SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-Q xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES
          EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 or, oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES
          EXCHANGE ACT OF 1934 From 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 StreetFremont
  California 94538United States of
  America
  (510) 360-3700
  The Mercury Centre, Wycombe LaneWooburn Green
  High Wycombe, Bucks HP10 0HH
  United Kingdom
  (44) 1628-539500
 (Address and telephone number of principal executive offices and
principal places of business) 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. 
YesxNoo As
of May 11, 2001, there were 19,472,401 Ordinary shares of £0.20 each nominal
value, outstanding.   INSIGNIA
SOLUTIONS PLC

PART
1 - FINANCIAL INFORMATION

Item
  1.
  Financial
  Statements:Condensed
  Consolidated Balance Sheet at March 31, 2001 and December 31, 2000Condensed
  Consolidated Statement of Operations for the three months ended March 31,
  2001 and 2000Condensed
  Consolidated Statement of Cash Flows for the three months ended March 31,
  2001 and 2000Notes to
  Unaudited Condensed Consolidated Financial StatementsItem
  2.
  Managements
  Discussion and Analysis of Financial Condition and Results of OperationsItem
  3.
  Quantitative
  and Qualitative Disclosures About Market RiskPART II
- OTHER INFORMATION

Item
  6.
  Exhibits
  and Reports on Form 8-KSignatures

PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements

INSIGNIA
SOLUTIONS PLC
CONDENSED CONSOLIDATED BALANCE SHEET(amounts in thousands, unaudited)



March 31,
  December 31,ASSETS
  2001
  2000Current assets:Cash and cash
  equivalents
  $12,044
  $12,051Cash and cash
  equivalents held in escrow
  4,986
  -Accounts
  receivable, net of allowances of $261 and $42, respectively
  3,319
  3,385Prepaid and
  other current assets
  1,203
  1,088Total current assets
  21,552
  16,524Property and
  equipment, net
  515
  512Cash and cash
  equivalents held in escrow
  -
  5,050Restricted cash
  250
  250Other
  noncurrent assets
  100
  -$22,417
  $22,336

LIABILITIES,MANDATORY REDEEMABLEAND
SHAREHOLDERS EQUITYCurrent liabilities:Accounts
  payable
  $560
  $1,096Accrued
  liabilities
  1,453
  1,833Accrued
  royalties
  973
  770Income taxes
  payable
  401
  550Deferred
  revenue
  862
  898Total current liabilities
  4,249
  5,147Contingencies (Note 6)Mandatorily redeemable warrants
  1,440
  1,440Shareholders equity:Ordinary
  shares
  6,166
  5,876Additional
  paid-in capital
  58,226
  54,117Accumulated
  deficit
  (47,203)
  (43,783)Other
  accumulated comprehensive loss
  (461)
  (461)Total shareholders equity
  16,728
  15,749$22,417
  $22,336

See
accompanying notes

INSIGNIA SOLUTIONS PLCCONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(amounts in thousands, except per share amounts, unaudited)



Three months ended 
  March 31,2001
  2000Net revenues:License
  $1,081
  $1,243Service
  615
  268Total net revenues
  1,696
  1,511Cost of net revenues:License
  611
  570Service
  184
  191Total cost of net revenues
  795
  761Gross margin
  901
  750Operating expenses:Sales and
  marketing
  1,731
  1,292Research and
  development
  1,594
  1,454General and
  administrative
  1,251
  945Total operating expenses
  4,576
  3,691Operating loss
  (3,675)
  (2,941)Interest income (expense), net
  224
  (220)Other income, net
  31
  8Loss before income taxes
  (3,420)
  (3,153)Provision for income taxes
  -
  5Net
  loss
  $(3,420)
  $(3,158)Net loss per share:Basic
  $(0.18)
  $(0.22)Diluted
  $(0.18)
  $(0.22)Weighted average equivalent shares:Basic
  18,654
  14,089Diluted
  18,654
  14,089

See accompanying notes

INSIGNIA SOLUTIONS PLCCONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
 (amounts in thousands, unaudited)

Three
  months endedMarch 31,2001
  2000Cash flows from
  operating activities:Net loss
  $(3,420)
  $(3,158)Adjustments to reconcile net loss to
  net cash usedin
  operating activities:Depreciation
  89
  117Other
  3
  (50)Net changes in assets and
  liabilities:Accounts receivable, net
  66
  (1,813)Prepaid and other current
  assets
  (115)
  (83)Other noncurrent
  assets
  (100)
  -Accounts payable
  (536)
  113Accrued liabilities
  (380)
  185Accrued royalties
  203
  103Deferred revenue
  (36)
  438Income taxes
  (149)
  (4)Convertible debt
  -
  21Net cash used in
  operating activities
  (4,375)
  (4,131)Cash flows from
  investing activities:Purchases of property and equipment
  (95)
  (55)Product line sale proceeds held in
  escrow
  (77)
  70Product line sale proceeds released
  from escrow
  141
  1,000Net cash provided
  (used) by investing activities
  (31)
  1,015Cash flows from
  financing activities:Proceeds from exercise of stock options
  125
  -Proceeds from issuance of shares,
  net
  4,274
  414Net cash provided by
  financing activities
  4,399
  414Net decrease in cash
  and cash equivalents
  (7)
  (2,702)Cash and cash
  equivalents at beginning of the period
  12,051
  4,677Cash and cash
  equivalents at end of the period
  $12,044
  $1,975

See
accompanying notes

INSIGNIA SOLUTIONS PLC

NOTES TO UNAUDITED CONDENSED
CONSOLIDATEDFINANCIAL STATEMENTS

Note 1.  Basis of
presentation

The condensed consolidated financial
statements are unaudited.  However, in
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) which are necessary for a fair presentation of the financial
position and results for the interim period have been included.

The results of operations for the three
months ended March 31, 2001 are not necessarily indicative of the results to be
expected for the entire fiscal year, which ends on December 31, 2001.

These unaudited condensed consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 2000, included in
Insignia Solutions plcs (Insignia) 2000 Annual Report and Form 10-K.

Note 2.  Income taxes

Insignia accounts for income taxes under
an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in Insignias financial statements or tax returns.  In estimating future tax consequences,
Insignia generally considers all expected future events other than enactments
of changes in the tax law or rates.

Note 3.  Net income
(loss) per share

Basic
net income (loss) per share is computed using the weighted average number of ordinary
shares outstanding during the period. 
Diluted net income (loss) per share is computed using the weighted
average number of ordinary shares and ordinary share equivalents outstanding
during the period.  Ordinary equivalent
shares consist of warrants and stock options (using the treasury stock
method).  Ordinary equivalent shares are
excluded from the computation, if their effect is antidilutive.

Statement
regarding computation of loss per share 
(in thousands except per share data,unaudited):

Three months ended 
  March 31,2001
  2000Net loss
  $(3,420)
  $(3,158)Calculation of basic loss per share:Weighted average number of ordinary sharesoutstanding used in
  computation
  18,654
  14,089Basic loss per share
  $(0.18)
  $(0.22)Calculation of diluted loss per share:Weighted average number of ordinary shares outstanding used in
  computation
  18,654
  14,089Net effect of dilutive stock options outstanding
  -
  -18,654
  14,089Diluted loss per share
  $(0.18)
  $(0.22)

Note 4.  Comprehensive
income (loss)

Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income
(FAS 130), requires that all items recognized under accounting standards as
components of comprehensive earnings be reported in an annual statement that is
displayed with the same prominence as other annual financial statements.  FAS 130 also requires that an entity
classify items of other comprehensive earnings by their nature in an annual
financial statement.  Comprehensive
income, as defined, includes all changes in equity during a period from
non-owner sources.

Total
comprehensive loss was not different from the net loss reported for the three
months ended March 31, 2001.

Note 5.  New
accounting pronouncements

In
September 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities.  This statement became effective for all
fiscal quarters of fiscal years beginning after June 15, 1999.  In June 1999, the FASB issued Statement of
Financial Accounting Standard No. 137 "Accounting for Derivative
Instruments  Deferral of the Effect Date of SFAS Statement No. 133 (SFAS
137).  SFAS 137 deferred the effective
date of SFAS 133 until June 15, 2000. 
Insignia adopted SFAS 133 in 2001. 
The adoption of SFAS 133 did not affect the results of operations.

Note 6.  Contingencies

On October 4, 1999, Insignia filed suit
against Citrix Systems Inc. ("Citrix") and GraphOn Corporation
("GraphOn") in the Superior Court of the State of California, County
of Santa Clara, relating to the misappropriation assertions of GraphOn and Citrixs
refusal to release funds still remaining in escrow and breach of a Cooperation
Agreement between Insignia and Citrix. 
On March 15, 2000, GraphOn filed a suit against Citrix and Insignia in
the Superior Court of the State of California, County of Santa Clara, alleging
trade secret misappropriation and breach of contract arising out of the same
facts and circumstances set forth in Insignia's action against GraphOn.  The two cases were consolidated.

This case was settled out of court on
April 5, 2001.  The settlement did not
involve any payment on the GraphOn claims against Insignia and the balance of
an escrow account, $4.9 million, was released to Insignia on April 20, 2001.

Note 7.  Segment
information

Statement
of Financial Accounting Standards 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131), provides for segment
reporting based upon the management approach.  The management approach designates the internal organization that
is used by management for making operating decisions and assessing performance
as the source of Insignias reportable segments.  SFAS 131 also requires disclosures about products and services,
geographic areas, and major customers.

Insignia
operates in a single industry segment providing virtual machine technology
which enables software applications and operating systems to be run on various
computer platforms.  In the first
quarter of 2001, General Instrument Corporation dba The Broadband Communications
Sector of Motorola, Inc. (Motorola), Grape Systems, Inc. (Grape), and
Echelon Corporation (Echelon) accounted for 29%, 12% and 11% of total
revenues, respectively.  In the first
quarter of 2000, Index Systems Inc., a subsidiary of Gemstar International
Group Limited (Gemstar), Compaq Computer Corporation (Compaq), and Quantum
Corporation (Quantum) accounted for 53%, 15% and 13% of total revenues,
respectively.  No other customer
accounted for 10% or more of Insignia's total revenues during the first quarter
of 2001 and 2000.

Geographic
information

Financial
information by geographical region is summarized below (in thousands):



Three months ended March 31,2001
  2000Revenues from
  unaffiliated customers:United States
  $1,493
  $1,511International
  203
  -Consolidated
  $1,696
  $1,511Intercompany revenues:United States
  $162
  $-International
  701
  513Consolidated
  $863
  $513Operating loss:United States
  $(1,908)
  $(888)International
  (1,767)
  (2,053)Consolidated
  $(3,675)
  $(2,941)Identifiable assets:United States
  $8,163
  $3,633International
  41,017
  22,964Intercompany items and eliminations
  (26,763)
  (15,114)Consolidated
  $22,417
  $11,483Long-lived assets:United States
  $473
  $422International
  27,155
  20,957Intercompany items and eliminations
  (26,763)
  (15,114)Consolidated
  $865
  $6,265

All
of the international revenues and substantially all of the international
identifiable assets relate to Insignia's operations in the United Kingdom.  Intercompany sales are accounted for at
prices intended to approximate those that would be charged to unaffiliated
customers.

Financial
information by line of product is summarized below (in thousands):



Three months ended
  March 31,2001
  2000Jeode
  $1,696
  $1,473SoftWindows
  -
  38Total
  $1,696
  $1,511

Revenues from United States operations
included export sales of $231,000 and $103,000 for the three months ending
March 31, 2001 and 2000, respectively.

Revenue by geographic area for the
quarter ended March 31, 2001 is as follows (in thousands):



U.S.
  U.S.Exports
  Europe
  TotalOEM
  $1,049
  $5
  $191
  $1,245Distributor
  214
  225
  -
  439End
  User
  -
  -
  12
  12Total
  $1,263
  $230
  $203
  $1,696Percentage
  of total revenue
  74%
  14%
  12%
  100%

Revenue
by geographic area for the quarter ended March 31, 2000 is as follows (in
thousands):

U.S.
  U.S.Exports
  Europe
  TotalOEM
  $1,363
  $-
  $-
  $1,363Distributor
  7
  43
  -
  50End
  User
  38
  60
  -
  98Total
  $1,408
  $103
  $-
  $1,511Percentage
  of total revenue
  93%
  7%
  -%
  100%

There
were no European countries that accounted for more than 10% of total revenue.

Note 8.  Private
placement and warrants

In
December 1999, Insignia entered into agreements whereby Insignia issued
1,063,515 Ordinary Shares in ADS form at a price of $4.23 per share to Castle
Creek Technology Partners LLC and four other investors of whom one is a member
of Insignias board of directors. 
Insignia also issued warrants to the purchasers to purchase a total of
319,054 ADSs at the price of $5.29 per share. 
The warrants expire on December 9, 2004.  Insignia received $4.5 million less offering expenses totaling
$0.4 million.  The securities were
issued by the Company in reliance upon the exemption from registration provided
under Rule 506 of Regulation D promulgated under the Securities Act to five
accredited investors in a transaction not involving any public offering.

During
2000, Insignia issued a total of 19,994 Ordinary Shares in ADS form at various
prices, ranging from $6.281 to $16.50 to a director of Insignia, as payment for
drawdown fees under a Line of Credit arrangement entered into in March
2000.  The securities were issued in
reliance upon the exemption from registration provided under Section 4(2) of
the Securities Act.

On November 24, 2000 Insignia entered
into agreements whereby Insignia issued 3,600,000 Ordinary Shares in ADS form
at a price of $5.00 to a total of 23 investors, including Sun Microsystems,
BSquare, and a member of Insignias board of directors.  Insignia also issued warrants to purchase
1,800,000 ADSs to the investors at an exercise price of the lower of the
average quoted closing sale price of Insignias ADSs for the ten trading days
ending on the day preceding the date of the warrant holders intent to exercise
less a 10% discount, and $6.00.  The
warrants expire on November 24, 2003, however, subject to certain conditions,
if the quoted sale price of the ADSs exceed $9.00 per share for any thirty
consecutive trading days, Insignia may cancel the warrants upon sixty days
prior written notice.  Insignia received
$18.0 million less offering expenses totaling $2.0 million.  Insignia also issued warrants to purchase
225,000 ADSs to the placement agent exercisable at a price of $5.00.  These warrants expire on November 24,
2005.  The securities were issued by the
Company in reliance upon the exemption from registration provided under Rule
506 of Regulation D promulgated under the Securities Act to 23 accredited
investors in a transaction not involving any public offering.

On December 31, 2000 Insignia issued a
total of 251,333 Ordinary Shares in ADS form to Quantum Peripherals (Europe)
SA, at a per share price of $4.23 per share under the terms of a convertible
promissory note entered into on October 20, 1999.  The securities were issued in reliance upon the exemption from
registration provided under Section 4 (2) of the Securities Act based on the
fact that the shares were sold by the issuer in a sale not involving a public
offering.

On
February 12, 2001 Insignia entered into agreements whereby Insignia issued
940,000 Ordinary Shares in ADS form at a price of $5.00 to a total of 4
investors, including Wind River Systems, Inc., and a member of Insignias board
of directors.  Insignia also issued
warrants to purchase 470,000 ADSs to the investors, at an exercise price of the
lower of the average quoted closing sale price of Insignias ADSs for the ten
trading days ending on the day preceding the date of the warrant holders
intent to exercise less a  10%  discount, and $6.00.  The warrants expire on February 12, 2004,
however, subject to certain conditions, if the quoted sale price of the ADSs
exceed $9.00 per share for any thirty consecutive trading days, Insignia may
cancel the warrants upon sixty days prior written notice.  Insignia received $4.7 million less offering
expenses totaling $0.5 million. 
Insignia also issued warrants to purchase 25,000 ADSs to the placement
agent exercisable at a price of $5.00. 
These warrants expire on February 12, 2006.  The securities were issued by the Company in reliance upon the
exemption from registration provided under Rule 506 of Regulation D promulgated
under the Securities Act to four accredited investors in a transaction not
involving any public offering.

Dilution Adjustments

In December 1999, Insignia issued
1,063,515 Ordinary Shares in ADS form at a price of $4.23 per share through a
private placement.  Insignia received
$4.5 million less offering expenses totaling $0.4 million.  Along with ADSs, Insignia also issued to the
investors warrants that entitle them to purchase a total of 319,054 ADSs at an
exercise price of $5.29 per ADS.  As
described below, the exercise price and the number of ADSs issuable under the
warrants are subject to various adjustments. 
In addition, Insignia may issue additional warrants that entitle the
investors to purchase ADSs at the nominal value on designated adjustment dates
in the future.

Under the December 1999 private
placement, the investors received warrants to purchase three ADSs for every 10
ADSs they purchased.  The exercise price
of the warrants was set at 125% of the original per ADS purchase price, or
$5.29.  However, the warrants contain
anti-dilution provisions which decrease this exercise price and increase the
number of ADSs purchasable if Insignia sells or is deemed to sell any shares at
below market price during the term of the warrants, which ends on December 9,
2004.  The private placement that closed
on November 24, 2000 was a sale which triggered the anti-dilution provisions in
the warrants, and, as a consequence, the exercise price of the warrants has
been decreased from $5.29 to $4.77 per ADS, and the number of ADSs purchasable
has increased to 353,834.  The private
placement on February 12, 2001 also triggered the anti-dilution provisions of
the issuance of December 9, 1999. 
However, the effect of such dilution was less than 1% of the exercise
price and consequently such adjustment is deferred until such time as the
accumulation of this adjustment and future adjustments exceed at least 1% of
the exercise price.

As part of their warrant agreements, the
investors may be entitled to cash payments upon the occurrence of certain Major
Transactions, as defined in the warrant agreements, including change of control
provisions.  Cash payments are
determined in a methodology described in the agreement.  Such methodology is impacted by market
price.  A major transaction is defined
as a merger, reorganization, or sale of all or substantially all of the assets
of Insignia in which the stockholders of Insignia immediately prior to the
transaction possess less than 50% of the voting power of the surviving entity
(or its parent) immediately after the transaction.

Under
the December 1999 private placement, the investors were entitled to additional
warrants to purchase ADSs at £0.20 nominal value per share if the average of
the closing bid price of the ADSs over the ten days before an adjustment date
was less than $4.23.  The adjustment
dates commenced on March 10, 2000 and occurred on the 10th of each
month through March 10, 2001, inclusive. 
The rights for an adjustment date to occur would terminate upon release
of at least $4.75 million of the funds held in escrow by Citrix on December 9,
1999.  However, not enough of the funds
held were released to trigger this termination.  As calculated the average bid price of Insignias ADSs on all
the adjustment dates exceeded $4.23 per share and consequently no adjustment occurred.  The adjustment rights have now expired.

Insignia
obtained a third-party valuation to allocate fair value to amounts received
from the private placement between the ADSs and the warrants.  In 1999 the amount allocated to mandatorily
redeemable warrants totaled $1.440 million, of which $0.590 million was
allocated to the warrant, and $0.850 million was allocated to the additional
warrant.  Of the remaining net proceeds
received, $2.619 million was allocated to mandatorily redeemable capital.  The $2.619 million of mandatorily redeemable
capital was reclassed, when the registration statement for the ADSs and the
ADSs underlying the warrants  issued
in  the December 1999 private  placement became  effective on March 28, 2000, of which $0.340 million was
classified as Ordinary Shares and $2.279 million was classified as additional
paid-in capital.

Amounts
classified as warrants will remain outside 
of  shareholders equity  for 
the  life of   the warrant or until they are
exercised,  whichever  occurs 
first.  This  classification  reflects  certain
potential  cash payments  that 
may occur, should  Insignia  complete 
a  major  transaction,  such  as  a takeover, 
during  the  life of 
the  warrants.  If a major transaction had occurred as of
March 31, 2001, the maximum cash payout would have been $622,155 based on the
estimated Black & Sholes value of the warrant.

Limitations
in the transaction agreements preclude these investors in question from
achieving certain levels of beneficial ownership.  The securities purchase agreement, the warrants and the
additional warrants contain the restriction that Insignia may not issue and a
selling investor may not purchase, and the warrants and additional warrants may
not be exercised for any ADSs if doing so would cause such investor to
beneficially own more than 9.9% of the total ordinary shares in issue as
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934.  Under the additional warrants, if
such investors are prohibited from exercising the additional warrant as a
result of the 9.9% restriciton, the selling investor may, at its option and in
addition to its other rights under the securities purchase agreement and the
warrant, retain the warrant or demand payment, in cash, from Insignia in an
amount  calculated  by 
the  Black-Scholes  formula multiplied  by the number of ADSs 
for  which  the additional warrant was exercisable,
without regard to any limits on exercise. 
The restrictions on the levels of beneficial ownership in these  documents do not, however, restrict  those investors  from  exercising  the 
warrants or additional warrants up to those limitations, selling ADSs to
decrease their level of beneficial ownership, and exercising the warrants to
receive additional ADSs.  This could
result in additional dilution to the holders of Insignias ADSs and a potential
decrease in the price of the ADSs.

Note 9.  Convertible
promissory note

On
October 20, 1999, Insignia signed a convertible promissory note in favor of
Quantum Corporation (Quantum) for $1.0 million.  The note was convertible at Quantums option to Insignias shares
any time during the lifetime of the note. 
The initial conversion price was $4.28 per share with adjustment clauses
for stock splits, reverse stock splits and certain offerings.  As a result of the private placements in
December 1999 (see note 8) this conversion price was adjusted to $4.23 per
share on December 9, 1999.  All unpaid
principal and unpaid interest, accrued at 8% per annum, compounded quarterly,
was converted to Ordinary Shares on December 31, 2000.

Note 10.  Line of
credit

On
March 20, 2000, Insignia entered into an agreement with a director whereby he
would provide Insignia a $5.0 million line of credit with a commitment fee of
four points based upon the total amount of the line and drawdown/termination
fee of two points for drawdown or termination. 
The interest rate on amounts drawn down was at prime plus 2% until June
30, 2000 and thereafter at prime plus 4% per annum simple interest, payable in
cash at the repayment date.  Insignia
drew down a total of $3.0 million of the line of credit during 2000.  A total of 19,994 Ordinary Shares in ADS
form were issued to the  director  as 
payment for drawdown fees under the line of credit arrangement.  On November 27, 2000 Insignia repaid this
sum, along with all accrued interest and the termination fee due.

Note 11.  Related
party transaction

During the three months ended March 31,
2001 and the twelve months ended December 31, 2000, Insignia recognized revenue
of $25,000 and $310,000, respectively, from Phoenix Technologies Ltd.  The CEO of Phoenix Technologies Ltd. was
also a director on Insignias Board of Directors from March 1997 until March
2001.

During the three months ended March 31,
2001 and the three months ended December 31, 2000, Insignia recognized revenue
of $119,000 and $2.4 million, respectively, from Wind River Systems, Inc.
("Wind River").  Wind River
participated in a private placement of equity in Insignia in February 2001 on
the same terms as the other three unrelated investors in the private
placement.  Wind River paid the
aggregate purchase price of $2 million for 400,000 ordinary shares represented
by ADRs and warrants to purchase 200,000 ordinary shares represented by
ADRs.  In addition, a Vice President of
Wind River, John C. Fogelin, was appointed to Insignia's board of directors in
January 2001.



Item 2.  Managements Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion and analysis should
be read in conjunction with the unaudited condensed consolidated financial
statements and notes thereto included in Part I - Item 1 of this Form 10-Q and
the Managements Discussion and Analysis of Financial Condition and Results of
Operations set forth in Insignias Form 10-K for the year ended December 31,
2000 (the Form 10-K).

Future operating results

This Form 10-Q contains forward looking
statements.  These forward looking
statements concern matters which include, but are not limited to, the revenue
model and market for the Jeode product line, the features, benefits and
advantages of the Jeode platform, international sales, gross margins, the
availability of licenses to third-party proprietary rights, business and sales
strategies, matters relating to proprietary rights, competition, exchange rate
fluctuations and Insignias liquidity and capital needs 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 the Jeode
platform; the performance and functionality of Jeode; Insignias 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
risks listed from time to time in the reports that Insignia files with the U.S.
Securities and Exchange Commission. 
There can be no assurance that Insignia will experience growth in
revenues and net income in any particular period when compared to prior periods.  Any quarterly or annual shortfall in net
revenues and/or net income from the levels expected by securities analysts and
shareholders would result in a substantial decline in the trading price of
Insignias shares.

Insignia continues to face significant
risks associated with the successful execution of its new product
strategy.  These risks include, but are
not limited to continued technology and product development, introduction and
market acceptance of new products, changes in the marketplace, liquidity,
competition from existing and new competitors which may enter the marketplace
and retention of key personnel.  Due to
the generally long sales cycles associated with the Jeode platform, including a
licensing process which usually takes as long as 6 to 9 months to complete,
Insignia does not currently have accurate visibility of future order rates and
demand for its products generally. 
There can be no assurance that Jeode platform products will achieve
market acceptance.

Insignia has experienced operating losses
in each quarter since the second quarter of 1996.  To achieve profitability, Insignia will have to increase its
revenue.  Insignias ability to increase
revenues depends upon the success of its Jeode product line.  Jeode has been available only since March
1999 and it may not achieve market acceptance. 
If Insignia is unable to generate revenues from Jeode in the form of
development license fees, maintenance and support fees, commercial use
royalties and customer-funded engineering services, Insignias current revenue
will be insufficient to sustain its business.

The
following table sets forth the unaudited condensed consolidated results of
operations as a percentage of total revenues for the three month periods ended
March 31, 2001 and 2000.



Three
  months endedMarch
  31,2001
  2000Net revenues:License
  63.7%
  82.3%Service
  36.3%
  17.7%Total net revenues
  100.0%
  100.0%Cost of net revenues:License
  36.0%
  37.7%Service
  10.9%
  12.7%Total
  cost of net revenues
  46.9%
  50.4%Gross
  margin
  53.1%
  49.6%Operating expenses:Sales and
  marketing
  102.1%
  85.5%Research and
  development
  94.0%
  96.2%General and
  administrative
  73.7%
  62.5%Total
  operating expenses
  269.8%
  244.2%Operating
  loss
  (216.7%)
  (194.6%)Interest income, net
  13.2%
  (14.6%)Other income (expense),
  net
  1.8%
  0.5%Loss
  before income taxes
  (201.7%)
  (208.7%)Provision for income
  taxes
  0%
  0.3%Net loss
  (201.7%)
  (209.0%)

Overview

Insignia, which commenced operations in
1986, develops, markets and supports software technologies that speed the
adoption of Java-based individualized computing in Internet appliances and
embedded devices.

In January 1998, Insignia announced its
intention to launch a new product line called the JeodeÔplatform, based on
Insignias Embedded Virtual Machine (EVM) technology.  This followed a strategic review in late
1997 of Insignias business.  Insignia
also explored new markets that would take advantage of Insignias 15 years of
emulation software development experience. 
The Jeode platform is Insignias implementation of Sun Microsystems,
Inc.s (Sun) Java® technology tailored for Internet appliances and embedded
devices.  It utilizes patent-pending
intellectual property to provide these resource-constrained devices with high
performance, fully-compatible Java applet and application support.   The product became available for sale in
March 1999.  The Jeode platform is now
the principal product line of Insignia and will be for the foreseeable future.  The Jeode product line revenue model is
based on original equipment manufacturers (OEMs) and channel partners
customer transactions.

Insignias
principal product line in past years was SoftWindows.  This product enabled Microsoft Windows
(Windows®) applications to be run on most Apple Computer Inc. (Apple®)
Macintosh computers and many UNIX workstations.  Revenues from this product line grew until 1995, but declined
significantly after that date, along with margins.  This was due to a declining demand for Apple Macintosh products
and increased competition.  Insignia also
shipped RealPC, a low cost software product that allowed consumers to play
games and other applications designed for Intel-based PCs on their Power
Macintosh computers.  In early 1999
Management took steps to discontinue these product lines, and on October 18,
1999, Insignia signed an exclusive licensing arrangement with FWB Software, LLC
(FWB).  This arrangement allowed
Insignia to focus exclusively on its Jeode platform business strategy.

Revenues

Three months ended 
  March 31,2001
  2000(in
  thousands)License revenue
  $1,081
  $1,243Service revenue
  615
  268Total net revenue
  $1,696
  $1,511

The
Jeode product line was the primary business of Insignia for the first quarter
of 2001 and 2000.

Revenue
from the Jeode product line is derived from four main sources: the sale of a
development license, the sale of annual maintenance and support
contracts/services, a commercial use royalty based on shipments of products
that include Jeode technology, and customer-funded engineering activities.  Insignia derived its SoftWindows revenues
from the sale of packaged software products and annual maintenance contracts,
along with royalties received from bundling agreements with OEMs and
customer-funded engineering activities under OEM contracts.  Revenues from the sale of development
licenses, packaged products and royalties received from OEMs are classified as
license revenue, while revenues from customer-funded engineering activities,
training, and annual maintenance contracts are classified as service revenue.

In the first quarter of 2001, total
revenues increased by 12% compared to total revenues for the first quarter of
2000.  The increase is primarily due to
increased sevice revenues relating to the Jeode platform product line.  The Jeode platform is now the principal
product of Insignia accounting for 100% of the first quarter total
revenue.  The Jeode platform accounted
for 97% of total revenue for the three months ended March 31, 2000.  Insignia expects to see continued
acceleration in the adoption of the Jeode platform.  However, due to revenue recognition factors, not all this growth
will necessarily translate into revenue at the time of sale.

License revenue and service revenue
accounted for 64% and 36%, respectively, of total revenues in the first quarter
of 2001.  In the first quarter of 2000,
license revenue and service revenue accounted for 82% and 18%, respectively.

License revenue decreased 13% in the
first quarter of 2001 compared to license revenues in the first quarter of
2000.  Jeode license revenues for the
three months ended March 31, 2001 and the three months ended March 31, 2000
accounted for 100% of total license revenues.

Service revenue in the first quarter of
2001 was 130% higher than service revenue in the first quarter of 2000.  The increase is primarily due to increased
Jeode engineering and Jeode support contracts. 
Jeode service revenues for the three months ended March 31, 2001
accounted for 100% of total service revenues. 
Jeode service revenues for the three months ended March 31, 2000
accounted for 85% of total service revenues. 
SoftWindows service revenues for the three months ended March 31, 2001
accounted for 0% of total service revenues, respectively.  SoftWindows service revenues accounted for
15% of the service revenue for the three months ended March 31, 2000.

Revenue from Insignias SoftWindows
products accounted for 0% of total revenue in the three months ended March 31,
2001 and 3% of total revenues in the three months ended March 31, 2000.  The decline is a result of discontinuing the
SoftWindows product line and launching the Jeode platform product line.



Sales to distributors and OEMs
representing more than 10% of total revenue in each period accounted for the
following percentages of total revenues.

Three months ended
  March 31,2001
  2000OEMs:Motorola
  29%
  -Echelon
  11%
  -Quantum
  *
  13%Compaq
  *
  15%Gemstar
  *
  53%All OEMs
  73%
  90%Distributors:Grape
  12%
  -All Distributors:
  26%
  3%





* Less than 10%Sales to customers outside the United
States, derived mainly from customers in Europe and Asia, represented
approximately 26% of total revenues in the three months ended March 31, 2001
and 7% of total revenues in the three months ended March 31, 2000.  Insignia markets Jeode to Internet appliance
and embedded device manufacturers in the United States, Europe and Japan.

Cost of revenues and gross
margin

Three months ended
  March 31,2001
  2000(in
  thousands, except percentages)Cost of license
  revenue
  $611
  $570Gross margin: license
  revenue
  43%
  54%Cost of service
  revenue
  184
  191Gross margin: service
  revenue
  70%
  29%Total cost of revenues
  $795
  $761Gross margins: total
  revenues
  53%
  50%

Cost of license revenue is mainly
comprised of royalties to third parties, along with the costs of documentation,
duplication and packaging.  Cost of
service revenue includes costs associated with customer-funded engineering
activities and end-user support under maintenance contracts.

Insignia believes that the significant
factors affecting the Jeode platform gross margin include pricing of the
development license, pricing of the unit usage and royalties to third parties
such as Sun Microsystems, Inc. (Sun). 
In early 1999, Insignia signed a five-year agreement with Sun under
which Sun established Insignia as an authorized Virtual Machine Provider.  Under this agreement, Insignia will pay Sun
a per unit royalty on each Jeode platform-enabled Internet appliance or
embedded device shipped by Insignias customers, plus a royalty on all
development licenses put in place between Insignia and its customers.  License revenue gross margins in the quarter
ended March 31, 2001 were 43%, compared to 54% for the same period in 2000 due
to a large deal with lower gross margin.

Gross
margin for service revenue is impacted by the level of and pricing terms of
customer funded engineering activities, which can vary from customer to
customer, from contract to contract and the level of maintenance contracts
sold.  Service gross margins in the first
quarter of 2001 were 70% compared to 29% in the same period of 2000.  The increase is due to Jeode customer-funded
engineering activities and maintenance agreements with favorable margins.  In the first quarter of 2000, the continued
support of existing SoftWindows contracts with no renewal revenue resulted in
Insignia achieving lower service revenue gross margins.

Operating expenses

Three months ended
  March 31,2001
  2000(in
  thousands, except percentages)Sales and marketing
  $1,731
  $1,292Percentage of total
  revenues
  102%
  86%Research and
  development
  $1,594
  $1,454Percentage of total
  revenues
  94%
  96%General and
  administrative
  $1,251
  $945Percentage of total
  revenues
  74%
  63%

Sales and marketing expenses consist
primarily of personnel and related overhead costs, salesperson commissions,
advertising and promotional expenses, and trade shows. Sales and marketing
expenses increased by 34% in the quarter ended March 31, 2001 from the quarter
ended March 31, 2000.  The increase is primarily
due to increased personnel costs and new hires.  Insignia anticipates a moderate increase in sales and marketing
expenses in the next few quarters as Insignia continues to increase its
marketing and sales organization for its Jeode product line.  Insignia has established a direct sales force
in the United States, Europe and Japan. Insignia has also developed
relationships with strategic partners to leverage the Jeode technology.

Research and development expenses consist
primarily of personnel costs, overhead costs relating to occupancy and
equipment depreciation.  Research and
development expenses rose by 10% in the three months ended March 31, 2001 over
the same period in 2000 due to increased personnel costs.  Research and development expenses are
expected to increase moderately over the next several quarters.  In accordance with Statement of Financial
Accounting Standards No. 86, software development costs are expensed as
incurred until technological feasibility is established, after which any additional
costs are capitalized. In 2001 and 2000, no development expenditures were
capitalized, as there were no amounts that qualified for capitalization.

General and administrative expenses
consist primarily of personnel and related overhead costs for finance, legal,
information systems, human resources and general management. General and
administrative expenses increased by 32% in the three months ended March 31,
2001 over the same period in 2000.  The
increase is primarily due to increased general reserves for bad debt and
recruiting fees for replacement hires. 
General and administrative expenses are expected to increase moderately
over the next several quarters.

Interest income (expense), net

Three months ended
  March 31,2001
  2000(in
  thousands, except percentages)Interest income
  (expense), net
  $224
  $(220)Percentage of total
  revenues
  13%
  (15%)

Interest income (expense), net increased
from expense of $220,000 in the three months ended March 31, 2000 to income of
$224,000 in the three months ended March 31, 2001.  The increase was primarily due to the reduction of debt in the
fourth quarter of 2000 and additional financing in the fourth quarter of 2000
and the first quarter of 2001 resulting in increased interest income earned on
Insignias cash and cash equivalents.

Other income, net

Three months ended
  March 31,2001
  2000(in
  thousands, except percentages)Other income, net
  $31
  $8Percentage of total
  revenues
  2%
  1%

In the three months ended March 31, 2001,
Insignia realized a foreign exchange gain of $30,000 compared to a gain of
$10,000 in the three months ended March 31, 2000.

Approximately 98% of Insignias total
revenues and over 48% of its operating expenses are denominated in United
States dollars.  Most of the remaining
revenues and expenses of Insignia are British pound sterling denominated and
consequently Insignia is exposed to fluctuations in British pound sterling
exchange rates.  To hedge against this
currency exposure, Insignia has, in prior years, entered into foreign currency
options and forward exchange contracts for periods and amounts consistent with
the amounts and timing of its anticipated British pound sterling denominated
operating cash flow requirements.

Insignia has, at times, an investment
portfolio of fixed income securities that are classified as
available-for-sale-securities.  These
securities, like all fixed income instruments, are subject to interest rate
risk and will fall in value if market interest rates increase.  Insignia attempts to limit this exposure by
investing primarily in short-term securities.

Provision for income taxes

Three months ended
  March 31,2001
  2000(in
  thousands)Provision for income
  taxes
  $-
  $5Effective income tax
  rate
  -
  -

Insignias provision for income taxes for
the three months ended March 31, 2000 primarily represents certain U.S.
taxes.  Insignia has recorded a full
valuation allowance against all deferred tax assets, primarily comprising net
operating losses, on the basis that significant uncertainty exists with respect
to their realization.

Liquidity and capital resources

March
  31,2001
  2000(in
  thousands)Cash, cash equivalents
  and restricted cash
  $12,294
  $2,345Cash and cash
  equivalents held in escrow
  $4,986
  $5,130Working capital
  (deficit)
  $17,303
  $(2,883)Net cash used in
  operating activities
  $(4,378)
  $(4,131)

Insignia has transitioned its product
focus from compatibility products to its Jeode product line based on Insignias
EVM technology.  This change in product
focus has resulted in a redirection of available resources from Insignias
historical revenue base towards the development and marketing efforts
associated with the Jeode platform, which was released for general availability
in March 1999.  Cash used in operating
activities in the first quarter of 2001 totaled $4.4 million compared to $4.1
million for the same period in 2000.

Insignias
cash, cash equivalents, restricted cash, and funds held in escrow, were $17.3
million at March 31, 2001, an increase of $9.8 million from $7.5 million at
March 31, 2000.  Working capital
increased to $17.3 million at March 31, 2001, from $(2.9) million at March 31,
2000.  The principal source of working
capital came from a private placement funding and receivable collections.

Insignia believes the existing cash
balances will be sufficient to meet Insignias expected liquidity and capital
needs through March of 2002.

Item 3.  Quantitative and Qualitative Disclosures
About Market Risk.

From
time to time, Insignia enters into derivative financial instruments such as
currency option contracts to hedge certain anticipated, but not yet committed,
transactions expected to be denominated in foreign currencies.  Insignia does not use derivative financial
instruments for trading or speculative purposes.  Insignias downside risk with respect to currency option
contracts (British pound sterling) is limited to the premium paid for the right
to exercise the option.  Insignia did
not enter into any currency option hedge contracts in the first quarter of 2001
or the first quarter of 2000 and had no option hedge contracts outstanding as
of March 31, 2001 or March 31, 2000.



PART II - OTHER INFORMATION

Item 1.  Legal
Proceedings.

On October 4, 1999, Insignia filed suit
against Citrix and GraphOn in the Superior Court of the State of California,
County of Santa Clara, relating to the misappropriation assertions of GraphOn
and Citrixs refusal to release funds still remaining in escrow and breach of a
Cooperation Agreement between the parties. 
On March 15, 2000, GraphOn filed a suit against Citrix and Insignia in
the Superior Court of the State of California, County of Santa Clara, alleging
trade secret misappropriation and breach of contract arising out of the same
facts and circumstances set forth in Insignias action against GraphOn.  The two cases were consolidated.

This case was settled out of court on April 5, 2001.  The settlement did not involve any payment
on the GraphOn claims against Insignia and the balance of an escrow account,
$4.9 million, was released to Insignia on April 20, 2001.

Item 5.  Other Information.

On
March 31, 2001, Mr. Albert E. Sisto resigned from the board of directors of
Insignia.  Mr. Sistos resignation was
not due to a disagreement with
the Company on any matter relating to Insignias operations, policies or
practices.

Item
6.  Exhibits and Reports on Form 8-K

(a) Exhibits
The following exhibits are filed as part of this Report:  None

(b) Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly authorized.



INSIGNIA SOLUTIONS PLC(Registrant)Date:
  May 15, 2001/s/Albert
  J. WoodAlbert J. WoodChief Financial
  Officer

INDEX TO EXHIBITS



Exhibit

NumberExhibit Title