##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 or,
 o
    
    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 0-27012
 Insignia Solutions plc
 (Exact name of Registrant as specified in its charter)
 England and Wales
(State or other jurisdiction of
incorporation or organization)
    
    Not applicable
(I.R.S. employer identification
number)
 
 41300 Christy Street
Fremont
California 94538
United States of America
(510) 360-3700
    
    Mercury Park, Wycombe Lane
Wooburn Green
High Wycombe, Bucks HP10 0HH
United Kingdom
(44) 1628-539500
 (Address and telephone number of principal executive offices and principal places of business)
 þ o
 o þ




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##### Table of Contents



INSIGNIA SOLUTIONS PLC
  
 PART 1 - FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:
    
    Page No.Condensed Consolidated Balance Sheets at June 30, 2005 and December 31, 2004 (unaudited)
    
    3Condensed Consolidated Statements of Operations for the three and six months ended June 30,2005 and 2004 (unaudited)
    
    4Condensed
Consolidated Statements of Cash Flows for the six months ended June 30,2005 and 2004 (unaudited)
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    6Item 2.
    
    Management's Discussion and Analysis of Financial Condition andResults of Operations
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    28Item 4.
    
    Controls and Procedures
    
    28PART II - OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    29Item 3.
    
    Defaults Upon Senior Securities
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    29Item 5.
    
    Other Information
    
    29Item 6.
    
    Exhibits
    
    29Signature
    
    
    
    30EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 INSIGNIA SOLUTIONS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, amounts in thousands, except share amounts)
 June 30,
    
    
    December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    842
    
    
    $
    902Restricted cash
    
    
    50
    
    
    
    50Accounts receivable, net of allowances of $195 and $0, respectively
    
    
    617
    
    
    
    175Other receivables
    
    
    66
    
    
    
    241Tax receivable
    
    
    137
    
    
    
    322Prepaid expenses
    
    
    261
    
    
    
    456Total current assets
    
    
    1,973
    
    
    
    2,146Property and equipment, net
    
    
    123
    
    
    
    140Intangible assets, net
    
    
    2,290
    
    
    
    Goodwill
    
    
    416
    
    
    
    Investment in affiliate
    
    
    
    
    
    
    68Other assets
    
    
    228
    
    
    
    233$
    5,030
    
    
    $
    2,587LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    779
    
    
    $
    241Accrued liabilities
    
    
    1,234
    
    
    
    995Notes payable
    
    
    64
    
    
    
    Deferred revenue
    
    
    118
    
    
    
    10Total current liabilities
    
    
    2,195
    
    
    
    1,246Commitments and contingencies (Note 6)Shareholders equity:Preferred shares, £0.20 par value: 3,000,000 shares authorized; no
shares issued
    
    
    
    
    
    
    Ordinary shares, £0.20 par value: 75,000,000 shares authorized;
42,433,025 and 35,722,205 shares issued and outstanding in 2005 and
2004, respectively
    
    
    14,470
    
    
    
    11,939Additional paid-in capital
    
    
    66,199
    
    
    
    64,459Ordinary share subscription
    
    
    712
    
    
    
    Accumulated deficit
    
    
    (78,085
    )
    
    
    (74,596
    )Other accumulated comprehensive loss
    
    
    (461
    )
    
    
    (461
    )Total shareholders equity
    
    
    2,835
    
    
    
    1,341$
    5,030
    
    
    $
    2,587
  3




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INSIGNIA SOLUTIONS PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, amounts in thousands, except per share amounts)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues:License
    
    $
    500
    
    
    $
    105
    
    
    $
    917
    
    
    $
    421Service
    
    
    234
    
    
    
    2
    
    
    
    279
    
    
    
    5Total net revenues
    
    
    734
    
    
    
    107
    
    
    
    1,196
    
    
    
    426Expenses:Cost of net revenues
    
    
    94
    
    
    
    5
    
    
    
    99
    
    
    
    28Sales and marketing
    
    
    667
    
    
    
    529
    
    
    
    1,329
    
    
    
    1,345Research and development
    
    
    767
    
    
    
    661
    
    
    
    1,591
    
    
    
    1,472General and administrative
    
    
    703
    
    
    
    670
    
    
    
    1,484
    
    
    
    1,261Amortization of intangible assets
    
    
    97
    
    
    
    
    
    
    
    110
    
    
    
    Total operating expenses
    
    
    2,328
    
    
    
    1,865
    
    
    
    4,613
    
    
    
    4,106Operating loss
    
    
    (1,594
    )
    
    
    (1,758
    )
    
    
    (3,417
    )
    
    
    (3,680
    )Interest income (expense), net
    
    
    (43
    )
    
    
    3
    
    
    
    (42
    )
    
    
    2Other income (expense), net
    
    
    37
    
    
    
    264
    
    
    
    6
    
    
    
    251Loss before income taxes
    
    
    (1,600
    )
    
    
    (1,491
    )
    
    
    (3,453
    )
    
    
    (3,427
    )Provision for (benefit from) income taxes
    
    
    
    
    
    
    (187
    )
    
    
    36
    
    
    
    (213
    )Net loss
    
    
    (1,600
    )
    
    
    (1,304
    )
    
    
    (3,489
    )
    
    
    (3,214
    )Deemed dividend related to beneficial conversion feature of
preferred stock
    
    
    (415
    )
    
    
    
    
    
    
    (415
    )
    
    
    Net loss attributable to ordinary shareholders
    
    $
    (2,015
    )
    
    $
    (1,304
    )
    
    $
    (3,904
    )
    
    $
    (3,214
    )Basic and diluted net loss per share
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.10
    )
    
    $
    (0.11
    )Weighted average shares and share equivalents:Basic and diluted
    
    
    42,407
    
    
    
    29,240
    
    
    
    40,956
    
    
    
    28,928
  4




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INSIGNIA SOLUTIONS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, amounts in thousands)
 Six months endedJune 30,2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (3,489
    )
    
    $
    (3,214
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    53
    
    
    
    53Amortization of intangible assets
    
    
    110
    
    
    
    Allowance for doubtful accounts
    
    
    195
    
    
    
    Non-cash
charge for warrants, shares and stock options
    
    
    65
    
    
    
    353Equity in net loss of affiliate
    
    
    68
    
    
    
    40Gain on sale of product line
    
    
    
    
    
    
    (298
    )Net changes
in assets and liabilities, net of acquired assets and liabilities:Accounts receivable
    
    
    (496
    )
    
    
    (195
    )Other receivables
    
    
    187
    
    
    
    (428
    )Tax receivable
    
    
    190
    
    
    
    (45
    )Prepaid royalties
    
    
    
    
    
    
    2,185Prepaid expenses
    
    
    206
    
    
    
    61Other noncurrent assets
    
    
    5
    
    
    
    (7
    )Accounts payable
    
    
    457
    
    
    
    (251
    )Accrued liabilities
    
    
    187
    
    
    
    (106
    )Deferred revenue
    
    
    (113
    )
    
    
    (821
    )Net cash used in operating activities
    
    
    (2,375
    )
    
    
    (2,673
    )Cash flows from investing activities:Investment in affiliate
    
    
    
    
    
    
    (75
    )Acquisition of Mi4e, net of cash acquired
    
    
    201
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    (30
    )Purchases of property and equipment
    
    
    (12
    )
    
    
    (58
    )Net cash
provided by (used in) investing activities
    
    
    189
    
    
    
    (163
    )Cash flows from financing activities:Proceeds from issuance of shares, net
    
    
    2,081
    
    
    
    1,604Proceeds from exercise of warrants
    
    
    
    
    
    
    389Proceeds from exercise of stock options and employee stock purchases
    
    
    89
    
    
    
    581Repayment of notes payable
    
    
    (44
    )
    
    
    Net cash provided by financing activities
    
    
    2,126
    
    
    
    2,574Net decrease in cash and cash equivalents
    
    
    (60
    )
    
    
    (262
    )Cash and cash equivalents at beginning of the period
    
    
    902
    
    
    
    2,212Cash and cash equivalents at end of the period
    
    $
    842
    
    
    $
    1,950Non-cash issuance of shares for acquired business
    
    $
    2,749
    
    
    $
    
  5




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INSIGNIA SOLUTIONS PLC
 
 NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(unaudited)
 Note 1. Basis of presentation
      Note 2. Net loss per share
  6




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(in thousands, except per share data)Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator  basic and diluted:Net loss attributable to ordinary shareholders
    
    $
    (2,015
    )
    
    $
    (1,304
    )
    
    $
    (3,904
    )
    
    $
    (3,214
    )Denominator of basic net loss per share:Weighted average number of ordinary shares outstanding
    
    
    42,407
    
    
    
    29,240
    
    
    
    40,956
    
    
    
    28,928Basic net loss per share
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.10
    )
    
    $
    (0.11
    )Denominator of diluted net loss per share:Weighted average number of ordinary shares outstanding
    
    
    42,407
    
    
    
    29,240
    
    
    
    40,956
    
    
    
    28,928Dilutive ordinary equivalent shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average number of ordinary shares outstanding
    
    
    42,407
    
    
    
    29,240
    
    
    
    40,956
    
    
    
    28,928Diluted net loss per share
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.10
    )
    
    $
    (0.11
    )
  Note 3.
Stock-based compensation
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss attributable to ordinary shareholders 
as reported
    
    $
    (2,015
    )
    
    $
    (1,304
    )
    
    $
    (3,904
    )
    
    $
    (3,214
    )Less stock-based compensation expense determined
under fair value based method
    
    
    (37
    )
    
    
    (204
    )
    
    
    (70
    )
    
    
    (390
    )Net loss  pro forma
    
    $
    (2,052
    )
    
    $
    (1,508
    )
    
    $
    (3,974
    )
    
    $
    (3,604
    )Basic and diluted net loss per share  as reported
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.10
    )
    
    $
    (0.11
    )Basic and diluted net loss per share  pro forma
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    $
    (0.10
    )
    
    $
    (0.12
    )
 7




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Stock Options:Volatility range
    
    
    272 - 276
    %
    
    
    139 - 140
    %
    
    
    104 - 276
    %
    
    
    139 - 198
    %Risk-free interest rate range
    
    
    4.21 - 4.28
    %
    
    
    3.75 - 4.07
    %
    
    
    3.88 - 4.33
    %
    
    
    1.11 - 4.07
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life (years)
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4Employee Stock Purchase Plan:Volatility range
    
    
    N/A
    
    
    
    N/A
    
    
    
    84
    %
    
    
    198
    %Risk-free interest rate range
    
    
    N/A
    
    
    
    N/A
    
    
    
    2.93
    %
    
    
    1.13
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life (years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5
 Note 4.
New accounting pronouncements
   Note 5. Mi4e Acquisition
   8




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Allocation
of Purchase Price:
 Tangible assets acquired
    
    $
    497Liabilities assumed
    
    
    (275
    )Goodwill(a)
    
    
    394Customer relationships(b)
    
    
    900Technology (c)
    
    
    1,500Total purchase price
    
    $
    3,016
 
 (a)
    
    Goodwill represents the excess of the purchase price over the fair value of the net
assets acquired and liabilities assumed.
 (b)
    
    Customer relationships will be amortized over 10 years, the period of time Insignia
estimates it will benefit from the acquired customer relationship.
 (c)
    
    Technology will be amortized over 5 years, the period of time Insignia estimates it
will benefit from the technology acquired.
    Six months endedJune 30,2005
    
    
    2004Net revenues
    
    $
    1,409
    
    
    $
    674Net loss
attributable to ordinary shareholders
    
    $
    (4,065
    )
    
    $
    (3,521
    )Net loss per share  Basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.11
    )
  9




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Note 6. Commitments and Contingencies
     Note 7. Segment reporting and long-lived assets
   Note 8. Equity transactions and warrants
   10




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11




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Warrants outstanding
    
    
    Warrants outstandingand exercisable
    
    
    exercise priceBalance, December 31, 2004
    
    
    2,130,911
    
    
    $
    0.92 - $5.00Granted
    
    
    6,738,355
    
    
    
    0.37 - $1.11
    (1)Exercised
    
    
    
    
    
    
    Balance, June 30, 2005
    
    
    8,869,266
    
    
    $
    0.37 - $5.00
    (1)
 
  Note 9. Related party transaction
  Note 10. Notes payable
   12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  This Form 10-Q contains forward-looking statements. Words such as anticipates, believes,
expects, future, and intends, and similar expressions are used to identify forward-looking
statements. These forward-looking statements concern matters which include, but are not limited to,
the revenue model and market for our products, its features, benefits and advantages of our
international operations and sales, gross margins, spending levels, the availability of licenses to
third-party proprietary rights, business and sales strategies, matters relating to proprietary
rights, competition, exchange rate fluctuations and our liquidity and capital needs. These and
other statements regarding matters that are not historical are forward-looking statements. These
matters involve risks and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. In addition to the factors discussed above, among other
factors that could cause actual results to differ materially are the following: the demand for our
products; their performance and functionality; our ability to deliver products on time, and market
acceptance of new products or upgrades of existing products; the timing of, or delay in, large
customer orders; continued availability of technology and intellectual property license rights;
product life cycles; quality control of products sold; competitive conditions in the industry;
economic conditions generally or in various geographic areas; and the other risks listed from time
to time in the reports that we file with the U.S. Securities and Exchange Commission. Factors that
could cause or contribute to such differences in results and outcomes include without limitation
those discussed below as well as those discussed elsewhere in this Report. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect managements
analysis only as of the date hereof. We assume no obligation to update these forward-looking
statements to reflect actual results or changes in factors or assumptions affecting such
forward-looking statements.
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net revenues:License
    
    
    68
    %
    
    
    98
    %
    
    
    77
    %
    
    
    99
    %Service
    
    
    32
    
    
    
    2
    
    
    
    23
    
    
    
    1Total net revenues
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100Expenses:Cost of revenues
    
    
    13
    
    
    
    5
    
    
    
    8
    
    
    
    7Sales and marketing
    
    
    91
    
    
    
    494
    
    
    
    111
    
    
    
    316Research and development
    
    
    104
    
    
    
    618
    
    
    
    133
    
    
    
    345General and administrative
    
    
    96
    
    
    
    626
    
    
    
    125
    
    
    
    296Amortization of intangibles
    
    
    13
    
    
    
    
    
    
    
    9
    
    
    
    Total operating expenses
    
    
    317
    
    
    
    1,743
    
    
    
    386
    
    
    
    964Operating loss
    
    
    (217
    )
    
    
    (1,643
    )
    
    
    (286
    )
    
    
    (864
    )Interest income (expense), net
    
    
    (6
    )
    
    
    3
    
    
    
    (3
    )
    
    
    Other income (expense), net
    
    
    5
    
    
    
    246
    
    
    
    
    
    
    
    59Loss before income taxes
    
    
    (218
    )
    
    
    (1,394
    )
    
    
    (289
    )
    
    
    (804
    )Provision for (benefit from) income taxes
    
    
    
    
    
    
    (175
    )
    
    
    3
    
    
    
    (50
    )Net loss
    
    
    (218)
    %
    
    
    (1,219)
    %
    
    
    (292)
    %
    
    
    (754)
    %
 Overview
  13




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
    
    initial licensing fees
    
    royalties paid based on volume of users
    
    support and maintenance fees
    
    trial and installation
    
    subscription fees for hosting services
    
    engineering services
   Critical accounting policies and estimates
  14




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Revenue recognition
        Accounts receivable and allowance for doubtful accounts
  15




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Intangible Assets and Goodwill
   Accounting
for the Impairment or Disposal of Long-Lived Assets
  Results of Operations
 Revenues
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands)
    
    
    (in thousands)License revenue
    
    $
    500
    
    
    $
    105
    
    
    $
    917
    
    
    $
    421Service revenue
    
    
    234
    
    
    
    2
    
    
    
    279
    
    
    
    5Total net revenue
    
    $
    734
    
    
    $
    107
    
    
    $
    1,196
    
    
    $
    426
   16




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Expenses
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands, except percentages)
    
    
    (in thousands, except percentages)Cost of net revenues
    
    $
    94
    
    
    $
    5
    
    
    $
    99
    
    
    $
    28Percentage of total revenues
    
    
    13
    %
    
    
    5
    %
    
    
    8
    %
    
    
    7
    %Sales and marketing
    
    $
    667
    
    
    $
    529
    
    
    $
    1,329
    
    
    $
    1,345Percentage of total revenues
    
    
    91
    %
    
    
    494
    %
    
    
    111
    %
    
    
    316
    %Research and development
    
    $
    767
    
    
    $
    661
    
    
    $
    1,591
    
    
    $
    1,472Percentage of total revenues
    
    
    104
    %
    
    
    618
    %
    
    
    133
    %
    
    
    345
    %General and administrative
    
    $
    703
    
    
    $
    670
    
    
    $
    1,484
    
    
    $
    1,261Percentage of total revenues
    
    
    96
    %
    
    
    626
    %
    
    
    125
    %
    
    
    296
    %Amortization
of intangible assets
    
    $
    97
    
    
    
    
    
    
    $
    110
    
    
    
    Percentage of total revenues
    
    
    13
    %
    
    
    
    
    
    
    9
    %
    
    
    
      17




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Provision for (benefit from) income taxes
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands, except percentages)
    
    
    (in thousands, except percentages)Provision for (benefit from) income taxes
    
    $
    
    
    
    $
    (187
    )
    
    $
    36
    
    
    $
    (213
    )Effective income tax rate
    
    
    
    %
    
    
    13
    %
    
    
    
    %
    
    
    6
    %
  Liquidity and capital resources
 June 30,
    
    
    December 31,2005
    
    
    2004(in thousands)Cash, cash equivalents and restricted cash
    
    $
    892
    
    
    $
    952Working capital (deficit)
    
    $
    (222
    )
    
    $
    900
      OperatingLeasesYear ending December 31, 2005 (July 1, 2005 through December 31, 2005)
    
    $
    1072006
    
    
    1222007
    
    
    952008
    
    
    952009
    
    
    95Thereafter
    
    
    918$
    1,432
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New
Accounting Pronouncements
   Risk Factors
  We may need additional financing to sustain our operations, and we may not be able to continue to
operate as a going concern.
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Our stock could be delisted from Nasdaq.
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The sale of our shares to Fusion Capital will cause dilution, and the sale of shares by Fusion
Capital and others could cause the price of our shares to decline.
   We have achieved minimal sales of our products to date.
    The long and complex process of licensing our products makes our revenue unpredictable.
  We rely on third parties for software development tools, which we distribute with some of our
products.
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If handset manufacturers (and other third parties) do not achieve substantial sales of their
products that incorporate our technology, we will not receive royalty payments on our licenses.
  We have a history of losses and we must generate significantly greater revenue if we are to achieve
profitability.
  We need to increase our sales and marketing expenditures in order to achieve sales of our products;
however, this increase in expenses is expected to decrease our cash position.
  If we are unable to stay abreast of technological changes, evolving industry standards and rapidly
changing customer requirements, our business reputation will likely suffer and revenue may decline.
  
    
    accurately anticipate industry trends and changes in technology standards;
    
    complete and introduce new product designs and features in a timely manner;
    
    continue to enhance our existing product lines; and
    
    respond promptly to customers requirements and preferences.
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Our targeted market is highly competitive.
   Our revenue model may not succeed.
  Fluctuations in our quarterly results could cause the market price of our shares to decline.
  
    
    the volume and timing of orders received during the quarter;
    
    the mix of and changes in customers to whom our products are sold;
    
    the mix of product and service revenue received during the quarter;
    
    the mix of development license fees and commercial use royalties received;
    
    the timing and acceptance of new products and product enhancements by us or by our competitors;
    
    changes in product pricing;
    
    foreign currency exchange rate fluctuations; and
    
    ability to recognize revenue on orders received.
  We have engineering and other operations both in the United States and foreign countries, which is
expensive and can create logistical challenges.
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International sales of our products, which we expect to comprise a significant portion of total
revenue, expose us to the business and economic risks of international operations.
  
    
    longer receivable collection periods and greater difficulty in accounts receivable collection;
    
    foreign government regulation;
    
    reduced protection of intellectual property rights in some countries where we do business;
    
    unexpected changes in, or imposition of, regulatory requirements, tariffs, import and
export restrictions and other barriers and restrictions;
    
    potentially adverse tax consequences;
    
    the burdens of complying with a variety of foreign laws and staffing and managing foreign operations;
    
    general geopolitical risks, such as political and economic instability, terrorism,
hostilities with neighboring countries and changes in diplomatic and trade relationships;
and
    
    possible recessionary environments in economies outside the United States.
 Our technology depends on the adoption of standards such as those set forth by the Open Mobile
Alliance (OMA). If such standards are not effectively established our business could suffer. Use
of open industry standards, however, may also make us more vulnerable to competition.
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Product defects can be expensive to fix and may cause us to lose customers.
   If we lose key personnel or are unable to hire additional qualified personnel as necessary, we may
not be able to successfully manage our business or sell our products.
  Our performance depends significantly on our ability to protect our intellectual property and
proprietary rights in the technologies used in our products. If we are not adequately protected,
our competitors could use the technologies that we have developed to enhance their products and
services, which could harm our business
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Our products may infringe the intellectual property rights of third parties, which may result in
lawsuits and prevent us from selling our products.
  We are at risk of securities litigation which, regardless of the outcome, could result in
substantial costs and divert management attention and resources.
  If we are unable to favorably assess the effectiveness of our internal controls over financial
reporting, or if our independent auditors are unable to provide an unqualified attestation report
on our assessment our stock price could be adversely affected.
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Our investors may have difficulty enforcing judgments against us in U.S. courts because many of our
assets and some of our directors and management are located in England and Sweden.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    We held an Extraordinary General Meeting on May 24, 2005. Proxies for the meeting were
solicited pursuant to Regulation 14A.(b)
    
    The matter described below was voted on at the Extraordinary General Meeting, and the
number of votes cast were as indicated:
 1.
 FOR
    
    AGAINST
    
    ABSTAIN15,751,442
    
    
    152,293
    
    
    
    5,681
 
 Item 5. Other Information
  
 Item 6. Exhibits
  ExhibitNumber
    
    Exhibit Title31.1
    
    Certificate of Chief Executive Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certificate of Chief Financial Officer and Principal Accounting Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate of Chief Executive Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certificate of Chief Financial Officer and Principal Accounting Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURE
  INSIGNIA SOLUTIONS PLC
(Registrant)Date: August 19, 2005
    /s/ Mark E. McMillanMARK E. MCMILLANChief Executive Officer 30




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EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Title31.1
    
    Certificate of Chief Executive Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certificate of Chief Financial Officer and Principal Accounting Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate of Chief Executive Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certificate of Chief Financial Officer and Principal Accounting Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.