UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549










Form 10-K





þ
            ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the fiscal years ended December 31, 2006 and December 31, 2007





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
            Not
      applicable(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      employer
              identification
      number)










7575
E. Redfield Road


Suite
201


Phoenix,
AZ 85260





(Address and telephone number of
principal executive offices and principal places of
business)





Securities
registered pursuant to Section 12(b) of the Act:


None





Securities
registered pursuant to Section 12(g) of the Act:


Ordinary
Shares (1p nominal value)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o     No þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes o     No þ





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 o     No þ





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K.   þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definition of “large accelerated filer”, “accelerated filer”and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):





Large
accelerated filer o
     Accelerated filer o     Non-accelerated
filer o      Smaller
reporting company þ





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).  Yes o     No þ





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant was approximately $510,000 as of the last
business day of the registrant’s most recently completed third fiscal quarter,
based upon the closing sale price on the Pink Sheets reported for such date.
Ordinary shares held by each officer and director and by each person who owns
10% or more of the outstanding ordinary share capital have been excluded in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.





As of
December 15, 2008, there were 50,888,247 ordinary shares of 1p each nominal
value outstanding.





TABLE
OF CONTENTS [Pagination to be revised]





PagePART IItem 1.
                    Business
                    2Item 1A.
                    Risk
      Factors
                    3Item 1B.
                    Unresolved
      Staff Comments
                    3Item 2.
                    Properties
                    4Item 3.
                    Legal
      Proceedings
                    4Item 4.
                    Submission
      of Matters to a Vote of Security Holders
                    4PART IIItem 5.
                    Market
      for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
      Purchases of Equity Securities
                    5Item 6.
                    Selected
      Unaudited Quarterly Financial Data
                    6Item 7.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    7Item 8.
                    Financial
      Statements and Supplementary Data
                    14Item 9.
                    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                    15Item 9A.
                    Evaluation
      of Disclosure Controls and Procedures
                    16Item 9A(T).
                    Evaluation
      of Internal Controls over Financial Reporting
                    16Item 9B.
                    Other
      Information
                    17PART IIIItem 10.
                    Directors
      and Executive Officers of the Registrant
                    20Item 11.
                    Executive
      Compensation
                    22Item 12.
                    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                    29Item 13.
                    Certain
      Relationships and Related Transactions
                    30Item 14.
                    Principal
      Accountant Fees and Services
                    30PART IVItem 15.
                    Exhibits
      and Financial Statement Schedules
                    32Signatures
                    
                    33





PART I





Forward-Looking
Information





Unless
otherwise indicated, the terms “Insignia,” the “Company,” “we,” “us,” and “our”
refer to Insignia Solutions plc and its subsidiaries. In this Annual Report on
Form 10-K, we may make certain forward-looking statements, including statements
regarding our plans, strategies, objectives, expectations, intentions and
resources that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. We do not undertake to update, revise
or correct any of the forward-looking information. The following discussion
should also be read in conjunction with the audited consolidated financial
statements and the notes thereto.





The
statements contained in this Annual Report on Form 10-K that are not historical
fact are forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995), within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The forward-looking statements contained
herein are based on current expectations that involve a number of risks and
uncertainties. These statements can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “may,” “will,” “should,” “intend,”
“plan,” “could,” “is likely,” or “anticipates,” or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy that
involve risks and uncertainties. The Company wishes to caution the reader that
these forward-looking statements that are not historical facts are only
predictions. No assurances can be given that the future results indicated,
whether expressed or implied, will be achieved. While sometimes presented with
numerical specificity, these projections and other forward-looking statements
are based upon a variety of assumptions relating to the business of the Company,
which, although considered reasonable by the Company, may not be realized.
Because of the number and range of assumptions underlying the Company’s
projections and forward-looking statements, many of which are subject to
significant uncertainties and contingencies that are beyond the reasonable
control of the Company, some of the assumptions inevitably will not materialize,
and unanticipated events and circumstances may occur subsequent to the date of
this report. These forward-looking statements are based on current expectations
and the Company assumes no obligation to update this information. Therefore, the
actual experience of the Company and the results achieved during the period
covered by any particular projections or forward-looking statements may differ
substantially from those projected. Consequently, the inclusion of projections
and other forward-looking statements should not be regarded as a representation
by the Company or any other person that these estimates and projections will be
realized, and actual results may vary materially. There can be no assurance that
any of these expectations will be realized or that any of the forward-looking
statements contained herein will prove to be accurate.





Item 1 — Business





Company
and Product Overview





Insignia
Solutions plc (“we”, “us”, “our” “Insignia”, or the “Company”) was incorporated
under the laws of England and Wales on November 20, 1985 under the name
Diplema Ninety Three Limited. We changed our name to Insignia Solutions Limited
on March 5, 1986 and commenced operations on March 17, 1986 until
April 4, 2007 developed, marketed and supported software technologies that
enabled mobile operators and phone manufacturers to update, upgrade and
configure the firmware of mobile devices using standard over-the-air (“OTA”)
data networks. Before 2003, our principal product line was the Jeodetmplatform,
based on our Embedded Virtual Machinetm(“EVM”)
technology. The Jeodetmplatform
was our implementation of Sun Microsystems, Inc.’s (“Sun”) Java®
technology tailored for smart devices. During 2001, we began development of a
range of products (“Secure System Provisioning” or “SSP” products and renamed in
2005 “Device Management Suite” or “IDMS” and “Open Management Client” or “OMC”)
for the mobile phone and wireless operator industry. The IDMS and OMC products
allowed wireless operators and phone manufacturers to reduce customer care and
software recall costs, as well as increase subscriber revenue by automatically
configuring mobile phones to support existing mobile data services and deploy
new mobile services based on dynamically provisional capabilities. During
2007, we owned the following subsidiaries:




·
                Jeode,
      Inc.
 ·
                Insignia
      Solutions Chusic Hoese
 ·
                Emulation Technologies,
      Inc.
 ·
                Insignia
      Solutions International Ltd
 ·
                Insignia
      Solutions France
 ·
                Insignia
      Solutions Foreign Sales Inc.
 ·
                Jeode,
      Ltd.
 ·
                Kenora,
      Ltd
 ·
                  Insignia
      Solutions AB·
                  Korroga
      Technologies Ltd


We
shipped our first mobile device management product in December 2003. In March
2005, we closed our acquisition of Mi4e Device Management AB (“Mi4e”), a private
company headquartered in Stockholm, Sweden. Its main product, a Device
Management Server (“DMS”), is a mobile device management infrastructure solution
for mobile operators that supports the Open Mobile Alliance (“OMA”) Client
Provisioning Specification.





On
February 11, 2007, we entered into an Asset Purchase Agreement (the “Asset
Purchase Agreement”) with Smith Micro Software, Inc. (“Smith Micro” or “SMSI”),
pursuant to which Smith Micro agreed to acquire substantially all of our assets
(the “Acquisition”). The Acquisition was consummated on April 4, 2007. The
aggregate consideration for the Acquisition was $18.575 million, consisting
of:





·
            $12.5
      million in cash;


·
            forgiveness
      of all indebtedness payable by us under the Promissory Note (the principal
      amount of which was $2.0 million on the closing date of the Acquisition),
      and


·
            a
      cash sum equal to the difference of $2.575 million less the dollar amount
      of the Employee Liabilities (as defined in the Asset Purchase Agreement)
      assumed by Smith Micro at closing; provided that Smith Micro shall be
      entitled to withhold $500,000 of this amount until Insignia delivers to
      Smith Micro Insignia’s audited financial statements (including the opinion
      of Insignia’s independent accountants) as of and for the year ended
      December 31, 2006. We delivered the audited financial statements for the
      year ended December 31, 2006 subsequent to the sale
  date.





As a
result of the Acquisition, until June 23, 2008, we had limited business
operations, and our activities consisted of planning for either a liquidation or
a merger with an operating company.  On June 23, 2008 we entered into
a merger with an operating company - see “Item 9B – Other Information – Merger
with Dollar Days International, Inc.”





In 2007
we maintained various subsidiaries in Korea, UK, France, Barbados, Hong Kong and
Sweden that were created to support or conduct our software
business.  As a result of the Acquisition, these subsidiaries now
only conduct minor compliance related activities.  We are
currently evaluating our corporate structure and intend to dissolve those
entities that are no longer relevant to the conduct of our business





The
Company held various patents and trademarks domestically and internationally in
connection with its software products.  Substantially all intellectual
property was transferred to SMSI per the Asset Purchase Agreement.





2





Research
and Development





In 2007
and 2006, we spent approximately $0.4 million and $2.5 million,
respectively, on research and development. Since April 4, 2007, we have not
conducted any research and development activities.





Sales
and Marketing





Prior to
April 4, 2007, we were selling and marketing our products to mobile operators
and device manufacturers worldwide through direct and indirect channels using a
distributed sales force consisting of direct sales representatives and sales
engineers. Our indirect sales channels included distributors and OEMs. In 2007
and 2006, indirect sales channels represented 59%, and 30% of net revenues,
respectively.  We have had no sales activities since April 4,
2007.





Competition





The
market for IDMS and OMC products is fragmented and highly competitive. This
market is also rapidly changing, and there are many companies creating products
that competed with ours. Our main competitors included Bitfone, InnoPath, Red
Bend, mFormation, Smarttrust and Swapcom.  As of April 4, 2007, we
exited this market and no longer compete with these entities.





During
the year ended December 31, 2006, two customers accounted for approximately 53%
of our revenues.  For the year ended December 31, 2007, one customer
generated approximately 45% of our revenues.





Employees





As of
December 31, 2006, we employed or contracted with 29 full-time persons, of
which 8 were located in the United States, 15 were located in Europe (primarily
in Sweden) and 6 were located in South Korea. Of these 29 individuals, 15 were
in sales and marketing, 7 in research and development and 7 in administration
and finance. Several of our Swedish employees were represented by labor
unions.   From April 4, 2007 through December 31, 2007, we had
one full-time employee, George Monk.  We believe our employee
relations were good. We experienced no work stoppages. We expect that subsequent
to the merger with Dollar Days International, Inc., we will employ additional
staff.





Governmental
Regulations





We were
subject to government regulations in the European Union, Sweden, France, United
Kingdom, Korea and the United States during the years ended December 31, 2006
and 2007.  Following the Acquisition and prior to the merger with
Dollar Days International, Inc., we had limited business operations, and our
principal governmental regulations were our SEC and United Kingdom filing
requirements.





Facilities





Our
principal executive offices in the United States are located at 7575 East
Redfield Road, Suite 201, Scottsdale, AZ 85260. Our telephone number at that
location is (480) 922-8155. Our registered office in the United Kingdom is
located at The Estate Office, Farley Hall, Castle Road, Farley Hill, Berks. RG7
1UL. Our telephone number at that location is 011-44-118-973-0047.





Item
1A – Risk
Factors





Not
applicable





Item 1B — Unresolved Staff
Comments





None.




3




Item 2 — Properties





In March
2006, we relocated our headquarters and principal management facility to
Campbell, California. In connection with the sale of substantially all of our
assets in April 2007, Smith Micro assumed our lease obligations in Campbell,
California, Stockholm, Sweden and in Seoul, South Korea, and contracted to allow
us to occupy an office in the Campbell facility.  We no longer utilize
the Campbell facility and subsequent to the merger with Dollar Days
International, Inc.,,we relocated our headquarters to Scottsdale,
AZ.  For a discussion of the merger with Dollar Days International,
Inc., see “Item 9B – Other Information – Merger with Dollar Days International,
Inc.”.





On
April 26, 2006 we entered into a sub-lease agreement for our United Kingdom
office in High Wycombe, United Kingdom with Norwest Holt Limited. The assigned
lease was a 15 year lease originally signed on April 12, 1998 with an
annual rent of 105,000 British Pounds that is subject to periodic price
adjustments.





Item 3 — Legal
Proceedings





None.





Item 4 — Submission of Matters to a Vote of
Security Holders





Not
applicable.


4


PART II





Item 5 —Market for
Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities





Price
Range of Ordinary Shares





Our
American Depositary Shares (“ADSs”), each representing one ordinary share of 1
pence nominal value, have been traded under the symbol “INSGY” from Insignia’s
initial public offering in November 1995 to December 24, 2000. Since
December 24, 2000, our ADSs have traded under the symbol “INSG”, except
between November 25, 2005 to December 21, 2005 when our trading symbol
changed to “INSGE” due to a filing delinquency. Our stock traded on the NASDAQ
National Market from November 1995 to January 2003, and then traded on the
NASDAQ SmallCap Market until April 24, 2006. Our trading symbol changed to
“INSGY” on April 25, 2006. Quotations for our stock currently appear in the
National Daily Quotations Journal, often referred to as the “pink sheets”, where
subscribing dealers can submit bid and ask prices on a daily basis. The
following table sets forth, for the periods indicated, the high and low sales
prices for our ADSs as reported by the NASDAQ National Market or NASDAQ SmallCap
Market, or on the “pink sheets”, as applicable:





2007 Quarters EndedDec 31
                    
                    
                    Sept 30
                    
                    
                    June 30
                    
                    
                    Mar 31Quarterly
      per share stock price:High
                    
                    $
                    0.08
                    
                    
                    $
                    0.08
                    
                    
                    $
                    0.09
                    
                    
                    $
                    0.13Low
                    
                    $
                    0.06
                    
                    
                    $
                    0.06
                    
                    
                    $
                    0.06
                    
                    
                    $
                    0.05





2006 Quarters EndedDec 31
                    
                    
                    Sept 30
                    
                    
                    June 30
                    
                    
                    Mar 31Quarterly
      per share stock price:High
                    
                    $
                    0.16
                    
                    
                    $
                    0.23
                    
                    
                    $
                    0.36
                    
                    
                    $
                    0.42Low
                    
                    $
                    0.08
                    
                    
                    $
                    0.10
                    
                    
                    $
                    0.08
                    
                    
                    $
                    0.32





As of
December 31, 2007 and September 30, 2008, our transfer agents reported there
were approximately 226 holders of record of our ordinary shares and ADSs. In
addition we believe a substantial number of holders of ADSs are held in nominee
or street name by brokers.





Dividends





We have
not declared or paid any cash dividends on our ordinary shares, and our present
policy is to retain earnings for use in our business. Any payment of dividends
would be subject, under English law, to the Companies Act 1985, and to our
Memorandum and Articles of Association, and may only be paid from our retained
earnings, determined on a pre-consolidated basis. As of December 31, 2006, we
had an accumulated deficit of approximately $89.9 million. As of
December 31, 2007, we had an accumulated deficit of approximately $81.0
million, and accordingly, we do not expect to have funds legally available to
pay dividends on our ordinary shares for the foreseeable future.





Stock
Option Plans





We have
four stock option plans, which provide for the issuance of stock options to
employees and outside consultants of Insignia to purchase ordinary shares. At
December 31, 2007 and 2006 approximately 3,199,000 and 2,058,000 ordinary shares
were available for future grants of stock options, respectively. Stock options
are generally granted at prices of not less than 100% of the fair market value
of the ordinary shares on the date of grant. Options granted under our option
plans generally vest over a four year period. Options are exercisable until the
tenth anniversary of the date of grant unless they lapse before that
date.








5





Total
                
                
                Weighted
                  Average Exercise
                  Price
                
                
                Weighted
                  Average
                  Remaining
                  Contractual
                  term (years)
                
                
                Aggregate
                  Intrinsic ValueOutstanding
      at January 1, 2006
                
                
                4,436,631
                
                
                $
                1.39
                
                
                
                5.7Granted
                
                
                2,290,000
                
                
                
                0.20Exercised
                
                
                -
                
                
                
                -Lapsed
                
                
                (2,796,728
                )
                
                
                0.99Outstanding
      at December 31, 2006
                
                
                3,929,903
                
                
                
                0.86
                
                
                
                7.7
                
                
                $
                -Granted
                
                
                600,000
                
                
                
                0.12Exercised
                
                
                -
                
                
                
                -Lapsed
                
                
                (1,741,527
                )
                
                
                1.82Outstanding
      at December 31, 2007
                
                
                2,788,376
                
                
                
                0.90
                
                
                
                6.8
                
                
                $
                -Exercisable
      at December 31, 2007
                
                
                1,713,376
                
                
                $
                1.34
                
                
                
                5.6
                
                
                $
                -





Item
6 — Selected Unaudited
Quarterly Financial Data





The
tables that follow present portions of our consolidated financial statements and
are not complete. You should read the following selected consolidated financial
data in conjunction with our consolidated financial statements and related notes
thereto and with “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in this Report. The consolidated
statements of operations data for the years ended December 31, 2007, and
2006 and the consolidated balance sheet data as of December 31, 2007 and
2006 are derived from our audited financial statements that are included
elsewhere in this Report. The historical quarterly results presented below are
not necessarily indicative of the results to be expected for any future fiscal
year. In the opinion of our management, the quarterly information includes all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the results for the interim periods.  See
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included elsewhere in this Report.





6


31-Dec
                  
                  
                  30-Sep
                  
                  
                  30-Jun
                  
                  
                  31-Mar(Unaudited, in thousands, except per share amounts)2007Revenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  883Gross
      profit
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  657Gain
      on sale of assets
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  13,132
                  
                  
                  
                  -Net
      income (loss)
                  
                  
                  (213
                  )
                  
                  
                  (179
                  )
                  
                  
                  11,619
                  
                  
                  
                  (1,793
                  )Net
      income (loss) loss attributable to ordinary shareholders
                  
                  
                  (213
                  )
                  
                  
                  (179
                  )
                  
                  
                  11,132
                  
                  
                  
                  (1,793
                  )Basic
      and diluted net income (loss) per share
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  0.22
                  
                  
                  $
                  (0.04
                  )2006Revenues
                  
                  $
                  1,353
                  
                  
                  $
                  258
                  
                  
                  $
                  669
                  
                  
                  $
                  558Gross
      profit
                  
                  
                  1,175
                  
                  
                  
                  74
                  
                  
                  
                  478
                  
                  
                  
                  428Net
      loss
                  
                  
                  (600
                  )
                  
                  
                  (1,705
                  )
                  
                  
                  (2,328
                  )
                  
                  
                  (2,353
                  )Net loss attributable to ordinary
    shareholders
                  
                  
                  (715
                  )
                  
                  
                  (1,820
                  )
                  
                  
                  (2,428
                  )
                  
                  
                  (2,427
                  )Basic
      and diluted net loss per share
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.04
                  )
                  
                  $
                  (0.05
                  )
                  
                  $
                  (0.05
                  )





Item 7 —Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





Except for the historical
information contained in this Annual Report on Form 10-K, the matters
discussed herein are forward-looking statements. Words such as “anticipates,”
“believes,” “expects,” “future,” and “intends,” and similar expressions are used to
identify forward-looking statements. 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. 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.





Overview





We
commenced operations in 1986 and until April 4, 2007 developed, marketed and
supported software technologies that enabled mobile operators and phone
manufacturers to update, upgrade and configure the firmware of mobile devices
using standard OTA data networks. Before 2003, our principal product line was
the Jeodetmplatform,
based on our EVM technology. The Jeode platform was our implementation of Sun’s
Java® technology tailored for smart devices. During 2001, we began development
of a range of products (“Secure System Provisioning” or “SSP” products and
renamed in 2005 “Device Management Suite” or “IDMS” and “Open Management Client”
or “OMC”) for the mobile phone and wireless operator industry. The IDMS and OMC
products allowed wireless operators and phone manufacturers to reduce customer
care and software recall costs, as well as increase subscriber revenue by
automatically configuring mobile phones to support existing mobile data services
and deploy new mobile services based on dynamically provisional
capabilities.





We
shipped our first mobile device management product in December 2003. In March
2005, we closed our acquisition of Mi4e, a private company headquartered in
Stockholm, Sweden. Its main product, a DMS, is a mobile device management
infrastructure solution for mobile operators that supports the OMA Client
Provisioning Specification. In April 2007, we sold substantially all of our
assets to Smith Micro Software, Inc. As of December 31, 2007, we had no ongoing
revenue generating operations.





Sale
of Assets to Smith Micro Software, Inc.





On
February 11, 2007, we entered into the Asset Purchase Agreement whereby, among
other things, we agreed to indemnify Smith Micro against any and all claims and
losses incurred or suffered by Smith Micro as a result of, among other things,
any inaccuracy of any representation or warranty of the Company contained in the
Asset Purchase Agreement for a period of one year, subject to a cap on our
indemnity obligation of $5 million. The Acquisition was consummated on April 4,
2007.  Under the terms of the Asset Purchase Agreement, the aggregate
consideration for the Acquisition was $18.575 million, consisting
of:




7





·
            $12.5
      million in cash;


·
            forgiveness
      of $2.0 million of indebtedness payable by Insignia to Smith Micro under a
      December 2006 Promissory Note, and


·
            a
      cash sum equal to the difference of $2.575 million less the dollar amount
      of the Employee Liabilities (as defined in the amended Asset Purchase
      Agreement) assumed by Smith Micro; provided that Smith Micro shall be
      entitled to withhold $0.5 million of this amount until Insignia delivers
      to Smith Micro Insignia’s audited financial statements (including the
      opinion of Insignia’s independent accountants) as of and for the year
      ended December 31, 2006.





Smith
Micro held back $1.5 million of the Acquisition consideration for twelve months
as security for satisfaction of our indemnification obligations under the Asset
Purchase Agreement, as amended.  We and Smith Micro subsequently
reached a settlement agreement and agreed to release all claims against each
other pursuant to the Asset Purchase Agreement.





Since the
April 2007 sale of substantially all of our assets, we have not generated any
revenues from operations.  Through December 31, 2007, we operated as a
holding company with limited operating activities and our operations generally
consist of administrative expenses related to maintaining our corporate
structure.





International





Our
operations outside of the United States were primarily in the United Kingdom,
Korea and Sweden. Sales to customers outside the United States represented 74%
and 88% of total revenues in 2007 and 2006, respectively. The operating expenses
of our operations outside the United States related primarily to our research
and development and international sales activities. These do not fluctuate in
direct proportion to revenues, and are also exposed to fluctuations in exchange
rates. We did not enter into any currency option hedge contracts in 2007 or
2006.





In 2007
we maintained various subsidiaries in Korea, UK, France, Barbados, Hong Kong and
Sweden that were created to support or conduct our software
business.  As a result of the Acquisition, these subsidiaries are
either dormant or are conducting minor compliance related
activities.  We are currently evaluating our corporate structure and
intend to close those entities that are no longer relevant to the conduct of our
business





Critical
Accounting Policies and Estimates





The
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America. Certain
accounting policies require the application of significant judgment by
management in selecting the appropriate assumptions for calculating financial
estimates. These estimates affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. By their nature, these judgments are subject to an
inherent degree of uncertainty. The most significant estimates and assumptions
are itemized below. Actual amounts could differ from these
estimates.


8





Revenue
recognition





As of
December 31, 2007, we had no revenue generating operations.  Any
resumption of revenue generating activities will result in us evaluating those
activities in accordance with applicable standards of generally accepted
accounting principles.




Our
previous revenue generating activities during 2006 and 2007 are recognized in
accordance with Statement of Position 97-2 “Software Revenue Recognition”, as
amended (“SOP 97-2”).  SOP 97-2 requires that four basic criteria must
be met before revenue can be recognized: 1) persuasive evidence of an
arrangement exists; 2) delivery has occurred or services rendered; 3) the fee is
fixed or determinable; and 4) collectibility is probable.





For
arrangements with multiple obligations (for example, undelivered maintenance and
support), we allocated revenue to each component of the arrangement using the
residual value method based on the fair value of the undelivered elements, which
is specific to us. This means that we deferred revenue equivalent to the fair
value of the undelivered elements. Our arrangements did not generally include
acceptance clauses. However, if an arrangement included an acceptance provision,
recognition occurred upon the earlier of receipt of written customer acceptance
or expiration of the acceptance period.





Accounts
receivable and allowance for doubtful accounts





The
preparation of financial statements requires us to make estimates of the
collectibility of our accounts receivable. To evaluate the adequacy of the
allowance for doubtful accounts, we specifically analyze accounts receivable,
historical bad debts, customer concentrations, customer credit-worthiness,
current economic trends and changes in customer payment
terms.  Substantially all of our trade accounts receivable were sold
to Smith Micro on April 4, 2007.  At December 31, 2007 and 2006 the
balance of the allowance for doubtful accounts was $0 and $100,000,
respectively.




Goodwill
and intangible assets




Consideration
paid in connection with acquisitions is required to be allocated to the acquired
assets, including identifiable intangible assets, and the assumed liabilities.
Acquired assets and liabilities are recorded based on an estimate of fair value,
which requires significant judgment with respect to future cash flows and
discount rates. Goodwill represents the excess of the purchase price over the
fair value of the net tangible and identifiable intangible assets acquired in a
business combination. Intangible assets are comprised of customer relationships
and technology and are being amortized using the straight-line method over the
estimated useful lives of ten and five years, respectively. For intangible
assets other than goodwill, we are required to estimate the useful life of the
asset and recognize its cost as an expense over the useful life. We are required
to test goodwill for impairment at least annually and more frequently if events
or changes in circumstances suggest that the carrying amount may not be
recoverable. We have determined that our consolidated results comprise one
reporting unit for the purpose of impairment testing.





As of
December 31, 2006, we performed our test for impairment of goodwill as required
by Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and
Other Intangible Assets” (“SFAS 142”). We completed our evaluation and concluded
that goodwill was not impaired as of December 31, 2006 as the fair value of
Insignia’s equity securities exceeded its carrying value. The amount of goodwill
as of December 31, 2007 and 2006 was $0 and $1.1 million, respectively, and was
included as a component of the sale transaction with Smith Micro.




Property
and equipment





Property
and equipment is recorded at cost, or if leased, at the lesser of the fair value
or present value of the minimum lease payments, less accumulated depreciation
and amortization. Depreciation and amortization is provided using the
straight-line method over the estimated useful lives which range from three to
four years, or the lease term if shorter. When property and equipment is retired
or otherwise disposed of, the cost and accumulated depreciation were relieved
from the accounts and the net gain or loss was included in the determination of
income (loss). Improvements that extend the life of a specific asset are
capitalized while normal repairs and maintenance costs are charged to operations
as incurred.  The amount of property and equipment, net as of December
31, 2007 and 2006 is $0 and $102,000, respectively.  Substantially all
of our property and equipment was sold to Smith Micro.




9





Impairment
of long-lived assets





We
evaluated our long-lived assets for indicators of possible impairment by
comparison of the carrying amounts to future net undiscounted cash flows
expected to be generated by such assets when events or changes in circumstances
indicated the carrying amount of an asset may not be recoverable. Should an
impairment exist, the impairment loss would be measured based on the excess
carrying value of the asset over the asset’s fair value or discounted estimates
of future cash flows. We have not identified any such impairment losses in the
years ended December 31, 2007 or 2006.





Foreign
currency translation





Our
functional currency for our non-U.S. operations is the U.S. dollar. Certain
monetary assets and liabilities of the non-U.S. operating companies are
denominated in local currencies (i.e. not the U.S. dollar). Upon a change in the
exchange rate between the non-U.S. currency and the U.S. dollar, we must
remeasure the local non-U.S. denominated assets and liabilities to avoid
carrying unrealized gains or losses on our consolidated balance sheet. Non-U.S.
dollar denominated monetary assets and liabilities are remeasured using the
exchange rate in effect at the balance sheet date, while nonmonetary items are
remeasured at historical rates. Revenues and expenses are translated at the
average exchange rates in effect during each period, except for those expenses
related to balance sheet amounts, which are translated at historical exchange
rates. Remeasurement adjustments and transaction gains or losses are recognized
in the statement of operations during the period of occurrence. During our early
years of existence, we used the pound sterling as the functional currency for
our non-U.S. operations. Accordingly, translation gains and losses recognized
during such periods have been included in the accumulated other comprehensive
loss account. Foreign exchange transaction gains (losses) included in other
income (expense), net on the consolidated statements of operations is $73,000
and ($255,000) in 2007 and 2006, respectively.




As the
Company sold substantially all of its foreign assets and no longer generates
revenue through foreign operations, the Company has reclassified amounts
previously classified as Other Comprehensive Loss to current year other income
and expense.





Software
development costs





Prior to
2006, we capitalized internal software development costs incurred after
technological feasibility has been demonstrated. We defined establishment of
technological feasibility as the completion of a working model. Such capitalized
amounts were amortized commencing with the introduction of that product at the
greater of the straight-line basis utilizing its estimated economic life,
generally six months to one year, or the ratio of actual revenues achieved to
the total anticipated revenues over the life of the product. At December 31,
2007 and 2006, no software development costs were capitalized.  At
December 31, 2007, we had no ongoing software development
activities.





Research
and development





We
expensed the cost of research and development as incurred. Research and
development expenses consisted primarily of personnel costs, overhead costs
relating to occupancy, software support and maintenance and equipment
depreciation.  Our research and development activities were sold to
Smith Micro in April 2007 and at December 31, 2007, we had no ongoing research
and development activities.




10





Stock-based
compensation





We used
the Black-Scholes option pricing model to estimate the fair value of stock
options and employee stock purchase plan shares. The fair value of equity-based
payment awards on the date of grant was determined by an option-pricing model
using a number of complex and subjective variables. These variables included
expected stock price volatility over the term of the awards, actual and
projected employee stock option exercise behaviors, risk-free interest rate and
expected dividends.





Estimated
volatility of our ordinary shares for new grants was determined based on the
historical volatility of our stock price. The expected term was determined using
the simplified method outlined in Staff Accounting Bulletin No. 107. The
risk-free interest rate used in the option valuation model is from U.S. Treasury
zero-coupon issues with remaining terms similar to the expected term on the
options. We do not anticipate paying any cash dividends in the foreseeable
future and therefore used an expected dividend yield of zero in the option
valuation model. In accordance with Statement of Financial Accounting Standards
No. 123 (revised) (“SFAS 123(R)”), we estimated forfeitures at the time of grant
and revised those estimates in subsequent periods if actual forfeitures differed
from those estimates. We used historical data to estimate option forfeitures and
record equity-based compensation expense only for those awards that were
expected to vest. All equity-based payment awards granted after January 1, 2006
were amortized on a straight-line basis, net of expected forfeitures, over the
vesting periods.





The
assumptions used to value equity-based payments were as follows:




Year ended December 31,2007
                  
                  2006Option
      Plans:Expected
      Dividends
                  
                  None
                  
                  NoneExpected
      term
                  
                  4 years
                  
                  6.08
      yearsRisk
      free interest rate
                  
                  4.5%
                  
                  4.5-6.0%Expected
      volatility rate
                  
                  424%
                  
                  129-287%




Income
taxes





We
account 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 our financial statements or
tax returns. In estimating future tax consequences, we generally consider all
expected future events other than enactments of changes in the tax law or
rates.





Results
of Operations





Revenue





Revenues
decreased from $2.8 million during the year ended December 31, 2006 to $0.9
million during the year ended December 31, 2007, or 69%.  This
decrease was due to the sale of substantially all revenue generating operations
to Smith Micro on April 4, 2007.  Since that time, we have not had any
revenue generating activities.





Cost
of revenues and gross margin





Cost of
revenues include the cost of software licenses paid to third parties,
amortization of intangibles, and personnel and overhead costs.  Gross
margins for the years ended December 31, 2007 and 2006 were 74% and 76%,
respectively.





Operating
expenses





Sales and
marketing





Sales and
marketing expenses decreased approximately 79% from $2.2 million for the year
ended December 31, 2006 to $0.5 million during the year ended December 31,
2007.  This is due to the asset sale to Smith Micro on April 4, 2007
and the cessation of sales and marketing activities at that time.




11





Research and
development





Our
research and development operations were sold to Smith Micro on April 4, 2007
resulting in an approximately 86% reduction in costs from $2.5 million for the
year ended December 31, 2006 to $0.4 million during the year ended December 31,
2007.





General and
administrative





General
and administrative expenses consist primarily of personnel and related overhead
costs for finance, information systems, and general management.





General
and administrative expenses increased approximately 13% from 2006 to 2007, from
$3.1 million to $3.6 million.  This was primarily due to increases in
our professional services expenditures and transaction costs incurred related to
the Smith Micro transaction.





Amortization of intangible
assets





Amortization
of intangible assets decreased approximately 75% as substantially all our
intangible assets were sold to Smith Micro on April 4, 2007.  We no
longer hold any intangible assets.





Interest
income (expense), net





We
incurred approximately $153,000 of net interest expense during the year ended
December 31, 2006 and generated approximately $180,000 of net interest income
for the year ended December 31, 2007.  This was due to our increased
liquidity and cash holdings as a result of the Smith Micro transaction and
reduction in on-going debt due to payments made after the Smith Micro
transaction.


.


Other
income (expense), net





Other
income (expense) increased from approximately $368,000 of expenses during the
year ended December 31, 2006 to approximately $742,000 of expenses during the
year ended December 31, 2007. This is primarily due to $250,000 in costs
incurred related to cancellation of a joint venture and $461,000 write off of
other comprehensive loss due to foreign currency exchange.





Gain
on sale of assets





We recognized a $13.1
million gain on the sale of assets in 2007 consisting of cash proceeds of $15.0
million and assumed liabilities of $2.1 million, offset by asset values of $3.4
million and $0.5 million related to a settlement agreement with Smith
Micro.  There were no gains from asset sales in 2006.





Liquidated
damages on subsidiary preferred stock





We recognized a charge
of approximately $680,000 in 2006 related to liquidated damages for which we
were liable under the liquidated damages clause of the underlying preferred
stock agreements.  In 2007, we reached a settlement with preferred
stockholders to reduce the amount of liquidated damages to $66,000 and as a
result, recorded a gain of $614,000.





Liquidity
and capital resources





At
December 31, 2006, we had cash, cash equivalents and restricted cash totaling
$361,000, total current assets of $1,402,000 and total current liabilities of
$6,410,000. Based upon our forecast and estimates at December 31, 2006, we
determined that our forecasted cash and cash equivalents would not be sufficient
to meet our operating and capital requirements for the next twelve
months.




12





At
December 31, 2006 we had a $750,000 loan outstanding under a bridge loan
agreement with Smith Micro. In the first quarter of 2007 we borrowed an
additional $1.25 million under this agreement.





On April
4, 2007, we sold substantially all of our assets and operations to Smith Micro
for cash proceeds of $15.0 million and assumed liabilities of $2.1 million,
offset by net asset values of $3.4 million and $0.5 million related to an
additional settlement.





At
December 31, 2007, we had cash and cash equivalents totaling $5.3 million total
current assets of $5.4 million and total current liabilities of $0.9 million.
The cash balance represents the remainder of the proceeds of the Acquisition. We
have expended a portion of the Acquisition consideration and the cash advanced
to us by Smith Micro prior to the Acquisition, including $3.0 million to
repurchase all of our Series A and Series B Preferred Stock, $3.6 million to pay
vendors and accrued costs and $1.0 million to pay amounts owed to our
directors.





As of
December 31, 2007, we had no operations and we anticipate we will not generate
any revenue until we consummate a business combination, at the
earliest.  We estimate our capital resources are adequate to fund our
limited operating activities for twelve months from the balance sheet
date.





Off-balance
sheet arrangements





The
Company did not have any off-balance sheet arrangements at December 31,
2007.





New
accounting pronouncements





In
December 2007, the FASB issued SFAS No. 141 (revised
2007) “Business Combinations” (“SFAS 141R”). SFAS 141R
establishes the requirements for how an acquirer recognizes and measures the
identifiable assets acquired, the liabilities assumed, any non-controlling
interest in the acquiree and the goodwill acquired. SFAS 141R requires
acquisition costs be expensed instead of capitalized as is required currently
under SFAS 141 and also establishes disclosure requirements for business
combinations. SFAS 141R applies to business combinations for which the
acquisition date is on or after fiscal years beginning on or after
December 15, 2008 and, as such, SFAS 141R is effective beginning in
the Company’s fiscal year 2009.  We are still evaluating the potential
impact on our consolidated financial statements upon adoption of
SFAS 141R.




In
December 2007, the FASB issued SFAS No. 160 “Non-controlling Interests
in Consolidated Financial Statements” — an amendment to ARB No. 51
(“SFAS 160”). SFAS 160 will change the accounting and reporting for
minority interests, which will now be termed “non-controlling interests.”
SFAS 160 requires non-controlling interests to be presented as a separate
component of equity and requires the amount of net income attributable to the
parent and to the non-controlling interest to be separately identified on the
consolidated statement of operations. SFAS 160 is effective for fiscal
years beginning on or after December 15, 2008 and, as such, will be
effective beginning in the Company’s fiscal year 2009. The adoption of
SFAS 160 is not expected to have a material impact on our consolidated
financial statements.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities - including an amendment of FASB
Statement No. 115” (“SFAS 159”). SFAS 159 provides companies with an option to
report selected financial assets and liabilities at fair value. The standard
requires companies to provide additional information that will help investors
and other users of financial statements to more easily understand the effect of
the company’s choice to use fair value on its earnings. It also requires
entities to display the fair value of those assets and liabilities for which the
company has chosen to use fair value on the face of the balance sheet. This
Statement is effective as of the beginning of an entity’s first fiscal year
beginning after November 15, 2007. Early adoption is permitted as of the
beginning of the previous fiscal year provided that the entity makes that choice
in the first 120 days of that fiscal year and also elects to apply the
provisions of Statement 157. The Company is currently evaluating whether the
adoption of SFAS 159 will have a material effect on its
consolidated financial position, results of operations or cash
flows.




13




In
September 2006, the FASB issued SFAS No. 157, “Fair
Value Measurements”
(“SFAS 157”), which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS 157 does not require any
new fair value measurements, but provides guidance on how to measure fair value
by providing a fair value hierarchy used to classify the source of the
information. In February 2008, the FASB issued FASB Staff Position 157-1, “Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of
Lease Classification or Measurement under Statement 13.”
(“FSP 157-1”). FSP 157-1 amends SFAS 157 to exclude leasing
transactions accounted for under SFAS 13 and related guidance from the
scope of SFAS 157. In February 2008, the FASB issued FASB Staff Position
157-2 (“FSP 175-2”), “Effective
Date of FASB Statement 157,”
which delays the effective date of SFAS 157 for all non-financial assets
and non-financial liabilities, except for items that are recognized or disclosed
as fair value in the financial statements on a recurring basis (at least
annually). SFAS 157 is effective for fiscal year 2009, however,
FSP 157-2 delays the effective date for certain items to fiscal year 2010.
We are evaluating the potential impact on our consolidated financial statements
upon adoption of SFAS 157.




In July
2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting
for Uncertainty in Income Taxes — an interpretation of FASB Statement
No. 109”
(“SFAS 109”). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an entity’s financial statements in accordance with
SFAS 109 and prescribes that a company should use a more-likely-than-not
recognition threshold based on the technical merits of the tax position taken or
expected to be taken. Tax positions that meet the more-likely-than-not
recognition threshold should be measured in order to determine the tax benefit
to be recognized in the financial statements. Additionally, FIN 48 provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition and was effective beginning the first
quarter of fiscal 2007. The adoption of FIN 48 did not result in a
cumulative adjustment to accumulated deficit.





In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain
Hybrid Financial Instruments — an Amendment of FASB Statements No. 133
and 140” (“SFAS 155”). SFAS 155 allows financial instruments that
contain an embedded derivative and that otherwise would require bifurcation to
be accounted for as a whole on a fair value basis, at the holders’ election.
SFAS 155 also clarifies and amends certain other provisions of
SFAS 133 and SFAS 140. SFAS 155 was effective beginning with our
2007 fiscal year. The adoption of SFAS 155 did not have a material effect
on our consolidated financial statements.




Item 8
— Financial
Statements and Supplementary Data





The
financial statements included in this report under this item are set forth
beginning on Page F-1 of this report, immediately following the signature
pages.


14


Item 9 —Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure





Effective
September 12, 2008, we dismissed Burr, Pilger & Mayer LLP (“BPM”) as our
independent registered public accounting firm and appointed Malone & Bailey,
P.C. (“Malone & Bailey”) as our new independent registered public accounting
firm for the fiscal year ended December 31, 2007. Our board of directors
approved the dismissal of BPM and the appointment of Malone & Bailey as the
Company’s new independent registered public accounting firm.





BPM has
not performed any audit related services regarding the Company’s financial
statements since June 1, 2007 relating to the consolidated financial statements
for fiscal year ended December 31, 2006. BPM’s reports on the consolidated
financial statements of the Company for the fiscal years ended December 31, 2006
and 2005 expressed an unqualified opinion and included an explanatory paragraph
regarding substantial doubt about the Company’s ability to continue as a going
concern.





During
the fiscal years ended December 31, 2006 and 2005 and through June 1, 2007,
there have been no disagreements with BPM (as defined in Item 304(a)(1)(iv) of
Regulation S-K) on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to BPM’s satisfaction, would have caused BPM to make reference thereto
in their reports on the Company’s financial statements for such years
ended.





During
the fiscal year ended December 31, 2006, there were no “reportable events” (as
such term is defined in Item 304(a)(1)(v) of Regulation S-K) except for the
following material weaknesses: In the course of the audit of the Company’s
consolidated financial statements for the year ended December 31, 2006, BPM
identified and reported the following material weaknesses in the Company’s
internal control over financial reporting: “The Company failed to maintain
effective controls over the financial reporting process because they lacked a
sufficient complement of accounting personnel with both the technical knowledge
of accounting principles generally accepted in the United States (“GAAP”) and
the financial reporting expertise requirements necessary to record, process and
report financial data consistent with the assertions of management in the
financial statements, on a timely basis. The complexities of certain
transactions and the GAAP rules covering such transactions that the Company
entered into in the area of equity led to material audit adjustments. In
addition, there were material audit adjustments as a result of our audit work on
accrued liabilities, revenue and the consolidation process.”





During
the fiscal year ended December 31, 2005, there were no “reportable events” (as
such term is defined in Item 304(a)(1)(v) of Regulation S-K) except for the
following material weaknesses: In the course of the audit of the Company’s
consolidated financial statements for the year ended December 31, 2005, BPM
identified and reported the following material weaknesses in the Company’s
internal control over financial reporting: “The Company failed to maintain
effective controls over the financial reporting process because they lacked a
sufficient complement of accounting personnel with both the technical knowledge
of  GAAP and the financial reporting expertise requirements necessary to
record, process, and report financial data consistent with the assertions of
management in the consolidated financial statements, on a timely basis. A
combination of employee turnover at the controller and chief financial officer
level and the acquisition of an additional company in a foreign country led to
additional workload with less accounting staff. In addition, the complexities of
the transactions and the GAAP rules covering such transactions that the Company
entered into during the period in the areas of equity and business combinations
led to material audit adjustments. Lack of effective controls over the financial
reporting process was noted resulting in material adjustments to the financial
statements being made during the audit fieldwork process. During the audit for
the six-month period ended June 30, 2005, four areas of significance were noted
related to the Company’s failure to complete, on a timely basis, a proper
analysis of, accounting for, and management review of (a) certain complex equity
transactions, (b) the acquisition of Mi4e, and (c) activity related to Mi4e
subsequent to the close of the acquisition.”





During
the fiscal year ended December 31, 2007 and through September 12, 2008, neither
the Company nor anyone on behalf of the Company has consulted with Malone &
Bailey regarding either:





1.
            The
      application of accounting principles to specified transactions, either
      completed or proposed or the type of audit opinion that might be rendered
      on the Company’s financial statements, and neither was a written report
      provided to the Company nor was oral advice provided that Malone &
      Bailey concluded was an important factor considered by the Company in
      reaching a decision as to an accounting, auditing or financial reporting
      issue; or




15




2.
            Any
      matter that was either the subject of a disagreement or a reportable
      event, as each term is defined in Items 304(a)(1)(iv) or (v) of Regulation
      S-K, respectively.





Item 9A — Controls
and Procedures





Evaluation
of Disclosure Controls and Procedures





We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)).  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, our disclosure controls and procedures were not
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.  These controls were not effective based on the following
factors:





·
            We
      have recently experienced turnover in the finance organization including
      the Chief Financial Officer, Corporate Controller and Swedish Controller
      positions.


·
            Because
      of our small size and limited financial resources, we have limited finance
      staff, who are not likely to be able to maintain a comprehensive knowledge
      of all relevant elements of changing reporting and accounting
      requirements, and who may not provide adequate resources in all
      circumstances to manage the complex accounting of a software company with
      operations in several countries.


·
            We
      have had to rely on contract consulting staff who are less likely to
      remain with us over the long term.


·
            Our
      accounting system and related infrastructure was acquired or built to
      handle the finances of a company significantly larger than we are
      currently, and any turnover in our finance staff may lead us to lose the
      ability to operate the system
effectively.





Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures of our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met.  Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be
considered relative to their costs.  Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, have been
detected.





See
“Changes in Internal Control Over Financial Reporting” for a discussion of
remediation efforts that are currently underway to improve our disclosure
controls and our internal controls over financial reporting.





Management’s
Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, as amended).  Our management assessed
the effectiveness of our internal control over financial reporting as of
December 31, 2007.  In making this assessment, our management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in “Internal Control-Integrated Framework.”  A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the company's annual or interim financial
statements will not be prevented or detected on a timely basis.  Based
upon that evaluation, our principal executive officer and principal accounting
and financial officer concluded that our disclosure controls and procedures were
ineffective as of the end of the period covered by this report as
follows:





·
            We
      have recently experienced turnover in the finance organization including
      the Chief Financial Officer, Corporate Controller and Swedish Controller
      positions.




16




·
            Because
      of our small size and limited financial resources, we have limited finance
      staff, who are not likely to be able to maintain a comprehensive knowledge
      of all relevant elements of changing reporting and accounting
      requirements, and who may not provide adequate resources in all
      circumstances to manage the complex accounting of a software company with
      operations in several countries.


·
            We
      have had to rely on contract consulting staff who are less likely to
      remain with us over the long term.


·
            Our
      accounting system and related infrastructure was acquired or built to
      handle the finances of a company significantly larger than we are
      currently, and any turnover in our finance staff may lead us to lose the
      ability to operate the system
effectively.





These
deficiencies have resulted, or contributed to the following observed or
potential control weaknesses:





·
            We
      have been delinquent in submitting many filings required pursuant to the
      Securities Exchange Acts.  Should any of our current finance
      staff leave, a critical amount of cumulative knowledge would likely leave
      the company and make it impractical for us to close our books or bring, or
      keep, our reporting with the SEC
current,


·
            We
      may not have internal capability to determine the appropriate accounting
      treatment of complex accounting
transactions.


·
            We
      continue to experience an unacceptable level of adjustments to our
      periodic reports





We
believe that these are individually and in combination material weaknesses
representing significant control deficiencies that could adversely affect our
ability to record, process, summarize and report financial data consistent with
the assertions of management in the consolidated financial statements, and
result in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or
detected.  Because of these material weaknesses, our management has
concluded that we did not maintain effective internal control over financial
reporting as of December 31, 2007, based on the criteria established in
“Internal Control -Integrated Framework” issued by the COSO.





Changes
in Internal Control Over Financial Reporting.





In our
efforts to continuously improve our internal controls, management is taking the
following steps to enhance the following controls and procedures subsequent to
the end of fiscal 2007 as part of our remediation efforts:





·
            Maintaining
      competitive pay rates and retention incentives in an attempt to have
      current staff remain with us.


·
            Simplifying
      where practical our legacy
infrastructure.


·
            Having
      a third party accounting firm to assist with audit preparation, closing
      procedures, the evaluation of complex accounting transactions and the
      preparation of periodic reports.





We have
undertaken such activities in 2008 and expect continued enhancements to our
internal control structure in the remainder of 2008 and
throughout   2009.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management’s
report in this annual report.





Item 9B — Other
Information





Recent
Events





Merger
Agreement with Dollar Days International, Inc.





On June
23, 2008, Insignia and its wholly-owned subsidiary, Jeode, entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with Dollar Days
International, Inc. (“Dollar Days”), providing for the merger of Dollar Days
into Jeode, which was completed on June 23, 2008. Under the terms of the Merger
Agreement, Insignia will (1) issue American Depositary Receipts (“ADR”s)
for approximately 73.3 million ordinary shares to Dollar Days’ shareholders, (2)
issue ADRs for approximately 7.7 million ordinary shares to an investor in
Dollar Days representing repayment of a note payable, as well as an additional
investment in Dollar Days, (3) issue a warrant to purchase  8.5
million ordinary shares at an exercise price of $0.01 to Peter Engel, the chief
executive officer of Dollar Days, (4) issue a warrant to purchase 3.6 million
ordinary shares at an exercise price of $0.13 per ADR to a financial advisor to
Dollar Days, and (5) issue options to purchase approximately 6.0 million ADRs,
in replacement and cancellation of  outstanding Dollar Days options.
The closing of the Merger Agreement did not require Insignia shareholder
approval.


17





Under the
Merger Agreement, Insignia shareholders maintained approximately 37.1%, Dollar
Days shareholders obtained 56.7%  and a new investor obtained 6.2% of
the stock of the combined company.  The merger will be accounted for
as a reverse merger whereby Dollar Days is the accounting acquirer resulting in
a recapitalization of Dollar Days’ equity.  Approximately 64% of the
ADRs contemplated by the Merger were to be issued subsequent to the closing of
the Merger, and the remaining ADRs will be issued following shareholder
authorization of either (i) a reverse split of the then issued and outstanding
ordinary shares or (ii) an increase in Insignia’s authorized share
capital.





Release Agreement with Smith Micro Software, Inc.





On June
23, 2008, Insignia and certain of its subsidiaries entered into a Release
Agreement with Smith Micro and DollarDays. Under the terms of the Release
Agreement, Insignia and Smith Micro agreed to release all claims against each
other pursuant to the Asset Purchase Agreement, including, but not limited to,
claims made by Smith Micro under a holdback certificate dated March 31, 2008
whereby Smith Micro sought indemnification for various alleged breaches of
representations and warranties in the Asset Purchase Agreement resulting in
alleged aggregate losses of between $3.1 million and $6.5 million. Insignia has
also agreed to release its claim for a $1.5 million purchase price holdback
amount held by Smith Micro and to deliver a cash payment of $0.5 million to
Smith Micro.





Changes
to the Board of Directors





In
connection with the transactions contemplated by the Merger Agreement, there was
a change in Insignia’s Board of Directors and management.  Prior to
the consummation of the transaction, Insignia’s Board of Directors consisted of
Viscount Nicholas Bearsted, Mark McMillan and Vincent Pino.  Effective
at the closing of the transactions contemplated by the Merger Agreement,
Viscount Nicholas Bearsted, and Mark McMillan resigned from our Board of
Directors.  Simultaneously at the closing, the Board of Directors
appointed Peter Engel, Christopher Baker and Filipe Sobral to serve on the Board
of Directors and Peter Engel was appointed Chief Executive Officer of
Insignia.





Subsequent
to, and in connection with, the Merger, George Monk also resigned from his
positions as a Director and Chief Financial Officer.  The then current
Board of Directors of Insignia appointed Larry Schafran as a director of
Insignia.




18




Appointment
of Mr. Engel as Chief Executive Officer




On June
23, 2008, pursuant to the transactions contemplated by the Merger Agreement and
concurrent with the completion of the Merger, Peter Engel was appointed Chief
Executive Officer of Insignia. Mr. Engel, 73, has served as the Chairman and
Chief Executive Officer of DollarDays since February 2007. Mr. Engel also serves
as Chairman and Chief Executive Officer of Affinity Media International
Corporation, a position held from 2005 to present. Mr. Engel has been
involved with the publishing industry since his first book, The Overachievers,
was published by St. Martins Press in 1976. Since 1998, Mr. Engel has
concentrated on building entrepreneurial enterprises, some of them in the
publishing arena. From 1998 to 2000 he was the president of the audio book
division of NewStar Media, Inc. (formerly a Nasdaq company). From 1992 to 1998
he was the president and CEO of Affinity Communications Corp., a West Coast
publishing and book concept developer whose books were published by many major
publishers including Crown, Harper Collins, Little Brown, McGraw Hill, Penguin,
Pocket, Putnam, Random House, Regnery, St. Martins Press, Simon & Schuster
and Viking. In 1980, Mr. Engel founded and became the president and CEO of The
American Consulting Corporation (“ACC”), a marketing services firm. ACC’s
clients included Campbell Soup, Carter-Wallace, Coors, Citicorp, Clorox, Dunkin’
Donuts, Frito-Lay, Gillette, Johnson and Johnson, Kraft, Mattel, Nestle, Nike,
Ocean Spray, PepsiCo, Quaker, and Seagram as well as over forty other companies.
Mr. Engel took ACC public in 1987 and sold it in 1988. From 1971 to 1980, Mr.
Engel was a senior executive at Colgate-Palmolive, where he was Vice President
Latin America and Canada, and Vice President of Marketing Services, eventually
rising to Group Vice President, Cosmetics and Beauty Accessories Division and
President and CEO of Helena Rubinstein. From 1968 to 1970, he was CEO of Candy
Corporation of America (“CCA”) and its public parent, Lehigh Coal and
Navigation. At CCA, he led the roll up of several candy companies (including
such brands as Bonomo’s Turkish Taffy, Mason Mints, Mason Dots, and Cella’s
Cherries) to form an integrated candy group. From 1966 to 1968, Mr. Engel was
General Manager, General Products Division, Philip Morris, where he was
responsible for non-tobacco products including: Personal razor blades, an
industrial blades business, Burma Shave, Clark Chewing Gum, and the launch of
Kit-Kat candy bars. Mr. Engel began his career in 1956 at Procter & Gamble,
rising to Tide brand manager in Canada. He was then promoted to become one of
the team of executives that opened P&G Germany. In 1964, Mr. Engel was moved
to P&G’s Cincinnati headquarters. Mr. Engel is a former Associate Professor
at the University of Southern California entrepreneurial program. Under his own
name, he is the author of three novels ( High Gloss, A Controlling Interest, and
Tender Offers), five business books  (The Overachievers, What’s Your
Exit Strategy, The Exceptional Individual, Scam, and The SOHO Desk Reference, a
Practical Guide for Entrepreneurs, ed. ), and several gift books. In addition,
he has ghost-written a number of books on alternative health and other issues.
Mr. Engel has also been granted patents covering cosmetics, health related
products, promotional concepts, and an Internet concept. He holds a B.Com from
McGill University in Montreal, and has completed the course work, but not the
dissertation, for a PhD in history at New York’s Columbia
University.





19





PART III





Item 10 — Directors and Executive Officers of
the Registrant





Executive
Officers and Directors of the Registrant





The
executive officers and directors of Insignia as of December 31, 2007 were
as follows:





Name
                    
                    Age
                    
                    PositionNicholas,
      Viscount Bearsted*(1)(2)(5)
                    
                    56
                    
                    DirectorDavid
      G. Frodsham(2)(3)
                    
                    50
                    
                    DirectorVincent
      S. Pino(1)(2)
                    
                    58
                    
                    DirectorMark
      E. McMillan (4)
                    
                    43
                    
                    Chief
      Executive Officer, President and a DirectorGeorge
      Monk (6)
                    
                    53
                    
                    Chief
      Financial
Officer








*
              Chairman
      of the Board of Directors(1)
              Member
      of the Compensation Committee.(2)
              Member
      of the Audit Committee.(3)
              David
      G. Frodsham resigned effective June 30, 2007(4)
              Mark
      E. McMillan resigned as Chief Executive Officer and President on April 4,
      2007. He remained a Director until June 23, 2008, when he
      resigned.(5)
              Nicholas,
      Viscount Bearsted resigned from the Board effective June 23,
      2008.(6)
              George
      Monk resigned as Chief Financial Officer effective June 30,
      2008.(7)
              Richard
      Noling resigned as a director of the Company effective July 21,
      2006.





Nicholas, Viscount Bearstedserved as Director and Chairman of the Board of Directors of Insignia
since December 1987. He was Insignia’s Chief Executive Officer from September
1988 until September 1993. He received a Bachelors Degree in Chemistry from
Oxford University in 1972. He also serves on the Boards of various private
companies. Mr. Bearsted resigned from our Board of Directors on June 23,
2008.





David G. Frodshamwas
appointed a director of Insignia in August 1999. Since February 2000, he has
served as Chief Executive Officer of Argo Interactive Group plc, a British
software company specializing in device intelligence from wireless internet. He
received a BSc. from Kings College, London and an MBA from INSEAD in France. Mr.
Frodsham resigned from our Board of Directors on June 30, 2007.





Vincent S. Pinowas appointed
a director of Insignia in October 1998. From February 1998 until his retirement
in November 2000, he served as President of Alliance Imaging, a provider of
diagnostic imaging and therapeutic services. Mr. Pino began his association
with Alliance in 1988 as Chief Financial Officer. From 1991 through 1993
Mr. Pino held the position of Executive Vice President and Chief Financial
Officer. Mr. Pino received an MBA and a B.S. degree in finance from the
University of Southern California in 1972 and 1970, respectively.





Mark E. McMillanwas named
Chief Executive Officer and a director of Insignia in February 2003.
Mr. McMillan joined Insignia in November 1999 as Senior Vice President of
Worldwide Sales and Marketing, was promoted to Executive Vice President of
Worldwide Sales and Marketing in May 2000 and Chief Operating Officer in October
2000. Mr. McMillan was promoted to President in July 2001. Before joining
Insignia, Mr. McMillan served as Vice President of Sales, Internet
Division, for Phoenix Technologies Ltd. Prior to that, Mr. McMillan served
as Phoenix’s Vice President and General Manager of North American Operations.
Mr. McMillan attend the University of Wisconsin Milwaukee.




20




George Monk served as our
Chief Financial Officer since July 2006, after consulting for us since May 2006.
From September 2005 to July 2006, he served as an independent financial
consultant to various companies. From January 2005 to September 2005 Mr. Monk
served as Chief Financial Officer of Macrovision, a provider of software and
security applications. Previously he served as Vice President of Finance of
Thoratec Corporation, a medical devices company, from October 2003 to January
2005. Prior to joining Thoratec, from September 2002 to September 2003, Mr. Monk
served as an independent financial consultant to various companies. From March
2001 to August 2002, Mr. Monk served as Vice President of Finance and Controller
of Redback Networks, a provider of broadband networking equipment, and from
April 1997 to February 2001, Mr. Monk served as Corporate Controller of Aspect
Communications, a provider of contact center solutions and services. Mr. Monk
holds a B.S. in Mechanical Engineering from Leeds University in England.





Changes
to the Board of Directors





Richard
Noling resigned as a director effective July 21, 2006 and David Frodsham
resigned as a director effective June 30, 2007.   See information
included in “Recent Events,” with overall changes to the Board of Directors
relating to the merger with Dollar Days.




Audit
Committee and Audit Committee Financial Expert





The Audit
Committee as of December 31, 2007 consisted of two directors, Viscount Bearsted
and Vincent S. Pino, each of whom qualifies as an “independent director” under
NASDAQ MarketPlace Rule 4200(a)(15). The Board of Directors determined that
all Audit Committee members are financially literate under the current listing
standards of The NASDAQ Stock Market, Inc. The Audit Committee is responsible
for approving the services performed by our independent auditors and reviewing
our accounting practices and systems of internal accounting controls. The Audit
Committee is governed by a written charter approved by the Board of
Directors.





The
Company’s Board of Directors has determined that Mr. Pino qualifies as the
Company’s “audit committee financial expert”, as defined in applicable SEC rules
and meets the financial sophistication requirements of The NASDAQ Stock Market,
Inc.





Section 16(a)
Beneficial Ownership Reporting Compliance





Section 16(a)
of the Exchange Act requires the Company’s directors and officers, and persons
who own more than 10% of the Company’s ordinary shares to file initial reports
of beneficial ownership and reports of changes in beneficial ownership with the
SEC. Such persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms that they file. Based solely on its
review of the copies of such forms furnished to the Company and written
representations from the executive officers and directors, the Company believes
that all Section 16(a) filing requirements were met in 2007, except that a
Form 4 was filed late for an option granted to Mark McMillan on November 17,
2006.





Code
of Ethics





The
Company has adopted a code of ethics that applies to all officers and employees,
including its principal executive officer, principal financial officer and
controller. This code of ethics was filed as Exhibit 14.01 to our 2005
Annual Report on Form 10-K.




21




Item 11 — Executive
Compensation




SUMMARY
COMPENSATION TABLE




The table
below summarizes the total compensation paid or earned by each of the named
executive officers for the fiscal years ended December 31, 2007, and 2006.
The named executive officers were not entitled to receive payments which would
characterized as “non-equity incentive plan compensation” for the fiscal years
ended December 31, 2007, and 2006. We do not administer a pension plan
program. We have a 401(k) program, but currently do not match employee
contributions.


Other Annual
                            
                            
                            TotalName and Principal Positions
                            Year
                            
                            Salary ($)
                            
                            
                            Bonus ($)
                            
                            
                            Option Awards
                              ($) (1)
                            
                            
                            Compensation
                              ($)
                            
                            
                            Compensation
                              ($)Mark E.
      McMillan (4)(6)
                            2007
                            
                            
                            333,203
                            
                            
                            
                            512,227
                            
                            
                            
                            26,334
                            
                            
                            
                            164
                            
                            
                            
                            871,928Chief
      Executive Officer
                            2006
                            
                            
                            230,000
                            
                            
                            
                            29,750
                            
                            
                            
                            1,
      572
                            
                            
                            
                            1,492
                            (2)
                            
                            
                            332,652and
      PresidentGeorge
      Monk
                            2007
                            
                            
                            240,000
                            
                            
                            
                            469,227
                            
                            
                            
                            16,576
                            
                            
                            
                            2,587
                            
                            
                            
                            728,390Chief
      Financial Officer(3)(6)
                            2006
                            
                            
                            124,615
                            
                            
                            _
                            
                            
                            
                            —
                            
                            
                            
                            47,625
                            (5)
                            
                            
                            172,240John
      Davis
                            2006
                            
                            
                            82,750
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            82,750Chief
      Financial Officer (7)Priyen
      Doshi, VP of Marketing (8)
                            2006
                            
                            
                            28,750
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            28,750




(1)
                  
                  Effective
      January 1, 2006, we adopted the fair value recognition provisions of
      SFAS No. 123(R), “Share-Based
      Payments”
      (SFAS No. 123(R)), requiring us to recognize expense related to
      the fair value of our stock-based compensation awards. Stock-based
      compensation expense for all stock-based compensation awards granted
      subsequent to December 31, 2005 is based on the grant-date fair value
      estimated in accordance with the provisions of SFAS No. 123(R).
      The amounts in this column reflect the dollar amount recognized for
      financial statement reporting purposes for the fiscal years ended
      December 31, 2007 and 2006 in accordance with SFAS 123(R).
      Assumptions used in the calculation of these amounts are included in the
      footnotes to our audited financial statements for the fiscal year ended
      December 31, 2007, included in this Annual Report on
      Form 10-K.(2)
                  
                  Represents
      Insignia contributions to certain benefit programs.(3)
                  
                  Mr. Monk
      joined Insignia on July 10, 2006. He previously was a consultant to the
      Company commencing May 4, 2006.(4)
                  
                  Mr.
      McMillan resigned on April 4, 2007.(5)
                  
                  Represents
      the amount Mr. Monk received for consulting with the Company from May 4
      through July 10, 2006 before he was appointed as CFO.(6)
                  
                  On
      April 24, 2008 we amended the compensation agreement of Mr. Monk to
      provide that an amount equal to one year’s salary of $240,000 and a
      targeted bonus of $96,000 would be due and payable to Mr. Monk within
      seven days of a change of control of Insignia, regardless of whether or
      not Mr. Monk were terminated upon such a change of control. No further
      termination payment would be due if he was subsequently terminated. Prior
      to this amendment, this payment would be made upon a termination of
      employment or a demotion following a change of control.
                    
                    Additionally,
      related to potential change in control, Insignia agreed to pay a bonus to
      Mr. Monk and Vincent Pino, a director of Insignia, equal to a total of
      $250,000, less any payments made to obtain a fairness opinion, to be split
      equally between Mr. Monk and Mr. Pino, and payable within seven days of
      the closing of a merger with
DollarDays.




22




Finally,
      Insignia agreed to pay bonuses of $30,000 to each of Mark McMillan, former
      chief executive officer and director of Insignia, and Mr. Monk, within
      seven days of the closing of the Merger with DollarDays, as full and final
      settlement of amounts payable to them related to the deferred portion of
      the consideration that may have been payable by Smith Micro under the
      Asset Purchase Agreement had Insignia not entered into the Release
      Agreement with Smith as described in the Recent Events section of this
      document.On
      June 23, 2008, we completed the Merger Agreement with DollarDays as
      discussed in the Recent Events section of this document. Payments under
      these compensation agreements were paid as follows during fiscal 2008: an
      aggregate of approximately $488,000 to Mr. Monk, $125,500 to Mr. Pino, and
      $34,500 to Mr. McMillan. These amounts are not reflected in the table
      above as they occurred subsequent to December 31, 2007.(7)
                      
                      Mr.
      Davis resigned effective May 31, 2006.(8)
                      
                      Mr.
      Doshi resigned effective February 10,
2006.




Compensation
Philosophy and Objectives




Insignia
Solutions compensation strategy is aimed at providing sufficient incentive to
current staff to remain with Insignia through the wind up of the business or the
merger of the Company with an operating business, in order to maximize
shareholder value. Elements of this compensation are:




Base Salaryintended to
provide a competitive annual salary for employees based on their job scope,
level and experience and is intended to recognize and reward the day-to-day
performance of one’s duties. We generally review base salary levels annually to
assess whether we have met our target positioning relative to the market in
which we compete for employees. We also review individual executive performance
to assess whether a merit increase is warranted based on individual and
company-wide performance. Mr. McMillan’s salary remained unchanged from his
salary in the prior year as he continued to manage the company’s launch into the
MDM (mobile device management) business. Mr. Monk’s salary was based on the
market salary for the Chief Financial Officer position at the time he was hired
in 2006.




Bonusesintended to provide a
variable cash compensation element to the Company’s compensation plans and to
allow the Company to reward senior executives on a quarterly basis. Our
objective is to have an incentive program competitive with the market, aligns
focus, ties to results and rewards performance. Each executive’s compensation
agreement includes a bonus target percentage (50% of base salary for Mr.
McMillan and 40% of base salary for Mr. Monk) established by the Compensation
Committee. The Compensation Committee assessed quarterly performance of each
executive and awarded each a bonus based around these percentages. The Company
does not use any formulaic basis to calculate executive bonuses and these
amounts were established by the Compensation Committee based on their
qualitative assessment of the efforts of the executives in securing the future
of the Company.




Stock Optionsintended to
provide a long term incentive compensation element to the Company’s compensation
plans and to allow the Company to reward senior executives for increases in the
value of the Company’s share price. The goal of the Company’s stock option
program is to align management and employee performance with the longer-term
interests of investors through stock options, and we continue to believe that
equity in the form of stock options is both a motivator as well as a recruiting
and retention tool. We also believe it is a superior instrument in our
compensation portfolio to align executive performance with the longer term goals
of the company. Those goals in turn align with the longer term stockholder
interests. Mr. McMillan was awarded 700,000 options priced at $0.15 cents, which
was the stock price at the time the options were awarded. This number of options
was based on the 600,000 options included in Mr. Monk’s offer letter when he
joined the Company as CFO, and which were issued to him in 2007.




23




401K Defined Contribution Plan
intended to provide a vehicle for tax deferred savings. The Company did not
provide any match for employee contributions through the end of
2007.


Employee Stock
Purchase Plan (ESPP).
  Deferred Compensation.
  We do not currently have any deferred compensation programs for
employees or executives.


24





GRANTS
OF PLAN-BASED AWARDS TABLE (2007)




The table
below provides information with respect to each stock option granted to each
named executive officer during 2007. The stock options set forth below were
granted for fixed amounts of shares and unless noted otherwise below, vesting
under such stock options is contingent only upon continued service with Insignia
and not achievement of other performance-related targets or
conditions.




All Other OptionAwards: Number of
                            
                            
                            Exercise or Base
                            
                            
                            Grant Date FairSecurities
                            
                            
                            Price of Option
                            
                            
                            Value of Stock andUnderlying Options
                            
                            
                            Awards
                            
                            
                            Option AwardsName
                            
                            Grant Date
                            
                            (#)
                            
                            
                            ($/Sh)
                            
                            
                            ($)(1)Mark McMillan
      (1)(2)
                            
                            11/17/06
                            
                            
                            700,000
                            
                            
                            $
                            $0.15
                            
                            
                            $
                            $0.15George
      Monk (1)(2)
                            
                            3/16/07
                            
                            
                            600,000
                            
                            
                            $
                            $0.12
                            
                            
                            $
                            $0.12




(1)
              
              We
      estimate the fair value of stock options, consistent with the provisions
      of SFAS No. 123(R) and SAB 107. The fair value of each
      option grant is estimated on the date of grant using the Black-Scholes
      option valuation model and the straight-line attribution approach. For a
      detailed discussion about the computation please refer to our audited
      financial statements for the fiscal year ended December 31, 2007,
      included in this Annual Report on
  Form 10-K.





(2)
                
                These
      options become vested and exercisable with respect to 25% of the shares on
      first anniversary of the award and 2.083% of the shares in each of the
      47 months thereafter. These options become exercisable upon a change
      of control of the Company and expire 10 years from the date of
      grant.  As a result of the merger with DollarDays in June 2008,
      these options became exercisable in
2008.


25





AGGREGATED
OPTION EXERCISES IN 2007 AND YEAR-END OPTION VALUES





The
following table sets forth certain information concerning the exercise of
options by each of the Named Executive Officers during 2007 including the
aggregate amount of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
options to acquire shares as of December 31, 2007. Also reported are values
of “in-the-money” options, which represents the positive spread between the
respective exercise prices of outstanding options to acquire shares and $0.07
per share, which was the closing price of the ADSs as reported on the Pink
Sheets on December 31, 2007.





Number of Securities
                
                
                Value of UnexercisedShares
                
                
                
                
                
                Underlying Unexercised
                
                
                In-the-MoneyAcquired on
                
                
                Value
                
                
                Options at Year-End (#)
                
                
                Options at Year-End ($)(2)Name
                
                Exercise (#)
                
                
                Realized ($)(1)
                
                
                Exercisable
                
                
                Unexercisable
                
                
                Exercisable
                
                
                UnexercisableMark E.
      McMillan
                
                
                —
                
                
                
                —
                
                
                
                1,234,500
                
                
                
                675,000
                
                
                
                —
                
                
                
                —George
      Monk
                
                
                —
                
                
                
                —
                
                
                
                225,000
                
                
                
                375,000
                
                
                
                —
                
                
                
                —




OUTSTANDING
EQUITY AWARDS AT YEAR END TABLE (2007)




The table
below provides information regarding each unexercised stock option held by each
of our named executive officers as of December 31, 2007. No named executive
officer is the holder of unvested shares of stock or unvested shares of stock,
units or other rights awarded under any equity incentive plan as of
December 31, 2007.




Option
      AwardsNumber of Securities
                            Underlying
                            Unexercised Options
                          
                          
                          Number of Securities
                            Underlying
                            Unexercised Options
                          
                          
                          Equity Incentive
                            Plan Awards:
                            Number of
                            Securities
                            Underlying
                            Unexercised
                            Unearned Options
                          
                          
                          Option
                            Exercise
                            Price
                          
                          Option
                            ExpirationName
                          
                          (#) Exercisable
                          
                          
                          (#) Unexercisable
                          
                          
                          (#)
                          
                          
                          ($)
                          
                          DateMark McMillan
                          
                          
                          150,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (1)
                          
                          $
                          4.594
                          
                          11/4/0975,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (2)
                          
                          
                          5.750
                          
                          10/17/10100,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (3)
                          
                          
                          3.550
                          
                          7/2/1134,500
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (4)
                          
                          
                          2.000
                          
                          10/15/1150,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (5)
                          
                          
                          1.340
                          
                          1/24/12200,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (6)
                          
                          
                          0.371
                          
                          4/5/13100,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (7)
                          
                          
                          0.371
                          
                          4/5/13200,000
                          
                          
                          
                          —
                          
                          
                          
                          —
                          (8)
                          
                          
                          0.610
                          
                          7/29/1350,000
                          
                          
                          
                          50,000
                          
                          
                          
                          50,000
                          (9)
                          
                          
                          0.750
                          
                          2/10/15100,000
                          
                          
                          
                          100,000
                          
                          
                          
                          100,000
                          (10)
                          
                          
                          0.410
                          
                          10/20/15175,000
                          
                          
                          
                          525,000
                          
                          
                          
                          525,000
                          (11)
                          
                          
                          0.150
                          
                          11/17/16George
      Monk
                          
                          
                          225,000
                          
                          
                          
                          375,000
                          
                          
                          
                          375,000
                          (12)
                          
                          
                          0.12
                          
                          3/16/17








(1)
                    No
      options have been exercised.(2)
                    This
      option was originally granted for 125,000 shares. No options have been
      exercised. In 2004 Mr. McMillan returned 50,000 of these options to the
      Company.(3)
                    No
      options have been exercised.(4)
                    No
      options have been exercised.(5)
                    No
      options have been exercised.(6)
                    No
      options have been exercised.(7)
                    No
      options have been exercised.(8)
                    No
      options have been exercised.(9)
                    This
      option was originally granted for 100,000 shares. No options have been
      exercised.
  26
  (10)
                  This
      option was originally granted for 200,000 shares. No options have been
      exercised.(11)
                  No
      options have been exercised.(12)
                  No
      options have been
exercised.




DIRECTOR
COMPENSATION




Board
of Directors Compensation Practices





We
compensate our non-employee board members with the goal of being competitive in
the market for directors.





In
addition to the initial stock option grant and annual stock option grants for
non-employee directors, non-employee directors are eligible to receive
discretionary grants of stock options. No options were issued to non-employee
directors in 2007.





Director
Compensation Plan




We pay
each outside director $1,000 for every regular meeting attended, $2,500 per
quarter of service on the Board, $500 per quarter for service on each
committee, plus $500 for each committee meeting attended, and reimburses outside
directors for reasonable expenses in attending meetings of the Board. The
Chairman of the Board receives an additional $1,500 per quarter. In
addition, each new outside director is granted an option to purchase
25,000 shares and each outside director is granted an option to purchase
10,000 shares annually for so long as he serves as an outside director. No
options were issued to outside directors in 2007 or 2006.


DIRECTOR
COMPENSATION TABLE (2007)





The table
below sets forth the amounts of total compensation awarded to or, earned by
non-employee directors of Insignia Solutions in 2007 for membership on the
Board, committees of the Board and/or attendance at meetings of the Board and
Board committees, pursuant to the Director Compensation Plan. The non-employee
directors were not entitled to receive payments which would characterized as
“non-equity incentive plan compensation” for the fiscal year ended
December 31, 2007. We do not administer a pension plan
program.




Fees Earned
                  
                  
                  
                  
                  
                  Option
                  
                  
                  All Otheror Paid in Cash
                  
                  
                  Stock Awards
                  
                  
                  Awards
                  
                  
                  Compensation
                  
                  
                  TotalName
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)
                  
                  
                  ($)Nicholas,
      Viscount Bearsted
                  
                  $
                  32,000
                  
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  32,000Vincent
      Pino
                  
                  
                  26,000
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  26,000David
      Frodsham
                  
                  
                  10,000
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  10,000Mark
      McMillan
                  
                  
                  15,500
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  15,500


27





TRANSACTIONS
WITH RELATED PERSONS





We have
adopted and maintain a code of ethics that applies to all directors, executive
officers and employees. The code covers matters that we believe are supportive
of high standards of ethical business conduct, including those regarding legal
compliance, conflicts of interest, insider trading, corporate opportunities,
competition and fair dealing, maintenance of corporate books and records, gifts
and entertainment, political contributions, international business laws,
confidentiality, protection of company assets, public communications, special
obligations applicable to our Chief Executive Officer and senior financial
officers, and standards and procedures for compliance with the code. The code
has been filed with the SEC at www.sec.gov.





At
December 31, 2006, we owed a total of $873,000 principal plus accrued interest
to Viscount Bearsted and Vincent Pino, members of our board of directors. The
notes were repayable within 30 days of a change of control of Insignia or the
sale of substantially all of our assets. In December 2006 in consideration for
subordinating these loans to bridge funding from Smith Micro, we agreed to pay
these lenders additional interest in an amount equal to ten percent of the
principal amount of the loans.  These notes were repaid upon sale of
assets to Smith Micro and no amounts are outstanding.





Effective
April 1, 1997, Nicholas, Viscount Bearsted, Chairman of Insignia, entered
into a Consulting Agreement with us whereby he acts as a consultant to us
providing advice and assistance as the Board may from time to time request. The
agreement was amended April 20, 1998 and deleted his commitment to provide
us services and our commitment to pay him a minimum amount. He agreed to remain
available to perform services as requested by us. The agreement is terminable by
either party upon six months’ advance written notice and by us for cause at any
time. In the event of any business combination resulting in a change of control
of Insignia or in the event of disposal of a majority of the assets of Insignia,
and termination or constructive termination of his consultancy, Viscount
Bearsted will be entitled to receive an additional twenty-six weeks’ consultancy
fees. In September 2007, we and the consultant mutually agreed to terminate the
agreement. No fees have been paid under this agreement in the past three fiscal
years or in 2007.





DIRECTORS’
ATTENDANCE AT ANNUAL STOCKHOLDER MEETINGS




We invite
our Board members to attend our annual stockholder meetings, but do not require
attendance. In 2007, we did not hold a Stockholders Meeting.




CODE
OF CONDUCT AND ETHICS




We have
adopted a code of conduct and ethics that applies to our directors, executive
officers and employees, including our Chief Executive Officer and Chief
Financial Officer. The code of conduct and ethics is available at www.sec.gov.





Board
Composition





Our
Articles of Association stipulate that the minimum number of directors is two,
but do not set any maximum number. Directors may be elected by the shareholders,
or appointed by the Board, and remain in office until they resign or are removed
by the shareholders. In addition, at each Annual General Meeting one-third of
the directors who have been in office longest since their last election, as well
as any directors appointed by the Board during the preceding year, are required
to resign and are then considered for re-election, assuming they wish to stand
for re-election. In the election of directors, each shareholder is entitled on a
poll to one vote for each ordinary share held. Shares may not be voted
cumulatively. The executive officers serve at the discretion of the Board of
Directors. There are no family relationships among any of our directors or
executive officers.




28




Communications
with Directors





Shareholders
or other interested parties may communicate with any director or committee of
the Board by writing to them c/o Audit Committee of the Board of Directors,
Insignia Solutions plc, 7575 E. Redfield Road, Suite 201, Phoenix, AZ 85260, or
by sending an e-mail to board@insignia.com. Comments or questions regarding our
accounting, internal controls or auditing matters will be referred to members of
the Audit Committee. Comments or questions regarding the nomination of directors
and other corporate governance matters will be referred to members of the Board
of Directors.





Compensation
Committee Interlocks and Insider Participation





The
Compensation Committee of the Board of Directors makes all decisions involving
the compensation of our executive officers. The Compensation Committee consists
of the following non-employee directors: Vincent S. Pino and Nicholas, Viscount
Bearsted. In 2007, none of our executive officers served as a member of the
board of directors or compensation committee of any entity that had one or more
executive officers serving as a member of our Board of Directors or Compensation
Committee.





Item 12 —Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters





The
following table sets forth certain information, as of December 31, 2007,
with respect to the beneficial ownership of our ordinary shares by (i) each
shareholder known by Insignia (based on filings with the Securities and Exchange
Commission) to be the beneficial owner of more than 5% of ordinary shares,
(ii) each director, (iii) each Named Executive Officer as of
December 31, 2007, and (iv) all directors and executive officers as of
December 31, 2007 as a group. The address for each of our directors and officers
is: c/o Insignia Solutions Inc., 7575 E. Redfield Road, Suite 201, Phoenix,
AZ 85260.





The
percentage of shares beneficially owned is based on  50,438,247
ordinary shares outstanding as of December 31, 2007. Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power with respect to all shares beneficially owned, subject
to community property laws where applicable. Shares subject to options that are
currently exercisable or exercisable within 60 days of December 31,
2007 are deemed to be outstanding and to be beneficially owned by the person
holding such option for the purpose of computing the percentage ownership of
such person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.





Name of Beneficial Owner
                
                Amount and Nature of
                  Beneficial Ownership
                
                
                Percent of ClassNicholas,
      Viscount Bearsted(1)
                
                
                789,196
                
                
                
                1.6
                %Mark
      E. McMillan(2)
                
                
                1,315,745
                
                
                
                2.5
                %Vincent
      S. Pino(3)
                
                
                520,165
                
                
                
                1.0
                %George
      Monk(4)
                
                
                249,996
                
                
                
                0.5
                %All
      directors and executive officers as group
    (4 persons)(5)
                
                
                2,875,102
                
                
                
                5.5
                %








(1)
            Includes
      152,250 options that are exercisable within 60 days after
      December 31, 2007.(2)
            Includes
      1,263,662 options that are exercisable within 60 days after
      December 31, 2007(3)
            Includes
      101,626 options that are exercisable within 60 days after
      December 31, 2007.(4)
            Includes
      249,996 options that are exercisable within 60 days after
      December 31, 2007.(5)
            Includes
      1,767,534 options that are exercisable within 60 days after
      December 31, 2007.





Equity
Compensation Plan Information





The
following table presents information as of December 31, 2007 with respect
to equity compensation plans under which our ADSs may be issued upon the
exercise of options. Each of these plans have been approved by our
shareholders.




29




(Thousands
      of ADS’s)
                        
                        
                        Plan Category
                      
                      (a)
                        Number of Securities
                        to be Issued
                        Upon Exercise of
                        Outstanding Options,
                        Warrants and Rights
                      
                      
                      (b)
                        Weighted-Average
                        Exercise Price of
                        Outstanding Options,
                        Warrants and Rights
                      
                      
                      (c)
                        Number of Securities
                        Remaining Available
                        for Issuance Under
                        Equity Compensation Plans
                        (Excluding Securities
                        Reflected in Column(a))Equity compensation plans
      approved by security holders
                      
                      
                      2,788
                      
                      
                      $
                      0.90
                      
                      
                      
                      3,199Equity
      compensation plans not approved by security holders
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —Total
                      
                      
                      2,788
                      
                      
                      $
                      0.90
                      
                      
                      
                      3,199





Item 13 — Certain Relationships and Related
Transactions





On April
4, 2007, we paid Mr. McMillan the amount of his target bonuses for 2005 and 2006
and for the first quarter of 2007, which bonuses had not previously been paid to
Mr. McMillan for such periods, and which had been accrued by us. The total
amount of such bonuses was $151,748. In addition, on April 4, 2007, the Company
paid George Monk (our chief financial officer) a bonus for 2006 and the first
quarter of 2007 of $72,000, which was the amount of his target bonus for the
period of his employment.





Item 14 — Principal Accountant Fees and
Services





Burr,
Pilger & Mayer LLP and their respective affiliates (collectively,
“BPM”) was our independent public registered accounting firm until September 12,
2008.  Effective September 12, 2008, we retained Malone & Bailey,
PC as our independent registered accounting firm.





Audit
Fees





The
aggregate fees billed or expected to be billed for professional services related
to the audit of the financial statements as of and for the year ended December
31, 2007 by Malone & Bailey, PC is $70,000 The aggregate fees billed or
expected to be billed for professional services rendered by Burr, Pilger &
Mayer LLP for the years ended December 31, 2006 for the annual audit of our
financial statements for such year amounted to approximately
$213,000.





Effective
September 12, 2008, we retained Malone & Bailey, PC as our independent
public registered accounting firm. See further discussion of this change in Item
9 of this Report on Form 10-K.





Audit-Related
Fees





There
were no aggregate fees billed or expected to be billed for audit–related
services not reported as audit fees rendered by Malone and Bailey, PC and Burr,
Pilger & Mayer LLP for the years ended December 31, 2007 and 2006,
respectively, for (a) the audit of our financial statements and other documents
presented to Companies House  and (b) reviews of SEC
filings.





Tax
Fees





The
aggregate fees billed or expected to be billed for tax services rendered by
Malone and Bailey, PC and Burr, Pilger & Mayer LLP for the years ended
December 31, 2007 and 2006 amounted to approximately $0 and $40,000,
respectively .





All
Other Fees





We did
not receive products and services provided by Malone and Bailey, PC or Burr,
Piger & Mayer LLP, other than those discussed above, for the fiscal years
ended December 31, 2007 and 2006, respectively.





30





The Audit
Committee has adopted a policy that requires advance approval of all audit,
audit-related, tax services and other services performed by our independent
public registered accounting firm. Each of the audit and permitted non-audit
services has been pre-approved by the Audit Committee or the Audit Committee’s
Chairman pursuant to delegated authority by the Audit Committee, other than
de-minimus non-audit services for which the pre-approval requirements are waived
in accordance with the rules and regulations of the SEC.




31




PART IV





Item 15 — Exhibits and Financial Statement
Schedules





(a) Documents
filed as part of this report:





1. Financial Statements and
Reports





The
consolidated financial statements included in Part II, Item 8 of this
Annual Report on Form 10-K are filed as part of this Report.





2. Financial Statements
Schedule





Schedule II — Valuation
and Qualifying Accounts for the two years ended December 31, 2007 included
in Part II, Item 8 of this Annual Report on Form 10-K are filed
as part of this Report.





All other
financial statement schedules have been omitted because either the required
information (i) is not present, (ii) is not present in amounts
sufficient to require submission of the schedule or (iii) is included in
the Consolidated Financial Statements and Notes thereto under Part II,
Item 8 of this Annual Report on Form 10-K.





3. Exhibits





The
exhibit list in the Index to Exhibits is incorporated herein by reference as the
list of exhibits required as  part of this report.




32




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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 on December 23, 2008.





INSIGNIA
      SOLUTIONS PLCBy:
                      /s/  Peter
  EngelPeter
      EngelPresident,
      Chairman  and Chief Executive Officer(Principal
      Executive Officer)By:
                      /s/Michael MooreMichael
      MooreChief
      Financial Officer(Principal
      Financial
Officer)





POWER
OF ATTORNEY





KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints George M. Monk as his true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
to this Annual Report on Form 10-K of Insignia Solutions plc, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, grant unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:





Signature
                            
                            Capacity
                            
                            DateAdditional
      Directors:/s/CHRISTOPHER
      BAKER
                            
                            Director
                            
                            December
      23, 2008Christopher
      Baker/s/Vincent
      PINO
                            
                            Director
                            
                            December
      23, 2008Vincent
      Pino/s/LARRY
      SCHAFRAN
                            
                            Director
                            
                            December
      23, 2008Larry
      Schafran/s/FILIPE
      SOBRAL
                            
                            Director
                            
                            December
      23, 2008Filipe
      Sobral





33





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





Document
                    
                    PageReports
      of Independent Registered Public Accounting Firms
                    
                    
                    F-2Consolidated
      Balance Sheets
                    
                    
                    F-4Consolidated
      Statements of Operations
                    
                    
                    F-5Consolidated
      Statements of Shareholders’ Equity (Deficit)
                    
                    
                    F-6Consolidated
      Statements of Cash Flows
                    
                    
                    F-7Notes
      to Consolidated Financial Statements
                    
                    
                    F-8


F-1




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


Insignia
Solutions plc





We have
audited the accompanying consolidated balance sheet of Insignia
Solutions plc (the “Company”) as of December 31, 2007 and the related
consolidated statements of operations, stockholders’ equity (deficit) and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.





We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.   An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 2007 and the consolidated results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.





/s/MALONE & BAILEY,
PC





www.malone-bailey.com


Houston,
Texas


December
12, 2008


F-2




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To The
Board of Directors and Shareholders of


Insignia
Solutions plc:





We have
audited the accompanying consolidated balance sheet of Insignia Solutions plc
and subsidiaries (the “Company”) as of December 31, 2006, and the related
consolidated statements of operations, shareholders’ equity (deficit), and cash
flows for the year then ended. Our audit also included the financial statement
schedule listed in Item 15(a)(2). These consolidated financial statements
and the financial statement schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our
audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor have we been engaged to perform, an audit of the Company’s internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Insignia Solutions plc and
subsidiaries as of December 31, 2006, and the results of their operations and
their cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.





As
discussed in Note 1 to the consolidated financial statements, in April 2007 the
Company sold substantially all of its assets to Smith Micro Software, Inc. As a
result of this transaction, the Company has no ongoing business
operations.  Management’s plans as to these matters are also described
in Note 1. The consolidated financial statements do not include any adjustments
that may result from the outcome of this uncertainty.





As
discussed in Note 2 to the consolidated financial statements, on January 1,
2006 the Company changed its method of accounting for stock-based compensation
as a result of adopting Statement of Financial Accounting Standards No. 123
(revised 2004), "Share Based Payment" applying the modified prospective
method.





/s/ Burr,
Pilger & Mayer LLP





San Jose,
California


June 1,
2007


F-3





INSIGNIA
SOLUTIONS PLC


CONSOLIDATED
BALANCE SHEETS


(Amounts
in thousands, except for share and per share data)





December 31,
                    
                    
                    December 31,2007
                    
                    
                    2006AssetsCash
      and equivalents
                    
                    $
                    5,340
                    
                    
                    $
                    341Restricted
      cash
                    
                    
                    -
                    
                    
                    
                    20Accounts
      receivable, net of allowance for doubtful accounts of $0 in 2007 and $100
      in 2006
                    
                    
                    -
                    
                    
                    
                    926Other
      Receivables
                    
                    
                    7
                    
                    
                    
                    -Prepaid
      expenses
                    
                    
                    37
                    
                    
                    
                    115Total
      current assets
                    
                    
                    5,384
                    
                    
                    
                    1,402Property
      and equipment, net
                    
                    
                    -
                    
                    
                    
                    102Intangible
      assets, net
                    
                    
                    -
                    
                    
                    
                    1,703Goodwill
                    
                    
                    -
                    
                    
                    
                    1,115Other
      assets
                    
                    
                    -
                    
                    
                    
                    42Total
      assets
                    
                    $
                    5,384
                    
                    
                    $
                    4,364Liabilities
      and Shareholders' Equity (Deficit)Accounts
      payable
                    
                    $
                    59
                    
                    
                    $
                    1,544Accrued
      liabilities
                    
                    
                    867
                    
                    
                    
                    2,562Deferred
      revenue
                    
                    
                    -
                    
                    
                    
                    153Short-term
      debt
                    
                    
                    -
                    
                    
                    
                    1,278Notes
      payable to related parties
                    
                    
                    -
                    
                    
                    
                    873Total
      current liabilities
                    
                    
                    926
                    
                    
                    
                    6,410Commitments
      and contingencies (Note 9)Shareholders'
      equity (deficit):Preferred
      shares, 1 pence par value, 3,000,000 shares  authorized, no
      shares issued or outstanding
                    
                    
                    -
                    
                    
                    
                    -Ordinary
      shares, 1 pence par value, 110,000,000 shares  authorized,
      50,438,247 shares issued and outstanding
                    
                    
                    14,750
                    
                    
                    
                    14,750Additional
      paid in capital
                    
                    
                    70,545
                    
                    
                    
                    72,769Ordinary
      share subscription
                    
                    
                    160
                    
                    
                    
                    840Accumulated
      deficit
                    
                    
                    (80,997
                    )
                    
                    
                    (89,944
                    )Accumulated
      other comprehensive loss
                    
                    
                    -
                    
                    
                    
                    (461
                    )Total
      shareholders' equity (deficit)
                    
                    
                    4,458
                    
                    
                    
                    (2,046
                    )Total
      liabilities and shareholders' equity (deficit)
                    
                    $
                    5,384
                    
                    
                    $
                    4,364





See
accompanying notes to consolidated financial statements


F-4


INSIGNIA
SOLUTIONS PLC


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Amounts
in thousands, except for share and per share data)





Year ended December 31,2007
                  
                  
                  2006Net
      revenues:License
                  
                  $
                  508
                  
                  
                  $
                  1,813Service
                  
                  
                  375
                  
                  
                  
                  1,025Total
      net revenues
                  
                  
                  883
                  
                  
                  
                  2,838Cost
      of net revenues:License
                  
                  
                  74
                  
                  
                  
                  300Service
                  
                  
                  152
                  
                  
                  
                  383Total
      cost of net revenues
                  
                  
                  226
                  
                  
                  
                  683Gross
      Profit
                  
                  
                  657
                  
                  
                  
                  2,155Operating
      expenses:Sales
      and marketing
                  
                  
                  467
                  
                  
                  
                  2,193Research
      and development
                  
                  
                  354
                  
                  
                  
                  2,511General
      and administrative
                  
                  
                  3,551
                  
                  
                  
                  3,135Amortization
      of intangible assets
                  
                  
                  23
                  
                  
                  
                  92Total
      operating expenses
                  
                  
                  4,395
                  
                  
                  
                  7,931Operating
      loss
                  
                  
                  (3,738
                  )
                  
                  
                  (5,776
                  )Other
      income (expense):Interest
      income (expense), net
                  
                  
                  180
                  
                  
                  
                  (153
                  )Other
      income (expense), net
                  
                  
                  (742
                  )
                  
                  
                  (368
                  )Gain
      on sale of assets
                  
                  
                  13,132
                  
                  
                  
                  -Liquidated
      gain (damages) on subsidiary preferred stock
                  
                  
                  614
                  
                  
                  
                  (680
                  )Total
      other income (expense)
                  
                  
                  13,184
                  
                  
                  
                  (1,201
                  )Income
      (loss) before income tax expense
                  
                  
                  9,446
                  
                  
                  
                  (6,977
                  )Income
      tax expense
                  
                  
                  12
                  
                  
                  
                  9Net
      income (loss)
                  
                  
                  9,434
                  
                  
                  
                  (6,986
                  )Accretion
      of dividend on subsidiary preferred stock
                  
                  
                  -
                  
                  
                  
                  (404
                  )Dividends
      paid on subsidiary preferred stock
                  
                  
                  (487
                  )
                  
                  
                  -Net
      income (loss) attributable to ordinary shareholders
                  
                  $
                  8,947
                  
                  
                  $
                  (7,390
                  )Net
      income (loss) per share:Basic
      and diluted
                  
                  $
                  0.18
                  
                  
                  $
                  (0.15
                  )Weighted
      average common shares outstanding:Basic
      and diluted
                  
                  
                  50,438,247
                  
                  
                  
                  48,864,799





See
accompanying notes to consolidated financial statements




F-5


INSIGNIA
SOLUTIONS PLC


CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)


(Amounts
in thousands, except for share and per share data)





AccumulatedAdditional
                                      
                                      
                                      Ordinary
                                      
                                      
                                      
                                      
                                      
                                      OtherOrdinary Shares
                                      
                                      
                                      Paid in
                                      
                                      
                                      Share
                                      
                                      
                                      Accumulated
                                      
                                      
                                      ComprehensiveShares
                                      
                                      
                                      Amount
                                      
                                      
                                      Capital
                                      
                                      
                                      Subscription
                                      
                                      
                                      Deficit
                                      
                                      
                                      Loss
                                      
                                      
                                      TotalBalance
      at January 1, 2006
                                      
                                      
                                      42,897,776
                                      
                                      
                                      $
                                      14,634
                                      
                                      
                                      $
                                      66,850
                                      
                                      
                                      $
                                      729
                                      
                                      
                                      $
                                      (82,958
                                      )
                                      
                                      $
                                      (461
                                      )
                                      
                                      $
                                      (1,206
                                      )Shares
      issued upon conversion of subsidiary shares to parent company
      shares
                                      
                                      
                                      2,627,183
                                      
                                      
                                      
                                      47
                                      
                                      
                                      
                                      (47
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Shares
      issued upon exercise of warrants, net of issuance costs and unamortized
      debt discount
                                      
                                      
                                      3,923,392
                                      
                                      
                                      
                                      52
                                      
                                      
                                      
                                      1,032
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,084Reclassification
      of subsidiary preferred stock and warrant liabilities
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,950
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,950Shares
      issued for acquired business
                                      
                                      
                                      989,896
                                      
                                      
                                      
                                      17
                                      
                                      
                                      
                                      670
                                      
                                      
                                      
                                      (687
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Employee
      stock based compensation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      314
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      314Shares
      issuable in connection with consulting agreements
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      118
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      118Shares
      issuable for liquidated damages on subsidiary preferred
    stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      680
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      680Accretion
      of dividend related to subsidiary preferred stock
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      404Accretion
      of dividend related to subsidiary preferred stock
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (404
                                      )Net
      loss
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (6,986
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (6,986
                                      )Balance
      at December 31, 2006
                                      
                                      
                                      50,438,247
                                      
                                      
                                      
                                      14,750
                                      
                                      
                                      
                                      72,769
                                      
                                      
                                      
                                      840
                                      
                                      
                                      
                                      (89,944
                                      )
                                      
                                      
                                      (461
                                      )
                                      
                                      
                                      (2,046
                                      )Employee
      stock based compensation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      161
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      161Preferred
      share redemption
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (2,385
                                      )
                                      
                                      
                                      (680
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (3,065
                                      )Write-off
      other comprehensive loss
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      461
                                      
                                      
                                      
                                      461Preferred
      share dividend
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (487
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (487
                                      )Net
      income
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      9,434
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      9,434Balance
      at December 31, 2007
                                      
                                      
                                      50,438,247
                                      
                                      
                                      $
                                      14,750
                                      
                                      
                                      $
                                      70,545
                                      
                                      
                                      $
                                      160
                                      
                                      
                                      $
                                      (80,997
                                      )
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      4,458





See
accompanying notes to consolidated financial statements.


F-6


INSIGNIA
SOLUTIONS PLC


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Amounts
in thousands)





Year ended December 312007
                
                
                2006CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                
                $
                9,434
                
                
                $
                (6,986
                )Adjustments
      to reconcile net income (loss) to net cash flows used
      in  operating activities:Depreciation
      and amortization
                
                
                120
                
                
                
                437Allowance
      for doubtful accounts
                
                
                -
                
                
                
                (75
                )Stock
      based compensation
                
                
                161
                
                
                
                314Non-cash
      interest expense
                
                
                -
                
                
                
                198Gain
      on sale of assets
                
                
                (13,132
                )
                
                
                -Reclassification
      of other comprehensive loss
                
                
                461
                
                
                
                -Non-cash
      charge for issuance of equity instruments
                
                
                -
                
                
                
                118Loss
      on sale of property and equipment
                
                
                -
                
                
                
                25Impairment
      of note receivable from related party
                
                
                -
                
                
                
                50Liquidated
      (gain) damages on subsidiary preferred stock
                
                
                (614
                )
                
                
                680Changes
      in assets and liabilities:Accounts
      receivable
                
                
                241
                
                
                
                420Prepaid
      expenses and other current assets
                
                
                71
                
                
                
                217Other
      assets
                
                
                42
                
                
                
                172Tax
      receivable
                
                
                -
                
                
                
                192Accounts
      payable
                
                
                (1,485
                )
                
                
                304Accrued
      liabilities
                
                
                (2,097
                )
                
                
                512Deferred
      revenue
                
                
                17
                
                
                
                (30
                )Net
      cash used in operating activities
                
                
                (6,781
                )
                
                
                (3,452
                )CASH
      FLOWS FROM INVESTING ACTIVITIESDecrease
      in restricted cash
                
                
                20
                
                
                
                48Proceeds
      from sale of assets, net of cash transferred to Smith
Micro
                
                
                14,968
                
                
                
                -Purchases
      of property and equipment
                
                
                (19
                )
                
                
                (85
                )Goodwill
      additions
                
                
                (100
                )
                
                
                -Net
      cash provided by (used in) investing activities
                
                
                14,869
                
                
                
                (37
                )CASH
      FLOWS FROM FINANCING ACTIVITIESPreferred
      stock redemption
                
                
                (2,938
                )
                
                
                -Net
      changes in line of credit with Silicon Valley Bank
                
                
                (508
                )
                
                
                508Proceeds
      from the issuance of notes to related parties
                
                
                -
                
                
                
                895Repayments
      of notes to related parties
                
                
                (873
                )
                
                
                (61
                )Proceed
      from short-term debt
                
                
                1,250
                
                
                
                750Repayment
      of short-term debt
                
                
                (20
                )
                
                
                (168
                )Proceed
      from issuance of shares, net of issuance costs
                
                
                -
                
                
                
                690Net
      cash provided by (used in) financing activities
                
                
                (3,089
                )
                
                
                2,614NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                4,999
                
                
                
                (875
                )CASH
      AND CASH EQUIVALENTS, beginning of year
                
                
                341
                
                
                
                1,216CASH
      AND CASH EQUIVALENTS, end of year
                
                $
                5,340
                
                
                $
                341Non-cash
      investing and financing activitiesAccrual
      of acquisition earn-out
                
                $
                -
                
                
                $
                523Reclassification
      of subsidiary preferred stock liability to equity
                
                
                -
                
                
                
                1,975Reclassification
      of warrant liability to equity
                
                
                -
                
                
                
                1,975Note
      payable converted to common stock
                
                
                -
                
                
                
                394Note
      payable forgiveness by Smith Micro from the sale of assets
                
                
                2,000Supplemental
      cash flow informationCash
      paid for interest
                
                
                152
                
                
                
                -Cash
      paid for dividend
                
                
                487
                
                
                
                -





See
accompanying notes to consolidated financial statements.


F-7


INSIGNIA
SOLUTIONS PLC


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS





(Amounts
in thousands, except for share and per share data)





NOTE
1: BACKGROUND





Insignia
Solutions plc (the “Company”), commenced operations in 1986 and until April
2007 developed, marketed and supported Mobile Device Management (“MDM”) software
technologies that enable mobile operators and phone manufacturers to configure,
update and upgrade mobile devices using standard over-the-air data
networks.




In April
2007 the Company sold substantially all of the assets of the Company to Smith
Micro Software, Inc. (Smith Micro) (Note 4).  Pursuant to terms of the
sale agreement, the Company agreed to indemnify Smith Micro against claims and
losses incurred or suffered by Smith Micro as a result of, among other things,
any inaccuracy of any representation or warranty contained in the sale agreement
of the Company for a period of one year.  Under terms of the sale
which was amended and consummated April 4, 2007, the aggregate consideration for
the sale was $18,575, consisting of:




·
            $12,500
      in cash;




·
            Forgiveness
      of all indebtedness payable by Insignia under a promissory note to Smith
      Micro, the principal amount of which was $2,000 on the closing
      date




·
            $2,575
      in cash less employee liabilities assumed by Smith Micro at closing;
      provided that Smith Micro is entitled to withhold $1,500 of the sale
      consideration for twelve months as security for satisfaction of the
      Company’s indemnification obligations (see Note 13, Subsequent
      Events).




Since the
April 2007 sale of substantially all of the Company’s assets, the Company has
not generated any revenues from operations.  The Company now operates
as a holding company with limited operating activities.  For the
remainder of 2007, the Company’s ongoing operating activities generally consist
of administrative and legal functions to maintain the Company’s corporate
structure in order to identify a prospective operating entity to merge
with.  As the Company sold substantially all of its foreign assets and
no longer generates revenue through foreign operations, the Company has
reclassified amounts previously classified as Other Comprehensive Loss to
current year other income and expense.




In June
2008, the Company entered into an Agreement and Plan of Merger with DollarDays
International, LLC,  (see Note 17, Subsequent Events).




NOTE 2: SIGNIFICANT ACCOUNTING
POLICIES




Basis
of presentation and principles of consolidation




The
consolidated financial statements are prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America and include the accounts of the Company and its wholly
owned subsidiaries.  All significant intercompany accounts and
transactions are eliminated in consolidation.




Use
of estimates




The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect amounts reported in the
consolidated financial statements. Actual results could differ from those
estimates.




Cash
and cash equivalents




Cash and
cash equivalents consist primarily of amounts held in U.S. financial
institutions.  At times, balances may exceed federally insured
limits.  Short-term investments with original maturities of three
months or less are considered to be cash equivalents.


F-8





Restricted
cash




At
December 31, 2006, restricted cash of $20 represents a rental deposit for space
leased in a building.  At December 31, 2007, $0 of cash is
restricted.




Revenue
recognition




Subsequent
to the sale to Smith Micro of all its operations, the Company did not have any
revenue generating operations.  If the Company resumes revenue
generating activities, the Company will evaluate those activities in accordance
with applicable standards of generally accepted accounting
principles.




Prior to
the sale in April 2007, the Company’s previous revenue generating activities
were recognized in accordance with Statement of Position 97-2 “Software Revenue
Recognition”, as amended (“SOP 97-2”).  SOP 97-2 requires that four
basic criteria must be met before revenue can be recognized: 1) persuasive
evidence of an arrangement exists; 2) delivery has occurred or services
rendered; 3) the fee is fixed or determinable; and 4) collectibility is
probable.  Determination of criteria (3) and (4) are based on
management’s judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectibility of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected.





At the
time of the transaction, the Company assessed whether the fee associated
with its revenue transaction is fixed or determinable and whether or not
collection is probable. The Company assessed whether the fee is fixed or
determinable based on the payment terms associated with the transaction. If a
significant portion of a fee is due after the normal payment terms, which are 30
to 90 days from invoice date, we accounted for the fee as not being fixed or
determinable. In these cases, the Company recognized revenue on the earlier of
due date or cash collected.





The
Company assessed collectibility based on a number of factors, including past
transaction history with the customer and the credit-worthiness of the customer.
The Company did not request collateral from its customers. If the Company
determined that collection of a fee is not reasonably assured, it deferred the
fee and recognized revenue at the time collection became probable, which was
generally upon receipt of cash.





For all
sales, the Company used either a signed license agreement or a binding purchase
order (primarily for maintenance renewals) as evidence of an
arrangement.





For
arrangements with multiple obligations (for example, undelivered maintenance and
support), the Company allocated revenue to each component of the arrangement
using the residual value method based on the fair value of the undelivered
elements, which is specific to the Company, and it deferred revenue equivalent
to the fair value of the undelivered elements. Fair value for the ongoing
maintenance and support obligation was based upon separate sales of renewals to
other customers or upon renewal rates quoted in the contracts. Fair value of
services, such as training or consulting, was based upon separate sales of these
services to other customers.





The
Company’s arrangements did not generally include acceptance clauses. However, if
an arrangement included an acceptance provision, recognition occurred upon the
earlier of receipt of written customer acceptance or expiration of the
acceptance period.





The
Company recognized revenue for maintenance and hosting services ratably over the
contract term. The Company’s training and consulting services were billed based
on hourly rates, and it generally recognized revenue as these services were
performed. However, at the time of entering into a transaction, the Company
assessed whether or not any services included within the arrangement required it
to perform significant work either to alter the underlying software or to build
additional complex interfaces so that the software performed as the customer
requested. If these services were included as part of an arrangement, the
Company recognized the entire fee using the percentage of completion method. The
Company estimated the percentage of completion based on its estimate of the
total costs to complete the project as a percentage of the costs incurred to
date and the estimated costs to complete.




Revenue
is presented on the consolidated statement of operations net of
returns and allowances.




Accounts
receivable and allowance for doubtful accounts




The
preparation of consolidated financial statements require the Company to make
estimates of the uncollectibility of accounts receivable.  To evaluate
the adequacy of the allowance for doubtful accounts, the Company specifically
analyzes accounts receivable, historical bad debts, customer concentrations,
customer credit-worthiness, current economic trends and changes in customer
payment terms.  The Company’s trade accounts receivable were sold to
Smith Micro in April 2007.


F-9


Goodwill
and intangible assets




Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets acquired in a business
combination.  Intangible assets are comprised of customer
relationships and technology and are amortized using the straight-line method
over the estimated useful lives of ten and five years,
respectively.   The amount of goodwill as of December 31, 2006
was $1,115. Substantially all of the Company’s goodwill and intangible assets
were sold to Smith Micro in April 2007.  Amortization of intangible
assets was $97 and $392 for the years ended December 31, 2007 and 2006,
respectively.




The
Company is required to test goodwill for impairment annually, and at December
31, 2006 the Company performed its test for impairment under Statement of
Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”).  The Company increased its goodwill balance by
approximately $100 in 2007 and $523 in 2006 due to additional earn-out payment
arrangements made in accordance with the original purchase agreement between the
Company and Mi4e. The Company concluded that goodwill was not impaired at
December 31, 2006 and all goodwill was sold to Smith Micro during 2007 resulting
in $0 balance at December 31, 2007.




Property
and equipment




Property
and equipment is recorded at cost, or if leased, at the lesser of the fair value
or present value of the minimum lease payments, less accumulated depreciation
and amortization. Depreciation and amortization is provided using the
straight-line method over the estimated useful lives of the assets, which range
from three to four years or the lease term if shorter.  Substantially
all of the Company’s property and equipment were sold to Smith
Micro.  Depreciation and amortization expense was $22 for the year
ended December 31, 2007.




Impairment
of long-lived assets




The
Company evaluates its long-lived assets for indicators of possible impairment by
comparison of the carrying amounts to future net undiscounted cash flows
expected to be generated by such assets when events or changes in circumstances
indicate the carrying amount of an asset may not be
recoverable.  Should an impairment exist, the impairment loss would be
measured based on the excess carrying value of the asset over the asset’s fair
value or discounted estimates of future cash flows.  The Company has
not identified any such impairment losses in the years ended December 31, 2007
or 2006.




Foreign
currency translation




The
Company’s functional currency for its non-U.S. operations is the U.S. dollar.
Certain monetary assets and liabilities of the non-U.S. operating companies are
denominated in local currencies (i.e. not the U.S. dollar). Upon a change in the
exchange rate between the non-U.S. currency and the U.S. dollar, the Company
must remeasure the local non-U.S. denominated assets and liabilities to avoid
carrying unrealized gains or losses on its consolidated balance sheet. Non-U.S.
dollar denominated monetary assets and liabilities are remeasured using the
exchange rate in effect at the balance sheet date, while nonmonetary items are
remeasured at historical rates. Revenues and expenses are translated at the
average exchange rates in effect during each period, except for those expenses
related to balance sheet amounts, which are translated at historical exchange
rates. Remeasurement adjustments and transaction gains or losses are recognized
in the statement of operations during the period of occurrence. During our early
years of existence, the Company used the pound sterling as the functional
currency for its non-U.S. operations. Accordingly, translation gains and losses
recognized during such periods have been included in the accumulated other
comprehensive loss account. Gains and losses from foreign currency transactions
are included in the statements of operations. Foreign exchange transaction gains
(losses) included in other income (expense), net on the consolidated statements
of operations is $73 and ($255) in 2007 and 2006, respectively.  As
the Company sold substantially all of its foreign assets and no longer generates
revenue through foreign operations, the Company has reclassified amounts
previously classified as Other Comprehensive Loss to current year other income
and expense


F-10


Research
and development




The
Company expenses the cost of research and development costs as
incurred.  Research and development expenses consist primarily of
personnel costs, overhead costs relating to occupancy, software support and
maintenance and equipment depreciation.




Stock-based
compensation




Equity-based
payments




Effective
January 1, 2006 the Company adopted the provisions of, and accounts for
equity-based compensation in accordance with, SFAS No. 123 (revised 2004),
“Share-Based Payment” (“SFAS 123R”) which revised SFAS No. 123 “Accounting for
Stock-Based Compensation” (“SFAS 123”) and supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees” (“APB 25”).  In accordance
with SFAS 123R, equity based compensation cost is measured at the grant date
based on the fair value of the award.  The Company elected the
modified-prospective method.  Under this transition method,
equity-based compensation includes the amortized value of vesting equity-based
payments granted prior to January 1, 2006, based on the grant date fair value as
determined under SFAS 123, and those granted subsequently in accordance with
SFAS 123R.  Results for prior periods have not been
restated.




The
effect of adopting SFAS 123R on the Company’s loss before taxes and net loss for
the year ended December 31, 2006 (the year of adoption) is as
follows:




Employee
      stock-based compensation
                  
                  $
                  314Tax
      effect
                  
                  
                  -Increase
      to net loss
                  
                  $
                  314




The
adoption of SFAS 123R did not have any impact on the Company’s cash flows during
the years ended December 31, 2007 or 2006.




Valuation
and assumptions




The
Company uses the Black-Scholes option pricing model to determine the fair value
of stock options and employee stock purchase plan shares based on the
assumptions in Note 6. The assumption for the expected term was determined using
the simplified method outlined in Staff Accounting Bulletin No.
107.  The risk-free interest rate is based on the US Treasury rates at
the date of grant with maturity dates approximately equal to the expected term
at the grant date. The historical volatility of Company’s stock is used as the
basis for the volatility assumption.




Income
taxes




The
Company 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 its financial
statements or tax returns.  In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax law or rates.




Concentrations
of credit risk




Financial
instruments that potentially subject the Company to a concentration of credit
risk principally consist of cash and cash equivalents and trade accounts
receivable. The Company invests its excess cash primarily in institutional money
market funds with quality financial institutions.  At December 31,
2007, the Company’s cash in financial institutions exceeded the federally
insured deposits limit by approximately $5,287.  At December 31, 2007,
the Company had no trade accounts receivable and at December 31, 2006 two
customers accounted for 54% of trade accounts receivable.




The
Company’s had one product line accounted which for 100% of revenues for the
years ended December 31, 2007 and 2006.


F-11


Comprehensive
income (loss)





SFAS No.
130, “Reporting Comprehensive Income” (“SFAS 130”), requires that all items
recognized under accounting standards as components of comprehensive income
(loss), be reported in an annual statement that is displayed with the same
prominence as other annual financial statements. SFAS 130 also requires that an
entity classify items of other comprehensive income (loss) by their nature in an
annual financial statement. Comprehensive income (loss), as defined, includes
all changes in equity during a period from non-owner sources. The comprehensive
loss is equal to the net loss for all periods presented.




Recently
issued accounting pronouncements




In May
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (“FSP”), “Accounting Principles Board 14-1 Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a
retrospective basis, as such, will be effective beginning in the Company’s
fiscal year 2009. The Company is evaluating the potential impact on its
consolidated financial statements.




In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 161, “Disclosures about Derivative Instruments and Hedging
Activities — an amendment of FASB Statement No. 133”
(“SFAS 161”). SFAS 161 requires enhanced disclosures about the
objectives of derivative instruments and hedging activities, the method of
accounting for such instruments under SFAS 133 and its related
interpretations, and a tabular disclosure of the effects of such instruments and
related hedged items on an entity’s financial position, financial performance
and cash flows. SFAS 161 is effective for fiscal years beginning after
November 15, 2008, as such, will be effective beginning in the Company’s
fiscal year 2009. The Company is evaluating the disclosure requirements of
SFAS 161; however, the adoption of SFAS 161 is not expected to have a
material impact on the Company’s consolidated financial statements.




In
December 2007, the FASB issued SFAS No. 141 (revised
2007), “Business Combinations” (“SFAS 141R”). SFAS 141R
establishes the requirements for how an acquirer recognizes and measures the
identifiable assets acquired, the liabilities assumed, any non-controlling
interest in the acquiree and the goodwill acquired. SFAS 141R requires
acquisition costs be expensed instead of capitalized as is required currently
under SFAS 141 and also establishes disclosure requirements for business
combinations. SFAS 141R applies to business combinations for which the
acquisition date is on or after fiscal years beginning on or after
December 15, 2008, as such, SFAS 141R is effective beginning in the
Company’s fiscal year 2009.  The Company is still evaluating the
potential impact on its consolidated financial statements upon adoption of
SFAS 141R.




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling
Interests in Consolidated Financial Statements — an amendment to ARB
No. 51” (“SFAS 160”). SFAS 160 will change the accounting and
reporting for minority interests, which will now be termed “non-controlling
interests.” SFAS 160 requires non-controlling interests to be presented as
a separate component of equity and requires the amount of net income
attributable to the parent and to the non-controlling interest to be separately
identified on the consolidated statement of operations. SFAS 160 is
effective for fiscal years beginning on or after December 15, 2008, as
such, will be effective beginning in the Company’s fiscal year 2009. The
adoption of SFAS 160 is not expected to have a material impact on the
Company’s consolidated financial statements.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities - including an amendment of FASB
Statement No. 115” (“SFAS 159”). SFAS 159 provides companies with an option to
report selected financial assets and liabilities at fair value. The standard
requires companies to provide additional information that will help investors
and other users of financial statements to more easily understand the effect of
the company’s choice to use fair value on its earnings. It also requires
entities to display the fair value of those assets and liabilities for which the
company has chosen to use fair value on the face of the balance sheet. This
Statement is effective as of the beginning of an entity’s first fiscal year
beginning after November 15, 2007. Early adoption is permitted as of the
beginning of the previous fiscal year provided that the entity makes that choice
in the first 120 days of that fiscal year and also elects to apply the
provisions of Statement 157. The Company is currently evaluating whether the
adoption of SFAS 159 will have a material effect on its financial position,
results of operations or cash flows.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS 157”), which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS 157 does not
require any new fair value measurements, but provides guidance on how to measure
fair value by providing a fair value hierarchy used to classify the source of
the information. In February 2008, the FASB issued FASB Staff Position 157-1,
“Application of FASB Statement No. 157 to FASB Statement No. 13 and
Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13.”
(“FSP 157-1”). FSP 157-1 amends SFAS 157 to exclude leasing
transactions accounted for under SFAS 13 and related guidance from the
scope of SFAS 157. In February 2008, the FASB issued FASB Staff Position
157-2 (“FSP 175-2”), “Effective Date of FASB Statement 157,” which delays
the effective date of SFAS 157 for all non-financial assets and
non-financial liabilities, except for items that are recognized or disclosed as
fair value in the financial statements on a recurring basis (at least annually).
SFAS 157 is effective for fiscal year 2009, however, FSP 157-2 delays
the effective date for certain items to fiscal year 2010. The Company is
evaluating the potential impact on its consolidated financial statements upon
adoption of SFAS 157.


F-12




In July
2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting
for Uncertainty in Income Taxes — an interpretation of FASB Statement
No. 109” (“SFAS 109”). FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an entity’s financial statements in
accordance with SFAS 109 and prescribes that a company should use a
more-likely-than-not recognition threshold based on the technical merits of the
tax position taken or expected to be taken. Tax positions that meet the
more-likely-than-not recognition threshold should be measured in order to
determine the tax benefit to be recognized in the financial statements.
Additionally, FIN 48 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition
and was effective beginning the first quarter of fiscal 2007. The adoption of
FIN 48 did not result in a cumulative adjustment to accumulated deficit
(see Note 9).





In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain
Hybrid Financial Instruments — an Amendment of FASB Statements No. 133
and 140” (“SFAS 155”). SFAS 155 allows financial instruments that
contain an embedded derivative and that otherwise would require bifurcation to
be accounted for as a whole on a fair value basis, at the holders’ election.
SFAS 155 also clarifies and amends certain other provisions of
SFAS 133 and SFAS 140. SFAS 155 was effective beginning fiscal
2007. The adoption of SFAS 155 did not have a material effect on the
Company’s consolidated financial statements.




NOTE
3: INCOME (LOSS) PER SHARE




Basic
income (loss) per share is computed based on the weighted average number of
common shares outstanding and excludes any potential dilution. Diluted income
(loss) per share reflect potential dilution from the exercise or conversion of
securities into common stock. The effects of certain stock options and warrants
are excluded from the determination of the weighted average common shares
outstanding for diluted income per share in each of the periods presented as the
effects were antidilutive or the exercise price for the outstanding options
exceeded the average market price for the Company’s common stock.





The
following common shares were excluded from the computation of net income (loss)
per share because the effects were antidilutive:





Year ended December 31,2007
                      
                      
                      2006Warrants
                      
                      
                      4,348,211
                      
                      
                      
                      16,157,394Stock
      options
                      
                      
                      1,713,376
                      
                      
                      
                      3,929,903Total
                      
                      
                      6,061,587
                      
                      
                      
                      20,087,297




NOTE
4: GAIN ON SALE OF ASSETS





The
Company recorded a gain on sale of assets totaling $13,132 during the year ended
December 31, 2007 related to the sale of substantially all of the assets of the
Company to Smith Micro (Note 1). A portion of the sale consideration was used
for the retirement of the Bridge Loan between the Company and Smith Micro (Note
11).   In addition, Smith Micro agreed to assume certain
liabilities of the Company relating to the transferred
assets.   The Company and Smith Micro completed the transaction
in April 2007 and entered into a settlement agreement in June 2008 related to
the sale (Note 13).   The Company included the gain in other
income as the asset sale was part of the Company’s effort to pursue strategic
opportunities, which include the merger with any potential prospect (Note
13).  A summary of the gain related to the asset sale to Smith Micro
is as follows:


F-13





Cash
      proceeds
                  
                  $
                  14,977Settlement
      costs
                  
                  
                  (500
                  )Net
      proceeds
                  
                  
                  14,477Net
      assets sold
                  
                  
                  (1,345
                  )Gain
                  
                  $
                  13,132




NOTE
5: OTHER INCOME (EXPENSE), NET





Other
income (expense), net, consists primarily of approximately $250 of expenses to
cancel a joint venture with J-Tek Corporation and approximately $461 to write
off other comprehensive loss related to foreign currency exchange (Note
1).  In 2003, the Company entered into a joint venture agreement with
J-Tek Corporation to form Asia Chusik Hocsa and, because there were no ongoing
activities with the joint venture, the Company paid $250 to cancel the joint
venture agreement with J-Tek in 2007.





NOTE
6: STOCK PLANS





The
Company has four stock option plans, which provide for the issuance of stock
options to employees and outside consultants of Insignia to purchase ordinary
shares. At December 31, 2007 and 2006 approximately 3,199,000 and 2,058,000
ordinary shares were available for future grants of stock options, respectively.
Stock options are generally granted at prices of not less than 100% of the fair
market value of the ordinary shares on the date of grant. Options granted under
the Company’s option plans generally vest over a four year period. Options are
exercisable until the tenth anniversary of the date of grant unless they lapse
before that date.





During
2007, the Company granted 600,000 options exercisable at $0.12 with a fair value
of $66 to an employee for services.  The options vest 25% per year for
4 years and expire in 10 years.  The Company recognized $17 of expense
during the year ended December 31, 2007 related to this option
grant.





The
following table summarizes the Company’s stock option activity:





Total
                    
                    
                    Weighted
                      AverageExercise
                      Price
                    
                    
                    Weighted
                      Average
                      Remaining
                      Contractual
                      term(years)
                    
                    
                    Aggregate
                      IntrinsicValueOutstanding
      at January 1, 2006
                    
                    
                    4,436,631
                    
                    
                    $
                    1.39
                    
                    
                    
                    5.7Granted
                    
                    
                    2,290,000
                    
                    
                    
                    0.20Exercised
                    
                    
                    -
                    
                    
                    
                    -Lapsed
                    
                    
                    (2,796,728
                    )
                    
                    
                    0.99Outstanding
      at December 31, 2006
                    
                    
                    3,929,903
                    
                    
                    
                    0.86
                    
                    
                    
                    7.7
                    
                    
                    $
                    -Granted
                    
                    
                    600,000
                    
                    
                    
                    0.12Exercised
                    
                    
                    -
                    
                    
                    
                    -Lapsed
                    
                    
                    (1,741,527
                    )
                    
                    
                    1.82Outstanding
      at December 31, 2007
                    
                    
                    2,788,376
                    
                    
                    
                    0.90
                    
                    
                    
                    6.8
                    
                    
                    $
                    -Exercisable
      at December 31, 2007
                    
                    
                    1,713,376
                    
                    
                    $
                    1.34
                    
                    
                    
                    5.6
                    
                    
                    $
                    -




F-14


The
assumptions used to value equity-based payments are as follows:




Year ended December 31,2007
                  
                  
                  2006Option
      plans:Expected
      dividends
                  
                  None
                  
                  
                  NoneExpected
      term
                  
                  4
      years
                  
                  
                  6.08
      yearsRisk
      free interest rate
                  
                  
                  4.5
                  %
                  
                  
                  4.5
      - 6.0
                  %Expected
      volitility rate
                  
                  
                  424
                  %
                  
                  
                  129
      - 287
                  %




The
weighted average grant date fair value of options granted during the years ended
December 31, 2007 and 2006 was $0.12 and $0.19 per share,
respectively.




As of
December 31, 2007, there was approximately $172 of unrecognized compensation
cost, net of for estimated forfeitures, related to non-vested equity-based
payments granted to employees.  Total unrecognized compensation cost
is expected to be recognized over a weighted average period of 2.37
years.




In March
1995, the Company’s shareholders adopted the 1995 Employee Share Purchase Plan
(the “Purchase Plan”) with 275,000 ordinary shares reserved for issuance
thereunder. The Purchase Plan qualifies as an “employee stock purchase plan”
under section 423 of the U.S. Internal Revenue Code. At December 31, 2006,
289,430 ordinary shares were reserved for future Purchase Plan
issuances.





In the
second quarter of 2006 the Company suspended contributions to the Purchase Plan
and returned payroll deductions already made back to employees. No shares were
issued during 2006 under the Purchase Plan. There were no liabilities
outstanding related to the Purchase Plan at December 31, 2007 or
2006.





NOTE
7: EMPLOYEE BENEFIT AND PENSION PLANS





The
Company has a 401(k) plan covering all of its U.S. employees and a defined
contribution pension plan covering all its United Kingdom employees. Under both
of these plans, employees may contribute a percentage of their compensation and
the Company makes certain matching contributions. Both the employees’ and the
Company’s contributions are fully vested and nonforfeitable at all times. The
assets of both these plans are held separately from those of the Company in
independently managed and administered funds. The Company’s contributions to
these plans aggregated approximately $6 in 2007 and $10 in 2006.





NOTE
8: INCOME TAXES





The
components of net deferred income tax assets are as follows:





Year Ended December 31,2007
                  
                  
                  2006Net
      operating loss carry forwards
                  
                  $
                  23,229
                  
                  
                  $
                  23,229Tax
      credit carry forwards applied
                  
                  
                  (4,291
                  )
                  
                  
                  -Accrued
      expenses, allowance and other temporary differences
                  
                  
                  274
                  
                  
                  
                  319Net
      deferred income tax assets before valuation allowance
                  
                  
                  19,212
                  
                  
                  
                  23,548Deferred
      income tax asset valuation allowance
                  
                  
                  (19,212
                  )
                  
                  
                  (23,548
                  )Net
      deferred income tax asset
                  
                  $
                  -
                  
                  
                  $
                  -




F-15


The
components of income (loss) before income taxes are as follows:





Year Ended December 31,2007
                      
                      
                      2006United
      States
                      
                      $
                      4,320
                      
                      
                      $
                      (4,308
                      )United
      Kingdom and other countries
                      
                      
                      5,126
                      
                      
                      
                      (2,669
                      )$
                      9,446
                      
                      
                      $
                      (6,977
                      )





The
components of the income tax expense (benefit) are as follows:





Year Ended December 31,2007
                  
                  
                  2006Current:U.S.
      federal
                  
                  $
                  118
                  
                  
                  $
                  -U.S.
      state and local
                  
                  
                  3
                  
                  
                  
                  -United
      Kingdom and other countries
                  
                  
                  (109
                  )
                  
                  
                  9Total
      provision (benefit)
                  
                  $
                  12
                  
                  
                  $
                  9





Our
actual provision from income taxes differs from the provision computed by
applying the statutory federal income tax rate to loss before income taxes as
follows:





Year Ended December 31,2007
                  
                  
                  2006U.S.
      federal statutory rate
                  
                  
                  34.0
                  %
                  
                  
                  (34.0
                  )%State
      and local taxes, net of U.S. federal benefit
                  
                  
                  -
                  
                  
                  
                  -Foreign
      income taxes at other than U.S. rate
                  
                  
                  (1.9
                  )
                  
                  
                  0.1Net
      operating losses applied
                  
                  
                  (32.0
                  )
                  
                  
                  -Valuation
      allowance for net deferred income tax assets
                  
                  
                  -
                  
                  
                  
                  34.0Effective
      tax rate
                  
                  
                  0.1
                  %
                  
                  
                  0.1
                  %





As of
December 31, 2007, we had available net operating loss (“NOL”) carry forwards of
approximately $53,000 for U.S. federal tax purposes, which expire in various
years from 2017 to 2026.





Based on
the available objective evidence, management believes it is more likely than not
that the net deferred income tax assets will not be fully realizable.
Accordingly, the Company has provided a full valuation allowance against its net
deferred tax assets at December 31, 2007 and 2006.





The tax
reform act of 1986 limits the use of net operating loss and tax credit carry
forwards in certain situations where changes occur in stock ownership of a
company.  As the Company experienced a change of control subsequent to
December 31, 2007 (as described in Note 17), utilization of the federal and
state carry forwards are expected to be limited.


F-16


NOTE
9:  COMMITMENTS AND CONTIGENCIES





Commitments





The
Company had no non-cancelable operating leases as of December 31,
2007.





On
April 26, 2006 the Company entered into a sub-lease agreement for its
United Kingdom office in High Wycombe, United Kingdom with Norwest Holt Limited.
The assigned lease is a 15 year lease originally signed on April 12,
1998 with an annual rent of 105,000 British Pounds (approximately $210,000 at
December 31, 2007) that is subject to periodic price adjustments.  The
following table sets forth the minimum amounts payable under the Company’s
original lease, which is currently assigned to the sub-lessee:





2008
                  
                  $
                  2102009
                  
                  
                  2102010
                  
                  
                  2102011
                  
                  
                  2102012
                  
                  
                  210Thereafter
                  
                  
                  128Total
                  
                  $
                  1,178





Guarantees





In the
Company’s sales agreements, it typically agreed to indemnify our customers for
any expenses or liability resulting from claimed infringements of patents,
trademarks or copyrights of third parties. The terms of these indemnification
agreements are generally perpetual any time after execution of the agreement.
The maximum amount of potential future indemnification is unlimited. To date the
Company has not paid any amounts to settle claims or defend
lawsuits.  Since April 2007, the Company has not entered into sales
agreements.





The
Company, on a limited basis, had granted price protection for the Jeode product
line. The terms of these agreements were generally perpetual. The Company has
not recorded any liabilities for these potential future payments either because
they are not probable or it has yet to incur the expense.  Since April
2007, the Company has not sold Jeode products.





The
Company warrants its software products against defects in material and
workmanship under normal use and service for a period of ninety days. There is
no warranty accrual recorded because potential future payments either are not
probable or it has yet to incur any expense.  Since April 2007, the
Company has not sold software products.





Contingencies





From time
to time, the Company may become involved in litigation relating to claims
arising from the ordinary course of business. Management is not currently aware
of any matters that could have a material adverse effect on the consolidated
financial position, results of operations or cash flows of the
Company.


F-17


NOTE
10:  WARRANTS





The
following table summarizes activity of the Company’s warrants:





Warrants
                        Outstanding and
                      
                      
                      Weighted
                        Average
                        Exercise
                      
                      
                      Weighted
                        Average
                        Remaining
                        ContractualExercisable
                      
                      
                      Price
                      
                      
                      term (years)Outstanding
      at January 1, 2006
                      
                      
                      20,105,786
                      
                      
                      $
                      0.46
                      
                      
                      
                      4.6Granted
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      (3,923,392
                      )
                      
                      
                      0.33Lapsed
                      
                      
                      (25,000
                      )
                      
                      
                      5.00Outstanding
      at December 31, 2006
                      
                      
                      16,157,394
                      
                      
                      
                      0.48
                      
                      
                      
                      3.7Granted
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -Lapsed
                      
                      
                      (11,809,183
                      )
                      
                      
                      0.49Outstanding
      at December 31, 2007
                      
                      
                      4,348,211
                      
                      
                      
                      0.43
                      
                      
                      
                      2.5Exercisable
      at December 31, 2007
                      
                      
                      4,348,211
                      
                      
                      $
                      0.43
                      
                      
                      
                      2.5





Warrants
outstanding at December 31, 2007 had no intrinsic value.





NOTE
11:  NOTES PAYABLE TO RELATED PARTIES AND SHORT-TERM DEBT





On
October 3, 2005, the Company entered into a Loan and Security Agreement with
Silicon Valley Bank (“SVB”) pursuant to which the Company may request that SVB
finance certain eligible accounts receivable (each, a “financed receivable”) by
extending credit to the Company in an amount equal to 80% of such financed
receivable (subject to certain adjustments). The aggregate amount of financed
receivables outstanding at any time may not exceed $1,250. On the maximum
receivables of $1,250, it can borrow up to $1,000. The Company must pay a
finance charge on each financed receivable in the amount equal to 2% plus the
greater of 6.5% or SVB’s most recently announced prime rate (annualized),
multiplied by the total outstanding gross face amount for such financed
receivable. As security for the loan, the Company granted SVB a first priority
security interest in substantially all of its assets, including intellectual
property. Upon execution of the Loan and Security Agreement, the Company paid
SVB a non-refundable facility fee of $15. In October 2006 and January 2007 this
facility was extended in 3 month increments, with the Company paying SVB a
non-refundable facility fee each time of $4.  As of December 31, 2007
and 2006, approximately $0 and $508, respectively, was outstanding.





The
Company had a note payable to ALMI Företags Partner (“ALMI”) for a total loan
amount of Swedish Krona (“SEK”) 700 or approximately $88. This note was to be
repaid by May 31, 2007 in quarterly installments of approximately SEK 54 or
approximately $7. The interest rate on this note was originally 9.25% which was
revised to 8.75% per annum on July 1, 2005. As of December 31, 2006, the
outstanding balance of the ALMI note was approximately SEK 129 or $19. This loan
was secured by a chattel mortgage in the amount of SEK 700 or approximately
$88.  This note was repaid in the first quarter of 2007.





The
Company also had a note payable to Skandinaviska Enskilda Banken (“SEB”) in the
total amount of SEK 300 or approximately $38. The interest rate on the SEB note
is approximately 6.75% per annum. This loan is secured by a chattel mortgage in
the amount of SEK 500 or approximately $63.  As of December 31, 2006,
the outstanding balance was approximately SEK 8 or approximately $1. This note
matured in January 2007 and was repaid in the first quarter of
2007.




F-18


Between
June 26 and September 11, 2006, Viscount Bearsted and Vincent Pino, members of
the Board of Directors of the Company, advanced to the Company and its
subsidiaries amounts (in US Dollars, English Pounds and Swedish Krona) totaling
approximately $895. These advances carried interest rates varying between 10%
and 18%. In August 2006, the Company repaid approximately $61 of the advances,
and at November 1, 2006 the net amounts owing under these various advances,
including interest, was approximately $873 in the aggregate which was converted
at that time into two loans to a subsidiary of the Company.  The
outstanding balance at December 31, 2006 was approximately $873.  The
loans were secured by all of the assets of the Company (subordinated to any
financing under the current bank line of credit) of approximately $689 (in the
case of Viscount Bearsted) and $184 (in the case of Mr. Pino) with a term of one
year and carrying an annual interest rate of 10%. The notes were repayable
within 30 days of a change of control of the Company or the sale of
substantially all of the Company’s assets. If not repaid when due, the interest
rate on the notes increased to 20% retroactive to November 1, 2006. In December
2006 in consideration for subordinating these loans to bridge funding from Smith
Micro, the Company agreed to pay these lenders additional interest in an amount
equal to ten percent of the principal amount of the loans.  These
notes were repaid in April 2007 upon sale of assets to Smith Micro.





On
December 22, 2006, The Company entered into a Bridge Loan Agreement with Smith
Micro pursuant to which The Company borrowed $750 on December 22, 2006. Under
this agreement, the lender agreed to lend up to an additional $750 in the event
that a definitive agreement (the “Definitive Agreement”) between the parties was
executed regarding the acquisition of substantially all of the assets of the
Company by Smith Micro (the “Acquisition”). The loans were secured by
substantially all of the assets of the Company and certain of its subsidiaries,
including its intellectual property, and payment of the loans and performance of
the Bridge Loan Agreement were guaranteed by the Company and certain of its
subsidiaries. Pursuant to the Bridge Loan Agreement, The Company has agreed to
pay interest on the unpaid principal amount of the loans on a quarterly basis in
the amount of ten percent (10%) per annum. The total principal amount of the
loans was due and payable on the earlier of (i) the date on which the
Acquisition is consummated, (ii) December 22, 2007, (iii) the date that is sixty
(60) days after termination of the Definitive Agreement by the lender under
certain circumstances, or (iv) October 1, 2007, if the Definitive Agreement was
not executed by the Company and lender by January 30, 2007. In February 2007,
Smith Micro increased the amount of the facility to $2,000 and advanced an
additional $1,250 to the Company under this bridge financing
facility.  The bridge loan indebtedness was repaid in April 2007 in
connection with the asset sale to Smith Micro and there are currently no amounts
owed to Smith Micro.





NOTE
12:  EQUITY TRANSACTIONS





Series
A Preferred Stock





On June
30, 2005 and July 5, 2005, the Company and its wholly-owned subsidiary, Insignia
Solutions, Inc., entered into securities subscription agreements with certain
investors (the Series A Investors) pursuant to which the subsidiary issued its
Series A Preferred Stock, no par value per share, to the investors for $1,440
(including exchange of $275 in bridge notes). The shares of Series A Preferred
Stock (plus all accrued and unpaid dividends thereon) held by each investor are
exchangeable for American Depositary Shares (“ADS”s) (i) at any time at the
election of such investor, (ii) automatically upon written notice by us to such
investor in the event that the sale price of the ADSs on the Nasdaq SmallCap
Market is greater than $1.50 per share for a period of ten consecutive trading
days, and certain other conditions are met, and (iii) automatically to the
extent any shares of the Series A Preferred Stock have not been exchanged prior
to June 30, 2007. The Series A Preferred Stock will accrue dividends at a rate
of 15% per year compounded annually until June 30, 2007, at which time no
further dividends will accrue, and are payable in the form of additional ADSs.
Including accruable dividends, the shares of Series A Preferred Stock issued on
June 30, 2005 and on July 5, 2005 will be exchangeable for 3,306,251 and
1,456,075 ADSs, respectively, at an initial purchase price of $0.40 per ADS. For
the years ended December 31, 2007 and 2006, approximately $25 and $84,
respectively, of dividends became payable to Series A
Investors.  Pursuant to the subscription agreements, we also issued to
the investors on June 30, 2005 and July 5, 2005, warrants to purchase an
aggregate of 2,500,000 and 1,101,000 ADSs, respectively, at an exercise price
per share equal to the greater of $0.50 or the U.S. Dollar equivalent of 20.5
U.K. pence. These warrants are immediately exercisable and expire on June 30,
2010. We also entered into registration rights agreements with the investors
pursuant to which we agreed to file a registration statement with the SEC
covering the resale of (i) the ADSs issued to the investors upon exchange of the
Series A Preferred Stock under their subscription agreements and (ii) the ADSs
issuable upon exercise of their warrants.





In 2006,
several of the Series A Investors converted 9,564 shares of Series A Preferred
Stock into 2,627,183 ADSs.





In 2007,
the Company reached a settlement agreement with the remaining Series A Investors
to redeem the outstanding Series A Preferred Stock for $410, waive any accrued
interest and dividends, and cancel any remaining outstanding
warrants.


F-19


Series
B Preferred Stock





On
December 29, 2005, the Company and its subsidiary, Insignia Solutions Inc.,
entered into a subscription agreement with certain investors (the “Series B
Investors”), pursuant to which we and our subsidiary completed a private
placement of our subsidiary’s Series B Preferred Stock and received aggregate
proceeds of $1,975 (including exchange of $250 in bridge notes).  The
shares of Series B Preferred Stock (plus all accrued and unpaid dividends
thereon) held by each December 2005 Investor are exchangeable for ADSs (i) at
any time at the election of the investor or (ii) automatically upon written
notice by the Company to the December 2005 Investor in the event that the sale
price of the ADSs on the NASDAQ SmallCap Market is greater than $0.80 per share
for a period of twenty consecutive trading days and certain other conditions are
met. The Series B Preferred Stock accrues dividends at a rate of 7.5% per year;
the first year’s dividends are payable in the form of additional ADSs upon
exchange, and subsequent accrued dividends are payable only if declared by our
subsidiary’s board of directors.  If the Company’s stock is delisted
from the Nasdaq National Market, which occurred on April 25, 2006, the dividend
rate changes from 7.5% to 20%. Including accruable dividends, the shares of
Series B Preferred Stock will be exchangeable for an aggregate of 9,178,068
ADSs, representing an initial purchase price of $0.25 per ADS. For the
years ended December 31, 2007 and 2006, approximately $167 and $320 of dividends
became payable to Series B Investors.




Pursuant
to the December 2005 Subscription Agreement, we also issued warrants to
purchase an aggregate of 9,085,000 ADSs to the December 2005 Investors at an
exercise price of $0.37 per share. These warrants
are exercisable from June 29, 2006 until December 29, 2010. In
connection with the private placement, we also issued warrants to purchase an
aggregate of 635,950 ADSs to Next Level Capital, Inc., as partial compensation
for its services as placement agent, on substantially similar terms as the
warrants issued to the December 2005 Investors in such private placement. The
additional compensation to Next Level Capital, Inc. consisted of cash payment
equal to 7% of the gross investment proceeds of $1,975 or $138.





In
addition, we entered into a registration rights agreement with the Series B
Investors pursuant to which we agreed to file a registration statement with the
SEC. The registration rights agreement provides that if a registration statement
covering resale of the shares issued in the December 2005 private
placement  has not been filed with the SEC on the specified timetable
, then we would make pro rata payments to each investor, as liquidated damages
and not as a penalty, in an amount equal to 2% of the sum of (i) the aggregate
purchase price paid by the investors for the shares of Series B Preferred Stock
of our subsidiary, ADSs issuable upon exchange of such Series B Preferred Stock
and warrants issued at the December 2005 private placement and (ii) the
aggregate exercise price of the shares subject to warrants then issuable upon
exercise of outstanding warrants then held by such investors, for each monthly
anniversary following the date by which such registration statement should have
been filed or have been declared effective by the SEC, as
applicable.





The
Company determined that these liquidated damages were onerous and thus, could
result in net-cash settlement of the transaction in accordance with EITF No.
00-19, “Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company’s Own Stock” (“EITF
00-19”).  Accordingly, the Company determined that the Series B
Preferred Stock should be accounted for as a liability and thus recorded the
proceeds received from the issuance of the Series B Preferred Stock as a
preferred stock liability on the consolidated balance sheet in the amount of
$1,975. Since the warrants issued to the investors were also covered by the
registration rights agreement they were also determined to be liabilities in
accordance with EITF 00-19. The Company valued the warrants using the
Black-Scholes option pricing model and recorded $1,975 as a discount to the
Series B Preferred Stock. In accordance with EITF 00-27, the Company compared
the amount allocated to the Series B Preferred Stock to the fair value of the
common stock that would be received upon conversion to determine if a beneficial
conversion feature existed. The Company determined that a beneficial conversion
feature of $1,975 existed and, in accordance with EITF 00-27, amortized that
amount immediately to the value of the Series B Preferred Stock, as the Series B
Preferred Stock is immediately convertible. This amount was also included in
non-cash interest expense since the Series B Preferred Stock was recorded as a
liability.





On April
18, 2006, the Company entered into an agreement with the Series B Investors to
amend the registration rights agreement. The amendment caps potential liquidated
damages resulting from any potential late effectiveness of the registration
statement and allows the Company to pay any potential liquidated damages in cash
or shares, at the Company’s option.  As a result of this amendment,
the value of the shares of Series B Preferred Stock ($1,975) and the value of
the warrants ($1,975) that were issued to the investors in such private
placement were reclassified to additional paid-in capital on the consolidated
balance sheet.  In 2006, we expensed $680 related to the liquidated
damages which represents the maximum amount for which the Company is liable
under the liquidated damages clause.





In 2007,
the Company reached a settlement with the Series B Investors to redeem the
outstanding series B
preferred stock for $2,528, comprised of a face value of $1,975, accrued
dividends of $487 and liquidated damages of $66.  The Series B
Investors agreed to waive $614 of liquidated damages and cancel all unexercised
warrants.  The Company recorded a corresponding gain of $614 in 2007
related to the reduction in liquidated damages previously accrued.





Warrant
Exercises





In March
2006, an investor exercised two warrants to acquire 2,720,000 ADSs, pursuant to
a securities subscription agreement.  The investor paid for the
exercise of such warrants partly in cash and partly through the cancellation of
a promissory note in the principal amount of $450, plus unpaid accrued
interest.  The Company received proceeds of $523 in cash, net of share
issuance costs.





In March
and July 2006, Insignia and certain investors amended the warrants issued to
them to reduce the exercise price of such warrants to $0.25 per share and
exercised warrants to purchase an aggregate of 1,203,392 ADSs, which resulted in
approximately $300 in cash, net of share issuance costs.





Total
proceeds, net of issuance costs, from the 2006 warrant exercises totaled
approximately $1,084.


F-20


Other
Share Transactions





In
connections with the Company’s acquisition of Mi4e, a private company
headquartered in Stockholm, Sweden, in March 2005, the Company agreed to issue
3,959,588 shares to the owners of Mi4e of which 2,969,692 were issued in 2005
and 989,896 were issued in 2006.





During
2006 the Company agreed to issue shares valued at $118 to certain consultants
and recorded the transactions as an ordinary share subscription on the
consolidated balance sheet.





NOTE
13:  Mi4E ACQUISITION





On March
16, 2005, the Company acquired 100% of Mi4e, a private company headquartered in
Stockholm, Sweden. The consideration paid in the transaction was
3,959,588 ADSs representing ordinary shares. In addition, up to a maximum
of 700 Euros (approximately $1,100 at December 31, 2006) was payable in
cash in a potential earn-out based on a percentage of future revenue collected
from sales of existing Mi4e products. As of December 31, 2006 $721 had been
earned and accrued for in the accompanying consolidated financial statements.
During the year ended December 31, 2007, an additional $100 was earned and there
are no amounts payable at December 31, 2007.   Mi4e developed,
marketed and supported software technologies that enable mobile operators and
phone manufacturers to update firmware of mobile devices using standards
over-the-air data networks. Its main product DMS is a mobile device management
infrastructure solution for mobile operators that support the OMA Client
Provisioning Specification. Mi4e has been reorganized and renamed as a
wholly-owned subsidiary, Insignia Solutions Sweden.





The
initial purchase price of approximately $3,000 consisted of 3,959,588 ordinary
shares (including 989,896 shares issued in March 2006) with a value of
approximately $2,749 and acquisition costs of approximately $267. The fair value
of the Company’s ordinary shares was determined using an average value of
$0.6943 per share, which was the average closing price of the Company’s ordinary
shares three days before and after the measurement date of February 10, 2005.
The shares issuable in March 2006 were recorded as an ordinary share
subscription on the consolidated balance sheet. These shares were issued in
April 2006 and represent the final issuance of stock related to the acquisition.
Earn-out amounts payable by Insignia to Mi4e’s shareholders are recorded as
additional purchase price and an increase to goodwill when they are earned, and
such amounts were not included in the initial purchase price. Insignia allocated
the initial purchase price to the tangible and intangible assets acquired and
liabilities assumed, based on their estimated fair values.





The
excess of the purchase price over the fair value of the identifiable tangible
and intangible net assets acquired and liabilities assumed of $1,115 at December
31, 2006 was assigned to goodwill.  In accordance with SFAS 142,
goodwill will not be amortized but is tested for impairment at least annually.
This amount is not deductible for tax purposes.  All goodwill was
removed from the Company’s books in connection with the asset sale to Smith
Micro in April 2007.





NOTE
14:  BALANCE SHEET DETAIL





Accruals




Year ended December 31,2007
                              
                              
                              2006Accrued
      liabilities:Accrued
      legal and professional services
                              
                              $
                              274
                              
                              
                              $
                              427Accrued
      earn-out for Mi4e acquisition
                              
                              
                              -
                              
                              
                              
                              721Accrued
      compensation and payroll taxes
                              
                              
                              13
                              
                              
                              
                              591Accrued
      interest on note payable
                              
                              
                              -
                              
                              
                              
                              102Accrued
      Smith Micro settlement charges
                              
                              
                              500
                              
                              
                              
                              -Other
                              
                              
                              80
                              
                              
                              
                              721$
                              867
                              
                              
                              $
                              2,562




F-21


Goodwill





Insignia
increased its goodwill balance by $523 in 2006 to a balance of $1,115 as of
December 31, 2006 due to an accrual for an earn-out provision in the purchase
agreement.   An additional $100 was earned during
2007.  All goodwill was removed from the Company’s books in connection
with the asset sale to Smith Micro during 2007 and at December 31, 2007, the
Company had no goodwill recorded in the accompanying consolidated financial
statements.





Intangible
assets





The
components of intangible assets as of December 31, 2006 are as follows (in
thousands):





Gross
                    Carrying
                    Amount
                  
                  
                  Accumulated
                    Amortization
                  
                  
                  Net Carrying
                    AmountTechnology
                  
                  $
                  1,500
                  
                  
                  $
                  (534
                  )
                  
                  $
                  966Customer
      relationships
                  
                  
                  900
                  
                  
                  
                  (163
                  )
                  
                  
                  737Intangible
      assets
                  
                  $
                  2,400
                  
                  
                  $
                  (697
                  )
                  
                  $
                  1,703





The
identifiable intangible assets are subject to amortization and have approximate
original estimated useful lives as follows: technology - five years and customer
relationships - ten years.





The
following table presents details of the amortization expense of intangible
assets as reported in the consolidated statements of operations (in
thousands):





Year ended December 31,2007
                            
                            
                            2006Reported
      as:Costs
      of net revenues
                            
                            $
                            74
                            
                            
                            $
                            300Operating
      expenses
                            
                            
                            23
                            
                            
                            
                            92Total
                            
                            $
                            97
                            
                            
                            $
                            392





Substantially
all intangible assets were disposed of in connection with the asset sale to
Smith Micro in April 2007 and at December 31, 2007, the Company had no
intangible assets recorded in the accompany financial statements.





NOTE
15:  SEGMENT REPORTING





SFAS No.
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.





Until
April 2007 the Company operated in a single industry segment providing MDM
software technologies that enable mobile operators and phone manufacturers to
configure, update and upgrade mobile devices using standard over-the-air data
networks. In 2007 and 2006, the MDM product accounted for 100% of total revenue.
In 2007, one customer accounting for 45% of total revenue.  In 2006
one customer accounted for 39% of total revenue and a second customer generated,
14% of the total revenue.




F-22


Revenue
by geographic area is as follows (in thousands):





Year Ended December
      31,2007
                  
                  
                  2006U.S.
                  
                  $
                  226
                  
                  
                  $
                  348Asia
      Pacific
                  
                  
                  404
                  
                  
                  
                  687EMEA
                  
                  
                  253
                  
                  
                  
                  1,803$
                  883
                  
                  
                  $
                  2,838Percentage
      of total revenueU.S.
                  
                  
                  25
                  %
                  
                  
                  12
                  %Asia
      Pacific
                  
                  
                  29
                  %
                  
                  
                  24
                  %EMEA
                  
                  
                  46
                  %
                  
                  
                  64
                  %100
                  %
                  
                  
                  100
                  %





Revenues
are attributed to countries based on the principal address of the
customer.





As of
December 31, 2006 the majority of the Company’s long-lived assets were located
outside the United States, principally in Sweden. As of December 31, 2006, all
of its net intangible assets ($1,703) and goodwill ($1,115) were located outside
the United States and $92 of its net property and equipment were located outside
the United States. As of December 31, 2007, the Company did not have long-lived
assets.





NOTE
16:  JOINT VENTURE AGREEMENT





On
December 31, 2003, the Company entered into a joint venture agreement with J-Tek
Corporation to form Insignia Asia Chusik Hoesa (“Insignia Asia”). The Company
owned 50% of the entity and was accounting for this investment under the
equity method of accounting. During 2004, the Company made two investments of
$75 each and recognized its share of losses of approximately $82. During 2005,
its share of losses recognized was $68, leaving us with a zero balance in our
investment in this joint venture. During 2005, the Company also recognized
license and maintenance revenue of $193 from Insignia Asia, and Insignia
Solutions, Inc., the Company’s subsidiary, loaned $50 to Insignia Asia. The note
was due in December 2006 and had a zero percent interest rate. In 2006, Insignia
Solutions Inc. wrote-off this note and, while not contractually obligated to do
so, funded additional amounts totaling approximately $341 to Insignia Asia to
allow them to continue operating. The entire amount of the advances was recorded
as general and administrative expense on the consolidated statement of
operations in 2006. No revenue was recognized for transactions with Insignia
Asia in 2006.  In March 2007, the Company purchased the remaining
outstanding shares of Insignia Asia from J-Tek Corporation for $250 and
recognized a corresponding expense in Other income (expense), net, in the
accompanying consolidated financial statements.





NOTE
17:  SUBSEQUENT EVENTS





On June
23, 2008, the Company entered into an Agreement and Plan of Merger with Dollar
Days International, LLC (“DDI”), a Delaware corporation (the “Merger
Agreement”).  Under the term of the Merger Agreement, these
transactions consisted of the following:





·
            DDI
      formed a wholly-owned Delaware Corporation, Dollar Days International,
      Inc. (“DDI Inc.”) and contributed all its assets and liabilities in
      exchange for 100% of the stock of the
  Corporation


·
            DDI
      Inc. merged with the Company, whereby the Company agreed to issue
      73,333,333 ADRs, which are common stock equivalents of the Company for all
      of the outstanding common stock of
DDI.


·
            The
      combined entity agreed to issue an aggregate of 7,682,926 ADRs to a new
      investor in exchange for cash of
$1,000.





The
Company did not immediately issue the ADRs as agreed to under the terms of the
Merger Agreement as the Company did not have sufficient authorized shares to
permit such issuances.  The Company expects to resolve this issue
through a shareholder vote in 2009 to enact a reverse split.  There
can be no assurance that such measures will be approved by the
shareholders.




F-23


Under the
agreement and plan of merger, the Company’s shareholders maintained
approximately 37.1%, DDI’s shareholders obtained 56.7%, and a new investor
obtained 6.2% of the combined company stock.  The merger will be
accounted for as a reverse merger whereby DDI is the accounting acquirer
resulting in a recapitalization of DDI’s equity.





In
connection with the reverse merger, the surviving corporation agreed to issue
the following dilutive securities:





·
            Warrants
      to purchase approximately 6 million ADRs are to be issued in exchange for
      the cancellation of the outstanding options of the
  Company.


·
            Warrants
      to purchase approximately 3.6 million ADRs are to be issued with an
      exercise price of $0.13 per ADR to an investment bank in exchange for
      services related to the merger.


·
            Warrants
      to purchase approximately 8.6 million ADRs at an exercise price of $0.01
      per ADR are to be issued to the Company’s
  Chairman.





On June
23, 2008, the Company and certain of its subsidiaries entered into a Release
Agreement with Smith Micro and DDI (the “Release Agreement”). Under the terms of
the release agreement, the Company and Smith Micro agreed to release all claims
against each other pursuant to that certain Asset Purchase Agreement between the
Company, Smith Micro, and the other parties thereto dated February 11, 2007, as
amended April 4, 2007 (the “Asset Purchase Agreement”), including, but not
limited to, claims made by Smith Micro under a holdback certificate dated March
31, 2008 whereby Smith Micro sought indemnification for various alleged breaches
of representations and warranties in the Asset Purchase Agreement resulting in
alleged aggregate losses of between approximately $3,100 and $6,500 (as
disclosed on Form 8-K dated June 23, 2008). Insignia has also agreed to release
its claim for a $1,500 purchase price holdback amount held by Smith Micro and to
deliver a cash payment of $500 to Smith Micro.


F-24


SCHEDULE II





Valuation
and Qualifying Accounts





Balance at
                    Beginning
                    of
                    Period
                  
                  
                  Additions
                  
                  
                  Deductions
                    (Write-Offs)
                  
                  
                  Balance
                    at
                    End of
                    Period(In
      thousands)Allowance
      for doubtful accounts:Year
      ended December 31, 2007
                  
                  $
                  100
                  
                  
                  $
                  —
                  
                  
                  $
                  (100
                  )
                  
                  $
                  —Year
      ended December 31, 2006
                  
                  $
                  175
                  
                  
                  $
                  —
                  
                  
                  $
                  (75
                  )
                  
                  $
                  100


II-1





INDEX
TO EXHIBITS





Exhibit
                  Number
                
                Exhibit Title3.02(1)
                
                Registrant’s
      Articles of Association.3.04(1)
                
                Registrant’s
      Memorandum of Association.4.01(1)
                
                Form
      of Specimen Certificate for Registrant’s Ordinary
  Shares.4.02(2)
                
                Deposit
      Agreement between Registrant and The Bank of New York.4.03(2)
                
                Form
      of American Depositary Receipt (included in
      Exhibit 4.02).4.04(3)
                
                American
      Depositary Shares Purchase Agreement dated January 5,
      2004.4.05(3)
                
                Registration
      Rights Agreement dated January 5, 2004.4.06(3)
                
                Form
      of Warrant to Purchase American Depositary Shares dated January 5,
      2004 and issued to the purchasers of American Depositary
      Shares.4.07(3)
                
                Form
      of Warrant to Purchase American Depositary Shares dated January 5,
      2004 and issued to the principals of Nash Fitzwilliams, Ltd., as placement
      agent.4.08(32)
                
                Warrant
      dated February 10, 2005 (reissued on March 15, 2006) and
      issued to Fusion Capital Fund II, LLC.4.09(32)
                
                Warrant
      dated November 4, 2005 (reissued on March 15, 2006) and
      issued to Fusion Capital Fund II, LLC.4.10(32)
                
                Form
      of Warrant to Purchase American Depositary Shares dated July 18,
      2005, issued to certain investors pursuant to the American Depositary
      Shares Purchase Agreement between the Registrant and the Purchasers,
      as defined therein, dated October 18, 2004.10.01(1)
                
                Registrant’s
      1986 Executive Share Option Scheme, as amended, and related
      documents.10.02(1)
                
                Registrant’s
      1988 U.S. Stock Option Plan, as amended, and related
      documents.10.03(5)
                
                Registrant’s
      1995 Incentive Stock Option Plan for U.S. Employees and related
      documents, as amended.10.05(1)
                
                Insignia
      Solutions Inc. 401(k) Plan.10.06(1)
                
                Registrant’s
      Small Self-Administered Pension Plan Definitive Deed and
      Rules.10.14(1)
                
                Form
      of Indemnification Agreement entered into by Registrant with each of its
      directors and executive officers.10.28(6)
                
                Registrant’s
      U.K. Employee Share Option Scheme 1996, as amended.10.38(7)
                
                Lease
      Agreement between Insignia Solutions, Inc. and Lincoln-Whitehall Pacific,
      LLC, dated December 22, 1997.10.42(5)
                
                Registrant’s
      1995 Employee Share Purchase Plan, as amended.10.44(8)
                
                Lease
      agreement between Registrant and Comland Industrial and Commercial
      Properties Limited dated August 12, 1998 for the Apollo House
      premises and the Saturn House premises.10.62(9)
                
                Warrant
      Agreement, dated as of November 24, 2000, between Registrant and
      Jefferies & Company, Inc.10.63(10)
                
                Form
      of ADSs Purchase Warrant issued November 24, 2000.10.64(11)
                
                ADSs
      Purchase Warrant issued to Jefferies & Company, Inc., dated
      November 24, 2000.




II-2





10.67(12)
                  
                  Warrant
      Agreement, dated as of February 12, 2001, between Registrant and
      Jefferies & Company, Inc.10.68(13)
                  
                  Form
      of ADSs Purchase Warrant issued February 12, 2001.10.69(14)
                  
                  ADSs
      Purchase Warrant issued to Jefferies & Company, Inc., dated
      February 12, 2001.10.85(15)*
                  
                  Warrant
      Agreement between the Registrant and International Business Machines
      Corporation dated November 24, 2003.10.87(16)
                  
                  American
      Depositary Shares Purchase Agreement between the Registrant and the
      Purchasers, as defined therein, dated October 18, 2004 (the “October
      2004 ADS Purchase Agreement”).10.88(16)
                  
                  Form
      of Warrant issued to Purchasers, as defined in the October 2004 ADS
      Purchase Agreement.10.89(16)
                  
                  Registration
      Rights Agreement between the Registrant and the Purchasers, as defined in
      the October 2004 ADS Purchase Agreement, dated October 18,
      2004.10.90(17)
                  
                  Stock
      Purchase and Sale Agreement dated February 9, 2005 between, among
      others, the Registrant, Kenora Ltd and the Sellers (as defined
      therein).10.91(18)
                  
                  Securities
      Subscription Agreement by and between the Registrant and Fusion Capital
      Fund II, LLC dated February 10, 2005.10.92(18)
                  
                  Registration
      Rights Agreement by and between the Registrant and Fusion Capital
      Fund II, LLC dated February 10, 2005.10.93(18)
                  
                  Warrant,
      dated as of February 10, 2005, by and between the Registrant and
      Fusion Capital Fund II, LLC.10.94(18)
                  
                  Warrant,
      dated as of February 10, 2005, by and between the Registrant and
      Fusion Capital Fund II, LLC.10.96(19)
                  
                  Termination
      and Waiver Agreement dated June 30, 2004 between the Registrant and
      Esmertec A.G.10.97(20)
                  
                  Registration
      Rights Agreement, dated March 16, 2005, between the Registrant, Noel
      Mulkeen and Anders Furehed.10.98(21)
                  
                  Agreement,
      dated May 21, 2005, amending the Securities Subscription Agreement by
      and between the Registrant and Fusion Capital Fund II, LLC dated
      February 10, 2005 and related warrants.10.99(22)
                  
                  Form
      of Securities Subscription Agreement, dated as of June 30, 2005, by
      and among the Registrant, Insignia Solutions Inc. and the investors in the
      closings of the private placement that took place on June 30, 2005
      and July 5, 2005 (the “June/July 2005 Private
      Placement”).10.100(23)
                  
                  Form
      of Warrant, dated as of June 30, 2005, issued by the Registrant to
      each of the investors in the June/July 2005 Private
    Placement.10.101(24)
                  
                  Form
      of Registration Rights Agreement, dated as of June 30, 2005, by and
      between the Registrant and each of the investors in the June/July 2005
      Private Placement.10.102(25)
                  
                  Agreement,
      dated June 30, 2005, amending the Securities Subscription Agreement
      by and between the Registrant and Fusion Capital Fund II, LLC dated
      February 10, 2005.10.103(26)
                  
                  Agreement,
      dated August 31, 2005, amending the Securities Subscription Agreement
      by and between the Registrant and Fusion Capital Fund II, LLC dated
      February 10, 2005.10.104(31)
                  
                  Employment
      Offer Letter between the Registrant and Richard Noling dated
      September 14, 2005.10.105(31)
                  
                  Loan
      and Security Agreement between the Registrant and Silicon Valley Bank
      dated October 3, 2005.10.106(27)
                  
                  Employment
      Offer Letter between the Registrant and John Davis dated November 21,
      2005.10.107(28)
                  
                  Securities
      Subscription Agreement, dated as of December 29, 2005, by and among
      the Registrant, Insignia Solutions Inc. and the investors in the private
      placement that took place on December 29, 2005 (the “December 2005
      Private
Placement”).




II-3





10.108(29)
                    
                    Form
      of Warrant, dated as of December 29, 2005, issued by the Registrant
      to each of the investors in the December 2005 Private
      Placement.10.109(30)
                    
                    Registration
      Rights Agreement, dated as of December 29, 2005, by and between the
      Registrant and each of the investors in the December 2005 Private
      Placement.14.01(32)
                    
                    Code
      of Ethics.21.01(32)
                    
                    Subsidiaries
      of the Registrant.23.01†
                    
                    Consent
      of Malone & Bailey, PC, Independent Registered Public Accounting
      Firm.23.02†
                    
                    Consent
      of Burr, Pilger & Mayer LLP, Independent Registered Public
      Accounting Firm.24.01†
                    
                    Power
      of Attorney (included on signature page).31.1†
                    
                    Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2†
                    
                    Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1†
                    
                    Certification
      of Principal Executive Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2†
                    
                    Certification
      of Principal Financial Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.99.01(32)
                    
                    Press
      release dated November 10,
2005.





____________





†
              
              Filed
      or furnished herewith.*
              
              Confidential
      treatment has been granted with respect to certain portions of this
      agreement. Such portions were omitted from this filing and filed
      separately with the Securities and Exchange Commission.(1)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s
      Registration Statement on Form F-1 (File No. 33-98230) declared
      effective by the Commission on November 13, 1995.(2)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s Annual
      Report on Form 10-K for the year ended December 31,
      1995.(3)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s
      Registration Statement on Form S-3 (File No. 333-112607) filed
      on February 9, 2004.(4)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s Annual
      Report on Form 10-K for the year ended December 31,
      1997.(5)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s Quarterly
      Report on Form 10-Q for the quarter ended March 31,
      2004.(6)
              
              Incorporated
      by reference to Exhibit 4.05 from Registrant’s Registration Statement
      on Form S-8 (File No. 333-51760) filed on December 13,
      2000.(7)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s Quarterly
      Report on Form 10-Q for the quarter ended March 31,
      1998.(8)
              
              Incorporated
      by reference to the exhibit of the same number from Registrant’s Annual
      Report on Form 10-K for the year ended December 31,
      1998.




II-4





(9)
                  
                  Incorporated
      by reference to Exhibit 10.53 from Registrant’s Current Report on
      Form 8-K filed on November 29, 2000.(10)
                  
                  Incorporated
      by reference to Exhibit 4.11 from Registrant’s Current Report on
      Form 8-K filed on November 29, 2000.(11)
                  
                  Incorporated
      by reference to Exhibit 4.12 from Registrant’s Current Report on
      Form 8-K filed on November 29, 2000.(12)
                  
                  Incorporated
      by reference to Exhibit 10.55 from Registrant’s Current Report on
      Form 8-K filed on February 15, 2001.(13)
                  
                  Incorporated
      by reference to Exhibit 4.13 from Registrant’s Current Report on
      Form 8-K filed on February 15, 2001.(14)
                  
                  Incorporated
      by reference to Exhibit 4.14 from Registrant’s Current Report on
      Form 8-K filed on February 15, 2001.(15)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Annual
      Report on Form 10-K for the year ended December 31,
      2003.(16)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Current
      Report on Form 8-K filed on October 22, 2004.(17)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Current
      Report on Form 8-K filed on February 10, 2005 (Items 1.01
      and 9.01).(18)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Current
      Report on Form 8-K filed on February 10, 2005 (Items 1.01,
      1.02 and 9.01).(19)
                  
                  Incorporated
      by reference to Exhibit 10.87 from Registrant’s Quarterly Report on
      Form 10-Q for the quarter ended June 30,
2004.(20)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Current
      Report on Form 8-K filed on March 22, 2005, as amended on
      July 1, 2005.(21)
                  
                  Incorporated
      by reference to Exhibit 10.97 from Registrant’s Current Report on
      Form 8-K filed on May 20, 2005.(22)
                  
                  Incorporated
      by reference to Exhibit 10.01 from Registrant’s Current Report on
      Form 8-K filed on July 7, 2005.(23)
                  
                  Incorporated
      by reference to Exhibit 10.02 from Registrant’s Current Report on
      Form 8-K filed on July 7, 2005.(24)
                  
                  Incorporated
      by reference to Exhibit 10.03 from Registrant’s Current Report on
      Form 8-K filed on July 7, 2005.(25)
                  
                  Incorporated
      by reference to Exhibit 10.04 from Registrant’s Current Report on
      Form 8-K filed on July 7, 2005.(26)
                  
                  Incorporated
      by reference to Exhibit 10.01 from Registrant’s Current Report on
      Form 8-K filed on September 7, 2005.(27)
                  
                  Incorporated
      by reference to Exhibit 10.01 from Registrant’s Current Report on
      Form 8-K filed on December 12, 2005.(28)
                  
                  Incorporated
      by reference to Exhibit 10.01 from Registrant’s Current Report on
      Form 8-K filed on January 4, 2006.(29)
                  
                  Incorporated
      by reference to Exhibit 10.02 from Registrant’s Current Report on
      Form 8-K filed on January 4, 2006.(30)
                  
                  Incorporated
      by reference to Exhibit 10.03 from Registrant’s Current Report on
      Form 8-K filed on January 4, 2006.(31)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s
      Registration Statement on Form S-1 filed on February 14,
      2006.(32)
                  
                  Incorporated
      by reference to the exhibit of the same number from Registrant’s Annual
      Report on Form 10-K for the year ended December 31, 2005 filed on July 7,
      2006.




II-5