This letter is intended to provide Mandrakesoft Shareholders with the latest news of the company. 
Subscribe to the Shareholder Monthly Newsletter, in order to receive directly in your mail box the latest financial news related to Mandrakesoft. 

MANDRAKESOFT 
Strong increase in consolidated revenues in second quarter
(January - March 2002) 
+155% to Eur 0.97 Million
(In € million) 2000-2001 2001-2002 Variation 
1st quarter (*) 2nd quarter (*) 
1.32 1.36 +3% 0.38 0.97 +155% 1st semester (*) 
1.70 2.33 +37% (*) consolidated figures, not checked by auditors

After the sales in the First Quarter of the 2001-2002 fiscal year showed little change in comparison with the previous year, Mandrakesoft has seen a significant rise in the Second with the turnover increasing by 155% to Eur0.97Million. This is particularly noteworthy, as sales in Q2 and Q4 can reasonably be expected to be lower than the other two since they do not benefit from the 'launch effect' of new versions of Mandrakelinux. For example, the new 8.2 version of Mandrake Linux was launched in the beginning of April 2002 (Q3). 

The substantial rise in sales during the first half of the 2002 fiscal year (October 2001 to March 2002) reflects the success of the group's new offerings: 

The launch of online sales on MandrakeStore in 2001, which in addition to a greater gross margin contributed 22% of total sales. 

OEM sales, particularly those in conjunction with Hewlett Packard, now represent 16% of the half-yearly sales. 

The launch of Mandrakeclub (Mandrakelinux users club) is proving very successful : Annual subscriptions have generated cash of Eur0.44 Million in the first six months, yielding a revenue of Eur37.000 (revenues are spread evenly throughout the duration of the subscription). 
Moreover : 

Sales via traditional distribution channels are declining due to difficult market conditions, and now represent 51% of sales. Mandrakesoft's dependence on its American distributor Macmillan continues to decrease, and is now down to 35% of sales, in comparison with over 51% in the same period in the prior year. 

Sales of services represented 9% of total revenues, with a strong increase in the second quarter (+271%), in comparison with the first, thanks to the reshaping of the service offerings 
at the beginning of the quarter. 

This strong sales performance should, in conjunction with the cost-cutting measures which are in hand, allow another substantial reduction in operating losses, in comparison with the previous two semesters. 

In order to continue its development and increase its market share, Mandrakesoft plans a capital increase, with the aim to further strengthen its financial structure. 

More information is available at:  (insert) 

Euroclear : (insert)

Reuters : (insert) 

OTC US: (insert) 

Number of shares : (insert)

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