financing transactions in the USA and
internationally. He has served on the boards of Belgian, Indian and French joint
ventures  as  well  as  American  Companies.  Mr.  Miller's responsibilities are
primarily  business  and  legal.

     RICHARD  YOUHILL,  Sales  Director  of the Company since March 5, 2001. Mr.
Youhill joined the Company as UK Sales Manager in 1993 and has held the position
of  Group  Sales  Manager for the last 3 years. Prior to joining the Company, he
was  Sales  Manager  for a UK based supplier of CAD/CAM software and has over 14
years  of  UK  and  international experience in the sales & marketing of CAD/CAM
software.  Mr.  Youhill's  responsibilities  are  primarily  the  management and
development  of  the  direct sales personnel and indirect dealer sales channels.

     IVY  LINDSTROM FREDERICKS, was appointed on May 16, 2002 as a non-executive
director  of  the  Company.  She  is  Managing  Director,  Corporate  Finance at
Westminster  Securities Corp. in New York. She has nearly 20 years experience in
the  investment  banking  industry with several firms including Ambient Capital,
KPMG,  Kidder  Peabody  and  Drexel  Burnham  Lambert.

     There  are  no  family relationships between any of the Directors or senior
management  of  the  Company.

     Stephen  Palframan  acts  as a non-executive director for Janvier Limited a
microwave  technology and computer software company and a non-executive director
of  Goodall  Bates and Todd a fuel distributor and lubricant blending company in
the  U.K.

     Elliot Miller acts as a non-executive director of Raven Technologies Inc, a
software  development  company  operating  in  the  United States which does not
compete  with the Company.  Mr. Miller is of counsel to the law firm of Kleban &
Samor,  P.C.  which  is  the  Company's legal counsel in the United States.  Mr.
Miller  is not a shareholder of such law firm and receives no compensation based
upon  any  fees  paid  to  such  law  firm  by  the  Company.

     Ivy  Fredericks  is  an officer in the firm of Westminster Securities Corp.
which  has received compensation from the Company for securing financing for the
Company  and  may


                                       35
<PAGE>
be entitled to additional compensation as described in Section 10C herein

     None  of  the  other  Directors  of  the Company currently sit on corporate
boards  of  other  companies.

There  are no arrangements or understandings with major shareholders, customers,
suppliers or others, pursuant to which any person referred to above was selected
as  a  Director  or  member  of  senior  management.



                                B. Compensation.
                                   ------------

     Directors  Compensation.  The  aggregate  direct  remuneration  paid to all
persons, as a group, who served in the capacity of Director or executive officer
during  the  year that ended December 31, 2002 was approximately $785,000 (2001:
$757,000).  This amount includes amounts set aside or accrued to provide pension
retirement  or  similar  benefits  but  does not include amounts expended by the
Company  or made available to such persons as expenses, such as business travel,
professional  and  business association dues, that are customarily reimbursed to
officers  other  than  independent  Directors.  English Law does not require the
disclosure  of  management  compensation  on  an  individual  basis.

     Options to Purchase Securities of the Company. Peter Wharton was granted an
option in 1999, exercisable from October 21, 2001 until October 21, 2008.  As of
December  31,  2002 the option consisted of rights to purchase 142,857 shares of
ordinary  stock  at 21 pence per share. None of these options were exercised and
with  Mr.  Wharton's  resignation from the Company all of these options have now
lapsed.

     Richard  Youhill  was  granted an option in 1998, exercisable from April 2,
2001  until April 2, 2008.  As of May 20, 2003 the option consisted of rights to
purchase  17,000  shares  of  ordinary  stock  at  50  pence  per  share.

     Pensions.  Contributions  were  made  to a group personal pension plan on a
defined  contribution  basis  on  behalf  of three directors.  The total of such
contributions  during  the  year  ended  December  31,  2002  was $25,000 (2001:
$20,000).

                               C. Board Practices
                                  ---------------

     Pursuant to Article 69 of the Company's Articles of Association, each board
member  must  be elected at the annual general meeting of shareholders after his
initial  appointment.  Each  year certain of the Directors must offer themselves
for  re-election.  Current  expiration  dates  for  each  Director's term are as
follows:

          Donald A. Babbs           2003
          Elliot I. Miller          2005
          Stephen Palframan         2004
          Gerard O' Driscoll        2006
          Richard Youhill           2007
          Ivy Fredericks            2005

     Service Contracts with the Directors. -  The  following is a listing of the
current


                                       36
<PAGE>
service contracts in effect between the Company and its Directors:

     DONALD  A.  BABBS.  The  Company entered into an Executive Service Contract
with  Donald  A.  Babbs  on  March  20,  1998.*


     GERARD  O'DRISCOLL.  The Company entered into an Executive Service Contract
with  Gerard  O'Driscoll  on  March  20,  1998.*

     ELLIOT  I.  MILLER. The Company entered into a Non-Executive Service Letter
Agreement  (the  "Letter Agreement"), and a subsequent letter agreement amending
the  Letter  Agreement, with Elliot I. Miller dated March 20, 1998 and April 20,
1998,  respectively.

     STEPHEN  PALFRAMAN. The Company entered into a Non-Executive Service Letter
Agreement  with  Stephen  Palframan  dated  January  5,  2000.

     RICHARD  YOUHILL.  The  Company entered into an Executive Service Agreement
dated  March  1,  2001  with  Richard  Youhill.*

     IVY  FREDERICKS.  The  Company  entered into a Non-Executive Service Letter
Agreement  with  Ivy  Fredericks  dated  May  16,  2002

     *  In  the  event  that  the  Director terminates his contract, the Company
breaches  the  contract,  there  is  a  takeover  or  a change of control of the
Company,  or  the  Company  fails  at a general meeting to re-elect the Director
following  the  Director's  retirement  by  rotation,  a  termination payment is
required  under  the  agreement  to be paid to the Director that shall equal the
aggregate  of:  (i)  the  gross  salary  payable  to the Director for the period
commencing  on  the  termination date and ending on the earliest of twelve  (12)
months  from  the  date  of  termination  notice  or  the Director's sixty-fifth
birthday ("Relevant period");and, (ii) a sum equivalent to the notional value to
the  Director  of all benefits in-kind that would otherwise have been receivable
by  the Director from the Company for the Relevant Period based on their taxable
value  for  the  tax  year  immediately  preceding  the  tax  year  in which the
termination  occurs  and assuming that the value of such benefits in kind to the
Director  accrues  on  a  regular  monthly  basis.

     Audit Committee.  The Company presently has an Audit Committee comprised of
the  following  independent  Directors:

               Elliot  I.  Miller
               Stephen  Palframan
               Ivy  Fredericks

     The Audit Committee meets not less than twice a year and is responsible for
among  other  things:

     1.   Evaluating the performance of independent auditors and recommending to
          the Board of Directors the appointment of the independent auditors and
          where appropriate recommending that the Board of Directors replace the
          independent  auditors.
     2.   Discussing  with  the  independent  auditors the scope of their audit.
     3.   Discussing  with the independent auditors and management the Company's


                                       37
<PAGE>
          accounting  principles,  policies  and practices and its reporting and
          practices.
     4.   Reviewing  and  discussing  with  the independent auditors and Company
          management  the  Company's audited annual financial statements and the
          results  of  the  annual  audit.
     5.   Considering  the independent auditors' judgments about the quality and
          appropriateness  of  the Company's accounting principles as applied in
          its  financial  reporting.
     6.   Discussing  with  the  independent  auditors  and  the Company's Chief
          Financial  Officer  the  adequacy  of  the  Company's  or  any  of its
          subsidiaries  accounting,  financial  and  operational  controls.
     7.   Considering  whether  the independent auditors' provision of non-audit
          services  is  compatible  with  maintaining  the independent auditors'
          independence.
     8.   As  a  whole, or through the Audit Committee Chair, reviewing with the
          independent  auditors the Company's interim financial results included
          in  Form  6-K  prior  to  filing  with  the  Securities  and  Exchange
          Commission  ("SEC").
     9.   Submitting  appropriate reports required by the SEC to the shareowners
          in  the  Company's  annual  proxy  statements  and provide appropriate
          certification  to  The  American  Stock  Exchange  as  required.
     10.  Ensure  that  the  independent auditors submit periodic reports to the
          Audit  Committee delineating all relationships between the independent
          auditors and the Company, consistent with Independence Standards Board
          Standard  No.  1;  discuss such reports with the independent auditors,
          and  recommend  that the Board of Directors take appropriate action to
          satisfy  itself  of  the  independence  of  the  independent auditors.
     11.  Discuss  with  the  independent  auditors  the  matters required to be
          discussed  by  Statement  on  Auditing  Standards  No.  61.


     Remuneration  Committee.  A Remuneration Committee has been established and
is comprised of the non-executive Chairman and two Non-executive Directors.  The
current  members of the Remuneration Committee are Stephen Palframan (Chairman),
Elliot I. Miller and Ivy Fredericks.  This committee will review the performance
of the Executive Directors and set the scale and structure of their remuneration
and the basis of their service contracts with due regard to the interests of the
shareholders.

                                  D. Employees
                                     ---------

The average number of employees of the Company, including Executive Directors,
for the following years ending on December 31, were:

<TABLE>
<CAPTION>
By Activity                                                 2002  2001  2000
-----------                                                 ----  ----  ----
<S>                                                         <C>   <C>   <C>
Development                                                   25    21    20
Sales, marketing and technical support                        53    46    40
Administration                                                15    13    13
                                                          ------------------

                                                              93    80    73
                                                          ==================
By Location
-----------


                                       38
<PAGE>
European Union                                                82    75    66
Rest of World                                                 11     5     7
                                                          ------------------

                                                              93    80    73
                                                          ==================
</TABLE>


                             E.     Share Ownership
                                    ---------------

     Directors  and  their  interests.  Details  of  beneficial  holdings of the
members  of  the  Company's  Board of Directors at May 20, 2003 are given below.

<TABLE>
<CAPTION>
Name of Director                            Number of     Percent
----------------                            ---------     -------
                                            Shares Owned  of Shares
                                            ------------  ---------
<S>                                         <C>           <C>
Donald A. Babbs                                4,903,380   13.2%
Gerard George O'Driscoll                         558,000    1.5%
*Elliot I. Miller                                 20,000    0.1%
*Stephen Palframan                                     0      0%

Richard Youhill                                        0      0%
Ivy Fredericks                                         0      0%


Total  Director Shares                         5,481,380      14.8%
<FN>

*Non  Executive  Directors

     Mr.  Babbs'  interests  include  58,000  shares  held by his wife Nicoletta
     Babbs.
     Mr Millers' interests are held as American Depositary Receipts
</TABLE>

     Directors' Interests in Share Options.  Peter Wharton was granted an option
in  1999  exercisable  from  October  21,  2001  until  October 21, 2008.  As of
December  31,  2002 the option consisted of rights to purchase 142,857 shares of
ordinary  stock  at 21 pence per share. None of these options were exercised and
with  Mr  Wharton's  resignation  these  options  have  now  lapsed.
     Richard  Youhill  was  granted  an option in 1998 exercisable from April 2,
2001  until April 2, 2008.  As of May 20, 2003 the option consisted of rights to
purchase  17,000  shares  of  ordinary  stock  at  50  pence  per  share.

     No  other Director of the Company has any options to purchase securities of
the  Company.

     Employee  Option  Plans.

                                  Introduction
                                  ------------

     All  employees may participate in the Company's Share Option Schemes at the
discretion of the Company's Remuneration Committee (the Share Option Schemes are
also referred to herein as the "Share Option Plans"). The Company's Remuneration
Committee administers the Share Option Plans in accordance with the Share Option
Scheme Rules. The Share Option Plans are subject to various limits on the number
of  shares  that  may  be  issued  in


                                       39
<PAGE>
respect  of  options  granted  under the Share Option Plans. These limits comply
with  the  guidelines  of  the Association of British Insurers.  The Company has
three  forms  of option plans available to its employees, they are: the Approved
Scheme,  the  Unapproved  Scheme  and  the  Shadow  Scheme.  The  rights  and
restrictions  of  these  Share  Option  Plans  are  discussed  hereinbelow.

     Operation  of  the  Share  Option  Plans
     ----------------------------------------

     Options  which  may  not  be  transferred  or  encumbered in any way may be
granted within 42 days of Inland Revenue approval of the Plan in the case of the
Approved  Plan (within 42 days from shareholder approval of the Unapproved Plan)
and,  thereafter,  normally  within  42  days,  after  the  announcement  of the
Company's  interim  or  final  results.  No  payment is made for the grant of an
option.

     The  price at which the shares may be subscribed for by participants cannot
be  less  than  the  higher  of:

     (A)  the  nominal  value  of  a  share;  or
     (B)  in  relation  to the Approved Plan, the market value determined by the
          Board.

     Options may normally only be exercised (in full or in part) after the third
anniversary of the date of grant. Under the Approved Plan, options not exercised
within  ten years from the date of grant shall lapse.  Options granted under the
Unapproved  Plan  will  lapse  if  they  are  not exercised prior to the seventh
anniversary  of  the  date  of  grant.

     The  Company will apply for shares allotted under the Share Option Plans to
be  listed  or  admitted  on  any  stock  exchange  or other market on which its
ordinary  shares  are  then  listed  or  traded.

     Performance  Conditions
     -----------------------

     Options  to  the sustained underlying financial performance of the Company.
Any such targets will be notified to the participant and disclosed in the Annual
Report  and  Accounts.   However,  the  Committee may, at its discretion, select
different  performance  targets  in  the  future,  in  which case details of the
revised  performance  targets  will  also  be disclosed in the Annual Report and
Accounts  for  that  year.

     Early  Exercise.
     ----------------

     If  a  participant  dies,  his  personal  representatives  may exercise his
options  within  2  months  of his death, notwithstanding that they may not have
become  exercisable  in  the  normal  manner.

     Early  exercise is also permitted if a participant ceases to be an employee
or  director  of  the  Company  in certain specified circumstances, for example,
redundancy  or retirement.  If a participant ceases to be a director or employee
other  than  in the specified circumstances, he may only exercise his options at
the  discretion  of  the  Board  of  Directors.

     Early  exercise  of  options  would  also  be  permitted  in  certain other
situations  including  a  change  in  control  of  the  Company  or  a voluntary
winding-up  of  the  Company.  In the event of a change in control, participants
may  alternatively  release  their  options  in  substitution  for


                                       40
<PAGE>
the  grant  of  options  over  shares  in  the acquiring company, subject to the
consent  of  the  acquiring  company.

     Variation  of  Capital.
     -----------------------

     In  the  event  of  any  variation  in  the  share  capital of the Company,
including  a capitalization of rights issue, the number of shares subject to any
option  and the exercise price relating to it may be adjusted subject to (except
in  the  case of a capitalization issue) the auditors confirming in writing that
such  adjustment  is,  in their opinion, fair and reasonable and, in the case of
the  Approved  Plan,  subject  also  to  Inland  Revenue  approval.

     Alterations  to  the  Share  Option  Plans.
     -------------------------------------------

Subject  to  certain  specified exceptions, the prior approval of the Company in
the annual general stockholders meeting must be obtained for any  alterations to
the  Share  Option  Plans,  other  than  any  minor  alterations  to benefit the
administration  of  the  Share Option Plans, if such alterations would be to the
advantage  of  participants.  The exceptions relate to taking account of changes
in  legislation  or  obtaining or maintaining favorable tax, exchange control or
regulatory  treatment.

     No  alterations  to  the  Approved Plan shall take effect without the prior
written  consent  of  Inland  Revenue.

     The  Shadow  Plan.
     ------------------

     Qualification under the Shadow Plan is achieved in a similar fashion to the
Share  Option  Plans.  Therefore,  except  as  described  below,  the  summary
applicable  to the Share Option Plans is also generally applicable to the Shadow
Plan.  The  key  distinction between the two types of Plan is that a participant
under  the  Shadow Plan is not granted an interest in the Company's shares but a
right  to  receive  what  is  referred  to  in  the  Shadow  Plan  as  the "Cash
Equivalent".  The Cash Equivalent is the amount by which the market value of the
number  of  shares in respect of which the shadow option has been granted at the
date  of exercise exceeds the market value of those shares at the date of grant.
Shadow  options may be exercised in similar circumstances and subject to similar
conditions  applicable  to the exercise of options under the Share Option Plans.
Like  the  Approved  Plan,  the life of a shadow option is limited to ten years,
rather  than  the seven years applicable to options granted under the Unapproved
Plan.

     The  main  purpose  of  the Shadow Plan is to enable the Company to provide
equity-related  incentives to employees whose participation in the Approved Plan
or  the  Unapproved  Plan  may,  at  the relevant time, not be practicable.  For
example,  local  tax or securities laws in the jurisdiction in which an employee
is  working  may  prevent  or make difficult his or her participation in a share
option  plan.  In such circumstances, the Company considers it important that it
can,  nonetheless,  offer  incentives  which are comparable to those received by
other  employees  of  the  Company.

     The  Company  regularly  reviews  its  policy  regarding  share options and
considers  making  further  grants  of  options in order to motivate, retain and
recruit  employees  and  executives  required  for  the  future  success  of the
business.  At  the  Company's  Annual  General  Meeting  held  on June 18, 2002,
shareholders  authorized  the  directors  to  adopt  in addition to the existing
schemes  described  above  ("the  Existing  Schemes"),  such  further  employee


                                       41
<PAGE>
incentive  schemes  as  they  deem  fit provided the aggregate nominal amount of
shares  which may be placed under option to be issued under the Existing Schemes
and  any  such further employee incentive schemes involving the issue of shares,
shall  not  exceed 10% of the ordinary share capital of the Company from time to
time  in  issue.

ITEM  7.  MAJOR  SHAREHOLDERS  AND  RELATED  PARTY  TRANSACTIONS.

                              A. Major Shareholders
                                 ------------------

Beneficial  Shareholders/  Change  in  Share  Capital.  The table below provides
details of major shareholders owning 3% or more of the outstanding shares of the
Company  as  of  17th  April  2003,  together with the changes in percentages of
ownership  as  a result of the placing concluded in May 2002. The Company has no
knowledge  of  any  other  individual  interest  or  group  of interests held by
persons  acting  together  which  exceeds  3%  of the outstanding shares  of the
Company.

<TABLE>
<CAPTION>
                                NO. OF SHARES                            NO. OF SHARES
                                    PRE                  NO. OF SHARES      POST
                                  PLACING     % OF CAP    SUBSCRIBED       PLACING     % OF CAP
<S>                            <C>            <C>        <C>            <C>            <C>
D.A Babbs                          4,903,380      23.0%              -      4,903,380      13.2%
E Galardo                          3,683,974      17.2%              -      3,683,974       9.9%

MANAGED BY FRIENDS IVORY SIME PLC. HELD IN THE NAME OF CHASE NOMINEES LTD
Baronsmead VCT Plc                 1,600,000       7.5%              -      1,600,000       4.3%
Baronsmead VCT 2 Plc                       0         -       2,325,582      2,325,582       6.2%
Baronsmead VCT 3 Plc                       0         -       1,395,349      1,395,349       3.7%
                               -----------------------------------------------------------------
                                   1,600,000       7.5%      3,720,931      5,320,931      14.2%
                               -----------------------------------------------------------------

MANAGED BY RATHBONES INVESTMENT MANAGEMENT. HELD IN THE NAME OF RATHBONE NOMINEES LTD
Pennine AIM VCT plc                  600,000       2.8%        348,840        948,840       2.5%
Pennine AIM VCT II plc               600,000       2.8%        348,840        948,840       2.5%
Pennine Downing AIM VCT plc                -         -         697,680        697,680       1.9%
Pennine Downing AIM VCT 2 plc              -         -       1,162,780      1,162,780       3.1%
                               -----------------------------------------------------------------
                                   1,200,000       5.6%      2,558,140      3,758,140      10.0%
                               -----------------------------------------------------------------

HELD IN THE NAME OF BWD RENSBURG NOMINEES
Capital for Companies VCT plc              -         -       1,000,000      1,000,000       2.7%
BWD AIM VCT plc                            -         -       1,790,698      1,790,698       4.8%
                               -----------------------------------------------------------------
                                           -         -       2,790,698      2,790,698       7.5%
                               -----------------------------------------------------------------

Artemis AIM VCT plc                        -         -       2,325,582      2,325,582       6.2%
Noble Enterprise VCT                 400,000       1.9%        930,233      1,330,233       3.6%
Guinness Flight VCT plc              600,000       2.8%      1,162,791      1,762,791       4.7%
Proven VCT plc                             -         -       1,162,791      1,162,791       3.1%
M Cignetti                         1,259,866       5.9%              -      1,259,866       3.4%
S.Galardo                          1,189,916       5.6%              -      1,189,916       3.2%
NC Graphics                                                                 1,250,000       3.3%
(Cambridge) Ltd **
<FN>

* Baronsmead  VCT  Plc subscribed for 1,000,000 ordinary shares of 0.5 pence in September 2001,
which  is  included  in  the  table  above.

* NC  Graphics  (Cambridge)  Ltd  acquired its shares as partial consideration for the purchase


                                       42
<PAGE>
of the  Machining  Strategist  business
</TABLE>

     None of the Company's major shareholders have different voting rights

     At present, there are no ordinary shares of the Company known to be held in
the  United  States, but there are ADRs outstanding representing 23,000 ordinary
shares.

     The  Company  is  not  directly  or  indirectly  controlled  by  another
corporation,  government  or  by  any  other  legal  or  natural  person.

     To  the extent known to the Company, there are no arrangements in existence
that  may  at  a  subsequent  date result in a change of control of the Company.

     There  are no experts or counsel to the Company who own a material interest
in  the  Company.


                         B. Related Party Transactions.
                            --------------------------

          Elliot  I. Miller is of counsel to the firm Kleban & Samor, P.C., U.S.
legal  counsel to the Company. Elliot Miller acts as a non-executive director of
Raven  Technologies Inc., a software development company operating in the United
States  which does not compete with the Company. Mr. Miller is of counsel to the
law  firm  of  Kleban  & Samor, P.C. which is the Company's legal counsel in the
United  States. Mr. Miller is not a shareholder of such law firm and receives no
compensation  based upon any fees paid to such law firm by the Company. In 2002,
the  Company  paid  fees  and  disbursements  to  such law firm of $ 111,000 for
services  rendered.


     Ivy  Lindstrom  Fredericks  is  an  officer of Westminster Securities Corp.
which  has  been  engaged  by  the Company to conduct a private placement of the
Company's  shares  as  described  in  Item  10c  herein.

ITEM  8.  FINANCIAL  INFORMATION.

     The  Company's  financial  condition  is  presented  in  the  consolidated
financial  statements  and  the  related  notes  included  in  this  filing  and
incorporated  by  reference  herein.

ITEM  9.  LISTING  INFORMATION

                             A.     Listing Details.
                                    ---------------
     Price  History  of  Stock.  The  following  table reflects the high and low
mid-market  price per share of the Company's ordinary shares, as reported on AIM
since  April  2,  1998.

<TABLE>
<CAPTION>
                                      $ per share
                                      High    Low
<S>                                    <C>   <C>
1999                                   0.67  0.19
2000                                   0.71  0.33

2001
First quarter                          0.50  0.38
Second quarter                         0.38  0.36


                                       43
<PAGE>
Third quarter                          0.42  0.34
Fourth quarter                         0.39  0.33

2002
First quarter                          0.35  0.33
Second quarter                         0.40  0.33
Third quarter                          0.32  0.28
Fourth quarter                         0.28  0.24

During last six months
December  2002                         0.25  0.25
January   2003                         0.26  0.26
February  2003                         0.26  0.26
March     2003                         0.24  0.24
April     2003                         0.22  0.22
May       2003                         0.22  0.22
</TABLE>

<TABLE>
<CAPTION>
Average daily share volumes:

<S>                                        <C>
April 3, 1998 to December 31, 1998         24,000
Year ending December 31, 1999              29,000
Year ending December 31, 2000              16,000
Year ending December 31, 2001               3,000
Year ending December 31, 2002              12,500
Five months to May 31, 2003                 6,400
</TABLE>



                               B. Not Applicable.
                                  --------------

                          C. Markets Currently Listed.
                             ------------------------

     The Company's Ordinary Shares, 0.5 pence par value, are presently traded on
the Alternative Investment Market of the London Stock Exchange.

     The Company's American Depositary Shares, each representing twenty (20)
Ordinary Shares, 0.5 pence par value, are presently traded on the American Stock
Exchange.



                                D. Not Applicable
                                   --------------

                                E. Not Applicable
                                   --------------

                                F. Not Applicable
                                   --------------


ITEM  10.  ADDITIONAL  INFORMATION.


                                       44
<PAGE>
                                A. Share Capital
                                   -------------

                                Not Applicable
                                --------------




                          B. Articles of Association.
                             -----------------------

     The information called for by this item has been reported previously in the
Company's Registration Statement on Form 20-F, effective May 22, 2001 and is
hereby incorporated by reference in this Report.




                             C. Material Contracts.
                                ------------------


     Share  Sale  Agreement with Vero Tooling Solutions, Inc. On May 9, 2002 the
Company's  US  subsidiary Vero International Inc. entered into an agreement with
the  two  principal  owners  ("the Sellers") of Vero Tooling Solutions, Inc. the
Company's distributor in Canada.  Under this Agreement the Company acquired 100%
ownership  of Vero Tooling Solutions, Inc. for a consideration to the Sellers at
Closing  of  $1,  forgiveness  of indebtedness of $259,000 and the assumption of
$355,000  in  indebtedness.  Each  of  the  Sellers have entered into employment
agreements  with  the  Vero International Inc for an indefinite term.  Under the
terms  of  the employment agreements, the Sellers are entitled to receive annual
aggregate  remuneration  at  the  rate  of  $188,000  in basic salary and  bonus
payments  based  upon  sales  made  by  such  employee.

     Sale  and Purchase Agreement with NC Graphics (Cambridge) Ltd. On September
28,  2002  the Company purchased the Machining Strategist (3D CAM) business from
NC  Graphics (Cambridge) Ltd, a UK company and Arthur Flutter (Managing Director
of  NC  Graphics  (Cambridge)  Ltd.  The  purchased  business included the joint
ownership of the Machining Strategist intellectual property, exclusive ownership
of  the  Machining  Strategist  name,  goodwill  and  the  transfer of Machining
Strategist  end  users,  foreign distributors and sales, support and development
staff.  The consideration for the Machining Strategist business was $1.5 million
in  cash  and  shares  valued at  $374,000. Under the terms of the agreement the
Sellers are not allowed to dispose of the share based consideration for a period
of  eighteen  months  from  the  date  of  the  agreement.  The  $1.87  million
consideration  was  allocated  as  follows:  distribution  rights $0.62 million,
intellectual  property  $1.25 million.  The former Sales Director and the former
Development  Director of NC Graphics (Cambridge ) Ltd simultaneously transferred
their  employment  pursuant  to  specific  employment  agreementswith  Vero
International  Software (UK) Ltd. Other staff joined Vero International Software
(UK)  Ltd  in accordance with the terms and conditions of the UK TUPE employment
rules.


     Transfer of Business Agreement with Ing. Boleslav Ziman. On August 29, 2002
Vero International Software Srl, the Italian subsidiary of the Company, sold its
shareholding  in VISI-Sro the wholly owned Czech Republic subsidiary to Boleslav
Ziman  for  a  consideration


                                       45
<PAGE>
of  $33,000.  Boleslav  Ziman  had been the manager of this subsidiary since its
formation in 1990. The consideration is to be paid over a projected period of 30
months  in  the  form  of increased software license charges for the sale of the
Company's  software  products.  The  Company  simultaneously signed an exclusive
distribution  agreement  with  VISI  Sro  for  the  sale of VISI-Series software
products  in  the  territories  of  the  Czech  republic  and  Slovakia.

     Termination  Agreement  with  SIID  Ltd  of  Japan.  SIID had purchased the
CAD/CAM  business  of  a  company  known  as  SII in April of 2002 including the
distribution  agreements  pertaining to the distribution of VISI-Series products
in  Japan.  On  6th  November  Vero  International  Software  UK Ltd effected an
agreement  with  SIID  Ltd  of  Japan  terminating  the  long standing exclusive
distribution  arrangements for VISI-Series products in Japan and the sale by the
Company  of  SIID  software products worldwide. Under the terms of the agreement
SIID  ceased  the  sale  of  VISI-Series  in  Japan  on April 1st 2003 and it is
anticipated  that the Company will cease the sale of SIID products from November
2003  onwards.

     The  agreement  described  the  handover arrangements, transfer of Japanese
language  rights and dealer agreements. No consideration was envisaged under the
agreement.

     The Company has since set up a wholly owned subsidiary in Tokyo to continue
the  distribution  of  VISI-Series  products  in  this  important  market.

     Real  Property  Leases.  See  Item  4.D  for a summary of the real property
leases  currently  held  by  the  Company  and  its  subsidiaries.

     License  Agreements.  At present the Company licenses a number of component
software  technologies  from  third  parties  suppliers  that  must  remain
confidential.  Component  libraries  are  licensed  under  these  agreements and
integrated  with  the Company's software. In the future, the Company will likely
continue  to  require  further  license  rights to patents or other intellectual
property  held  by  others  on  an  ongoing  basis.

     Private  Placement.   Pursuant  to  an engagement letter dated 15 November,
2001  (the  "Engagement Letter" the Company engaged Westminster Securities Corp.
("Westminster")  to  act  as  placement agent in connection with the sale of its
ordinary shares in a proposed private placement (the "Private Placement").   See
Exhibit  12(a)(i).  Westminster  was  not  successful  in completing the Private
Placement,  however  Westminster  was  successful in arranging the investment by
Hemisphere  Capital Corp. in the $1.0M Convertible Debenture described herein on
January  10,  2003.

     The  Company  has  compensated  Westminster to date $120,000 and reimbursed
Westminster  for  legal  fees  and  related  expenses  totaling  $16,001.

     Finally,  the  Company  is obligated to issue and sell to Westminster, five
(5)  year  warrants to purchase 18,334 ADRs  an exercise price of $5.4515per ADR
at  a  price  of  $.0001  per  warrant  (the  "Warrants").

     On  January  10,  2003,  the  Company  issued  a  $1.0  million convertible
debenture  ("Debenture"  to  Hemisphere  Capital, LLC, a private equity investor
based  in  London,  with  an  office  in  Boston,  Massachusetts that is engaged
primarily  in  investing in information technology businesses in Western Europe.
The  Debenture  bears  interest  at  9%  per  annum,  is  convertible in certain
circumstances  into  American  Depositary  Receipts ("ADRs") of the Company at a
price  of  $4.5429  per  ADR,  with each ADR representing 20 ordinary shares and


                                       46
<PAGE>
will  mature no later than January 10, 2006.  The Debenture would be convertible
into  4,402,460  ordinary  shares  subject  to  anti-dilution  and other similar
adjustments. A copy of the Debenture is included herein as Exhibit 12(a)(iii) to
this  Report.

     Under the terms of the Debenture, Hemisphere has the right to subscribe for
between  $2.M  and  $4.0M  of  preference shares of the Company (the "Preference
Shares") for a period of 120 days after notice from the Company offering to sell
the Preference Shares to Hemisphere, following approval of the Preference Shares
by  the Company's Board of Directors and shareholders.  The Debenture is due and
payable,  if not sooner converted, upon various contingencies, including failure
of  the  Company's shareholders at an extraordinary general meeting held for the
purpose  to  authorize  the  Preference  Shares on or before July 31, 2003.  The
Company  has  the  option  to  require conversion of the Debenture into ordinary
shares  as  of  the  final  maturity  date  of  the  Debenture.

     The  Company  intends to seek the authorization of its shareholders for the
issuance  of  the  Preference  Shares  at  an  extraordinary  general meeting of
shareholders  to  be  held  in  July,  2003.

     A  more  complete  description  of  the  terms  of  the  Debenture  and the
Preference  Shares  is  contained  in  the  Loan  and Investment Agreement dated
January  10,  2003 between the Company and Hemisphere which is Exhibit 12(a)(ii)
to  this  Report.




                              D.    Exchange Controls.
                              -----------------------

                              None

                              E. Taxation.
                             ------------


     Taxation  in  the  United  Kingdom.
     ----------------------------------

     The  following  paragraphs  provide  a  general  guide,  based  on  current
legislation  and  practice, to the UK tax position of UK residents holding their
shares  (otherwise  than  under  a  Personal  Equity  Plan or Individual Savings
Account) as investments and not as trading stock.  Any person who is in doubt as
to his taxation position or requires information which is more detailed than the
general  outline  below  should  consult  his  professional  advisors.


     Dividends.  Under  current  UK taxation legislation no tax will be withheld
from  dividend  payments  by  the  Company.

     An  individual shareholder who is resident (for tax purposes) in the UK and
who receives a dividend from the Company will currently be entitled to receive a
tax credit equal to 10 percent of the combined total of the dividend and the tax
credit.  The  UK  income  tax charge in respect of dividends for lower and basic
rate  taxpayers  is  regarded  as  met  in  full  by  the  tax  credit  and such
shareholders  will  have no further liability to tax on a dividend received from
the  Company.  Higher  rate  taxpayers  will  be liable to tax on the sum of the
dividend  plus  the associated tax credit at the Schedule F rate (currently 32.5
percent)  against  which  liability  they  can offset the associated tax credit.
Subject  to  certain  exceptions  for


                                       47
<PAGE>
certain  insurance companies and companies which hold shares as trading stock, a
UK  resident corporate shareholder which receives a dividend paid by the Company
will  not  be taxable on the dividend.  The dividend received (together with the
associated  credit)  will be treated as franked investment income of the company
receiving  the  dividend.  After  April  6, 1999 the repayment of tax credits is
limited  to  certain  specialist  categories  which  are  entitled  to  special
exemptions  and  reliefs.

     Capital Gains. A disposal of shares by a shareholder resident or ordinarily
resident  for  tax  purposes  in the UK or a shareholder who carries on a trade,
profession  or  vocation in the UK through a branch or agency and has used, held
or acquired the shares for the purposes of such trade, profession or vocation or
such  branch  or  agency  may, depending on the shareholder's circumstances, and
subject  to  any  available  exemptions,  allowances  or reliefs, give rise to a
chargeable  gain  or  an  allowable  loss  for  the  purposes  of UK taxation of
chargeable  gains.  Special  rules  apply  to disposals by individuals at a time
when  they  are  temporarily  not  resident  or  ordinarily  resident in the UK.

     United  States  Federal  Income  Taxation
     -----------------------------------------

     The  following  discussion is a summary of the material U.S. federal income
tax  and  UK  tax consequences of the purchase, ownership and disposition of the
Company's  shares  by  a  U.S.  Holder.  The discussion is based on the Internal
Revenue  Code  of  1986,  as  amended,  U.S.  Treasury  Regulations  promulgated
thereunder  and  judicial  and administrative interpretations thereof, all as in
effect  on  the  date  hereof  and  all of which are subject to change, possibly
retroactively.  This  discussion  is  also  based  on  the double tax convention
between  the  UK and U.S. (the "Convention") which came into force in March 2003
with  effect  from  1  May  2003  in  respect  of  taxes  withheld  at  source.
Notwithstanding  the  entry into force of this Convention, a US Holder may elect
for the old convention to apply for a period of 12 months from the date on which
the  relevant provisions of the new Convention came into effect.  For example, a
US holder may elect for the old convention to apply to and distributions made by
the  Company  on  or  before 30 April 2003.  US Holders should consult their tax
advisers  in  relation  to  whether  this treatment would be beneficial to their
personal  circumstances.

     The  discussion is not a full discussion of all tax considerations that may
be  relevant  to  a  U.S.  Holder's decision to purchase shares.  The discussion
addresses only U.S. Holders that will hold shares as capital assets and that use
the  U.S.  dollar as their functional currency.  The discussion does not address
the  tax treatment of investors subject to special rules under the Convention or
the  US  Internal  Revenue  Code  1986  such as banks, broker-dealers, insurance
companies,  regulated  investment  companies, tax-exempt entities, dual-resident
taxpayers,  non-U.S.  persons,  investors  that  own  directly, indirectly or by
attribution  10  per  cent  or more of the Company's voting shares and investors
holding  shares as part of a hedging, straddle, conversion, constructive sale or
similar  transaction.

     Prospective investors are urged to consult their tax advisors regarding the
U.S. federal, state, local and foreign tax consequences to them of an investment
in  the  Company's  shares.

     As used in this discussion, the term "U.S. Holder" means a beneficial owner
of shares that does not maintain a "permanent establishment" or "fixed base"  in
the  UK,  as  such terms are defined in the UK-US income tax treaty, and that is
either  (i)  an  individual  citizen  or  resident  of the United States, (ii) a
corporation  organized  in  or  under  the  laws  of  the  United


                                       48
<PAGE>
States  or a political subdivision thereof, (iii) a trust subject to the control
of a U.S. person and the primary supervision of a U.S. court, (iv) an estate the
income  of  which  is  subject to U.S. federal income taxation regardless of its
source  or  (v)  a  partnership,  to  the  extent  the  interests  therein  are
beneficially  owned  by any of the persons described in clauses (i), (ii), (iii)
or  (iv)  above.

     DIVIDENDS

The  UK  does  not  currently  apply  a  withholding  tax on dividends under its
internal  laws.  If the UK were to impose a withholding tax , as permitted under
the Convention, the rate of such withholding will not exceed 15% of the dividend
paid  to  a U.S. Holder. In such circumstances, a U.S. Holder should be entitled
to a credit for such withholding tax, subject to applicable limitations, against
the  U.S.  Holder's  federal  income  tax  liability.

     Subject  to  the  passive foreign investment company rules described below,
the  amount of any dividends paid out of current and/or accumulated earnings and
profits,  as determined under U.S. tax principles, will be included in the gross
income of a U.S. Holder on the day such dividends are actually or constructively
received  and  will  be characterized as ordinary income for U.S. federal income
tax  purposes.  To  the  extent  that a dividend exceeds current and accumulated
earnings  and  profits, it will be treated as a non-taxable return of capital to
the  extent of a U.S. Holder's adjusted basis in the shares, and thereafter as a
capital  gain.  The  Company  does  not  currently  maintain calculations of its
earnings  and  profits under U.S. tax principles.  Dividends paid by the Company
to  corporate  U.S.  Holders  will  not  be  eligible for the dividends-received
deduction  that  might  otherwise  be available if such dividends were paid by a
U.S.  corporation.

     Dividends paid by the Company in pounds sterling will be included in a U.S.
Holder's  income when the distribution is actually or constructively received by
the  U.S.  Holder.  The  amount  of  the dividend distribution includible in the
income  of  a  U.S. Holder will be the U.S. dollar value of the pounds sterling,
determined  by  the  spot  rate  of  exchange  on  the date of the distribution,
regardless  of  whether  the  pounds  sterling  are actually converted into U.S.
dollars  at  such  time.  If  the pounds sterling received as a dividend are not
converted  into  U.S.  dollars  on  the  date of receipt, then a U.S. Holder may
realize  an  exchange  gain  or  loss  on a subsequent conversion of such pounds
sterling  into  U.S.  dollars.  The  amount  of  any  gain  or  loss realized in
connection  with  a  subsequent conversion will be treated as ordinary income or
loss  and  generally will be treated as US-source income or loss for foreign tax
credit  purposes.

     On  May  28,  2003,  President Bush signed into law the Jobs and Growth Tax
Relief  Reconciliation  Act  of  2003  (the  "2003  Act").  Under  the 2003 Act,
"qualifying  dividends"  from  domestic  corporations  received  in  tax  years
beginning  after  December  31,  2002  are  to  be  taxed at a 15% rate for most
individual taxpayers. Individuals in the 10% or 15% bracket will be subject to a
5%  rate  on  dividend  income.  A  specific  holding-period  requirement  for
dividend-paying  stock  and  several  other  special  rules  apply.

     CAPITAL  GAINS

     Under the Convention, each country may tax capital gains in accordance with
its  own  domestic  law.  Under  current  UK  law,  a U.S. Holder who is neither
resident  or  ordinarily  resident for tax purposes in the UK will not be liable
for  UK  tax  on  capital gains realized on the sale or other disposal of shares
unless,  in  the  year  of  assessment  in  which  the  gain  accrues


                                       49
<PAGE>
to  such  holder, that U.S. Holder carries on a trade in the UK through a branch
or  agency and the shares are or have been used by, held by, or acquired for use
by, or for the purpose, of such trade, branch or agency.  However, a U.S. Holder
who  has  been  resident in the UK for at least four years and held shares or at
that  time  may, in certain circumstances, become liable to UK capital gains tax
on  his  return to the UK following a disposal of such shares.  Any U.S. Holders
whose  circumstances  are  such  that  they  may fall within such provisions are
advised  to  consult  their  tax  adviser.

     Subject  to the passive foreign investment company rules described below, a
U.S.  Holder  generally will recognize capital gain or loss on the sale or other
disposition  of  the  shares  in  an  amount equal to the difference between the
amount  realized  in such sale or disposition and the U.S. Holder's adjusted tax
basis  in  the shares.  Such capital gain or loss will be long-term capital gain
or  loss  if  a  U.S.  Holder  has  held  the  shares for more than one year and
generally will be U.S.-source income for foreign tax credit purposes.  Long-term
capital  gains  realized  by  an  individual  U.S.  Holder  on  a  sale or other
disposition  of  shares are generally subject to reduced rates of taxation.  The
deductibility  of  capital losses is subject to limitations.  A U.S. Holder that
receives  foreign  currency  upon  the  sale  or other disposition of the shares
generally  will  realize an amount equal to the U.S. dollar value of the foreign
currency  on  the  date  of sale (or, if the shares are traded on an established
securities  market,  in  the  case  of cash basis taxpayers and electing accrual
basis  taxpayers,  the settlement date).  A U.S. Holder will have a tax basis in
the  foreign  currency  received  equal to the U.S. dollar amount realized.  Any
gain  or  loss  realized  by  a  U.S. Holder on a subsequent conversion or other
disposition  of  foreign  currency  will  be  ordinary  income  or loss and will
generally  be  U.S.  source  income  for  foreign  tax  credit  purposes.

On  May  28, 2003, President Bush signed into law the Jobs and Growth Tax Relief
Reconciliation  Act  of 2003 (the "2003 Act"). Under the 2003 Act, effective for
sales,  exchanges,  and  payments  received  on or after May 6, 2003, and before
January 1, 2009, the long-term capital gains tax rate is reduced from 20% to 15%
for  most  taxpayers, and from 10% to 5% for gains that otherwise would be taxed
in  the  10%  or  15%  bracket  if  they  were  ordinary  income.

     UK  INHERITANCE  TAX

     Shares  held by an individual who is domiciled in the U.S. for the purposes
of  the double taxation convention relating to estate and gift taxes between the
U.S. and the UK, and for the purposes of the convention is not a national of the
UK,  will not be subject to UK inheritance tax on the individual's death or on a
lifetime transfer of shares, except in certain cases where the shares are placed
in  trust  (other than by a settlor domiciled in the  U.S. who is not a national
of  the  UK)  and,  in  the  exceptional  case, where the shares are part of the
business  property  of a UK permanent establishment of an enterprise or pertains
to  a  UK  fixed  base  of an individual used for the performance of independent
personal services.  The convention generally provides a credit for the amount of
any  tax  paid in the UK against the  U.S. federal tax liability in a case where
the  shares  are subject both to UK inheritance tax and to  U.S. federal gift or
estate  tax.

     PASSIVE FOREIGN INVESTMENT COMPANY RULES

     Special  U.S.  tax  rules  apply to U.S. shareholders in companies that are
considered  passive foreign investment companies ("PFICs").  The Company will be
classified  as  a  PFIC  in  a  particular  tax  year  if  either


                                       50
<PAGE>
-    75 percent or more of its gross income is passive income; or
-    the  average percentage of the value of its assets that produce or are held
     for the production of passive income is at least 50 percent. Cash balances,
     even  if  held  as  working  capital,  are  considered  to  be  passive.

     In  the  event that the Company is classified as a PFIC in any year, a U.S.
Holder  can  elect  to  mark  its  shares  to  market.  If a U.S. Holder makes a
mark-to-market election, it will be required in any year in which the Company is
a  PFIC to include as ordinary income the excess of the fair market value of its
shares  at  year-end  over  its basis in those shares.  In addition, any gain it
recognizes  upon  the sale of its shares will be taxed as ordinary income in the
year  of  sale.

     If the Company is determined to be a PFIC and a U.S. Holder does not make a
mark-to-market  election, it will be subject to a special tax at ordinary income
tax  rates  on  "excess  distributions",  including certain distributions by the
Company  and gain on the sale of its shares.  The amount of income tax on excess
distribution  will  be  increased  by  an  interest charge to compensate for tax
deferral,  calculated  as  if  excess distributions were earned ratably over the
period  it  holds  its  shares.  Classification  as  a  PFIC may also have other
adverse  tax consequences, including in the case of individuals, the denial of a
step-up  in  the  basis  of  such  individual's  shares  at  death.

     U.S.  Holders  should consult their tax advisers regarding the U.S. federal
income  tax  considerations  discussed  above  and  the desirability of making a
mark-to-market  election.

     UK  STAMP  DUTY

No  stamp  duty  or  stamp duty reserve tax (SDRT) will be payable in the United
Kingdom  on  the purchase or transfer of an ADS, provided that the ADS , and any
separate  instrument  or  written  agreement  of  transfer,  remain at all times
outside  the  United  Kingdom  and  that  the instrument or written agreement of
transfer  is not executed in the United Kingdom. Stamp duty or SDRT is, however,
generally  payable  at  the  rate  of  1.5%  of  the  amount  or  value  of  the
consideration or, in some circumstances, the value of the ordinary shares, where
ordinary  shares  are  issued  or  transferred  to a person whose business is or
includes  issuing  depositary  receipts,  or  to  a  nominee or agent for such a
person.

     A  transfer  for  value of the underlying ordinary shares will generally be
subject to either stamp duty or SDRT, normally at the rate of 0.5% of the amount
or  value  of the consideration. A transfer of ordinary shares from a nominee to
its  beneficial owner, including the transfer of underlying ordinary shares from
the  Depositary  to  an ADS holder, under which no beneficial interest passes is
subject  to  stamp  duty  at  the fixed rate of  5.00 per instrument of transfer


                    F.     Dividends and Paying Agents
                    ----------------------------------

                           Not Applicable.

                    G.     Statement by Experts.
                    ---------------------------

                           Not Applicable


                                       51
<PAGE>
                    H.     Documents on Display.
                    ---------------------------

You  may read and copy all or any portion of this Annual Report  or any reports,
exhibits,  statements  or  other  information  filed  by  the  Company  at  the
Securities  and  Exchange  Commission's  public  reference  room  at  Room 1024,
Judiciary  Plaza,  450  Fifth  Street,  N.W.,  Washington,  D.C. 20549.  You can
request  copies of these documents upon payment of a duplicating fee, by writing
to  the  Securities  and  Exchange  Commission.  Please  call the Securities and
Exchange  Commission  at 1-800-SEC-0330 for further information on the operation
of  the  public reference rooms.  The Company will file periodic reports on Form
6-K  reporting  information  that  the  Company (i) makes or is required to make
public  pursuant  to the law of the jurisdiction in which it is incorporated, or
(ii)  files  or  is  required  to  file  with  any  stock  exchange on which its
securities  are  traded  and  which  was  made public by that exchange, or (iii)
distributes  or  is required to distribute to its securityholders.  As a foreign
issuer  the  Company will not be subject to the proxy rules of Exchange Act Sec.
14  or the insider short-swing profit reporting requirements of the Exchange Act
Sec.  16.

     Pursuant  to  AIM  Rule 16 a company must prepare half-yearly reports which
must  be  notified  to the Company announcements office without delay and in any
event  not  later  than three months after the end of the relevant period. Under
this  rule  the  Company is required to report results for the six months to the
end  of  June  of  each  year.

     Pursuant to AIM Rule 17 an AIM Company must publish annual audited accounts
prepared  in  accordance with United Kingdom or United States generally accepted
accounting  practice  or international accounting standards. These accounts must
be  sent to the holders of its AIM securities without delay and in any event not
later  than  six  months  after  the  end  of the financial period to which they
relate.  Since admission to AIM, the Company has prepared and distributed annual
accounts  under  United  Kingdom  GAAP  for  each  year ending on December 31st.

                    I. Subsidiary Information
                    -------------------------

                    Not Applicable
                    --------------

ITEM  11.  QUANTITATIVE  AND  QUALITATIVE  FACTORS  ABOUT  MARKET  RISK  -

The  following  table  provides  information  about  the  Company's  significant
derivative financial instruments that are sensitive to changes in exchange rates
as  of  December  31,  2002.

Foreign-Exchange  Risk  Management

For  foreign  currency  forward  contracts  related to certain sale and purchase
transactions  denominated in foreign currencies, the table presents the notional
amounts  and  the  weighted  average  contractual  forward  exchange rates.  The
foreign  currency  forward  contracts entered into by the Company have a term of
generally  less  than  one  year.  The Company had $2,302,000 notional amount of
foreign  currency  forward  contracts  outstanding  in  various  currencies  at
December  31,  2002


                                       52
<PAGE>
<TABLE>
<CAPTION>
                                                          Average
                                           Contract     Contractual   Fair Value at
                                          Amount Buy      Forward        December
  Foreign Currency Forward Contracts        (Sell)     Exchange Rate     31, 2002
<S>                                      <C>           <C>            <C>
Euro                                     $  (524,000)  1.56 Euro/GBP  $ nil
U.S. Dollar                              $(1,500,000)  1.59 USD/GBP   $ 13,830
Yen                                      $  (278,000)  192 Yen/GBP    $ nil
</TABLE>

Generally forward currency contracts hedge the Company's exposure to changes in
exchange rates on monetary assets and liabilities denominated in currencies
other than the functional currency of the Company or its subsidiaries.


ITEM  12.  DESCRIPTION  OF  SECURITIES  OTHER  THAN  EQUITY  SECURITIES.

          NONE

     On  January  10,  2003,  the  Company  issued  a  $1.0  million convertible
debenture  ("Debenture"  to  Hemisphere  Capital,  LLC.  The Debenture will bear
interest  at 9% per annum, is convertible in certain circumstances into American
Depositary  Receipts ("ADRs") of the Company at a price of $4.5429 per ADR, with
each  ADR  representing 20 ordinary shares and will mature no later than January
10,  2006.  The  Debenture  would  be convertible into 4,402,460 ordinary shares
subject  to  anti-dilution  and  other  similar  adjustments.

     Under the terms of the Debenture, Hemisphere has the right to subscribe for
between $2.M and $4.0M of preference shares of the Company ("Preference Shares")
for  a  period  of  120  days after notice from the Company offering to sell the
Preference  Shares to Hemisphere, following approval of the Preference Shares by
the  Company's  Board of Directors and Shareholders.  The Debenture shall become
due  and payable, if not sooner converted, upon various contingencies, including
failure  of  the Company's shareholders at an extraordinary general meeting held
for  the purpose to authorize the Preference Shares.  The Company has the option
to  require  conversion  as  of  the  final  maturity  date  of  the Debentures.

     A  more  complete  description  of  the  terms  of  the  Debenture  and the
Preference  Shares  is  contained  in  the  Loan  and Investment Agreement dated
January  10,  2003 between the Company and Hemisphere which is Exhibit 12(a)(ii)
to  this  Report.

     The  Company  intends to seek the authorization of its shareholders for the
issuance  of  the  Preference  Shares  at  an  extraordinary  general meeting of
shareholders  to  be  held  in  July,  2003.


                                       53
<PAGE>
                                     PART II

ITEM 13.   DEFAULTS, ARREARAGES AND DELINQUENCIES.

Not applicable

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS.

Not applicable.

ITEM 15.  Intentionally omitted.

ITEM 16.  Intentionally omitted.


                                    PART III

ITEM  17.  FINANCIAL  STATEMENTS.

Not  applicable.

ITEM  18.  FINANCIAL  STATEMENTS

See  Financial  Statements  attached  hereto.


ITEM  19.  EXHIBITS.

A.  Management Certifications

In accordance with the Sarbanes Oxley Act of 2002, Section 302 and Section 906,
the Chief Executive Officer and acting Chief Financial Officer has signed the
attached certifications.

B.  Exhibits


See Exhibit Index and exhibits attached hereto.


                                       54
<PAGE>
                                    SIGNATURE

The registrant hereby certifies that it meets all of the filing requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on its behalf.

                              VI GROUP PLC

                              By: s/Elliot I. Miller
                                  -----------------------------
                                   Elliot I. Miller
                                   Director and Deputy Chairman
                                   of VI Group plc.


Date: June 26, 2003


                                        i
<PAGE>
                                    CERTIFICATIONS
     I,  Donald A. Babbs, the Chief Executive Officer and acting Chief Financial
Officer,  certify  that:

1)   I  have  reviewed  this  annual  report  on  Form 20-F of VI Group plc (the
     "registrant").
2)   Based  on  my  knowledge  ,  this annual report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  by  this  annual  report;
3)   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included in this annual report, fairly present in all material
     respects  the  financial condition, results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this annual report;
4)   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules  13a-14  and  15d-14) for the Registrant and have:
     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  Registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;
     b)   evaluated  the  effectiveness  of the Registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and
     c)   presented  in  this  annual  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;
5)   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  function):
     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and
     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and
6)   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether  or  not there were significant changes in internal
     controls  or  in  other  factors  that  could significantly affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: June 26, 2003

                              s/Donald A. Babbs
                              -----------------
                              Signature:  Donald A. Babbs
                              Title:  Chief Executive Officer and Acting
                               Chief Financial Officer


                                        2
<PAGE>
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the annual report on Form 20F (the "Report") of VI Group
plc (the "Company") for the period ending December 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Donald
A. Babbs, Chief Executive Officer of the Company, certify, to the best of my
knowledge, pursuant to 18 U.S.C. Sec.1350, as adopted pursuant toSec.906 of the
Sarbanes-Oxley Act of 2002, that:

     1)   The  Report  fully  complies with the requirements of Section 13(a) or
          15(d)  of  the  Securities  Exchange  Act  of  1934;  and
     2)   The  information  contained  in  the  Report  fairly  presents, in all
          material  respects,  the financial condition and results of operations
          of  the  Company.


                              s/ Donald A.Babbs
                              --------------------------------------------
                              Donald A. Babbs, Chief Executive Officer
                              VI Group plc
                              June 26, 2003


                                        3
<PAGE>
                                     VI GROUP PLC

                          INDEX TO FINANCIAL STATEMENTS


                                                                        PAGE


Independent Auditors' Report                                            F-1


Consolidated Balance Sheets as of December 31, 2002 and 2001            F-2


Consolidated Statements of Operations for the years ended December 31,
2002, 2001 and 2000.                                                    F-3


Consolidated Statements of Shareholders' Equity and Comprehensive
Income (Loss) for the years ended December 31, 2002, 2001 and 2000.     F-4


Consolidated Statements of Cash Flows for the years ended December 31,
2002, 2001 and 2000.                                                    F-5


Notes to the Consolidated Financial Statements for the years ended
December 31, 2002, 2001 and 2000.                                       F-6


<PAGE>
INDEPENDENT  AUDITORS'  REPORT


To  the  Shareholders  of
VI  Group  plc



We have audited the accompanying consolidated balance sheets of VI Group plc and
its  subsidiaries as of December 31, 2002 and 2001, and the related consolidated
statements  of  operations,  shareholders'  equity  and cash flows for the years
ended  December  31,  2002,  2001  and  2000. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.


We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States.  Those  standards  require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free  of  material  misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit  also  includes  assessing  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for  our  opinion.


In our opinion the financial statements referred to above present fairly, in all
material  respects,  the consolidated financial position of VI Group plc and its
subsidiaries  as of December 31, 2002 and 2001 and the results of its operations
and  its  cash  flows  for  the years ended December 31, 2002, 2001 and 2000, in
conformity  with  accounting principles generally accepted in the United States.




Moore  Stephens
Chartered  Accountants
St.  Paul's  House
London,  EC4P  4BN

April  24,  2003


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                                  VI GROUP PLC

                          CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2002 AND 2001
                 ($AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                               2002     2001
<S>                                                           <C>      <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                     $ 1,907  $  746
Accounts receivable, net of allowance for doubtful accounts
of $376, $115                                                   6,673   4,347
Inventory                                                          32      40
Prepaid expenses and other assets                               2,343   1,173
                                                              -------  -------
TOTAL CURRENT ASSETS                                           10,955   6,306
Property, plant and equipment, net                              1,024     573
Accounts and notes receivable                                     118     536
Goodwill                                                        1,864     487
Software licenses                                               1,352     139
Other intangible assets                                            69     105
                                                              -------  -------
TOTAL ASSETS                                                  $15,382  $8,146
                                                              =======  =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and other short term debt                      $   758  $  627
Current portion of long term debt                                 122      86
Accounts payable                                                  923     766
Accrued liabilities and other creditors                         2,506   1,524
Income taxes                                                      396     251
                                                              -------  -------
TOTAL CURRENT LIABILITIES                                       4,705   3,254
Capital lease obligations                                         223      56
Bank loan                                                          13      29
Accrued liabilities                                               389     280
                                                              -------  -------
TOTAL LIABILITIES                                               5,330   3,619
                                                              =======  =======
SHAREHOLDERS' EQUITY
Common stock, 80,000,000 shares authorized
(2001:80,000,000), 0.5 pence par value, 37,261,166 shares
issued and outstanding (2001:21,360,000)                          292     175
Additional paid in capital                                      8,922   4,286
Retained earnings                                                 646     720
Accumulated other comprehensive income (loss)                     192    (654)
                                                              -------  -------
SHAREHOLDERS' EQUITY                                           10,052   4,527
                                                              -------  -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                    $15,382  $8,146
                                                              =======  =======
</TABLE>
          See accompanying notes to consolidated financial statements


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                  VI GROUP PLC

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                 ($AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                         2002      2001      2000
                                                       --------  --------  --------
<S>                                                    <C>       <C>       <C>
NET REVENUE
Product revenue                                        $ 8,599   $ 7,770   $ 7,262
Service revenue                                          2,678     1,538     1,181
                                                       --------  --------  --------
TOTAL NET REVENUE                                       11,277     9,308     8,443
                                                       --------  --------  --------

COST OF REVENUE
Cost of product                                         (1,501)   (1,412)   (1,406)
Cost of service                                           (884)     (595)     (439)
                                                       --------  --------  --------
TOTAL COST OF REVENUE                                   (2,385)   (2,007)   (1,845)
                                                       --------  --------  --------

GROSS PROFIT                                             8,892     7,301     6,598
                                                       --------  --------  --------

OPERATING EXPENSES
Selling expenses                                         4,412     3,051     2,703
General and administration                               2,700     1,982     1,595
Product development                                      1,439     1,260     1,563
                                                       --------  --------  --------
TOTAL OPERATING EXPENSES                                 8,551     6,293     5,861
                                                       --------  --------  --------

Income from operations                                     341     1,008       737
                                                       --------  --------  --------
OTHER INCOME
Net interest income (expense)                               35         2        31
                                                       --------  --------  --------
TOTAL OTHER INCOME                                          35         2        31
                                                       --------  --------  --------

INCOME BEFORE INCOME TAXES                                 376     1,010       768
INCOME TAX                                                (450)     (415)     (412)
                                                       --------  --------  --------
NET (LOSS) INCOME                                      $   (74)  $   595   $   356
                                                       ========  ========  ========

Earnings per share
-  Basic                                               $(0.002)  $  0.03   $  0.02
                                                       ========  ========  ========
-  Diluted                                             $(0.002)  $  0.03   $  0.02
                                                       ========  ========  ========
</TABLE>
          See accompanying notes to consolidated financial statements


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                         VI  GROUP  PLC

        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
                      FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                        ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


               Common   Additional    (Accumulated     Accumulated     Total     Comprehensive
                stock     paid in       deficit)          other                     income
                          capital       retained      comprehensive
                                        earnings      (loss) income
<S>            <C>      <C>          <C>             <C>              <C>       <C>
At January 1,
2000           $   164  $     3,740  $        (231)  $         (251)  $ 3,422

Net income
for the year         -            -            356                -       356              356
Common
stock issued         3          198              -                -       201                -
Exchange
differences          -            -              -             (268)     (268)            (268)
               -------  -----------  --------------  ---------------  --------  ---------------

At December
31, 2000       $   167  $     3,938  $         125   $         (519)  $ 3,711   $           88
                                                                                ===============

Net income
for the year         -            -            595                -       595              595
Common
stock issued         8          348              -                -       356                -
Exchange
differences          -            -              -             (135)     (135)            (135)
               -------  -----------  --------------  ---------------  --------  ---------------

At December
31, 2001       $   175  $     4,286  $         720   $         (654)  $ 4,527   $          460
                                                                                ===============

Net income                                     (74)                       (74)             (74)
for the year
Common             107        4,253                                     4,360
stock issued
- May 2002
Common              10          383                                       393
stock issued
- Sept. 2002
Exchange
differences          -            -              -              846       846              846
               -------  -----------  --------------  ---------------  --------  ---------------

At December    $   292  $     8,922  $         646   $          192   $10,052   $          772
               =======  ===========  ==============  ===============  ========  ===============
31, 2002
</TABLE>
          See accompanying notes to consolidated financial statements


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                  VI GROUP PLC

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                 ($AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                         2002      2001      2000
<S>                                                    <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                      $   (74)  $   595   $   356
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization                              437       484       376
Profit on disposal of property, plant & equipment          (28)       12         6
Changes in assets and liabilities:
Increase in accounts receivable                         (1,922)   (1,312)     (785)
Increase in prepaid expenses                              (496)     (452)     (204)
Decrease in inventory                                       14        (2)        2
Increase (decrease) in accounts payable                     53       165      (133)
Increase (decrease) in other liabilities                   965       287       648
                                                       --------  --------  --------
NET CASH PROVIDED BY (USED IN) OPERATING                (1,051)     (223)      266
                                                       --------  --------  --------
ACTIVITIES

NET CASH USED IN INVESTING ACTIVITIES
Additions to Property, Plant and Equipment                (701)     (281)     (149)
Additions to software licenses                          (1,328)      (20)      (18)
Proceeds from sale of property, plant and                   75        22         9
equipment
Purchase of businesses                                  (1,357)     (398)     (280)
                                                       --------  --------  --------
CASH FLOWS FROM INVESTING ACTIVITIES                    (3,311)     (677)     (438)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock                   4,753       367         -
Bank overdraft increase (repayments)                        19       183        71
Mortgage loan repayments                                   (66)      (58)      (55)
Capital lease payments                                     224       (20)       (6)
                                                       --------  --------  --------
NET CASH PROVIDED BY FINANCING ACTIVITIES                4,930       472        10
                                                       --------  --------  --------

NET INCREASE/ (DECREASE) IN CASH AND CASH                  568      (428)     (162)
EQUIVALENTS
EXCHANGE DIFFERENCES                                       593       102       (90)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR               746     1,072     1,324
                                                       --------  --------  --------
CASH AND CASH EQUIVALENTS, END OF YEAR                 $ 1,907   $   746   $ 1,072
                                                       ========  ========  ========
SUPPLEMENTARY DISCLOSURES:
Interest paid                                          $    52   $    32   $    33
                                                       --------  --------  --------
Income tax paid                                        $   286   $   421   $   397
                                                       --------  --------  --------
</TABLE>
          See accompanying notes to consolidated financial statements


                                      F-5
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


1.   OPERATIONS

     VI  Group  plc  (the  "Company")  was incorporated in the United Kingdom on
     November  5,  1997  as a public limited company and commenced operations on
     January  1, 1998. The Company and its subsidiaries, develop, and distribute
     Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM) software
     that  enhances  the  efficiency  of the design and manufacturing process in
     industry.

     On  February  12,  1998,  the  Company  completed  the  acquisition of Vero
     International  Software  S.r.l. (Italy). This transaction was accounted for
     under  the  requirements of Interpretation 39 of Accounting Standards Board
     Opinion No. 16, whereby the acquisition was treated as a transfer of shares
     between  companies  with common control in a manner similar to a pooling of
     interests.  Accordingly, all assets and liabilities of the acquired company
     were  recognised at historical cost and the historical financial statements
     of  the  acquired  company  became  a component of the historical financial
     statements  of  the  Company.

     The  Company faces numerous risks associated with its industry. These risks
     include  dependence  on  new product introductions, product delays, rapidly
     changing  technology,  intense  competition  and dependence on distribution
     channels.

     For  presentation  of  the  Consolidated Statements of Operations in EBITDA
     (Earnings  before  interest,  tax,  depreciation  and  amortization) format
     please  see  Item  5  of  form  20-F.



2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     (a)  CONSOLIDATION

     The  accompanying consolidated financial statements include the accounts of
     VI Group plc and its wholly-owned subsidiaries, Vero International Software
     S.r.l.  (Italy),  Vero Sistemi e Consulenze S.r.l. (Italy), Vero Tecnologie
     S.p.A  (Italy),  Vero  International  Software UK Limited (UK), Visi S.R.O.
     (Czech  Republic)  and  Vero  International  Inc.  (USA).  All  significant
     intercompany  accounts  and  transactions  have  been  eliminated.

     (b)  USE  OF  ESTIMATES

     The  preparation  of  financial  statements  in  conformity  with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and  the  reported  amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     (c)  CASH  AND  CASH  EQUIVALENTS

     For the purposes of the Company's consolidated statement of cash flows, the
     Company  considers  all  highly liquid securities and debt instruments with
     original  maturities  of  three  months  or  less to be equivalent to cash.


                                      F-6
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     (d)  INVENTORIES

     Inventories  consisting  of  compact disks, manuals and packaging materials
     and  supplies  are  valued  at  the  lower of cost (first-in, first-out) or
     market.

     (e)  TRADE  RECEIVABLES


     Trade  receivables  are  amounts  invoiced  and due from customers less any
     provision  for  bad  debts.


     (f)  PROPERTY  AND  EQUIPMENT

     Property  and  equipment  are  stated  at  cost  less  depreciation. Office
     equipment, computer equipment, and Motor vehicles are depreciated using the
     straight-line method over estimated useful lives ranging from four to eight
     years.  Leasehold  improvements are amortized on a straight-line basis over
     the  lesser  of  the  estimated  useful  life  or the remaining lease term.

     (g)  OTHER  NON-CURRENT  ASSETS

     Other  non-current  assets  consist  primarily  of capitalized software and
     goodwill  on  consolidation.

     Capitalized  Software consists of purchased software products and is stated
     at  un-amortized  cost. The amortization for purchased software products is
     computed  on  a  product-by-product  basis.  The annual amortization is the
     greater  of  the  amount  computed  using  (a) the ratio that current gross
     revenues  for a product bear to the total of current and anticipated future
     revenues  for  that  product  or  (b)  the  straight-line  method  over the
     remaining  estimated  economic  life  of  the product, including the period
     being  reported  on.  The  amortization  period for capitalized software is
     generally  five  years.

     The  excess  of  the purchase consideration over the fair value of acquired
     tangible  assets  is attributed to skilled workforce, intellectual property
     and  goodwillEach  element was amortized over between 1 and 10 years, using
     the straight line method, until December 31 2001. Effective January 1, 2002
     the  company  adopted  Statement of Financial Accounting Standards ("SFAS")
     No.142,  "Goodwill  and  Other  intangible  Assets".  Under  this Standard,
     goodwill  is  no  longer  amortized  but  reviewed  for impairment at least
     annually.

     (h)  LONG-LIVED  ASSETS

     As  prescribed  by Statement of Financial Accounting Standards ("SFAS") No.
     144, "Accounting for the Impairment of Long-lived Assets and for Long-lived
     Assets  to  be Disposed of", the Company assesses the recoverability of its
     long-lived  assets  (including  goodwill)  by determining whether the asset
     balance  can  be  recovered over the remaining depreciation or amortization
     period  through  projected  un-discounted  future  cash  flows.  Cash  flow
     projections,  although  subject  to  a  degree of uncertainty, are based on
     trends  of  historical  performance  and  management's  estimate  of future
     performance,  giving  consideration to existing and anticipated competitive
     and  economic  conditions.


                                      F-7
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     (i)  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

     The carrying value of cash, accounts receivable, accounts payable and notes
     payable approximates the fair value. In addition, the carrying value of all
     borrowings  approximate  fair  value  based  on  interest  rates  currently
     available  to  the  Company.

     (j)  REVENUE  RECOGNITION

     The Company derives revenues principally from two sources, customer license
     fees  on  its  VISI-Series  products  and  service  fees.

     The  Company  recognizes  revenue  based  on the provisions of Statement of
     Position  ("SOP")  97-2,  "Software Revenue Recognition". As no significant
     modification  to  the  Company's  software  products  is required, software
     license revenues are recognized upon persuasive evidence of an arrangement,
     delivery  and acceptance of the software, and when collection of a fixed or
     determinable license fee is considered probable. Agreements may provide the
     customers  the right to multiple copies in exchange for guaranteed amounts,
     only  if  copies  are requested by the customer. The license fee is payable
     even  if  no  additional  copies  are requested by the customer. Revenue is
     recognized  at the delivery of the product master or the first copy and the
     estimated costs of duplication, incidental to the arrangement, are accrued.

     Service  revenues  consist  of  fees from maintenance and technical support
     agreements  and  consulting  or training arrangements. Maintenance revenue,
     when  bundled  with  the  sale of software licenses, is recognised together
     with  the  initial  licensing  fee  on  delivery of the software as (a) the
     maintenance fee is included with the initial licensing fee, (b) maintenance
     included  with  the  initial  license  is  for  one  year  or less, (c) the
     estimated  cost  of  providing  maintenance  during  the  arrangement  is
     insignificant, and (d) unspecified upgrades/enhancements offered during the
     maintenance arrangement historically have been and are expected to continue
     to  be  minimal  and  infrequent.  All  estimated  costs  of  providing the
     services,  including upgrades/enhancements are accrued. Maintenance revenue
     under  separate  arrangements is deferred and recognized on a straight-line
     basis  over  the  term  of  the  agreement;  amounts received in advance of
     revenue  recognition  are  classified  as  deferred  revenue.  Maintenance
     agreements  provide  for technical support and periodic unspecified product
     upgrades. Revenues from consulting services or training are measured by the
     relationship of hours incurred and estimated total hours of the contract or
     training  course.  Revisions  in  estimated  hours  are  reflected  in  the
     accounting  period  in  which  the  required  revisions  become  known.


                                      F-8
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     The  Company  sells  software  licenses  to distributors at a predetermined
     price.  Distributors are responsible for supplying maintenance and customer
     support  to  the  end  customer.  The  Company  may provide maintenance and
     customer  support  to  the  distributors.  Revenues  on  these  sales  are
     recognized in the same manner as all other software license and maintenance
     sales.  These sales are not contingent upon the distributors' resale of the
     software.

     The  Company  is  generally  not contractually obligated to accept returns,
     except  for  defective,  shelf-worn and damaged products in accordance with
     negotiated terms. In accordance with SFAS No. 48, "Revenue Recognition when
     Right  of  Return  Exists",  revenue  is  recorded  net of an allowance for
     estimated  returns,  exchanges,  markdowns, price concessions, and warranty
     costs.  Such  reserves are based upon management's evaluation of historical
     experience,  current  industry  trends  and  estimated costs. The amount of
     reserves  ultimately required could differ materially in the near term from
     the  amounts included in the accompanying consolidated financial statements

     (k)  PRODUCT  DEVELOPMENT

     Product  development  costs incurred in the research and development of new
     software  products  and  enhancements  to  existing  software  products are
     expensed  as incurred until technological feasibility has been established.
     The  Company considers technological feasibility to be established when all
     planning,  designing,  coding,  and testing has been completed according to
     design  specifications.  After  technological  feasibility  has  been
     established,  any  additional costs would be capitalized in accordance with
     Statement  of  Financial  Accounting  Standards No. 86, "Accounting for the
     Cost  of  Computer  Software  to  be  Sold, Leased, or otherwise Marketed."
     Through  December  31,  2002,  software  development has been substantially
     completed concurrently with the establishment of technological feasibility,
     and  accordingly,  no  costs  have  been  capitalized  to  date.

     (l)  ADVERTISING  COSTS

     The  Company  generally  expenses advertising costs as incurred, except for
     production  costs  associated  with media campaigns, which are deferred and
     charged  to  expense at the first run of the advert. Advertising costs were
     $122,  $124  and  $160  for  the  year  2002,  2001  and 2000 respectively,

     (m)  INCOME  TAXES

     The  Company  accounts  for  income  taxes  using  the  liability method as
     prescribed  by  SFAS  No. 109, "Accounting for Income Taxes." The statement
     requires  an  asset  and  liability  approach  for financial accounting and
     reporting of income taxes. Deferred income taxes are provided for temporary
     differences  in  the  recognition  of  certain income and expense items for
     financial  reporting  and  tax purposes given the provisions of the enacted
     tax  laws.


                                      F-9
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)


     (n)  FOREIGN  CURRENCY

     The  Company  follows  the  principles  of  SFAS  No. 52, "Foreign Currency
     Translation," using the local currency of its operating subsidiaries as the
     functional  currency.  Accordingly,  all assets and liabilities outside the
     United  States  are translated into U.S. dollars at the rate of exchange in
     effect  at  the balance sheet date. Income and expense items are translated
     at  the  weighted average exchange rate prevailing during the period. Gains
     or  losses  arising  from  the  translation of non U.S. companies financial
     statements  are included in the accompanying consolidated balance sheets as
     a  separate  component  of  stockholders'  equity.

     Gains  and losses resulting from foreign currency transactions are included
     in  the  determination  of net income. (Losses)/gains from foreign currency
     transactions  amounting  to  $(27),  $(9),  and  $77 during the years ended
     December 31, 2002, 2001 and 2000, respectively, and are included in general
     and  administrative  expenses in the consolidated statements of operations.


     (o)  EARNINGS  PER  SHARE

     The Company accounts for earnings per share in accordance with SFAS No. 128
     "Earnings  Per  Share"  and  SFAS No. 129, "Disclosure of Information about
     Capital Structure." Basic earnings per share is computed by dividing income
     attributable  to  common  stockholders  by  the  weighted average number of
     common  shares  outstanding.  Diluted  earnings  per  share  is computed by
     dividing income attributable to common stockholders by the weighted average
     number  of  common shares outstanding plus the effect of any dilutive stock
     options  and  common  stock  warrants.

     For  the year ended December 31, 2002, all options to purchase common stock
     were  excluded from the diluted loss per share calculation as the effect of
     such  inclusion  would  be  antidilutive.

     (p)  COMPREHENSIVE  INCOME  (LOSS)

     The  Company  has  adopted  SFAS No. 130, "Reporting Comprehensive Income".
     Comprehensive  income  of  the Company includes net income adjusted for the
     change  in  foreign  currency  translation  adjustments.  The net effect of
     income  taxes  on  comprehensive  income  is  immaterial.  The  disclosures
     required  by  SFAS  No.  130  have  been  included  in  the  Statements  of
     Stockholders'  Equity.

     (q)  STOCK-BASED  COMPENSATION

     The  Company  accounts  for  employee  stock options in accordance with the
     Accounting  Principles  Board  Opinion  No.  25 and makes the necessary pro
     forma  disclosures mandated by SFAS No. 123. In accordance with APB No. 25,
     the  Company  recognizes compensation expense for fixed stock option grants
     only  when  the exercise price is less than the fair value of the shares on
     the  date  of  grant.


                                      F-10
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

2.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     (r)  LEASES

     The  Company follows the principles of SFAS No. 13 "Accounting for Leases".
     Assets  acquired under capital leases are recorded as assets in the balance
     sheet  and depreciated over their estimated useful lives or the lease term,
     whichever  is  the  shorter.  The  interest element of these obligations is
     charged  to  the  statement  of  operations  over  the relevant period. The
     capital  element  of the future payments is treated as a liability. Rentals
     payable  under  operating leases are charged to the statement of operations
     as  incurred.

     (s)  DERIVATIVE  FINANCIAL  INSTRUMENTS

     In accordance with SFAS No. 133, "Accounting for Derivative Instruments and
     Hedging Activities" the company may use forward contracts to hedge exposure
     to changes in the fair value of monetary assets and liabilities denominated
     in  currencies  other  than  the  functional currency of the company or its
     subsidiaries. Unrealised gains and losses arising from movements in foreign
     currency exchange rates on qualifying and non-qualifying fair value hedging
     instruments  are  recognised  in  the accompanying statement of operations.

     (s)  RECENT  ACCOUNTING  PRONOUNCEMENTS


     On  January  1,  2002, the Company adopted SFAS No. 142 "Goodwill and other
     Intangible  Assets".  Under  this standard, goodwill is no longer amortized
     but  reviewed  for impairment at least annually. The standard also provides
     guidance  on  the  accounting  for  other  intangible  assets.  An acquired
     intangible  asset  (other  than  goodwill)  with  an indefinite useful life
     should  not be amortized until its useful economic life is determined to be
     finite.  These assets should be tested for impairment at least annually. An
     acquired  intangible asset (other than goodwill) with a limited useful life
     should  be  amortized  over  its  useful  economic  life  and  reviewed for
     impairment  in accordance with SFAS No. 144, "Accounting for the Impairment
     or  Disposal  of  Long-Lived  Assets.

     On  January  1,  2002, the Company adopted SFAS No. 144 "Accounting for the
     Impairment or Disposal of Long Lived Assets". This standard supersedes SFAS
     No.  121  "Accounting  for  the  Impairment  of  Long-Lived  Assets and for
     Long-Lived  Assets  to  be  Disposed Of" but retains the basic requirements
     regarding  when and how to measure an impairment loss. SFAS No. 144 applies
     to  long-lived  assets  to be held or disposed of but specifically excludes
     certain  classes  of  assets  such  as  goodwill  and  intangible not being
     amortized.

     (t)  RECLASSIFICATIONS

     Certain  reclassifications  have  been  made  to  the  prior-year financial
     statements  to  conform  to  the  current-year  presentation.


                                      F-11
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


3.   PREPAID  EXPENSES  AND  OTHER  ASSETS

     Prepaid  expenses  and  other  assets  consisted  of  the  following:

                                                         DECEMBER 31,


                                                         2002   2001

     Prepaid licenses                                   $  181  $  197
     Prepaid marketing and advertising                      34      23
     Prepaid VAT                                            63       7
     Prepaid financing costs                               869     592
     Grant receivable                                      750      76
     Other prepaid expenses                                446     278
                                                        ------  ------

     TOTAL PREPAID EXPENSES AND OTHER ASSETS            $2,343  $1,173
                                                        ======  ======

4.   INVENTORIES

     Inventories  are stated at the lower of cost or market. Inventories consist
     of  the  following:


                                                                    DECEMBER 31,
                                                                    2002   2001

     Goods for resale                                               $  32  $  40
                                                                    =====  =====


                                      F-12
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


5.   PROPERTY,  PLANT  AND  EQUIPMENT

     Property,  plant  and  equipment  consists  of  the  following:


                                                              DECEMBER 31,
                                                             2002      2001

     Leasehold improvements                                $   475   $   385
     Office equipment                                        1,218       870
     Motor vehicles                                            518       353
                                                           --------  --------
                                                             2,211     1,608
     Less: accumulated depreciation                         (1,187)   (1,035)
                                                           --------  --------
     Property, plant and equipment, net of
     accumulated depreciation                              $ 1,024   $   573
                                                           ========  ========

     Included  above  are  the  following  assets  acquired  under capital lease
     obligations:


                                                              DECEMBER 31,
                                                              2002    2001

     Office equipment                                        $ 126   $ 123
     Motor vehicles                                            347      87
                                                             ------  ------
                                                               473     210
     Less: accumulated amortization                           (167)   (130)
                                                             ------  ------
     Assets acquired under capital lease
     obligations, net of accumulated amortization            $ 306   $  80
                                                             ======  ======

     Depreciation  and  amortization  expense amounted to $437, $229 and $256 in
     the  years  ended  December  31,  2002,  2001  and  2000.


6.   ACCOUNTS  AND  NOTES  RECEIVABLE

     Accounts  and  notes  receivable  includes  uncollateralized  demand  notes
     receivable  due  from  distributors  of the Company's software amounting to
     $278  as  of  December  31, 2002 (2001: $299). The notes bear interest at a
     fixed  rate  of  7%.  The Company has recognized interest income related to
     these  notes  of  $  9  in  2002  (2001:  $22,  2000:  $22).


                                      F-13
<PAGE>
                                   VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


7.   BANK  OVERDRAFT  AND  OTHER  SHORT  TERM  DEBT

     The Company's overdrafts are secured by fixed and floating charges over the
     assets  of  Vero  International  Software  S.r.l.  and  Vero  International
     Software  UK Limited. Interest rates are variable and ranged from 6.875% to
     9.175%  and  6.0%  to 7.05% as of December 31, 2002 and 2001, respectively.

     The  Company has bank facilities available to its subsidiaries. The Italian
     subsidiary  has  facilities  of  up  to  $0.74  million  dollars,  from  a
     combination  of  three separate banks, available in Italian Lira at between
     1%  to  3% above the bank base rate. The UK subsidiary has a multi-currency
     facility  of  up  to  $0.8 million secured on qualifying trade debtors when
     outstanding  at  an  interest  rate of 1.5% above the UK bank base rate. On
     December  31,  2002,  the  amount  borrowed under such facilities was $0.74

8.   OTHER  ASSETS


                                                          Other
                                 Goodwill   Software   intangible   Total
                                            licences     assets

     Cost:
     As at 1 January 2002             620        300          196   1,116
     Exchange movements               151         97           23     271
     Additions                          -          -            6       6
     Acquisitions                   1,244      1,233            -   2,477
                                ----------  ---------  -----------  ------
     As at December 1, 2002     $   2,015      1,630          225   3,870
                                ----------  ---------  -----------  ------

     Accumulated Amortization:
     As at 1 January 2002            (133)      (161)         (91)   (385)
     Exchange movements               (18)       (24)         (13)    (55)
     Charge for the year                -        (93)         (52)   (145)
                                ----------  ---------  -----------  ------
     As at December 31, 2002    $    (151)      (278)        (156)   (585)
                                ==========  ---------  -----------  ------

     Net book value:
     As at 1 January 2002             487        139          105     731
                                ----------  ---------  -----------  ------
     As at December 31, 2002        1,864      1,352           69   3,285
                                ----------  ---------  -----------  ------

     Amortization  expense related to goodwill amounted to $nil, $26 and $109 in
     the  year  ended  December  31,  2002,  2001  and  2000  respectively.

     Amortization  expense  related  to software amounted to $93, $90 and $70 in
     the  years  ended  December  31,  2002,  2001  and  2000  respectively.

     If  goodwill amortization had not been expensed in 2001 and 2000 income and
     earnings  per  share  would  have been as follows: Income 2001: $704; 2000:
     $382;  Earnings  per  share  2001:  $0.03;  2000:  $0.02


                                      F-14
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

8.   OTHER  ASSETS  (CONTINUED)

     On  March 2, 2001 the company's UK operating subsidiary, Vero International
     Software  UK  Ltd,  entered  into  an  agreement  with  Ubiquity  Software
     Corporation  Limited  of  Newport,  South  Wales to acquire a part of their
     business  which  provides  software  and  systems for the secure electronic
     transfer  of  CAD/CAM  data.

     The  acquisition  was  accounted  for  as  a purchase. The acquired assets,
     liabilities  and  results  of  operations  are  included  with those of the
     Company  as  of  March  2,  2001.  The  total  consideration  was  $361.

     On  July  1,  2002,  the  Company's  U.S.  operating  subsidiary,  Vero
     International,  Inc.  acquired  the  Company's  Canadian  distributor  Vero
     Tooling  Solutions, Inc. for the nominal sum of one dollar. The acquisition
     was  accounted  for  as  a  purchase. The acquired assets, liabilities, and
     results  of operations are included with those of the Company as of July 1,
     2002.  The  excess  of  the  cost of acquisition over the fair value of the
     identifiable  net  liabilities  was  $  631,  which  represents  goodwill.

     On September 28, 2002, the Company acquired the Machining Strategist 3D CAM
     business  of  NC  Graphics  (Cambridge)  Limited  in  consideration for the
     issuance  of 1,250,000 shares of common stock valued at $ 374 and cash of $
     1,495.  The  acquisition  was  accounted  for  as  a purchase. The acquired
     assets,  liabilities  and  results of operations are included with those of
     the Company as of September 28, 2002. The excess of the cost of acquisition
     over  the  fair  value  of  the  identifiable  net  assets was $ 613, which
     represents goodwill. The results of the Company, giving pro forma effect to
     the  transaction  as  if  it  had  taken  effect  on  January  1, 2002, are
     estimated:


                                             MACHINING       PRO
                                              COMPANY    STRATEGIST    FORMA

                                            $            $            $
     Net revenue                                11,277         1,083   12,360
     Income from operations                        341           164      505
     Net (loss)/ income                            (74)          115       41

     Earnings per share
     - Basic                                $   (0.002)  $     0.004  $ 0.001
     - Diluted                              $   (0.002)  $     0.004  $ 0.001


                                      F-15
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


9.   ACCRUED  LIABILITIES

     Accrued  liabilities  consisted  of  the  following:


                                                           DECEMBER 31,
                                                           2002    2001

     Accrued compensation and commissions                 $  425  $  249
     Deferred revenue                                        681     408
     Taxes and social security payable                       462     257
     Accrued licence fees                                    268     198
     Other                                                   670     413
                                                          ------  ------
     TOTAL ACCRUED LIABILITIES                            $2,506  $1,525
                                                          ======  ======


10.  INCOME  TAXES

     Income  (loss)  before  income  taxes  consists  of  the  following:


                                                             DECEMBER 31,
                                                        2002    2001    2000

     European Union                                     $ 263  $  580  $ 800
     Rest of World                                        112     430    (32)
                                                        -----  ------  ------
     Total                                              $ 375  $1,010  $ 768
                                                        =====  ======  ======


     The  provision  for  income  taxes  is  comprised  of  the  following:


                                                            DECEMBER 31,
                                                        2002   2001    2000

     Current:
     European Union                                     $ 450  $ 412  $ 421
     Rest of World                                          -      3     (9)
                                                        -----  -----  ------
     Total                                              $ 450  $ 415  $ 412
                                                        =====  =====  ======


                                      F-16
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

9.   INCOME  TAXES  (CONTINUED)

     A  reconciliation  of  the  statutory income tax rate and the effective tax
     rate  as  a  percentage  of  pre-tax  income  is  as  follows:


                                                                DECEMBER 31,
                                                            2002   2001   2000
                                                               %      %      %

     Weighted average statutory income tax                    43     32     32
     rate
     Unutilised losses                                        55    (10)     -
     Permanent differences                                    39     17     20
     Other                                                   (16)     2      2
     Effective tax rate                                      120     41     54


     Net  operating  loss  carry  forwards  resulting in a deferred tax asset of
     approximately  $  250  have not been recognized due to the insufficiency of
     evidence  to  support  the  recoverability  of  the  asset.


11.  CAPITAL  LEASE  OBLIGATIONS

     Capital  lease  obligations  at December 31, 2002 and 2001 consisted of the
     following:


                                                                  DECEMBER 31,
                                                                  2002    2001

     Net obligations                                             $ 311   $  81
     Less current portion                                          (88)    (25)
                                                                 ------  ------
     Capital lease obligations payable, net of
     current portion                                             $ 223   $  56
                                                                 ======  ======

     The  interest  rate  is  variable  and at December 31, 2002 was 5.5% (2001:
     5.5%).


                                      F-17
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

11.  CAPITAL  LEASE  OBLIGATIONS  (CONTINUED)

     Principal  and  interest payment requirements on capital leases obligations
     are  as  follows:


     Year ending December 31,
     2003                                                                $ 103
     2004                                                                $  95
     2005                                                                $  84
     2006                                                                $  60
                                                                         ------
                                                                           342
     Less: interest payments                                             $ (31)
                                                                         ------
     Net present value of capital lease obligations                      $ 311
                                                                         ------


12.  SHAREHOLDERS  EQUITY
     In  May  2002  the  Company  issued  14,651,166  shares  of common stock in
     exchange  for  cash  of  $4,700.

     In  connection  with the acquisition of the Machining Strategist business a
     further  1,250,000 share were issued in September 2002 at a valuation of 20
     pence  per  share.

13.  COMMITMENTS  AND  CONTINGENCIES

     The  Company  leases  certain  facilities  and  motor  vehicles  under
     non-cancelable  operating leases. Future minimum contract commitments under
     non-cancelable  commitments  are  as  follows:


                                                                   LEASES
                                                                  -------

     Year ending December 31,
     2003                                                         $   340
     2004                                                         $   268
     2005                                                         $   193
     2006                                                         $    92
     2007                                                         $    68
        Thereafter                                                $    34

     Rent expense was $250, $148 and $144 for the years ended December 31, 2002,
     2001  and  2000 respectively. Development expenses in connection with third
     party  software  agreements  amounted  to $487, $274 and $333 for the years
     ended  December  31,  2002,  2001  and  2000  respectively.

     Proceedings  have  been  initiated  against  the  Company  by  NC  Graphics
     (Cambridge)  Limited  ('NCG')  for the payment of disputed invoices arising
     from the acquisition by the Company of NCG's Machining Strategist business,
     totalling  $172. It is the Directors' view that this claim is without merit
     and  the  Company  has advised, through its solicitors, of its intention to
     vigorously defend this claim. The Company has notified NCG of its intention
     to  pursue,  as  part  of these proceedings, a counterclaim for substantial
     damages  arising  from  NCG's  failure  to comply with certain terms of the
     agreement relating to the acquisition of the Machining Strategist business.


                                      F-18
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

14.  EARNINGS  PER  SHARE

     Basic  earnings per share is calculated by dividing net income available to
     common  stockholders  by  the  weighted  average  number  of  common shares
     outstanding  and  does  not  include the impact of any potentially dilutive
     common  stock  equivalents.  Diluted  earnings  per  share  is  computed by
     dividing income attributable to common stockholders by the weighted average
     number  of  common shares outstanding plus the effect of any dilutive stock
     options.

     The  calculation  of  basic  earnings  per  share  is  as  follows:-


                                                     2002     2001     2000

     Net income available to common stockholders   $   (74)  $   595  $   356
                                                   --------  -------  -------
     Weighted average number of common shares
     outstanding (000s)                             31,228    20,642   20,210
     Basic (loss) earnings per share               $(0.002)  $  0.03  $  0.02
                                                   ========  =======  =======


     The  calculation  of  diluted  earnings  per  share  is  as  follows:


                                                     2002      2001       2000

     Net income available to common stockholders   $   (74)  $    595   $   356
                                                   --------  ---------  --------
     Weighted average number of common shares
     outstanding (000s)                             31,228     20,642    20,210
     Options outstanding                               460        477       477
     Non dilutive options                             (460)      (334)     (334)
     Use of proceeds                                     -       (112)      (85)
                                                   --------  ---------  --------
                                                    31,228     20,673    20,268
                                                   --------  ---------  --------
     Diluted (loss) earnings per share             $(0.002)  $   0.03   $  0.02
                                                   ========  =========  ========


                                      F-19
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

15.  STOCK  OPTION  PLANS

     The  Company  has  three  forms of option plans available to its employees,
     they are: the Approved Scheme, the Unapproved Scheme and the Shadow Scheme.
     The rights and restrictions, including options authorised under these plans
     vary  in  accordance  with  limits  and  guidelines  established  by  the
     Association  of  British  Insurers.  Options under the plans generally vest
     over  3  years  and  are  exercisable  up to 7 years from the vesting date.

     The  Company  treats the excess, if any, between the exercise price and the
     estimated  fair  market  value of the Company's stock on the grant date, as
     deferred  compensation  expense to be amortised over the vesting period for
     financial  reporting  purposes. No compensation cost was recognized for the
     years  ended  December  31,  2002,  2001  and  2000,  respectively.

     The  following  is  a  summary of option activity pursuant to the Company's
     stock  option  plans:


                            2002                2001                2000
                                Weighted            Weighted            Weighted
                                average             average             average
                      Shares    exercise   Shares   exercise   Shares   exercise
                                 price *             price *             price *

     Options
     outstanding at
     beginning of     476,857     41p     476,857     41p     541,857     42p
     year
     Lapsed          (17,000)     50p        -         -      (65,000)    50p
                                          --------  --------  --------  --------
     Options
     outstanding at
     end of year      459,857     41p     476,857     41p     476,857     41p
                     ---------            --------  --------  --------  --------

     *  Expressed  in  pence.  There  are  100  pence  per  UK  Pound  Sterling.

     The  following  outlines  the significant assumptions used to calculate the
     fair  value information presented utilizing the Black-Scholes Single Option
     approach  with  ratable  amortization:


     Risk free rates                                         5.63% - 5.69%
     Expected life                                           7 - 10 years from
                                                             date of grant
     Expected volatility                                     65%
     Expected Dividends                                      None
     Weighted average grant-date fair value of Options       38p


                                      F-20
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


16.  STOCK  OPTION  PLANS  (CONTINUED)

     Details  of the options outstanding and exercisable as of December 31, 2002
     are  as  follows:


     Range of exercise prices*     Number       Weighted   Weighted    Number
                                 outstanding    average     average  exercisable
                                                remaining    price*
                                              contract life

     21p - 50p                        459,857  4.47 years       41p      476,857

     *  Expressed  in  pence.  There  are  100  pence  per  UK  Pound  Sterling.


     The  Company  applies  APB 25 and related interpretations in accounting for
     its  stock option plans. Stock options are granted at current market prices
     at  the  date  of  the  grant,  therefore  no  compensation  cost  has been
     recognized  for its stock option plans. The following table shows pro forma
     net  loss  as  if the fair value based accounting method prescribed by SFAS
     No.  123  had  been  used  to  account  for  stock based compensation cost:


                                                            DECEMBER 31,
                                                       2002     2001    2000

     Net income (loss) as reported                   $   (74)  $ 595   $ 356
     Pro forma compensation expense                        -     (40)    (26)
                                                               ------  ------
     Pro forma net income (loss)                         (74)    555     330
                                                     ========  ======  ======

     Basic earnings (loss) per share as reported      (0.002)  $0.03   $0.02
                                                               ======  ======
     Diluted earnings (loss) per share as reported    (0.002)  $0.03   $0.02
                                                               ======  ======

     Basic pro forma earnings (loss) per share        (0.002)  $0.03   $0.02
                                                               ======  ======
     Diluted pro forma earnings (loss) per share     $(0.002)  $0.03   $0.02
                                                               ======  ======


                                      F-21
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


17.  RELATED  PARTIES


     Vero  International  Software s.r.l leases its premises at Romano Canavese,
     near  Turin,  Italy,  from  Mrs.  A.  Giacinta, the mother-in-law of Mr. E.
     Galardo,  a  director.  The  rental  payments,  which are lower than market
     value,  as  the  Company has financed the leasehold improvements, were $18,
     $15  and  $16  in  the  years  ended  December  31,  2002,  2001  and 2000.

     Mr.  E.  Miller,  a  director,  is  a consultant to Kleban and Samor, P.C.,
     Attorneys  at  Law. The group engaged the services of this firm which acted
     on  a number of assignments in relation to the Company's business for which
     the  aggregate  of fees amounted to approximately $111, $174 and $81 in the
     years  ended  December 31, 2002, 2001 and 2000. Amounts due and included in
     accounts  payable  were  $40  and  $28  at  December  31,  2002  and  2001,
     respectively.

     Mrs  I Fredericks is Managing Director of Corporate Finance for Westminster
     Securities  Corporation  ("Westminster"),  based  in  New York. In November
     2001,  the  group  retained  the  services  of  Westminster  which acted as
     placement  agent  to  secure  additional  finance for the Company through a
     private  placement  of  shares  in  the  Company.  Westminster  Securities
     Corporation  is  entitled to commission of 7% of the amount raised, payable
     on  each  closing, together with warrants equal to 10% of the amount raised
     at  an  exercise price of $5.4515. Westminster qualifies for commission and
     warrants  in  connection  with  the  convertible  debenture  and  proposed
     financing  arrangements  with Hemisphere Capital described in note 21]. The
     aggregate  of  fees  paid  during  2002  was  $30  (2001:  $20).


                                      F-22
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


18.  SEGMENT  AND  GEOGRAPHICAL  INFORMATION

     The Company operates in one principal business segment, the development and
     sale  of computer software programs and related services. Information about
     the  Company's operations in its principal markets (by source) is presented
     below:

<TABLE>
<CAPTION>
                                            DECEMBER 31,
                                                          2002     2001    2000
<S>                                                     <C>       <C>     <C>
     Net revenues
     Italy                                                4,520   $4,120  $3,584
     United Kingdom                                       4,447    4,007   4,045
     United States                                        2,095      950     609
     Rest of World                                          215      231     205
                                                        --------  ------  ------
     Consolidated net revenues                          $11,277   $9,308  $8,443
                                                        ========  ======  ======

     Income from operations
     Italy                                                  831   $  300  $  169
     United Kingdom                                        (506)     300     519
     United States                                          105      399       5
     Rest of World                                          (89)       9      44
                                                        --------  ------  ------
     Consolidated income (loss) from operations         $   341   $1,008  $  737
                                                        ========  ======  ======

     Expenditures for acquisition of long-lived
     assets
     Italy                                              $   121   $   95  $   97
     United Kingdom                                         402      180      38
     United States                                           80       24      28
     Rest of World                                           20        4       4
                                                        --------  ------  ------
     Total expenditures for acquisitions of long-lived
     assets                                             $   623   $  303  $  167
                                                        ========  ======  ======
</TABLE>

Long-lived  assets  by  geographic  region  consist  of  the  following:


                                                        2002    2001    2000

     Italy                                             $  348  $  216  $  270
     United Kingdom                                     3,188   1,046     752
     United States                                        762      36      28
     Rest of World                                         11       6       4
                                                       ------  ------  ------
     Total long-lived assets                           $4,309  $1,304  $1,054
                                                       ======  ======  ======


                                      F-23
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001, AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

19.  FINANCIAL  INSTRUMENTS

     (a)  The  following  methods  and  assumptions  were used by the Company in
          estimating  fair  value  disclosures  for  financial  instruments:-

          MORTGAGE  NOTES

          The  carrying  amounts  reported  in  the  balance  sheets  for  these
          instruments  approximate  their  fair  value as the interest rates are
          based  on  a  floating  rate.

          ACCOUNTS  AND  NOTES  RECEIVABLE

          The  fair  value  of  accounts  receivable  due in excess of 1 year is
          determined  by  imputing  interest,  generally LIBOR plus 2%, over the
          estimated  period  to collect accounts due. Notes receivable in excess
          of  1-year  approximate  fair  value  as  interest  rates are based on
          floating  rates.

          The estimated fair value of accounts and notes receivable in excess of
          1  year  is  as  follows  at  December  31,  2002:


                                                             CARRYING    FAIR
                                                               VALUE    VALUE

          Accounts and notes receivable                      $     118  $  118


          OTHER  ASSETS  AND  LIABILITIES

          The fair value of accounts receivable and accounts payable approximate
          their  carrying  value  due  to  their  short-term  nature.

     (b)  MARKET  RISK

          Market  risk exists with respect to changes in foreign exchange rates.
          At December 31, 2002, the Company, through its Italian subsidiary, had
          mortgage  notes  of  $34.  None  of  this  exposure  is hedged through
          purchasing  forward  exchange  currency contracts. However the Company
          has  operations  in  Italy and expects to generate revenues in Italian
          Lira.  Since  the  Company's  mortgage notes bear interest at variable
          rates,  it  is  exposed  to  movements  in  interest  rates.


                                      F-24
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001 AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

19.  FINANCIAL  INSTRUMENTS  (CONTINUED)


     (c)  CONCENTRATIONS  OF  CREDIT  RISK

          The  Company  is exposed to credit risk to the extent that it operates
          through  a  network of dealers. The risk is mitigated by the fact that
          dealers  do  not generally hold inventory. No single end user accounts
          for  more  than  10  per  cent of the Company's reported revenues. Two
          dealers  accounted for approximately 11% and 7% respectively, of total
          net  revenues  for  the  year  ended  December  31,  2002.

          Financial  instruments  that  potentially  subject  the  Company  to
          concentrations  of  credit  risk  include accounts receivable from its
          customers, which are located throughout the United Kingdom, Italy, the
          United States and, to a lesser extent, other regions of the world. The
          credit  risk  associated  with  the  Company's  accounts receivable is
          mitigated by its credit evaluation process, although collateral is not
          required.  Three  dealers collectively accounted for approximately 15%
          of  net  accounts  receivable  as  of  December  31,  2002

          The  Company  maintains cash balances at large financial institutions,
          which  do not provide insurance on amounts under deposit arrangements.
          The  Company  has  not  experienced  any  losses  in such accounts and
          believes  it  is  not  exposed to any significant credit risk on cash.

     (d)  FORWARD  FOREIGN  EXCHANGE  CONTRACTS

          The company enters into forward foreign currency contracts to purchase
          and  sell  foreign  currencies to reduce exposures to foreign currency
          risks.  The  forward exchange contracts generally have maturities that
          do  not  exceed  12  months  and  require  the  company to exchange at
          maturity  U.S.  dollars,  Euros  and Japanese Yen for U.K. Sterling at
          rates  agreed  to  at the inception of the contracts. The Company uses
          forward  foreign  currency  contracts as fair value hedges to mitigate
          foreign  currency  risks  related  to  recognised  monetary assets and
          liabilities  arising  on  transactions denominated in currencies other
          than  the  functional  currency  of  the  Company or its subsidiaries.

          At  December  31  2002,  the  fair  value  of forward foreign currency
          contracts  in gain (i.e. asset) positions was $802, and the fair value
          of  forward  foreign  currency  contracts  in  loss  (i.e.  liability)
          positions  was  $1,500.  These  fair values were determined based upon
          current forward rates applicable to the remaining terms of the forward
          contracts  as  of  December 31, 2002. These currency forward contracts
          did  not  qualify  as  fair  value hedges under SFAS 133. The net gain
          (loss) arising from foreign currency forward contracts, which amounted
          to  $64,  $(6)  and $10 during the years ended December 31, 2002, 2001
          and  2000,  respectively,  have  been included within the consolidated
          statements  of  operations.


                                      F-25
<PAGE>
                                  VI GROUP PLC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2002, 2001 AND 2000
                 ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)



20.  PENSIONS

     The  company  operates  a defined contribution pension scheme for employees
     based  in  the  United  Kingdom.  The  scheme  is  funded by the payment of
     contributions  to  an  independently  administered fund. Contributions were
     $57,  $43  and  $38  for  the  years ended December 31, 2002, 2001 and 2000
     respectively.


21.  SUBSEQUENT  EVENTS

     On  January  10,  2003,  the  Company  issued  a  $1.0  million convertible
     debenture  ("Debenture"  )  to  Hemisphere Capital, LLC. The Debenture will
     bear interest at 9% per annum, is convertible in certain circumstances into
     American  Depositary Receipts ("ADRs") of the Company at a price of $4.5429
     per  ADR,  with each ADR representing 20 ordinary shares and will mature no
     later  than  January  10,  2006.  The  Debenture  would be convertible into
     4,402,460  ordinary  shares  subject  to  anti-dilution  and  other similar
     adjustments.

     Under the terms of the Debenture, Hemisphere has the right to subscribe for
     between  $2,000 and $4,000 of preference shares of the Company ("Preference
     Shares") for a period of 120 days after notice from the Company offering to
     sell  the  Preference  Shares  to  Hemisphere,  following  approval  of the
     Preference Shares by the Company's Board of Directors and Shareholders. The
     Debenture  shall  become  due  and  payable,  if not sooner converted, upon
     various  contingencies,  including failure of the Company's shareholders at
     an  extraordinary  general  meeting  held  for the purpose to authorize the
     Preference  Shares.  The Company has the option to require conversion as of
     the  final  maturity  date  of  the  Debentures.

     The  Company  intends to seek the authorization of its shareholders for the
     issuance  of  the  Preference Shares at an extraordinary general meeting of
     shareholders  to  be  held  in  July  2003.


                                      F-26
<PAGE>
<TABLE>
<CAPTION>
                                    FORM 20-F
                          ANNUAL REPORT OF VI GROUP PLC
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                  EXHIBIT INDEX
                                  -------------


Exhibit       Document                                             Page Number
--------  -------------------------------------------------------  ---------------
<C>       <S>                                                      <C>
    1.        Articles of Association                             *Incorporated by
                                                                   Reference

    2.        None

    3.        None

    4(a)      Share Sale Agreement between the                    *Incorporated by
              Company and Tecnocam S.p.A.                          Reference
              Dated May 15, 2000

    4(a)      Sale and Purchase Agreement between                 *Incorporated by
              Vero International Software UK                       Reference
              Limited and Ubiquity Software
              Corporation Limited dated
              March 2, 2001


    4(a)      Sale and Purchase Agreement between Vero
              International, Inc. Steven Witherspoon and
              Adam Panchyshyn dated May 9, 2002 regarding
              Purchase of Vero Tooling Solutions, Inc.             E-1

    4(a)      Sale and Purchase Agreement between the Company
              and NC Graphics (Cambridge) Limited and
              Arthur Flutter dated September 27, 2002
              regarding purchase of assets of Machining Strategist
              business                                             E-28

    4(a)(iii) Consulting Agreement between Company
              and Ezio Galardo dated April 15, 2002               *Incorporated by
                                                                   Reference 2001

    4(a)(iii) Termination of Executive Service Agreement
              between Company and Ezio Galardo
              dated April 15, 2002                                *Incorporated by
                                                                   Reference 2001


    4(b)(ii)  Software Licensing Agreement                        *Incorporated by
              Reference

    4(b)(ii)  Distribution Agreement                              *Incorporated by
                                                                   Reference

    4(b)(iii) Translation in English of                           *Incorporated by
              Commercial property lease for                        Reference


<PAGE>
              subsidiary Vero International
              Software dated May 1, 1997

              Commercial property lease for                       *Incorporated by
              subsidiary Vero International                        Reference
              Software dated May 1, 1997


    4(b)(iii) Commercial property lease  for                      *Incorporated by
              Brimscombe Port Stroud Property                      Reference
              between the Company and HUE Investments
              Limited dated August 12, 1998


    4(b)(iii) Translation into English of                         *Incorporated by
              Former Teconocam S.p.A. (now Vero                    Reference
              Tecnologie S.p.A.) commercial
              property lease dated October 18,
              1999 and assumed by the Company


              Former Teconocam S.p.A. (now Vero                   *Incorporated by
              Tecnologie S.p.A.) commercial                        Reference
              property lease dated October 18,
              1999 and assumed by the Company


    4(b)(iii) Translation into English                            *Incorporated by
              Commercial property lease between                    Reference
              subsidiary Vero System e Consulenze S.r.l.
              dated October 31, 1998


              Commercial property lease between                   *Incorporated by
              subsidiary Vero System e Consulenze S.r.l.           Reference
              dated October 31, 1998


    5.        None

    6.        See Note 14 of Consolidated
              Financial Statements

    7.        Not Applicable

    8.        Subsidiaries                                        E-47

    9.        Not Applicable

   10.        Not Applicable


<PAGE>
   11.        Not Applicable

   12(a)(i)   Engagement Letter between the
              Company and Westminster Securities Corp.
              dated November 15, 2001                             *Incorporated by
                                                                   Reference 2001

   12(a)(ii)  Loan and Investment Agreement between the
              Company and Hemisphere Capital LLC dated
              January 10, 2003                                     E-48

   12(a)(iii) 1,000,000 Convertible Debenture
              dated January 10, 2003 issued by the
              Company to Hemisphere Capital LLC                    E-103
</TABLE>


*Exhibits  marked  "Incorporated  by  Reference"  are  hereby  incorporated  by
reference  to  Exhibits  bearing  like  number  and  filed  with  the  Company's
Registration  Statement  on  Form  20F,  effective May 22, 2001. Exhibits marked
"Incorporated  by  Reference  2001"  are  hereby  incorporated  by  reference to
Exhibits  bearing like number and filed with the Company's Annual Report on Form
20F  for  the  fiscal  year  ended  December  31,  2001.


<PAGE>